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Is the Greek public debt actually "unpayable"?
When it comes to public debt and deficits, I sometimes feel like people go to one extreme or the other. Japan has a public debt equal to about 250% of GDP, but many people wave it away as a minor inconvenience, even calling for more fiscal stimulus, despite the failure of previous efforts. In contrast, the Greek debt is often assumed to be obviously unpayable, despite being a far lower percentage of GDP. And maybe it is, but I'm not entirely convinced. Of course my opinion does not matter---what does matter is the view of bond market participants. And they are becoming increasingly optimistic about Greek debt. Notice ... (full story)