April 12, 2011
Kenneth Rogoff's partner-in-crime in the book This Time is Different, Carmen Reinhart, has no doubt that the Portugal situation will wind up like situation in Greece and Ireland. During a recent interview, Reinhart, a fellow at the Peterson Institute for International Economics, said that Greece, Ireland, and Portugal would not be able to avoid the restructuring of their debt.
“I do think that the IMF, like the EU, continuing to hammer that restructuring is not needed is ill-placed, completely ill placed,” Reinhart said. “The idea that we can solve the massive debt overhang that Ireland, Greece, and Portugal have exclusively with adjustments is one that I don’t subscribe to,” she added.
As Reinhart explained, the efforts to delay Greece’s debt restructuring have been expansive and expensive, but the situation of growth absence keeps getting worse because inflation is not an option. Under these circumstances, “it's very reasonable to expect a Greek restructuring” in the course of the next year, she said,
However, she added that the situation would not resemble a “chaotic Argentine scenario with Greece leaving the euro and a unilateral default."
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This article originally appeared at elEconomista.es, an online Spanish business news website. Click here for the original version of this article, in Spanish.
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