Trouble in Greece
15 Sep 2012, 8:43 am
What brought this up is the thread about right-wing politics in Europe. But anyways, it got me to thinking about some scenario before. What if the Golden Dawn gained a strong position in Greek politics? Would we see similar situations as during the 1930's? I see many interesting parralells, such as the potential trade war with the us and China, the failure of banks, the potential for more mayhem with derivatives, and the property crisis. Anyone see where we could have problems in Europe? And just to point out that in the 70's that there was a coup, so this idea is not outside the realm of possibility.
15 Sep 2012, 11:02 pm
Goes to show that Socialist policies don't work in real life.
Its more down to Socialism combined with capitalist banks who print money out of nothing.
15 Sep 2012, 11:30 pm
The EU doesn't print money out of nothing unless it's given to private banks. As far as EU members go it's like gold... a de facto gold standard and that's why the EU is in such trouble.
Socialist policies worked perfectly until this Mengerian right wing de facto gold standard of a currency was put into being. Then again that's what gold bugs say about the gold standard and the reason they want it; it will constrain governments. The euro is constraining European governments all right, forcing them to shrink their economies by 20%, 25% and more!
15 Sep 2012, 11:33 pm
Socialist policies worked perfectly until this Mengerian right wing de facto gold standard of a currency was put into being. Then again that's what gold bugs say about the gold standard and the reason they want it; it will constrain governments. The euro is constraining European governments all right, forcing them to shrink their economies by 20%, 25% and more!
Greece's problem has to do with the fact they can't balance a checkbook, the banks have nothing to do with it. It's just they ran out of other people's money to spend so they are collapsing due to their Socialist policies.
15 Sep 2012, 11:45 pm
Money is like a flowing river, not a stagnant pond, one cannot "run out of it". Moreover, the problem with Greece is that it has a de-facto gold standard. Back when their debt to GDP ratio hit around 90%, a very manageable number, there was a run on Greece that caused it to be in a situation where it was in danger of not having enough euros in the vault to pay creditors. Why? It's because they can't create euros out of thin air unlike the US that creates dollars out of thin air to pay creditors. The result is the US can set its interest rate at 1% but Greece has to pay what the secondary market demands. If that market fears there will be no euros in the vault when it's time for them to be paid, then that rate will go through the roof, guaranteeing that there'd be no euros in the vault. So when Greece was in this danger, the EU told it that it would lend them those euros but with an important condition. Shrink the economy. You see, Germany had spent 10 years deflating itself and its banks put lots of money into Greece and Italy and Spain to inflate real estate bubbles mostly, bubbles that burst. The result was that Greece had a lot more inflation than Germany and this made Greek manufactures uncompetitive vs Germany but as there are no trade barriers this meant that Greek manufacturers shut down and German products replaced those Greek products. Germany demanded that Greece therefore carry out "internal devaluation", to quickly undo the desynchronisation of the past decade! To do this, the economy had to be shrunk, massive unemployment deliberately created for the purposes of forcing wages way way down. That would make Greek labour competitive. It would also cause Greece's debt to GDP ratio to skyrocket. I believe it has nearly doubled since the start of the crisis. Deflation has the effect of making debts larger. It has made repaying debts practically impossible.
What are the causes of the crisis? German austerity that has reduced its standard of living under Schroeder, a right wing policy designed to turn it into an export economy. Right wing bubble economics in Greece. A right wing Mengerian currency that permits interest rates to skyrocket and right wing internal devaluation that makes debts balloon in weight against the economy. The right wing is 100% responsible for the disaster, as the neoliberal right has been in the driver's seat for the past 20 years in Europe. Socialism was practiced throughout Europe for decades without a hitch until these right wing constructs came to dominate and they are responsible for the troubles. It's the many of the same things that helped make the Great Depression so bad.
15 Sep 2012, 11:57 pm
What are the causes of the crisis? German austerity that has reduced its standard of living under Schroeder, a right wing policy designed to turn it into an export economy. Right wing bubble economics in Greece. A right wing Mengerian currency that permits interest rates to skyrocket and right wing internal devaluation that makes debts balloon in weight against the economy. The right wing is 100% responsible for the disaster, as the neoliberal right has been in the driver's seat for the past 20 years in Europe. Socialism was practiced throughout Europe for decades without a hitch until these right wing constructs came to dominate and they are responsible for the troubles. It's the many of the same things that helped make the Great Depression so bad.
You really have no clue about economics and how currency works.
In order for a currency to work, it must have a perceived value, when countries print insane amounts of new currency, it causes hyper-inflation, something that Obama and Bernanke seem to want to cause.
Also, the Euro is not based on the gold standard. Greece's problem is entirely due to the fact they can't balance their check book and ran up a mountain of debt.
16 Sep 2012, 4:06 am
That's actually quite cute.
Things have been getting bad in Greece for years, and it has been widely reported for years.
Anyway, the whole thing is worrying. I can only see that things'll get much worse yet.
In the UK, as elsewhere, what is a systemic problem personified by the avarice and corruption of the banks gets blamed on the foreigners (as both immigrants and good old xenophobia), the poor, the disabled and the unemployed. Statements to this effect issue forth from the government and the media. The government itself revels in the public's distrust and cynicsm that they helped create, and brazenly pushes through one piece of bad (both morally and otherwise) legislation after another. What's more, because it's part of our mythology to fight fascists, it can never be that we are at all fascistic.
Which is to say, the background is there for something bad. Hatred and vitriol is aimed at those who are not able to defend themselves, who do not have a voice, even when times are good. When times are bad, such hatred only gets stronger.
16 Sep 2012, 6:55 am
Yup - plus the sheer amount of illegal immigrants that the Greek government has let into their borders (without ever asking the people) and you've got an explosion and an easy scapegoat for the entire country's woes.
Extreme parties (both quasi-Nazi and communist) always flourish in circumstances like this, especially as Greece has a very sizeable communist element. If the problems are solved, they'll melt away and return to their caves.
The European Union is now split from between north and south - you have a running battle in the German and Greek newspapers for instance. The Greeks call the Germans Nazis, the Germans call the Greeks profligate, workshy layabouts. And it all could have been avoided.
The best thing that could happen for Greece is that they leave the euro and slowly work their way back up. Democracy (or rather, the lack of) is the root cause here.
16 Sep 2012, 9:17 am
What are the causes of the crisis? German austerity that has reduced its standard of living under Schroeder, a right wing policy designed to turn it into an export economy. Right wing bubble economics in Greece. A right wing Mengerian currency that permits interest rates to skyrocket and right wing internal devaluation that makes debts balloon in weight against the economy. The right wing is 100% responsible for the disaster, as the neoliberal right has been in the driver's seat for the past 20 years in Europe. Socialism was practiced throughout Europe for decades without a hitch until these right wing constructs came to dominate and they are responsible for the troubles. It's the many of the same things that helped make the Great Depression so bad.
You really have no clue about economics and how currency works.
In order for a currency to work, it must have a perceived value, when countries print insane amounts of new currency, it causes hyper-inflation, something that Obama and Bernanke seem to want to cause.
Also, the Euro is not based on the gold standard. Greece's problem is entirely due to the fact they can't balance their check book and ran up a mountain of debt.
Yes and no. Current economic system is dependent on debt increasing. America has debt, is it possible that America can pay all its debt.
16 Sep 2012, 9:49 am
Yeah, agree, it is easy to see fringe political parties coming to power in Greece, and elsewhere in Europe. Already in Greece the NAZI and communist parties are racking up votes in election. Economic leaders in the EU keep saying the financial crisis is over, they have solved the problems. And yet all to often a short time later the financial crisis comes roaring back. That has caused people to loose faith in their government leaders. That in turn opens the door for radial groups to come to power promoting unique economic ideas.
The ones that have been hurt the worst in this financial crisis in Europe, and America also are the young. Youth unemployment is very high here in the US and in Europe. Rioting and political unrest tends to be a youthful occupation. With that, have to imagine Europe has the potential to be in further turmoil in the future.
A few articles I recall on youth unemployment.
"Tonight, We Are Young…and Unemployed"
http://blogs.the-american-interest.com/ ... nemployed/
&
"There Are No Winners In The War Against The Young"
http://blogs.the-american-interest.com/ ... dy-losing/
snippet:
You [younger Americans] are in big trouble. You don’t even know it. You’re busy trying to get a degree, land a job, start a family, save for a home. You don’t follow the news. But trust me—you’ve been taken for a ride by your elders. . . .
The job market for young people is a disaster, the toll of a burst financial and housing bubble that both parties let fester. The crisis has reached the point where years of unpaid labor (in the form of internships) have become a way of life for millions of Americans in their 20s.
Our K-12 schools have slid from the best in the world to mediocre under both Republican and Democratic presidents and governors. That’s largely because for decades we’ve embraced a bipartisan policy of recruiting middling students to become teachers.
Our roads, bridges, sewers, airports and power grids desperately need upgrades. Our investments in research and development as a share of our economy trail that of our peers. Republicans don’t seem to care. Democrats care enough to propose token sums that would fund a fraction of the need.
There’s no cash for such investments in the future because pension and health-care programs for seniors (plus a bloated Pentagon) take up so much of the budget. At the federal level, seven dollars go to programs supporting elderly consumption for every dollar invested in people under 18. Nationally (after taking account of the fact that most education is paid for at the state and local level), the ratio is still 2 1 / 2 to one…
Want more? For years, states have let public pension managers assume their investments would grow 7.5 or 8 percent a year, when 3 to 6 percent has been more realistic. This bipartisan ploy hides trillions more in pension shortfalls, funds that will have to be forked over one day by (you guessed it) younger Americans.
Read the whole thing. Miller echoes arguments Via Meadia has been making for some time. The evidence is devastating, but as Miller concludes, young people haven’t woken up to the dangers, even as the policies that turn the screws on them have gone on for years....
16 Sep 2012, 10:28 am
A real currency works according to the State Theory of Money. Money gets its value through taxation. That is, by demanding taxes in this currency it creates demand for the currency. An important function of the money's value is the size of the country's market. If a country produces many things and has many people buying things then it becomes attractive to buy the local currency in order to buy and sell in that currency and to of course pay taxes in that currency. The Mengerian idea is that money gets value through scarcity. The problem with this is that a currency too scarce cannot be sufficient for the economy which in turn will contract to reflect the scarce money.
Remember that money is a claim on a number of goods and services produced. If the monetary system is such that the economy keeps contracting, that fewer goods and services are produced, then that money is a claim in a shrinking supply of goods, the value of the money thus decreases! That's what a Mengerian currency will do for you!
The Euro is a de-facto gold standard. What do I mean by that? A gold standard fixes the money supply depending on the amount of gold and also is a promise that you can exchange the paper currency for gold. A country cannot create gold on demand...If the country does not have any gold left in the vault when someone demands it for the paper currency, then the country defaults. With the euro, the euro currency is something that the euro countries cannot produce on demand, just like gold. Like gold, they need euros in a vault somewhere. Like gold, therefore, there is a default risk. The gold bugs have been explicit on saying that reason they want a gold standard is to tie the hands of government, to make it incapable of doing practically anything to alleviate unemployment or to make economic policy in any meaningful sense. The euro in a sense does this to the EU countries.
The reason Greece has had increasing problems is because they have lost control over economic policy and have had their exports become less competitive in the EU as the Germans had become an export-oriented economy. Greece had no mechanisms to counteract this tendancy. Germany now demands "internal devaluation" that is achieved through economic shrinkage and mass unemployment, which has caused thousands of people to die. That's murder.
Greece was subject to a panic, a run (as was common in gold standard days) when its debt to GDP ratio was at a manageable 90%, With a real fiat currency that would have been a piece of cake, but with the euro, there was a panic and to get the Greeks through that immediate crisis, Germany made certain demands. Shrink your economy. Cause mass unemployment. Privatise to our private concerns pennies on the euro. The worst blackmail, the worst so-called cure and an extremely right wing one that that. The Right is who is responsible for the disasters, not the Left. Don't forget that for one moment. Socialism worked excellently before the euro, and kept working before the euro really began to fail... socialism is not the problem. Neoliberalism is the problem.
16 Sep 2012, 7:56 pm
Didn't the Us intervene in Greece when there was a threat of a take over by communists? So in between the history of authoritarianism, and a history of backlashes for socialist and communista, it ought to be interesting. In most cases where there are fascists rising, there is a tandem of left-wing opposition, or in certain cases, majority. Look at Italy, Spain, and Russia to a lesser extent. What to we see now in Greece? A rising left-wing party in Syzria, a rising fascist party, and a rising communist party in tandem with the former party. I am not saying everything will go as it used to be, but it will ryhme.
16 Sep 2012, 10:24 pm
The Wall Street Journal agrees with me
So you see, I am right. The EU is an extreme right wing de facto gold standard type of place and democratic governance is completely suffocated by the way by it. Oh, how some love to torture powerless people in the name of Virtue...
