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Debt over GDP is higher thant 125 % so basically, at 3-3.5% you need around 4% growth with balanced budget (which needs more contractionary spending.. whcih is a feedback impossibility). Let's say Greece needs a 5% growth to pay down debt at 3%... is it really possible? Or are we asking the impossible?
Isn't it better just to slash debt at around 70-80% GDP with haircut interest rates to 1-2% and ask Greece to grow at normal 3%?
A pleasure I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude
To what degree might Greece's economy grow in a world in which it's public spending doesn't give the economy a steroid bounce? No one knows. The debt to GDP might as well be 14400% if Greece does not have a way to bounce back strong.
The reason - the only reason - that Greek sovereign debt is unsustainable is that Greek foreign debt is unsustainable, because Greece has a persistent, cycle-averaged foreign deficit in excess of any realistic growth rate for a European economy.
Currency crisis, not debt crisis.
- Jake Friends come and go. Enemies accumulate.
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