I'm noting my old buddy Morgan as he's as usual got the most coherent Right wing narrative. I had a nice Twitter chat with him this morning and he argues that the Greeks want to avoid Grexit as they have s choices: to be South Carolina or Venezuela.
Now I don''t consider either to be my model for what Greece or anyone else should strive for. However, what he seems to be saying is that
1. Leaving the euro makes them inevitably Venezuela
2. The should stay in the EU, become SC-ie , go after pensions and government workers and things will be bright.
"if south Carolina had they own currency they would be Venezuela. the nature of things is that later in Europe they will move to federated state model with eurowide safety net and military. you need to CHEER for Greece to be south Carolina especially If you are sure it won't work, growth won't boom."
"hint: that eurowide safety net you want? It won't be created until Greece makes the growth shot cultural changes."
https://twitter.com/i/notifications
He is very good at gaming things out. To agree with him here though you have to agree that a Grexit means Venezuela and the EU means a coming federated state with a safety net and military. If you question either of these assumptions it's not so straightforward.
I at least question why Greece has to become Venezuela if it leaves the EU and Market Monetarist Lars Christensen says the same thing.
http://diaryofarepublicanhater.blogspot.com/2015/07/lars-christensen-grexit-will-restart.html
Keep in mind too that Lars agrees with Morgan about Greece needing to do structural reforms but admits that this is a long term supply side issue-not a short term demand issue. In the meanwhile Greece's demand side has been savaged.
If you realize this then the question of reforms is really besides the point at to the question of Grexit. I have to agree with Krugman here-if Greece can't get a decent deal here then why not Grexit?
"So now what? A few months ago I thought that stabilizing Greece at a small primary surplus might work, in the sense that it would allow a return to growth even if it didn’t do anything to make up lost ground. But the creditors are still demanding a rising primary surplus over time, and balking at top line debt relief that might at least offer a clear marker of progress. If those are the requirements for Greece to stay in the eurozone, Grexit is inevitable."
http://krugman.blogs.nytimes.com/2015/07/10/austerity-and-the-greek-depression/?module=BlogPost-Title&version=Blog%20Main&contentCollection=Opinion&action=Click&pgtype=Blogs®ion=Body
So Grexit may be all that saves Greece. You have to remember that right now what matters is the short term for them. You can't debate the long term if you don't save the short term. The short term pain otherwise will have long term effects.
P.S. A lot of people don't like Morgan but he's probably my favorite Rigth winger as he's not afraid to have a discussion with liberals. I don't think Scott is such a bad guy-whatever he says about me-but he can't stand to discuss stuff with people he doesn't agree with.
Now I don''t consider either to be my model for what Greece or anyone else should strive for. However, what he seems to be saying is that
1. Leaving the euro makes them inevitably Venezuela
2. The should stay in the EU, become SC-ie , go after pensions and government workers and things will be bright.
"if south Carolina had they own currency they would be Venezuela. the nature of things is that later in Europe they will move to federated state model with eurowide safety net and military. you need to CHEER for Greece to be south Carolina especially If you are sure it won't work, growth won't boom."
"hint: that eurowide safety net you want? It won't be created until Greece makes the growth shot cultural changes."
https://twitter.com/i/notifications
He is very good at gaming things out. To agree with him here though you have to agree that a Grexit means Venezuela and the EU means a coming federated state with a safety net and military. If you question either of these assumptions it's not so straightforward.
I at least question why Greece has to become Venezuela if it leaves the EU and Market Monetarist Lars Christensen says the same thing.
http://diaryofarepublicanhater.blogspot.com/2015/07/lars-christensen-grexit-will-restart.html
Keep in mind too that Lars agrees with Morgan about Greece needing to do structural reforms but admits that this is a long term supply side issue-not a short term demand issue. In the meanwhile Greece's demand side has been savaged.
If you realize this then the question of reforms is really besides the point at to the question of Grexit. I have to agree with Krugman here-if Greece can't get a decent deal here then why not Grexit?
"So now what? A few months ago I thought that stabilizing Greece at a small primary surplus might work, in the sense that it would allow a return to growth even if it didn’t do anything to make up lost ground. But the creditors are still demanding a rising primary surplus over time, and balking at top line debt relief that might at least offer a clear marker of progress. If those are the requirements for Greece to stay in the eurozone, Grexit is inevitable."
http://krugman.blogs.nytimes.com/2015/07/10/austerity-and-the-greek-depression/?module=BlogPost-Title&version=Blog%20Main&contentCollection=Opinion&action=Click&pgtype=Blogs®ion=Body
So Grexit may be all that saves Greece. You have to remember that right now what matters is the short term for them. You can't debate the long term if you don't save the short term. The short term pain otherwise will have long term effects.
P.S. A lot of people don't like Morgan but he's probably my favorite Rigth winger as he's not afraid to have a discussion with liberals. I don't think Scott is such a bad guy-whatever he says about me-but he can't stand to discuss stuff with people he doesn't agree with.
Scott mentioned you in his latest post, and in an uncritical way as well (kind of a H/T really).
ReplyDeleteIs this the high point in Sax-Sumner relations to date?
Absolutely Tom! I just finished a post about it! Hell is truly freezing over!
Deletehttp://diaryofarepublicanhater.blogspot.com/2015/07/on-euro-and-greece-sumner-and-i-for.html
Hey Mike,
ReplyDeleteGreece is giving you lots of material isn't it? That whole part of the world is so fucked up right now.
Cullen Roche had a nice piece yesterday I think where he gives his thoughts on Greece and I think I agree with him. He says the time for Greece to exit the Euro was 5 -6 years ago not today. They have already experienced most of the pain and an exit now would simply put them at risk of hyperinflation. Hyperinflations are most likely when 1) You have real supply problems, dependent on foreign imports 2) You have a lot of debts in currencies other than your own 3) Tax system is broken 4) Bonds will not be in high demand
Now, all this stuff COULD be managed..........IF the Greeks were a unified front, had the realities of situation well explained to them and they were committed to sovereignty. However I don't think any of that is the case a t present. I think Cullen is correct and that Greece missed the optimal time to leave the Euro. They will experience much more pain upon leaving now than they would have then.
SO I guess Im saying that I agree with Morgan in a sense. If Greece leaves they will jump right into the real possibility of a Venezuala/Zimbabwe/ Argentina like hyperinflation if they don't manage things with extreme care but by staying they are like a South Carolina if the Euro project federalizes. They will probably have a lot of military bases (like SC..... and the rest of the south really) and they have good vacation spots. An economy dependent on military spending and tourism could work quite well, most of the southern US is in the exact situation, but Europe is a long way from that type of integration...... if ever.
Well, well, well! It''s like the stars are perfectly aligned! You agree with Morgan and Scott Sumner links to me approvingly!
Deletehttp://diaryofarepublicanhater.blogspot.com/2015/07/on-euro-and-greece-sumner-and-i-for.html
Yes,this euro stuff gives you a lot of room to learn about monetary economics if nothing else.