this is the new mantra, the Otter defense "You effed up, you trusted us" Why should anyone ever lend to Greece again? Are they less risky now?
They shouldn't. Ever. They aren't fiscally responsible enough to trust so it's time to make them learn the hard way the consequences of irresponsibility. Greece isn't too big to fail.
LOL, and what happens when everybody works harder and saves more and spends less simultaneously? Profit? This is the stupidity of austerity distilled to its raw freebased essence. If everybody just stopped spending money, we'd all be better off! Nope...we'd all be dead.
If they default, no one would for a while. Just like when a private citizen goes bankrupt, that's the price they pay for wiping out their debt for a fresh start. Then have a new currency and it devalues until it reaches a market equilibrium. It will be worth less, so imports will be more expensive, but it will be much cheaper to import and Greece will be much cheaper for tourists to visit. That's how they then begin the process of rebuilding their economy. Defaulting on debt is part of capitalism - that's why different debt has different interest rates. Lender takes a risk in order to make money. If it works out, they profit. If it doesn't, they lose. It's weird that a supposed free marketer would be so opposed to it.
This fails Economics 101. If people are spending less, then there is less to make and sell, and thus working harder and longer is pointless and counterproductive.
They have had a trade deficit. If they spend less on imports, they can reduce the trade deficit. Your statement is only true in a vacuum in which a national economy is isolated from the rest of the world.
Your statement doesn't address the point that he was referring to at all. The guy he responded to said the solution was to "save more and spend less" which definitely contradicts Econ 101. Spending less on imports will obviously help. But there's a ton of other factors that influence their international trade issues. I couldn't tell you what though because even though I aced international economics I don't remember a single thing. :grin:
This is just so embarrassing for you on so many levels. Let me chronicle the embarrassments that I have seen from you over the last 15 minutes as part of my annual "How is Sir Jackie doing?" assessment. 1. Endorsed dip****tery of 1-1 = 2 austerianism. This really doesn't even need explanation. If everybody saves, and nobody spends, economies die and people starve. This is a baseline assumption of modern economics and people who say that the answer is just for everybody to save should be laughed at and ridiculed. 2. Attempt to compound this mistake with a couple of defensive ploys that are both contradictory and ridiculous. I'll address the most ridiculous one first. By quoting from the "criticisms of the paradox of thrift" subsection of wikipedia. I will paraphrase this subsection which says "Hayek said nuh-uh" in 1929. First it's freaking hilarious that a good German socialist like yourself (and I'm not being derogatory, socialism is just fine) would become a hardcore Hayekian in the course of some hot and heavy wikipedia rebutting. Second, Hayek's 1929 criticism consists as far as I can tell of a rehash of Say's law, aka "IF you build it, they will come!" or "Supply creates its own demand". That idea is dumb in the abstract, but fortunately he created it right at the beginning of the Great Depression. We then had a 10 year natural experiment in which we found out that supply and savings most definitely did not create demand. The consequence was a World War, among other things. The other thing is that we have now have century's worth of data and there are basically zero data points that lead the paradox of thrift not being true and Hayek or Say being right. Conversely we have literally thousands of examples of them being wrong, which is why even conservative economists like Milton Friedman and the neoclassical guys consigned them to the dustbin years ago, where they belong. Unfortunately, Ron Paul and assorted libertarian crackpots with a devoted following in the US brought Hayek back a few years ago as part of the whole "black helicopter" mise en scene. So you should probably check prior to wreck on that one. Finally, your other implication is something like "Greece should just work harder, spend no money and run a trade surplus" - assuming the magical divine intervention of translating "hard work" into "exports" with zero capital to do so is somehow solvable (it' s not, but why belabor), now we're back to math. How do you propose Greece run a trade surplus, presumably like Germany, when most of the trade in EU countries is conducted within the EU? Can every EU country be a net exporter in a universe where most of its trade is within the EU? How does that math work? I can think of only one or two possible state of affairs where this would be true - a massive devaluation of the Euro to make extra-EU exports more competitive, or a massive scaleback of German exporting/production (and a reduction in its own income) to enable the other EU nations to run a trade surplus You Germans on board for that? Yeah, I thought so. So my assessment is complete: The State of Sir Jackie in 2015 is "not so good, you guys". See you next year.
ATW: University of Chicago MBA SamFisher: A lengthy Clutchfans BBS post I did not read ATW: 1 SamFisher: 0
This thinking is why Japan can't have nice things. Ask your friendly central bank governor why they target certain inflation ranges and avoid deflation like the plague. also this whole spend less save more argument is moored in economic nonsense stripped of any context. Please, people, if you believe in neoclassical growth models, read some Solow, and Golden Rule savings rate logic. https://en.wikipedia.org/wiki/Golden_Rule_savings_rate it'll frame your arguments better. save more spend less means nothing without context.
