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Buiter: “It’s Five Minutes to Midnight for Greece”

Incoming Citigroup Chief Economist Willem Buiter believes Greece still has it within their means to prevent a national default. In the video below, he discusses with Bloomberg what the crisis in Greece means not just for the Greeks but also for the Brits, Americans, Irish, Portuguese, Italians – all of whom have less than ‘pristine’ government finances. What happens in Greece is pivotal for the global economy because a default there would likely trigger distress elsewhere. 

As for talk of unsustainable deficits, it seems premature to start worrying about inflation and higher interest rates when we are still in a deflationary environment.  I don’t buy Buiter’s arguments on Labour’s loss of fiscal credibility mandating some pain upfront. Government should wait until it sees the ‘whites of inflation’s eyes’ before firing anti-stimulus bullets. And if they do begin firing, addressing future liabilities (everywhere) or military spending (US only) is just as effective as cutting other present discretionary spending.

Buiter’s video is below

About 

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College. Edward also writes a premium financial newsletter. Sign up here for a free trial.

7 Comments

  1. dansecrest says:

    Interesting stuff. Bill Mitchell (Aussie chartalist) thinks Greece should “abandon the Euro and restore currency sovereignty” — http://bilbo.economicoutlook.net/blog/?p=6545