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La Repubblica - Italy | Wednesday, July 1, 2015

Athens can break the vicious circle

The rejection of further austerity demands is the only sensible way out of the Greek crisis, economist Mariana Mazzucato writes in the centre-left daily La Repubblica: "As Greece's finance minister Varoufakis has repeatedly stressed, Greece isn't suffering a liquidity crisis but a solvency crisis that in turn has been caused by a competitiveness crisis and been exacerbated by the financial crisis. A crisis of this type can't be solved with more and more cutbacks, but only with a serious investment strategy accompanied by real and not pro forma reforms to boost competitiveness. In the false belief that this is merely a liquidity crisis, too much focus was put on the debt repayment deadlines and stringent austerity requirements for new bailout packages which without growth and competitiveness can never be repaid, thus creating a vicious circle."

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