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You just need to look at the way Greece has been forced to take billions of new loans over the past two years and the conditions attached to them (billed as designed to return Greece to debt sustainability whereas any realistic assessment was already predicting from the beginning what has already happened: not only is Greece's ability to pay deteriorating, but it is descending deeper and deeper into debt). tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
Elsewhere you say
In any case, you continue to not address the issue of why the periphery should accept depression conditions rather than the core accepting some inflation. I'm not arguing for any of those solutions, as I see both as unacceptable. I want to see widespread sovereign defaults, bank recapitalizations and the emergency funds of the ESFS spent on infrastructure spending in the periphery as a way of offsetting austerity.
I'm not arguing for any of those solutions, as I see both as unacceptable. I want to see widespread sovereign defaults, bank recapitalizations and the emergency funds of the ESFS spent on infrastructure spending in the periphery as a way of offsetting austerity.
Which could have been met with lower interest rates, or that failing, financial stimulus.
So, how do you propose infrastructure spending in the periphery would have happened after 1999 in the absence of "credit card spending"?
The issuance of sovereign debt seems reasonable, as does private equity (not "private equity" as in LBO variety, but equity as in the opposite of debt) investment if the latter were not forthcoming at a great enough scale. Peak oil is not an energy crisis. It is a liquid fuel crisis.
Low interest rates for all is what we got and it fed private debt bubbles in the periphery. As to financial stimulus... what continent have you spent the past 2 years in? tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
And everyman believes that the Germans are good at Econ 101.
Which is why we're in deep doo-doo. tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
As someone said: would you like to be in a monetary union where Greeks run the fiscal policy and Germans run the monetary policy? Currently, only 8 % of Swedes do. And I'm not one of them. The only person I know who still wants to join the euro does so because he thinks it's a step closer to the United States of Europe, and damn the consequences. Which is after all also what the architects of the euro felt.
Or in the words of Romano Prodi back in 2001: "I am sure the euro will oblige us to introduce a new set of economic policy instruments. It is politically impossible to propose that now. But some day there will be a crisis and new instruments will be created" Peak oil is not an energy crisis. It is a liquid fuel crisis.
Beats the current arrangement where the Germans run both. tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
If only. Apparently Germany doesn't agree that the rest of us are part of them.
Or maybe they do. They don't seem to have much "solidarity" for the Ossies either. tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
So, how do you propose infrastructure spending in the periphery would have happened after 1999 in the absence of "credit card spending"? The issuance of sovereign debt seems reasonable, as does private equity (not "private equity" as in LBO variety, but equity as in the opposite of debt) investment if the latter were not forthcoming at a great enough scale.
The issuance of sovereign debt seems reasonable, as does private equity (not "private equity" as in LBO variety, but equity as in the opposite of debt) investment if the latter were not forthcoming at a great enough scale.
Also, I said the private sector should have supplied the equity, not direct-state investment in productive assets, even if such do make sense in certain industries. Power and infrastructure comes to mind. Peak oil is not an energy crisis. It is a liquid fuel crisis.
That is to say, if you want state-level (and below) consolidated government debt to be less than 60 % of GDP, you will have to let federal consolidated government debt (in the Eurozone that means central bank reserves and cash, but not ensured deposits in excess of the bank's reserves and cash position) to be in excess of 40 % of GDP (the consolidated government liabilities to GDP ratio is on the order of 100 % for most advanced industrial societies).
- Jake Friends come and go. Enemies accumulate.
Or, to put it in another way: Government bonds are a part of the money supply.
With a properly run central bank, cash and government bonds held by own residents contribute precisely equally to society's gearing: Not at all. (Foreign government bonds are different.)
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