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I trust you're familiar with the following story, too.

From Deutsche Welle: Als Griechenland deutsche Schulden halbierte. That's what "European solidarity" means.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 04:45:22 PM EST
[ Parent ]
I really doubt we'd be having this debate if this was about debt. If Greece campaigned to get its debt cut in half, and could show how it would get its budget back on track by that, practically every German politician would jump at the occasion.

You would see Schäuble walking around as Greece's biggest supporter.

But, alas, they can't.  

by cris0 on Tue Feb 14th, 2012 at 06:10:39 PM EST
[ Parent ]
Of course it's not about debt, it's about guilt.

Oh, wait...

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 06:15:45 PM EST
[ Parent ]
Oh, suddenly this debate is no longer about debt? Interesting.
by Katrin on Tue Feb 14th, 2012 at 06:17:42 PM EST
[ Parent ]
David Graeber would love this exchange.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Tue Feb 14th, 2012 at 06:18:14 PM EST
[ Parent ]
debt and deficit are 2 different things.

Very early on quite a few European politicians noted that Greek debt in and by itself was not the major problem.  

Greece's complete inability to balance its budget even with much reduced debt, though, certainly was. (and is)

by cris0 on Tue Feb 14th, 2012 at 07:33:05 PM EST
[ Parent ]
Balancing the government budget is stupid.

The government is the employer of last resort. This implies that the government has to be able to print and spend money at will.

Why is this difficult to understand?

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 07:36:28 PM EST
[ Parent ]
sigh

since everybody is going to jump on that:

s/balance/curb to a level appropriate for its growth/

by cris0 on Tue Feb 14th, 2012 at 07:37:30 PM EST
[ Parent ]
Greece's deficit was perfectly appropriate for its growth path. Probably a bit too small, actually, considering the mercantilist attack Germany and the Netherlands were subjecting it to.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 08:14:25 PM EST
[ Parent ]
Much reduced debt? What? Debt is up.
by Upstate NY on Tue Feb 14th, 2012 at 10:20:07 PM EST
[ Parent ]
Greece should not get its budget "back on track" to a 1930s style depression.

Balanced budgets are bad. Why is this so hard to grasp? Governments need to run deficits - usually quite substantial ones - to ensure full employment and macroeconomic stability. Any deal that does not allow European states to run any deficit required to defend full employment is a totally unacceptable deal and should be rejected and repudiated.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 06:17:53 PM EST
[ Parent ]
I'm at pains not to flip my wig here.

Greece has cut its budget by 19%.
It is being asked to cut it another 6%.

No country in history has ever cut its budget that much without an accompanying economic stabilizer (such as currency devaluation).

In other words, Greece has slashed a ton already.

And it did so in a recession. Any further so-called reforms would have only killed the economy even more.

Not single serious economist has ever said this plan would ever work. And now that it hasn't worked, the dunderheads are looking for scapegoats, as though the deregulation of the taxi and pharmacy sector will save Greece.

Even the IMF in its own handbook warns against cutting the budget like this in so short of time without any economic stabilizer whatsoever.

by Upstate NY on Tue Feb 14th, 2012 at 06:19:22 PM EST
[ Parent ]
When the IMF says you're cutting government budgets too fast, you know you're in really deep shit.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 14th, 2012 at 06:25:08 PM EST
[ Parent ]
And yet, Greek politicians prefer this to default and control over their currency...
by asdf on Wed Feb 15th, 2012 at 01:17:27 PM EST
[ Parent ]
They yearn to be "good Europeans"...

... and to retire to a sinecure at a global corporation.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Wed Feb 15th, 2012 at 03:54:15 PM EST
[ Parent ]
Greece needs some crazy Mahathir Mohammad-style guy.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Thu Feb 16th, 2012 at 08:38:18 PM EST
[ Parent ]

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