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Gross domestic product tumbled 5.5 percent in the first three months of this year, the official numbers showed, far more than an earlier flash estimate of 4.8 percent.

As predicted (tho' finding the comments would take more time than I can afford to spend.)

The Greece economy is a network supported by productive consumers using their discretionary income to purchase goods and services offered by other productive consumers.  This network comprises 70%, or so, of a nation-state's economy.  It's Plain & Fancy impossible to increase economic activity in this network by reducing the amount of productive consumer's discretionary income.  

This gets real simple: if you ain't got no money, you can't spend what you don't have.  

Thus decreasing productive consumer's discretionary income MUST decrease micro-economic activity and if the Financial Interests depend -as they do - on micro-economic activity to provide the flow of Cash to pay off debt economic polices and regulations decreasing the ability of an economy to pay interest and principle of accumulated debt is stupidly counter-productive.  

I realize this analysis is 180 degrees opposed to NCE macro-economic La-La Land prescriptions so I can only humbly suggest they write down their little mathematical equations on EU-approved A4 paper, fold the paper until it is all corners ... and shove them up their asses.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Mon Jun 13th, 2011 at 11:52:28 AM EST
You don't understand:
The main difference between empirical DSGE models and the more traditional macroeconometric models (such as the AWM) is that both the parameters and the shocks to the structural equations are related to deeper structural parameters describing household preferences and technological and institutional constraints.

These micro foundations have three advantages:

  • They provide a theoretical discipline on the structure of the model that is being estimated, which may be particularly helpful in those cases where the data themselves are not very informative, for example regarding the long-run behaviour of the economy or because there has been a regime change.
  • Being able to relate the reduced-form parameters to deeper structural parameters makes the use of the model for policy analysis more appropriate, i.e. less subject to the Lucas critique, as those structural parameters are less likely to change in response to changes in policy regime.
  • Micro-founded models may provide a more suitable framework for analysing the optimality of various policy strategies as the utility of the agents in the economy can be taken as a measure of welfare.

For these reasons, staff at the ECB and the Eurosystem have started to develop empirical DSGE models for monetary policy analysis. The Smets-Wouters (2003) Model is an example of such a medium-sized DSGE model, which has been estimated on the basis of quarterly euro area macro data. The model features three types of economic agents: households, firms and the central bank. Households decide how much to consume, how much to invest and how much to work and at what wage. Firms employ workers and capital and decide how much to produce and at what price to sell their products.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Mon Jun 13th, 2011 at 12:02:06 PM EST
[ Parent ]
Dynamic Stochastic General Equilibrium does not Model the phenomena.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Tue Jun 14th, 2011 at 11:52:58 AM EST
[ Parent ]
Don't be unserious.

Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Tue Jun 14th, 2011 at 11:53:41 AM EST
[ Parent ]
wait a minute.  AH ... found it:

OK, NOW I'm ready

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Tue Jun 14th, 2011 at 05:03:34 PM EST
[ Parent ]
But it isn't impossible to increase bond yields.

Not wanting to make an obvious point here, but THIS IS NOT ABOUT THE ECONOMIC HEALTH OF GREECE.

This is basically economic rape. It's the equivalent of hiring some pointy-haired hatchet man to come in and "rationalise" a company by firing everyone and moving whatever productive capacity is left to slave factories in the Marshall Islands.

For every drop in "costs", the short-term share price/bond yield increases. And that counts as a win.

When there's no longer any company left to rationalise, the process starts again somewhere else.

Only now it's happening to nation states rather than corporations.

And the solution is the same as the solution to M&A rape - worker occupation, and marching orders for the pirates.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Jun 13th, 2011 at 12:36:33 PM EST
[ Parent ]


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