Varoufakis says negotiations are at an 'impasse' calls for a 'bad bank'.
Greek Finance Minister Yanis Varoufakis has been relieved of his duties as the day-to-day negotiator with the IMF/EU. That's given him time to write a post at Project Syndicate about creating a 'development bank' and 'bad bank' to restore credit and confidence in the banking system in Greece.
"Imagine further that the "bad bank" helps the financial sector, which was recapitalized generously by strained Greek taxpayers in the midst of the crisis, to shed their legacy of non-performing loans and unclog their financial plumbing. In concert with the development bank's virtuous impact, credit and investment flows would flood the Greek economy's hitherto arid realms, eventually helping the bad bank turn a profit and become "good."
Finally, imagine the effect of all of this on Greece's financial, fiscal, and social-security ecosystem: With bank shares skyrocketing, our state's losses from their recapitalization would be extinguished as its equity in them appreciates... One can easily imagine Greece recovering strongly as a result of this strategy."
