Friday, 1 July 2011

Jeffrey Sachs makes the Eurocrat case;

to paraphrase, Greece doesn't have to default if it has 3% interest rate, and breathing space and can magically get its economy growing again and cut its 18% deficit into a surplus....

if you punch all of those assumptions and hope into a model you'll see that the debt load is sustainable.

(red lines are historical data from Eurostat, that we've aggregated, blue lines are the forecasts with all of the assumptions above)..

It is a *little* rich for Mr Sachs to call those expecting a default naive, especially when the scenario that avoids default has so many conditions and unrealistic political movements.

I'll say it again, Greece will not default while they are still getting more loans, they'll borrow more money, but when the time comes for budget surpluses to be run, then they'll default and use the cover of the rioters and language of 'odious debt'.

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