Being in the Eurozone means they can’t deal with their own problem in the traditional way - devaluation of their currency to make their product more attractive.
How much do you want to bet that this deal fails to get the support in Parliament… Tsipras seems to have basically capitulated on all fronts.
What we have is more austerity; is that not the thing which started this whole mess in the first place.
I think the Greek Parliament will be made to understand that the choice is between this deal and dropping Euro and declaring bankruptcy. I am pretty sure EU is not going to tolerate any more clowning from either the Greek PM or from the Greek Parliament.
We can bet bragging rights. I think the Greek parliament will have to accept whatever deal they can get at this point because anything else will see their entire economic system collapse. They are out of time and their banks are running on empty and at the point of collapse sometime this week or early next at the latest.
The real sticking point I see is the German government and voters, to be honest. This is going to be hard for the German voters to swallow. There are a few other governments that might balk as well. What a freaking mess this is. :smack:
Well I personally am not going to bet on German or Greek politics, as I basically know nothing about it.
Yes. Yes. Very much so. Thank you.
My point was that temporary fiscal stimulus was plausible. Contrary to some of the old Republican commentary whose attitude was, “Ha! Like that would ever happen!” But happen it did. Temporary stimulus spending is politically plausible in the US. I would argue it always has been.
Can you direct us to some of that Republican commentary?
What do you mean by politically plausible? The stimulus spending was wasted, and while the deficit may have come down the debt it created certainly didn’t.
Once in 70 years with considerable backlash in public support is far from a ringing endorsement of plausibility.
It was possible because we could afford it and we were facing a depression. The American public cares a great deal about piling up debt. Stimulus will go the wayside for another generation or two.
So you agree that stimulus can be temporary? Because I understood upthread you were skeptical of that concept.
You can get any number of analyses, which my simple table above refuted. Here are two:
Debt has nothing to do with whether spending can go up, then down. Whatever the funds are spent on, they add to aggregate demand. You have not substantiated your claims anyway. Thank you again though for conceding my point upthread.
Stimulus programs were typical in recessions prior to 1990. Hell, the Bush tax cuts were sold as a mechanism for addressing recession.
OK, back to Greece and its comic tragedy:
From BBC:
“civil servants called for a 24-hour strike on Wednesday.”
You really can’t make this stuff up.
At this point, is anyone going to notice?
“We aren’t going to accept any bribes on Wednesday”.
Don’t feel too bad; you’re giving it your best shot.
I’m [del]half-expecting[/del] three-quarters-expecting the Greek parliment to boot Tsipras out of the PM’s seat within the next couple of days. Shit, if Obama had come back with a deal a fraction as bad as this, Republicans would be lining up to impeach him, and Democrats would be helping him pack.
Of course stimulus spending can be temporary.
What I said above is that the stimulus spending creates a “new normal” level of spending, against which future levels of spending are measured, and thus permanently raises the level of spending. I noted that the Obama administration has claimed success in cutting the deficit by using the stimulus-level of 2009 as the point of comparison. That’s not the same thing as saying it can’t be temporary.
If the deficit is $400B, and you raise it to $1,200B, then even $600B can be depicted as disciplined budget cutting, while in reality even the original $400B may have been too high.
I’m not sure of the details of the various spending components, but the first link (I’m having trouble with the second) is not off base with the Medicaid spending issues. The fact is that the ACA pumped a lot more money into the Medicaid program, although it doesn’t show up in the deficit because it’s offset by increased taxes.
It’s important in this context to distinguish between deficit specifically and spending. These critics were claiming that spending would be permanently elevated, not that their couldn’t be taxes which would offset their impact on the deficit.
Fotheringay-Phipps : I feel that we’re having a reality-grounded discussion, which is good. I agree that there’s probably something to what you are saying. I’m most comfortable making a mild argument along the lines of, “It ain’t necessarily so.” While large deficit numbers presumably make some sort of cognitive impression (reasonable point), I’ll also note that this effect didn’t stop Bill Clinton from achieving a budget surplus during the late 1990s. I could also argue the opposite case that just because I’ve shown something plausible in the US, it doesn’t follow that the same political patterns would apply to Greece. In fact, that seems unlikely on its face.
(Also, I’d say whether deficits are “Too high” or “Too low” is best determined by observing their shares of GDP. But that’s a tangent. )
As for Federal spending, as a share of GDP it’s hard to see its allegedly addictive qualities during the 1990s when it generally declined. But the fact remains that there is in fact a fair degree of inertia in governmental programs. The addictiveness of federal spending is a reasonable question for research.
Chart: Spending as a share of GDP. You can see the decline during the 1990s, and the bump (up then down) during the Lesser Depression: Federal Spending and Revenue as a Share of GDP
Can we now change the subject to"The IMF voted against the bailout. Fuck them"?
That’ll be the same Irish who, after rejecting the Euro in one referendum, voted for it after the EU threw them a lot of sweeteners will it?
Which is a perfect example of how complicit the main EU players are in this mess.
They wanted Greece in, they knew they couldn’t possibly conform to the financial criteria so there was a joint cooking of the books and plenty of selective deafness/blindness.
None of that is a secret and was widely covered at the time.
The thinking being that Greece’s insolvency would never be exposed…whoopsy!
Greece aren’t blameless, they could have said no at any point but let’s not pretend that they weren’t lead down the garden path by France and Germany with promises sweet nothings.
Well, now it has collapsed around their ears and this “agreement” does absolutely nothing to solve the problem in the short terms and merely delays further bailouts (as pointed out by the IMF) in the hope that decision time never comes and something else comes along to distract.
One thing you can be sure of, this failure will be used by the federalist euro wing to argue for faster and more complete political and financial integration, even though it was indecent haste to push through the current model that brought us to this position in the first place.
If I was a Brit, I would be looking to replace Nelson’s column with that of John Major right now.
You chaps dodged a Battleship shell.
Fair point. But there are exceptions to everything and the particular economic and political dynamic at that time was condusive to that. Besides for the economy growing pretty decently, for most of that time Clinton was facing opposition control of congress from a group that had swept into power by promising fiscal responsibility. This put a damper on spending growth and allowed revenue to catch up. But you can’t always count on the stars aligning like that.