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Europe braces itself for a revolutionary Leftist backlash after GreeceAthens' ritual humiliation was a cautionary tale for Leftists in the Mediterranean but it won't be enough to kill them off just yet
Greece, the Sacrificial Lamb
Greece Really Should Leave The Euro, The Economics Is Entirely Clear Here
Austerity is bad but bankruptcy is 'much worse,' says Greece's top spokesman, Lefteris Kretsos
Germany Wants a Strong Greece
Why Greece’s Lenders Need to SufferThere is definitive proof, for anyone willing to look, that Greece is not solely or even primarily responsible for its own financial crisis. The proof is not especially exciting: It is a single bond, with the identification code GR0133004177. But a consideration of this bond should end, permanently, any discussion of Greece’s crisis as a moral failing on the part of the Greeks.
Greece Isn't a Morality TaleBy Mark BuchananOne of the more troubling elements of the recent drama over Greece's debt was the urge by many to see a deficiency of national character, rather than euro-zone economics, as the problem. Right-leaning opinion, not only in Germany but around the world, put the trouble down to Greek corruption and, worse, laziness: The bad people of Greece retire too early and produce less per capita than the European average, despite working longer hours. We shouldn't conclude much of anything from such comparisons. It's a complete myth that economic productivity somehow reflects the average ability of people to work hard. It has far more to do with the nature of industries in different nations, and how technology has changed their productivity over time. Nearly 20 percent of Greek economic output comes from tourism, which is natural enough, given the nation's surpassing beauty. Aside from the Internet making it easier to book and advertise trips, however, tourism remains a labor-intensive activity not that different from 30 years ago. People take planes and taxis, stay in hotels, eat meals, listen to music and take excursions on boats. All of that requires a large number of people to cook and serve, entertain, clean rooms and drive taxis for long hours. The amount of these things that can be produced per hour and per person hasn't changed a lot with time. Compare that with, say, the German automobile industry. According to Eurostat data, the total output of the European motor-vehicle industry -- German companies account for about half of it -- grew in the decade before the financial crisis by about 4.4 percent a year. That corresponds to a doubling of output in 15 years. Much of this increase came from gains in manufacturing productivity -- value created per hour of work -- which in Germany, according to OECD numbers, grew by 40 percent over the same period.In other words, rapid economic growth in Germany and other fast-growing, developed nations has come mostly from improvements in industrial efficiency, not from some morally superior character of the workers in those nations. Getting back to Greece: It's no surprise that the productivity per capita of its tourism-heavy economy hasn't kept up with Germany's industrial juggernaut. These are different economies supplying different kinds of goods. Before 2010, Greek productivity per capita was stable at a level of about 93 percent of the European average. Productivity in Greece only plummeted after 2010, following the imposition of severe austerity. Here's the simple, amoral story of Greece and Germany: One economy thrives on rapidly advancing industrial technology, the other on valuable economic services that get created and delivered in ways that just don't change a lot with time. The Greeks aren't lazy, and the euro zone's problems have nothing to do with anyone's moral shortcomings.
Who Is to Blame for the Greek Crisis, the Greeks or Europe’s Leaders? Part One of a Two-Part Series of ColumnsThe political crisis in Europe revolving around Greece’s economy is currently on hold. While the Greek people continue to endure Great Depression-level suffering, the months-long standoff between the government of Greece and Europe’s leaders was temporarily resolved by an agreement to negotiate further—an agreement to possibly agree at some point in the future, but only if the Greek government imposes further austerity on its people immediately.Unfortunately, this latest gambit will almost surely end badly—not just for the Greek people, but for Europe and the rest of the world as well. The American people, too, have much at stake.As I will explain below, the situation in Greece is economically simple, but politically nasty. Europe’s economic and political institutions—very much dominated by the German government—have willfully made the Greek situation worse. Rather than treating the problems in Greece as a manageable economic challenge, Germany’s leaders (only slightly hindered by some useful resistance from the International Monetary Fund) have instead turned the crisis into a matter of nationalistic scapegoating.Europe’s political and financial leaders have, in short, used the “European project”—an admirable effort that was based on the idea of making Europe’s diverse peoples a unified whole—to sow bigotry and chauvinistic discord aimed at the Greek people. That is clearly bad for Greece. It could also set back European political unity for decades.
Blaming the Victims in Greece: Part Two of a Two-Part Series of ColumnsIn my most recent Verdict column, I described why the conditions that Europe’s leaders have imposed on Greece are both unreasonable and economically myopic. What is most puzzling, however, is that Greece’s creditors—led by the German government—continue to demand that Greece engage in policies that will make it impossible to pay back its loans. It is a modern version of a debtors’ prison, with punishment being meted out for perceived bad behavior, no matter the fact that the punishment itself precludes making things right.The most immediate victims of the cruel policy regime being imposed on Greece are, of course, the Greek people. Suffering under years of austerity, with measured unemployment rates of 25 percent overall and more than 50 percent for young would-be workers (both of which are surely underestimates), the Greek people elected a government earlier this year that promised to try to mitigate those damaging policies. We now know that Europe’s leaders are completely unwilling to change, and the new policy regime that they are inflicting on Greece is in many ways worse than what existed before.This new policy regime is a time bomb, which means that there will soon be yet another Greek crisis. When that happens, beyond the predictable claims that (despite having done everything they have been ordered to do) this is still somehow the fault of the Greeks, the economic instability in Europe will worsen. One of the more dispiriting aspects of the Greek crisis has been witnessing the sneering contempt that Europe’s leaders heap upon Greece’s government. In part, this is because the 2015 elections in Greece brought to power a party called Syriza, which translates to “coalition of the radical left.” As I explained in a post on Dorf on Law shortly after that election in January, however, the government of Prime Minister Alexis Tsipras has been anything but radical.Indeed, Tsipras has done everything possible to keep Greece in the Eurozone, and he has never proposed anything remotely leftist during his time in office. His government has simply said that it would be better for Greece—and for all of Europe, including Greece’s creditors—to reduce (but not reverse) the extreme austerity measures under which Greeks have suffered for the past five years. “We’re willing to live under austerity, but not quite such extreme austerity,” is nowhere to be found in Karl Marx’s writings.Nonetheless, Europe’s leaders have done everything possible to bully, diminish, and blame the Tsipras government.What is perhaps most upsetting about the Greek situation, however, is the way in which the supposed failings of Greek governments—the current Tsipras government, but also the non-leftist governments before it—are now being used as an excuse to harm the Greek people.This is not just cruel. It is a recipe for disaster.Neil H. Buchanan, a Justia columnist, is an economist and legal scholar, a Professor of Law at The George Washington University, and a Senior Fellow at the Taxation Law and Policy Research Institute, Monash University (Melbourne, Australia).
Greek Debt Crisis: Even If Greece Defaults, German Taxpayers Will Come Out Ahead, Says German Think TankContrary to German politicians' claims that their taxpayers have paid the tab for Greece's economic woes, the Greek crisis has actually benefited Germany financially, suggests a new analysis from a leading German economic think tank.In fact, the authors estimate that even if Germany forgave the entirety of Greek debt on its books, the country would still come out ahead. The report, from the Halle Institute for Economic Research, examines the relative savings Germany has enjoyed due to depressed interest rates on its government bonds. As frightened bond investors have fled Greece and other troubled economies since 2010, they have piled heavily into German debt, which is seen as relatively safe. That increased demand has sent interest rates on German debt issues falling. If one adds up all the savings from lower government financing costs, the Halle Institute argues, it comes out to 100 billion euros ($110 billion) -- more than the 90 billion-odd euros ($99 billion) Germany has committed to the Greek bailout. "Even if Greece indeed does not repay any of its loans, Germany comes out ahead," the authors write.
QuoteGreek Debt Crisis: Even If Greece Defaults, German Taxpayers Will Come Out Ahead, Says German Think TankContrary to German politicians' claims that their taxpayers have paid the tab for Greece's economic woes, the Greek crisis has actually benefited Germany financially, suggests a new analysis from a leading German economic think tank.In fact, the authors estimate that even if Germany forgave the entirety of Greek debt on its books, the country would still come out ahead. The report, from the Halle Institute for Economic Research, examines the relative savings Germany has enjoyed due to depressed interest rates on its government bonds. As frightened bond investors have fled Greece and other troubled economies since 2010, they have piled heavily into German debt, which is seen as relatively safe. That increased demand has sent interest rates on German debt issues falling. If one adds up all the savings from lower government financing costs, the Halle Institute argues, it comes out to 100 billion euros ($110 billion) -- more than the 90 billion-odd euros ($99 billion) Germany has committed to the Greek bailout. "Even if Greece indeed does not repay any of its loans, Germany comes out ahead," the authors write.http://www.ibtimes.com/greek-debt-crisis-even-if-greece-defaults-german-taxpayers-will-come-out-ahead-says-2046493
Europe has taken charge of Greece like a television nanny
QuoteEurope has taken charge of Greece like a television nannyhttp://www.theguardian.com/business/2015/aug/16/europe-taken-charge-greece-like-three-day-nanny
It is crucial for the stability of the euro area that there is no doubt that participation in the euro is irreversible. Now there is such doubt. The discussion about Grexit has undoubtedly caused instability in this respect. It is like a fine hairline crack that can lead to a major fracture. Consequently, it has to be repaired now. This is particularly important for us as a central bank. We do not decide who belongs in the euro area. That is a political decision. But the ECB's working assumption is that a country’s participation in the euro is irreversible. This is also how we have dealt with Greece and why the provision of liquidity to Greece could be sustained.
Greece is for sale – and everything must goSo the privatisations aren’t to do with helping Greece. The beneficiaries are corporations from around the world, though eyebrows are particularly being raised at the number of European companies – from German airport operators and phone companies to French railways – who are getting their hands on Greece’s economy. Not to mention the European investment banks and legal firms who are making a fast buck along the way. The self-interest of European governments in forcing these policies on Greece leaves a particularly unpleasant flavour.
"Deep-Seatedly Wrong" Economic Thinking Is Killing GreeceIn discussing Greece’s Third Memorandum of Understanding (MoU) and its draconian terms, Stiglitz observes that the MoU is really a “surrender document” that eclipses the country’s economic sovereignty and ensures that Greece’s depression — already deeper than America’s Great Depression — will get worse. Among the puzzling aspects of the MoU are demands for reforms on things seemingly trivial as milk. While pensioners are eating out of garbage cans, the troika has been haggling over how old a carton of milk can be if it is to be labeled “fresh.” Stiglitz observes that if you look closely you see that special interests — in this case the big dairy companies of Holland — appear to be behind the reforms. Dutch milk sellers would prefer that their milk, which travels long distances to reach Greece, be allowed to call itself fresh — a move that will only hurt local dairies. By discouraging local production, the MoU paves the way for even more Greek unemployment and less demand for goods and services — hardly a recipe for economic health. (The chairman of the Eurogroup, it may be worth noting, is Jeroen Dijsselbloem, the Dutch Finance minister).
Consider the facts before criticising Greece over migrant crisis
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