The left ascends to power in Greece, creating uncertainty and hope

Would Greece be better without the Euro?

Probably end up more like Argentina

 

Same thing that needs to be done here. The citizens of Germany need to claw back money from their bankers and other elite who benefitted in what is really high level corruption or crime in many cases. In addition as noted the citizens of Germany as a whole benefitted from the policies that benefitted Greece.

It does no good for the German working class or the Greeks to punish the Greeks to the point where their economy can't produce (possibly pay some more of the debt to German and other Euro bankers) or have the Greeks turn fascist which the Germans did when similarly stressed in the 1930's.

Austerity was a brutal failure except for the banking and some of the rest of the elite, though the German working class as a whole benefitted a it, too.

 

Short-term, who knows. I don't think anyone can predict what the chaos would look like.

Long run, absolutely. The Euro benefits the strong countries in the eurozone and hurts the weak ones. Greece needs a currency that can depreciate so they can be more competitive.

Argentina is not all bad - not good, certainly, but there is no outcome for Greece that is going to be good. They have major problems, some self-inflicted, some external. The goal is to get the least-bad.

In the 2000's, Argentina they had a solid economy and a growing middle class. They have a lot of issues, certainly, and are in the midst of another partial debt default (that was sparked in part due to a ruling by US courts, which is kind of weird in itself). I think it's hard to argue they would have done any better had they not defaulted in the early 2000's. This is the Worldbank summary of Argentina:

http://www.worldbank.org/en/country/argentina/overview


The country has grown steadily during the past decade and has invested heavily in health and education, areas which account for 8% and 6% of GDP respectively. Between 2000 and 2011, the middle class increased from 34% to 53% of the population.

It has prioritized social spending through various programs, including the creation of the Universal Child Allowance, which reaches approximately 3.7 million children and adolescents up to 18 years old, 9.3% of the population.

The economy's external sector faces significant challenges. Estimates for the first 6 months of 2014 were 0.1% GDP growth compared with 2013 and the forecasts for the whole of 2014 range from -1% to -1.5%. For 2015, around 0.5% is expected.

This was all done without access to international credit markets (the consequence of defaulting). If Greece could duplicate that, they'd probably be better off than the path they are on.

 

"The Euro benefits the strong countries in the eurozone and hurts the weak ones. "

I don't think that's true, at least not before the current problems. Which is why so many weak countries wanted to get in. And many weak countries still want to get in. Lithuania just joined.

One reason may be price stability. The problem for Greece has been that inflation is too low for them but not necessarily for Germany. But would they swap that for high inflation?

Argentinian inflation:

Inflation[edit]
High inflation has been a weakness of the Argentine economy for decades.[114] Inflation has been unofficially estimated to be running at around 25% annually since 2008, despite official statistics indicating less than half that figure;[4][115] these would be the highest levels since the 2002 devaluation.[114] A committee was established in 2010 in the Argentine Chamber of Deputies by opposition Deputies Patricia Bullrich, Ricardo Gil Lavedra, and others to publish an alternative index based on private estimates.[39] Food price increases, particularly that of beef, began to outstrip wage increases in 2010, leading Argentines to decrease beef consumption per capita from 69 kg (152 lb) to 57 kg (125 lb) annually and to increase consumption of other meats.[114][116]

Consumer inflation expectations of 20 to 30% led the national mint to buy banknotes of its highest denomination (100 pesos) from Brazil at the end of 2010 to keep up with demand. The central bank pumped at least 1 billion pesos into the economy in this way during 2011.[117]

 

Sure - the Euro is a great short-term positive for weak countries. They get inflation under control and lower their borrowing costs dramatically. But if your economy is not healthy, then it creates bigger problems down the line because it makes you even less competitive.

As long as things are good, the Euro works reasonably well, and the drawbacks get masked by prosperity for everyone. The problems in the Euro only arise when things go south, and 2008 was really the first significant downturn since the invention of the Euro. At that point, the needs of the weak and strong countries diverge and that's where all hell breaks loose.

It depends on the alternative. If you're Italy and holding your own, you don't. But if you're Greece and in a downward spiral? High inflation is bad in the short-term, but its a reset mechanism in the long-run.

As I said, Argentina has lots of problems. But it also had 10 years of real GDP growth and substantially grew its middle class. Right now, Greece has nothing positive going for it. There's no real path forward on their current trajectory. Greece is unlikely to be in a good situation in 5 or 10 years regardless of which path they take - the question is simply which is less bad.

 

Sad part is, that would be an improvement for Greece.

 

I honestly don't understand how you can be such a communist, and place such little value on freedom. Don't you understand that it should be up to the owners of the business, those people who invested in their business, to decide on their pricing structure? Why do you think that some guys who just randomly got elected should take away the business owners' freedom to decide on their pricing structure? Why do you think the state "knows better"? Why are you so much against entrepreneurs? What is wrong with you?

 

Can you make a solid economic argument instead of just promoting your class warfare bull****?

 

No need to launch into typical right wing/libertarian dogma. I said it depends on the details. We weren't talking about small business here. All inclusives. For all we know they are run by the oligarchic Greek families that even you might want to pay some taxes.

 

So any business bigger than a small business should, in your communist view of the world, be subject to completely random fiddling with details of their pricing policy?

Also, in your view of the world, all-inclusive pricing means not paying taxes?

 

Where did you get "completely random"? Not even a good try.

I did not say all-inclusive necessarily mean not paying taxes.

You just don't know, what the new Varousfakis sp? concern was about the all-inclusives was but you want to jump to conclusions.

 

Do you understand the basic concept of freedom of contract? Like...at all?

 

Deserves a similar silly response. Do you understand that governments at times due to public policy concerns restrict the freedom to contract? That this is not communism?

Look, you have no idea what Varoufakis's concern with the all-inclusives is.

 

Your blind stalinist faith in governmental restrictions of freedom is interesting. In case of doubt, the government is right to restrict freedoms...if you consider it a left government. Like Chavez, like Fidel Castro, like Tsipras.

 

Not really it is a case by case basis. History has shown over and over that market fundamentalism leads to a small group with all the pie.

The best counter example to date are the social democracies of Europe and to the extent that we had or still have a bit of a one here. You are a citizen of one of the best with the resulting benefits.

Government is needed to be sufficiently strong to be a countervailing force to the guys at the top who actually are devoted to creating monopoly power and only paying lip service to markets. Many cases show strong GDP growth will virtually no trickle down to the majority and as we have seen recently actually trickle up to the top as the majority gets poorer in real terms.

Right wingers like to call anyone from a Democrat (Obama for instance )or certainly a liberal democrat or a social democrat on the left as a "communist" Par for the course.

 

So, after having argued the whole time that Greece needs to take responsibility, I will now surprise you with something that is seemingly a reversal of my previous position, but really isn't:

A debt deal, including forgiveness of more debt, needs to be found that benefits the "common man" in Greece. Something similar to what was done with Germany in 1953. However, that needs to be coupled with enforceable commitments as to the structure of government spending in Greece. Their government can't just promise the world, after decades of corruption, fraud and irresponsible spending. They need to change. Debt forgiveness and improvement of lives of regular people in Greece: Yes. Debt forgiveness and future freebies from the EU and from the richer countries in Europe so that Greek elites and Greek government can continue to defraud the rest of Europe and put more money into their pockets: No.

 

do we expect the Greeks to start raiding bank accounts ala Cyprus?

 

that will likely eventually be done in every EU country including germany.