Thread: Again on Greece
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Old May 22 2013, 12:37 AM   #7
Re: Again on Greece

I agree that the invocation of, to use Krugman's term, the confidence fairy is nonsense, aggregate demand matters.
I also agree that a partial default on debt would have been preferable to the bailing out of banks (any reader of the work of Reinhard and Rogoff, not the crappy paper but the book This Time is Different: Eight Centuries of Financial Folly, should know that default is not the end of the world, has happened frequently and never led to a prolonged lack of access to capital).
I also agree with your general sentiment that that the Greeks have been fucked badly. This is Kleinian shock therapy, i.e. a crisis is misused to implement "structural reforms" aka neoliberal policies. I am German (Germany is the obvious villain in this play, we mainly bailed out our own banks who owned Greek IOUs and we are the source of the idiotic ECB policy) so I hear this crap about "structural reforms" from our central bankers all the time. Sound economics are absent.

About the IMF, let's please not forget that the institution is not speaking with just this one ugly voice, Blanchard and many other economists have actually spoken out against austerity.

I disagree on your politicization of the source of the crisis though. This has nothing to do with Cold War politics (As you ranted about Tito and sound like a die-hard Stalinist you might wanna keep in mind that Stalin had an agreement with Churchill about how to dive Europe after WWII. He agreed that Greece should belong to the West and kept his promise, he never interfered when the US installed an authoritarian regime. Obviously I am just reporting facts here and not condoning the power politics of either side. If you are liberal you should be a liberal and not an asshole who works together with fascists to keep the commies at bay and if you are a socialist you better be an international democratic socialist and not a national authoritarian socialist like Stalin.) it was plain fiscal irresponsibility which got amplified to such huge problem because the ECB was unwilling until recently to buy government bonds. In the US this shit wouldn't happen, state bond yields do of course differ but a speculative attack would never be possible because the Fed is willing to be the lender of last resort and buy government bonds to stabilize the collapse of demand and rise of yields which would happen after a speculative attack.
The illegal we do immediately; the unconstitutional takes a little longer. - former US Secretary of State and unconvicted war criminal Henry Kissinger

Last edited by horatio83; May 22 2013 at 12:51 AM.
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