tag:blogger.com,1999:blog-2546602206734889307.post7367150833000119055..comments2024-03-19T05:54:16.651+00:00Comments on mainly macro: How a Greek drama became a global tragedyMainly Macrohttp://www.blogger.com/profile/09984575852247982901noreply@blogger.comBlogger21125tag:blogger.com,1999:blog-2546602206734889307.post-54068854211172386292014-03-11T18:31:58.796+00:002014-03-11T18:31:58.796+00:00As soon as Moving , picking regional movers rather...As soon as <a href="www.amoveforless." rel="nofollow">Moving</a> , picking regional movers rather then country wide restaurants features a heap regarding strengths, however for many, opting for regional going businesses without model acknowledgement could cause bother about stability on an easily affordable price tag.Anonymoushttps://www.blogger.com/profile/00247852295978598212noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-1709181850023766832013-06-22T16:27:19.796+00:002013-06-22T16:27:19.796+00:00Great article Simon. Great article Simon. Dimitrihttp://www.dimitrizenghelis.comnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-42067513064319323312013-06-22T16:24:35.986+00:002013-06-22T16:24:35.986+00:00Amileoj has it right. The dynamics of a real excha...Amileoj has it right. The dynamics of a real exchange rate adjustment to competitiveness within a single currency, means the most indebted nation (Greece) must face the highest real interest rates over that path. Very unstable dynamics. A demand injection to help restore balance between private desired saving and investment is surely the only option?dimitrihttp://www.dimitrizenghelis.comnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-58202318919705048672013-06-18T19:06:22.153+00:002013-06-18T19:06:22.153+00:00It is sad that people still think that size matter...It is sad that people still think that size matters.<br /><br />I am aware of several regions in Europe that have worst indicators that Greece.<br /><br />Those regions if were not integrated in larger regions (called countries) where the national budget compensates their lack of competitivity they would be exposed as "Greece".<br /><br />So they are more but more zombies economies in Europe.<br /><br />However, that is the path designed by those interested in a Global Government!teamneurshttps://www.blogger.com/profile/15063406049157158979noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-18114105845949395182013-06-18T18:57:46.023+00:002013-06-18T18:57:46.023+00:00I am with you regarding the multipliers!
Please, ...I am with you regarding the multipliers!<br /><br />Please, get my email here (http://www.teamneurs.org/) and lets continue the conversation through email.teamneurshttps://www.blogger.com/profile/15063406049157158979noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-16273901343052048442013-06-15T12:30:12.368+00:002013-06-15T12:30:12.368+00:00Or to buy goods and services from Germany, the UK,...Or to buy goods and services from Germany, the UK, France,etc.<br /><br />The 'German' plan was for Germany to be an export powerhouse to the rest of Europe, and then to invest those earnings in the rest of Europe to make even more money.<br /><br />If the rest of Europe is broke, and in a depression,....Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-40154619845966321342013-06-15T12:00:43.473+00:002013-06-15T12:00:43.473+00:00Q.e.d.
Hanno AchenbachQ.e.d.<br /><br />Hanno AchenbachAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-51840099417156180422013-06-15T10:15:04.783+00:002013-06-15T10:15:04.783+00:00You argue well, but none of these arguments really...You argue well, but none of these arguments really stand up.<br /><br />1) This sounds like delay in the remote hope that something will turn up. Never a good strategy, but one that politicians with high discount rates are always too attracted to.<br /><br />2) The general consensus with banks that are too large to fail is that they should be dealt with immediately by direct state support, as happened (with one exception) in the US and UK. As you say, European policymakers have not done this, so why would they have wanted this option? More likely they just hoped the problem would go away.<br /><br />3) Again, if this was the intention, then subsequent developments are strange indeed e.g. threatening Greece with forced exit<br /><br />4) The argument here seems to be that if Greece had defaulted it would have been under less pressure to undertake necessary structural reforms. But an even more effective strategy, if that is the goal, is not to provide any funds at all - as you say earlier, with primary deficits this would have forced a much more painful immediate adjustment.<br /><br />So I think what happened was not muddling through to give time to develop a proper strategy - it was just muddled thinking.Mainly Macrohttps://www.blogger.com/profile/09984575852247982901noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-35764917311055128562013-06-15T06:15:56.563+00:002013-06-15T06:15:56.563+00:00@ Deepish Thinker14 June 2013 10:12
Excellent pos...@ Deepish Thinker14 June 2013 10:12<br /><br />Excellent post - far better than anything Simon Wren-Lewis, Paul Krugman, or Martin Wolf have ever written on the subject.<br /><br />Hanno AchenbachAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-76995398161316069132013-06-14T17:59:41.592+00:002013-06-14T17:59:41.592+00:00Well, fine, don't "waste" your resou...Well, fine, don't "waste" your resources on them. Just don't expect them to repay their debts or to stay on the Euro, because both those things will be impossible once Greece is cut off.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-57004890649389477102013-06-14T17:12:40.134+00:002013-06-14T17:12:40.134+00:00It seems that Europe stumbled into a sub-optimal h...It seems that Europe stumbled into a sub-optimal handling of the Greek crisis. However, let us not pretend that there were any easy options.<br /><br />As you rightly observe, forgiveness was not politically feasible.<br /><br />Immediate default was, in retrospect, probably the least bad alternative. <br /><br />However, it was hardly a pain free option. <br /><br />When you default on your debts people stop lending you money. Since the Greek government was running a massive budget deficit, default would have meant immediate austerity far harsher than anything the troika has imposed. In addition, since Greek banks held a lot of government debt, default would likely have resulted in the simultaneous collapse of the Greek banking system.<br /><br />For the other Eurozone countries, the risks associated with a Greek default were frighteningly large. The very real possibility of a Europe wide banking crisis was not, contra to your dismissal, something any sane leader would take lightly. Furthermore, establishing that Greece was a "special case" is something more easily said than done.<br /><br />So the Eurozone's leaders opted for something of a muddle through strategy. This wasn't completely crazy.<br /><br />Firstly, the strategy had some option value. Postponing default allowed for the possibility, if the Eurozone economy improved, of a somewhat smaller, partial default at a later date (hasn't really worked out this way, but in 2010 it was at least a possibility).<br /><br />Secondly, it gave some breathing space for the European banking system to prepare for default and the possible follow-on consequences (though it's not clear how effectively this breathing space has been used).<br /><br />Thirdly, it allowed the creation of circumstances that would force an effective forgiveness strategy. Governments propping up Greece in the short term end up owning the majority of Greece's debt, which Greece will ultimately default on. The end result not unlike if Greece's debt had been forgiven upfront. <br /><br />Fourthly, putting conditions on the loans required to keep Greece solvent in the short term would force the dysfunctional Greek government to tackle structural reform (though the results on this front have been profoundly disappointing).<br /><br />Put yourself in the position of a Eurozone leader in 2010. Would you really have signed off on an immediate Greek default?<br /><br />Me thinks not. <br /><br />Deepish Thinkerhttp://www.deepish-thought.comnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-41436036189040560752013-06-14T16:18:21.507+00:002013-06-14T16:18:21.507+00:00This is excellent.This is excellent.Martin Wolfhttps://www.blogger.com/profile/06865994744430634646noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-7851386966226230312013-06-14T14:41:36.215+00:002013-06-14T14:41:36.215+00:00Perhaps you say this because you want to save thos...Perhaps you say this because you want to save those scarce rescue resources for the rescue of the Netherland after it takes longer than anticipated for the real estate market to hit bottom?<br /><br />Otherwise, sounds like you're making a case that Greeks are poor lazy southerners. Now, where have I heard that before?John Redmondnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-77746739680423516732013-06-14T12:58:32.597+00:002013-06-14T12:58:32.597+00:00I think that the IMF should refuse to participate ...I think that the IMF should refuse to participate in any further bailouts, unless the ECB raises its target inflation rate, to say 4%. They are used to dictating terms to sovereign governments; they do it all the time. The ECB is the relevant monetary authority for the bail-out countries. And a little boost from inflation and devaluation would help the whole situation.<br /><br />It would also give the Germans a way out of letting domestic political concerns dictate crisis management. <br />The Econometrixhttp://www.theeconometrix.com/noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-82001721516720271272013-06-14T11:06:00.115+00:002013-06-14T11:06:00.115+00:00"I cannot help but ask how long will we have ..."I cannot help but ask how long will we have to wait for a similar self-analysis of the ECB’s role in this affair?"<br /><br />You are going to have to wait for all eternity. I don't know why people outside the eurozone don't get it : the fundamental assumption of the eurozone design is that THE ECB IS ALWAYS RIGHT. So if something goes wrong it is necessarily someone else's fault.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-79535726444870310702013-06-14T07:07:54.259+00:002013-06-14T07:07:54.259+00:00They did not got the multipliers wrong, I believe ...They did not got the multipliers wrong, I believe that they were on a search for a number to fit a predetermined agenda, so as to have a "scientific" justification. <br /><br />I am saying this because my own research some time before Greece applying for the bailout, there was no evidence for the multiplier to be such low. Both from some theoretical models as well as from some econometrics. Indeed, only with the usual frictionless RBC model calibrated for Greece multipliers was low. <br /><br />This does not necessary mean that I am in disagreement over the sustainability of the debt, or that stimulus might worked. I am just trying to understand those calculations. <br /><br />My puzzle though is what Blanchard, as research director of IMF, was thinking on this. I cannot believe that Blanchard was also such naively "optimistic". I will feel very disappointed if O. Blanchard was also in support of that projections. <br /><br />Many Thanks <br />Safis <br /> Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-86850814499613701262013-06-14T06:35:15.102+00:002013-06-14T06:35:15.102+00:00 Part 2
Bottom will be much deeper than wages com... Part 2<br /><br />Bottom will be much deeper than wages competition now shows. Nobody puts his money there, when there are alternatives (still cheaper) than Turkey or Rumenia arund. <br />In a nutshell it is completely dysfunctional (both organisational and economical) for the league it wants to play in. So it will be relegated (and they can be happy if it is only one divivsion).<br />The issue is more how to organise that relegation. Of course we have ideas how that should be done with keeping basic services in tact. However seen the fact that they have shown themselves totally unable to organise buttering a sandwich expect no organisation or something very close (aka a big mess).<br /><br />The country is a goner. Imho a complete waist to spend scarce resources for rescue on from an Euro-rescue perspective.Riknoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-12750593011952291132013-06-14T06:34:14.207+00:002013-06-14T06:34:14.207+00:00Greece is simply F'ed if they donot get their ...Greece is simply F'ed if they donot get their government situation in order. The government has always been dysfunctional but now has been found out.<br /> <br />If you look at the economic assets of the country (earning capacity obo sources/assets, not obo of former GDP figures what you do), that simply never can support a GDP par capita that they have now. And it is in a sector of the worldmarket where competition is growing with the speed of sound (read salesprices down). Add a government sector parasiting on that (taking half and not even delivering 15% added value, to take S'Pore as reference (talking about best practices).<br />No basis to earn that much money (like before), and unable to turn the situation around (or organise what they have properly). They stil have almost double the number of civil servants per capita of Holland (sort of same size) and it still doesnot work. Government spends still more per capita than a lot of well run EMs earn per capita and it is total crap.<br /><br />The problem is twofold:<br />-they simply donot have the organisation the transform macro money into working policies, allthough the cost of the present organisation is 10s% of GDP too high. The only thing they might be able to is getting back to the original point if the can get finance from that. But nobody is going to do that as the original point was based on lying and overborrowing (aka totally unsustainable).<br />-they have been found out as dysfunctional and show themselves unable to turn the situation around or even get it under control.<br />Nobody will invest in such a country, unless it is covered by long term guarantees by the Germanys. And does are not going to happen.<br /><br />Just see it as it is: a relatively remote from worldmarkets, close to 3rd world country in development, with a reasonable (but not more than that) educated and skilled population, hardly natural resources, in a continent with very limited growth potential. Seen from that angle GDP is still double or so compared to the peers with which they will have to compete. And its government sector would be still dysfunctional and very expensive compared to the competition in that group.<br /><br />The mistakes you make are:<br />-that basically assume that it can work (which is not supported by the facts, they simply cannot get the things organised);<br />-you take as a zero the high GDP per capita, when the country was heavily on financial steriods (which will never happen again).<br /><br />On competitiveness like nearly all economist you are also missing the clue. A lot of the economic earning capacity will be destroyed this way. So 'growth' will have to come from new investments. Seen what they have themselves in house that will have to come from abroad (there are only so many bottles you can fill).<br />Which makes the investment decision a completely different one from extending an existing investments. Really new stuff. Seen from that angle Greece is still:<br />- way too expensive on wagescosts (compared to its competition);<br />- related costs are still at Western European level (you look at wagescost as reference for general pricing not only for wages alone);<br />- high tax enviroment;<br />- not top notch educated/skilled population with language problems internationally;<br />- logistic costs that make moving goods from Greece to say Rotterdam more expensive than from China.<br />Simply total crap over the whole board.<br /><br />Riknoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-44333768127402597892013-06-14T06:27:21.202+00:002013-06-14T06:27:21.202+00:00In other words, stimulus, in whatever form, target...In other words, stimulus, in whatever form, targeted specifically at the periphery is exactly what the periphery needs most--just as stimulus targeted at the hardest hit and most 'backward' parts of the U.S. was precisely what was needed (and, with the exception of the interregnum of '37, what was provided) to mitigate the demand shock of the Great Depression.Amileojnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-90102241982828530242013-06-14T06:19:56.241+00:002013-06-14T06:19:56.241+00:00An economy in which labor is rendered dirt cheap b...An economy in which labor is rendered dirt cheap by massive unemployment and constant downward pressure on real wages--which is the economy that the absence of stimulus to replace missing aggregate demand gives you--is not one that is going to become 'competitive'.<br /><br />The scenario you are thinking of only makes sense if the country in question has its own currency, whereby declining export prices, and the resulting injection of imported demand, can offset rising import prices.<br /><br />The path back to health for Greece as for any economy suffering a huge shortfall of demand is by way of more demand, however arranged, not by way of reduced labor costs per se. The latter approach can never overcome the paradox of thrift.Amileojnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-52228194000543302852013-06-14T02:57:23.509+00:002013-06-14T02:57:23.509+00:00The problem with a generous lender of last resort ...The problem with a generous lender of last resort is that it would bring stimulus to the periphery which would slow down the pace at which the periphery regains competitiveness. Though of course it could be argued that ten years of mild deflation is better than five years of serious deflation in the periphery.Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.com