dagblog - Comments for "Hollande's dilemma: Austerity vs. Insolvency"

Point being, they can chuck

PeraclesPlease — Wed, 09 May 2012 19:46:33 +0000

In reply to If the whole point of the EZ

Point being, they can chuck Greece out, but they still have to come up with a growth strategy for Italy, Spain, Portugal.... Not a group suicide pact that the Germans seem gunning for.

However the Germans haven't been "fair-weather". Even now they're footing the bill, and they're finally sticking to their guns on the bailout. Too bad they're wrong this time, though we still don't know which 3rd way is right. I doubt if it's an unlimited line of credit to Greece, though other southern countries, might be so.

" If they wanted to be monetarily independent from countries like Greece, they should not have married their currency with them." - that's not terribly fair. Germany took a chance both because of past guilt and the chance to build up the zone - which has overall worked up until 2008. Greece hid many of its problems via Goldman Sachs et al, and didn't collect its taxes as obligated. There aren't many "countries like Greece" in the EU. Ireland for one has worked quite hard and quite successfully. As have the new East European countries.

If the whole point of the EZ

DF — Wed, 09 May 2012 17:39:57 +0000

In reply to Well no, they can tell Greece

If the whole point of the EZ is just Germany picking winners and losers, then they should never have gotten involved in a currency union. The problem is that they did that. Attitudes, Greek, German and otherwise are beside the point. As Genghis has likewise pointed out, the problem is not a future EZ without Greece. The problem is an EZ that is destroyed by an economic policy that is based on punishing Greece instead of fixing widespread economic depression across the EZ. That is what could cause the EZ to fall apart. Fixing Greece will be relatively cheap compared to the potential damage done by insisting on a prolonged depression. Countries like Spain and Ireland are likewise being harmed by the policy preference of the Germans, who seem to be willing to concede nothing - not a bit of their trade surplus, not a basis point of inflation. If they wanted to be monetarily independent from countries like Greece, they should not have married their currency with them. They did. For all of the moralizing over the feckless Greeks, what about the fair-weather Germans? More to the point, how does any of the international moralizing actually address the economic problems?

Greece can't stay in the Eurozone and devalue like they need to in order to recover. See Iceland. The political question that must then be considered is this: What will the political implications be for the future of the Eurozone if Greece exits, especially if Greece is then able to mount a recovery? Will Ireland, Spain and others continue to hang in there for the long, hard slog?

Surplus planned for next

PeraclesPlease — Tue, 08 May 2012 21:52:29 +0000

In reply to "#2, I"m not so sure what

Surplus planned for next year, as all tooth fairies do.

Greece had one million companies in 2009, but 250,000 have since closed and 300,000 more do not pay their workers on time, according to Antonis Samaras, leader of the conservative New Democracy party.

Greece will have to cope with an even deeper recession than expected in 2012, according to the country’s central bank. In a revision to its previous estimate a month ago, it suggests Athens will find it even harder to meet its fiscal targets, meaning yet more pain for the population.

The Bank of Greece forecast the economy will shrink by about 5 per cent this year – the fifth consecutive year of contraction – compared with its previous estimate of 4.5 per cent just a few weeks ago. But the outcome could be worse still if there are delays in implementing structural reforms, the bank said.

The Greek economy never runs at full capacity, obviously, but the chances of that are even more remote.

In terms of dickish proposals, the Greeks excel at them. I've obviously got a chip on my shoulder, after living a bit through the Macedonian embargo and the attitude towards Turkey (shared by much of the EU as well....).

But what's the basis for running huge deficits when shipping & tourism were going well, and then refusing to pay now? Blame the rich, blame the IMF, blame the Germans (with obligatory swastikas) - is it really all 3?

In any case, the issue is less about whether to prop up the Greek economy, but whether there's a real way to prop it up that will actually work. Whether lazy, incompetent, tunneling, statist or other description, there's a serious question what efforts at renewal will actually work. Of course Germany can just head to Western Union and wire money - crisis solved.

And after that, Spain, Italy,

Michael Wolraich — Tue, 08 May 2012 21:34:26 +0000

In reply to Well no, they can tell Greece

And after that, Spain, Italy, and Ireland.

Greece is a sideshow and has been all along. It's too small to drag down the rest of Europe or to make much of a difference if it leaves the EU.

But German austerity is killing far bigger countries than Greece with far more functional governments.

"#2, I"m not so sure what

Anonymous Obey — Tue, 08 May 2012 20:47:23 +0000

In reply to I'm just a country boy - I

"#2, I"m not so sure what that means. Appropriate to *WHICH* country?"

Well, obvs I had in mind 'appropriate to the depth of the recession'. One generally wants (tho not you personally, I see) fiscal policy to be counter-cyclical, where any given country runs deficits in recessions and surpluses when growing above trend. The exact amount that is reasonable for any given country will vary, depending on the output gap, productivity growth and so on. That's why I threw out 15%, but any reasonably viable proposal on the part of the triumvirate will involve some consideration for the counter-cyclical function of fiscal policy, and a revenue stream sufficient to cover spending when the economy is running at full capacity. I'm sure the number-crunchers can come up with a more definite figure with the pretty standard models, and I'm guessing it's somewhere between 10 and 20%.

But demanding - and apparently now ... getting (!) - the Greeks to wring out a primary surplus at this point is totally nuts. Because it's just going to keep them in a negative feedback cycle of cuts in government spending leading to cuts in aggregate demand leading to falling revenue leading to further cuts. And

"Will 15% be enough for the Greeks in the street?"

- Wow. That's a weird objection. Right now they've got the Greeks producing a primary surplus, and you're just going to ... assume ... those lazy Greeks will reject a reasonable, economically viable offer, so ... fuck 'em? How about we wait for the triumvirate to make an offer that isn't dickishly outrageous, and how about ... IF the Greeks reject that ... THEN start to condemn 'em.

How's that for a plan? Judge them for their actual reaction to the actual plan, rather than their hypothetical reaction in your absinthe-drenched imagination? HEH?!

Well no, they can tell Greece

PeraclesPlease — Tue, 08 May 2012 20:32:05 +0000

In reply to Greece cannot possibly

Well no, they can tell Greece to go get stuffed and kick them out of Eurozone.

The attitude that Germans have to help no matter how obstinate the Greeks are is exactly what drives the Germans to their worst.

West Germans tightened their belts for 23 years to bring East Germans back into the fold. They have no appetite for more greedy freeloaders, and 67 years after WWII, they're getting less interested in guilt trips and more interested in shared responsibility.

Slovenia's passed Greece in per capita GDP; Czech Republic's almost caught up; Poland is 1 1/2 times bigger in total GDP, Turkey's 2 1/2 times. 30 years in the EU and Greece has trouble competing with Iron Curtain countries. Color me unimpressed. If Germany's going to hand out cheap money, they can hand it to Romania and Bulgaria.

I think you'd do better with

PeraclesPlease — Tue, 08 May 2012 19:14:59 +0000

In reply to Of course I'm grumpy, I live

I think you'd do better with Ilsa. Deep massage, knows when she's off work as well, and if there's humping to be done.... well, it'll cost you extra but worth it.

Regarding LaRouche, well, his fancy pants daughter is the you-go-girl now, no more prune face fronting the operation. Better, eh? Imagine Elle with a quasi-fascist lede and pictures of refugees out of 1984? With waxed bodies and no tan lines?

In any case, the austerity vs. insolvency was meant for Greece, as prelude to my 3rd way, which is some new agey tripe involving prisms and Acropolis laser lights - might even get Vangelis and Jon Anderson if they're still alive.

Once again, no, I don't see Greek path from austerity anywhere but through the Augean stables. Or at least up to and into, not sure the path leads on from there. But what to do with an insatiable politice - just give them a larger line of credit, let the good times roll? Hope they learn what a factory means, or how to program?

Again, re: French, I didn't say they were hard-done-by - I said they were quite successful and productive, even though obviously a call for more stimulus implies they'd like to do better. And when the French spend, everyone's happy - especially old Strauss-Kahn. He'll get your 3rd leg fixed up in no time flat. Of course he doesn't know exactly *how* it's done, and figures it just happens for free, from gracious and grateful chorus line girls. That's French capitalism for you.

Greece cannot possibly

DF — Tue, 08 May 2012 19:01:08 +0000

In reply to I'm just a country boy - I

Greece cannot possibly recover with Germany controlling monetary policy for itself. For better or for worse, Germany already agreed to share its economic fate with the rest of the EU. That ship has sailed. Now that downside risk has appeared in this arrangement, the Germans are balking. That's not on the menu. Shared economic fate is on the menu. Unless you or someone else can actually articulate a "third way" that is not only specific, but mathematically feasible, there will remain two solutions: 1.) Germany can yield its position and accept that it must engage in policy that will benefit the EU as a whole, including Greece, or 2.) Germany can continue to insist on austerity, which is mathematically equivalent to insisting on a second recession for the EU right now. Moralizing and cultural butter aside, there isn't any middle ground between these positions. Mathematically, rates of inflation and interest must be allowed to change in a way that Germany currently finds undesirable in order for the EU to get beyond its debt crisis.

Of course I'm grumpy, I live

Qnonymous — Tue, 08 May 2012 18:45:52 +0000

In reply to Try this: - some viewers from

Of course I'm grumpy, I live in goddamn Greektown. Everywhere I go, this is what they talk about. The other day I'm at my hippie chiro, she's dry-humping my leg back into place, and babbling about whether the Greeks should revolt or just go to the beach. (I told her maybe she should concentrate a little more on her work, dammit, or I'd be off to Ilsa's office.)

My problem was that while you're saying some sensible things, you've got them pasted under a headline that might as well have come from Lyndon LaRouche. "Hollande's Dilemma: Austerity Vs. Insolvency." You know, you can scuff that up as much as you like, it's not a useful way to see things. For instance, no matter how you slice it, Germany the European nation which is closest to France in terms of Public Debt as a % of GDP. so where's your "Merkel: Fat-Headed Idiot or Just-A-Big-Fool?" headline?

In a similar vein, the quip about French industry being so hard-done-by continues to strike me as having been based on prejudice more than good economics. That is, they do really quite well, given conditions which American RW economists would have you believe would have led to their total collapse. My conclusion? RW American economists are morons.

If you had just written on the Greeks, fine then. They're economic goofballs who've fucked themselves into the floor. BUT. The German idea that there is a path from global-austerity to Greek-recovery is laughable. The more this fabulous austerity has kicked in, the worse things have gotten. So if I'm Greek, which I'm not, yet, I'd be happier that the French are gonna restart spending money.

But today, no matter how you taunt me, my mood will remain excellent. After all, my leg works just fine.

I'm just a country boy - I

PeraclesPlease — Tue, 08 May 2012 18:37:19 +0000

In reply to "The ones who need austerity

I'm just a country boy - I can tell you how best to plant the back 40....

A said a 3rd way between austerity and EU largesse. What that means, idunno.

Certainly äusterity doesn't mean inflationless, to pick on a German scab. So #1, fine.

#2, I"m not so sure what that means. Appropriate to *WHICH* country? Will Greece accept *ANY* conditions? (i.e. the Greek government that can sustain any significant popular support?)

Remember how Greece negotiated over Cyprus. The Turks came in with a bunch of compromises and concessions, worked hard to meet the deadlines, the Greeks told them to get fucked, they weren't budging on anything. And the EU let Cyprus in under Greek conditions.

Well, that bit of soap opera didn't cost the EU money. But in this case, it'll cost not only for Greece, but also the precedent set for others. Will 15% be enough for the Greeks in the street? Why not 20%? 25%? The EU let them into Eurozone despite better judgment - maybe their "lucky" streak will keep running.