INFORMATION
This website uses cookies to store information on your computer. Some of these cookies are essential to make our site work and others help us to improve by giving us some insight into how the site is being used.
For further information, see our Privacy Policy.
Continuing to use this website is acceptance of these cookies.
We are not accepting any new registrations.
This website uses cookies to store information on your computer. Some of these cookies are essential to make our site work and others help us to improve by giving us some insight into how the site is being used.
For further information, see our Privacy Policy.
Continuing to use this website is acceptance of these cookies.
We are not accepting any new registrations.
Grexit?
Re: Grexit?
On the first one I wonder if the graph has been "corrected" for all of the financial factors and market shifts (e.g. the amount of stuff now made in China) pre and post Euro? Especially since 1980.
Like to see graphs of shift in GDP over the last 25 years to see what effect the various financial events had.
Like to see graphs of shift in GDP over the last 25 years to see what effect the various financial events had.
"Look forward; yesterday was a lesson, if you did not learn from it you wasted it."
Me, 2015
Me, 2015
Re: Grexit?
Lies, damned lies and statistics!
I don't know enough about economics to fully understand the implications, but virtually every article has an 'agenda' and will use statistics that suit their agenda and ignore contra arguments
Re: Grexit?
Thoughts? Plenty!
While I'm marshalling them, here's an article from Allister Heath which makes sobering reading.
But read on. I think it is a distinct possibility that we could see another military dictatorship in Greece. Not a likelihood, but a possibility.
While I'm marshalling them, here's an article from Allister Heath which makes sobering reading.
A caveat: when he says "hurt the hardest", he means lose the most, not suffer the most. If the poorest are hit too, (which they will be) they will undoubtedly be at the bottom of the pile.Leftist politics have doomed Greece to collapse
It is always those in the middle -- and especially what Marxist intellectuals call the petit bourgeois, the aspiring, hard-working workers and savers -- who are hurt the hardest
But read on. I think it is a distinct possibility that we could see another military dictatorship in Greece. Not a likelihood, but a possibility.
It was Adam Smith who put it best. “There is a great deal of ruin in a nation”, he wrote in reply to an over-excited young man who thought that Great Britain was facing devastation after a setback during the US war of independence.
Smith was right about the specifics as well as the general point, of course: America was thankfully soon to win its independence, and both Britain and the US went on to prosper and thrive.
More generally, Smith was spot on about something even more important: it is very hard for politicians and officials, however incompetent, to truly destroy a prosperous nation.
They can impoverish it, and slow its growth, and damage it in all sorts of ways, but inflicting genuine collapse is tough. Core market institutions - the rule of law, private property and widespread, specialised human capital - are remarkably resilient when they are established properly; our free market economies are self-organising, decentralised networks that can take multiple hits and bounce back.
Even countries that have been mismanaged for decades, such as France or Italy, remain prosperous, even though they are steadily falling behind in relative terms.
But while it is hard to break a relatively developed and prosperous country, it’s not impossible. Venezuela is a complete basket case, its economy so damaged by its mad Marxist administration that it suffers even from shortages of toilet paper.
Argentina has suffered catastrophic problems over the years, so much so that the “Argentine paradox” is now a case study in what not to do in university applied economic departments worldwide. In the years just prior to the First World War, Argentina almost caught up with the UK and US in terms of living standards and national income per person.
The country continued to do well until the 1930s, and even in the after-war years was still seen as sufficiently wealth as to be an alternative to Europe. But years of statist, socialist and protectionist policies eventually did ruin the country.
Tragically, Greece itself is now very close to the brink. It is set to default on its €1.6bn payment to the IMF on Tuesday [ which it now has] and its referendum will determine whether or not it quits the euro, or if it is able to cling on for a while longer.
[My bold]There are generally four steps to social and economic collapse. First, the middle class loses access to its money, either because the banks shut or go bust in a mass, uncontrolled manner. Second, food and supplies start to run out in supermarkets as foreign suppliers slash lines of credit or domestic companies are banned from sending cash abroad.
Third, the state starts printing money uncontrollably, and hyperinflation sets in. Fourth, the lights start to go out, with power cuts and a generalised failure of the infrastructure. This process has now started, and could easily spiral out of control.
Greece is very much at step one, though it could end up in stage two much more quickly than many realise. In the short term, the public will probably put up with the limits on how much cash they can withdraw.
One week isn’t that long; and the money is still theirs. But businesses, as well as individuals, are also being affected, and it is here that the constraints could bite most dramatically over the next few days.
A special committee has been set up to vet all significant corporate deals that involve spending cash abroad; but the bureaucracy involved in such a demented act of central planning is clearly extraordinary.
There is simply no chance that there will be enough time and manpower to process every transaction; and that means that it will soon become harder for Greek importers to purchase the goods and commodities that the public needs. At some stage, this will lead either to much higher prices or, if price controls are imposed, to crippling shortages.
If Greece votes yes on Sunday, the government will collapse and the EU will once again have succeeded in removing a government it doesn’t like. If Greece votes no, it will be out of the euro, at least in practice, this time next week. This will trigger stage three of the collapse: a new currency will be issued -- perhaps in the form of state IOUs -- and it will immediately start to depreciate against the euro.
When it becomes obvious that Greece no longer remains in the euro, the state will legislate to redenominate all euro assets and liabilities into the new drachma, which by now will be collapsing very quickly, while formally defaulting on what’s left of its euro-denominated debts. This will trigger another massive set of bankruptcies and ensure that, for a time at least, no foreign company will want to deal with a Greek company.
With nobody within or outside the country inclined to trust the government, the new drachma will plunge and the price level, measured in terms of the new currency, will start to shoot up.
At the same time, the banking system, which by then will no longer be propped up by the European Central Bank, will collapse, with all banks shutting indefinitely. By then, stage four will kick in: the public sector will down tools and key utilities will stop working, triggering all out social and economic chaos.
The rich can mitigate the effect of enforced bank holidays, capital controls and hyperinflation by holding assets or cash abroad; the very poor don’t have much to lose in the first place. It is always those in the middle -- and especially what Marxist intellectuals call the petit bourgeois, the aspiring, hard-working workers and savers -- who are hurt the hardest.
They will have worked hard to build a life for themselves, and will find it intolerable to see it all snatched away. These are grim days indeed for Greece.
Re: Grexit?
At least you recognise the limits of your current knowledge; that means it is possible for you to learn more, if you wanted to. You could teach many top politicians a lesson on how to think about world-scale problems, Altfish!Altfish wrote:
I don't know enough about economics to fully understand the implications,
True enough. This has to be kept in mind when reading and evaluating articles such as those Nick and I have linked to in this thread.but virtually every article has an 'agenda' and will use statistics that suit their agenda and ignore contra arguments
Re: Grexit?
Nice one!thundril wrote:Sauce for the goose?
But Greece would still have to sort out its tax avoiders etc.
"Look forward; yesterday was a lesson, if you did not learn from it you wasted it."
Me, 2015
Me, 2015
Re: Grexit?
True for Greece, and the uk, and everyone else that has tax avoiders on a troublesome scale. Whether Greece stays in the Euro or leaves; whether Greece keeps its current administration or gets a new one; the problems will be fewer if people pay the taxes that are due.Dave B wrote:Nice one!thundril wrote:Sauce for the goose?
But Greece would still have to sort out its tax avoiders etc.
Re: Grexit?
Lots of interesting things to explore there, Thundril. Thanks!thundril wrote:Sauce for the goose?
My immediate thought (and I haven't studied it in detail) is that there is a crucial difference. Germany surrendered, accepted the guilt of their Nazi past, and adopted economic policies which fell in with the Allies economic world-view.
Greece, OTOH, has not admitted that their systems are pretty rubbish, have refused to reform, (though they have made huge cuts to government expenditure) and worse, think they should continue as before. Until that is confirmed, they will not be helped by the rest of the EU..
If they were to do these things, then there is a great incentive for the rest of the EU to agree a massive right-down. But the lefties in power in Greece do not feel inclined to play ball, so will suffer the consequences.
Of course, they should never have been in the Euro. And nor should Germany, France, Spain, Italy.... well you get the picture...
Re: Grexit?
It is tax evasion that's the problem in Greece. The avoidance has occurred where people and businesses have left Greece: and altogether different problem. Britain is remarkably free of corruption compared to much of continental Europe, which has had a somewhat uncertain relationship with democracy and the rule of law. More than a few have had recent dictatorships of the left and right within living memory.Dave B wrote:Nice one!thundril wrote:Sauce for the goose?
But Greece would still have to sort out its tax avoiders etc.
Re: Grexit?
In Greece everyone does it. In the UK only the rich and corporations can get away with itNick wrote:It is tax evasion that's the problem in Greece.
Re: Grexit?
the law defines which is which, but since the law seems to recognise the economic advantages of some types of avoidance, the ethical difference is not that clear. And I don't see Nick's mention of dictatorship versus democracy as at all relevant: corruption has little to do with the form of government, and is much more to do with perceptions of governmental legitimacyAltfish wrote:In Greece everyone does it. In the UK only the rich and corporations can get away with itNick wrote:It is tax evasion that's the problem in Greece.
Re: Grexit?
Yeah, I used the wrong term but, as been implied, here it is mainly the fat cats and, probably, coyboy builders. In Greece seems like a national hobby!Altfish wrote:In Greece everyone does it. In the UK only the rich and corporations can get away with itNick wrote:It is tax evasion that's the problem in Greece.
"Look forward; yesterday was a lesson, if you did not learn from it you wasted it."
Me, 2015
Me, 2015
Re: Grexit?
Whereas Greece hasn't actually killed anyone at all. Which apparently you don't think is a crucial difference?Nick wrote:Lots of interesting things to explore there, Thundril. Thanks!thundril wrote:Sauce for the goose?
My immediate thought (and I haven't studied it in detail) is that there is a crucial difference. Germany surrendered, accepted the guilt of their Nazi past, and adopted economic policies which fell in with the Allies economic world-view.
Re: Grexit?
Glad you agree that this is not about finance, but regime change.Nick wrote:
Greece, OTOH, has not admitted that their systems are pretty rubbish, have refused to reform, (though they have made huge cuts to government expenditure) and worse, think they should continue as before. Until that is confirmed, they will not be helped by the rest of the EU..
If they were to do these things, then there is a great incentive for the rest of the EU to agree a massive right-down. But the lefties in power in Greece do not feel inclined to play ball, so will suffer the consequences.
Re: Grexit?
Well, the people will suffer, not the politicians. So the people voted in a party that is taking the country along a rocky road to a possible hell on earth.If they were to do these things, then there is a great incentive for the rest of the EU to agree a massive right-down. But the lefties in power in Greece do not feel inclined to play ball, so will suffer the consequences.
Just like we did last election.
"Look forward; yesterday was a lesson, if you did not learn from it you wasted it."
Me, 2015
Me, 2015
Re: Grexit?
There's no comparison, Dave. Really there isn't. If you think there is, then why not toddle off to Greece and enjoy the added benefits of ouzo, the Med and the sunshine.....Dave B wrote:Well, the people will suffer, not the politicians. So the people voted in a party that is taking the country along a rocky road to a possible hell on earth.If they were to do these things, then there is a great incentive for the rest of the EU to agree a massive right-down. But the lefties in power in Greece do not feel inclined to play ball, so will suffer the consequences.
Just like we did last election.
Re: Grexit?
So, Thundril, what do you make of the articles you have highlighted?