American Economist Stiglitz: ‘Greece’s New Bailout Makes No Sense’



stiglitz_26.7_708American economist Joseph Stiglitz is convinced that Greece’s third bailout deal will not be helpful for the country. In his article, published by the New York Times, the Nobel laureate explained why he thinks that the measures the Troika is asking Greece to implement make no sense, for neither of the parties involved.

“Having spent the last week in Athens talking to ordinary citizens, young and old, as well as current and past officials, I’ve come to the view that this is about far more than just Greece and the euro.

Some of the basic laws demanded by the Troika deal with taxes and expenditures, and the balance between the two, and some deal with the rules and regulations affecting specific markets. What is striking about the new program (called ‘the third Memorandum’) is that on both scores it makes no sense either for Greece or for its creditors,” he wrote.

Furthermore, he added, that while reading the details of the deal, he had a sense of “déjà vu.” As chief economist at the World Bank in the late 90s, he had witnessed firsthand the devastating impact that such programs had on Eastern Asian countries.

“Whether or not the program is well implemented, it will lead to unsustainable levels of debt, just as a similar approach did in Argentina,” he stressed. The macropolitics required by the Troika will drive Greece deeper into recession, which is why Christine Lagarde spoke about the need for debt restructuring.

This deal makes no sense for Greece or its creditors “It’s like a 19th-century debtors’ prison,” he said, where imprisoned debtors could not make any income to repay their debt.

“I strongly believe that the policies being imposed will not work, that they will result in depression without end, unacceptable levels of unemployment and ever-growing inequality,” he concluded.


5 COMMENTS

  1. The 3rd memo won’t work. It won’t work because there is no balance between the country’s economy, taxasion and investment. This 3rd memo will lead to a deeper recession. Juncker knows it, Merkel knows it and schultz knows it. There are much more better solutions to the problem to bring prosperity and atract private investors in order to get us out of this crisis. Why they want to exterminate Greece when they can turn it to a success story, why???

  2. The lenders of money to a country as economically incompetent as Greece must accept some responsibility for their misjudgement and thus be prepared for loss of capital eg 50 cents in the dollar.

  3. Economists, make no sense either. Go back to your classroom where you belong, as you don’t know what you are talking about.

    Greece must reform it’s laws to encourage business, and investment. Economists don’t know how to do that. Nor are they qualified. Greece needs real experts, not these talking head clowns.

  4. The Troika loansharks main objective is to seize the massive untapped oil and natural gas reserves in Greek territorial waters at fire sale prices. Assets such as ports, and airports are used to disguise the real prize – Energy resources! That is the main reason why the Troika signed Greece up to a 3rd memorandum, Tsipras just asked where do I sign.

    According to a November 2012 report published by Deutsche Bank, Greece may possess ‘3.5 Tcm’ of natural gas worth ‘USD599bn’ (2012 prices) and this is just for the region south of Crete, this does not include massive potential oil and natural gas reserves in the Aegean sea, the Gulf of Patras, and to a lessor, though still sizeable extent in the Ionian sea.

  5. MSM you may be right but I can tell you Greece is a long way from having a viable Oil and Gas sector I suggest more strategic and geo -political reasons are at play, but as far as this article goes he is spot on and wether the creditors like it or not they will need to look at haircut to even give this 3rd memorandum a remote chance of succeeding otherwise we will be in the same position next year