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

Voting history

Greece’s elections and the future of the Eurozone

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Question 2: Do you agree that refusal of the core EU countries to a renegotiation of the Greek bailout agreements would carry serious risks for the economic well-being of the Eurozone?

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Answer:
Strongly Agree
Confidence level:
Very confident
Comment:
The charade has run much too long already. Greek debt was unsustainable in spring 2010, the bailout just added more, the leadup to default brought a huge transfer of private creditors' holdings into the official sector, so the big haircuts in the restructuring of spring 2012 still left a clearly unsustainable debt burden. 'Extend and pretend', even with lower interest rates, is not a serious long-term policy and leaves Greece with a continuing debt overhang that deters investment and hinders growth. So renegotiation and debt forgiveness along Paris Club lines is necessary. Greece is small, to be sure, so continuing depression there has only minor repercussions, but it keeps very much alive the risk of Grexit. And Grexit would be a disaster for Greece as well as a major risk for the continued existence of the eurozone - and hence for its 'economic well-being'.

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Question 1: Do you agree that a Syriza victory on 25 January would lead to a significant or sustained escalation in spreads for other peripheral Eurozone countries?

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Answer:
Disagree
Confidence level:
Confident
Comment:
New firewalls against contagion are some comfort, and ECB will have announced some version of QE by then.

2014 Autumn Statement

 

Question 2: Do you agree that the underperformance of tax receipts in recent years, provides a strong case for higher taxes?

Answer:
Agree
Confidence level:
Very confident

Question 1: Do you agree that the scale of this planned reduction in total managed expenditure is credible?

Answer:
Strongly Disagree
Confidence level:
Very confident

Secular Stagnation

Question 2: Do you think that current structural and fiscal policies should place a considerably greater emphasis on pushing the natural rate into positive territory?

Answer:
Strongly Agree
Confidence level:
Very confident
Comment:
Although there is no evidence of a 'long run decline in real rates' (see answer to Q1), even the US and UK would benefit from policies that would raise the natural rate, a fortiori the euro area and Japan. But they would also benefit from a move to higher inflation targets, which could bring down real market rates and give some room for monetary policy. Alas, this will not happen.

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