Richard Portes's picture
Affiliation: 
London Business School and CEPR

Voting history

Deal or no deal: The Greece standoff

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Question 3: Do you agree that implementation of the agreement will lead to an expected decrease in Greek debt repayments?

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Answer:
Disagree
Confidence level:
Confident
Comment:
Not at this stage. That might come in a third programme, but only if Greece has demonstrated with concrete measures that it is willing to do deep reforms.

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Question 2: Do you agree that Greece would be better off defaulting right now rather than signing to the agreement under consideration?

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Answer:
Disagree
Confidence level:
Confident
Comment:
Default would be default on the institutions: IMF, ECB, ESM. The ECB would be unable to accept GGBs as collateral, and ELA would cease. The capital of the banks would be hit severely, because they hold large amounts of GGBs. Much of their 'Tier 1' capital is effectively fictitious, because it is 'deferred tax assets'. The banks would collapse. The government would try to impose controls to stop capital flight, but the Greek administration is unlikely to be able to enforce them effectively. Grexit would bring a sharp devaluation, with little expansionary effect through trade (Greece is a relatively closed economy) and devastating balance-sheet effects for firms with debts in euros.

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Question 1:  

Do you agree that, on balance, the implementation of the agreement as outlined in media reports will have a non-trivial negative effect on Greek GDP?

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Answer:
Strongly Agree
Confidence level:
Extremely confident
Comment:
Tax increases, pension cuts in an environment of liquidity squeeze and highly oligopolistic product markets. Add huge uncertainty - this deal will be a short-run expedient. The recession that resumed at end-2014 and has carried into 2015H1 will intensify.

Monetary policy and the zero lower bound (ZLB)

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Question 1: Do you agree that it is feasible for the UK authorities to change the monetary system so that materially negative policy interest rates could be safely implemented? (In answering, you may wish to explain your reasons and define your view of 'material')

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Answer:
Strongly Disagree
Confidence level:
Extremely confident
Comment:
All monetary policy has distributional consequences, so that is not an issue. Effects on DB pensions and on existing nominal contracts, including those at Libor + spread, are significant. But the main point is that this proposal is politically not feasible, at least for many years to come. Don't muck about with my money!

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Question 2: Do you agree that the benefits of reforming the monetary system to allow materially negative policy interest rates outweigh the possible costs?

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Answer:
Disagree
Confidence level:
Very confident

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