Wednesday, July 15, 2015

Greek Needs Aggressive Debt Relief or Alliances Will Be Redefined Across Mediterranean

The IMF, a confluence of political connections and failed economic theories, recommends far more debt relief for Greece than anything tabled in negotiations by European governments so far. The IMF's recommendation, a position that undermines Germany's policy of austerity, implies that a policy of austerity - the balanced budgets of the Great Depression era will not repaid debt while simultaneously supporting a vibrant economy; Hoover learned this lesson the hard way. Reducing spending and aggressive taxation will cause the Greek economy to implode, thus, limiting its ability to repay debt. Even the IMF recognizes vicious cycle.

If Greece's debt is not written off or Greece devalues by dropping the Euro for the Drachma, the resulting political, social, and economic implosion will redefine alliances across the Mediterranean. China and Russia are watching and willing to 'help'. The Iran Nuclear deal, a move that suggests growing concern of shifting alliances within the region, has more to do with shifting alliances between the superpowers than global nuclear security - public really doesn't care anyways. Unfortunately, the West holds few cards in the alliance game after each economic down cycle. One is fast approaching.

Headline: IMF: Greece may need 30 years to recover

An International Monetary Fund study published on Tuesday showed that Greece needs far more debt relief than European governments have been willing to contemplate so far, as fractious parties in Athens prepared to vote on a sweeping austerity package demanded by their lenders.

The IMF's stark warning on Greece's debt came as Prime Minister Alexis Tsipras struggled to persuade deeply unhappy leftist lawmakers to vote for a package of austerity measures and liberal economic reforms to secure a new bailout.



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