Rhodes on “Greece’s Achilles’ Heel” in The Wall Street Journal

This morning, The Wall Street Journal published an op-ed “Greece’s Achilles’ Heel” by William R. Rhodes.  Bill is the President and CEO of William R. Rhodes Global Advisors, LLC; Professor-at-Large at Brown University; and former Senior Vice Chairman of Citigroup Inc.  CFS was honored to have Bill serve as a member of the Honorary Committee at Bretton Woods 2014.

“Greece’s Achilles’ Heel” is excellent (see http://on.wsj.com/1HUxBjp).  It struck a chord on two levels.

1) The approach is clear and represents the best path for Greece.  Bill notes:

– “It has yet to start negotiating seriously about a long-term solution to its debt crisis. The government needs to understand that creditors have long memories and want assurances that it will live up to the terms of whatever deal is struck.”

– “Past crises have shown that there is never a white knight able to ride to the rescue – despite rumors that the Greeks may turn to Moscow and Beijing for aid.”

– “Sovereign-debt deals have the best chance of succeeding if they are not seen as being imposed by the creditors, but rather owned and authored by the debtor country’s government.”

In a paper “Solving the Greek Crisis,” CFS outlined the math supporting a similar strategy in 2011.  Although time has elapsed, the basic approach remains valid (See “Solving the Greek Crisis: http://www.centerforfinancialstability.org/research/Greece_062411.pdf).

2)  On a personal note, I traveled with a fellow banker to Nicaragua in the late 1980s to help structure a buyback.  Nothing happened.  In the aftermath, the country remained stagnant through 1995 when a buyback was finally orchestrated and the country began to grow again. Now is the time for action in Greece.

Lastly, at Bretton Woods, Bill offered an Honorary Committee Address called “Critical Issues for the Bretton Woods Institutions” – see http://www.centerforfinancialstability.org/bw2014/bw_rhodes.pdf.  Many of these issues and recommendations are essential reading in advance of the upcoming IMF / World Bank meetings.

Best regards,
Larry

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