Μάλλον υπερβάλει ο καλός αρθρογράφος, εκτός εάν διατυπώνει κρυφές επιθυμείες της νιότης του.Ο ελληνικός λαός δεν εμπιστεύεται το πολίτευμα
A homemade financial crisis Sweden was unprepared for the rapid deregulation of the credit market that it undertook in the mid-1980s. Cheap money led to a rapidly growing stock of debt
Choosing the long term over the short term Financial crises and budget consolidation processes are typically followed by high and stubborn unemployment.
in October 1994, it had to take action. Sweden had a budget deficit of 10 per cent of GDP... In November 1994, the first bill presenting a large consolidation programme was presented to parliament, amounting to 7.5 per cent of GDP...
The government attacked the deficit by reducing government spending in general, by cutting cash transfers, and by raising taxes. Spending cuts accounted for approximately 53 per cent of total savings, compared to 47 per cent from higher taxes...
The government safeguarded spending on childcare and education and instead made the deepest cuts in the social transfer system...This strategy, however, was not popular and led to massive protests, fuelled by the media... This wasn’t a surprise: cutting benefits in a situation with very high unemployment meant that many households suffered significant drops in income...
Telling a story of national survival The Swedish financial crisis severely tested the political system. Debt always does. A country with deficit and debt problems is constantly monitored by the financial markets...The Social Democrats started telling their story: that the cuts were, at root, a fight for the survival of the Swedish model itself.
Flexicurity – before flexicurity was even a word The Rehn-Meidner model is a unique Swedish contribution to the field of macroeconomics, and one of the few coherent visions of economic policy beyond Keynesianism.
Active labour market policy In a severe recession, many people who are inactive lose contact with working life and do not maintain the skills needed to rejoin the labour market when demand picks up. In these circumstances, it is important to avoid a ‘culture of unemployment’.
Strategic policies directed at future growth A fight against unemployment cannot be successful if it is not attached to a broader vision of what the economy will be like on the other side of the crisis.
"If Greece one day handles its revenues again without taking on new debt, then we must
take a look at the situation and assess it. That is not going to happen before 2014/2015
if all goes to plan," ReutersThis development probably carries equal weight to last week's deal. It is significant that Merkel chose Bild to start preparing the Derman public of a possible Greek debt write-off
Gabriel Sterne of the brokerage Exotix : The much-discussed Greek buyback - condition for disbursment of IMF funds- decision is complex, worthy of the dozen game theorists who have so far won the Nobel Prize for Economics.
(My insert)Jan Strupczewski of Reuters Key elements of the Greek debt deal with the euro zone and IMF
the latest package of interest-rate reductions, debt buybacks and deferred payments is not the full debt restructuring and debt write-down that Greece needs to get its economy back on its feet.
At best, the terms of the deal will provide the country with just enough debt relief to get it through another year or two.Finally, Katie Martin at same WSJ Blog gathers the reaction of the markets
CITIGROUP: Economists still see a 60% chance of Greece leaving the euro over the next year or two. Although the probability of Greece leaving in the very near-term has fallenHugo Dixon at Reuters/Opinion thinks that the Battle against Grexit (is) far from won
SS. Visit Marc's MarcToMarket Blog as you can play with an interactive graph of The Economist, he hosts.The rub, however, lies at the core. If the European official efforts succeed, the price of the Greek bond should increase, especially after the next couple of years. Why should an investors cash in now ?This suggests that only those that "have to" will participate in what is said is a voluntary program. The likely candidates are not foreign investors, but domestic institutions, including government pensions and insurance companies.
Gabriel Sterne of the brokerage Exotix : The much-discussed Greek buyback - condition for disbursment of IMF funds- decision is complex, worthy of the dozen game theorists who have so far won the Nobel Prize for Economics.
(My insert)Jan Strupczewski of Reuters Key elements of the Greek debt deal with the euro zone and IMF
the latest package of interest-rate reductions, debt buybacks and deferred payments is not the full debt restructuring and debt write-down that Greece needs to get its economy back on its feet.
At best, the terms of the deal will provide the country with just enough debt relief to get it through another year or two.Finally, Katie Martin at same WSJ Blog gathers the reaction of the markets
CITIGROUP: Economists still see a 60% chance of Greece leaving the euro over the next year or two. Although the probability of Greece leaving in the very near-term has fallenHugo Dixon at Reuters/Opinion thinks that the Battle against Grexit (is) far from won
The IMF is right. Greece urgently needs OSI. The longer Europe resists, the greater the risks to the integrity of Greece and to the credibility of Eurozone policy responses. Let’s hope that good sense prevails when European officials convene again next week.A good round up of commentary, including a Reuters' story is by Kate Mackenzie at FT Alphaville
Even as other EU countries have curbed the reach of the state, it has grown in France to consume almost 57% of GDP, the highest share in the euro zone. Because of the failure to balance a single budget since 1981, public debt has risen from 22% of GDP then to over 90% now....and growing! M."Normal" has some sleepless nights ahead.
Hollande faces a basic political choice in the coming months. Will he be a preemptive center-left reformer in the mold of former Chancellor Gerhard Schröder of Germany, who set Germany on the path to economic and political dominance following his election victory in 2002 over the center right candidate, Edmund Stoiber? (Schröder’s action broke with ten years of German economic ossification after reunification a decade earlier.) Or will Hollande be forced to take the role of center-left reformer like former Spanish Prime Minister José Luis Zapatero, who for years had denied that anything was wrong in the Spanish economy and banking system, until market forces (and the European Central Bank) convinced him otherwise?
Greek governments in the years before the recession
behaved very badly in both economic and political terms
As a result, when the recession hit, the Greek government’s finances became untenable,,,,,,,,,,
understandable why the Greek government did not want a complete default..........
The Greek government’s position is no longer unsustainable because it is
spending more than it is receiving in taxes. It is unsustainable
because it cannot afford to pay the interest on its debtsThe whole piece is worth reading until mastered.
Keynesian theory prescribed deficit spending during times of business recessions and the accumulation of surpluses during good times, in order to be able to pay down debts that would inevitably accrue down the road.
The problem is that the model developed by Keynesian theory begins to break down as we near the event horizon of a black hole of debt.
"..when account is taken of the magnified impact of consolidation in a depressed economy, and of the spillover effects of coordinated fiscal consolidation across almost EU countries, fiscal multipliers will indeed be considerably elevated, and the impact on growth correspondingly larger.
The direct implication is that the policies pursued by EU countries over the recent past have had perverse and damaging effects. Our simulations suggest that coordinated fiscal consolidation has not only had substantially larger negative impacts on growth than expected, but has actually had the effect of raising rather than lowering debt-GDP ratios.."In the end, there will be change and Krugman and Co. will , again, be vindicated. Will Greece still be in the EZ when that happens? I tend to side with those who are cagey on this, and one could not rule out Christian Fahrholz's fears.
Overall then, its hard to see how the gap will be filled without some larger decision being taken over the future of Greece in the eurozone.
Social Security is mainly a system in which each generation pays for the previous generation’s retirement, in the expectation that it will receive the same treatment from the next generationPaul Krugman
internal devaluation becomes even more necessaryHe ends his column thus;
Food for thought – and for even more europessimism.
Mr Berezin's ( of Bank Credit Analyst) June report accurately pinpoints the source of the crisis: persistently higher inflation and slower productivity growth in the periphery led to growing current account deficits with Germany. (emphasis added)Thus The Economist (Free Exchange) 25/07/12 endorses Berezin's diagnosis.
What happened back in 2009 was not a case of long established living standards being suddenly slashed, it was a case of them being cut back to where they were before they were raised in an unsustainable way in order to win elections.is indeed "food for thought".
