Iceland ain’t Greece. Iceland wasn’t as financially screwed as Greece had become and it appears that Iceland has made more of an effort to get itself back on a sound financial footing.
Following your line of reasoning, people shouldn’t talk about the situation in Greece.
They are doing it out of the idea that Greece needs to suffer for its economic sins. Austerity has no *rational *basis. It’s the latest round of the idea that poverty is a sign of moral failure that needs to be punished.
Krugman is careful to note that Greece is the example of where the government, not the banks, caused the problem. The banks helped, but the fault was with the government.
In any case EU-wide austerity is causing EU-wide problems. If we cut Greece out of the picture entirely, the situation doesn’t look much better. The Greek economy is not that big.
But it is clear that the austerity forced upon them so far hasn’t helped. Not to improve the economy, not to get the structural reforms required implemented.
Good point. Suppose Greece decides to implement austerity by laying off schoolteachers and increasing class sizes to compensate, eager to save the money that they would have paid in salary. Now, you have a bunch of out-of-work schoolteachers who are no longer paying taxes but are now costing the government in welfare payouts. Due to the increasing costs of welfare, the government decides to mothball a few navy destroyers and send the sailors home. Now, you have a bunch of unemployed sailors collecting welfare. With welfare costs rising and tax revenue dropping, the government decides to ramp up austerity by cutting back on road repair. Now you have a few hundred or maybe even thousand road workers who get socked in their paycheck due to reduced hours and maybe even layoffs. They go on welfare. The government doesn’t know why their country is so messed up. Why can’t all these lazy people go get jobs? Maybe we need some more austerity.
Massive banks in Germany and France loaned Greece far more than they had any reason to because they would never have to fear Greece devaluing it’s currency and instead would get their money back with interest when bailed out by wealthier governments avoiding a default on the loan. I’d say that’s a little farther in than ‘helping’. They helped like a Gettaway Driver helps.
This wasn’t an accident, this was a glaringly large loophole in the entire economic system. This wasn’t a failure of government, this was invested interests letting the powerful steal with both hands.
Again, bullshit. Austerity, defined as cutting spending and increasing revenue absolutely has utility in some instances. It’s simply not a silver bullet that is good for every situation…just like increasing spending by the government to spur a flagging economy is good in some situations but not in all situations. Your absurd idea that this is all about purposely causing pain to the Greeks and has no other basis is, as with most of your views on politics, simply ridiculous. Grow up…there is a broader world out there than your narrow little black and white view.
Well Tsipras has started out strongly - he won’t wear a tie until the Greek debtis renegotiated!
And his first official act as Prime Minister was to lay a wreath at the site of a German massacre from WWII.
Hahahaha. You’re a hoot. Neither Germany, or any other nation, owes Greece a functional government, or a working tax system. Greece can chose to work with governments that have proven that they know how to get the job done, or Greece can go back to doing whatever they were doing when their financial roof caved-in on their heads.
It’s not just “another name”.
A sovereign haircut is a default. By definition. They’re not fulfilling their obligations, so it’s a default. People call it a “haircut” to indicate that the default is not a 100% repudiation of the debt, which is actually rare. The word emphasizes that some cuts are steeper than others. According to at least some research, sovereign defaults with higher haircuts can cause more long-term damage.
This isn’t the only definition of “haircut” in finance, but in the context of default, the meaning is clear. A sovereign haircut is a default. The question is the size of the default.
It’s worth pointing out, too, that Iceland has its own currency.
Although really, the Greek economic problems are so bad, having their own currency might not have helped. “Massive inflation” is nearly always a good prediction for a country so poorly governed.
Drachma.
I have to admit, I’m intensely curious to see what would happen if Greece got bounced from the eurozone.
I speak purely in the interest of science.
Except some of these schoolteachers, sailors and road workers emmigrate abroad; some take jobs as road sweepers; all eventually die off. There is never a good time to implement austerity. If I thought for a second that austerity would be implemented during the good times then I would be more inclined to call for less of it today.
Then why are you trying to shout down their best chance for saving more lives?
Let’s say, for example, that you are dealing with a deadbeat dad. You can either argue that he should go to jail, or that he should stay free. If he goes to jail, the mom will have to work and the five children will be cramped into a single room, with poor light, insufficient nourishment, and they’ll grow up stunted, with poor health, and a shortened lifespan. If the dad stays with the family, he will spend all the money he can, gambling, getting drunk, etc. He won’t let the wife work, and when he catches her saving money so that she can keep the family alive, he beats her. He molests his own children, and will probably end up killing at least one (if not more) of them. The children who survive will grow up stunted, with poor health, a shortened lifespan, unable to do much physical labor due to poorly healed bone fractures, and suffering PTSD.
Now you could make the argument that dad is a larger earner than mom, so he’s doing a better job of growing the economy. But since the size and growth of the economy isn’t relevant to the situation, making that argument is just being obtuse and making a bad situation worse.
Yes, in a fantasy, Authoritarian god-emperor sort of world, you could go in and cast a spell on dad, changing his personality into that of a benevolent, caring sort. Or in a non-fantasy, Authoritarian god-emperor sort of world, you could hire people to watch dad all day and make him behave well. But that’s not a solution that’s anywhere on the horizon. Delusions of a perfect world, ruled by you, aside, the only options that are on the table are “dad in jail” or “dad blowing his stash and beating his kids”. Neither is good, but arguing that Keynesian economics dictates that we should let dad stay with his family is not just stupid, it’s cruel.
Why would I? It’d be a bit tricky for me to drive north if they leave, but frankly I couldn’t care less if Georgia remains part of the Union (with the possible exception of the NFL divisional realignment that might be required if the Falcons decide to stay in Atlanta.)
In any case, Greece is a wholly sovereign and independent state. Georgia is not.
It has been an ideal since the end of WW2 that Europe finally put their nationalist tendencies to rest and unify as a singular political entity.
Greece leaving the EU would signal a failure of sorts for that dream to come to fruition.
They’re talking about leaving the common currency, not the EU.
That’s the paradox of the single currency. So far it is responsible for increasing nationalist tendencies on the continent.
Right. They had that additional degree of freedom in what moves could be made. Plus IIRC, in the course of Iceland’s banking-sector meltdown (where a bunch of bankers went to jail, mind you), the legitimacy of the state itself was not put in question, and the general populace was in better economic and social shape to begin with so they could absorb the hit better.
Score another victory for wide-eyed liberalism.
Score another victory for jingoistic threadshits.
Come see the irony inherent in the system…help, HELP! The thread is being digressed!!!
A lot of ideas sound great on paper. Except this piss-shit excuse for a rebuttal.
You disagree that the unified currency is contributing to nationalist tensions? That the Germans are more than happy to fork over billions of Euro to the insolent Greeks? That the Greeks love the embarrassment of being their big brothers’ lapdog? All under the happy baby-boomer banner of “At last! A united Europe!”
Please, enlighten us. Your contribution thus far has been…short and insufficient.