Congratulations to Greece for the victory. I wish the best for Greece, Europe and the global economy.
I was in Greece on vacation last September, and it was one of the best experiences of my life. The people were so generous and kind. Strangers treated me like family.
Now the EU has to acknowledge that there is a humanitarian crisis on top of the fiscal crisis and start providing immediate humanitarian relief. This is an ethical obligation and will also provide much needed economic stimulus.
Unfortunately, Greece stays in the Euro. The current Greek economic depression will grow deeper, and the suffering of the Greek people will increase in a major way. The only way to cure the problem is to drop the Euro and default on the loans.
This should be a no-brainer. Ever since it got independence from Turkey, Greece has been a serial defaulter on loans. It owns the record for number of government defaults. Over-borrowing and default are built into the Greek culture. This will never change, unless immigration changes Greek culture.
The only question facing the Germans et al. is, Should we loan them more money? The humane answer is, No.
Over-borrowing and default are built into the Greek culture. This will never change, unless immigration changes Greek culture.
You don't say...
The only question facing the Germans et al. is, Should we loan them more money? The humane answer is, No.
Actually, populism holds sway in both Greece and Germany at the moment. Thankfully, Greece has averted this danger for the time being with the outcome of the last election.
Some Greek politicians/people don't want to reform the country or want to reform it in the wrong way (=more statism).
On the other hand, some German politicians/people don't understand that trade imbalances are not sustainable over the long run. If a country produces more than it consumes, then some other country must consume more than it produces.
There are only three ways to deal with this problem: fiscal transfers, loans, or investment.
Some level of fiscal transfers are necessary in a currency union because it is impractical for every region of the world to produce the same as every other (e.g., petrodollar states couldn't balance their trade even if they wanted to); the EU budget plays this role at the moment, but to a very small degree. Loans are useful in the short-term, but they exasperate the problem in the long term.
Only investment is a long-term solution: states that run trade surpluses must invest some of their profits to states that run trade deficits.
The current situation in the eurozone is a dead end because there is people/capital flight to the "center", and no investment in the "periphery". The "periphery" is propped up by loans which further drains resources there.
Ultimately, this scheme is bound to collapse unless there is a real European plan to do so that would involve: (i) creating a business-friendly climate in the periphery, and (ii) more investment of capital from the "center" in "periphery" countries.
That is the only "win-win" scenario; at the moment the "center" is doing well because of the aforementioned capital/people flight and the lowering of its borrowing costs, but as more and more countries in the "periphery" go bust, the onus on the "center" will increase, and ultimately everyone loses.
The euro zone crisis will cease when it finally dissolves. The euro zone was a failed experiment, and it will be recognized as such in the near future. There cannot be a single currency zone with nations of greatly differing economic structure and magnitude, in addition to unique social issues. Not to mention Greece entered the euro zone thanks to the collusion of her treasonous government with bankers of Goldman Sachs for the formation of fraudulent paperwork. Greece's territorial and ethnic integrity continues to be undermined by the E.U., Turkey, and her great ally, the U.S. It is due time for Greece to receive her rightful reparations from Germany and to claim her exclusive economic zone, which will aid her progression to a state of autarky.
Ultimately, this scheme is bound to collapse unless there is a real European plan to do so that would involve: (i) creating a business-friendly climate in the periphery, and (ii) more investment of capital from the "center" in "periphery" countries.
I agree 100%. German politicians have tried several times to bring investors to Crete, Rhodes, and the mainland - but the investors gave up because of all the red tape and unclear land ownership.
- land ownership data needs to be digitized and put in a national database - the central government needs to have more say over laws and regulations on the local level
However, the problem is that these changes need to be implemented within months, not years.
And, yeah - low government bond interest rates in Germany are not sustainable either way - so better use some of the advantage now to prop up the periphery countries, as long as the low rates exist.
Oh, and sorry for the other Euro exit - the Greek team fought well, but clearly didn't belong in the top four.
Stay on topic. Be polite. Use facts and arguments. Be Brief. Do not post back to back comments in the same thread, unless you absolutely have to. Don't quote excessively. Google before you ask.
Congrats, dienekes. Hopefully they won't have to play Germany...
ReplyDeleteGreece stays in the Euro...
ReplyDeleteLet's hope so, at least in the long run, regarding the currency. As to the other Euro, I may have conflicting national interests, shortly... ;)
Well, you're the euro-logist...
ReplyDeleteLOL!
DeleteDienekes all i can say its a very +ve choice by the Greek people but the real question is when and how (to you) will the Eurozone crisis end?.
Congratulations to Greece for the victory. I wish the best for Greece, Europe and the global economy.
ReplyDeleteI was in Greece on vacation last September, and it was one of the best experiences of my life. The people were so generous and kind. Strangers treated me like family.
Now the EU has to acknowledge that there is a humanitarian crisis on top of the fiscal crisis and start providing immediate humanitarian relief. This is an ethical obligation and will also provide much needed economic stimulus.
ReplyDeleteCongrats to Greece, as they've done better than anyone expected. Now, however, they face the German titan.
ReplyDeleteOne can't help but think of 2004 though...
Congrats to Greece on making the playoffs!
ReplyDeleteNow on to play Merkel's Germany next...
Speaking of things Greek, just discovered this awesome Greek band a few months ago.
Antaeus - Time:
http://www.youtube.com/watch?v=nZ2mtEAw92c
Unfortunately, Greece stays in the Euro. The current Greek economic depression will grow deeper, and the suffering of the Greek people will increase in a major way. The only way to cure the problem is to drop the Euro and default on the loans.
ReplyDeleteThis should be a no-brainer. Ever since it got independence from Turkey, Greece has been a serial defaulter on loans. It owns the record for number of government defaults. Over-borrowing and default are built into the Greek culture. This will never change, unless immigration changes Greek culture.
The only question facing the Germans et al. is, Should we loan them more money? The humane answer is, No.
Over-borrowing and default are built into the Greek culture. This will never change, unless immigration changes Greek culture.
ReplyDeleteYou don't say...
The only question facing the Germans et al. is, Should we loan them more money? The humane answer is, No.
Actually, populism holds sway in both Greece and Germany at the moment. Thankfully, Greece has averted this danger for the time being with the outcome of the last election.
Some Greek politicians/people don't want to reform the country or want to reform it in the wrong way (=more statism).
On the other hand, some German politicians/people don't understand that trade imbalances are not sustainable over the long run. If a country produces more than it consumes, then some other country must consume more than it produces.
There are only three ways to deal with this problem: fiscal transfers, loans, or investment.
Some level of fiscal transfers are necessary in a currency union because it is impractical for every region of the world to produce the same as every other (e.g., petrodollar states couldn't balance their trade even if they wanted to); the EU budget plays this role at the moment, but to a very small degree. Loans are useful in the short-term, but they exasperate the problem in the long term.
Only investment is a long-term solution: states that run trade surpluses must invest some of their profits to states that run trade deficits.
The current situation in the eurozone is a dead end because there is people/capital flight to the "center", and no investment in the "periphery". The "periphery" is propped up by loans which further drains resources there.
Ultimately, this scheme is bound to collapse unless there is a real European plan to do so that would involve: (i) creating a business-friendly climate in the periphery, and (ii) more investment of capital from the "center" in "periphery" countries.
That is the only "win-win" scenario; at the moment the "center" is doing well because of the aforementioned capital/people flight and the lowering of its borrowing costs, but as more and more countries in the "periphery" go bust, the onus on the "center" will increase, and ultimately everyone loses.
The euro zone crisis will cease when it finally dissolves. The euro zone was a failed experiment, and it will be recognized as such in the near future. There cannot be a single currency zone with nations of greatly differing economic structure and magnitude, in addition to unique social issues. Not to mention Greece entered the euro zone thanks to the collusion of her treasonous government with bankers of Goldman Sachs for the formation of fraudulent paperwork. Greece's territorial and ethnic integrity continues to be undermined by the E.U., Turkey, and her great ally, the U.S. It is due time for Greece to receive her rightful reparations from Germany and to claim her exclusive economic zone, which will aid her progression to a state of autarky.
ReplyDeleteUltimately, this scheme is bound to collapse unless there is a real European plan to do so that would involve: (i) creating a business-friendly climate in the periphery, and (ii) more investment of capital from the "center" in "periphery" countries.
ReplyDeleteI agree 100%. German politicians have tried several times to bring investors to Crete, Rhodes, and the mainland - but the investors gave up because of all the red tape and unclear land ownership.
- land ownership data needs to be digitized and put in a national database
- the central government needs to have more say over laws and regulations on the local level
However, the problem is that these changes need to be implemented within months, not years.
And, yeah - low government bond interest rates in Germany are not sustainable either way - so better use some of the advantage now to prop up the periphery countries, as long as the low rates exist.
Oh, and sorry for the other Euro exit - the Greek team fought well, but clearly didn't belong in the top four.