There is a Difference Between Greece and the US » If we learn the wrong lessons from Greece, our social safety net may wind up in tatters. Many market analysts, commentators and economists claim to be having a hard time finding a metric in which the US is in better financial shape than Greece. Ken Rogoff, for example, recently warned that a Greek default would usher in a series of sovereign defaults, and suggested recently on NPR that the crisis also had implications for the US. The historian Niall Ferguson made a similar claim a few months ago in the Financial Times. The cries of the deficit hawks grow louder: Repent all ye fiscal profligates, before the "day of reckoning" comes. Let's dial down the Biblical hysteria a wee bit while there's still time for rational debate.
The Eurozone failed from day one The current Eurozone crisis is getting worse and has concentrated our minds on the most recent period of European history. As in all these situations where focus is very immediate our memories get a little blurred and we are inclined to accept propositions that closer analysis of the data suggest do not hold water. January 1 was the tenth anniversary of the date when Euro notes and coins began to circulate. Eurozone in crisis in graphics: Deficit Continue reading the main story EU rules say that countries using the euro are not allowed to have an annual deficit of more than 3% of GDP, but several countries have failed to keep to that rule in recent years. Note that Germany, Italy and France were all among the first countries to break the Maastricht rule during the last decade, while Spain and the Republic of Ireland ran surpluses before the 2008 crisis.
German Economic Striving at the Expense of Workers and Neighbors Will Backfire February 21, 2012 | Like this article? Join our email list: Stay up to date with the latest headlines via email. Unemployment in Germany is now at a 20 year low and the country’s economy seems to be impervious to the strains afflicting its neighbors in the economic periphery- notably, Greece, Portugal, Italy and Spain. Marshall Auerback and Rob Parenteau: The Myth of Greek Profligacy & the Faith Based Economics of the ‘Troika’ By Marshall Auerback, a portfolio strategist and hedge fund manager, and Rob Parenteau, CFA, sole proprietor of MacroStrategy Edge and a research associate of The Levy Economics Institute Historically, Greeks have been very good at constructing myths. The rest of the world? Not so great, if the current burst of commentary on the country is anything to go by. Reading the press, one gets the impression of a bunch of lazy Mediterranean scroungers, enjoying one of the highest standards of living in Europe while making the frugal Germans pick up the tab.
A tale of two economies – Greece and Iceland Last Friday (March 9, 2012), the Greek government effectively defaulted on its public debt after the required minimum of 75 per cent of private creditors agreed to the so-called “haircut” or debt swap. I find it amusing how the Euro leaders have attempted to massage the default as a debt swap or some other euphemism. The facts are obvious – close to 100 per cent of those who are holding Greek government debt will lose at a minimum 53.5 per cent of the value of their assets. Die Top-Ökonomen: Kemal Dervis - Weg mit den deutschen Exportüberschüssen Kemal Dervis Das Thema sollten jedoch nicht nur auf Leistungsbilanzdefizite in Industrieländern und Überschüsse in Entwicklungsländern beschränkt werden. Viele Entwicklungsländer - darunter Indien, Südafrika, Brasilien und die Türkei - weisen Leistungsbilanzdefizite auf. Auch gibt es viele Industrieländer mit einem Leistungsbilanzüberschuss: Deutschland ist seit dem Beginn der Eurokrise ein bekanntes Beispiel, aber auch Japan, die Niederlande, Norwegen und Schweden produzieren Überschüsse. Es geht also nicht nur darum, die Überschüsse der Entwicklungsländer abzubauen, um dadurch die Defizite der Industrieländer entsprechend zu verkleinern.
Germany: A False Model at Reports from the Economic Front As growing numbers of countries face renewed austerity pressures, there is a tendency to explain the trend by searching for specific policy failures in each country rather than considering broader structural dynamics. Key to the credibility of those who argue for a focus on national decisions is the existence of countries that people believe are performing well. Thus, the argument goes, if only policy makers followed best practices their people wouldn’t find themselves in such a bad place.
Germans and Aliens The Times has an article today about Germany’s faith in austerity as the answer to depression. It’s sad reading for anyone hoping that Europe will get its act together; it’s especially galling that Germans remain so committed to belief in expansionary austerity, despite the thorough empirical debunking the notion has been given over the past year and a half (see, e.g., this IMF working paper (pdf)). But the Germans believe that their own experience shows that austerity works: they went through some tough times a decade ago, but they tightened their belts, and all was well in the end.
The eurozone crisis is not about market discipline Washington, DC - The people who gave us the eurozone crisis are working around the clock to redefine it in order to profit politically. Their editorials - run as news stories in media outlets everywhere - claim that the euro crisis is a story of profligate governments being reined in by the bond market. This is what is known in economics as a "lie". The eurozone crisis is most definitely not a story of countries with out of control spending getting their comeuppance in the bond market. Prior to the economic collapse in 2008, the only country that had a serious deficit problem was Greece.
The meaning of "solidarity" in the eurozone 4 June 2012Last updated at 20:20 ET By Michael Goldfarb Writer and broadcaster Supporters of European integration have always been keen on the idea of "solidarity" between nations. It's not a word heard so much in the Anglo-Saxon world - but at this time of crisis, perhaps examples from American history hold useful lessons? European Union technocrats use the word "solidarity" a lot these days.
Robert Mundell, evil genius of the euro The idea that the euro has "failed" is dangerously naive. The euro is doing exactly what its progenitor – and the wealthy 1%-ers who adopted it – predicted and planned for it to do. That progenitor is former University of Chicago economist Robert Mundell. The architect of "supply-side economics" is now a professor at Columbia University, but I knew him through his connection to my Chicago professor, Milton Friedman, back before Mundell's research on currencies and exchange rates had produced the blueprint for European monetary union and a common European currency.
Euro-da-Fé (Brussels) Nonplussed by this week’s unemployment report showing the Eurozone jobless rate rising to an unprecedented 12%, members of the European Parliament and Europe’s national governments pressed ahead on Wednesday with passage of a stringent new package of austerity measures. Dubbed “hyperaustérité” or “Übersparpolitik” by its backers, the new program of ruthless cuts and social demolition promises to deliver even higher levels of joblessness, misery and hopelessness than has been achieved so far by earlier rounds of austerity. Along with the new economic measures, the European Union (EU) also announced its intention to change its name to the “European Sadomasochistic Cult.” The new ESC will take the leading role in the implementation of European hyperausterity. “Nothing is really changing,” stated Dutch finance minister and Eurogroup chairman Jeroen Dijsselbloem.
“Nobody in Europe” sees a “contradiction” between austerity and growth By William K. Black The two most revealing sentences about the gratuitous Eurozone disaster – the creation of the deepening über-Depression – was reported today.