STOCK MARKET WATCH -- Friday, 23 January 2015

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7. Top Economists Call For Greece To Get A Debt Write-Off Ahead Of Crucial Election

http://www.businessinsider.com/stiglitz-pissarides-goodhart-call-for-debt-forgiveness-for-greece-2015-1

A letter published in the Financial Times, co-authored by 18 eminent economists from academia, research institutes and industry, states that "the whole of Europe will benefit from Greece being given the chance of a fresh start".

Some form of forgiveness of the country's mountainous sovereign debt burden (currently around 177% of GDP) would be necessary, though not by itself sufficient, in order for the country to aid Europe's prospects for sustainable economic recovery.

Here are their suggestions in detail:

Greece should be provided a "further conditional increase in the grace period, so that Greece does not have to service any debt, for example for the next five years and then only if Greece is growing at 3% or more".

Some debt reduction, especially of bilateral official debt [held by institutions like the European Central Bank], to further increase the fiscal space available.

Significant money [provided through eurozone institutions] for efficient investment projects, especially for exports.

The letter is especially interesting as their calls mimic a number of proposals put forward by Greece's left-wing Syriza party, which is currently leading in the polls. Alexis Tsipras, the head of the party and the man who could become Greece's next prime minister, took the opportunity earlier this week to outline his economic plans in the FT.



Read more: http://www.businessinsider.com/stiglitz-pissarides-goodhart-call-for-debt-forgiveness-for-greece-2015-1#ixzz3Pe3fnbyx