European leaders led by Germany resist sensible Greek debt restructuring: Hopefully Reason rather than pride will prevail in end

Most of the leadership of the Eurozone led by Chancellor Merkel and German Finance minister Wolfgang Schauble have so far refused to agree to any of the very sensible debt restructuring proposals made by the Greek government and brought to them in person  for consideration by the new Greek finance minister  and former Professor of Economics Yanis Valoufakis. Instead they have stubbornly insisted that once the current program expires on February 28 it must be renewed on similar terms after an inspection visit by the hated Troika of Eurocrats with whom Greece has insisted it will no longer negotiate. This sets up a who will blink first scenario that Valoufakis as a student of game theory will find very familiar. In these circumstances a Greek exit from the euro begins to look more likely even if the damage done to the eurozone currency might be substantial. Perhaps the IMF representatives will have better advice and suggestions about how to engineer an acceptable compromise since they surely now must understand that austerity in an economy rocked by financial collapse and a banking crisis is the worst possible policy response in both economic and political terms. The easiest solution would involve using the ECB’S quantitative easing capacities to ease the Greek situation in the short run followed by some variation of the debt restructuring proposals. History however teaches us that politicians often allow personal pride to interfere with more rational outcomes. Much is at stake in Europe . May reason rather than pride prevail.


About haroldchorneyeconomist

I am Professor of political economy at Concordia university in Montréal, Québec, Canada. I received my B.A.Hons (econ.&poli sci) from the University of Manitoba. I also completed my M.A. degree in economics there. Went on to spend two years at the London School of Economics as a Ph.D. student in economics and then completed my Ph.D. in political economy at the University of Toronto. Was named a John W.Dafoe fellow, a CMHC fellow and a Canada Council fellow. I also was named a Woodrow Wilson fellow in 1968 after completing my first class honours undergraduate degree. Worked as an economist in the area of education, labour economics and as the senior economist with the Manitoba Housing and Renewal Corporation for the Government of Manitoba from 1972 to 1978. I also have worked as an economic consultant for MDT socio-economic consultants and have been consulted on urban planning, health policy, linguistic duality and public sector finance questions by the governments of Manitoba, Saskatchewan,the cities of Regina and Saskatoon, Ontario and the Federal government of Canada. I have also been consulted by senior leaders of the British Labour party, MPs from the Progressive Conservative party, the Liberal party and the New Democrats on economic policy questions. Members of the Government of France under the Presidency of Francois Mitterand discussed my work on public sector deficits. I have also run for elected office at the municipal level. I first began to write about quantitative easing as a useful policy option during the early 1980s.
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