Peter Mullins - Comments

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The Simple Math Behind Greece’s Complicated Situation
5 years ago

You appear to be knowledgeable but you are both complicating the matter and missing the point: Adding interest to GDP each year (remember you start back at zero the next year) is not the same as the increase in debt caused by compounding interest rates. No amount of creative accounting will negate this fact and the author has done a good job of demonstrating it - Greece is extremely unlikely to just grow its way out of the current hole.

However, the author ignored the fact that the country must instead run a primary budget surplus to fund the gap identified above. The real issue is that the surplus required is huge and growing and has reached the point of not being achievable or acceptable to the Greek public.

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