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Thursday, July 02, 2015

A Game-Changer for Greece?

The IMF's debt sustainability analysis (DSA) for Greece has been leaked (full copy here, courtesy of FT), and it may well prove a game-changer. It basically confirms what Greek PM Alexis Tsipras and Finance Minister Yanis Varoufakis have been telling us (and the ECB) for some time: Greek debt, as currently structured, is unsustainable even under best-case scenarios.

Greek pensioners wait outside a bank.
According to IMF, Greece will need "over €50 billion over the three-year period from
October 2015 to end–2018" (p. 9 item 4). IMF says "further concessions are necessary to restore debt sustainability." Specifically, IMF suggests "to extend the grace period to 20 years and the amortization period to 40 years on existing EU loans." (See p. 12, item 10.) The DSA also talks extensively about haircuts: the need for ECB to recognize actual losses, thereby reducing amounts owed.

It's hard to overemphsize the importance of the findings in IMF's sustainability analysis. The IMF document shows that the relief packages being offered to Greece by ECB have been ridiculously underpowered and ECB knows it. ECB is thus fraudulently enticing Greece to take loans it knows Greece can't pay. This is criminal, predatory lending activity, by definition. In most civilized countries, it's illegal.

IMF is no dummy, and neither are Greek leaders. IMF shows, in its DSA, that Greece wouldn't qualify for further IMF loans even if it hadn't defaulted on June 30. The June 30 default (technically, an arrears) moots any further IMF payouts for Greece, but that's okay; the DSA shows Greece was at the end of that particular road already anyway.

Latvia's outgoing President Andris Berzins offered a shockingly accurate observation in an interview with Latvian Independent TV recently, when he said "this [Greek] debt is so big that everyone understands that it won’t be repaid." Indeed, Greece's total debt (€315 billion) is so large, if a crowdfunding campaign were held tomorrow, every human being alive today on earth would have to contribute €44.

The outgoing Latvian president also said: "Loans to Greece have just bought time so that those in power don’t have to take decisions. This is like a game: who can hold out longer by not showing that this money has been lost? This burden has become bigger and there obviously is no possibility to repay."

Of course, taking a writedown on Greek debt (the only realistic way forward) is political suicide for the likes of Angela Merkel, because it would signify that the cost of the Greek bailout has been passed directly to German taxpayers. (Germany is not the only debtholder, of course. Other Zone countries, and their taxpayers, would absorb the cost of a haircut as well.) This is why Merkel will fight debt forgiveness to the death, even though Germany itself benefitted immensely from debt forgiveness in post-war years (and Greece was one of the signatories of the 1953 London Conference).

In the meantime, the Greek referendum has become (in addition to its other meanings) a vote of confidence, or  no confidence, for the country's leaders. Both Tsipras and Varoufakis have said they'll step down if the vote is not a resounding OXI.

Here's hoping Greece votes NO to predatory lending and further unsustainable (by IMF's own definition) debt. The alternative is more payday-loan chicanery, leading (inevitably) to an involuntary default on debt that's no longer capable of being repaid under any forseeable scenario.

Be sure to join us here tomorrow for our Friday Water Cooler links: our best-of-the-best freakonomic news links.

Psychotherapy is Becoming Less Effective

Is psychotherapy becoming less effective? A major study says yes, at least for CBT. 

Cognitive Behavioral Therapy has long been considered (somewhat inappropriately) to be a kind of gold standard in psychotherapy for depression. It's not foolproof (no therapy is), but many consider CBT to have a better evidence base than other talk-therapy modalities.

Now comes word that CBT's effectiveness has been going down continuously for the last 35 years. According to a meta-analysis by Tom J. Johnsen and Oddgeir Friborg (2015), which looked at 70 studies from 1977 to 2014, effect sizes based on Beck Depression Inventory scores have fallen by half since the first studies were done. That's a pretty huge drop.

If the following graph is right, in 30 years CBT will be completely ineffective. And if CBT is a proxy for psychoterapy more generally, all of psychotherapy may be headed for zero effectiveness. We may be living in psychotherapy's End Times.

Beck Depression Inventory based effect sizes have gone down over time.  The size of the circles indicates the relative contribution of each study to the analysis. Hamilton scores (not shown) have also gone down. (Johnsen and Friborg, 2015)

Johnsen and Friborg confirmed the well-known fact that smaller studies tend to have larger effect sizes, but even after discarding all small studies from the meta-analysis, a significant time effect remained.

The researchers noted that spontaneous remission rates among control groups have not changed over the period of study. Hence, the decaying effectiveness of CBT is probably not a global effect related to generally worsening ability of people to recover from depression.

Many study participants took meds in the course of the 70 studies. But the percentage of patients on psychotropic medication did not covary with effect sizes, which is somewhat surprising, since prevailing orthdoxy holds that drugs-plus-CBT gives better results than either CBT or drugs alone. Prevailing orthodoxy was not confirmed here.

Interestingly, Johnsen and Friborg found that CBT is somewhat more effective among female patients than among male patients. No reason could be found for this.

Some studies used the Beck manual for CBT whereas others didn't explicitly have this in the study design. When non-Beck-manual studies were excluded from the analysis, the time-decay effect was worse. (In other words, studies that adhered closely to the Beck manual showed even greater deterioration of effect sizes with time.) This is hard to explain, but it tends to bolster the basic finding: CBT has become less effective over time.

Johnsen and Friborg looked at severity of depression along two scales (Beck Depression Inventory, and the Hamilton scale); they confirmed that less-depressed people tend to see less benefit from CBT, but this was already known. It doesn't explain the time-deterioration phenomenon, which is robust across patient groups. Whether you're severely depressed or not, CBT is less effective now than it used to be.

The researchers note that "it is not inconceivable that patients’ hope and faith in the efficacy of CBT has decreased somewhat, in recent decades." However, it's well known in placebo research that hope isn't always a requirement for a placebo to work. Thus it's by no means certain that expectation reduction can explain CBT's dwindling effectiveness.

The complete study (PDF) is online here. Download it and give it a look. And maybe give a copy to your therapist.

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Have you checked out my free book Mental Health Myths Debunked? Tons of info, tons of live links, lots of straight talk about depression, meds, therapy, psychiatry, mental health trends, statistics, and more (documented, with links to sources). And you know me, I call bullshit on bogus ideas (then give URLs to the actual data). The idea that antidepressants take weeks to do anything? Myth. Most people benefit from antidepressants? Myth. Antidepressants separate from placebo in clinical trials? Largely myth. (Half the trials show separation. Half don't.) Electroshock therapy is safe and effective? Bigtime myth. But don't take my word for it: Read the science for yourself. It's all laid out (with references) in the book. Download ePub or PDF now at NoiseTrade. Tell a friend.


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