Are The Greeks Villains If They Default On Their National Debt?

Release Date
October 20, 2015

Topic

Debt Economics Gov't Debt & Spending Government Politics & Policy
Description

Are The Greeks Villains If They Default On Their National Debt? Things are so complicated in Europe; you would think you need a Ph.D. in economics to keep track of what’s going on. But at least with this video, you don’t.
Professor Garett Jones, Associate Professor of Economics at George Mason University, explains what will happen if Greece defaults on their national debt. Here’s what he has to say:
Are the Greeks villains if they default? I say no. Going bankrupt isn’t some horrible crime. Sometimes you make promises that you just can’t keep. Most legal systems have some way to work that out. Countries usually don’t. Greece would have to take an ugly approach. They’d have to openly tell people, we’re not gonna repay you.
Or we’ll repay half of what we owe. In return, we’re going to become the kind of place the global investor class will love. We will implement supply side reforms. We’ll fight back on corruption. We’ll have a clear, clean, simple tax system. We’ll do the things that make the international investing community love us.
So, they’ll hate the fact that we broke promises to them in the past. But they’ll be unable to resist the temptation to invest here in the future. The Greeks haven’t been promising that. Instead, they’ve been promising, we want you to forgive our debts, or at least half our debts.
And then we wanna go on with our same old ways. A little bit of corruption, a little bit of favoritism to insiders, a lot of strong unions. And these are the kind of things that terrify the global investor class. They have to promise to the world, this is the one time we’ve done something criminal, and from here on out, we’re going to be saints.
And the way we can do that is by setting up real rules of reform. Real rules that a global investor would like. Low taxes, transparency, low corruption. The Greeks could decide to just blow off half or more of their loans, as long as they combine it with serious supply side reform.
Be the kinda the place that investors want to ship their money and ship their experts. Not the kinda place they wanna run away from.

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Are the Greeks villains if they default? I say no. Going bankrupt isn’t some horrible crime. Sometimes you make promises that you just can’t keep. Most legal systems have some way to work that out. Countries usually don’t. Greece would have to take an ugly approach. They’d have to openly tell people, we’re not gonna repay you.
Or we’ll repay half of what we owe. In return, we’re going to become the kind of place the global investor class will love. We will implement supply side reforms. We’ll fight back on corruption. We’ll have a clear, clean, simple tax system. We’ll do the things that make the international investing community love us.
So, they’ll hate the fact that we broke promises to them in the past. But they’ll be unable to resist the temptation to invest here in the future. The Greeks haven’t been promising that. Instead, they’ve been promising, we want you to forgive our debts, or at least half our debts.
And then we wanna go on with our same old ways. A little bit of corruption, a little bit of favoritism to insiders, a lot of strong unions. And these are the kind of things that terrify the global investor class. They have to promise to the world, this is the one time we’ve done something criminal, and from here on out, we’re going to be saints.
And the way we can do that is by setting up real rules of reform. Real rules that a global investor would like. Low taxes, transparency, low corruption. The Greeks could decide to just blow off half or more of their loans, as long as they combine it with serious supply side reform.
Be the kinda the place that investors want to ship their money and ship their experts. Not the kinda place they wanna run away from.