Sumner Agrees With the Troika on Greece

      He explains what Greece needs today-in his mind-but the short version is he agrees with the ECB, the IMF and the European Commission on what Greece needs:

     "Yes, Greece should never have joined the euro.  But what about today?  What is their best option?  A letter written by 13 distinguished (Greek?) economists (including one Nobel Prize winner) is highly critical of the Syriza approach, and instead calls for neoliberal policy reforms.  Here’s an excerpt:

A Grexit and move to a new drachma would be a complete disaster for Greece. The banks would collapse as depositors would withdraw their euros not knowing whether they would be able to withdraw them later and at what exchange rate.

.  .  .

What would be crucial elements of a good agreement? Besides the fiscal issues of balancing the budget and making pensions proportional to contributions, a good agreement should emphasize microeconomic reforms. It should greatly simplify the procedures for running a business in Greece and reduce business taxes, in order to attract investment and create a productive, export-oriented sector, new jobs, and debt-repayment potential. It should reduce the huge and inefficient state sector that weighs down on the private sector and the taxpayers. The procurement mechanisms of the state should become competitive. Greece should proceed with privatization of trains, airports, ports, and the energy sector. The “closed sectors” of the economy (such as pharmacies and transportation) should be opened to competition. The labor market should be liberalized and the state should crack down on the underground economy that pays no taxes and no pension contributions.

Finally, an agreement must restructure the Greek sovereign debt to European countries and the European Stability Mechanism. Keeping the nominal value constant, the best way to restructure the debt is to elongate its maturities. If maturities are moved to 75 years and the presently variable interest rates are converted to fixed ones and slightly reduced, the net present value of the debt will be reduced by 50 percent. A 10-year grace period (during which interest is not paid but recapitalized) with the money saved invested would promote growth.

Growth is, in fact, the only guarantee that Greece will pay its debts.

Written by:Marios Angeletos, MITGeorge Constantinides, University of ChicagoHaris Dellas, Universitat BernNicholas Economides, New York UniversityMichael Haliassos, Goethe University FrankfurtYannis Ioannides, Tufts UniversityCostas Meghir, Yale UniversityStylianos Perrakis, Concordia UniversityManolis Petrakis, University of CreteChris Pissarides, Nobel Laureate, London School of Economics and University of CyprusThanasis Stengos, University of GuelphDimitris Vayanos, London School of EconomicsNikos Vettas, Foundation for Economic and Industrial Research; Athens University for Economics and Business

    "My own view is that Greeks should vote yes on Sunday to get rid of Syriza.  The new government should implement aggressive neoliberal reforms.  If that’s not possible, then perhaps they should leave the euro.  But only after attempting a supply-side solution first."

     http://www.themoneyillusion.com/?p=29822

    Sumner is not a fan of Syrzia and Tsipras-though in my conversations with him he seems not to want to explain why. He says that it's not 'serious' because some in the party call themselves 'Maoists' and likens Greece to the killers that escaped from prison here in NY recently. Well that makes it all as clear as mud. 

    For some reason-that he also doesn't explain here, he thinks it was a mistake for the Greeks to join the euro but now it would be a mistake to leave it. What's more important is austerity and structural reforms. So he  got 13 economists to agree with this-how many go the other way? 

   Whether or not the market needs structural reforms is a question for the Greek people not the Troika or Sumner who agrees with them up and down the line here. Structural reforms are not the immediate problem but rather the relentless austerity the Greeks are being weighed down. 

    The Greeks should vote no and then if down the road the agree structural reforms they can do them. What is objectionable is for these to be imposed by these bloodless technocrats in the EU.

   It's not surprising that as a libertarian Sumner is so up in arms about giving the Greeks a choice. 

   http://diaryofarepublicanhater.blogspot.com/2015/06/joseph-stiglitz-shows-that-eu-is.html