Post by Progenitor A on Aug 24, 2018 7:29:50 GMT 1
THE INTERNATIONAL MONETARY FUND DEMOLISHES THE EU CLAIMS (THAT THE GREEK ECONOMIC RECESSION IS OVER):
Below is an edited article by Ambrose Evans Pritchard in testerday's Telegraph. Do read it . It shows the EU at its very worst - destroying the world's oldest democracy
Greek.....interest rate shocks will hit from early 2020s onwards as the grace period (of EU 'cheap' loans) tapers off and the country switches to the capital markets. Gross financing needs each year will smash through the plausible pain threshold of 20pc of GDP by 2038, and keep rising thereafter.
......The workforce will contract by 1.1pc each year for four decades. Economic trend growth is minus 0.4pc.
The IMF doubts that reform can lift this much higher.
“It has been an enormous policy disaster,” said Professor Charles Wyplosz, the expert brought in by the IMF’s watchdog to review the sorry episode. “People compare this to the Great Depression in the Thirties but that was a nice walk in a beautiful forest by comparison. Nothing like this has ever happened before to a developed economy.
“When the crisis began in 2010 the debt ratio was 120pc of GDP. Eight years later it is 180pc and the Greek economy has shrunk by a quarter. The outcome is as a bad as it could possibly have been, and the problem is certainly not solved. If you cook the assumptions, you can claim anything is sustainable.
“What the Europeans have now done is put Greece to sleep under anaesthesia but when the people wake up and feel the pain they are going to be very angry. Economically it is nonsense, and politically it is shameful.”
.........
The original sin (of the EU) was to foist bailout loans on Greece – in violation of the IMF’s own rules – when it was already insolvent. The country needed debt cancellation of 50pc to restore viability, given that the cure of devaluation was blocked.
This was done entirely in order to save Europe’s banks and the euro...... Both the Indian and Brazilian members of the IMF board protested in 2010 that Greece was being sacrificed to save monetary union.
.......
There was no excuse for what happened next. The EU tried to force through an “internal devaluation” of 20pc to 30pc by means of deflationary wage cuts. The country was forced to go through a fiscal squeeze of 11pc of GDP over the first three years.
This was scientific malpractice.... (resulting in a downward spiral.) The economic base contracted faster than austerity cuts could keep up, causing the debts to rise faster. When the targets were missed, the Greeks were forced to cut deeper.
The IMF watchdog said there had been a chronic “lack of realism”. Top staff of the Fund had become cheerleaders for the euro project throughout the EMU crisis. Critics were silenced. Officials were prone to “groupthink” and “superficial and mechanistic” analysis.
Needless to say, there is no chance that Greece will muddle through until 2060. The next global economic downturn will push the country back into recession and blow up the debt trajectory.
Below is an edited article by Ambrose Evans Pritchard in testerday's Telegraph. Do read it . It shows the EU at its very worst - destroying the world's oldest democracy
Greek.....interest rate shocks will hit from early 2020s onwards as the grace period (of EU 'cheap' loans) tapers off and the country switches to the capital markets. Gross financing needs each year will smash through the plausible pain threshold of 20pc of GDP by 2038, and keep rising thereafter.
......The workforce will contract by 1.1pc each year for four decades. Economic trend growth is minus 0.4pc.
The IMF doubts that reform can lift this much higher.
“It has been an enormous policy disaster,” said Professor Charles Wyplosz, the expert brought in by the IMF’s watchdog to review the sorry episode. “People compare this to the Great Depression in the Thirties but that was a nice walk in a beautiful forest by comparison. Nothing like this has ever happened before to a developed economy.
“When the crisis began in 2010 the debt ratio was 120pc of GDP. Eight years later it is 180pc and the Greek economy has shrunk by a quarter. The outcome is as a bad as it could possibly have been, and the problem is certainly not solved. If you cook the assumptions, you can claim anything is sustainable.
“What the Europeans have now done is put Greece to sleep under anaesthesia but when the people wake up and feel the pain they are going to be very angry. Economically it is nonsense, and politically it is shameful.”
.........
The original sin (of the EU) was to foist bailout loans on Greece – in violation of the IMF’s own rules – when it was already insolvent. The country needed debt cancellation of 50pc to restore viability, given that the cure of devaluation was blocked.
This was done entirely in order to save Europe’s banks and the euro...... Both the Indian and Brazilian members of the IMF board protested in 2010 that Greece was being sacrificed to save monetary union.
.......
There was no excuse for what happened next. The EU tried to force through an “internal devaluation” of 20pc to 30pc by means of deflationary wage cuts. The country was forced to go through a fiscal squeeze of 11pc of GDP over the first three years.
This was scientific malpractice.... (resulting in a downward spiral.) The economic base contracted faster than austerity cuts could keep up, causing the debts to rise faster. When the targets were missed, the Greeks were forced to cut deeper.
The IMF watchdog said there had been a chronic “lack of realism”. Top staff of the Fund had become cheerleaders for the euro project throughout the EMU crisis. Critics were silenced. Officials were prone to “groupthink” and “superficial and mechanistic” analysis.
Needless to say, there is no chance that Greece will muddle through until 2060. The next global economic downturn will push the country back into recession and blow up the debt trajectory.
