The political economy confirms the policy response: Policymakers may pay greater attention to insuring against rare bad events – to which they could be held to account – than to allowing scores of great things to flourish. 8  Kevin Warsh (2007), "Market Liquidity: Definitions and Implications," speech delivered at the Institute of International Bankers Annual Washington Conference, Washington, March 5.
It is not the adjustment programme which is causing the recent decline in GDP. The current economic depression is an unavoidable correction of the substantial positive output gap that has built up until 2009. Is there any alternative to the current adjustment? We do not help Greece by creating false expectations. Calls for loosening the fiscal stance are illusory.