tag:blogger.com,1999:blog-8764541874043694159.post2965733290999446868..comments2024-03-28T07:33:46.151+00:00Comments on Coppola Comment: A New Deal for GreeceFrances Coppolahttp://www.blogger.com/profile/09399390283774592713noreply@blogger.comBlogger42125tag:blogger.com,1999:blog-8764541874043694159.post-8647175627838949562015-07-08T15:05:42.236+01:002015-07-08T15:05:42.236+01:00I don't think there is the political will acro...I don't think there is the political will across the EU for the type of fiscal transfers that would be necessary. So sadly I think the euro project going to be restricted to countries prepared to tie there economies to the German economy (and suffer the consequences fiscal austerity and internal devaluation when in recession). <br /><br />For Greece this is going to be a disaster either case such as the size of the debts. Indeed I still think that being tied to essentially a German currency and avoiding hyper-inflation is probably the lesser of two evils (if politically feasible).Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-19759971510752608262015-07-08T13:44:35.411+01:002015-07-08T13:44:35.411+01:00Well I'm glad that we are rowing back from ext...Well I'm glad that we are rowing back from extreme positions - which are usually less than useful - I'll hope to do the same here.<br /><br />My point would be that Greece is only being offered all stick and no carrot. Of course there have to be structural adjustments within Greece - and Syriza was elected to do just that - to break with the old clientelism of Pasok and ND. But these take time and investment. And therefore Greece needs relief from austerity and some form of Marshall plan in order to take steps towards recovery. The outcome of the big stick can only be negative - the further immiserisation of the Greek population - and to what end? Debts that the IMF confess will never be repaid. Punishment in this case is counter-productive - unless you like the idea of punishment.<br /><br />Regarding the other poorer nations - well they should be getting more help as well. We keep hearing about the "success" of austerity - but Spain has 50+% youth unemployment, Latvia suffered a huge outflow of its young intelligentsia - these "successes" exist largely in the minds of "serious people" only.<br /><br />The point being that there is a design flaw in the eurozone. You can't have a currency union without fiscal transfers. Otherwise we are all just waiting for the next poorer nation to be the next victim of a structural problem.<br />gastro georgenoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-12139058478192316332015-07-08T12:39:57.551+01:002015-07-08T12:39:57.551+01:00Central Banks are currency issuers. Suffering loss...Central Banks are currency issuers. Suffering losses in the currency they issue is meaningless to them, and handling unpaid debt need not involve transfers to ECB, as paperwork suffices. I expect we will soon witness that.<br /><br />I won't claim the original Irish or Greek deals made sense for either, but I will suggest that any Irish envy towards Greece is deeply misplaced.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-18409885233236368132015-07-08T12:02:49.439+01:002015-07-08T12:02:49.439+01:00Firstly I agree that there is anti-Greek racism. I...Firstly I agree that there is anti-Greek racism. I hope that we can agree that crass generalisations about groups of people of any background are not helpful! <br /><br />Secondly you seem to have (deliberately?) misread my last post. Obviously I support an inclusive society. Obviously I think a government should invest in all its citizens. However governments also need to have the ability to apply sanctions (primarily as a deterrent to those who many on the cusp of a life of crime). Its why we have jails and a police force! <br /><br />The implication of your post is that it should be all carrot and no stick. This simply isn't feasible when dealing with citizens of countries or unions of nations. There is an argument that perhaps more "carrot" should have been applied to Greece before "wielding the stick" but that's not the same as the argument you have presented. <br /><br />Indeed going back to the original post you commented on, if you think more "carrot" should have been applied to Greece then how would you justify this spending to poorer (and less nationalistic) countries in the EU. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-69296415199372754702015-07-08T10:37:18.374+01:002015-07-08T10:37:18.374+01:00Doubly ironic considering the amount of anti-Greek...Doubly ironic considering the amount of anti-Greek racism ...<br /><br />"I suspect a government would either seek the power of arrest, make the teenagers pay themselves or exclude them from the country!"<br /><br />You see I think that this reply is an excellent demonstration of the current problem. One would think that, if you wanted to exist in an inclusive society, that you would be willing to invest in the futures of all of your population. Yet this is your recipe for both Greece and black kids. Jail them, make them pay or kick them out.<br />gastro georgenoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-31470598418475882442015-07-08T10:28:49.268+01:002015-07-08T10:28:49.268+01:00@gastro george
Very silly comment (and the use of ...@gastro george<br />Very silly comment (and the use of a racist example is deeply ironic given the level of anti-German racism coming from elements of the left at the moment). However let work with your dumb analogy for a moment (although I'll rephrase it as "troubled teenagers" for my own sanity).<br /><br />For your analogy with Greece and the EU ,,,, and troubled teenagers and the government to work: - <br />- The troubled teenagers would somehow have to exist outside the framework of government control (e.g. the government have no powers of arrest over them) <br />- would have to be very expensive for the government in terms of the bills they run up. <br /><br />I strongly suspect most government would struggle to deal with such people. I suspect a government would either seek the power of arrest, make the teenagers pay themselves or exclude them from the country!<br /><br />So going back to Greece which is it: loss of sovereignty, austerity or exclusion from the EU/Eurozone.... Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-222821783579105802015-07-08T00:59:10.590+01:002015-07-08T00:59:10.590+01:00... which rather leads back to the second point. W...... which rather leads back to the second point. Why should the rest of the Eurozone pay for developing a Greek industrial base (by cancelling all its debts - which essentially amounts to a fiscal transfer). If the argument is about "getting growth" then surely there is a argument that money could just as easily be spent developing industries and encouraging growth in other EU countries (e.g. the Baltics to Romania which are all currently poorer than Greece - in terms of GDP per capita). <br /><br />What have Syriza done to convince the rest of the EU that an investment in Greece would be sensible anyway. As far as I can tell Syriza have been sending out some rather bellicose socialist and nationalist messages indicating that they are at best lukewarm about reforms. The fear is that any debt forgiveness would be forgotten (and the country would return back to its cronyist old ways). If Syriza were successful then others with nationalist or hard left agendas in the EU would surely copy them and the whole organisation would fall apart pretty quickly (serving no good for anybody - that is if you think - as I do - that the EU is broadly a good thing). <br /><br />Frankly I think its got to the point where Greece doesn't back down then it has to leave the Euro (for the sake of the whole of the EU). Sadly I don't share your optimism about a "Euro-free" Greece. I fear that the benefits of cheaper labour (from devaluation of the new Drachma) will more than be offset by an unstable currency, political instability and emigration (of the brightest and best) Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-84495506490734228782015-07-07T21:57:03.276+01:002015-07-07T21:57:03.276+01:00They do if you are a eurozone taxpayer who will ha...They do if you are a eurozone taxpayer who will have to shoulder the ECB's losses. Why should an Irish taxpayer have to pay extra tax, so the Greeks can get a deal that Ireland wasn't given?Sobershttps://www.blogger.com/profile/11407417389022146963noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-89597950214938293162015-07-07T21:33:10.803+01:002015-07-07T21:33:10.803+01:00Things getting better in Greece do not harm you.Things getting better in Greece do not harm you.Randomhttps://www.blogger.com/profile/04445772572707818311noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-79004018224154550642015-07-07T20:11:52.844+01:002015-07-07T20:11:52.844+01:00The Great Depression in Germany provided a politic...The Great Depression in Germany provided a political opportunity for Hitler. Germans were ambivalent to the parliamentary republic and increasingly open to extremist options. In 1932, Hitler ran against Paul von Hindenburg for the presidency. Hitler came in second in both rounds of the election, garnering more than 35 percent of the vote in the final election. The election established Hitler as a strong force in German politics. Hindenburg reluctantly agreed to appoint Hitler as chancellor in order to promote political balance.<br /><br />Hitler used his position as chancellor to form a de facto legal dictatorship. The Reichstag Fire Decree, announced after a suspicious fire at the Reichstag, suspended basic rights and allowed detention without trial. Hitler also engineered the passage of the Enabling Act, which gave his cabinet full legislative powers for a period of four years and allowed deviations from the constitution.www.MiguelNavascues.comhttps://www.blogger.com/profile/00880006105532291958noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-61822354956056045792015-07-07T20:08:21.775+01:002015-07-07T20:08:21.775+01:00http://www.biography.com/people/adolf-hitler-93401...http://www.biography.com/people/adolf-hitler-9340144#rise-to-powerwww.MiguelNavascues.comhttps://www.blogger.com/profile/00880006105532291958noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-20175937840680361782015-07-07T20:06:10.490+01:002015-07-07T20:06:10.490+01:00Greece has both fiscal surplus AND growth targets,...Greece has both fiscal surplus AND growth targets, and the IMF's analysis shows that if either target is missed debt becomes unsustainable. Therefore GDP contraction does not solve the problem. <br /><br />I would remind you that Greece has already suffered a 25% contraction of GDP. How far do you think it should fall?Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-3336230134130983662015-07-07T19:58:14.158+01:002015-07-07T19:58:14.158+01:00"But if the private sector is unwilling/unabl..."But if the private sector is unwilling/unable to take on debt and the external sector does not go further into surplus (or remains in deficit), then the fiscal surplus can only be maintained at the price of GDP contraction."<br />Yes, exactly. So, GDP contraction make possible external surplus. I repeat: this is just the reason of the Spain' surplus: the contraction of GDP. What's new?www.MiguelNavascues.comhttps://www.blogger.com/profile/00880006105532291958noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-68772217215018225982015-07-07T19:52:21.857+01:002015-07-07T19:52:21.857+01:00Yes he did. After he crush the law. Your sources a...Yes he did. After he crush the law. Your sources are wrong. But in any case, Syriza is a communist party allied with a nazi one. Ce n'est pas une blague www.MiguelNavascues.comhttps://www.blogger.com/profile/00880006105532291958noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-73863788395818290992015-07-07T18:25:14.623+01:002015-07-07T18:25:14.623+01:00Er, no he didn't: https://en.wikipedia.org/wik...Er, no he didn't: https://en.wikipedia.org/wiki/Reichstag_fireFrances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-66872993904185483762015-07-07T18:22:41.374+01:002015-07-07T18:22:41.374+01:00No mistake.
1) Assuming GDP remains constant, if...No mistake. <br /><br />1) Assuming GDP remains constant, if fiscal surplus is sustained then private sector deficit and/or external sector surplus must rise<br /><br />2) But there are growth targets too, so for fiscal surplus to be sustained private sector deficit and/or external surplus must rise CONSIDERABLY<br /><br />3) If the private sector is unwilling/unable to take on debt, then as long as the external surplus is increasing the fiscal surplus may be maintained without GDP contraction<br /><br />4) Similarly, if the external sector fails to go further into surplus but private sector is willing & able to take on debt, the fiscal surplus may be maintained without GDP contraction<br /><br />5) But if the private sector is unwilling/unable to take on debt and the external sector does not go further into surplus (or remains in deficit), then the fiscal surplus can only be maintained at the price of GDP contraction. <br /><br />6) In practice, if the private sector will not borrow and the external sector remains in deficit, neither the fiscal surplus nor GDP growth can be maintained. So we would continue to have missed targets. <br /><br />I did not want to dwell on the sectoral balances arithmetic in this post. I have written about it many times before. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-59753731406906303412015-07-07T18:10:04.050+01:002015-07-07T18:10:04.050+01:00Sorry, there is a mistake. You use identity and af...Sorry, there is a mistake. You use identity and after you elude it. Along your argument, a fiscal surplus determines a external surplus and/or a private deficit. Little after, you said that neither the first nor the second is probable (for economic reasons). Contradictory, isn't?www.MiguelNavascues.comhttps://www.blogger.com/profile/00880006105532291958noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-42860475014909794862015-07-07T18:02:39.280+01:002015-07-07T18:02:39.280+01:00Hitler won Governmemt democratically. Democracy is...Hitler won Governmemt democratically. Democracy is not just to vote. www.MiguelNavascues.comhttps://www.blogger.com/profile/00880006105532291958noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-91954971085497798612015-07-07T17:26:14.105+01:002015-07-07T17:26:14.105+01:00I would add that building an industrial base from ...I would add that building an industrial base from almost nothing is also all but impossible without investment. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-80660741224485960402015-07-07T17:24:46.572+01:002015-07-07T17:24:46.572+01:00You don't think that 25% fall in GDP, 27% unem...You don't think that 25% fall in GDP, 27% unemployment and 50% youth unemployment is a painful adjustment? How high would unemployment have to be for it to be "painful", then?<br /><br />Greece has made considerable reform effort already. Much more is needed, and the problem is that the "low hanging fruit" have mostly been plucked.The need now is for radical institutional reform - legal system, judiciary, tax collection and so on - which is really hard to do in a badly damaged economy with no inward investment and no creditworthiness. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-51603868964984923372015-07-07T17:20:19.304+01:002015-07-07T17:20:19.304+01:00I struggle to understand how holding a referendum...I struggle to understand how holding a referendum is "crushing democracy". Sounds to me like your prejudices talking here. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-30866774691699606782015-07-07T17:18:49.958+01:002015-07-07T17:18:49.958+01:00Miguel,
I have made no mistake. The accounting id...Miguel,<br /><br />I have made no mistake. The accounting identity is as I describe. <br /><br />The factors you mention - exchange rate and competitiveness - are both influences on the external sector. This is currently in deficit and in my view is likely to remain so. Raising competitiveness is more than just a question of labour market reforms to cut ULCs: it also requires investment, something Greece sorely lacks and is not going to get while the sovereign is at risk of default and the banks at risk of insolvency. And the exchange rate dynamics are not positive for Greek exports. The Euro is far too high for it even with recent falls. Worth remembering that one of its principal export destinations is Russia, and the rouble has fallen far more than the Euro. <br /><br />Spain's balance of payments surplus was indeed due to demand fall not supply rise. I don't regard that as positive anyway, but in an economy which imports as many essentials as Greece does it's not going to happen. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-54384735314366718362015-07-07T14:38:03.013+01:002015-07-07T14:38:03.013+01:00New Deal for Greece:
Anybody looking for the dea...New Deal for Greece: <br /><br />Anybody looking for the deal of continued austerity (to placate the Germans) plus debt relief (to help the Greeks) should look at that proposal:<br /><br />https://radicaleconomicthought.wordpress.com/2015/07/07/how-to-negotiate-debt-relief/matt_ushttps://radicaleconomicthought.wordpress.com/noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-26438391419811573882015-07-07T08:40:40.490+01:002015-07-07T08:40:40.490+01:00More here http://www.miguelnavascues.com/2015/07/g...More here http://www.miguelnavascues.com/2015/07/grecia-al-microscopio-metedura-de-pata.html. I would say also that you have a terrible "penchant" for these neocomunist that are crushing democracy in Greece. <br />Keynes said that institutional framework is not irrelevant when we are talking about economy. www.MiguelNavascues.comhttps://www.blogger.com/profile/00880006105532291958noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-29622586783829823352015-07-07T08:31:24.617+01:002015-07-07T08:31:24.617+01:00Frances, you have commited a mistake in
"But ...Frances, you have commited a mistake in<br />"But even these new policy targets are unrealistic. For a sovereign to run a substantial primary surplus AND achieve positive growth, either the external sector or the private sector must be in deficit. This implies that either Greece must also run a substantial trade surplus or Greek households and businesses must take on debt. The second of these is highly unlikely: real incomes for Greek households are falling sharply, Greek businesses are understandably unwilling to borrow to invest and Greek banks have high and rising proportions of non-performing loans on their balance sheets. Greece must therefore run a substantial trade surplus to have any chance at all of meeting these targets. Frankly, given Greece's long-standing competitiveness problem, the damage to Greece's already weak supply side in recent years, and the fact that it is locked into the Euro at far too high a real exchange rate, the chances of this are very low."<br />The arithmetic of accountable identity is always done, independently of exchange rate, competitiveness, etc... Spain reach a BoP surplus because of the fall of intranet demand, which is just what Greece can get. www.MiguelNavascues.comhttps://www.blogger.com/profile/00880006105532291958noreply@blogger.com