Sachs: ‘We need to keep our heads in the sand’

When it comes to policy advice, be wary of Sachs. This is the man whose shock therapy did wonders for Russia. How apropos to the current debate. If I recall correctly, it was only when Russia kicked out Sachs, defaulted on its debt and devalued the currency that the economy turned around.

The FT’s Gillian Tett sounds a lot more sensible. From today’s FT:

But the alternative to restructuring will probably be grim too. If Greece staggers on, without a miracle, fears about future “haircuts” will continue to poison the bond markets and interbank world. That will essentially produce a pattern similar to Japan in the late 1990s: a world of gnawing, half-concealed anxiety, where asset prices keep stealthily slipping because investors cannot shrug off their fears of more bad news to come. 

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