I visited Greece for six months in the mid 80's. It was easy for me to live on savings because the exchange rate was so favorable. Tourism was high for the same reason and foreign visitors bought the hand-woven rugs on sale in the Plaka. People were poor, the women were incredibly hard workers, and many of the men had moved to Germany -- initially to work for higher wages but then gradually the money stopped coming home and the men never returned to their families. It was a beautiful and tragic place.
Spain had a surplus before the real estate market collapsed.
Italy has had higher debt levels in the past and as a sovereign nation with its own currency was able to shrink its deficits on its own with no help from Germany. Now, because it does not have its own currency, it is trapped.
In other words, the story is richer and more complex than your childlike morality-play version.
"The Mediterraneans wanted to have the euro so they could live a life of leisure and have the Germans work for them"
If that were true Germany would never have wanted a common currency with the Mediterranean nations. Germany has benefited enormously from the Eurozone. It allowed them to get a lot more profit from their exports than they would have been able to get without it.
The problem with your reasoning is that you're mixing metaphors. You started off by claiming that tax evasion is proof that people aren't choosing to buy the gov't (=services) and that therefore tax evasion is "free market proof" of the worthlessness of those gov't services.
That's baloney because if people are getting the services for free (via tax evasion) there's no market principle involved. The tax evasion may prove something but whatever that something may be, it can't be that the free market has determined the services are worthless.
Now you're saying something completely different, namely that "bad" governments fail to thrive -- in a Darwinian sense. You're just taking some of the same words and using them in a completely different argument. Whatever the validity of this new argument may be (and it has holes too), it has no bearing on your original assertion.
"they shouldn't be allowed to borrow any more money"
That's not a feasible option. Greece's debts are not credit card accounts. They're bonds that mature. The only way the principal *can* be repaid in the near term is by rolling over the debt. There are only two alternatives to rolling over the debt: 1) sovereign default (which the eurozone will never allow) or 2) a monetary gift (i.e., bailout) that doesn't need to be paid back.
No you're not. A market is an exchange place in which price for commodity is set. If a car thief steals a BMW, does that make the BMW a bad product? No, if anything, it indicates that it's a desirable product -- one worth the risk of jail time. Your logic is flawed because you're not describing a market; you're describing a theft.
"But the dream of European unity is dissolving in real time....."
Actually that's the good news. Germany is driving the entire region into recession with its fantasy notions of how sovereign monetary systems work.
The Eurozone needs to dissolve. Eventually, it will. It's really only a question of how much pain that process inflicts. If it can dissolve peicewise rather than with a big explosion, that's the lesser evil.
Eurozone Agreement: Bad For Germany, Bad For The World [View article]
Great article! Sadly, ideological blinders will prevent most readers from understanding it. When people think "debt" they equate it to personal or household debt and simply can't get beyond that to understand the ways in which sovereign debt (with control over own currency) differs.
Germany will not change course until it has an unemployment crisis. Germans are extremely stoic and have a sufficiently socialistic system that this discomfort level would need to be quite high, with unemployment in the 20-30% range, before they begin to think about changing course. Once they reach that point, deterioration should be quite rapid, so it's conceivable unemployment in Germany will reach levels well above 50% before the slow process to enact policy measures begins to kick in. I've been saying this for a long time -- that the ECB will not print until it's too late to matter. So far, events are unfolding as expected.
"This discussion has some strange twists and turns."
The problem is, S.U., that you posted facts and data. There are a lot of people with very set opinions who won't stand for having them contradicted by facts under any circumstances.
Yeah, I agree GreenRiver. One of the reasons for getting away from the gold standard was the bubble problem. People hoard gold, it goes up in value, then profit taking leads to dumping. Boom-bust cycles also occur in nature. It's an inherent outcome of the non-linear dynamics.
Europe's Disastrous Summit [View article]
I visited Greece for six months in the mid 80's. It was easy for me to live on savings because the exchange rate was so favorable. Tourism was high for the same reason and foreign visitors bought the hand-woven rugs on sale in the Plaka. People were poor, the women were incredibly hard workers, and many of the men had moved to Germany -- initially to work for higher wages but then gradually the money stopped coming home and the men never returned to their families. It was a beautiful and tragic place.
Spain had a surplus before the real estate market collapsed.
Italy has had higher debt levels in the past and as a sovereign nation with its own currency was able to shrink its deficits on its own with no help from Germany. Now, because it does not have its own currency, it is trapped.
In other words, the story is richer and more complex than your childlike morality-play version.
Europe's Disastrous Summit [View article]
??? I never once said that. You're just setting up strawmen.
"you are just making excuses for them"
Excuses? What excuses? Now you're fabricating. This is a waste of time. Goodbye troll.
Europe's Disastrous Summit [View article]
If that were true Germany would never have wanted a common currency with the Mediterranean nations. Germany has benefited enormously from the Eurozone. It allowed them to get a lot more profit from their exports than they would have been able to get without it.
Europe's Disastrous Summit [View article]
That's baloney because if people are getting the services for free (via tax evasion) there's no market principle involved. The tax evasion may prove something but whatever that something may be, it can't be that the free market has determined the services are worthless.
Now you're saying something completely different, namely that "bad" governments fail to thrive -- in a Darwinian sense. You're just taking some of the same words and using them in a completely different argument. Whatever the validity of this new argument may be (and it has holes too), it has no bearing on your original assertion.
Europe's Disastrous Summit [View article]
That's not a feasible option. Greece's debts are not credit card accounts. They're bonds that mature. The only way the principal *can* be repaid in the near term is by rolling over the debt. There are only two alternatives to rolling over the debt: 1) sovereign default (which the eurozone will never allow) or 2) a monetary gift (i.e., bailout) that doesn't need to be paid back.
Europe's Disastrous Summit [View article]
No you're not. A market is an exchange place in which price for commodity is set. If a car thief steals a BMW, does that make the BMW a bad product? No, if anything, it indicates that it's a desirable product -- one worth the risk of jail time. Your logic is flawed because you're not describing a market; you're describing a theft.
Europe's Disastrous Summit [View article]
Europe's Disastrous Summit [View article]
Actually that's the good news. Germany is driving the entire region into recession with its fantasy notions of how sovereign monetary systems work.
The Eurozone needs to dissolve. Eventually, it will. It's really only a question of how much pain that process inflicts. If it can dissolve peicewise rather than with a big explosion, that's the lesser evil.
Eurozone Agreement: Bad For Germany, Bad For The World [View article]
Germany will not change course until it has an unemployment crisis. Germans are extremely stoic and have a sufficiently socialistic system that this discomfort level would need to be quite high, with unemployment in the 20-30% range, before they begin to think about changing course. Once they reach that point, deterioration should be quite rapid, so it's conceivable unemployment in Germany will reach levels well above 50% before the slow process to enact policy measures begins to kick in. I've been saying this for a long time -- that the ECB will not print until it's too late to matter. So far, events are unfolding as expected.
Bottom line: prepare for depression. It's coming.
Playing Out The Scenarios From A Disorderly Collapse Of The Eurozone [View article]
Playing Out The Scenarios From A Disorderly Collapse Of The Eurozone [View article]
How Japan Escaped A Depression [View article]
The problem is, S.U., that you posted facts and data. There are a lot of people with very set opinions who won't stand for having them contradicted by facts under any circumstances.
How Japan Escaped A Depression [View article]
How Japan Escaped A Depression [View article]
Your fact checking is rusty. The U.S. is the biggest purchaser of U.S. debt. The second biggest purchaser is China.
The Eurozone's Terrible Mistake [View article]