I'm not underplaying the difficulties faced by Greece but it is debt-servicing (i.e. scheduled repayment of capital & interest) NOT the total (170% of GDP) amount of debt that is immediately relevant. The average maturity of Greek debt is relatively long; such that, as a % of GDP and at current interest rates, it's debt-servicing burden is approx 2.6% of GDP - lower than some other EU countries, e.g. Italy.
Sure long term debt and low interest rates all good. But are you aware of the austerity conditions they have had to fulfill to secure that deal? They have a depression going on and yet the government is running a budget surplus (before interest payments) while cutting x and y. For a nation state anything above 100% debt to GDP is a risk: unless growth and inflation outstrips the interest rate and deficit, the debt % will grow. As it grows, creditors lose confidence and bump up interest rates.
So the Eurozone and Troika solved the interest rate issue and are now running with quantitative easing. Next step is to increase demand so government and countries can grow there way out of the crisis creating opportunity for the many and not the few.
I'm not underplaying the difficulties faced by Greece but it is debt-servicing (i.e. scheduled repayment of capital & interest) NOT the total (170% of GDP) amount of debt that is immediately relevant. The average maturity of Greek debt is relatively long; such that, as a % of GDP and at current interest rates, it's debt-servicing burden is approx 2.6% of GDP - lower than some other EU countries, e.g. Italy.
Exactly. Some above saying that anyone else with 170% debt to income ratio would be bankrupt - that's the position of vast numbers of UK mortgage holders and has been for decades!
But why is it commonly stated - by those who propose debt forgiveness for the Greeks - that they will never be able to pay off their debts? In much the same way that Germany was forgiven in the mid 50s (albeit that people had more trust that Germany was on the right path overall)?
Genuine question, macro-economics isn't in my area of professional experience (Ok, such as it is:-))
I'm not underplaying the difficulties faced by Greece but it is debt-servicing (i.e. scheduled repayment of capital & interest) NOT the total (170% of GDP) amount of debt that is immediately relevant. The average maturity of Greek debt is relatively long; such that, as a % of GDP and at current interest rates, it's debt-servicing burden is approx 2.6% of GDP - lower than some other EU countries, e.g. Italy.
Sure long term debt and low interest rates all good. But are you aware of the austerity conditions they have had to fulfill to secure that deal? They have a depression going on and yet the government is running a budget surplus (before interest payments) while cutting x and y. For a nation state anything above 100% debt to GDP is a risk: unless growth and inflation outstrips the interest rate and deficit, the debt % will grow. As it grows, creditors lose confidence and bump up interest rates.
So the Eurozone and Troika solved the interest rate issue and are now running with quantitative easing. Next step is to increase demand so government and countries can grow there way out of the crisis creating opportunity for the many and not the few.
"Bumped up" interest rates from loss of confidence (i.e. a higher credit spread) hurts the borrower if and when he is issuing new debt or re-financing his debt. Aside from a lower debt-servicing burden, the relatively long average maturity of Greek debt means that it also has a lower re-financing risk than some other Eurozone members. A higher credit spread would principally hurt the investors owning Greek debt as assets.
Sorry, @PragueAddick I didn't see the programme so can't comment on it.
@Stig you're right about mortgages and numbers of people living in houses. But, if you use that argument, you'd have to counter the long-term debt by factoring in the value of other assets like pension plans for example. I'm sure many of the super-rich become less rich if you take account of the number of dependants and servants living in their houses!!
In the main, as @Dippenhall explained the money is not "sitting in the hands of the extremely wealthy" - it is generally out there working very hard indeed.
Let's look at an example: Warren Buffet one of the world's most asset-laden individuals and the CEO and largest shareholder in Berkshire Hathaway - a company where one single share would cost you a staggering US$225,000.
BH, in turn, owns or has significant holdings in vast numbers of enterprises including (according to Wiki) GEICO, BNSF, Lubrizol, Dairy Queen, Fruit of the Loom, Helzberg Diamonds, FlightSafety International, NetJets, Heinz, Mars Inc, American Express, The Coca-Cola Company, Wells Fargo, IBM, Restaurant Brands International and others. BH has minimal debt and it employs 300,000 people. So, I suspect the Greeks would rather Buffet was head-quartered in Greece rather than Nebraska!
So, I'm not sure how you would "distribute" such wealth while still allowing the companies to make a very good living for large numbers of people. Perhaps we will all get another opportunity to see the Labour Party try and fail, yet again, at this task in the next 5 years? Or perhaps not if the Greek left-wing experiment goes tits up in the next few months?
I'm not underplaying the difficulties faced by Greece but it is debt-servicing (i.e. scheduled repayment of capital & interest) NOT the total (170% of GDP) amount of debt that is immediately relevant. The average maturity of Greek debt is relatively long; such that, as a % of GDP and at current interest rates, it's debt-servicing burden is approx 2.6% of GDP - lower than some other EU countries, e.g. Italy.
Good morning Mr Molloy.
This is a bit above my pay grade. Could you expand on the implications of the point you are making? For example what would you say to the Syriza leaders if they asked your advice before meeting with the troika?
My advice to Mr Tsipras: 1. Debt-relief may be politically significant to the new Government but it will not make a lot of difference to Greece's economic problems, which stem from a dysfunctional revenue collection system; an uncompetitive and now totally screwed economy; and being tied into a flawed monetary union. 2. Whatever you do, undoing the mistakes of the past entails PAIN - but you have a choice: Option 1 - the SLOW DEATH of the status quo - continuing the indefinite pain (with a horizon far longer than the probable life of your government) of remaining within an organisation that your country joined stupidly and by falsifying statistics but which politically now castrates every Greek government. Option 2 - LANCE THE BOIL & GET OUT OF THE EURO AND THE EU. Economic agony is certain in the short term from re-creation of the Drachma with inevitable hyper-inflation and external debt default BUT there will light at the end of the tunnel. OK it wasn't in the Eurozone but there is still a parallel - look to Iceland not Ireland.
@PeanutsMolloy Ireland (and Spain) have growth again after taking their medicine. Greece, France and Italy do not because they are all in dire need of structural reforms to their economies. For Greece it is far easier to bring in those painful reforms from within the Eurozone and that might work as long as mechanisms are put in place to keep demand going. Increased tax collection for sure but reducing over manning in the public sector creates unemployment unless otherwise sectors create jobs at the same rate.
Leaving the €uro sounds so simple but that risks bringing the whole currency down and all players in the poker game are fully aware of this.
I agree debt relief with rates so low won't be a big contributor. But what they do need is less austerity and more investment - they need a hand to create the conditions such that Warren Buffet and others want to create wealth over there. I'm not familiar with Greek and Italian regulatory framework and bureaucracy but I do know that French employee rights and social insurance contributions act as a massive brake on growth.
So do we want Euro breakup or macro economic policy across the Eurozone which creates wealth, jobs etc. No German chancellor wants the €uro to fail on their watch so perhaps attitudes will shift?
Funny old day for the Greeks yesterday .. Demis Roussos dies, a Greek fighter aircraft crashed in Spain killing ten and an extreme left wing party formed a coalition government with an extreme right wing party ..
The Euro will fail. The only question is when, not if. It is a political currency and not an economic currency. It is an experiment that is part of the wider agenda of total political and economic integration. The people in control of the euro have shown countless times that they are not fit for purpose. Every decision they make in a desperate, squirming attempt to improve growth actually has the opposite affect and stifles and restricts growth.
Look at the rate of unemployment across the eurozone. It is still growing. They have managed to take countries who had stable, growing economies and turned them all into a collective basket case of unemployment, huge debt, no-growth and growing poverty among the low wage economies.
When Greece joined the euro it was one of the cheapest countries to visit. Now it is one of the most expensive, has very expensive fuel costs where petrol was 2 euro a litre just a couple of years ago. VAT has risen from 9% to 23%. During this time wages have been reduced from an average 700 euro a month to around 400-450 average today. Prices in supermarkets and clothes shops would make the hair stand up on the back of your neck.
Try renting an apartment, feeding and clothing your family, paying your bills, property taxes, travel to work on an income of that scale.
The thing is that there is no shortage of places for wealthy investors to put their money. Why choose Greece with the uncertainty that comes from their predicament. I can see why it would make sense to build a manufacturing plant there. With high unemployment you would think that they could secure, relatively, cheap labour,both to build the manufacturing plant and then to work in it, and if Greece stays in the EU you can export directly to member states.
However, with the possibility of Greece being 'removed' from the EU and the EMU there is an inherent risk that doesn't apply in other countries. Also there is no doubt that, despite the higher cost of production, manufacturing in Germany comes with many fewer risks.
This also, obviously, ignores the, outrageously, low cost of labour in places like China and India, as well as a few others.
So where is the investment going to come from if not from Greece plc borrowing from it's European neighbors? With the likelihood that those running the country can't be trusted to invest the money wisely I can see why people are inclined to give them just enough to save the Euro all the while watch the country decline and hope that when it does go bust it is 'not on their watch'.
The €uro has been set up without political nor fiscal union. Countries are unlikely to pool all of their sovereignty but the biggest banks will share common regulation. Will countries agree to minimum and maximum rates of VAT and corporation tax? Will Italy and Greece take on the required reforms? VAT is an easy tax to collect and a classic austerity "weapon". Raising it to 23% is probably one of the nutty suggestions enforced by the Troika and one would expect it to be reduced, just as Labour reduced VAT over hear in the middle of the 2007-09 crash.
So yes, the €uro was created without an explicit statement about the roadmap required to sustain it. I haven't see precise calculations of the impact of it crashing but I suspect that the price is so high that all the players will keep it ticking over. People make many comments about Portugal, Ireland and Greece but at the end of the day, it will be the four big economies of Germany, France, Italy and Spain who will decide how it plays out. Perhaps they are assisted by watching what happens in Greece...Perhaps they learn and find better solutions... Or maybe they don't?
Such a shame to hear about the state of Greece now. I went there over 30 years ago and it was a great place - everybody got about on ancient dilapidated mopeds (including the police). It was a relaxed place where you could get drunk for a quid. The locals seemed happy and seemed to have all they needed. Why they wanted to join the EU escapes me. Even worse, why did they want to join in the Euro experiment? Their economy is so far removed from Germany's, how was that ever going to work?
I sure as hell wouldn't want to responsible for sorting out the mess the EU seems to have gotten itself into.
The Euro will fail. The only question is when, not if. It is a political currency and not an economic currency. It is an experiment that is part of the wider agenda of total political and economic integration. The people in control of the euro have shown countless times that they are not fit for purpose. Every decision they make in a desperate, squirming attempt to improve growth actually has the opposite affect and stifles and restricts growth.
Look at the rate of unemployment across the eurozone. It is still growing. They have managed to take countries who had stable, growing economies and turned them all into a collective basket case of unemployment, huge debt, no-growth and growing poverty among the low wage economies.
When Greece joined the euro it was one of the cheapest countries to visit. Now it is one of the most expensive, has very expensive fuel costs where petrol was 2 euro a litre just a couple of years ago. VAT has risen from 9% to 23%. During this time wages have been reduced from an average 700 euro a month to around 400-450 average today. Prices in supermarkets and clothes shops would make the hair stand up on the back of your neck.
Try renting an apartment, feeding and clothing your family, paying your bills, property taxes, travel to work on an income of that scale.
There is no doubt that the euro is a flawed project. However it is often unfairly blamed for economic errors- or worse- by national politicians. Your post is a case in point.
Take the case of Slovakia. Before the fall of the wall it was the eastern - and less developed - part of Czechoslovakia. In the 90s in the hands of nasty populist far right wingers it fell behind and was forgotten, and treated like the delinquent son by most Czechs. However in 2004 a decent centre-right government came to power and made sweeping fiscal reforms. It then joined the euro - just in time for the global crisis, the worst possible time to join, you might think. The Czechs, meanwhile stayed out of the euro, despite being a strong exporting economy and attracting foreign investment in the auto sector.
I invite you to compare the performance of the two countries' economies since 2004. You will see that Slovak GDP has outperformed (often by a factor of 2 or more) that of its big brother in virtually every year. Very crude calculations suggest that in GDP per head the Slovaks will overtake the Czechs maybe next year. I actually achieved my 15 minutes of - relative- fame in this country by writing a blogpost about it which was picked up the top Czech finance house and went a bit viral. (You may do your research and say, what about Slovak unemployment? The answer is that the east of the country is desolate, with a big Roma population, and that is why it has much higher unemployment than the more industrialised Czech Republic.). The point is that the euro, far from dragging Slovakia down, has been a major building block in its economic renaissance. It is none of the things you described, even though you would categorise it as a low wage economy with Greece Portugal et al.
Europe is never as straightforward as Euro-sceptic dogma would have you believe.
The Euro will fail. The only question is when, not if. It is a political currency and not an economic currency. It is an experiment that is part of the wider agenda of total political and economic integration. The people in control of the euro have shown countless times that they are not fit for purpose. Every decision they make in a desperate, squirming attempt to improve growth actually has the opposite affect and stifles and restricts growth.
Look at the rate of unemployment across the eurozone. It is still growing. They have managed to take countries who had stable, growing economies and turned them all into a collective basket case of unemployment, huge debt, no-growth and growing poverty among the low wage economies.
When Greece joined the euro it was one of the cheapest countries to visit. Now it is one of the most expensive, has very expensive fuel costs where petrol was 2 euro a litre just a couple of years ago. VAT has risen from 9% to 23%. During this time wages have been reduced from an average 700 euro a month to around 400-450 average today. Prices in supermarkets and clothes shops would make the hair stand up on the back of your neck.
Try renting an apartment, feeding and clothing your family, paying your bills, property taxes, travel to work on an income of that scale.
There is no doubt that the euro is a flawed project. However it is often unfairly blamed for economic errors- or worse- by national politicians. Your post is a case in point.
Take the case of Slovakia. Before the fall of the wall it was the eastern - and less developed - part of Czechoslovakia. In the 90s in the hands of nasty populist far right wingers it fell behind and was forgotten, and treated like the delinquent son by most Czechs. However in 2004 a decent centre-right government came to power and made sweeping fiscal reforms. It then joined the euro - just in time for the global crisis, the worst possible time to join, you might think. The Czechs, meanwhile stayed out of the euro, despite being a strong exporting economy and attracting foreign investment in the auto sector.
I invite you to compare the performance of the two countries' economies since 2004. You will see that Slovak GDP has outperformed (often by a factor of 2 or more) that of its big brother in virtually every year. Very crude calculations suggest that in GDP per head the Slovaks will overtake the Czechs maybe next year. I actually achieved my 15 minutes of - relative- fame in this country by writing a blogpost about it which was picked up the top Czech finance house and went a bit viral. (You may do your research and say, what about Slovak unemployment? The answer is that the east of the country is desolate, with a big Roma population, and that is why it has much higher unemployment than the more industrialised Czech Republic.). The point is that the euro, far from dragging Slovakia down, has been a major building block in its economic renaissance. It is none of the things you described, even though you would categorise it as a low wage economy with Greece Portugal et al.
Europe is never as straightforward as Euro-sceptic dogma would have you believe.
Excuse me if I find the last sentence somewhat hilarious when it is more often than not Europhiles whose belief in the EU's benevolence is equivalent to a fanatical religious belief than a common sense asssment of the facts available. That isn't to say that there are not those on the Euro-sceptic side who ignore facts in pursuit of an agenda but when the EU and its supporters tries to take credit for, amongst several other equally grandiose yet untenable claims, the fall of the Soviet Union, yet they distance the EU from any failure that occurs under its watch despite the facts in front of them, you have to wonder.
I went there over 30 years ago and it was a great place - everybody got about on ancient dilapidated mopeds (including the police). It was a relaxed place where you could get drunk for a quid. The locals seemed happy and seemed to have all they needed. ?
Over 30 years ago - they were probably happy because they were still basking in the glow of the downfall of the military junta that run the place until 1974!
Sorry, @PragueAddick I didn't see the programme so can't comment on it.
@Stig you're right about mortgages and numbers of people living in houses. But, if you use that argument, you'd have to counter the long-term debt by factoring in the value of other assets like pension plans for example. I'm sure many of the super-rich become less rich if you take account of the number of dependants and servants living in their houses!!
In the main, as @Dippenhall explained the money is not "sitting in the hands of the extremely wealthy" - it is generally out there working very hard indeed.
Let's look at an example: Warren Buffet one of the world's most asset-laden individuals and the CEO and largest shareholder in Berkshire Hathaway - a company where one single share would cost you a staggering US$225,000.
BH, in turn, owns or has significant holdings in vast numbers of enterprises including (according to Wiki) GEICO, BNSF, Lubrizol, Dairy Queen, Fruit of the Loom, Helzberg Diamonds, FlightSafety International, NetJets, Heinz, Mars Inc, American Express, The Coca-Cola Company, Wells Fargo, IBM, Restaurant Brands International and others. BH has minimal debt and it employs 300,000 people. So, I suspect the Greeks would rather Buffet was head-quartered in Greece rather than Nebraska!
So, I'm not sure how you would "distribute" such wealth while still allowing the companies to make a very good living for large numbers of people. Perhaps we will all get another opportunity to see the Labour Party try and fail, yet again, at this task in the next 5 years? Or perhaps not if the Greek left-wing experiment goes tits up in the next few months?
Only a matter of time before someone cited the alliance of Greek Eurocommunists, Trots, Maoists and gawd knows what as equivalent to the Fabians, Social Democrats and assorted New Labour pragmatists of the British Labour Party.
Without revisiting the three - not one, as in Greece - election victories won by Blair, and the problems he caused himself with Iraq, without which the Tories would not have returned to power, never mind the banking crisis, prior to which the Tories were arguing there was too much regulation in the financial sector, the 1997-2010 government delivered a massive overhaul of public goods that had been serially neglected since 1976.
You can argue about how they financed that, but one thing I am clear about is that it had to be done or the schools and hospitals would have collapsed around our ears. That's not in anyone's interest, including "business" and if elements of the latter spent more time creating additional wealth and less avoiding tax we'd all be a whole lot better off.
Sorry, @PragueAddick I didn't see the programme so can't comment on it.
@Stig you're right about mortgages and numbers of people living in houses. But, if you use that argument, you'd have to counter the long-term debt by factoring in the value of other assets like pension plans for example. I'm sure many of the super-rich become less rich if you take account of the number of dependants and servants living in their houses!!
In the main, as @Dippenhall explained the money is not "sitting in the hands of the extremely wealthy" - it is generally out there working very hard indeed.
Let's look at an example: Warren Buffet one of the world's most asset-laden individuals and the CEO and largest shareholder in Berkshire Hathaway - a company where one single share would cost you a staggering US$225,000.
...
So, I'm not sure how you would "distribute" such wealth while still allowing the companies to make a very good living for large numbers of people. Perhaps we will all get another opportunity to see the Labour Party try and fail, yet again, at this task in the next 5 years? Or perhaps not if the Greek left-wing experiment goes tits up in the next few months?
cafcfan, you and Dippenhall seem to view everything through the lens of the status quo. The changes in Greece have come through the ballot box and what they amount to we will have to wait and see. Think revolution, albeit via the balllot box. This is why the international left is excited at the prospect of wholesale change. If Syriza see through a leftist agenda they will respect the needs of the people in their everyday lives, e.g. employment, food, water, shelter, energy. Assets and markets don't operate without workers, energy, innovation, a public sector and a tax system. Money doesn't 'works hard' all on its own, and it counts for nothing at all without consensus as to its worth. So some currency issues will need to be addressed. Greece must strive to be self-sustaining as far as possible. It will form allies outside of Europe, with the BRICS for example, making new friends and some enemies no doubt. There is more to this than debt and your versions of economics where people seem to come last! Addressing Euro issues is likely to be just one early first stage in what is to come.
Indeed @Airman Brown in these days of near zero inflation PFI is very expensive compared to issuing government bonds and then using quantitative easing to buy them back. You don't need Trotskyism and Marxists to understand basic Keynes theory stating that governments putting up decent buildings provides services AND jobs and is a good way to stimulate the economy.
But it appears we do need left wing orators in Greece and Spain to secure the headlines to point out that you should spend your way out of recession. With interest rates so low it seems mad not to!
One area where the left will hopefully differ from their predecessors is this obsession with renationalisation. It takes more debt to fund that without adding anything plus putting operational matters in the hands of politicians, some of whom appear to have trouble tying their shoe laces given the frequency with which they trip themselves up.
If anything governments should be selling "mature" assets as another way to raise finance and help focus on strategy and policy.
So this is potentially a game changer which can break up this austerity fest before austerity breaks up societies.
As @swords_alive points out, it's a revolution by ballot box. I have had the benefit of speaking with a couple of people recently who know leading Italian politicians. The consensus was that Italy can't reform because of the associated pain would be unacceptable - the only antidote is a much looser monetary policy to ease things. Up until last week this path was blocked.
It appears the people are removing the road block!
The Euro will fail. The only question is when, not if. It is a political currency and not an economic currency. It is an experiment that is part of the wider agenda of total political and economic integration. The people in control of the euro have shown countless times that they are not fit for purpose. Every decision they make in a desperate, squirming attempt to improve growth actually has the opposite affect and stifles and restricts growth.
Look at the rate of unemployment across the eurozone. It is still growing. They have managed to take countries who had stable, growing economies and turned them all into a collective basket case of unemployment, huge debt, no-growth and growing poverty among the low wage economies.
When Greece joined the euro it was one of the cheapest countries to visit. Now it is one of the most expensive, has very expensive fuel costs where petrol was 2 euro a litre just a couple of years ago. VAT has risen from 9% to 23%. During this time wages have been reduced from an average 700 euro a month to around 400-450 average today. Prices in supermarkets and clothes shops would make the hair stand up on the back of your neck.
Try renting an apartment, feeding and clothing your family, paying your bills, property taxes, travel to work on an income of that scale.
There is no doubt that the euro is a flawed project. However it is often unfairly blamed for economic errors- or worse- by national politicians. Your post is a case in point.
Take the case of Slovakia. Before the fall of the wall it was the eastern - and less developed - part of Czechoslovakia. In the 90s in the hands of nasty populist far right wingers it fell behind and was forgotten, and treated like the delinquent son by most Czechs. However in 2004 a decent centre-right government came to power and made sweeping fiscal reforms. It then joined the euro - just in time for the global crisis, the worst possible time to join, you might think. The Czechs, meanwhile stayed out of the euro, despite being a strong exporting economy and attracting foreign investment in the auto sector.
I invite you to compare the performance of the two countries' economies since 2004. You will see that Slovak GDP has outperformed (often by a factor of 2 or more) that of its big brother in virtually every year. Very crude calculations suggest that in GDP per head the Slovaks will overtake the Czechs maybe next year. I actually achieved my 15 minutes of - relative- fame in this country by writing a blogpost about it which was picked up the top Czech finance house and went a bit viral. (You may do your research and say, what about Slovak unemployment? The answer is that the east of the country is desolate, with a big Roma population, and that is why it has much higher unemployment than the more industrialised Czech Republic.). The point is that the euro, far from dragging Slovakia down, has been a major building block in its economic renaissance. It is none of the things you described, even though you would categorise it as a low wage economy with Greece Portugal et al.
Europe is never as straightforward as Euro-sceptic dogma would have you believe.
Excuse me if I find the last sentence somewhat hilarious when it is more often than not Europhiles whose belief in the EU's benevolence is equivalent to a fanatical religious belief than a common sense asssment of the facts available. That isn't to say that there are not those on the Euro-sceptic side who ignore facts in pursuit of an agenda but when the EU and its supporters tries to take credit for, amongst several other equally grandiose yet untenable claims, the fall of the Soviet Union, yet they distance the EU from any failure that occurs under its watch despite the facts in front of them, you have to wonder.
"I'm sure there's a point you're trying to make here, I'm just not sure it's a good one."
The Euro will fail. The only question is when, not if. It is a political currency and not an economic currency. It is an experiment that is part of the wider agenda of total political and economic integration. The people in control of the euro have shown countless times that they are not fit for purpose. Every decision they make in a desperate, squirming attempt to improve growth actually has the opposite affect and stifles and restricts growth.
Look at the rate of unemployment across the eurozone. It is still growing. They have managed to take countries who had stable, growing economies and turned them all into a collective basket case of unemployment, huge debt, no-growth and growing poverty among the low wage economies.
When Greece joined the euro it was one of the cheapest countries to visit. Now it is one of the most expensive, has very expensive fuel costs where petrol was 2 euro a litre just a couple of years ago. VAT has risen from 9% to 23%. During this time wages have been reduced from an average 700 euro a month to around 400-450 average today. Prices in supermarkets and clothes shops would make the hair stand up on the back of your neck.
Try renting an apartment, feeding and clothing your family, paying your bills, property taxes, travel to work on an income of that scale.
There is no doubt that the euro is a flawed project. However it is often unfairly blamed for economic errors- or worse- by national politicians. Your post is a case in point.
Take the case of Slovakia. Before the fall of the wall it was the eastern - and less developed - part of Czechoslovakia. In the 90s in the hands of nasty populist far right wingers it fell behind and was forgotten, and treated like the delinquent son by most Czechs. However in 2004 a decent centre-right government came to power and made sweeping fiscal reforms. It then joined the euro - just in time for the global crisis, the worst possible time to join, you might think. The Czechs, meanwhile stayed out of the euro, despite being a strong exporting economy and attracting foreign investment in the auto sector.
I invite you to compare the performance of the two countries' economies since 2004. You will see that Slovak GDP has outperformed (often by a factor of 2 or more) that of its big brother in virtually every year. Very crude calculations suggest that in GDP per head the Slovaks will overtake the Czechs maybe next year. I actually achieved my 15 minutes of - relative- fame in this country by writing a blogpost about it which was picked up the top Czech finance house and went a bit viral. (You may do your research and say, what about Slovak unemployment? The answer is that the east of the country is desolate, with a big Roma population, and that is why it has much higher unemployment than the more industrialised Czech Republic.). The point is that the euro, far from dragging Slovakia down, has been a major building block in its economic renaissance. It is none of the things you described, even though you would categorise it as a low wage economy with Greece Portugal et al.
Europe is never as straightforward as Euro-sceptic dogma would have you believe.
Excuse me if I find the last sentence somewhat hilarious when it is more often than not Europhiles whose belief in the EU's benevolence is equivalent to a fanatical religious belief than a common sense asssment of the facts available. That isn't to say that there are not those on the Euro-sceptic side who ignore facts in pursuit of an agenda but when the EU and its supporters tries to take credit for, amongst several other equally grandiose yet untenable claims, the fall of the Soviet Union, yet they distance the EU from any failure that occurs under its watch despite the facts in front of them, you have to wonder.
"I'm sure there's a point you're trying to make here, I'm just not sure it's a good one."
The Euro will fail. The only question is when, not if. It is a political currency and not an economic currency. It is an experiment that is part of the wider agenda of total political and economic integration. The people in control of the euro have shown countless times that they are not fit for purpose. Every decision they make in a desperate, squirming attempt to improve growth actually has the opposite affect and stifles and restricts growth.
Look at the rate of unemployment across the eurozone. It is still growing. They have managed to take countries who had stable, growing economies and turned them all into a collective basket case of unemployment, huge debt, no-growth and growing poverty among the low wage economies.
When Greece joined the euro it was one of the cheapest countries to visit. Now it is one of the most expensive, has very expensive fuel costs where petrol was 2 euro a litre just a couple of years ago. VAT has risen from 9% to 23%. During this time wages have been reduced from an average 700 euro a month to around 400-450 average today. Prices in supermarkets and clothes shops would make the hair stand up on the back of your neck.
Try renting an apartment, feeding and clothing your family, paying your bills, property taxes, travel to work on an income of that scale.
There is no doubt that the euro is a flawed project. However it is often unfairly blamed for economic errors- or worse- by national politicians. Your post is a case in point.
Take the case of Slovakia. Before the fall of the wall it was the eastern - and less developed - part of Czechoslovakia. In the 90s in the hands of nasty populist far right wingers it fell behind and was forgotten, and treated like the delinquent son by most Czechs. However in 2004 a decent centre-right government came to power and made sweeping fiscal reforms. It then joined the euro - just in time for the global crisis, the worst possible time to join, you might think. The Czechs, meanwhile stayed out of the euro, despite being a strong exporting economy and attracting foreign investment in the auto sector.
I invite you to compare the performance of the two countries' economies since 2004. You will see that Slovak GDP has outperformed (often by a factor of 2 or more) that of its big brother in virtually every year. Very crude calculations suggest that in GDP per head the Slovaks will overtake the Czechs maybe next year. I actually achieved my 15 minutes of - relative- fame in this country by writing a blogpost about it which was picked up the top Czech finance house and went a bit viral. (You may do your research and say, what about Slovak unemployment? The answer is that the east of the country is desolate, with a big Roma population, and that is why it has much higher unemployment than the more industrialised Czech Republic.). The point is that the euro, far from dragging Slovakia down, has been a major building block in its economic renaissance. It is none of the things you described, even though you would categorise it as a low wage economy with Greece Portugal et al.
Europe is never as straightforward as Euro-sceptic dogma would have you believe.
Excuse me if I find the last sentence somewhat hilarious when it is more often than not Europhiles whose belief in the EU's benevolence is equivalent to a fanatical religious belief than a common sense asssment of the facts available. That isn't to say that there are not those on the Euro-sceptic side who ignore facts in pursuit of an agenda but when the EU and its supporters tries to take credit for, amongst several other equally grandiose yet untenable claims, the fall of the Soviet Union, yet they distance the EU from any failure that occurs under its watch despite the facts in front of them, you have to wonder.
"I'm sure there's a point you're trying to make here, I'm just not sure it's a good one."
Oh look it's the new Bournemouth Addick
That one went over my head. Never mind. What exactly did your random tirade have to do with my presentation of the inconvenient truth about the relative economic performance of Slovakia (in the euro) and the Czech republic (not in the euro); two countries whose economies, location in Europe, and national strengths are similar because they were, in our lifetimes, one country?
The Euro will fail. The only question is when, not if. It is a political currency and not an economic currency. It is an experiment that is part of the wider agenda of total political and economic integration. The people in control of the euro have shown countless times that they are not fit for purpose. Every decision they make in a desperate, squirming attempt to improve growth actually has the opposite affect and stifles and restricts growth.
Look at the rate of unemployment across the eurozone. It is still growing. They have managed to take countries who had stable, growing economies and turned them all into a collective basket case of unemployment, huge debt, no-growth and growing poverty among the low wage economies.
When Greece joined the euro it was one of the cheapest countries to visit. Now it is one of the most expensive, has very expensive fuel costs where petrol was 2 euro a litre just a couple of years ago. VAT has risen from 9% to 23%. During this time wages have been reduced from an average 700 euro a month to around 400-450 average today. Prices in supermarkets and clothes shops would make the hair stand up on the back of your neck.
Try renting an apartment, feeding and clothing your family, paying your bills, property taxes, travel to work on an income of that scale.
There is no doubt that the euro is a flawed project. However it is often unfairly blamed for economic errors- or worse- by national politicians. Your post is a case in point.
Take the case of Slovakia. Before the fall of the wall it was the eastern - and less developed - part of Czechoslovakia. In the 90s in the hands of nasty populist far right wingers it fell behind and was forgotten, and treated like the delinquent son by most Czechs. However in 2004 a decent centre-right government came to power and made sweeping fiscal reforms. It then joined the euro - just in time for the global crisis, the worst possible time to join, you might think. The Czechs, meanwhile stayed out of the euro, despite being a strong exporting economy and attracting foreign investment in the auto sector.
I invite you to compare the performance of the two countries' economies since 2004. You will see that Slovak GDP has outperformed (often by a factor of 2 or more) that of its big brother in virtually every year. Very crude calculations suggest that in GDP per head the Slovaks will overtake the Czechs maybe next year. I actually achieved my 15 minutes of - relative- fame in this country by writing a blogpost about it which was picked up the top Czech finance house and went a bit viral. (You may do your research and say, what about Slovak unemployment? The answer is that the east of the country is desolate, with a big Roma population, and that is why it has much higher unemployment than the more industrialised Czech Republic.). The point is that the euro, far from dragging Slovakia down, has been a major building block in its economic renaissance. It is none of the things you described, even though you would categorise it as a low wage economy with Greece Portugal et al.
Europe is never as straightforward as Euro-sceptic dogma would have you believe.
Excuse me if I find the last sentence somewhat hilarious when it is more often than not Europhiles whose belief in the EU's benevolence is equivalent to a fanatical religious belief than a common sense asssment of the facts available. That isn't to say that there are not those on the Euro-sceptic side who ignore facts in pursuit of an agenda but when the EU and its supporters tries to take credit for, amongst several other equally grandiose yet untenable claims, the fall of the Soviet Union, yet they distance the EU from any failure that occurs under its watch despite the facts in front of them, you have to wonder.
"I'm sure there's a point you're trying to make here, I'm just not sure it's a good one."
Oh look it's the new Bournemouth Addick
That one went over my head. Never mind. What exactly did your random tirade have to do with my presentation of the inconvenient truth about the relative economic performance of Slovakia (in the euro) and the Czech republic (not in the euro); two countries whose economies, location in Europe, and national strengths are similar because they were, in our lifetimes, one country?
That you attributed the Euro as the sole cause of Slovakia's superior economic performance relative to the Czech Republic with no evidence (pointing out a correlation is not in itself evidence unless a causal link can be proven), then you accuse Eurosceptics of being dogmatic.
By your own admission, the Czech Republic was much more developed and economically stronger than Slovakia. During the last 10 years developing economies have, on the whole, been outperforming developed economies due to a variety of factors. I would be cautious to state that the Euro is the only reason why Slovakia has outperformed the Czech Republic.
Sorry, @PragueAddick I didn't see the programme so can't comment on it.
@Stig you're right about mortgages and numbers of people living in houses. But, if you use that argument, you'd have to counter the long-term debt by factoring in the value of other assets like pension plans for example. I'm sure many of the super-rich become less rich if you take account of the number of dependants and servants living in their houses!!
In the main, as @Dippenhall explained the money is not "sitting in the hands of the extremely wealthy" - it is generally out there working very hard indeed.
Let's look at an example: Warren Buffet one of the world's most asset-laden individuals and the CEO and largest shareholder in Berkshire Hathaway - a company where one single share would cost you a staggering US$225,000.
...
So, I'm not sure how you would "distribute" such wealth while still allowing the companies to make a very good living for large numbers of people. Perhaps we will all get another opportunity to see the Labour Party try and fail, yet again, at this task in the next 5 years? Or perhaps not if the Greek left-wing experiment goes tits up in the next few months?
cafcfan, you and Dippenhall seem to view everything through the lens of the status quo. The changes in Greece have come through the ballot box and what they amount to we will have to wait and see. Think revolution, albeit via the balllot box. This is why the international left is excited at the prospect of wholesale change. If Syriza see through a leftist agenda they will respect the needs of the people in their everyday lives, e.g. employment, food, water, shelter, energy. Assets and markets don't operate without workers, energy, innovation, a public sector and a tax system. Money doesn't 'works hard' all on its own, and it counts for nothing at all without consensus as to its worth. So some currency issues will need to be addressed. Greece must strive to be self-sustaining as far as possible. It will form allies outside of Europe, with the BRICS for example, making new friends and some enemies no doubt. There is more to this than debt and your versions of economics where people seem to come last! Addressing Euro issues is likely to be just one early first stage in what is to come.
Implementing the stimulus agenda will require investment. The idea is to spend the money that otherwise has been repaying debt. If this provides sufficient funds to finance the proposals fine. Given Greece can't collect taxes, and it intends to increase spending, can't see it having a balanced budget, it will have a deficit like it's always had, so it will have to borrow money. Who will lend to Greece if it has a habit of not re-paying ? Risk takers will lend money, but at a rate of interest that will take just put Greece back to square one.
You can vote for any political policy that attracts you, it does not mean that the policy can work. There will be a reality check and a face saving fudge, wouldn't get too excited about rhetoric.
Assets and markets? don't operate without workers etc... Assets aren't nailed down, they can move where their value can be protected and enhanced, they don't stick around to be misused. Markets will reflect confidence, or not, in the future. Financial markets work on the basis of a buyer and seller of debt, which is why it is all about confidence. Markets don't behave in any other way, if that's the status quo Greece is going to change I wish them luck.
I absolutely did not attribute the Euro as the sole cause. I wrote
However in 2004 a decent centre-right government came to power and made sweeping fiscal reforms. It then joined the euro - just in time for the global crisis, the worst possible time to join, you might think.
While the Czech Republic was more developed and economically stronger than Slovakia, in a European context the difference is marginal. A quick glance at the key data will confirm that. So in fact you've got the best side by side comparison in the EU of what happens when two countries make different decisions re the euro all other factors being equal (or as equal as they can get in such a complex matter). What it shows - and i claimed nothing more- is that the euro is not the nailed on growth-stifling, unemployment-creating disaster that @e-cafc is claiming. otherwise you would have expected the figures to be the other way round. By the way my analysis was widely adopted locally by the kind of people whom you'd probably respect.
My overall point is that the euro, while flawed in many ways (as I said right at the start of my post) is often used by incompetent national politicians as a tool to hide their incompetence. If @e-cafc wants to find people who are not fit for purpose in this context, he need only look at the imbeciles across the Irish Sea who spunked all that EU money on a property boom, got a few IT companies to set up there in return for low taxes, then had the gall to label themselves Celtic Tigers, and now preside over a land full of half finished carcasses of residential and commercial property. The Slovaks did things differently, and it has turned out better. Despite being in the euro.
You obviously know more than I do about the euro and the politics involved but I have seen it's effects 1st hand. The euro is a poverty inducing currency as has been proved over and over again. This is solely down to the people who are running this fake, politically motivated currency. Are you trying to tell me that the powers that be who are in control of the euro actually know what they doing? Let's not insult everyone's intelligence here.
As you said, the euro is a flawed political experiment and it is failing.
Prague............which countries economies are thriving with unrestricted growth who are inside the euro? Is there 19 or 20 countries now in the euro? How many are thriving economies? My estimate is zero!
Indeed @Airman Brown in these days of near zero inflation PFI is very expensive compared to issuing government bonds and then using quantitative easing to buy them back. You don't need Trotskyism and Marxists to understand basic Keynes theory stating that governments putting up decent buildings provides services AND jobs and is a good way to stimulate the economy.
!
Interest rates (on bonds) are low in the UK and Germany (in fact negative rates in Germany) because the markets believe that they are certain to be repaid. Before the Greek election, they were over 2% for Greece. If Greece defaults, then rates will be at least double digit.
Prague............which countries economies are thriving with unrestricted growth who are inside the euro? Is there 19 or 20 countries now in the euro? How many are thriving economies? My estimate is zero!
I will try to give you a sensible answer. Overall i'm trying to caution you against people who want you to believe that the euro is itself a totally bad thing, for all countries which have it. Often these people are not economists, and few of them seem to be businessmen either.
Very few countries around the world could be said to be "thriving" right now.
But over the total life of the euro and a country's membership of it, the obvious answer is Germany. But then a lot of people then jump on Germany saying it's good for you at the expense of the rest of us.
I gave you the example of Slovakia above. It's a small country admittedly.
Overall I don't think the Finns are unhappy with euro membership. The implosion of their biggest company, Nokia, has nothing to do with the euro. Nor do I find Dutch or Belgians in what you might call the "business" class suggesting they should get out of the euro. I'm not sure I can assess the French mood accurately.
You could go on holiday to the Med countries and talk to local people who claimed that the euro arrived and made prices rise. But then when you looked into it, what they were talking about was shops and businesses rounding up the exchange rate, when the euro was introduced. So it wasn't in fact the euro, but their fellow countrymen cheating them!!
The worst performing countries in the eurozone are those in the south. They are mostly only recent democracies - or in Italy's case, a mafia state masquerading as a democracy. So the quality of national politicians, their central bankers, their teams of advisers might not be that high. So those countries made loads of bad decisions, failed to deal with problems. Greece is the worst of the lot. The Irish were not much better.
As i understood you, you spent some time living in Greece, is that right?
Thanks for the detailed response. Yes I have spent time living in Greece. I have lived in Athens and down in the west Pelopponese near Olympia. I am in fact going over for the summer this year from May until October. Hopefully they will have a great summer in terms of tourism and money coming into the country.
The Euro will fail. The only question is when, not if. It is a political currency and not an economic currency. It is an experiment that is part of the wider agenda of total political and economic integration. The people in control of the euro have shown countless times that they are not fit for purpose. Every decision they make in a desperate, squirming attempt to improve growth actually has the opposite affect and stifles and restricts growth.
Look at the rate of unemployment across the eurozone. It is still growing. They have managed to take countries who had stable, growing economies and turned them all into a collective basket case of unemployment, huge debt, no-growth and growing poverty among the low wage economies.
When Greece joined the euro it was one of the cheapest countries to visit. Now it is one of the most expensive, has very expensive fuel costs where petrol was 2 euro a litre just a couple of years ago. VAT has risen from 9% to 23%. During this time wages have been reduced from an average 700 euro a month to around 400-450 average today. Prices in supermarkets and clothes shops would make the hair stand up on the back of your neck.
Try renting an apartment, feeding and clothing your family, paying your bills, property taxes, travel to work on an income of that scale.
There is no doubt that the euro is a flawed project. However it is often unfairly blamed for economic errors- or worse- by national politicians. Your post is a case in point.
Take the case of Slovakia. Before the fall of the wall it was the eastern - and less developed - part of Czechoslovakia. In the 90s in the hands of nasty populist far right wingers it fell behind and was forgotten, and treated like the delinquent son by most Czechs. However in 2004 a decent centre-right government came to power and made sweeping fiscal reforms. It then joined the euro - just in time for the global crisis, the worst possible time to join, you might think. The Czechs, meanwhile stayed out of the euro, despite being a strong exporting economy and attracting foreign investment in the auto sector.
I invite you to compare the performance of the two countries' economies since 2004. You will see that Slovak GDP has outperformed (often by a factor of 2 or more) that of its big brother in virtually every year. Very crude calculations suggest that in GDP per head the Slovaks will overtake the Czechs maybe next year. I actually achieved my 15 minutes of - relative- fame in this country by writing a blogpost about it which was picked up the top Czech finance house and went a bit viral. (You may do your research and say, what about Slovak unemployment? The answer is that the east of the country is desolate, with a big Roma population, and that is why it has much higher unemployment than the more industrialised Czech Republic.). The point is that the euro, far from dragging Slovakia down, has been a major building block in its economic renaissance. It is none of the things you described, even though you would categorise it as a low wage economy with Greece Portugal et al.
Europe is never as straightforward as Euro-sceptic dogma would have you believe.
Excuse me if I find the last sentence somewhat hilarious when it is more often than not Europhiles whose belief in the EU's benevolence is equivalent to a fanatical religious belief than a common sense asssment of the facts available. That isn't to say that there are not those on the Euro-sceptic side who ignore facts in pursuit of an agenda but when the EU and its supporters tries to take credit for, amongst several other equally grandiose yet untenable claims, the fall of the Soviet Union, yet they distance the EU from any failure that occurs under its watch despite the facts in front of them, you have to wonder.
"I'm sure there's a point you're trying to make here, I'm just not sure it's a good one."
Oh look it's the new Bournemouth Addick
That one went over my head. Never mind.
I think he's trying to say that you're also incredibly charming, funny, intelligent, urbane, look like Hugh Jackman and an all round nice guy. Well...something like that anyway but all a bit weird tbh.
I do understand the reasons for austerity - you can't spend what you don't have. Not indefinitely anyway. But what I don't get is that during this period of austerity, rich people have got richer. Surely everybody should be getting proportionately poorer and do their bit. Even more galling is that many of the people responsible for the crash are amongst those getting richer. Somebody surely has to stand up against this.
Maybe there is a point where people won't take any more and Greece has reached it. Of course, Germany won't want this to end well as it will set an example......but they won't want it to end badly for the implcations to the Eurozone. What a mess.
An analogy that fits Greece is: If I rely on a car to get me to work (when there is no bus or train alternative) and it breaks down and I can't afford the reapirs, what makes most financial sense: borrow to pay for my car to be repaired….? Or pack in my job and become unemployed?
Comments
For a nation state anything above 100% debt to GDP is a risk: unless growth and inflation outstrips the interest rate and deficit, the debt % will grow. As it grows, creditors lose confidence and bump up interest rates.
So the Eurozone and Troika solved the interest rate issue and are now running with quantitative easing. Next step is to increase demand so government and countries can grow there way out of the crisis creating opportunity for the many and not the few.
Genuine question, macro-economics isn't in my area of professional experience (Ok, such as it is:-))
A higher credit spread would principally hurt the investors owning Greek debt as assets.
@Stig you're right about mortgages and numbers of people living in houses. But, if you use that argument, you'd have to counter the long-term debt by factoring in the value of other assets like pension plans for example. I'm sure many of the super-rich become less rich if you take account of the number of dependants and servants living in their houses!!
In the main, as @Dippenhall explained the money is not "sitting in the hands of the extremely wealthy" - it is generally out there working very hard indeed.
Let's look at an example: Warren Buffet one of the world's most asset-laden individuals and the CEO and largest shareholder in Berkshire Hathaway - a company where one single share would cost you a staggering US$225,000.
BH, in turn, owns or has significant holdings in vast numbers of enterprises including (according to Wiki) GEICO, BNSF, Lubrizol, Dairy Queen, Fruit of the Loom, Helzberg Diamonds, FlightSafety International, NetJets, Heinz, Mars Inc, American Express, The Coca-Cola Company, Wells Fargo, IBM, Restaurant Brands International and others. BH has minimal debt and it employs 300,000 people. So, I suspect the Greeks would rather Buffet was head-quartered in Greece rather than Nebraska!
BTW Buffet's house in Omaha has always caused much fascination. It has five bedrooms and 2.5 bathrooms and cost him $31,500. He owns no other residential property. Here's an article about it. fool.com/investing/general/2014/10/04/what-warren-buffetts-house-can-teach-you-about-suc.aspx
So, I'm not sure how you would "distribute" such wealth while still allowing the companies to make a very good living for large numbers of people. Perhaps we will all get another opportunity to see the Labour Party try and fail, yet again, at this task in the next 5 years? Or perhaps not if the Greek left-wing experiment goes tits up in the next few months?
1. Debt-relief may be politically significant to the new Government but it will not make a lot of difference to Greece's economic problems, which stem from a dysfunctional revenue collection system; an uncompetitive and now totally screwed economy; and being tied into a flawed monetary union.
2. Whatever you do, undoing the mistakes of the past entails PAIN - but you have a choice:
Option 1 - the SLOW DEATH of the status quo - continuing the indefinite pain (with a horizon far longer than the probable life of your government) of remaining within an organisation that your country joined stupidly and by falsifying statistics but which politically now castrates every Greek government.
Option 2 - LANCE THE BOIL & GET OUT OF THE EURO AND THE EU. Economic agony is certain in the short term from re-creation of the Drachma with inevitable hyper-inflation and external debt default BUT there will light at the end of the tunnel. OK it wasn't in the Eurozone but there is still a parallel - look to Iceland not Ireland.
Ireland (and Spain) have growth again after taking their medicine. Greece, France and Italy do not because they are all in dire need of structural reforms to their economies.
For Greece it is far easier to bring in those painful reforms from within the Eurozone and that might work as long as mechanisms are put in place to keep demand going.
Increased tax collection for sure but reducing over manning in the public sector creates unemployment unless otherwise sectors create jobs at the same rate.
Leaving the €uro sounds so simple but that risks bringing the whole currency down and all players in the poker game are fully aware of this.
I agree debt relief with rates so low won't be a big contributor. But what they do need is less austerity and more investment - they need a hand to create the conditions such that Warren Buffet and others want to create wealth over there. I'm not familiar with Greek and Italian regulatory framework and bureaucracy but I do know that French employee rights and social insurance contributions act as a massive brake on growth.
So do we want Euro breakup or macro economic policy across the Eurozone which creates wealth, jobs etc. No German chancellor wants the €uro to fail on their watch so perhaps attitudes will shift?
Look at the rate of unemployment across the eurozone. It is still growing. They have managed to take countries who had stable, growing economies and turned them all into a collective basket case of unemployment, huge debt, no-growth and growing poverty among the low wage economies.
When Greece joined the euro it was one of the cheapest countries to visit. Now it is one of the most expensive, has very expensive fuel costs where petrol was 2 euro a litre just a couple of years ago. VAT has risen from 9% to 23%. During this time wages have been reduced from an average 700 euro a month to around 400-450 average today. Prices in supermarkets and clothes shops would make the hair stand up on the back of your neck.
Try renting an apartment, feeding and clothing your family, paying your bills, property taxes, travel to work on an income of that scale.
However, with the possibility of Greece being 'removed' from the EU and the EMU there is an inherent risk that doesn't apply in other countries. Also there is no doubt that, despite the higher cost of production, manufacturing in Germany comes with many fewer risks.
This also, obviously, ignores the, outrageously, low cost of labour in places like China and India, as well as a few others.
So where is the investment going to come from if not from Greece plc borrowing from it's European neighbors? With the likelihood that those running the country can't be trusted to invest the money wisely I can see why people are inclined to give them just enough to save the Euro all the while watch the country decline and hope that when it does go bust it is 'not on their watch'.
Will countries agree to minimum and maximum rates of VAT and corporation tax?
Will Italy and Greece take on the required reforms?
VAT is an easy tax to collect and a classic austerity "weapon". Raising it to 23% is probably one of the nutty suggestions enforced by the Troika and one would expect it to be reduced, just as Labour reduced VAT over hear in the middle of the 2007-09 crash.
So yes, the €uro was created without an explicit statement about the roadmap required to sustain it. I haven't see precise calculations of the impact of it crashing but I suspect that the price is so high that all the players will keep it ticking over. People make many comments about Portugal, Ireland and Greece but at the end of the day, it will be the four big economies of Germany, France, Italy and Spain who will decide how it plays out. Perhaps they are assisted by watching what happens in Greece...Perhaps they learn and find better solutions... Or maybe they don't?
I sure as hell wouldn't want to responsible for sorting out the mess the EU seems to have gotten itself into.
Take the case of Slovakia. Before the fall of the wall it was the eastern - and less developed - part of Czechoslovakia. In the 90s in the hands of nasty populist far right wingers it fell behind and was forgotten, and treated like the delinquent son by most Czechs. However in 2004 a decent centre-right government came to power and made sweeping fiscal reforms. It then joined the euro - just in time for the global crisis, the worst possible time to join, you might think. The Czechs, meanwhile stayed out of the euro, despite being a strong exporting economy and attracting foreign investment in the auto sector.
I invite you to compare the performance of the two countries' economies since 2004. You will see that Slovak GDP has outperformed (often by a factor of 2 or more) that of its big brother in virtually every year. Very crude calculations suggest that in GDP per head the Slovaks will overtake the Czechs maybe next year. I actually achieved my 15 minutes of - relative- fame in this country by writing a blogpost about it which was picked up the top Czech finance house and went a bit viral. (You may do your research and say, what about Slovak unemployment? The answer is that the east of the country is desolate, with a big Roma population, and that is why it has much higher unemployment than the more industrialised Czech Republic.). The point is that the euro, far from dragging Slovakia down, has been a major building block in its economic renaissance. It is none of the things you described, even though you would categorise it as a low wage economy with Greece Portugal et al.
Europe is never as straightforward as Euro-sceptic dogma would have you believe.
Without revisiting the three - not one, as in Greece - election victories won by Blair, and the problems he caused himself with Iraq, without which the Tories would not have returned to power, never mind the banking crisis, prior to which the Tories were arguing there was too much regulation in the financial sector, the 1997-2010 government delivered a massive overhaul of public goods that had been serially neglected since 1976.
You can argue about how they financed that, but one thing I am clear about is that it had to be done or the schools and hospitals would have collapsed around our ears. That's not in anyone's interest, including "business" and if elements of the latter spent more time creating additional wealth and less avoiding tax we'd all be a whole lot better off.
cafcfan, you and Dippenhall seem to view everything through the lens of the status quo. The changes in Greece have come through the ballot box and what they amount to we will have to wait and see. Think revolution, albeit via the balllot box. This is why the international left is excited at the prospect of wholesale change. If Syriza see through a leftist agenda they will respect the needs of the people in their everyday lives, e.g. employment, food, water, shelter, energy. Assets and markets don't operate without workers, energy, innovation, a public sector and a tax system. Money doesn't 'works hard' all on its own, and it counts for nothing at all without consensus as to its worth. So some currency issues will need to be addressed. Greece must strive to be self-sustaining as far as possible. It will form allies outside of Europe, with the BRICS for example, making new friends and some enemies no doubt. There is more to this than debt and your versions of economics where people seem to come last! Addressing Euro issues is likely to be just one early first stage in what is to come.
You don't need Trotskyism and Marxists to understand basic Keynes theory stating that governments putting up decent buildings provides services AND jobs and is a good way to stimulate the economy.
But it appears we do need left wing orators in Greece and Spain to secure the headlines to point out that you should spend your way out of recession. With interest rates so low it seems mad not to!
One area where the left will hopefully differ from their predecessors is this obsession with renationalisation. It takes more debt to fund that without adding anything plus putting operational matters in the hands of politicians, some of whom appear to have trouble tying their shoe laces given the frequency with which they trip themselves up.
If anything governments should be selling "mature" assets as another way to raise finance and help focus on strategy and policy.
So this is potentially a game changer which can break up this austerity fest before austerity breaks up societies.
As @swords_alive points out, it's a revolution by ballot box. I have had the benefit of speaking with a couple of people recently who know leading Italian politicians. The consensus was that Italy can't reform because of the associated pain would be unacceptable - the only antidote is a much looser monetary policy to ease things. Up until last week this path was blocked.
It appears the people are removing the road block!
By your own admission, the Czech Republic was much more developed and economically stronger than Slovakia. During the last 10 years developing economies have, on the whole, been outperforming developed economies due to a variety of factors. I would be cautious to state that the Euro is the only reason why Slovakia has outperformed the Czech Republic.
You can vote for any political policy that attracts you, it does not mean that the policy can work. There will be a reality check and a face saving fudge, wouldn't get too excited about rhetoric.
Assets and markets? don't operate without workers etc... Assets aren't nailed down, they can move where their value can be protected and enhanced, they don't stick around to be misused. Markets will reflect confidence, or not, in the future. Financial markets work on the basis of a buyer and seller of debt, which is why it is all about confidence. Markets don't behave in any other way, if that's the status quo Greece is going to change I wish them luck.
However in 2004 a decent centre-right government came to power and made sweeping fiscal reforms. It then joined the euro - just in time for the global crisis, the worst possible time to join, you might think.
While the Czech Republic was more developed and economically stronger than Slovakia, in a European context the difference is marginal. A quick glance at the key data will confirm that. So in fact you've got the best side by side comparison in the EU of what happens when two countries make different decisions re the euro all other factors being equal (or as equal as they can get in such a complex matter). What it shows - and i claimed nothing more- is that the euro is not the nailed on growth-stifling, unemployment-creating disaster that @e-cafc is claiming. otherwise you would have expected the figures to be the other way round. By the way my analysis was widely adopted locally by the kind of people whom you'd probably respect.
My overall point is that the euro, while flawed in many ways (as I said right at the start of my post) is often used by incompetent national politicians as a tool to hide their incompetence. If @e-cafc wants to find people who are not fit for purpose in this context, he need only look at the imbeciles across the Irish Sea who spunked all that EU money on a property boom, got a few IT companies to set up there in return for low taxes, then had the gall to label themselves Celtic Tigers, and now preside over a land full of half finished carcasses of residential and commercial property. The Slovaks did things differently, and it has turned out better. Despite being in the euro.
As you said, the euro is a flawed political experiment and it is failing.
Very few countries around the world could be said to be "thriving" right now.
But over the total life of the euro and a country's membership of it, the obvious answer is Germany. But then a lot of people then jump on Germany saying it's good for you at the expense of the rest of us.
I gave you the example of Slovakia above. It's a small country admittedly.
Overall I don't think the Finns are unhappy with euro membership. The implosion of their biggest company, Nokia, has nothing to do with the euro. Nor do I find Dutch or Belgians in what you might call the "business" class suggesting they should get out of the euro. I'm not sure I can assess the French mood accurately.
You could go on holiday to the Med countries and talk to local people who claimed that the euro arrived and made prices rise. But then when you looked into it, what they were talking about was shops and businesses rounding up the exchange rate, when the euro was introduced. So it wasn't in fact the euro, but their fellow countrymen cheating them!!
The worst performing countries in the eurozone are those in the south. They are mostly only recent democracies - or in Italy's case, a mafia state masquerading as a democracy. So the quality of national politicians, their central bankers, their teams of advisers might not be that high. So those countries made loads of bad decisions, failed to deal with problems. Greece is the worst of the lot. The Irish were not much better.
As i understood you, you spent some time living in Greece, is that right?
Maybe there is a point where people won't take any more and Greece has reached it. Of course, Germany won't want this to end well as it will set an example......but they won't want it to end badly for the implcations to the Eurozone. What a mess.
An analogy that fits Greece is: If I rely on a car to get me to work (when there is no bus or train alternative) and it breaks down and I can't afford the reapirs, what makes most financial sense: borrow to pay for my car to be repaired….? Or pack in my job and become unemployed?