"What are the Options
Today?
The debt problem cannot be
avoided or hoped away. When debt is unsustainable it will not be sustained. The
only question is how and when the crisis comes. Here are the five options that
can address the debt quagmire."
"Option 1: Long-term debt reduction through budget surpluses"
"Option 2: Sales of
public assets"
"Option 3: Classic debt
restructuring"
"Option 4: Debt
forgiveness"
"Option 5: Debt
monetisation"
"At the end of the day, except for Option 1, which is the classic virtuous approach, and Option 2, the disposable of public assets, none of the other options is appealing.
But if Options 1 and 2 are
impossible, one has to choose among bad options.
Option 3 is clearly the least
desirable because it would shake the markets and possibly take down large
segments of the banking system. Option 4 is not just politically explosive; it
could trigger a debt crisis among the countries currently perceived as healthy.
This leaves us with Option 5."
