Morning Must-Read: Ken Rogoff: Time for Debt Restructuring in Europe

Kenneth Rogoff: Economic Recovery Require Debt Restructuring or Rescheduling: “Eurozone leaders continue to debate…

…how best to reinvigorate economic growth, with French and Italian leaders now arguing that the eurozone’s rigid “fiscal compact” should be loosened. Meanwhile, the leaders of the eurozone’s northern member countries continue to push for more serious implementation of structural reform. Ideally, both sides will get their way, but it is difficult to see an endgame that does not involve significant debt restructuring or rescheduling…. In general, neither pure austerity nor crude Keynesian stimulus can help countries escape high-debt traps…. debt rescheduling, inflation, and various forms of wealth taxation (such as financial repression), have typically played a significant role. It is hard to see how European countries can indefinitely avoid recourse to the full debt toolkit…. It is high time for a conversation on debt relief for the entire eurozone periphery…