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Guy comes into hospital suffering from dehydration. Austerity solution: deny fluids, administer diuretics, and wait for the problem to magically disappear.
There you go injecting facts into the discussion.
FWIW, Greece has also been on the austerity track for a couple years.
I'm sorry about the facts. I just don't seem to get it.
Greece's major problem is that they are on the Euro and therefore can't devalue their currency. The alternative is decades of deflation and misery. They should just default on the bonds and restart their own currency.
Before Greece (or any other country) can do anything, it must first stabilize the existing economy. And as far as investment, that's what this is all about. No one is going to invest money in Greece until a sound repayment plan is developed and the economy is stabilized.
Prioritizing...
Mircea
I am not talking about private investment, but public one. The government has to spend more on things that are important for the future, instead of destroying the rest of the economy just to make the finance mafia happy.
I'm sorry about the facts. I just don't seem to get it.
Greece's major problem is that they are on the Euro and therefore can't devalue their currency. The alternative is decades of deflation and misery. They should just default on the bonds and restart their own currency.
Unfortunately the southern countries do not work together, they should form their own separate economic zone including their own currency. They think too much of what other countries want, countries that don't give a damn about them anyway.
Unfortunately the southern countries do not work together, they should form their own separate economic zone including their own currency. They think too much of what other countries want, countries that don't give a damn about them anyway.
Paul Krugman wrote in 2010 why Greece shouldn't be on the Euro but have its own currency:
Quote:
Greece’s debt is in euros, devaluing won’t relieve the debt burden — so it won’t help.
But that’s missing the point. True, devaluation wouldn’t reduce the debt burden. But it would reduce the macroeconomic costs of fiscal austerity.
Think for a moment about Greece’s predicament now, even if it were to default on its debt. It’s running a huge primary deficit, so even if it were to stop paying any debt service it would be forced to slash spending and/or raise taxes, to the tune of 8 or 9 percent of GDP.
This would have a massively contractionary effect on the Greek economy, leading to a surge in unemployment (and a further fall in revenues, making even more belt-tightening necessary).
Now, if Greece had its own currency, it could try to offset this contraction with an expansionary monetary policy — including a devaluation to gain export competitiveness. As long as it’s in the euro, however, Greece can do nothing to limit the macroeconomic costs of fiscal contraction.
And that’s why a devaluation would help — it wouldn’t reduce the need for fiscal adjustment, but it would reduce the costs associated with fiscal adjustment.
Seems like the new, harsh austerity package for Greece, that was just agreed upon, will not be accepted as the conservative party has declared it will vote against it. In addition to that the IMF representative for Greece is to be declared a persona non grata in Greece.
The Germans, amongst others leant money to Greece and others to provide a market for the German products. That is debt used as monetary stimiulus and is not meant to be ever paid back. The debt was already paid in the form of profits for the lenders manufacturing economy. The people of Greece own the Germans nothing except a warm and gracious welcome when the pale people of the North visit for the warmth and wine.
You can't spend what you don't have. Thats why they're in that predicament and why we'll be there shortly. Austerity is the only option left for them. They can't borrow, they can't raise taxes to cover their debt.
But it doesn't have to be all or nothing. For every three or four dollars cut in spending they could raise a dollar in taxes. That would pay off their debt and free up more moderate responsible spending down the road.
The Germans, amongst others leant money to Greece and others to provide a market for the German products. That is debt used as monetary stimiulus and is not meant to be ever paid back. The debt was already paid in the form of profits for the lenders manufacturing economy. The people of Greece own the Germans nothing except a warm and gracious welcome when the pale people of the North visit for the warmth and wine.
Indeed, at the end of the day the Germans and others are benefiting from they money they lend.
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