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.