Auerback: Austerity during recession is equivalent to medieval bloodletting

Here’s a good video performance by Marshall Auerback on BNN’s Business Day program. Marshall thinks the Greek default deal is actually a relatively good one. But he sees a Portuguese default after the Greek default as a real possibility and envisions a scenario in which Portugal and Spain look to extract similar terms. Moreover, the quid pro quo for Greece is austerity – and that makes getting debt loads down harder when implemented during a downturn. He sees the policy prescription as the economic equivalent of bloodletting, something that medieval doctors used to do and were convinced produced results. The patients often died in the process.

Trading call wise, Marshall says gold still looks good here.

Click on image below for video.

1 Comment
  1. Anonymous says

    HIs comments about Greece being an economic Anschluss is wrong it is more akin to economic annexation. This is not voluntary it is opportunism by the Germans. What guarantees will there be that no Greek national treasures are sold at fire sale prices to German banks? Longer term he is right that the policy is toxic. Even if Germany escapes unscathed from the process which it will not, then they face being surrounded by economic wastelands who they cannot export to and will be flooding their borders with economic migrants from within the EU. 

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