, 5 tweets, 2 min read
My Authors
Read all threads
According to this article, exiting the euro would be disastrous for Italy because it would lead automatically to debt default. This is probably true, but it seems like a pretty incomplete argument. Remaining in the euro is likely to prevent Italy from...
brookings.edu/blog/order-fro…
...growing out of its debt anyway, as has already been the case for a decade, which would mean the economy suffers from several more years of no growth until it eventually defaults anyway – either explicitly or implicitly.

By the way that's always what happens to countries...
...with excess external debt (both developing and developed): economists and "money doctors" will insist that with the "right" growth-enhancing reforms (which are always the same), they can eventually outgrow the debt, but I can’t think of any case in the past 200 years in...
...which the strategy actually worked. What is barely understood in economics (although well understood in corporate finance) is that the debt itself can prevent growth. What always ends up happening happens is that after many years of struggling unsuccessfully to implement...
...the proposed reforms, the country eventually implicitly or explicitly defaults anyway, and only after significant write-downs does it finally begin to grow again.

foreignaffairs.com/articles/south…
Missing some Tweet in this thread? You can try to force a refresh.

Enjoying this thread?

Keep Current with Michael Pettis

Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

Twitter may remove this content at anytime, convert it as a PDF, save and print for later use!

Try unrolling a thread yourself!

how to unroll video

1) Follow Thread Reader App on Twitter so you can easily mention us!

2) Go to a Twitter thread (series of Tweets by the same owner) and mention us with a keyword "unroll" @threadreaderapp unroll

You can practice here first or read more on our help page!

Follow Us on Twitter!

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just three indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3.00/month or $30.00/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!