tag:blogger.com,1999:blog-2546602206734889307.post14995880022742565..comments2024-03-28T04:29:22.717+00:00Comments on mainly macro: What I did on my holidaysMainly Macrohttp://www.blogger.com/profile/09984575852247982901noreply@blogger.comBlogger41125tag:blogger.com,1999:blog-2546602206734889307.post-55010336043912994722015-07-04T18:54:45.201+00:002015-07-04T18:54:45.201+00:00I don't agree.
Economics is a consequentialis...I don't agree.<br /><br />Economics is a consequentialist discipline. Economists tend to be utilitarians. That makes the discipline remorselessly forward looking.<br /><br />That means the past is just evidence. It provides us guidance as to how we should behave in the future; see S W-L's reaction to my post. I do, of course, know full well that economists spend a lot of time looking at this. My point is rather why they look at it.Hugo(Spinning)noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-89714410211580483562015-07-03T20:44:44.935+00:002015-07-03T20:44:44.935+00:00To say that it is unusual for economists to look b...To say that it is unusual for economists to look backward and reflect on errors made in the past is wrong and also displays an enormous ignorance of economics and the output of economists. Examining and reflecting on past errors and good practice from events of years gone by is almost a pre-requisite in macro econ based studies, textbooks etc. <br />as for krugman saying 'no', as he briefly explains, to vote yes means more of the same economics of the madhouse being imposed upon them by the troika, so more of the hardship and no hope for the future, or a 'no' vote, which would very painful indeed, but as he points out, countries have taken this very difficult path before, and have come out of it in time...so at least there is the prospect of a future for Greece...unlike with the 'yes' vote if that does mean 'more of the same', which doesn't work and is not working.Simonhttps://www.blogger.com/profile/01453060744510427275noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-42955835109216658322015-07-03T19:52:39.182+00:002015-07-03T19:52:39.182+00:00gastro george2 July 2015 at 15:53
Anonymous3 July ...gastro george2 July 2015 at 15:53<br />Anonymous3 July 2015 at 04:08<br /><br />Obviously, Greece doesn't have a central bank and cannot issue its own currency.<br /><br />Doesn't that make it closer to a household than an "economy"? <br />If so, shouldn't it follow the rules of a Swabian housewife rather than ignore that it has no own central bank and cannot issue currency,given it is not sovereign over monetary policy?<br /><br />And isn't that true of all the Eurozone countries? <br /><br />PiemanAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-44497364634465762642015-07-03T15:12:08.472+00:002015-07-03T15:12:08.472+00:00SW-L asks why there was no alternative to rescuing...SW-L asks why there was no alternative to rescuing the banks that had loaned to Greece in 2010. My answer is: “otherwise the European banking system would have crashed”. <br /><br />And that’s the umpteenth time the fractional reserve bank system has been rescued from its own follies. In contrast, under full reserve, bank shareholders would automatically take a big hair cut (or would never have loaned to Greece in the first place), so no taxpayers’ money would have been devoted to rescuing private banks.<br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-55503691821663533222015-07-03T14:48:42.958+00:002015-07-03T14:48:42.958+00:00It all depends in whether the extra money that ena...It all depends in whether the extra money that enables the extra demand is a gift or a loan to Greece. Obviously if it’s a gift, then no problem. By the same token if the US gives the UK $100bn then loads of Brits can help themselves to 2nd homes in Florida and Cadillacs without the UK as a whole going into dept.<br /><br />As to Greece, if 10bn is loaned to Greece for the purpose of boosting demand in Greece, then Greece is initially an extra 10bn in debt. When spent, very roughly 1bn will be spent on imports. That’s another 1bn of debt. If the Greek government recoups all that 10bn after a few years and repays creditors, there is still the 1bn of imports to pay for. <br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-74703991137143915542015-07-03T13:37:31.262+00:002015-07-03T13:37:31.262+00:00Never a good idea to examine past mistakes - it mi...Never a good idea to examine past mistakes - it might even make you do something more sensible in the future!Mainly Macrohttps://www.blogger.com/profile/09984575852247982901noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-12812215794070774622015-07-03T13:10:33.286+00:002015-07-03T13:10:33.286+00:00because that is the only question that counts (at ...because that is the only question that counts (at least between now and Sunday).<br /><br />So.<br /><br />yes or no?SpinningHugonoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-69118340154032614882015-07-03T13:04:33.074+00:002015-07-03T13:04:33.074+00:00If my political judgement is so bad (and I agree, ...If my political judgement is so bad (and I agree, I did underestimate the inflexibility of the Troika), why are you so keen to want a yes or no?Mainly Macrohttps://www.blogger.com/profile/09984575852247982901noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-53304536909697152302015-07-03T12:42:25.828+00:002015-07-03T12:42:25.828+00:00Aaron,
Argentinas GDP dropped by 60% in a year af...Aaron,<br /><br />Argentinas GDP dropped by 60% in a year after default. Greece GDP dropped by 25% over 5 years.<br /><br />So there are worse scenarios!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-78050252384435654732015-07-03T12:37:34.799+00:002015-07-03T12:37:34.799+00:00Prof. Wren Lewis
it is disappointing and very unf...Prof. Wren Lewis<br /><br />it is disappointing and very unfortunate that you advertise a reasonable and balanced comment in the New Statesman with a quote full of gross simplifications and national clichés. It is about the same level as comparing PK and yourself with commies. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-2123162588487440282015-07-03T12:32:49.226+00:002015-07-03T12:32:49.226+00:00Prof. Wren Lewis
If this is your understanding a ...Prof. Wren Lewis<br /><br />If this is your understanding a Euro exit of Greece would have been a logical consequence at this point in time. Obviously this was not desirable. You cannot have both. Either default and Grexit, or keeping the Euro.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-4053326483246846752015-07-03T11:12:24.088+00:002015-07-03T11:12:24.088+00:00Wait, so more demand will give the Greek governmen...Wait, so more demand will give the Greek government more tax revenue? What prevents that from being an international re-arrangement through the government using that revenue to repay creditors?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-23600924140309387872015-07-03T11:08:40.587+00:002015-07-03T11:08:40.587+00:00Because they don't have their own Central Bank...Because they don't have their own Central Bank. The issue isn't that greece has hit some sort of boundary of realism or good taste in terms of macroeconomic policy, it is that they have hit a wall of political resistance from those who share their Central Bank. <br />In a common currency area, this kind of thing requires co-ordination, which would require inflationary policy in Germany. Instead, you have a quasi-moralistic view about debt, peddled on the basis of this imaginary salt-of-the-earth representative household, and it is this myth which prevents the policy levers SWL has referred to from being operated correctly.<br /><br />The Swabian housewife is the obstruction, not the solution!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-89613624700979856232015-07-03T10:09:44.688+00:002015-07-03T10:09:44.688+00:00The problem with that piece is that, unusually for...The problem with that piece is that, unusually for an economist, it is backwards looking. it concerns what the errors in the past were.<br /><br />But, frankly, so what? Economics is not a morality play, we are often told. The question is what should be done going forward. <br /><br />Now, in theory the optimal solution would be some kind of debt restructuring. but that isn't on the table. What Greece had on offer was not *that* appalling, at least in the short term. The refusal to accept it seems to have led to disaster and collapse in short order.<br /><br />Krugman in the NYT at least seems to me to be answering the question that needs answering today, as opposed to what should have been done in 2010. Is it yes or no.<br /><br />He says no, and leave the euro. I think this is crackpot. Greece's debts are denominated in euros. How will Grexit change that? How is there any Grexit path that does not involve Greece becoming an economic island cut off from everywhere else (and a very small one)?<br /><br />The only option now is to vote yes, and just accept whatever is now on offer from Eurogroup, which will be worse than last week. Yes that postpones the decision until later, the solvency problem doesn't disappear, but we are looking at a 25 year timeframe to solve that.<br /><br />Syriza seem to have hopelessly overplayed their hand. The negotiating strategy seems to have been "no agreement will be bad for you - as well as terrible for us". This was plausible when the world was full of fear in 2010, not so much now.When the other side said no, they had no exit strategy.<br /><br />Like their supporters, they seem to have mistaken an economically sensible case for a remotely viable political one. The lesson from taking people like Varoufakis more seriously than they deserve is clear.SpinningHugonoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-29335747782484637582015-07-03T09:39:15.934+00:002015-07-03T09:39:15.934+00:00The Swabian housewife in action:
https://www.youtu...The Swabian housewife in action:<br />https://www.youtube.com/watch?v=PhhzJ-yNJzUjmgnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-37674471370978110952015-07-03T07:04:41.730+00:002015-07-03T07:04:41.730+00:00There are only two options on the ballot paper.
N...There are only two options on the ballot paper.<br /><br />Not that S W-L's political judgment has proven very good on Greece <br /><br />http://mainlymacro.blogspot.de/2015/01/let-us-hope-for-syriza-victory.html<br /><br />His economic views are always interesting of course..<br />SpinningHugonoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-6555011966122806242015-07-03T02:06:07.988+00:002015-07-03T02:06:07.988+00:00You are right. It seems something is missing in my...You are right. It seems something is missing in my writing. But, in a way, it was intertwined on both arguments, yours & mine. Needless to say that is entirely my fault, for leaning on your usual honesty presenting facts and interpretation no matter what, makes no excuse for clarity.<br />So, in 2010 money was needed: a) to pay debt; b) give Greece room for structural adjustment, whose magnitude of course depended on the circumstances, relative strength in negotiating and the inevitable second guessing of both parties.<br />By then, what the EU knew was that bookmakers had taken Greece for the lame duck European Lehman’s relative in the world financial nightmare, so that no one would lend her a dime. And here’s the point. If you let her down, what would have happened to some other countries, with let’s say half or a quarter of her troubles. For it is worth remembering that we are not here with a flexible exchange rate system, not even one in which to assume (at least for some cases) the collection of your monies back, be it by year 4000. In short, what would have been the guess on prospective sequential “hair-cuts”? That all would be just fancy painted paper. Hence the outcome was crystal clear: pay & shut up; it’ll be easier to give some away later, with less of an audience.<br />The danger loomed on the misunderstanding, until some clever guys, caught between the old timers of the gold standard era, and the rumbling of bullying speculators, said well, you want German? Ok I’ll give you some. Give me all that you want of your Spanish stuff (or Italian, or Portuguese or whoever deserves it) and fuck off. We know they'll pay.<br />That restored Say's law a.k.a. S=I. And then things got back to normal, when reasonable long, long term fiscal reliability pays handsomely well against often crazy capital movements.<br />Moreover, that allowed to Greece’s restructuring & (some) hair-cut thereafter.<br />As for the infortunes of austerity in Greece and who is to be blamed, I think one has to have a deeper look at the strange bulge in government spending around 2011, which for me without better insight, looks like the effects of reallocation to cover more people or something of the sort, such that there has been more uneven pain than overall figures suggest. I’m sure that you as a Keynesian & Fiscalist expert (which is what I like of you most; I’m 57, so around the same geological layer) may get way better assessment on that clue. The same goes for violent shifts in expenditure targets, with the subsequent change in relative prices. How much you can do to smooth that and the volume of funds needed to address it, is not for me to tell.<br />Anonymoushttps://www.blogger.com/profile/04793663874157592771noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-9853597798124576482015-07-02T22:53:23.236+00:002015-07-02T22:53:23.236+00:00@Anon - If you hadn't noticed, for example, th...@Anon - If you hadn't noticed, for example, the Greeks can't issue their own currency.gastro georgenoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-40030281324871721002015-07-02T20:23:07.377+00:002015-07-02T20:23:07.377+00:00"But there was no alternative to bailing out ..."But there was no alternative to bailing out the creditors back in 2010 ...." You need to say why. Mainly Macrohttps://www.blogger.com/profile/09984575852247982901noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-68157913063103688962015-07-02T20:09:17.457+00:002015-07-02T20:09:17.457+00:00Look at the results of the Swabian house wife'...Look at the results of the Swabian house wife's economic and fiscal measures on Greece. Does it look like to you she's onto something?Simonhttps://www.blogger.com/profile/01453060744510427275noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-20919152568848884252015-07-02T18:35:24.675+00:002015-07-02T18:35:24.675+00:00SWL means well but ...
The 900+ word article in t...SWL means well but ...<br /><br />The 900+ word article in the NS was a wasted opportunity. <br /><br />Who reads the NS? Labour people and two Tory interns who are paid to read it. SWL had a platform many write but few are read.<br /><br />On the 8th Osborne will stand up and again compare the UK with Greece to justify further austerity. He is that predictable. The labour response will point out the hardship to be handed out to our weakest citizens. There will be no labour economic alternative. Labour need ideas.<br /><br />The mistake the Greeks made was to give up the Drachma. A labour response to Osborne is to say we have our own sovereign currency we have not made the Greek mistake and Osborne doesn't know how to use our most powerful economic weapon. The pound.<br /><br />The snarky remark about a Swabian housewife is counter productive. To compare Merkel to a Swabian housewife boosts her in Germany. A better approach is to state that the European Project is in real danger. Growth in Europe is the only way to save the European Project. Europe needs a concerted fiscal response to bring growth. We need bigger government deficits in the major European countries and we need them now. <br /><br />Leave the snarky remarks to those of us below the line.<br /><br />thats it fartig<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-25741942786142588612015-07-02T17:26:05.643+00:002015-07-02T17:26:05.643+00:00Since early 2008, southern Europeans have been all...Since early 2008, southern Europeans have been allowed to borrow and print themselves out of the pain, but this has not prevented the collapse. In 2013, there were signs of recovery, but 2014 showed only a sideward movement in manufacturing output. Spain's and Greece's unemployment rates are around 25 percent, while youth unemployment hovers around 50 percent. By January 2010, when the first debate about Grexit flared up, Greece had received €48 billion, or 22 percent of its GDP, in extra credit from the printing press (Target credit). Now, five years later, Greece's stock of net credit from foreign public institutions (Target plus fiscal) stands at €267 billion, which is 145 percent of GDP. (This is, incidentally, equivalent to twenty-nine U.S. Marshall plans for Germany, given that the Marshall aid that Germany received in the post-war era added up to 5 percent of Germany's GDP in 1952. The Marshall aid was part of the forgiveness of German debt, amounting to 20 percent of GDP, mentioned in the London Debt Agreement of 1953.) Greek finance minister Yanis Varoufakis is right when he says that all this help was useless, given that the country's rate of unemployment now is more than twice as large as five years ago and that the Greek state is bankrupt.<br />Furthermore, the loose budget constraints have worked against the re-adjustment of relative prices. By conducting capital and hence investment demand from north to south, the ECB's OMT program and other rescue operations have dampened both the inflationary forces in the north as well as the deflationary forces in the south.<br />Even after six years of crisis, the realignment of relative prices of Italy, Portugal, and Germany has been infinitesimal. In terms of the GDP deflator, only Greece and Spain have devalued by 7 percent or 6 percent, respectively, relative to the rest of the Eurozone, but that is clearly not enough. <br />If the ECB stops luring savings capital from north to south and gives up its "whatever it takes" philosophy, markets would by themselves bring about the necessary realignment by inflating the northern European countries. In particular, the current German construction boom, a result of investors' attempts to shield their wealth in turbulent times, would be rekindled and lead to higher wages and prices in Germany, boosting German imports and undermining the competitiveness of its exports, thus driving the Eurozone back towards an equilibrium of relative prices. That is a neoclassical recipe for a neoclassical problem and the neoclassical therapy should be flanked by institutional reforms in Greece. The reforms I have in mind are those which according to Acemoglu and Robinson would lead to “inclusive” institutions. That takes time and in the meantime the Drachme as an parallel currency would be helpful.<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-7188151327008042202015-07-02T17:15:53.692+00:002015-07-02T17:15:53.692+00:00Simon:
And why aren't the Greeks doing all th...Simon:<br /><br />And why aren't the Greeks doing all that? Then everything would be hunky-dory.<br /><br />Is the Swabian housewife on to something?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-54712801722328360372015-07-02T16:03:40.877+00:002015-07-02T16:03:40.877+00:00SW-L claims that more demand inside Greece will en...SW-L claims that more demand inside Greece will enable the Greek government to collect more tax and thus repay creditors. (Para starting “From a macroeconomic viewpoint…”) Nope. More demand inside Greece would suck in imports which would make Greece even more indebted to other countries or to banks and non-bank entities in other countries.<br /><br />The extra demand will of course enable the Greek government to collect more tax off the Greek private sector, but that’s just a re-arrangement of wealth or money WITHIN Greece.<br /><br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2546602206734889307.post-76184160653337432912015-07-02T15:26:38.615+00:002015-07-02T15:26:38.615+00:00Play fair! What about a "don't know"...Play fair! What about a "don't know" or "none of the above" option? Simonhttps://www.blogger.com/profile/01453060744510427275noreply@blogger.com