Senior fellow Arvind Subramanian was quoted in an NPR article on the European bailout.
From the Article
Over the next few weeks, European leaders have a big task ahead of them. They have to begin fleshing out that big bailout plan unveiled to so much fanfare in Brussels this week. The plan represents the most comprehensive effort so far to resolve Europe's grinding debt problems, which have done so much damage to the world's financial markets this year, but some issues may require a global effort to solve.
Even people who don't think too much of the bailout plan say it represents progress of a sort. Sony Kapoor, managing director of the consulting firm Re-define, says Europe has been muddling along for a long time — like a tanker headed in the wrong direction.
"Finally, belatedly, they have recognized what the main problems are and the tanker has been slowly been turned toward the right direction," he says.
That's not to say the plan goes far enough, he says. This crisis has its roots in Greece's massive debt load. The plan tries to address that by forcing banks and other investors to take big losses on the Greek bonds they hold. But economist Simon Tilwell, of the Center for European Reform, says that won't make enough of a dent in Greece's debts.
"That won't guarantee the Greek government access to the financial markets, so they haven't actually solved the Greek issue," Tilwell says.
The plan also calls for bolstering the stabilization fund that's supposed to help prop up Europe's weakest economies. Officials hope that outside investors will be willing to put money in the fund.
"The question is who has the ability to provide this," says Arvind Subramanian with the Peterson Institute for International Economics. "To some extent, the oil exporters can, but really the only country with that kind of muscle, economic cash, really, is China,"