NOT TO FORGET: Cottarelli and the role in the Greek question. Documents

Finally Cottarelli has made clear what was clear to most: the "independent technician" is, in reality, yet another man of the PD under technical guise. In this we thank him for having revealed himself, indeed having been defined " The spearhead of the PD " by Enrico Letta himself. To give a clear idea of ​​what awaits us and its real economic role in the events that involved Greece and the crisis of its sovereign debt, we are republishing this article from 2018 in which they were analyzed. At least you can't say you weren't warned …

Given that both Cottarelli and Blanchard are very reluctant to reveal their role in the Greek question, and since they seem to want to repeat the same frame with Italy, we took the liberty of going and looking for some official documents on the issue. Nothing secret, all official stuff made available to the public and already known.

The most interesting document on the Greek question is the report from the IMF's Independent Evaluation Office; that is, the office that audits IMF operations. We have already specifically dealt with this issue previously, but we will come back to it in the future because the issue of fiscal multipliers is dealt with in depth and specifically, pointing out that the multipliers used by the IMF in the assessment of fiscal policy were completely wrong, equal to a fifth of what was verified later. Anyway, let's see what the Cottarellian role in the story was. You can find it on page 23 of the report :

Third, the IMF remained divided on the merits and risks associated with debt restructuring. While the majority of IMF staff increasingly came to support debt restructuring, some key senior officials continued to take the position that the sovereign debt was sustainable. In September 2010, FAD published a paper arguing that, for “today's advanced economies,” including “peripheral” euro area countries, “default would not be in the interest of the citizens” (Cottarelli and others, 2010).

Third, the IMF remained divided on the consequences and risks of a debt restructuring. While the majority of the IMF staff were increasingly in support of the debt restructuring, some senior officials in key positions continued to claim that the debt was sustainable. In September 2010, the FAD published a paper stating that, for "today's advanced economies", including the "Peripherals" of the euro area, "Default is not in the interest of citizens (Cottarelli and others 2010)"

The Paper in question can be easily found on the FMI website , but don't expect much. The reasons are weak, some of which are contested in the same report of the IEO, such as, for example, its phobia for high multipliers, or the tolerability of enormous primary leftovers.

Cottarelli's choices influenced those of the IMF not to insist on a greater immediate debt cut and left the Greek state burdened with a burden it could not bear. However, two debt cuts had to be made, and in 2017 the IMF requested a third debt cut, which was not granted. In short, Cottarelli's statements turned out to be completely erroneous and prevented the crisis from being dealt with immediately in an efficient and effective way. Instead of resolving everything, the 12-24 months continued with a kind of slow agony that has not yet ended. Considering the Euro or even peripheral economies outside the rules of the economy was a sensational mistake, which is repeated even now. The problem is not to err, but to persevere in error, in a policy that has proved wrong. This is the great fault of the economist.

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This is a machine translation of a post published on Scenari Economici at the URL on Thu, 11 Aug 2022 07:00:12 +0000.