tag:blogger.com,1999:blog-6685155377705481833.post1304323497916872714..comments2023-09-22T03:17:50.469-04:00Comments on Middle Class Political Economist: Impending disaster in GreeceKenneth Thomashttp://www.blogger.com/profile/05747704671007690674noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-6685155377705481833.post-21758849705823159602015-07-20T22:42:45.510-04:002015-07-20T22:42:45.510-04:00Sounds like bad money after good.Sounds like bad money after good.Jackhttp://novatownhall.comnoreply@blogger.comtag:blogger.com,1999:blog-6685155377705481833.post-17618248836595909942015-07-20T12:15:17.340-04:002015-07-20T12:15:17.340-04:00Greece has been reducing its GDP faster than its d...Greece has been reducing its GDP faster than its debt, which is why the debt/GDP ratio keeps growing. The alternative to austerity is growth.<br /><br />As for your second question, even within the flawed lens of "country as family," if you declare bankruptcy it's actually quite easy to find credit card offers. They'll have crappy terms at first, but get better over time. So you should not be surprised that after a debt writedown, Greece can borrow. Iceland is a perfect example of this. It can now borrow at very low rates.Kenneth Thomashttps://www.blogger.com/profile/05747704671007690674noreply@blogger.comtag:blogger.com,1999:blog-6685155377705481833.post-79740378496785063412015-07-17T11:02:39.864-04:002015-07-17T11:02:39.864-04:00What is the alternative to "austerity"?
...What is the alternative to "austerity"?<br /><br />Greece has been overspending for years, and piling up debt. If the debt is cancelled so that Greece can make the new, lower payments, who will lend them more money? No-one. The result will still be "austerity" (i.e., living within their means).jackhttp://novatownhall.comnoreply@blogger.comtag:blogger.com,1999:blog-6685155377705481833.post-2622996703879126722015-07-15T16:28:56.953-04:002015-07-15T16:28:56.953-04:00Indeed. The full story serves as a milder foretas...Indeed. The full story serves as a milder foretaste of what has just happened, in much more brutal fashion, to Syriza supporters' hopes for a genuine (anti-austerian) solution to the Greek crisis: <br /><br />http://bilbo.economicoutlook.net/blog/?p=27039<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6685155377705481833.post-28857262435989077622015-07-15T13:59:38.404-04:002015-07-15T13:59:38.404-04:00According to David Andrews (in my co-edited book *...According to David Andrews (in my co-edited book *Structure and Agency in International Capital Mobility), France's foreign exchange reserves came within days of being exhausted and the country was facing an immediate plunge in the value of the franc of more than 20%. The government's assessment (which, of course, could have been wrong, but I'm not in a position to judge) was that the immediate inflationary consequences could not be dealt with. Hence, the retreat from unilateral expansion.<br /><br />At the same time, these events motivated the French to seek the creation of the euro, as a way of not being beholden to the German Bundesbank's monetary policy. But as we have seen, in the negotiations creating the euro, the Germans were successful at creating a European Central Bank that maintained the Bundesbank's singular responsibility of preventing inflation with the US Fed's dual mission of reducing unemployment. Talk about locking in a deflationary bias!Kenneth Thomashttps://www.blogger.com/profile/05747704671007690674noreply@blogger.comtag:blogger.com,1999:blog-6685155377705481833.post-5786167481703855562015-07-15T10:38:34.418-04:002015-07-15T10:38:34.418-04:00France did not have a floating exchange rate under...France did not have a floating exchange rate under Mitterrand. It had joined the European Exchange Rate Mechanism in 1979, and Mitterrand's decision to keep the franc in the ERM led to the u-turn and austerity starting in 1984.Rich Chttps://www.blogger.com/profile/11768615623375545324noreply@blogger.comtag:blogger.com,1999:blog-6685155377705481833.post-26690600066543609172015-07-15T09:31:23.690-04:002015-07-15T09:31:23.690-04:00I'm not sure I understand the worry about curr...I'm not sure I understand the worry about currency devaluation ("For example, the franc was 4.6453 to the dollar in January 1981, but fell to 8.0442 by August 1983, 9.3041 by September 1984, and 10.0933 in February 1985"). It was my understanding that devaluation was not a danger to avoid but rather a goal to achieve. Are you suggesting that there could be *too much* devaluation?Anonymousnoreply@blogger.com