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

[Keith Davis]

Great quote...


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> On Jul 6, 2015, at 10:03 AM, David Morris <fqmorris at gmail.com> wrote:
> 
> http://www.washingtonmonthly.com/political-animal-a/2015_07/and_i_shall_wear_the_creditors056421.php
> 
> "And I shall wear the creditors’ loathing with pride."
> 
>> On Mon, Jul 6, 2015 at 8:33 AM, John Bailey <sundayjb at gmail.com> wrote:
>> An amazingly fun analysis of the language of economists, by an
>> economist, if anyone cares to read (it's very long and slightly
>> Australia-centric):
>> 
>> http://www.themonthly.com.au/issue/2015/july/1435672800/richard-denniss/clowns-and-treasurers
>> 
>> On Mon, Jul 6, 2015 at 11:16 PM, David Morris <fqmorris at gmail.com> wrote:
>> > 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.
>> >>>>
>> >>>> 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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