An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
Greeks that collect pensions at 50 are the hardest workers in Europe(?) People who agree with austerity (organized 'creative destructive' restructuring, a tenet of capitalism) for Greece are 'fascists' and 'oppose democracy'(?) Warren Mosler's solution for Italy (leave the Euro) and start anew, same for Greece, is wrong (?)
perhaps the politics are getting too mixed up with the economics (?)
Politics and economics are joined at the hip. Neoliberals would like us to think they are separate and the economies are self-regulating and self-adjusting, and that all outcomes are based on just deserts rewarding smarts and hard work proportionally.
What we are learning about Greece is that the debt put on Greece in the previous bailouts was odious and the creditors knew it was odious. The credit was granted to bail out the private banks and transfer the debt to government, whence it would be transferred not to the taxpayers of the core but rather of Greece and not the wealthy but rather the little people through higher taxes and lower benefits.
This was not economics working according to so-called natural laws. It was political shenanigans by people in power with conflicts of interest that acted unethically and probably illegally.
"organized 'creative destructive' restructuring, a tenet of capitalism"
There's nothing creative about destroying an economy through wrong-headed policies.
And Schumpeter's assertion that you need recessions or depressions in order to have 'creative destruction' (i.e. new products and businesses replacing old ones) is simply wrong.
I respectfully disagree...In 'Boomerang' by Michael Lewis, I read that it wouldn’t have been possible for Greece to join the Eurozone without falsifying its numbers to meet some requirements. There was fraud in how the Greeks presented what they were doing. The Greek citizens are just as culpable for bringing down the banks in 2008...
Fast forward to present, instead of making the hard choices, the unpopular reforms, and the needed organized 'creative destructive' restructuring to put Greece on the path to economic recovery right away, Greece’s policymakers took the easy route. Alexis Tsipras and former finance minister Yanis Varoufakis created the narrative that their own people’s borrowing, profligate spending, tax evasion, corruption, and wanting to collect pensions at age 50, which over decades has now nearly bankrupted the country, was not their fault at all, it was someone else’s fault. Greek policymakers conjured up bogeymen like the German ‘paymasters’ and ECB ‘blackmailers’, to distract the Greek people instead of doing the much harder job of leading them on a path to recovery...
In 1975, the New York Daily News printed the headline 'Ford to City: Drop Dead'. That was the perception, that President Ford was the bad guy, because in a speech he made the night before, he called for holding NYC's feet to the fire, some tough love, to fix their finances. The reality was that he actually signed legislation afterwards to provide federal loans to NYC, but it was that speech, albeit misconstrued, that galvanized New Yorkers and spurred them to clean up their act...
Thanx to learning about MMT from Mike Norman, contributors to this blog, and others (and agreeing with 95% of it), I can now understand that leaving the Euro and having the ability to issue currency once again would have been a quicker solution to recovery in Greece's case, but I hardly blame the ECB and the Germans for at least trying to help with a slower solution.
Edward Germany elites is not arguing for making the Greek competitive. They never have argued that about south Europe, they just want vassals.
They just want the same stupid policies that have been done over and over all over the world and never resulted in anything but destruction of economic activity.
It's demonstrated that on depressions investment tanks and progress stagnates. This is like arguing, that in the middle ages, when there was a plague, it was great for growth after the plague had ended and killed 25% of the population. Or that WWII was great for economic stimulus. OFC at some point you gotta hit the bottom and rebuild, but discounting all the damage and destruction of capital, and more importantly: of human lives, done before is stupid and wrong. Suicidal rates have sky-rocketed in Greece, massive child starvation is taking place (ffs we are in the XXI century), yet we are supposed to embrace it because some idiot had the idea that this was "creative destruction". Why don't those idiots go and shoot themselves in the head before spitting that bullshit.
This is the ordoliberal position, is pure non-sense based on a moralist agenda set on the premise that "we have to suffer for our sins here in earth", ofc is always other who has to do the suffering while they rake millions and buyout everything in a deflationary economy.
I don't know if you remember but there wasn't actually a public debt crisis in Greece before their interest rates suddenly shot up to ridiculous levels. The ECB was always capable of avoiding this from happening, and able to bring the interest rates down, but it chose not to for ideological reasons. Eventually the ECB decided to backstop the debt of other European countries, but continued to refuse to do this for Greece.
If Greece had had its own currency, and there had been a run on the government debt, the result would have been a depreciation of the currency which actually would have been good for the economy given the trade deficit at the time. Instead Greece was locked into a rigid monetary system, with a too-strong currency, and absurd interest rates at the mercy of international speculators given the intentional refusal of the ECB to stand behind Greece.
Creative destruction? I remember reading somewhere that without state aid of some sort almost all the largest corporations on the US stock market would have gone to the wall.
We now know that this is true in the past few years of the whole financial system and the car manufacturers. From previous years we know it's true of the aerospace industry. The agribusiness corporations begging bowl is overflowing with subsidies from the state. Other than local mom and pop shops, what's left?
Free markets are an absurd myth: there never have been free markets and there never will be. Anything approaching a free market usually implodes. To misquote James Galbraith: conservatives abandoned the free market and so should everybody else.
I respectfully disagree...In 'Boomerang' by Michael Lewis, I read that it wouldn't have been possible for Greece to join the Eurozone without falsifying its numbers to meet some requirements. There was fraud in how the Greeks presented what they were doing. The Greek citizens are just as culpable for bringing down the banks in 2008...
Uh, no. The Greek citizens did not make these decisions. The Greek oligarchs and their cronies in government did, and Goldman helped them cook the books to meet the entry standards. The eurocrats knew that Greece was not a fit member or an optimal currency zone, but they were more interested politically in Europeanization than actually creating an effective and efficient monetary union. I posted several articles from left, right and center that explained this back then.
The people were promised unending prosperity as a result of the currency union when it was obvious to anyone with half a brain that there was no mechanism to deal with demand deficiency and as a result the mechanism was inherently deflationary and would lead eventually to spirally debt deflation, which is where the EZ is now.
15 comments:
Greeks that collect pensions at 50 are the hardest workers in Europe(?)
People who agree with austerity (organized 'creative destructive' restructuring, a tenet of capitalism) for Greece are 'fascists' and 'oppose democracy'(?)
Warren Mosler's solution for Italy (leave the Euro) and start anew, same for Greece, is wrong (?)
We should short the dollar going into the June jobs number (?)
Obama is the 'Worst. President. Ever.' (?)
Don't' get me wrong, I'm a big Mike Norman Fan, but perhaps the politics are getting too mixed up with the economics (?)
Instead of teaching people 'to separate fools from their money', I wish Mike would veer back to teaching fools like me to keep it.
perhaps the politics are getting too mixed up with the economics (?)
Politics and economics are joined at the hip. Neoliberals would like us to think they are separate and the economies are self-regulating and self-adjusting, and that all outcomes are based on just deserts rewarding smarts and hard work proportionally.
What we are learning about Greece is that the debt put on Greece in the previous bailouts was odious and the creditors knew it was odious. The credit was granted to bail out the private banks and transfer the debt to government, whence it would be transferred not to the taxpayers of the core but rather of Greece and not the wealthy but rather the little people through higher taxes and lower benefits.
This was not economics working according to so-called natural laws. It was political shenanigans by people in power with conflicts of interest that acted unethically and probably illegally.
There is no such thing as economics. There is only politics.
Because economics is a social science about people interacting with each other in large crowds.
"Greeks that collect pensions at 50 are the hardest workers in Europe(?)"
The average retirement age in Greece is the same as in Germany. It's over 60.
Edward,
"organized 'creative destructive' restructuring, a tenet of capitalism"
There's nothing creative about destroying an economy through wrong-headed policies.
And Schumpeter's assertion that you need recessions or depressions in order to have 'creative destruction' (i.e. new products and businesses replacing old ones) is simply wrong.
re creative destruction:
http://equitablegrowth.org/2015/07/01/musings-monetary-economics/
I respectfully disagree...In 'Boomerang' by Michael Lewis, I read that it wouldn’t have been possible for Greece to join the Eurozone without falsifying its numbers to meet some requirements. There was fraud in how the Greeks presented what they were doing. The Greek citizens are just as culpable for bringing down the banks in 2008...
Fast forward to present, instead of making the hard choices, the unpopular reforms, and the needed organized 'creative destructive' restructuring to put Greece on the path to economic recovery right away, Greece’s policymakers took the easy route. Alexis Tsipras and former finance minister Yanis Varoufakis created the narrative that their own people’s borrowing, profligate spending, tax evasion, corruption, and wanting to collect pensions at age 50, which over decades has now nearly bankrupted the country, was not their fault at all, it was someone else’s fault. Greek policymakers conjured up bogeymen like the German ‘paymasters’ and ECB ‘blackmailers’, to distract the Greek people instead of doing the much harder job of leading them on a path to recovery...
In 1975, the New York Daily News printed the headline 'Ford to City: Drop Dead'. That was the perception, that President Ford was the bad guy, because in a speech he made the night before, he called for holding NYC's feet to the fire, some tough love, to fix their finances. The reality was that he actually signed legislation afterwards to provide federal loans to NYC, but it was that speech, albeit misconstrued, that galvanized New Yorkers and spurred them to clean up their act...
Thanx to learning about MMT from Mike Norman, contributors to this blog, and others (and agreeing with 95% of it), I can now understand that leaving the Euro and having the ability to issue currency once again would have been a quicker solution to recovery in Greece's case, but I hardly blame the ECB and the Germans for at least trying to help with a slower solution.
Edward:
A) You're not a fool.
B) Buy my Forex course on video. Here.
Edward Germany elites is not arguing for making the Greek competitive. They never have argued that about south Europe, they just want vassals.
They just want the same stupid policies that have been done over and over all over the world and never resulted in anything but destruction of economic activity.
It's demonstrated that on depressions investment tanks and progress stagnates. This is like arguing, that in the middle ages, when there was a plague, it was great for growth after the plague had ended and killed 25% of the population. Or that WWII was great for economic stimulus. OFC at some point you gotta hit the bottom and rebuild, but discounting all the damage and destruction of capital, and more importantly: of human lives, done before is stupid and wrong. Suicidal rates have sky-rocketed in Greece, massive child starvation is taking place (ffs we are in the XXI century), yet we are supposed to embrace it because some idiot had the idea that this was "creative destruction". Why don't those idiots go and shoot themselves in the head before spitting that bullshit.
This is the ordoliberal position, is pure non-sense based on a moralist agenda set on the premise that "we have to suffer for our sins here in earth", ofc is always other who has to do the suffering while they rake millions and buyout everything in a deflationary economy.
Edward,
I don't know if you remember but there wasn't actually a public debt crisis in Greece before their interest rates suddenly shot up to ridiculous levels. The ECB was always capable of avoiding this from happening, and able to bring the interest rates down, but it chose not to for ideological reasons. Eventually the ECB decided to backstop the debt of other European countries, but continued to refuse to do this for Greece.
If Greece had had its own currency, and there had been a run on the government debt, the result would have been a depreciation of the currency which actually would have been good for the economy given the trade deficit at the time. Instead Greece was locked into a rigid monetary system, with a too-strong currency, and absurd interest rates at the mercy of international speculators given the intentional refusal of the ECB to stand behind Greece.
Creative destruction? I remember reading somewhere that without state aid of some sort almost all the largest corporations on the US stock market would have gone to the wall.
We now know that this is true in the past few years of the whole financial system and the car manufacturers. From previous years we know it's true of the aerospace industry. The agribusiness corporations begging bowl is overflowing with subsidies from the state. Other than local mom and pop shops, what's left?
Free markets are an absurd myth: there never have been free markets and there never will be. Anything approaching a free market usually implodes. To misquote James Galbraith: conservatives abandoned the free market and so should everybody else.
I respectfully disagree...In 'Boomerang' by Michael Lewis, I read that it wouldn't have been possible for Greece to join the Eurozone without falsifying its numbers to meet some requirements. There was fraud in how the Greeks presented what they were doing. The Greek citizens are just as culpable for bringing down the banks in 2008...
Uh, no. The Greek citizens did not make these decisions. The Greek oligarchs and their cronies in government did, and Goldman helped them cook the books to meet the entry standards. The eurocrats knew that Greece was not a fit member or an optimal currency zone, but they were more interested politically in Europeanization than actually creating an effective and efficient monetary union. I posted several articles from left, right and center that explained this back then.
The people were promised unending prosperity as a result of the currency union when it was obvious to anyone with half a brain that there was no mechanism to deal with demand deficiency and as a result the mechanism was inherently deflationary and would lead eventually to spirally debt deflation, which is where the EZ is now.
Folks: Thanks for your comments...Interesting debate.
Mike: Done...I bought your Forex course.
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