IMF: “Greece Needs to Cut Wages to Compete” – How Will People Live is a Question Nobody Cares to Answer…

Posted by keeptalkinggreece

Drawing plans on sheet papers seem the easy way. IMF’s chief economist Oliver Blanchard said that Greece needs to cut wages in private sector to boost competitiveness. However neither Blanchard nor the other wise-guys, economists or not, seem to be able to answer a simple but practical question: With all income decreases and hikes in taxes,  utilities and cost of living…How will the citizens cover their basic needs and feed their children? Does anyone have an idea?

 

The International Monetary Fund΄s chief economist said late Monday that Greece needs to cut wages to boost competitiveness and pull the country out of its economic quagmire. Greece “needs a dramatic decrease in its debt. That΄s the subject of negotiations,” Olivier Blanchard said, Dow Jones Newswires reported. “But that΄s only half of what it needs, and maybe in a way it΄s the easier half. “The other half is competitiveness…Either you basically increase productivity growth a lot and quickly, and you keep wage growth moderate, or you decrease wages,” he said.
“There is basically no way around that.”
Blanchard was speaking in Washington at the Carnegie Endowment for International Peace as Greece remained locked in talks with private creditors over writing off a large portion of its debt, in hopes that it would be able to avoid defaulting. If a deal is struck, the IMF is expected to join with the European Union in offering Greece more than in new bailout financing–earlier estimated at EUR130 billion, though with stringent conditions for economic reforms.
Blanchard acknowledged that reforms wouldn΄t be fast enough to right the economy, and that a push for boosting competitiveness vis-a-vis the rest of the euro zone would be essential. “Structural reforms, which have potential in Greece…take a while to take hold. And therefore a country like Greece probably has to do something on the wage side as