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The Economist: Greece, Ireland and Portugal Should Restructure their Debts Now

The Economist magazine said that Greece, Ireland and Portugal are on an unsustainable course but not for lack of effort by their governments as Greece and Ireland have made heroic budget cuts.
Greece is trying hard to free up its rigid economy, while Portugal has lagged in scrapping stifling rules, but its fiscal tightening is bold.
In all three places the outlook is darkening in large part because of mistakes made in Brussels, Frankfurt and Berlin, according to the Economist.
The magazine considers a measure of European leaders’ capacity for self-delusion the statement by German Chancellor Angela Merkel that the Euro-zone summit in late March was a big step forward” in solving the region’s debt crisis.
“Something between a fudge and a failure would be more accurate”, commented the Economist.
European Union insists the peripherals’ priority is to slash their budget deficits regardless of the consequences on growth. But as austerity drags down output, their enormous debts look ever more unpayable, so bond yields stay high. The result is a downward spiral.
“Greece should stop pretending that it can bear its current debt burden and push for restructuring. But the best hope lies with the IMF. Its economists have the most experience of debt crises. Some privately acknowledge that debt restructuring is ultimately inevitable. It is time the Fund’s top brass said so publicly and, by refusing to lend more without a deal on debt, pushed Europe’s pusillanimous politicians into doing the right thing”, commented the Economist.

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