All I really “get” about this issue is that Greece going down would bring down the entire world economy with it, and that it happening has at least some inevitability to it (IIRC, some have called these latest actions above “kicking the can down the road” - I think I read somewhere that someone else, dunno who, characterized it as “kicking the can down the road after filling it with explosives”).
So is there any reasonable way out for the world economy (reasonable in the sense of “there’s the will for it to be done amongst those with the power to do it”)? Or are we all just doomed?
If the big boom happens, when do you think it’ll go? I know the President is hoping it’s at least mid-November (given that such would probably utterly end any hopes of his being reelected no matter who’s up for the Republicans, right?), but who knows?
Paul Krugman talks about the severe damage he believes austerity measures are causing the Greece (and Ireland). There are ways out, but the people bankrolling the European “bailouts” (primarily the Germans) are illogically pro-austerity. If Ireland violence ends up like Greek violence, and it’s well on its way, maybe they will change their minds.
As dysfunctional governments go, all of the sudden American bailouts look pretty smooth, eh?
Krugman’s pretty lax with other people’s money (he’s also consistently wrong, or rather misses the point, about the austerity budget in the UK, but that’s another issue). When he dismisses an austerity budget in Greece, what he’s really saying is that functional northern European economies should send Greece yet more money that they’ll likely never see again to shore up the gigantic public sector (25% of Greeks employed by the state, and there has not yet been a single Greek public sector worker laid off — every redundancy has come from the private sector) and the Greek’s spending like there’s no tomorrow.
For one, there’s an element of moral hazard involved: Greece to some extent is being made an example of for other Eurozone economies (e.g. Italy). Further, the idea that if we just get Greece growing again, we can sort out the economic mess there in due course is illusory. Greece has been an economic basket case for ages. Without holding them to gunpoint, there’s likely no way to get the Greeks to reform. (This ignores the argument that the northerners are trying to force Greece’s hand in leaving the Eurozone and EU of their own accord.)
Whenever I hear that “kicking the can down the road” thing now, I can’t help thinking of Road Runner cartoons. I imagine the road leading off the edge of a canyon. I think we are at the point where Wile E. Coyote is running in mid-air before accepting that there’s nothing underneath him.
Yes. Not for Greece, but for the rest of the Euro-zone. The plan as far as I can see is to buy time until the Greek default. Time that shall be spend on strengthening the other nations and the big banks so that when Greece does go bankrupt it will not bring them down with it. This part is progressing satisfactorily. Italy and Spain have carried through wide-ranging economic and labour reforms that will put them in a better position over the coming years. So have many other Euro-nations. And in fact, with a 70% haircut, Greece already went bankrupt, everybody just decided to call it something else. I don’t think a complete default at this time will do much damage outside Greece.
Are you being ironic? It is hardworking German industrial workers being taxed to help pay for Greek corruption and tax-evasions. Of course they want it to stop. I too would like to stop paying tax, and have my German friends do it for me. Especially if I can scream at them afterwards and call them Hitler-Nazi-Whores.
I think the solution is more or less what’s being done (albeit with a lot of kicking and screaming), have the EU cut the Greeks a check to cover their deficits. People say its “kicking the can down the road”, as if its a temporary strategy and at some point there’s going to need to be some reckoning and some permanent solution will be needed, but really if you kick the can down the road enough times, eventually you have to admit that that that is your permanent strategy.
And I don’t think its that bad a strategy. The pessimistic projections I’ve seen is that it will cost something like 200 billion Euro over the next decade. 20 billion a year for a 12 trillion euro a year economy isn’t so large a bill to foot, especially given the likely costs if it isn’t done and Greece is allowed to collapse.
Seriously, you really have to go there (Greece, not Germany) and live for a while to see how screwed up society is - culturally and economically (of course, viewed from Canadian perspective). And it’s not just Greece. There are a number of countries in Eastern and Southern Europe who simply have different habits and elect Governments (left or right) who are unable to move society closer to a functioning model of North-Western Europe. The gap existed for centuries and all indicators show it will stay for a while.
Also, I totally get how uneducated columnist like Krugman would offer “different way”. But if he knew anything about Germany he’d know that his solution to “illogical austerity” does not have any basis in German reality. But, Krugman is probably writing for US readers so I get it in that sense (as in, we - US - are so much more compassionate). He forgot (if he even knows) how money supply works in Germany.
Why don’t the Germans just buckle down and pay? To me, it is part of being the economic power in Europe. It is like what they faced 16 years ago (they bought East Germansy). Yes, it cost them over $800 billion-but it HAD to be done. Europe cannot thrive with Greece in its current situation-so keep on working and paying taxes.
the thing is, Greece will never reform itself, as long as others keep paying their bills. So the whole thing has to stop-liquidate Greece and end the discussion.
Doesn’t the second half of your post answer the first half? Why throw good money after bad?
Besides, Germany has become the economic powerhouse of Europe for a reason: unions and government have kept wages and public spending under control over the last decade after going through their own patch as the “sick man of Europe”. Why should they now pay for the profligacy of others who are completely unable to run an economy effectively and seem to be completely unrepentant (notice the complete dearth of credible ideas for how to move their economy forward coming from Greece itself)?
The guy is a Nobel prize winner and a Professor of economics at Princeton. The newspaper column is basically a job he picked up. His Nobel prize was won for his work in international trade. It’s fair to say he knows more than the average layperson about German economics, even if you disagree with his conclusions or thinking.
It’s ok to disagree with his thinking but to call him “uneducated” or to call into question his bona fides in the German economic situation is very much at odds with reality.