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European Austerity

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Irviding
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#1

Posted 11 May 2012 - 03:04 AM

What do the Europeans think of this? I just read this article about British police sacrificing their careers to protest the Cameron government's austerity.

http://www.dailystar...r-pensions.ashx

^Article for reference.

Do any of you actually support these measures, and believe that austerity is the solution in bad economic times?(Cameron's austerity put Britain nto a double-dip recession might I add)

We can even bring it to the American side too, and talk about what the Tea-Party is advocating, i.e. rip down the entire government and rebuild it from the ground up to quote them almost directly.


sivispacem
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#2

Posted 11 May 2012 - 08:20 AM

Rather unhelpfully, my response to this is "yes and no".

I've made my views on cuts to certain parts of the public sector- most notably defence- rather clear. However, in the context of what has been going on over the last 24 hours, I have little sympathy for most of those protesting. My first point of contention is that those protesting have, over the last few years, had things rather too easy. It used to be the case that the public sector had to make do with lower wages and smaller bonuses than the private actor but this hasn't been the case for the last few years.The quality of pensions that most public sector workers can retire with is on the verge of being downright offensive to many private sector workers- it's a sick joke that government employees can retire on pay packets based on their final salary and an affront to the sector that actually provides economic well-being that they have the audacity to strike when the government tries to level the playing field. Even more troubling is the resistance amongst some tio the very principle of performance related pay. Unless large numbers of sector employees are routinely and intentionally being disruptive, slow or unproductive in their working habits then surely performance related pay is an entirely good thing?

The public sector has been hugely over-subsidised and is almost solely responsible for the fiscal mess we are in. However- and it is a big however- the cutting of expenditure in areas which drive growth is a spectacular own-goal. I'm all for re-jigging the public sector to provide better value for money, more competition and less monolithic and unresponsive services, but as you quite rightly identify you need growth to keep it all afloat and in my view they should be investing a portion of what they are saving by cutting public sector expenditure to promote science, technology, innovation and our big economy-driving industries. That's the only way we're going to find our way out of this mess.

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#3

Posted 11 May 2012 - 03:14 PM

My post is rather unhelpful as well.

sivi-

Without understanding the details of English policy, it sounds really complicated and sticky. I hope the best for you guys. For one thing, we all seem to be in this together with the global economy what it is and I'm pretty tired of watching my 401K sit there idol.

QUOTE
The public sector has been hugely over-subsidised and is almost solely responsible for the fiscal mess we are in. However- and it is a big however- the cutting of expenditure in areas which drive growth is a spectacular own-goal. I'm all for re-jigging the public sector to provide better value for money, more competition and less monolithic and unresponsive services, but as you quite rightly identify you need growth to keep it all afloat and in my view they should be investing a portion of what they are saving by cutting public sector expenditure to promote science, technology, innovation and our big economy-driving industries. That's the only way we're going to find our way out of this mess.


Your absolutely right!!! I push technical education and research hard. The only reason I didn't get laid off in 2008 is the fact that I work as an engineer for a good healthy company that engineers and manufactures products. There are only 3 ways to generate wealth: Grow it, dig it out of the ground or manufacture it. Without these, we stagnate and technology is key in the last one.

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#4

Posted 13 May 2012 - 03:37 AM Edited by Antinark, 13 May 2012 - 03:39 AM.

I read an article the other day that stated that if Corporate tax rates had been kept at their pre-1980's levels than all this austerity wouldn't be necessary.

Austerity is a scam. In Canada's case the government preaches austerity while they beef up the military and spend more on crime and order. They're actually spending MORE than previous centrist and left-leaning governments.

Here's the article for reference: link

Leftcoast
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#5

Posted 13 May 2012 - 04:22 AM

Antinark

I noticed the article you posted had mentioned what we, at least in the USA, call "trickle down economics". I don't disagree with your statement, mostly I want to bash "trickle down economics".

While I can't say that in the USA that trickle down economics should take all the blame for the economy, I do want to say that they are total BS. The whole idea is smoke and mirrors by the rich to give themselves an undue tax break and make the rest of the population pay for everything. They certainly are not helping to right the situation, that much is for sure.

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#6

Posted 13 May 2012 - 04:46 AM

Public sector workers and teachers here have had it good for a while so I dont care about there cuts. they are the only people that really have unions too so they will strike. But I agree with there cuts.

Irviding
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#7

Posted 13 May 2012 - 05:04 AM

QUOTE (nic_23 @ Saturday, May 12 2012, 23:46)
Public sector workers and teachers here have had it good for a while so I dont care about there cuts. they are the only people that really have unions too so they will strike. But I agree with there cuts.

But don't you also agree that cutting anything in a time of economic recession is a bad idea? It's simple macroeconomics. Don't cut spending in times of recession. I don't know why all of Europe is doing that. It's absolute stupidity to try to cut your way to prosperity.

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#8

Posted 13 May 2012 - 05:47 AM

QUOTE (Irviding @ Sunday, May 13 2012, 06:04)
QUOTE (nic_23 @ Saturday, May 12 2012, 23:46)
Public sector workers and teachers here have had it good for a while so I dont care about there cuts. they are the only people that really have unions too so they will strike. But I agree with there cuts.

But don't you also agree that cutting anything in a time of economic recession is a bad idea? It's simple macroeconomics. Don't cut spending in times of recession. I don't know why all of Europe is doing that. It's absolute stupidity to try to cut your way to prosperity.

were cutting there pensions lol they aint gonna be spending that money now are they? and i think there pay cuts are a fraction.

they get far too much anyway.

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#9

Posted 13 May 2012 - 11:40 PM

You can't endlessly raise taxes to finance a massive, growing government because you will eventually raise them to the point that your economy will stagnate. You also can't ignore the unsustainable debts, because it will lead to the collapse of the economy (as has already been seen in Greece). The only viable solution is to reduce spending.

Irviding
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#10

Posted 14 May 2012 - 12:03 AM Edited by Irviding, 14 May 2012 - 03:44 AM.

QUOTE (Chunkyman @ Sunday, May 13 2012, 18:40)
You can't endlessly raise taxes to finance a massive, growing government because you will eventually raise them to the point that your economy will stagnate. You also can't ignore the unsustainable debts, because it will lead to the collapse of the economy (as has already been seen in Greece). The only viable solution is to reduce spending.

Yes you can. If we in the US raised spending by about 1-2 trillion dollars, in the long run it wouldn't make much of a difference on the debt because that spending will increase the size of the economy, cause growth to come back in greater numbers, resulting in more confidence and at the end of the day more taxes (without having to raise marginal rates).

Greece's problems are not all to do with reckless spending as you've been lead to believe. If you refer to the below charts, you'll see that other countries in Europe were spending more than Greece and had higher deficits than Greece, and at this point today, they are exemplars of modern, western economies (Germany, Austria)

user posted image

user posted image

On the second chart, you can see Greece at the top, but other European countries facing massive economic turmoil right now like Spain, Portugal, and Ireland are way down there - models for the rest of the EU. Ireland was running a surplus for Christ's sake.

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#11

Posted 14 May 2012 - 12:29 AM

QUOTE (Irviding @ Monday, May 14 2012, 00:03)

Yes you can. If we in the US raised spending by about 1-2 trillion dollars, in the long run it wouldn't make much of a difference on the debt because that spending will increase the size of the economy, cause growth to come back in greater numbers, resulting in more confidence and at the end of the day more taxes (without having to raise marginal rates).


Growth and consumer confidence are important, but Keynesian stimulus isn't the correct approach. While I'm no expert on all the laws and regulations of the various European countries, I can imagine they have many useless laws that inhibit growth like America does. Legalizing drugs, gambling, prostitution; ending any protectionist trade policies that inhibit growth; removing occupational licensing laws; lowering inflation to restore consumer confidence, and other such acts would be significantly more likely to achieve success than stimulus spending would (and it wouldn't cost huge amounts of money).

I'm curious. In your opinion, what was the cause of the Greece economic woes?

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#12

Posted 14 May 2012 - 01:38 AM

QUOTE (Chunkyman @ Sunday, May 13 2012, 19:29)
QUOTE (Irviding @ Monday, May 14 2012, 00:03)

Yes you can. If we in the US raised spending by about 1-2 trillion dollars, in the long run it wouldn't make much of a difference on the debt because that spending will increase the size of the economy, cause growth to come back in greater numbers, resulting in more confidence and at the end of the day more taxes (without having to raise marginal rates).


Growth and consumer confidence are important, but Keynesian stimulus isn't the correct approach. While I'm no expert on all the laws and regulations of the various European countries, I can imagine they have many useless laws that inhibit growth like America does. Legalizing drugs, gambling, prostitution; ending any protectionist trade policies that inhibit growth; removing occupational licensing laws; lowering inflation to restore consumer confidence, and other such acts would be significantly more likely to achieve success than stimulus spending would (and it wouldn't cost huge amounts of money).

I'm curious. In your opinion, what was the cause of the Greece economic woes?

Can you point to some of those regulations that inhibit business, considering the fact that we have the highest ease of doing business rank in the world, apart from Singapore and Hong Kong?

Keynesian stimulus is the correct approach. It works every single time. It has never failed. Ever.

They can't lower inflation in Greece. That's part of the major problem with Spain, Greece, etc. because they can't control their own currencies i.e. devalue them.

Greece ran massive deficits when they didn't need to. They had massive corruption resulting in tremendous tax fraud. You name it. The Greek economy actually fared worse than it did after the initial crash due to all of the austerity. You also had a massive overvaluation of currency in Southern Europe, due to the capital that poured into there after the Euro was created. If Greece left the Euro and devalued its currencies to nothing, they'd rise out of this mess pretty quickly. Coupled with some fiscal stimulus after that, they'd be in good territory.

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#13

Posted 14 May 2012 - 01:57 AM

QUOTE
Growth and consumer confidence are important, but Keynesian stimulus isn't the correct approach. While I'm no expert on all the laws and regulations of the various European countries, I can imagine they have many useless laws that inhibit growth like America does. Legalizing drugs, gambling, prostitution; ending any protectionist trade policies that inhibit growth; removing occupational licensing laws; lowering inflation to restore consumer confidence, and other such acts would be significantly more likely to achieve success than stimulus spending would (and it wouldn't cost huge amounts of money).


How is removing occupational licensing laws going to help anything? As a blanket statement like you made, this doesn't work. Seriously, we don't need any one and every one to practice medicine or be allowed to sign off on engineering plans with no clue what they are doing. Make the laws more practical, sure, I'm all for that but we cannot simply do away away with them.

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#14

Posted 14 May 2012 - 03:22 AM Edited by Chunkyman, 14 May 2012 - 03:26 AM.

QUOTE (Leftcoast @ Monday, May 14 2012, 01:57)


How is removing occupational licensing laws going to help anything?  As a blanket statement like you made, this doesn't work.  Seriously, we don't need any one and every one to practice medicine or be allowed to sign off on engineering plans with no clue what they are doing.  Make the laws more practical, sure, I'm all for that but we cannot simply do away away with them.

Here is a good explanation by economist Milton Friedman as to why occupational licensing is economically undesirable. I'm aware it's an older work of his, but the ideas remain true. It's a bit long, but well worth the time.


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#15

Posted 14 May 2012 - 03:27 PM

Chunkyman-

Milton uses a lot of examples that I agree with, I don't see much reason to require a license for. Here is what I don't like; the way he talks in this article seems like it's aimed at making the licensing bodies look like old guilds and or part of the Indian cast system.

I will counter this with something I am familiar with, engineering licensing. First off, getting licensed as an engineer isn't about controlling how many people can work as a licensed engineer and it's not about controlling wages, it's about public safety. Any one can take the steps to get licensed if they want. It is very important to require certain engineers to have a license. Example: If the government contracts out the design and construction of a major bridge to Company A, Company A will do it's best to build the bridge as cheaply as possible. Company A decides not to use licensed engineers since (in this fictional example) it's not required by law and licensed engineers are more expensive. 1 year into service the bridge collapses due to faulty design sending 25 people falling to their death. There are plenty of examples similar to this that led to professionally licensed engineers. I chose a fake example avoid getting too far off topic with some of the more note worthy engineering disasters. The bottom line, there are a few professions that should still require a license, in the example of engineering, not all jobs even require a license. I can elaborate on that if you would like.


Last Paragraph in Milton Friedman's article.
QUOTE
I would not even want to maintain that the medical teams would dominate the field. My aim is only to show by example that there are many alternatives to the present organization of practice. The impossibility of any individual or small group conceiving of all the possibilities, let alone evaluating their merits, is the great argument against central governmental planning and against arrangements such as professional monopolies that limit the possibilities of experimentation. On the other side, the great argument for the market is its tolerance of diversity; its ability to utilize a wide range of special knowledge and capacity. It renders special groups impotent to prevent experimentation and permits the customers and not the producers to decide what will serve the customers best.


Milton Friedman, Capitalism and Freedom, 1962
Chapter IX, Occupational Licensure
http://books.cat-v.o...edom/chapter_09


I wanted to end by looking at Friedman's last paragraph, it seems to me like he isn't exactly for abolishing licensing, rather he is trying to think outside the box and come up with a better method. He certainly does point out a lot of professions that shouldn't need any license, I agree with you there. And I'm all for making improvements to the system, I can't in good conscience agree that we need to abolish licensing all together unless a better system is set to replace it.

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#16

Posted 14 May 2012 - 10:11 PM

I think his argument for ending occupational licensing laws is frankly ridiculous. What the hell is the point to it? Encourage greater competition in the marketplace because the people who use an unlicensed Podiatrist won't have feet anymore and therefore over time that unlicensed podiatrist will be taken off the market due to his failures? I mean come on.

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#17

Posted 15 May 2012 - 03:52 PM

QUOTE
I think his argument for ending occupational licensing laws is frankly ridiculous. What the hell is the point to it? Encourage greater competition in the marketplace because the people who use an unlicensed Podiatrist won't have feet anymore and therefore over time that unlicensed podiatrist will be taken off the market due to his failures? I mean come on.


I got the feeling Milton's over all thought is that the market would some how self regulate. Sometimes it sounds ok in theory, but in reality never seems to work out. We need laws to maintain order and in this case restrict certain professions by requiring a license. Referencing medieval guilds and crazy state laws requiring a license to shovel dirt or some other menial task is not a basis to say that Engineers and Medical Professionals should be allowed to practice unlicensed.


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#18

Posted 16 May 2012 - 06:44 PM

I hope that all europeans will finally realize that this austerity is anything but a solution to the crisis, before it's too late. Let me tell you, it's ugly. Many people are searching for food in the trash bins. Many people are commiting suicide. It's becoming less and less safer to move at night. Of course that's more prominent in big cities like Athens, but it's getting progressively worse everywhere. A Neonazi party is on the rise. If this continues I am willing to bet that most of the eurozone countries are going to become like that (except the ones that benefit from it, like germany). My country today is like germany in 1930. Humiliated, made an example of, looked down upon. No good is going to come out of this. And the worse of it is that the rest of europe has a completely distorted view of the situation here. Lazy greeks has become a slogan but that is totally untrue, for many reasons I am willing to go through if someone really wants me to. I don't know if it's worth staying in eurozone anymore after the massive cuts and the huge drop on the quality of life. Austerity cannot continue, is this really europe?

I think there is hope though. Sarkozy lost the elections in france, and the polls are showing a left wing party, syriza, as the most likely one to win the elections in June 17. The outlook on Merkel is not really good either. Thousands protest in Spain. Let this continue.

In my opinion, in the long run, the only solution for the crisis, the poverty, and the inequalities, is a different system than this hardcore corporatism, which is essentially a market dictatorship. Is it social democracy? Is it democratic socialism? I don't know. What I do know, is that capitalism has failed as much as communism. It's time to change it. (and that's what the neonazis are taking advantage of)

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#19

Posted 16 May 2012 - 06:51 PM

QUOTE (gtaivpc @ Wednesday, May 16 2012, 13:44)
I hope that all europeans will finally realize that this austerity is anything but a solution to the crisis, before it's too late. Let me tell you, it's ugly. Many people are searching for food in the trash bins. Many people are commiting suicide. It's becoming less and less safer to move at night. Of course that's more prominent in big cities like Athens, but it's getting progressively worse everywhere. A Neonazi party is on the rise. If this continues I am willing to bet that most of the eurozone countries are going to become like that (except the ones that benefit from it, like germany). My country today is like germany in 1930. Humiliated, made an example of, looked down upon. No good is going to come out of this. And the worse of it is that the rest of europe has a completely distorted view of the situation here. Lazy greeks has become a slogan but that is totally untrue, for many reasons I am willing to go through if someone really wants me to. I don't know if it's worth staying in eurozone anymore after the massive cuts and the huge drop on the quality of life. Austerity cannot continue, is this really europe?

I think there is hope though. Sarkozy lost the elections in france, and the polls are showing a left wing party, syriza, as the most likely one to win the elections in June 17. The outlook on Merkel is not really good either. Thousands protest in Spain. Let this continue.

In my opinion, in the long run, the only solution for the crisis, the poverty, and the inequalities, is a different system than this hardcore corporatism, which is essentially a market dictatorship. Is it social democracy? Is it democratic socialism? I don't know. What I do know, is that capitalism has failed as much as communism. It's time to change it. (and that's what the neonazis are taking advantage of)

Truly moving post. What do you believe the best solution is? I'm in the camp of your country exiting the Euro and devaluing your old currency. I certainly sees the troubled with that method though, namely its impacts on the rest of thr EU.

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#20

Posted 16 May 2012 - 07:15 PM Edited by gtaivpc, 16 May 2012 - 07:19 PM.

I'm no expert in economics. However, I am sure that we are in the wrong path. My opinion is that the terms of the bailout package have to be renegotiated. If we manage to adopt a less murderous approach that actually encourages growth, then I am willing to put up with the austerity a bit more and stay in the eurozone. If this fails, I say let's go back to a national currency, even though the first months will probably be worse than being in hell... I think that in the long run we'll be better off. There's an article in the financial times that points it out, here.


If the current austerity policy continues to be applied, I can only fear what will come next. It will either be a violent revolution, with riots and hunders of casualaties, or a totalitarian regime which is even worse. That's why nobody that supports this austerity has a grasp of the situation. The greek society is on the verge of madness (even Sparta, which I live extremely close to tounge.gif ). How can it not be, when the official figures of unemployment are up to 21%? In the ages up to 25, it's over 50%. And we're not talking about uneducated youth. We're talking about doctors, engineers, lawyers, with postgraduate studies and PhDs. All those years of hard work, so that we have a mild chance of getting a sh*tty part time job (cashiers, waiters, etc.) that pays 300 euros a month, of course not with insurance. Why would someone defend this policy?

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#21

Posted 16 May 2012 - 07:53 PM

QUOTE (gtaivpc @ Wednesday, May 16 2012, 20:15)
I'm no expert in economics. However, I am sure that we are in the wrong path. My opinion is that the terms of the bailout package have to be renegotiated. If we manage to adopt a less murderous approach that actually encourages growth, then I am willing to put up with the austerity a bit more and stay in the eurozone. If this fails, I say let's go back to a national currency, even though the first months will probably be worse than being in hell... I think that in the long run we'll be better off. There's an article in the financial times that points it out, here.

If the current austerity policy continues to be applied, I can only fear what will come next. It will either be a violent revolution, with riots and hunders of casualaties, or a totalitarian regime which is even worse. That's why nobody that supports this austerity has a grasp of the situation. The greek society is on the verge of madness (even Sparta, which I live extremely close to tounge.gif ). How can it not be, when the official figures of unemployment are up to 21%? In the ages up to 25, it's over 50%. And we're not talking about uneducated youth. We're talking about doctors, engineers, lawyers, with postgraduate studies and PhDs. All those years of hard work, so that we have a mild chance of getting a sh*tty part time job (cashiers, waiters, etc.) that pays 300 euros a month, of course not with insurance. Why would someone defend this policy?

Personally, I don't think Greece should have ever joined the Euro. It was never economically strong enough; it's had a history of having to inflate or deflate the value of its currency for various reasons, which is all well and good if you have a national currency but impossible if you are fiscally bound to other powers. It's a desperate situation in Greece- not just because of the cuts that are being forced onto it by the ECB but also because of an astonishing degree of political malpractice; decades of inflating their own growth figures whilst using loans to prop up the public purse; a societal approach which has until very recently actively encouraged large-scale tax evasion and fraud. If Greece hadn't joined the Euro then things would be much easier for them as they could manipulate their own currency, exchange rates and interest rates but that's very hard with a currency that's shared transnationally and especially dangerous for a country that's a net exporter and has spectacularly crippled their own economic capability by focusing most of their tax rises on private enterprise. And a fiscal union is always going to be governed by the most economically powerful nations in that union- something that the countries now struggling with the terms and conditions of bailouts and monetary assistance should have foreseen.

The problems with unemployment in Greece are not, however, directly caused by the cuts- they're caused by a more fundamental political and social issue that's prevalent across much of Southern Europe- nations with often Socialist-leaning histories which have spend generations gradually biasing their economy in favour of a large public sector at the expense of the private. My partner's father spent many years working in Greece, Italy, Germany, Colombia and many other countries, and he insists to this day that Greece was the hardest country he ever worked in in terms of managing and administering private enterprise. Greece, Italy, Portugal and Ireland made, in my view, a fundamental mistake in the development of their economies which nations like Germany- and for that matter the US- did not; they developed a public sector service infrastructure before they had the economic power to pay for it. Look at countries like a company- if you run a huge deficit for prolonged periods of time because you expenditure is far higher than either your productivity or your income, then you are going to run into serious trouble. In that context, where is it wisest to spend money? On self-serving, internal services like administration which bring almost no income or productivity gain at the expense of a large outlay (like subsidising a bloated, poorly managed and monolithic public sector) or on activities that see increased trade?

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#22

Posted 16 May 2012 - 09:14 PM Edited by Irviding, 16 May 2012 - 09:23 PM.

I agree with your entire post sivis, but I take issue with this -

QUOTE

The problems with unemployment in Greece are not, however, directly caused by the cuts

If anything, actually, the problems in unemployment are directly caused by austerity. The points you brought up are the 'indirect' causes. It's simple textbook macroeconomics which Merkel and other European leaders have forgotten. You do not EVER cut spending during a recession. Doing so exacerbates it, look at the UK for example. The massive unemployment in Greece RIGHT NOW, this second, today, is not due to the structural problems you mentioned. A better approach would have been for the Greek government to put through reforms, with the help of the EU, that would phase out their massively bloated public sector as you mentioned, and replace it with a better, more free-market economy. Give people who are currently employed in the bloated public sector under 40 the resources, government paid through stimulus, to go and get degrees for tasks in the private sector. Set up a private sector to take on all of those employees. Subsidize it and give it massive tax breaks. Private enterprise does not grow on its own. The people currently employed in the public sector who are bread-winners, have families, etc. - they keep their jobs but take a pension cut. If they still had their own currency, they could devalue it to literally nothing and stimulate consumer spending. The Greek Economy is currently sitting around 170% debt to GDP ratio. Too bad - take out more debt. The Europeans should lend them massive capital (and keep watch on the Greek government obviously) and allow them to enact stimulus measures to get the economy growing. The debt will pay down itself. Britain did the same after WWII and paid down its what? 280% debt/gdp ratio in the late 40s/50s to around 60-70 in the 70s. It's that simple. Simple, textbook macroeconomics that have been thrown out the window by Merkel and her cohorts for a retarded and crippling economic policy.

I think it's also important for me to add this: the Greek deficit has not gone down at all because the austerity measures pushed through caused the recession to worsen thus dampening tax receipts. So austerity fails on two ends.

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#23

Posted 01 June 2012 - 11:59 PM

Thought this was pretty good.

http://www.youtube.c...player_embedded

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#24

Posted 05 June 2012 - 05:04 AM

I read somewhere online (forget where) that some US investor thinks that the Euro zone is going collapse within the next 3 months.

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#25

Posted 05 June 2012 - 05:08 AM

QUOTE (nightwalker83 @ Tuesday, Jun 5 2012, 00:04)
I read somewhere online (forget where) that some US investor thinks that the Euro zone is going collapse within the next 3 months.

A lot of American economists think that. I'm not a believer in the current system; you can't have a fiscal union without a political union. It just doesnt work.

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#26

Posted 05 June 2012 - 05:16 AM

QUOTE (Irviding @ Tuesday, Jun 5 2012, 15:38)
QUOTE (nightwalker83 @ Tuesday, Jun 5 2012, 00:04)
I read somewhere online (forget where) that some US investor thinks that the Euro zone is going collapse within the next 3 months.

A lot of American economists think that. I'm not a believer in the current system; you can't have a fiscal union without a political union. It just doesnt work.

It amazes me how they thought the Eurozone would be a success given that it is made up of different groups of people whom are all wanting different things. With so much disagreement it is a wonder they even managed to get this far.

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#27

Posted 05 June 2012 - 07:29 AM

QUOTE (nightwalker83 @ Tuesday, Jun 5 2012, 06:16)
QUOTE (Irviding @ Tuesday, Jun 5 2012, 15:38)
QUOTE (nightwalker83 @ Tuesday, Jun 5 2012, 00:04)
I read somewhere online (forget where) that some US investor thinks that the Euro zone is going collapse within the next 3 months.

A lot of American economists think that. I'm not a believer in the current system; you can't have a fiscal union without a political union. It just doesnt work.

It amazes me how they thought the Eurozone would be a success given that it is made up of different groups of people whom are all wanting different things. With so much disagreement it is a wonder they even managed to get this far.

The Eurozone did (and still does) have the ability to work. It just needs to be limited to central continental European states like Germany, Belgium and Luxembourg. Even France aren't really economically stable enough for the Euro...

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#28

Posted 05 June 2012 - 12:07 PM

QUOTE (sivispacem @ Tuesday, Jun 5 2012, 02:29)
QUOTE (nightwalker83 @ Tuesday, Jun 5 2012, 06:16)
QUOTE (Irviding @ Tuesday, Jun 5 2012, 15:38)
QUOTE (nightwalker83 @ Tuesday, Jun 5 2012, 00:04)
I read somewhere online (forget where) that some US investor thinks that the Euro zone is going collapse within the next 3 months.

A lot of American economists think that. I'm not a believer in the current system; you can't have a fiscal union without a political union. It just doesnt work.

It amazes me how they thought the Eurozone would be a success given that it is made up of different groups of people whom are all wanting different things. With so much disagreement it is a wonder they even managed to get this far.

The Eurozone did (and still does) have the ability to work. It just needs to be limited to central continental European states like Germany, Belgium and Luxembourg. Even France aren't really economically stable enough for the Euro...

How so? It's not about their economic stability. It's about the fact that you have one country dictating monetary and even fiscal policy to an entire continent. The only way for the Euro to properly work is for a political union to be created. France is quite stable economically, as was Spain. It's because of all the capital that flowed to these countries like Greece and Spain because of the Euro that caused their collapse what you have now is essentially a country being dictated to by a woman with a physics degree who knows absolutely nothing about simple macroeconomics.

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#29

Posted 05 June 2012 - 05:11 PM Edited by sivispacem, 05 June 2012 - 05:14 PM.

QUOTE (Irviding @ Tuesday, Jun 5 2012, 13:07)
How so? It's not about their economic stability. It's about the fact that you have one country dictating monetary and even fiscal policy to an entire continent. The only way for the Euro to properly work is for a political union to be created. France is quite stable economically, as was Spain. It's because of all the capital that flowed to these countries like Greece and Spain because of the Euro that caused their collapse what you have now is essentially a country being dictated to by a woman with a physics degree who knows absolutely nothing about simple macroeconomics.

I disagree. If France and Spain were truly economically stable, they would have behaved largely like Germany did when the crash came- that is, suffering a few quarters of negative growth and then reverting back to growing at a reasonable rate. I agree that it is nonsensical for nations to share fiscal policy unless they have some kind of political unity, which is why the German-Benelux Euro model works- because much as the individual member states may protest, they are basically all one country anyway. Though I agree with your sentiments about Germany dictating Euro-zone economic policy under current circumstances, that would cease to be an issue in terms of this hypothetical union as they might as well be a single nation anyway.

For what its worth, I'm not entirely against the idea of a European super-state; that is, a proper nation state build from the basis of the EU or Euro zone. In economic and realpolitik terms it makes a lot of sense to have such a global player, and I think as long as social policy is internally administered by each sub-state and a degree of autonomy is still afforded its probably workable in the long-term as long as citizens forget their petty vindictive squabbles and embrace their new identity.

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#30

Posted 05 June 2012 - 09:38 PM

QUOTE (sivispacem @ Tuesday, Jun 5 2012, 12:11)
QUOTE (Irviding @ Tuesday, Jun 5 2012, 13:07)
How so? It's not about their economic stability. It's about the fact that you have one country dictating monetary and even fiscal policy to an entire continent. The only way for the Euro to properly work is for a political union to be created. France is quite stable economically, as was Spain. It's because of all the capital that flowed to these countries like Greece and Spain because of the Euro that caused their collapse what you have now is essentially a country being dictated to by a woman with a physics degree who knows absolutely nothing about simple macroeconomics.

I disagree. If France and Spain were truly economically stable, they would have behaved largely like Germany did when the crash came- that is, suffering a few quarters of negative growth and then reverting back to growing at a reasonable rate. I agree that it is nonsensical for nations to share fiscal policy unless they have some kind of political unity, which is why the German-Benelux Euro model works- because much as the individual member states may protest, they are basically all one country anyway. Though I agree with your sentiments about Germany dictating Euro-zone economic policy under current circumstances, that would cease to be an issue in terms of this hypothetical union as they might as well be a single nation anyway.

For what its worth, I'm not entirely against the idea of a European super-state; that is, a proper nation state build from the basis of the EU or Euro zone. In economic and realpolitik terms it makes a lot of sense to have such a global player, and I think as long as social policy is internally administered by each sub-state and a degree of autonomy is still afforded its probably workable in the long-term as long as citizens forget their petty vindictive squabbles and embrace their new identity.

But that's a result of their own doings; it's not because of intrinsic economic problems. The reason Germany got by essentially scott free was by how they responded to the crash. Instead of layoffs, they furloughed, cut wages, cut hours, etc. This allowed things to come back relatively nicely once the recession officially ended. France, on the other hand, ran its crisis response differently and are now paying for it. I'm not just talking about government workers by the way, I'm talking about how the German private sector responded as well as public. Germany, though, is not growing at a reasonable rate right now. I'm not going to google the specific number but I believe they are growing around 0.2-0.3 percent this year so far, as it contracted in early 2012 I know for a fact. France is growing around the same area, sputtering along with practically no growth. So this notion that Germany is in a better place right now in terms of growth is frankly wrong. It would cease to be an issue if a hypothetical union came about because no one state could dictate the others. It could be like a United Countries of Europe, following the US model of each country getting a fixed number of representatives for one house and based on their population (or maybe economic size) in another house. That would allow Germany to stop controlling the Eurozone with its draconian policies.





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