8 comments on “Strong words

  1. There’s a very good comment by “Bob D” in response to the article – about 10 or 12 down at the point of writing this. Well worth a read. If the comments fills up try searching for Like a smoker nailing 60 a day for 40 years we have developed cancer.

  2. Will Hutton on the radio this morning saying how it would be better for wise people to regulate. What wise people? I see no evidence that wise people exist (see, for example, the UEA CRU emails).

  3. That’s classic AEP. Every problem Greece faces seems unrelated to the euro – such as wages outstripping productivity, poor customer service or would be worse without it – debt service charges, but it gets the blame, and as always we get the AEP solution – devaluation and slam the money printing presses into top gear.

  4. Every problem Greece faces seems unrelated to the euro – such as wages outstripping productivity, poor customer service or would be worse without it – debt service charges, but it gets the blame

    No, you’re not reading AEP right. He doesn’t blame the Euro for those problems. He says that the Euro eliminates the one solution that Greece, Italy and others have to those problems: devaluation.

    Despite what Harold Wilson said, devaluation is an across-the-board pay cut for everyone in the country, as well as a domestic price cut. It’s a cynical way to run a wages and prices policy without all the tedious facing off with unions etc. It’s what Italy has done for decades, and Greece too. But with the Euro (and with a Gold Standard) this option is taken away.

    The only remaining option is wage and price deflation (which doesn’t deflate debts and thus debt:income ratios go the wrong way). The social unrest caused by this will force Greece to abandon the Euro and devalue.

    You can read this as “blaming the Euro” if you like, just as you can “blame gold” for Britain’s problems in the 1920s. AEP puts the blame where it’s due: the Greek politicians.

  5. …Every problem Greece faces seems unrelated to the euro….

    Perhaps unfair to blame the Euro, but the bubble would not have expanded nearly so fast if they had been required to borrow Drachma instead.

    The Euro has enabled politicians to behave with even less responsibility than we expected.

  6. Perhaps unfair to blame the Euro, but the bubble would not have expanded nearly so fast if they had been required to borrow Drachma instead.

    Take Ireland as an example closer to home: Continental interest rates with a UK-style housing market. Woosh!

    Coming back down again is going to be very very painful. Politically, financially and socially.

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