Tuesday, February 3, 2015
Who’s Unreasonable Now?
New York Times
February 2, 2015
OK, so as I understand the latest from the new Greek government, Yanis Varoufakis is saying that he and his colleagues don’t care what happens to the headline value of the debt — if you want to claim that there has been no write-off, OK. What they want instead is substantive but not outrageous relief from the burden of running primary surpluses (surpluses ex interest payments), reducing the amount of resources transferred to creditors from 4.5 to 1-1.5 percent of GDP; they also want flexibility to achieve these surpluses with a mix that includes more revenue and less spending austerity.
This is a dastardly ploy by those left-wing radicals. You see, it’s completely reasonable.
We’ve been assured, repeatedly, that everyone is aware that Greek debt can’t be paid in full in the sense that Greece eventually runs primary surpluses equal in present value to the headline debt number. How exactly that reality is represented — whether it’s a frank reduction in headline debt or a repackaging that reduced the true burden without being quite so explicit — shouldn’t matter.