Reinhart Says Restructuring Debt Would Spur Recovery in U.S.

http://www.bloomberg.com/news/2011-08-06/reinhart-says-restructuring-debt-would-spur-recovery-in-u-s-.html

Restructuring the debts of Americans, including debt forgiveness for low-income households, would be one of the most effective ways to speed up economic growth, said Carmen Reinhart, a senior fellow at the Peterson Institute for International Economics in Washington.


SAMEER SAYS


CARMEN IS RIGHT HERE
I FINALLY GET TO READ FROM SOMEONE WHO MAKES SENSE AND REALLY UNDERSTANDS THE PROBLEM


AND THIS BASICALLY SPELLS OUT MY BASE CASE SCENARIO


DEBT RESTRUCTURING
DEBT FORGIVENESS


THIS IS NOTHING BUT A CLASSIC DEFLATION
THIS CAN ALSO TURN INTO AN UGLY DEPRESSION


FOR EUROPE AND US - THERE IS NO CLEAR AND EASY WAY OUT


THEY ARE READY TO FACE DEFLATION
THEY ARE NOT READY TO FACE DEFAULTS
THEY ARE NOT READY TO SEE REAL PAIN IN FINANCIAL MKTS


BUT HEY - PLS WAKE UP AND STOP FOOLING YOURSELVES


EVEN IF YOU DONT ACCEPT THE FACT THAT WE ARE ABOUT TO FACE SEVERE DEFLATION - NATURE WILL TAKE ITS OWN OURSE 


PRINTING MONEY CAN NOT SOLVE THIS PROBLEM


SO FORGET THE FED AND ECB


THEY ARE TOOTHLESS


Another way to spur growth “that is kind of ugly” would be to compel faster “writedowns of bad loans in the financial industry,” Reinhart said.