[np] Austerity is not Greece's Problem (Ricardo Hausmann)

[David Morris]

I think the difference between the US and the Euro is obvious:  one is a
country, the other is a currency.  Currency, like Corporations, aren't
people. A Country is made of people.

The EU was never a sincere Union.  It was a bankers deal, pure and simple.

David Morris

On Saturday, July 4, 2015, David Morris <fqmorris at gmail.com> wrote:

> Blame is the name of this game.  Greasy Greece needs Reform School Marm
> Urkle. Meanwhile a nation is indentured, and the banks aren't
> inconvenienced.
>
> Bravo Euro!
>
> David Morris
>
> On Saturday, July 4, 2015, Kai Frederik Lorentzen <lorentzen at hotmail.de
> <javascript:_e(%7B%7D,'cvml','lorentzen at hotmail.de');>> wrote:
>
>>
>>  When looking out a window, it is easy to be fooled by your own
>> reflection and see more of yourself than the outside world. This seems to
>> be the case when US observers, influenced by their own country's fiscal
>> debate, look at Greece.
>>
>> For example, Joseph Stiglitz regards austerity in Greece as a matter of
>> ideological choice or bad economics, just like in the US. According to this
>> view, those who favor austerity must be obsessed with the theory, given the
>> availability of a kinder, gentler alternative. Why would you ever vote for
>> austerity when parties like Greece's Syriza or Spain's Podemos offer a
>> pain-free path?
>>
>> The question reflects a lamentable tendency to conflate two very
>> different situations. In the US, the issue was whether a government that
>> could borrow at record-low interest rates, in the middle of a recession,
>> should do so. By contrast, Greece piled up an enormous fiscal and external
>> debt in boom times, until markets said “enough" in 2009.
>>
>>
>> <http://www.project-syndicate.org/commentary/greece-export-problem-by-ricardo-hausmann-2015-03#>
>> Greece was then given unprecedented amounts of highly subsidized finance to
>> enable it to reduce gradually its excessive spending. But now, after so
>> much European and global generosity, Stiglitz and other economists  argue
>> that some of Greece's debt must be forgiven to make room for more spending.
>>
>> But the truth is that the recession in Greece has little to do with an
>> excessive debt burden. Until 2014, the country did not pay, in net terms, a
>> single euro in interest: it borrowed enough from official sources at
>> subsidized rates to pay 100% of its interest bill and then some. This
>> situation supposedly changed a bit in 2014, the first year that the country
>> made a small contribution to its interest bill, having run a primary
>> surplus of barely 0.8% of GDP (or 0.5% of its debt of 170% of GDP).
>>
>> Greece's experience highlights a truth about macroeconomic policy that is
>> too often overlooked: The world is not dominated by austerians; on the
>> contrary, most countries have trouble balancing their books.
>>
>> Recent advances in behavioral economics show that we all have enormous
>> problems with self-control. And game theory explains why we act even more
>> irresponsibly when making group decisions (owing to the so-called common
>> pool problem). Fiscal deficits, like unwanted pregnancies, are the
>> unintended consequence of actions taken by more than one person who had
>> other objectives in mind. And lack of fiscal control is what got Greece
>> into trouble in the first place (...)
>>
>> The problem is that Greece produces very little of what the world wants
>> to consume. Its exports of goods  comprise mainly fruits, olive oil, raw
>> cotton, tobacco, and some refined petroleum products. Germany, which many
>> argue should spend more, imports just 0,2 % of its goods from Greece.
>> Tourism is a mature industry with plenty of regional competitors. The
>> country produces no machines, electronics, or chemicals. Of every $10 of
>> world trade in information technology, Greece accounts for $0.01.
>>
>> Greece never had the productive structure to be as rich as it was: its
>> income was inflated by massive amounts of borrowed money that was not used
>> to upgrade its productive capacity. According to the Atlas of Economic
>> Complexity, which I co-authored, in 2008 the gap between Greece's income
>> and the knowledge content of its exports was the largest among a sample of
>> 128 countries (...)
>>
>>
>> http://www.project-syndicate.org/commentary/greece-export-problem-by-ricardo-hausmann-2015-03
>>
>>
>>
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