Sinn of IFO institute says the obvious: Greece will not be able to service its debt

Several influential German economic think tanks dissed the bailout for Greece to restructure its debt.  The most damning are the comments from Sinn, the President of the IFO.  He says point blank what we have been arguing here, that Greece can't repay its debt and there is not solution without bankruptcy.  Bankruptcy will allow them to open up the union contracts. 

So as Europe descends slowly to a financial quagmire, the only real austerity is bankruptcy.  Via Forexyard:
"Greece will not be able to service its debt. The sooner that is recognised the better it will be for all parties involved. Therefore Greece should come to an agreement with its creditor banks about a restructuring of its debt in which the banks renounce a part of their claims."

Addressing recent reports that the euro zone states were looking into plans to allow Greece and other nations to write off some of their debt burden using the European Financial Stability Facility (EFSF), Sinn said:

"I personally don't believe that is the right thing to do. It's one thing to help the Greeks in a crisis of liquidity when they cannot pay down maturing sovereign debt.

"It's a completely different thing to help the Greeks to restructure their old debt that is not even due yet by lending Greece money which the EFSF borrows in the capital market."

"Such euro bonds collectivise sovereign debt that stems from excessive consumption in the past and will load the risk onto the European tax payers," Sinn said.

"If Greece defaults on such debt, tax payers then have to abstain from consuming to finance the previous consumption of the Greeks. That can't be right."


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