That would be their dream. Not only in Greece, but throughout the Eurozone, nearly every populace wants and has wanted for years to dump the Euro.
There is not one voice there amongst all the protesters in every city. Yes, some are only protesting the austerity measures. Some are simply hoodlums looking to make a mess, ie the bank fire that killed 3. Some are furious with the elite in government, which is led by one of the wealthiest men in Greece and whose grandfather was also prime minister of Greece 3 times. And then some are protesting the bailout altogether and would rather see a outright default and dropping the Euro. This last scenario would stop Greece's ability to borrow overnight and thus the austerity measures would be automatically thrown on the people anyways. But at least they would have a fresh start and more importantly, a more competitive trading position and looser monetary policy - in other words a chance for growth in the future.
It is good to see the Greeks standing up to big finance. They are really standing up for average folk everywhere. There are ways to hande their probems without so much suffering for the average Greek. Are the ordinary Greeks somewhat at fault? Yes, but not nearly as much as the Greek elite and the international banking elite. The EU could allow more inflation which would help revolve the Greek economy so they could eventually grow their way out of their debt--with much less suffering for the average person. If you are wealthy to the point where you have all the money you could possibley want, you really don't need to be concerned with ordinary concerns like productivity or jobs. The only thing you need to worry about are inflation and taxes. Hence no concern for massive unemployment or social services or public tution rates or pensions. The Greeks are a good example for Americans. I guess many on the bbs are more horrified by some Greek protestors getting overwrought than the greed and dishonesty of the well dressed and usually polite folks at Goldman and other Wall Street leaders. I'm not. Sheeple think that it can't happen here. Many of the elite think that most if not all of the posters on this board will have too lavish social security, pension, health care overly generous public college tuition payments etc. This is class warfare and most of the sheeple don't realize it.
Yes, they could, but not every country in the EU needs more inflation. That is the crux of the problem with the euro. If Greece had its own currency then it could inflate. Of course the sheeple protesters are clueless about this. They want to continue to get lavish benefits they can't afford financed by cheap money that isn't there.
So, to clarify, your solution to the Greek crisis is for the EU to screw all the middle and lower class citizens in all the responsible countries, in order to help the ones in the country that violated EU rules? That's just brilliant.
No not really. A little bit of inflation is good for most people. Aren't you even a little bit concerned with Goldman's role in covering up Greece's finances, while undoubtedly shorting them? I suppose the average Greek school teacher with a modest pension to look forward is the main culprit and has to be punished. BTW do you ever think that conservative media owners (or, Gasp! the financial press) might have an agenda to feed you disinfo about ordinary folks and pensions and wages and tend to overlook the irresponsibility of folks in their class?
Here's some new thinking for Major on inflation outside his comfort zone of the traditional largely unexaminded conservative consensus on economics. ******* Did Your Momma Tell You That?" The Greek Crisis By DEAN BAKER Keynes quipped in the General Theory that the world is ruled by the ideas of long dead economists. I was reminded of this comment when I heard a member of Germany’s parliament scornfully dismiss the suggestion that the European Central Bank should target a somewhat higher rate of inflation. This suggestion had been put forward by Oliver Blanchard, one of the world’s leading macroeconomists. Furthermore, he had proposed a higher inflation target in his role as the chief economist for the International Monetary Fund. There is nothing wrong with disagreeing with an economist, no matter how prominent they are or where they work. But what was striking was the nature of the dismissal. The parliamentarian just asserted that: “inflation never solved anything.” That’s a strong statement. Did he get that information from his parents? Or, as we used to say growing up in Chicago, “Did your momma tell you that?” Blanchard and others arguing for a higher inflation target actually have very good reasons as to why higher inflation might be very helpful in solving the world economic crisis. First, a higher inflation rate will erode the real value of debt. This will benefit all debtors, households, businesses and countries. In the case of households, tens of millions of homeowners in the United States and elsewhere have seen much or all of their equity disappear with the collapse of the housing bubble. A modest rate of inflation should begin to lift house prices, restoring equity to these families. It will also reduce the burden of their monthly mortgage payments if wages rise in step with inflation. This will not only be beneficial to these families; a lower debt burden will allow families to spend more, helping to drive the economy. The same story applies to many businesses that are now facing crushing debt burdens. Furthermore the knowledge the prices of the items they sell will be rising 3-4 percent a year will make investment more attractive to businesses. Finally, a moderate rate of inflation can go far toward alleviating the debt burden faced by so many countries these days. After 10 years, a 3.0 percent rate of inflation will reduce the real value of a fixed debt by 26 percent; a 4.0 percent inflation rate will reduce it by 34 percent. The modest inflation of the 40s, 50s and 60s was a big factor in bringing down the huge U.S. World War II debt to a manageable level. Inflation can also be enormously helpful in allowing the euro zone countries with excessive labor costs (e.g. Greece, Portugal and Spain) to get their costs more in line. If wages in more competitive countries keep pace or exceed average euro zone inflation, while wages in the troubled countries don’t rise as rapidly, then they should be able to restore their competitiveness more quickly. These are the sorts of arguments that Blanchard and others have put forward for allowing a somewhat higher rate of inflation. But the German parliamentarian didn’t care, because he somehow already knew that “inflation never solves anything.” Policy that rests on unexamined assertions (that emanate from the teachings of long-dead economists) will be every bit as destructive today as it was in the first Great Depression. In Europe, this drama seems to be playing out in the desire to really make Greece feel pain. Greece undoubtedly has to straighten out its fiscal mess. (Is there some reason that everyone is not pushing a tax amnesty program as a way to reduce the Greek debt and show that it is serious about ending wholesale tax evasion?) However, it can’t be expected to balance its budget in the middle of the worst downturn in 70 years. The same applies to Portugal, Spain and other troubled European economies. Contractionary moves by these governments will worsen the downturn in these countries and in fact, make matters worse in the sound finance countries as well. Fewer imports in Spain and Greece mean fewer exports for Germany and France. Furthermore, enough downward pressure on these economies will likely require a debt restructuring at some point anyhow. The debt burden grows when economies shrink and that seems to be the plan coming from the economic center of Europe. There might be some justice in the fact that the austerity plans designed by Germany will come back to bite them, but it would be much better to see the Germans design good economic policy. There was perhaps an excuse for bad policy in the 30s; after all Keynes didn’t publish the General Theory until 1937. But, there is no excuse today – the ideas of Keynes have long been known and widely disseminated. It is a tragedy and an outrage that the people deciding economic policy are mindlessly repeating tired clichés rather than seriously trying to design policies that address the crisis in front of our faces. http://www.counterpunch.org/baker05042010.html
Perhaps I'm wrong as I suck at economics, but given the severity of the crisis and my understanding, Greece would pretty much need to go into hyperinflation to pay this thing off. I'm sure the other countries that don't have insane benefit rates would enjoy that.
Nobody is talking hyperinflation. What they are talking about it not killing demand by cutting social benefits, government spending in the middle of a big recession in Greece. It is similar to the thinking of the deficit hawks in the US that prevented Obama from having a big enough stimulus to really get us out of the recession quickly. If you kill the economy by cutting spending in a recession it leads to more government deficits and more claims that greek school teachers are "irresponsible".
Greece has nothing to pay for the benefits with. that's the problem. they don't produce anything. at some point you have to pay the piper. I hate to sound like a ron paul libertarian because that's not were i'm coming from we can run up defecits because we can believe our economy can handle it. they can't, and they can't keep printing money because no one is going to buy it.
glynch, Inflation is the most regressive tax that a country can use. What good does it do to maintain the welfare and pension payments if you kill their purchasing power? And how is that any better than reducing the payments?
Why should the Greeks have high standard of living? What do they produce that other countries need? Do they import many things? I don't really know what is going on in that country, other than they are in trouble.
Sure - and there already is a little bit of inflation. To fix Greece's problem, you need a LOT of inflation. A whole hell of a lot of it. And that destroys people's savings. It destroys people's wages. It destroy's people's pensions. If Greece were to decouple from Europe and drop the Euro, the Drahkma would plummet in value - that's the type of inflation needed to fix this. I actually support that move (it's what Argentina essentially did) - but I don't support killing the Euro's value and screwing over all the countries that didn't commit fraud. This is just irrelevant. Goldman's role doesn't determine whether its OK to screw the rest of Europe or not. Greek school teachers don't have "modest pensions". They have pensions promised to them by a government that has no ability to pay them. And yes, if it comes down to it, I'd rather have the Greek people pay the price rather than the rest of Europe, since the Greek people are the ones that have been benefitting from all this corruption for all this time. Have you ever considered that you don't have much of an understanding of economics? You seem to be under the impression that Greece deserves to be allowed to remain corrupt and hold onto all the fraudulent benefits that promised in that corruption, and that everyone else in Europe should foot the bill for it. I have a very different opinion.
You have no clue of my understanding of economics. There are many, many things wrong with your suggested article: 1. Inflation can work; I actually argued a bit of hyperinflation in the US as a possible solution for the housing crisis - it reduces the levels of debt (another alternative being to just tear down lots of excess old housing, as they are now doing in Detroit and some other cities). However, the US and Greece are totally different worlds. Greece can't inflate on its own - the rest of Europe has to do it for no good reason just to support Greece. It's a terrible solution that makes all sorts of people pay the price for no reason. 2. Raising the long-term inflation rate doesn't fix a short-term problem - and both the US financial crisis and the Greece problem are short-term problems. Fixes are needed in weeks, not decades. Inflating over the long-haul can be part of policy but in no way, shape, or form fixes the current problem. The only way to use inflation in the immediate sense is hyperinflation / devaluation of currency. 3. Greece's debt problem cannot be solved by inflation either - it's caused by annual spending problems. Inflation just means they are going to spend more on all their services. So all that happens is they inflate their currency, making all medical services more expensive. All their pensions start increasing at faster rates. etc. etc. You still need all the austerity measures. And you need them now because no one is willing to lend to Greece without them, which means their government can't function. Raising inflation is just going to raise the rates they have to pay, which increases their debt service costs too. If the US didn't have it's own ability to print currency, they'd be in the same boat.
For someone who argues for peace you seem way too eager to embrace class warfare. I agree the rich elite of Greece did a lot to cause this problem but so did a lot of other Greeks. This is a situation that spanned all of Greek society and I don't think it will be fixed through class warfare. If anything it will make things worse.
I know Ron Paul says inflation is "the most regressive tax" and all of modern economic evils started with the demise of the gold standard. BTW better to have the purchasing power cut by a real inflation of 5% than have your tuition go up by 100% or your pension check go down by 25%.
