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

[David Morris]

https://medium.com/@gavinschalliol/thomas-piketty-germany-has-never-repaid-7b5e7add6fff

Thomas Piketty: “Germany has never repaid.”

On Sat, Jul 4, 2015 at 2:36 PM, David Morris <fqmorris at gmail.com> wrote:

> 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>
>> 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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