USA - China - Germany 'German academics push for EU sovereign default plan' - India '.. to reduce fiscal-stimulus excesses.'

<blockquote>- USA Incorporated - a Look at the Grim Financial Situation of the USA, March 02, 2011

- Timing the China Property Crash, February 28, 2011

- 189 German Academics Support EU Sovereign Default Plan, February 26, 2011</blockquote>



<blockquote>'..it would be better to let countries restructure their debts.'</blockquote>


German academics push for EU sovereign default plan

By Agence France-Presse
2/25/2011
Source

Almost 200 German economics professors have signed a declaration rejecting current proposals to resolve the eurozone debt crisis, instead calling for a way for distressed countries to declare bankruptcy.

"We call on the German government to take measures in event of a failure of the European rescue mechanism and to quickly establish with European partners a detailed plan to manage the bankruptcy of heavily-indebted eurozone countries," said a text published by the Frankfurter Allgemeine Zeitung daily.

More than 200 professors were invited to sign the document, and 189 did so, including prominent figures such as Manfred Neumann of the University of Bonn and Justus Haucap of the University of Duesseldorf, both in western Germany.

Instead of the collective support mechanism set up last year that could be made permanent in a modified form from 2013, the economists argued it would be better to let countries restructure their debts.

"Restructuring allows the countries concerned to reduce their debt and start over," said the economists.

The solution being mulled at present and likely to be approved by European leaders next month would amount to "a permanent guarantee" of some countries' debt, with "very serious consequences," they added.

The signatories also doubted the effectiveness of measures to reinforce the competitiveness of weaker eurozone countries and control members' public finances owing to the European Union's "limited firepower."

The document was published as lawmakers from Chancellor Angela Merkel's ruling coalition sent her a clear message ahead of negotiations on a permanent EU rescue plan to take place in Brussels.

The German deputies said the future European Stability Mechanism should not be allowed to buy eurozone government debt, as the European Commission and European Central Bank would like.



*** India - 'It’s time for politicians to do their part to reduce fiscal-stimulus excesses.'

<blockquote>'Several asset bubbles and one global crisis later, we know better. The ongoing surges in prices of commodities such as food are fanning Asian inflation and they require bold action. Higher rates will only do so much. It’s time for politicians to do their part to reduce fiscal-stimulus excesses.

Just before joining India’s central bank, Subbarao said monetary policy is the “first line of defense” against price pressures. Now, he is being very vocal in urging the government to curtail fiscal policies that are working at cross purposes with interest rates.

...

And good luck with that. India’s government yesterday unveiled a budget proposal that kept the onus on the central bank to contain prices. That should be a concern for investors.'

- William Pesek, Inflation Above 9% Shows Bankers No Longer Gods, 2011-02-28</blockquote>