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Thursday, January 8, 2015

Jacob Funk Kirkegaard : "Greece’s Latest Travails Are Not Europe’s Problem This Time"

RealTime Economic Issues Watch | Greece’s Latest Travails Are Not Europe’s Problem This Time

A Grim Outlook No Matter What
The 2015 baseline outlook for Greece is not favorable. A dramatic new downturn cannot be ruled out. The most dreadful aspect of this situation is that it results from the erroneous assumptions and misperceptions of Greek leaders themselves.
(emphasis added)

Whatever happens, Greece will stay in the euro area and explore ways to deal with its huge debt stock, much of which is owned by other euro area governments. Restructuring these loans into 80- to 100-year bonds at concessionary rates or converting them to euro bonds remain feasible options in the longer term—but only if the chronology is right and Greece first completes its economic reform program.

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