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In reply to the discussion: STOCK MARKET WATCH - Monday, 12 March 2012 [View all]Demeter
(85,373 posts)46. What Greece Means By PAUL KRUGMAN
http://www.nytimes.com/2012/03/12/opinion/krugman-what-greece-means.html
So Greece has officially defaulted on its debt to private lenders. It was an orderly default, negotiated rather than simply announced, which I guess is a good thing. Still, the story is far from over. Even with this debt relief, Greece like other European nations forced to impose austerity in a depressed economy seems doomed to many more years of suffering...But what Greek experience actually shows is that while running deficits in good times can get you in trouble which is indeed the story for Greece, although not for Spain trying to eliminate deficits once youre already in trouble is a recipe for depression. These days, austerity-induced depressions are visible all around Europes periphery. Greece is the worst case, with unemployment soaring to 20 percent even as public services, including health care, collapse. But Ireland, which has done everything the austerity crowd wanted, is in terrible shape too, with unemployment near 15 percent and real G.D.P. down by double digits. Portugal and Spain are in similarly dire straits.
And austerity in a slump doesnt just inflict vast suffering. There is growing evidence that it is self-defeating even in purely fiscal terms, as the combination of falling revenues due to a depressed economy and worsened long-term prospects actually reduces market confidence and makes the future debt burden harder to handle. You have to wonder how countries that are systematically denying a future to their young people youth unemployment in Ireland, which used to be lower than in the United States, is now almost 30 percent, while its near 50 percent in Greece are supposed to achieve enough growth to service their debt....the main point is that America does have an alternative: we have our own currency, and we can borrow long-term at historically low interest rates, so we dont need to enter a downward spiral of austerity and economic contraction.
So it is time to stop invoking Greece as a cautionary tale about the dangers of deficits; from an American point of view, Greece should instead be seen as a cautionary tale about the dangers of trying to reduce deficits too quickly, while the economy is still deeply depressed. (And yes, despite some better news lately, our economy is still deeply depressed.)
The truth is that if you want to know who is really trying to turn America into Greece, its not those urging more stimulus for our still-depressed economy; its the people demanding that we emulate Greek-style austerity even though we dont face Greek-style borrowing constraints, and thereby plunge ourselves into a Greek-style depression.
So Greece has officially defaulted on its debt to private lenders. It was an orderly default, negotiated rather than simply announced, which I guess is a good thing. Still, the story is far from over. Even with this debt relief, Greece like other European nations forced to impose austerity in a depressed economy seems doomed to many more years of suffering...But what Greek experience actually shows is that while running deficits in good times can get you in trouble which is indeed the story for Greece, although not for Spain trying to eliminate deficits once youre already in trouble is a recipe for depression. These days, austerity-induced depressions are visible all around Europes periphery. Greece is the worst case, with unemployment soaring to 20 percent even as public services, including health care, collapse. But Ireland, which has done everything the austerity crowd wanted, is in terrible shape too, with unemployment near 15 percent and real G.D.P. down by double digits. Portugal and Spain are in similarly dire straits.
And austerity in a slump doesnt just inflict vast suffering. There is growing evidence that it is self-defeating even in purely fiscal terms, as the combination of falling revenues due to a depressed economy and worsened long-term prospects actually reduces market confidence and makes the future debt burden harder to handle. You have to wonder how countries that are systematically denying a future to their young people youth unemployment in Ireland, which used to be lower than in the United States, is now almost 30 percent, while its near 50 percent in Greece are supposed to achieve enough growth to service their debt....the main point is that America does have an alternative: we have our own currency, and we can borrow long-term at historically low interest rates, so we dont need to enter a downward spiral of austerity and economic contraction.
So it is time to stop invoking Greece as a cautionary tale about the dangers of deficits; from an American point of view, Greece should instead be seen as a cautionary tale about the dangers of trying to reduce deficits too quickly, while the economy is still deeply depressed. (And yes, despite some better news lately, our economy is still deeply depressed.)
The truth is that if you want to know who is really trying to turn America into Greece, its not those urging more stimulus for our still-depressed economy; its the people demanding that we emulate Greek-style austerity even though we dont face Greek-style borrowing constraints, and thereby plunge ourselves into a Greek-style depression.
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great minds think alike! -- but then all pastry is mildly obscene if done right. nt
xchrom
Mar 2012
#9
Allow me to suggest a couple of groups here that may be of help for your questions:
dixiegrrrrl
Apr 2012
#59