Ongoing European Debt Crisis

Portugal almost reached that level. And we're not feeling safe yet, 5 or 6 months after leaving the austerity program (though I suspect we are still getting policies from Germany and the EU to continue similar 'keep squeezing the sponge' attitudes). The only thing that probably saved us from total collapse was through our exports (and other parts of our trade connections) to Brazil, Angola and other countries).

edited 11th Oct '14 6:21:48 AM by Quag15

Britain is still carrying on it's austerity program indefinitely, despite being the quickest-growing economy in Europe at the moment...

Keep Rolling On

"Quickest growing economy in Europe" is something of a Damned by Faint Praise statement these days. That's like saying Britain is the "least fatally injured" of the victims of a suicide pact.

edited 11th Oct '14 7:11:29 AM by Fighteer

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"

You mean the European Union?^note  The UK isn't part of the Euro — in retrospect one of John Major's better decisions UKIP will agree with you...

Keep Rolling On

I'd think the Euro is a better candidate.

"For a successful technology, reality must take precedence over public relations, for Nature cannot be fooled." - Richard Feynman

Paul Krugman and Brad DeLong talk shop about Euro Crisis 2: Electric Bugaloo: Euro Harder. They both basically lay blame at Germany for not giving the ECB enough authority and basically being pig-headed and not forward-thinking with regards to what might happen should Europe fall into a triple~quadruple dip recession.

Ultimately, that was stuff that was worked out during the The '80s.

Keep Rolling On

The second article is really offensive.

"Since the chronic crisis had a German origin–in the lending decisions of German banks–it is only appropriate that it have a German solution–adjustment via German fiscal expansion and via the implicit real debt writedowns generated by moderate German inflation should be part of the solution."

Yeah sure, never mind that French banks loaned almost as much. Thankfully our guilt-complex isn't that great any more, otherwise I would us see take responsiblity for Southern Europe's screw-up too. Of course if you are responsible for two W Ws I guess one more European crisis doesn't hurt anymore.

@Fighteer: "For someone who insists that nobody can tell Germany what to do, you certainly seem only too happy to make demands of the other nations."

Well I am not asking other nations to donate money to Germany. He who has the money makes the rules, it has always been like that. You know that even the USA made some pretty harsh conditions for receiving the Marshall Plan right? Countries like Greece and Italy have so far failed to prove that they could be trusted to continue with structural reforms. Besides, I think Finland asked for guarantess in form of gold when they guaranted Greece's debt.

You're showing your bias again, Zarastro. Sometimes truth is offensive. German banks drove the lending to the periphery nations that caused their bubbles and the resulting asymmetric imbalance. Germany has benefited tremendously from the Eurozone, largely at the expense of its neighbors. It owes recompense.

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"

Not to mention that a good chunk of the cuts that Portugal made were done in order to save German and French banks. Germany also has its share of problems that contributed to the crisis.

What's offensive is saying that "Countries like Greece and Italy have so far failed to prove that they could be trusted to continue with structural reforms."

Italy, as far as I know, is rejecting/resisting austerity as a solution and attempts to take alternative improvement measures.

Greece (which has accepted austerity) has privatized nearly a million assets, upped retirement age at 67, imposed salary & pensions cuts, cracked down on tax evasion more than it did the past 30 years and lowered the minimum wage at 683.80 per month. Not to mention all the taxes, which have bled the market dry & left 20,000 people homeless in Athens alone.

What else are we supposed to do? Turn the Plain of of Thessaly into a parking lot?

edited 11th Oct '14 5:56:03 PM by LogoP

It is sometimes an appropriate response to reality to go insane.

Germany made already a big sacrifice when we gave up the Mark. We were promised that the Euro would be like the Mark and that no country would have to guarantee for another countries.

Lending the money was a mistake, but accepting them was nothing less either. Greeks have nobody to blame but themselves and their politicians. Just everybody tried to overlook what they did doesn#t mean it was acceptable. Yeah sure, Germany is responsible for the crisis. And America planned 9/11.

"Italy, as far as I know, is rejecting/resisting austerity as a solution and attempts to take alternative meassures of improvement."

Which is working great I assume. Of course they can reject austerity, but we could please than stop talking about anything should do for them?

" upped retirment age at 67" Anything else would have been obscene. It was already plenty of ammunition for Eurosceptical politicians that Greeks could retire earlier than Germans.

" imposed salary & pensions cuts," Those were way to high in many cases to begin with. I remember reading a long list comparing salaries in Germany and Greece in many professions.

"cracked down on tax evasion more than it did the past 30 years" Considering they did next to nothing during the last 30 years, this is not necessarily impressive. I acknowledge their effort, but they need to do more.

These may be true^note  they are, for the most part but it doesn't mean effort hasn't been undertaken.

I also don't see why Greece needs to do more when the only thing coming from those efforts is an ever-tanking economy, an unemployment rate at 26.4%, almost three million people living into poverty, a rise of suicides by 45% and international scorn.

The only ones who have benifited from the austerity are Greece's balkan neighbors and, of course Germany.

Also, the notion that Greece some howforced/rused its way into the EU is bogus. No matter how many attempts were done to cook the books^note : and, oh boy, were they done, its problems were well-known & all the big players in Europe knew exactly what they were getting into by letting Banana Republics like Greece into the Union and the Eurozone. Which they really shouldn't have done.

EDIT: For the record, I also believe that the notion of the euro-crisis being a "creation" of Germany is conspiracy theorist bull. Bordering on Germanophobia.

edited 11th Oct '14 6:42:00 PM by LogoP

It is sometimes an appropriate response to reality to go insane.

Germany didn't intentionally provoke the crisis, of course. I don't think any serious person believes that. What Germany did was help set the conditions for the crisis while benefiting from its consequences, secure in the belief that it was doing the "right thing".

Zarastro, here's the thing: no amount of cost cutting will help Greece recover fiscal solvency. That's because cost cutting cannot accomplish this, by basic mathematical principles. To claim otherwise is, again, to ignore fundamental economic rules known since the 1930s.

edited 11th Oct '14 7:03:50 PM by Fighteer

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"

There should be a law that mandates that any and all strategic-level national policies that directly affect the national economy should only be allowed after getting the stamp of approval by a nationwide body of widely acclaimed and accredited economists.

Fiat iustitia, et pereat mundus.

Indeed, some of the major answers for Greece aren't Economic at all, they're political and cultural in nature.

edited 12th Oct '14 1:01:45 AM by Greenmantle

Keep Rolling On

The hyper inflation happened in 1923, Nazi's party biggest rise happened in the elections of 1930 and Summer of 1932. The second election of 1932 was a small loss (so overall at end of 1932 the Nazi party still had more seats than they did in 1930).

Hyperinflation had absolutely nothing to do with the growth of the Nazi party, that is one of the many myths regarding the rise of Hitler.

Sounds like a much better world.

They way economics is practised in Europe I'd say it's a religion rather than an actual science.

"There should be a law that mandates that any and all strategic-level national policies that directly affect the national economy should only be allowed after getting the stamp of approval by a nationwide body of widely acclaimed and accredited economists."

We have this in Germany, called the German Council of Economic Experts (commonly referred to as "Wirtschaftsweisen"). They have no Veto-power but they have some influence on government policy.

But I don't think that giving economists too much power is a good idea, since as shown by Krugman, they have often no political expertise and thus no idea what would acutually be possible to implement.

I've recently listened to a debate at my university analyzing some of Krugman's common demands (not only his demands mind you, but he was used because he was mostly known) and how they violate either federal law or the European treaties. He is for example way too naive when it comes to the role of the ECB. The ECB is bound by the European treaties to a certain role, which he apparantly thinks can just be breached without consequences. There have been already law suits at the Federal Constitutional Court of Germany against th European Stability Mechanism (ESM) and although the FCC deemed the ESM as acceptable, it also warned the Federal Government that they were already pushing the limits of the Basic law and the European treaties. You can be sure that if we did what Krugman suggested, some guys would go to the FCC and might even win. I hope I don't need to tell you what this would mean for the government and Europe.

@zsmg: "Hyperinflation had absolutely nothing to do with the growth of the Nazi party, that is one of the many myths regarding the rise of Hitler."

You are mostly correct. However it should be noted that the Hyperinflation deeply traumatized Weimar and was often used as an argument against the Republic during his rise to power (his failed putsch happened in 1923 btw when the Republic was very fragile) and even afterwards. He used it in his book "Mein Kampf" and his speeches even after 1933.

Which is one of the main reasons why I wish Germany would get over the Evil Inflation Is Evil meme: it's one of Hitler's. <_<

edited 12th Oct '14 7:55:27 AM by Euodiachloris

@Zarastro: Oh, Krugman knows full well about the political issues in Europe. Don't insult the man without doing your research. He tells them what they need to do to fix their shit; it's up to them to generate the political will to make it happen.

"It's Occam's Shuriken! If the answer is elusive, never rule out ninjas!"

Even if hyperinflation was the main reason for NSDA Ps rise to power, that was a problem of another time. The existing conditions in present-day Europe (especially present day Germany) simply do not allow the rise of another Hitler.

A far-right populist? Maybe.^note :though unlikely in Germany A genocidal, war mongering dictator? NO.

x5 This is true.

edited 12th Oct '14 8:57:08 AM by LogoP

It is sometimes an appropriate response to reality to go insane.

@zsmg

Good point, actually.

Schild und Schwert der Partei

It's weird that people keep bringing up Hitler and the Nazis whenever Germany is being discussed economically. Even when it's relevant with the whole hyperinflation scare bullshit, it seems pretty creepy in an awkward faux pas kind of way.

"@Zarastro: Oh, Krugman knows full well about the political issues in Europe. Don't insult the man without doing your research. He tells them what they need to do to fix their shit; it's up to them to generate the political will to make it happen. "

No he doesn't, that's the problem. He either genuily doesn't know or ignores the reality in order to further his argument. Otherwise he would know that the ECB can't act the way he wants them to act without violating the treaties. This is not about political will, the FCC has made it abundantly clear that it will uphold the Basic Law and the treaties.

It's not that weird. Germany got well and truly traumatised by the guy in all walks of life. <_<

If you think the rest of the world had it hard, it's not a patch on what they had to deal with. -_-