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On July 10 2013 19:52 WhiteDog wrote:
You understand that's what I was saying since like two pages ago right ? Short run = trade off, long run = no impact on real economy.
Stop trolling bro, look up what happens in high inflation environments or stop going on about this. Everything that can be said has been said already.
Yeah like our life on this planet, or the mystical thing we call the market, they are developed. And we all know the best way to improve or develop something is to reduce its importance. 
First of all, improving does not automatically imply an increase or reduction in whatever measure of importance you want to pick, or even that it is merely one of both you have to commit to. Some things might need cutting while other things need expanding. What is appropriate is not the same for every country. The chances that the social structure is sub-optimal increases with the size and complexity of the underlying set of rules, regulations, and cultural influences amongst other things. But I suspect that the chance of sub-optimality is also increasing in the average time horizon of the policy makers and the how dynamic societal and technological change is.
Second, whatever you decide about what to spend your money on, you will have to be able to afford it. What is socially desirable has to comply to the financial constraint so to speak. What comes out of this maximization problem is up to the preferences of the voters. Why are you so mad when I say we have to improve the ability of governments to supply and pay for the services the voters demand? The financial constraint is what is preventing Greece from deficit spending, not me. The EU is providing a lot of relief in that sense, but because they have some conditions related to improving the social structure they are the bad guy? They are just playing with the hand they have been dealt in this figurative pokergame.
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On July 11 2013 00:27 Flyingdutchman wrote:Show nested quote +On July 10 2013 19:52 WhiteDog wrote:
You understand that's what I was saying since like two pages ago right ? Short run = trade off, long run = no impact on real economy. Stop trolling bro, look up what happens in high inflation environments or stop going on about this. Everything that can be said has been said already.
I'm not trolling, more like you don't understand my point... Nobody is talking about hyperinflation (usually set at 50% + inflation rate...) but at the possibility of a short term trade off. That push modern keynesian to defend the idea of a 2 to 4% inflation rate (closer to 4 than 2 for someone like Bourguignon, former chief economist of the world bank). What happens in high inflation environments is completly irrelevant to the matter.
First of all, improving does not automatically imply an increase or reduction in whatever measure of importance you want to pick, or even that it is merely one of both you have to commit to. Some things might need cutting while other things need expanding. What is appropriate is not the same for every country. The chances that the social structure is sub-optimal increases with the size and complexity of the underlying set of rules, regulations, and cultural influences amongst other things. But I suspect that the chance of sub-optimality is also increasing in the average time horizon of the policy makers and the how dynamic societal and technological change is.
This is irrelevant, can you stop jumping from one subject to another ?
You were arguing that the endogenous growth theory offered opportunities for a sustainable growth. I merely pointed out that in this theory most factor that contribute to the growth are directly or indirectly related to the state, and thus that I find it contradictory, or at least very difficult for a country, to both boost GDP growth and reduce the importance of the state within one's economy at the same time (because that is basically what is implied by the reduction of the deficits, especially in a situation of crisis). It's as simple as that.
The fact that you can do better or more efficient is a given.
Define social structure.
Why are you so mad when I say we have to improve the ability of governments to supply and pay for the services the voters demand? The financial constraint is what is preventing Greece from deficit spending, not me. The EU is providing a lot of relief in that sense, but because they have some conditions related to improving the social structure they are the bad guy? They are just playing with the hand they have been dealt in this figurative pokergame.
It's like you are discussing with someone else.
When I read you, I feel like Greece is an Island that never trade with anyone like in civilization (the game). The Greek debt have no link whatsoever with the German surplus ? With the Chinese high saving rate ? With the low interest rate we had in the last 10 or so years ? With the flawed euro ?
You are making a patchwork of economic theory and easy reasonning ("improving the social structure", "pay for the services of the voters demand") like everything is actually that simple in economy (no multiplicator ? no way for a country to endebt itself and actually gain from it ? no cycle and thus no necessity for a contra cyclical economic policy ? no distinction between private and public debt ? ). Your ideology is not only dangerous for the EU as it only point out the "bad countries" who did not behave "correctly", but it is denying the simple fact that there is a structural problem with the euro that needs to be fixed. Not to mention that the complexity and the cultural aspect of "social structure" that you find guilty of inefficience are the main reason why it is impossible to reform them in a short period withput doing worse.
Who in this thread is actually arguing against the idea that a country should invest carefully and try to control its debt ? I don't see Krugman in here. Who in this thread is actually defending the politicians who pushed the europe in this hole ? Aside from Germans, who actually seems to like Angela Merkel, I barely ever see any european citizen that likes their politicians - in France we fucking hate Hollande, in Greece I'm pretty sure some of them would have gladly hanged the government who lied about the public accounts.
The point is, the current policy of rigor is not working pushing Greece deeper and deeper into the recession, and since the problem is structural and at the european scale, there is a huge chance that the same kind of mecanism will happen in other european countries - like portugal.
But who cares that all the southern european countries get a 10-25 % unemployment for 5 to 10 years and that education and life expectancy decline if the Europe as a whole secure itself a 1 to 2% average GDP growth for the future 20 years, if it works - until there is no petrol and we all do the same thing again.
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On July 11 2013 01:32 WhiteDog wrote:
I'm not trolling, more like you don't understand my point... Nobody is talking about hyperinflation (usually set at 50% + inflation rate...) but at the possibility of a short term trade off. That push modern keynesian to defend the idea of a 2 to 4% inflation rate (closer to 4 than 2 for someone like Bourguignon, former chief economist of the world bank). What happens in high inflation environments is completly irrelevant to the matter.
Let's retrace our steps here and define the borders of the discussion. We have the actual situation where Greece is part of the EU monetary union, and the hypothetical situations, like defaulting/stepping out of monetary and/or political union. The problem with the hypothetical situations are that we are uncertain about the specifics until it actually happens, and therefore we have to make assumptions. You are assuming Greece will be able to successfully inflate away their debt, but that will depend on a lot of things, many of which have been named in this thread already by you, myself, and others. Navigating through all these different possibilities will result in many possible outcomes if you do not define the situation you are talking about precisely. It then becomes very convenient to start arguing about certain theoretical models, where the outcomes are also heavily dependent on the assumptions you make. But you even take it a step further, by taking one possible outcome of the models and stating it will apply to the actual situation. Unless you provide me with a model where the assumptions apply to the Greek situation and show that you are right, you are not going to convince me.
Personally, I feel that leaving the monetary union will not increase the Greek success in seigniorage, what you are basically arguing. Seigniorage needs above sustainable levels will result in 'high' inflation and even hyperinflation. 4%, the upper bound of acceptable inflation in current Keynesian theory (which in itself is very dependant on the specific country one takes into consideration) will not be enough to inflate away a 180% debt level. Furthermore, the institutional quality, or social structure, is also important in predicting possible success of inflationary policy.
Again, since we differ on the definition of inflation costs it is pointless to continue arguing along these lines. And you are apparently ignorant of a large body of political-economic research which pertain to institutions, or social structure.
This is irrelevant, can you stop jumping from one subject to another ?
You were arguing that the endogenous growth theory offered opportunities for a sustainable growth. I merely pointed out that in this theory most factor that contribute to the growth are directly or indirectly related to the state, and thus that I find it contradictory, or at least very difficult for a country, to both boost GDP growth and reduce the importance of the state within one's economy at the same time (because that is basically what is implied by the reduction of the deficits, especially in a situation of crisis). It's as simple as that.
The fact that you can do better or more efficient is a given.
Define social structure.
Aren't you a little late in asking for a definition of something that you have argued against since the beginning of our discussion? And what I said is in direct relation to what you posited, so I don't see why you would regard it as jumping from one subject to another.
It's like you are discussing with someone else.
When I read you, I feel like Greece is an Island that never trade with anyone like in civilization (the game). The Greek debt have no link whatsoever with the German surplus ? With the Chinese high saving rate ? With the low interest rate we had in the last 10 or so years ? With the flawed euro ?
You are making a patchwork of economic theory and easy reasonning ("improving the social structure", "pay for the services of the voters demand") like everything is actually that simple in economy (no multiplicator ? no way for a country to endebt itself and actually gain from it ? no cycle and thus no necessity for a contra cyclical economic policy ? no distinction between private and public debt ? ). Your ideology is not only dangerous for the EU as it only point out the "bad countries" who did not behave "correctly", but it is denying the simple fact that there is a structural problem with the euro that needs to be fixed. Not to mention that the complexity and the cultural aspect of "social structure" that you find guilty of inefficience are the main reason why it is impossible to reform them in a short period withput doing worse.
I love civilization! Building banks, libraries, and world wonders to improve my social structure to such a degree that I get a such a scientific lead that I can conquer the world.
Economics is a patchwork of different theories, you can't just take highly stylized results from models and apply them as blanket statements without considering the actual situation.
And the problem with the Euro is as much a problem of how the members behaved as the structure itself. I've mentioned many times already that each member country has flaws in their social structure, it is the nature of a changing world. It is the ability to adapt that will determine long run and short run success. You keep ignoring most of what I say anyway, so all that is left is going around in circles.
Let's just agree to disagree.
Who in this thread is actually arguing against the idea that a country should invest carefully and try to control its debt ? I don't see Krugman in here. Who in this thread is actually defending the politicians who pushed the europe in this hole ? Aside from Germans, who actually seems to like Angela Merkel, I barely ever see any european citizen that likes their politicians - in France we fucking hate Hollande, in Greece I'm pretty sure some of them would have gladly hanged the government who lied about the public accounts.
One of the main results of the Euro participation of the Greeks, according to Krugman, is that Greeks became even more unproductive due to inflation (amongst other things). His solution is therefore that the other member countries should spend more and inflate away their own competitive advantage. He also does not generally acknowledge that the need for the Euro, as seen by the European policymakers at the time, was in a large part to protect Europe from the FED printing press. It was a direct result of the unilateral stance the Americans took on the matter: 'The dollar is our currency and your problem'.
Talking about political leaders in black and white, like you are now is just silly. If 'everyone' hated Hollande he would not have been voted into office. Hanging lying governments is a good idea though :D I'll give you that.
The point is, the current policy of rigor is not working pushing Greece deeper and deeper into the recession, and since the problem is structural and at the european scale, there is a huge chance that the same kind of mecanism will happen in other european countries - like portugal.
But who cares that all the southern european countries get a 10-25 % unemployment for 5 to 10 years and that education and life expectancy decline if the Europe as a whole secure itself a 1 to 2% average GDP growth for the future 20 years, if it works - until there is no petrol and we all do the same thing again.
Average GDP growth of 1-2% would not be enough. The fallacious view of the stability and growth pact of a maximum 3% deficit is built upon the ponzi-schemish idea that debt-to-GDP ratio will decline if GDP grows more than 3%.
As I've already tried to explain to you numerous times, I'm more interested in increasing the trend than playing around with the fluctuations around it when it comes to economic growth. You can't increase the trend without improving the fundamentals.
The way I see our discussion, you are advocating policy that will have ambiguity regarding what the right course is and whether it is implemented correctly. I am advocating policy that only has ambiguity about the implementation.
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There's a new paper out there:
Creditor Participation in Banking Crisisin the Eurozone – A Corner Turned?
I haven't had a chance to look at it myself. From Alphaville:
The central charge is that foot-dragging by policy makers allowed a host of at-risk investors in bank debt to pass their pain to Europe’s taxpayers, as the crisis gathered pace. But it also seems interesting that politicians in Germany (even if it’s the Green variety) are now seeking to put hard numbers on the cost of delay and pussyfooting in euroland. And the specific hard number here is a wasted €35bn. Have a read. In passing, we’d just stay that Irish policymakers seem to come out rather well in the case studies. Which has to be some sort of first…
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Seigniorage needs above sustainable levels will result in 'high' inflation and even hyperinflation. 4%, the upper bound of acceptable inflation in current Keynesian theory (which in itself is very dependant on the specific country one takes into consideration) will not be enough to inflate away a 180% debt level. Furthermore, the institutional quality, or social structure, is also important in predicting possible success of inflationary policy.
What ? Keynesian consider that UNDER 4%, you CAN trade off between inflation and unemployment (the Phillip Curve is not vertical) - which means that you need to set yourself a 2 to 4% inflation rate, to minimise unemployment with monetary policy.
It also imply that ABOVE 4%, inflation is not supposed to be of any help to fight AGAINST UNEMPLOYMENT.
This has NOTHING TO DO with the idea that you could inflate away the debt.
And hyper inflation is set a 50% inflation. Not 6% or 10%.
In 1956, Phillip Cagan wrote The Monetary Dynamics of Hyperinflation, generally regarded as the first serious study of hyperinflation and its effects. In it, he defined hyperinflation as starting in the month that the monthly inflation rate exceeds 50%, and it ending when the monthly inflation rate drops below 50% and stays that way for at least a year.
http://en.wikipedia.org/wiki/Hyperinflation
You are assuming Greece will be able to successfully inflate away their debt, but that will depend on a lot of things, many of which have been named in this thread already by you, myself, and others
Not only you are stubborn, but you never actually read any of my posts. Nobody can actually say that Greece will never be able to "inflate away its debt", the problem is at what price ? I never stated that inflation was "the solution" for Greece. I said you could inflate away the debt of the entire EU zone, with relatively low damages. But, as I stated many time, inflation would never fix the competitivity problem (the debt is not the main problem) - I'm for the end of the euro as we know it.
Economics is a patchwork of different theories, you can't just take highly stylized results from models and apply them as blanket statements without considering the actual situation.
But EVERYBODY AGREE that a model WITHOUT MONEY cannot effectively EXPLAIN the events that happened through the "subprime crisis" (because the model of the central banks have no money).
EVERYBODY AGREE that a diversification model (that consider that the more people, the more different type of action, the better it is as the risk is disolved) IS UNABLE TO EXPLAIN the events that happened through the "subprime crisis" (because we witnessed a mecanism of CONTAGION that is the complete opposite to diversification, as diversification suppose an increase in the contact between the different parties, while contagion suppose QUARANTINE).
ALL IN ALL, "models" or "ideas" are worthless to explain a specific object if they don't take into consideration the key parameters that plays into the situation - just like your explanation is worthless because it is considering that all the competitivity inequalities are dues to "social structure" (such a concept that would require us to discuss for a thousand year just to "agree to disagree") without never taking into consideration the economic mecanism that put Greece and the EU into this situation (the euro, the mondialisation, the low interest rate, the high saving rate in China, the inequalities all around the world and specifically in Germany, etc.).
But, you don't need to COMPLETLY UNDERSTAND (or modelize) something, to fix it (just like I can fix my broken leg - if I had one - without necessarily having to know how my brain works). If I can't modelize an entire leg, I could just modelize the bones, and even if the leg is not complete, I could still use my model to understand a certain part of what is happening within the leg - that's what models do.
Models are really important, more than your blind arguments about "social structure" that goes nowhere and that doesn't take into consideration 99% of what is important to understand the crisis.
Average GDP growth of 1-2% would not be enough.
That is why I wrote 1 to 2% GDP growth.
One of the main results of the Euro participation of the Greeks, according to Krugman, is that Greeks became even more unproductive due to inflation (amongst other things). His solution is therefore that the other member countries should spend more and inflate away their own competitive advantage. He also does not generally acknowledge that the need for the Euro, as seen by the European policymakers at the time, was in a large part to protect Europe from the FED printing press. It was a direct result of the unilateral stance the Americans took on the matter: 'The dollar is our currency and your problem'.
I don't know what to say, Krugman is basically saying everything I say - Greece is the "victim" of the EU. The idea to "spend more" is another way to resolve the problem, along with what I was talking about when I said that there are no possibilities for fiscal flow within the EU. The problem is, how can we force Germans to spend ? An old country, growing older and older, is in a dire need to secure its tresory.
I don't understand why you mention Krugman but still use the idea of "structure", something Krugman would gladly laugh at (just like "natural growth", what's natural about growth ?). Just for fun, an article from Krugman called "Structural excuses".
Out of courtesy, I'll quote part of his little article, that perfectly apply to all the knowledge you dropped on us in this very forum :
"But the main thing about “structural reform” in Europe is the role it plays in discussion of macroeconomic policies. Instead of reflecting on the fact that Europe is sinking deeper into depression five years into the slump, and clearly needs less austerity and more aggressive monetary expansion, the usual suspects start talking about the need for structural reform. And my sense is that this talk of reform has, in practice, become less a real demand for specific actions than an excuse for not facing up to the reality of macroeconomic disaster, and a way to avoid discussing the responsibility of Germany and the ECB, in particular, to help end this disaster."
Talking about political leaders in black and white, like you are now is just silly. If 'everyone' hated Hollande he would not have been voted into office. Hanging lying governments is a good idea though :D I'll give you that.
It's not silly, it is HOW IT IS. Everybody fucking hate Hollande, the problem is that we hated Sarkozy even more. The offer man, there is no demand for a good that is not offered.
The perfect politicians is not offered on french markets right now.
You mix things up, and you call me silly.
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To Whitedog:
+ Show Spoiler +On July 18 2013 03:13 WhiteDog wrote:What ? Keynesian consider that UNDER 4%, you CAN trade off between inflation and unemployment (the Phillip Curve is not vertical) - which means that you need to set yourself a 2 to 4% inflation rate, to minimise unemployment with monetary policy. It also imply that ABOVE 4%, inflation is not supposed to be of any help to fight AGAINST UNEMPLOYMENT. This has NOTHING TO DO with the idea that you could inflate away the debt. And hyper inflation is set a 50% inflation. Not 6% or 10%. I thought you went on strike or something. It is actually starting to become kind of cute how you have absolutely no idea what I've said, so you take 11 words out of context and hope it sticks. And even then you miss the whole point being laid out. Maybe you should bold everything you say, at least it will look important that way. Show nested quote +You are assuming Greece will be able to successfully inflate away their debt, but that will depend on a lot of things, many of which have been named in this thread already by you, myself, and others You prove yourself to be not only stubborn but completly wrong AGAIN and AGAIN. Nobody can actually say that Greece will never be able to "inflate away its debt", the problem is at what price ? I never stated that inflation was "the solution" for Greece, as I stated many time that inflation would never fix the competitivity problem (the debt is not the main problem) - I'm for the end of the euro as we know it. I'm not going to quote your previous postings again because you forget what you say. Anyway, stepping out of the euro will not magically solve any problems, it will just postpone the inevitable if you do not tackle the foundations. That can hurt, which is why it basically never happens. And even if it happens the policy maker responsible loses his job because too many people think like you. Show nested quote +Economics is a patchwork of different theories, you can't just take highly stylized results from models and apply them as blanket statements without considering the actual situation. But EVERYBODY AGREE that a model WITHOUT MONEY cannot effectively EXPLAIN the events that happened through the "subprime crisis" (because the model of the central banks have no money). EVERYBODY AGREE that a diversification model (that consider that the more people, the more different type of action, the better it is as the risk is disolved) IS UNABLE TO EXPLAIN the events that happened through the "subprime crisis" (because we witnessed a mecanism of CONTAGION that is the complete opposite to diversification, as diversification suppose an increase in the contact between the different parties, while contagion suppose QUARANTINE). First of all, we were talking about the European debt crisis, not the subprime crisis. But I'll humour you and respond anyway: What are you talking about? I did not bring in any models into this. You are just throwing so much together, you sound like the oracle of Delphi. You really need a priest to structure your sentences. I'm sorry, if you want to argue you will have to come with something coherent
ALL IN ALL, your "models" or "ideas" are WORTHLESS to explain a specific object if they don't take into consideration the key parameters that plays into the situation - just like your explanation is worthless because it is considering that all the competitivity inequalities are dues to "social structure" (such a concept that would require us to discuss for a thousand year just to "agree to disagree") without never taking into consideration the economic mecanism that put Greece and the EU into this situation (the euro, the mondialisation, the low interest rate, the high saving rate in China, the inequalities all around the world and specifically in Germany, etc.).
You cannot "fix" something if you don't see what caused the problem to begin with. But sure, you don't need to COMPLETLY UNDERSTAND (or modelize) something, to fix it (just like I can fix my broken leg - if I had one - without necessarily having to know how my brain works).
Yes, blame it all on the other guys. That will get you far in life. Obviously there will be forces that work against a country, you cannot control that, if you want to devalue your currency have fun. Just watch as as domestic import prices go through the roof. You are not fixing anything, you are just digging the hole a deeper and deeper. That is why I wrote 1 to 2% GDP growth. Are you for real? Show nested quote +One of the main results of the Euro participation of the Greeks, according to Krugman, is that Greeks became even more unproductive due to inflation (amongst other things). His solution is therefore that the other member countries should spend more and inflate away their own competitive advantage. He also does not generally acknowledge that the need for the Euro, as seen by the European policymakers at the time, was in a large part to protect Europe from the FED printing press. It was a direct result of the unilateral stance the Americans took on the matter: 'The dollar is our currency and your problem'. I don't know what to say, Krugman is basically saying everything I say - Greece is the "victim" of the EU. The idea to "spend more" is another way to resolve the problem, along with what I was talking about when I said that there are no possibilities for fiscal flow within the EU. The problem is, how can we force Germans to spend ? An old country, growing older and older, is in a dire need to secure its tresory. I don't understand why you mention Krugman but still use the idea of "structure", something Krugman would gladly laugh at (just like "natural growth", I'm pretty sure he would never such idea to be of any use). Just for fun, an article from Krugman called "Structural excuses". Out of courtesy, I'll quote part of his little article, that perfectly apply to all the knowledge you dropped on us in this very forum : "But the main thing about “structural reform” in Europe is the role it plays in discussion of macroeconomic policies. Instead of reflecting on the fact that Europe is sinking deeper into depression five years into the slump, and clearly needs less austerity and more aggressive monetary expansion, the usual suspects start talking about the need for structural reform. And my sense is that this talk of reform has, in practice, become less a real demand for specific actions than an excuse for not facing up to the reality of macroeconomic disaster, and a way to avoid discussing the responsibility of Germany and the ECB, in particular, to help end this disaster."I can imagine that an American would hate the word reform, since it mostly results in 'corporate interests' getting more leeway if you know what I mean. The structural reform that the IMF is working on with Greece right now will help greatly, if the Greek government can get it done at least. They are making good progress on the politically easy things, the difficult ones are the ones that will help the most though. And to repay your courtesy I'll post the comment that happened to be at the top when I viewed the article: + Show Spoiler +Want to know what "structural reform" means in the context of Europe's economy? Why not ask Gerhard Schroder? After all, he was the Social Democrat Chancellor who is widely credited with implementing the successful "Agenda 2010" reforms a decade ago in Germany: http://online.wsj.com/article/SB10001424052702304141204577508530981893226.htmlFor Europe to recover, the rest of the Continent needs to copy the German model, not vice versa. Once again, Krugman gets everything backwards. He frets about the talk of structural reform becoming "an excuse for not facing up to the reality of macroeconomic disaster" when the real risk is that a narrow-minded focus on ending "austerity" in Europe becomes an excuse to avoid the Schroder-type reforms without which any economic recovery will be short-lived. Show nested quote +Talking about political leaders in black and white, like you are now is just silly. If 'everyone' hated Hollande he would not have been voted into office. Hanging lying governments is a good idea though :D I'll give you that. It's not silly, it is HOW IT IS. Everybody fucking hate Hollande, the problem is that we hated Sarkozy even more. The offer man, there is no demand for a good that is not offered. The perfect politicians is not offered on french markets right now. You mix things up, and you call me silly. There is no such thing as a perfect politician. They are human, and are therefore by definition not perfect. Welcome to the real world.
On July 18 2013 02:38 JonnyBNoHo wrote:There's a new paper out there: Creditor Participation in Banking Crisisin the Eurozone – A Corner Turned?I haven't had a chance to look at it myself. From Alphaville: Show nested quote +The central charge is that foot-dragging by policy makers allowed a host of at-risk investors in bank debt to pass their pain to Europe’s taxpayers, as the crisis gathered pace. But it also seems interesting that politicians in Germany (even if it’s the Green variety) are now seeking to put hard numbers on the cost of delay and pussyfooting in euroland. And the specific hard number here is a wasted €35bn. Have a read. In passing, we’d just stay that Irish policymakers seem to come out rather well in the case studies. Which has to be some sort of first…
It's too late to read the whole thing now, but if I'm correct in scanning the introduction and conclusion they state that there is ineffectual political decision making because it is involving too many organizations? Am I correct that they are proposing an alternative, one organization, where there would still be a large degree of insuring the losses of the financial system? Not so sure about the incentives that would keep in place 
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On July 18 2013 07:17 Flyingdutchman wrote:Show nested quote +On July 18 2013 03:13 WhiteDog wrote:4%, the upper bound of acceptable inflation in current Keynesian theory What ? Keynesian consider that UNDER 4%, you CAN trade off between inflation and unemployment (the Phillip Curve is not vertical) - which means that you need to set yourself a 2 to 4% inflation rate, to minimise unemployment with monetary policy. It also imply that ABOVE 4%, inflation is not supposed to be of any help to fight AGAINST UNEMPLOYMENT. This has NOTHING TO DO with the idea that you could inflate away the debt. And hyper inflation is set a 50% inflation. Not 6% or 10%. I thought you went on strike or something. It is actually starting to become kind of cute how you have absolutely no idea what I've said, so you take 11 words out of context and hope it sticks. And even then you miss the whole point being laid out. Maybe you should bold everything you say, at least it will look important that way.
I'm sorry if you don't like it when I teach you some macroeconomic buddy.
First of all, we were talking about the European debt crisis, not the subprime crisis. But I'll humour you and respond anyway: What are you talking about? I did not bring in any models into this. You are just throwing so much together, you sound like the oracle of Delphi. You really need a priest to structure your sentences. I'm sorry, if you want to argue you will have to come with something coherent
It was an exemple, because I use exemple to prove points. Sorry you didn't understood it.
I'm not going to quote your previous postings again because you forget what you say. Anyway, stepping out of the euro will not magically solve any problems, it will just postpone the inevitable if you do not tackle the foundations. That can hurt, which is why it basically never happens. And even if it happens the policy maker responsible loses his job because too many people think like you.
"Tackle the foundations", and never actually define what needs to be fixed ? Yeah, we go back to the critic of the word "structure" by Krugman : no idea, just hiding itself being a simple word because you can't face the real problems. You want to tackle the foundations, and you don't even know what are the foundations. Amazing reasoning.
Yes, blame it all on the other guys. That will get you far in life. Obviously there will be forces that work against a country, you cannot control that, if you want to devalue your currency have fun. Just watch as as domestic import prices go through the roof. You are not fixing anything, you are just digging the hole a deeper and deeper.
You can control that, that's the point.
And thank you, but I don't really need to get that far. I'm already a teacher full time, and working for the state. Guess a teacher in what discipline ?
I can imagine that an American would hate the word reform, since it mostly results in 'corporate interests' getting more leeway if you know what I mean. The structural reform that the IMF is working on with Greece right now will help greatly, if the Greek government can get it done at least. They are making good progress on the politically easy things, the difficult ones are the ones that will help the most though.
LOL This is so bad. Krugman don't like the "word" structure... because he is american ? And his arguments ? Who cares about them right ?
And now, worse and worse, you actually quote a random comment as a counter argument to Krugman's critic of the use of "structure". So funny. By the way, we can't copy the German models, because it sucks. The German models only works for Germany - an old country, demographically dying. If I was a German, I would actually question myself on the impact of that "model" on demography (yeah, when you pay people so low, when you don't build public structure to take care of kids while their parents are working like in France, the birth rate is bound to be low).
And the structural reform never worked in the under developped country, and they are not working in Greece : proof of that, look at the recession.
I'm not going to quote your previous postings again because you forget what you say. Anyway, stepping out of the euro will not magically solve any problems, it will just postpone the inevitable if you do not tackle the foundations. That can hurt, which is why it basically never happens. And even if it happens the policy maker responsible loses his job because too many people think like you.
Please do it, you will see that I only responded to someone talking about inflation quoting Sapir on the possibility to inflate away the debt. I never thought it was the best idea to face the debt crisis.
Here, two pages before :
On July 09 2013 20:03 WhiteDog wrote:
Inflation would lower the debt, maybe lower unemployment in some countries like France, and it will maybe force some firm to push higher the wages in some countries such as Germany, but it will not help the competitivity problem and the structural problem that exist because of how the euro was built...
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On July 18 2013 07:22 WhiteDog wrote:+ Show Spoiler +On July 18 2013 07:17 Flyingdutchman wrote:Show nested quote +On July 18 2013 03:13 WhiteDog wrote:4%, the upper bound of acceptable inflation in current Keynesian theory What ? Keynesian consider that UNDER 4%, you CAN trade off between inflation and unemployment (the Phillip Curve is not vertical) - which means that you need to set yourself a 2 to 4% inflation rate, to minimise unemployment with monetary policy. It also imply that ABOVE 4%, inflation is not supposed to be of any help to fight AGAINST UNEMPLOYMENT. This has NOTHING TO DO with the idea that you could inflate away the debt. And hyper inflation is set a 50% inflation. Not 6% or 10%. I thought you went on strike or something. It is actually starting to become kind of cute how you have absolutely no idea what I've said, so you take 11 words out of context and hope it sticks. And even then you miss the whole point being laid out. Maybe you should bold everything you say, at least it will look important that way. I'm sorry if you don't like it when I teach you some macroeconomic buddy. I'm not going to quote your previous postings again because you forget what you say. Anyway, stepping out of the euro will not magically solve any problems, it will just postpone the inevitable if you do not tackle the foundations. That can hurt, which is why it basically never happens. And even if it happens the policy maker responsible loses his job because too many people think like you. It was an exemple, because I use exemple to prove points. Tackle the foundations, and never actually define what needs to be fixed ? Yeah, we go back to the critic of the word "structure" by Krugman : no idea, just hiding itself being a simple word because you can't face the real problems. Yes, blame it all on the other guys. That will get you far in life. Obviously there will be forces that work against a country, you cannot control that, if you want to devalue your currency have fun. Just watch as as domestic import prices go through the roof. You are not fixing anything, you are just digging the hole a deeper and deeper. You can control that, that's the point. And thank you I'm already a teacher full time, and working for the state. Guess a teacher in what discipline ? I can imagine that an American would hate the word reform, since it mostly results in 'corporate interests' getting more leeway if you know what I mean. The structural reform that the IMF is working on with Greece right now will help greatly, if the Greek government can get it done at least. They are making good progress on the politically easy things, the difficult ones are the ones that will help the most though. LOL This is so bad. Krugman don't like the "word" structure... because he is american ? And his arguments ? Who cares about them right ? And the structural reform never worked in the under developped country, and they are not working in Greece : proof of that, look at the recession.
A. You are not teaching me anything useful, other than that you have difficulty understanding basic English
B.I've provided an IMF article that clearly stated some foundations that have already been proposed by people a lot smarter than both of us combined. Also, check out the spoiler I added to the spoiler in my last reply. It has a link in it that will tell you why Germany has the best economy at the moment.
C. Greece is not a underdeveloped country. Politically they come close to a banana republic though.
D. Greece was in trouble long before these reforms were proposed, even before we knew they were lying about their finances.
E. You were the one quoting Sapir in the first place. Stop posting nonsense
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Yes I responded by quoting Sapir.
No Greece was not "in trouble" long before. It was having some economic difficulties, but nowhere like it is nowadays.
Also, it's not that I don't understand, it's that I don't take the time to read half of the non sense you dare to post in here. It would hurt my head.
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2 more months and then you will have your inflation.
After the september german elections there will first be another eurocrisis with a big drop in the equity markets,this to give merkel an argument to agree with a european monetary easing and more power for the ecb.
Then after this drop and after merkel has agreed with the monetary easing the european markets will rise to heights never seen before.
Dax flat till the elections so as to not make the germans more anti europe, then dax to 6500 in the 1-3 months after the elections to push the germans into accepting the new powers for the ecb and then dax to 10k+ in 2014 as a result of the following asset inflation.
This is what i think will happen, and am realy curious if this will be prooven right.
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Greece's parliament has approved reforms making it easier to sack thousands of public sector workers, clearing the way for the receipt of a new tranche of bailout money.
Members of parliament voted 153 to 140 in favour of the most contentious parts of an austerity bill early on Thursday. The reforms will loosen rules on sacking public workers, whose jobs are currently protected by the constitution.
A total of 12,500 civil servants, including teachers and police, face reassignment or the sack by the end of the year, with a further 15,000 facing the same options next year.
The cuts will pave the way for more financial assitance from the country's "troika" of creditors - the International Monetary Fund, European Central Bank, and European Commission - to prop up its failing economy.
Source
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On July 18 2013 08:39 Rassy wrote:
2 more months and then you will have your inflation.
After the september german elections there will first be another eurocrisis with a big drop in the equity markets,this to give merkel an argument to agree with a european monetary easing and more power for the ecb.
Then after this drop and after merkel has agreed with the monetary easing the european markets will rise to heights never seen before.
Dax flat till the elections so as to not make the germans more anti europe, then dax to 6500 in the 1-3 months after the elections to push the germans into accepting the new powers for the ecb and then dax to 10k+ in 2014 as a result of the following asset inflation.
This is what i think will happen, and am realy curious if this will be prooven right.
We will know in a year :D I hope not though.
On July 18 2013 07:39 WhiteDog wrote:
Yes I responded by quoting Sapir.
No Greece was not "in trouble" long before. It was having some economic difficulties, but nowhere like it is nowadays.
Also, it's not that I don't understand, it's that I don't take the time to read half of the non sense you dare to post in here. It would hurt my head.
Nothing left to say then...
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On July 18 2013 08:39 Rassy wrote:
2 more months and then you will have your inflation.
After the september german elections there will first be another eurocrisis with a big drop in the equity markets,this to give merkel an argument to agree with a european monetary easing and more power for the ecb.
Then after this drop and after merkel has agreed with the monetary easing the european markets will rise to heights never seen before.
Dax flat till the elections so as to not make the germans more anti europe, then dax to 6500 in the 1-3 months after the elections to push the germans into accepting the new powers for the ecb and then dax to 10k+ in 2014 as a result of the following asset inflation.
This is what i think will happen, and am realy curious if this will be prooven right.
I agree with the direction of your prediction is going but no the scale.
In particular, I feel you overestimate the control Merkel has on the ECB (and the stock market).
Now, I am sure she talks to the Bundesbank president at least on a weekly basis and lower levels are phoning their ECB friends regularly, but there is no direct policy chain at all. In contrast, ECB heads have stated time and time again that they do not see balancing inflation against unemployment as part of their job. They are not the FED. They pride themselves as 'independent' from political influence.
Also, if she had wanted to, Merkel could have pushed for more inflation and monetary easing long time ago. She was and still is practically unbeatable in polls here in Germany (for some reason). Politically there was no need to wait until after the elections (although for the next two month now there really is).
In general, people tend to overestimate the power a German chancellor really has. She is no American president. She can't order much (but talk a lot and influence through back channels).
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On July 18 2013 11:40 {CC}StealthBlue wrote:Show nested quote +Greece's parliament has approved reforms making it easier to sack thousands of public sector workers, clearing the way for the receipt of a new tranche of bailout money.
Members of parliament voted 153 to 140 in favour of the most contentious parts of an austerity bill early on Thursday. The reforms will loosen rules on sacking public workers, whose jobs are currently protected by the constitution.
A total of 12,500 civil servants, including teachers and police, face reassignment or the sack by the end of the year, with a further 15,000 facing the same options next year.
The cuts will pave the way for more financial assitance from the country's "troika" of creditors - the International Monetary Fund, European Central Bank, and European Commission - to prop up its failing economy. Source
Just what Greece needs. more unemployed people who cant pay there bills.
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On July 18 2013 11:40 {CC}StealthBlue wrote:Show nested quote +Greece's parliament has approved reforms making it easier to sack thousands of public sector workers, clearing the way for the receipt of a new tranche of bailout money.
Members of parliament voted 153 to 140 in favour of the most contentious parts of an austerity bill early on Thursday. The reforms will loosen rules on sacking public workers, whose jobs are currently protected by the constitution.
A total of 12,500 civil servants, including teachers and police, face reassignment or the sack by the end of the year, with a further 15,000 facing the same options next year.
The cuts will pave the way for more financial assitance from the country's "troika" of creditors - the International Monetary Fund, European Central Bank, and European Commission - to prop up its failing economy. Source
"Cut yourself an arm, and I will help you tend to your wound".
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On July 18 2013 20:01 WhiteDog wrote:Show nested quote +On July 18 2013 11:40 {CC}StealthBlue wrote:Greece's parliament has approved reforms making it easier to sack thousands of public sector workers, clearing the way for the receipt of a new tranche of bailout money.
Members of parliament voted 153 to 140 in favour of the most contentious parts of an austerity bill early on Thursday. The reforms will loosen rules on sacking public workers, whose jobs are currently protected by the constitution.
A total of 12,500 civil servants, including teachers and police, face reassignment or the sack by the end of the year, with a further 15,000 facing the same options next year.
The cuts will pave the way for more financial assitance from the country's "troika" of creditors - the International Monetary Fund, European Central Bank, and European Commission - to prop up its failing economy. Source "Cut yourself an arm, and I will help you tend to your wound".
It's more one of those reforms that would have been useful... a decade or more ago. The point isn't to accumulate massive inefficiencies in the first place. But, considering we're used to "fixing a problem that wasn't true during the last crisis" legislation in the States, this seems par for the course for political bodies.
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On July 18 2013 20:53 Taf the Ghost wrote:Show nested quote +On July 18 2013 20:01 WhiteDog wrote:On July 18 2013 11:40 {CC}StealthBlue wrote:Greece's parliament has approved reforms making it easier to sack thousands of public sector workers, clearing the way for the receipt of a new tranche of bailout money.
Members of parliament voted 153 to 140 in favour of the most contentious parts of an austerity bill early on Thursday. The reforms will loosen rules on sacking public workers, whose jobs are currently protected by the constitution.
A total of 12,500 civil servants, including teachers and police, face reassignment or the sack by the end of the year, with a further 15,000 facing the same options next year.
The cuts will pave the way for more financial assitance from the country's "troika" of creditors - the International Monetary Fund, European Central Bank, and European Commission - to prop up its failing economy. Source "Cut yourself an arm, and I will help you tend to your wound". It's more one of those reforms that would have been useful... a decade or more ago. The point isn't to accumulate massive inefficiencies in the first place. But, considering we're used to "fixing a problem that wasn't true during the last crisis" legislation in the States, this seems par for the course for political bodies.
without these tranches they wouldn't even be able to pay wages anyway. This is more like cutting off a finger to save the arm imo. Why would you think dealing with inefficiencies a decade ago would help but not now?
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On July 19 2013 01:09 Flyingdutchman wrote:Show nested quote +On July 18 2013 20:53 Taf the Ghost wrote:On July 18 2013 20:01 WhiteDog wrote:On July 18 2013 11:40 {CC}StealthBlue wrote:Greece's parliament has approved reforms making it easier to sack thousands of public sector workers, clearing the way for the receipt of a new tranche of bailout money.
Members of parliament voted 153 to 140 in favour of the most contentious parts of an austerity bill early on Thursday. The reforms will loosen rules on sacking public workers, whose jobs are currently protected by the constitution.
A total of 12,500 civil servants, including teachers and police, face reassignment or the sack by the end of the year, with a further 15,000 facing the same options next year.
The cuts will pave the way for more financial assitance from the country's "troika" of creditors - the International Monetary Fund, European Central Bank, and European Commission - to prop up its failing economy. Source "Cut yourself an arm, and I will help you tend to your wound". It's more one of those reforms that would have been useful... a decade or more ago. The point isn't to accumulate massive inefficiencies in the first place. But, considering we're used to "fixing a problem that wasn't true during the last crisis" legislation in the States, this seems par for the course for political bodies. without these tranches they wouldn't even be able to pay wages anyway. This is more like cutting off a finger to save the arm imo. Why would you think dealing with inefficiencies a decade ago would help but not now?
Because these 12,500 people will now be broke. they cant pay there bills and so more defaults. Even less money to be spend on the economy ect ect. Its a snowball effect that has been happening since the start of this crisis.
When the economy is doing well it can handle these sort of lay-offs but its to vulnerable right now to keep throwing more and more jobless people into it.
The benefit is also a lot lower then you would probably think since these people will now just move on to wellfare so the government is still paying them.
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On July 19 2013 01:14 Gorsameth wrote:Show nested quote +On July 19 2013 01:09 Flyingdutchman wrote:On July 18 2013 20:53 Taf the Ghost wrote:On July 18 2013 20:01 WhiteDog wrote:On July 18 2013 11:40 {CC}StealthBlue wrote:Greece's parliament has approved reforms making it easier to sack thousands of public sector workers, clearing the way for the receipt of a new tranche of bailout money.
Members of parliament voted 153 to 140 in favour of the most contentious parts of an austerity bill early on Thursday. The reforms will loosen rules on sacking public workers, whose jobs are currently protected by the constitution.
A total of 12,500 civil servants, including teachers and police, face reassignment or the sack by the end of the year, with a further 15,000 facing the same options next year.
The cuts will pave the way for more financial assitance from the country's "troika" of creditors - the International Monetary Fund, European Central Bank, and European Commission - to prop up its failing economy. Source "Cut yourself an arm, and I will help you tend to your wound". It's more one of those reforms that would have been useful... a decade or more ago. The point isn't to accumulate massive inefficiencies in the first place. But, considering we're used to "fixing a problem that wasn't true during the last crisis" legislation in the States, this seems par for the course for political bodies. without these tranches they wouldn't even be able to pay wages anyway. This is more like cutting off a finger to save the arm imo. Why would you think dealing with inefficiencies a decade ago would help but not now? Because these 12,500 people will now be broke. they cant pay there bills and so more defaults. Even less money to be spend on the economy ect ect. Its a snowball effect that has been happening since the start of this crisis. When the economy is doing well it can handle these sort of lay-offs but its to vulnerable right now to keep throwing more and more jobless people into it. The benefit is also a lot lower then you would probably think since these people will now just move on to wellfare so the government is still paying them.
He doesn't understand that idea of "cycle". Sacking thousands of people in a situation of crisis is "pro cyclical" : it goes with the crisis and make it worse, as you say (loss in tax revenu, loss in global demand, no possibility for the private sector to take the place of the public, etc.).
Having contra cyclical policies is something that is defended by economists since ages, before Keynes actually, but well even in 2013 some people still refuse to understand it.
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On July 19 2013 01:09 Flyingdutchman wrote:Show nested quote +On July 18 2013 20:53 Taf the Ghost wrote:On July 18 2013 20:01 WhiteDog wrote:On July 18 2013 11:40 {CC}StealthBlue wrote:Greece's parliament has approved reforms making it easier to sack thousands of public sector workers, clearing the way for the receipt of a new tranche of bailout money.
Members of parliament voted 153 to 140 in favour of the most contentious parts of an austerity bill early on Thursday. The reforms will loosen rules on sacking public workers, whose jobs are currently protected by the constitution.
A total of 12,500 civil servants, including teachers and police, face reassignment or the sack by the end of the year, with a further 15,000 facing the same options next year.
The cuts will pave the way for more financial assitance from the country's "troika" of creditors - the International Monetary Fund, European Central Bank, and European Commission - to prop up its failing economy. Source "Cut yourself an arm, and I will help you tend to your wound". It's more one of those reforms that would have been useful... a decade or more ago. The point isn't to accumulate massive inefficiencies in the first place. But, considering we're used to "fixing a problem that wasn't true during the last crisis" legislation in the States, this seems par for the course for political bodies. without these tranches they wouldn't even be able to pay wages anyway. This is more like cutting off a finger to save the arm imo. Why would you think dealing with inefficiencies a decade ago would help but not now?
There needs to be a plausible place for those workers to go to find new jobs.
If the Greek government is reforming and growing its private sector than reforming and cutting back its inefficient public sector is an unquestionably good move. If not than it becomes harder to justify.
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EPT
