In response to Spain Needs to Debate Leaving the Euro; Tooth Fairy Economics I received a nice email from Michael Pettis confirming my translation was correct. He also attached the original article in English.
Michael Writes …
Thank’s Mish.
I am attaching the original, but the translations you got were basically right and covered the main points, which you understand anyway. Excessive debt impedes growth, and very few sovereign debt crises in history have been resolved by growth
The only other way to “resolve” a debt crisis is to assign the losses to one group or another It is usually workers through unemployment and middle class savers through hidden or explicit taxes who end up paying It may or may not be worthwhile to save the banks at the expense of the middle and working classes, but at the very least we should discuss it openly and make sure that this is what we have really decided is in the best interests of the Michael
Original Text in English
Spanish Government Debt is not Sustainable
Within four years of the 1837 crisis, before it was truly a united country under a central government, two-thirds of American states, including several of the richest, defaulted on their foreign debt. The US survived. If the European Union is to survive, European debt must be resolved. The longer we wait, the more likely a permanent breakup of the euro and the European Union.
This post was published at Global Economic Analysis on November 21, 2014.
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