Noah denkt™  -
    Project for Philosophical Evaluations of the Economy
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Debt restructuring in Greece?
Dialog with the Alter Ego, drafted and published on May 17, 2011

Question by Alter Ego of Noah denkt™ (AE):  
Noah denkt™ has always been rather optimistic about Greece’s
ability to overcome its huge debt problem. Isn’t time to recognize that your stance on this was altogether wrong?
Answer by Noah denkt™ (Nd): Well, it may be true that Greece will not be able to perform the economic miracle
that we were hoping for. It is equally true though, that the Greek government has been able to implement more
structural reforms and more budget cuts than most observers would have been willing to believe possible
beforehand. In other words, it definitely deserved the benefit of doubt.

AE: But still, all this sacrifice isn’t enough to turn the Greek economy around. What went wrong then?
Nd: It looks as if the country has fallen victim of the old European problem which is that continental European
cultures simply can’t seem to be able to develop an American dream type of mentality. Instead they continue to be
dependent on others when it comes to solving their personal and national problems.

AE: That may be true. At the same time, though,
it seems hardly possible for anyone in this world to overcome the
deflationary pressures that repeated austerity budgets generate.
Nd: We probably have to accept that..

AE: So, are you, finally, willing now, to endorse the idea of a debt restructuring program in Greece?
Nd: Well, it looks a lot, as if it will come to this right now, doesn’t it?

AE: You are still not convinced that this is the right way to go?
Nd: It’s true that we are somewhat uneasy about this.

AE: What is your main concern about a financial haircut in Greece?
Nd: The main question that we ask ourselves in this context is the following: What incentives will countries like
Ireland, Portugal and others have to continue down the path of thriftiness, if Greece is allowed to sidestep some
of the pressures that its national debt generates?

AE: Well, it isn’t as if a debt restructuring plan were altogether painless for those who receive more leniency from
their creditors. Just think about the devastating effect such a haircut might have on the fate of the Greek banks.
Nd: Still, we are not convinced that one Greek debt restructuring will do it for the entire European debt problem.
There may very well be other candidates who raise their hands afterwards.

AE: But is there an alternative solution to all that mess that has been created?
Nd: Probably not.

AE: So why do we continue to fuss about this then?
Nd: Because you have asked me about our thoughts. And because it is important to understand the risk
associated with such a move.

AE: But we see eye to eye on this issue now, don’t we?
Nd: Yes, we do.
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Debt restructuring in Greece, Greek debt restructuring, European debt problem, EURO-crisis, financial
haircut in Greece,
consequences of Greek debt restructuring, austerity budgets, deflationary
pressures of austerity budgets
, Keynesian theory