American 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.