Give him credit for defending what most people see as indefensible. He continues to see the EU as on the side of angels. He argues that what the EU really wants is not payment of debts or even austerity but for Greece to privatize it's statist economy.
“The US has a fiscal as well as a monetary union.”
"Yeah I know, and:
1. It’s OK if it takes a while for Greece to get to live in Fiscal Union. Because it makes them BEND BEND BEND BEND BEND.
2. BENDING actually gets them CLOSER to a Euro wide fiscal union.
"MY POINT is that South Carolina (Southern states) being forced to bend IS THE REASON we got Fiscal Union. And what’s MORE, even after Fiscal Union (wealth transfers to Souther States), we have STILL seen Southern states economically move towards free markets to compete."
"US states wandered in the wilderness with no control over currency, with rich people being able to move state to state, which forced states pre-1913 to compete to keep taxes on capital down."
"I’d argue between Civil War and 1913, South Carolina had to DEAL WITH IT.
INFACT, you can go ahead and think of BENDING as no different than being forced to give up Slavery."
http://www.themoneyillusion.com/?p=29923#comments
The analogy of Greece to the Old South is interesting though I think that to claim that Greece practices slavery in the way that SC did is certainly controversial and needs to be unpacked.
I mean what it comes down to is that he and Sumner don't like the structure of Greece's economy and therefore think that any amount of pain is worth it if they can do away with the Greek model.
I still think that if there is a mandate for this let the Greeks vote for it themselves. I mean this is almost shades of Iraq-no one liked the Saddam Hussein regime either but it was clearly not our place to go in there for regime change.
I replied to Morgan by pointing out that South had to go through 75 years until they had a comeback. Is this how long Greece has to wait?
So Krugman has a post that suggests it may be even longer than that.
"And we’re talking about huge costs here. Look at the crude Phillips curve I estimated for Greece a few days back, shown in the chart.
Credit
"It suggests that it takes about 4 point-years of output gap to reduce prices relative to baseline by 1 percentage point. So suppose that you are 25 percent overvalued, and get no help from higher inflation in the core. Then “internal devaluation” requires sacrificing around 100 percent of a year’s GDP. Let’s repeat that: given what we now know about the rules of the game, countries as overvalued as much of the European periphery became thanks to the lending boom are supposed to sacrifice a full year’s economic output as part of a process of beating prices and wages down."
“The US has a fiscal as well as a monetary union.”
"Yeah I know, and:
1. It’s OK if it takes a while for Greece to get to live in Fiscal Union. Because it makes them BEND BEND BEND BEND BEND.
2. BENDING actually gets them CLOSER to a Euro wide fiscal union.
"MY POINT is that South Carolina (Southern states) being forced to bend IS THE REASON we got Fiscal Union. And what’s MORE, even after Fiscal Union (wealth transfers to Souther States), we have STILL seen Southern states economically move towards free markets to compete."
"US states wandered in the wilderness with no control over currency, with rich people being able to move state to state, which forced states pre-1913 to compete to keep taxes on capital down."
"I’d argue between Civil War and 1913, South Carolina had to DEAL WITH IT.
INFACT, you can go ahead and think of BENDING as no different than being forced to give up Slavery."
http://www.themoneyillusion.com/?p=29923#comments
The analogy of Greece to the Old South is interesting though I think that to claim that Greece practices slavery in the way that SC did is certainly controversial and needs to be unpacked.
I mean what it comes down to is that he and Sumner don't like the structure of Greece's economy and therefore think that any amount of pain is worth it if they can do away with the Greek model.
I still think that if there is a mandate for this let the Greeks vote for it themselves. I mean this is almost shades of Iraq-no one liked the Saddam Hussein regime either but it was clearly not our place to go in there for regime change.
I replied to Morgan by pointing out that South had to go through 75 years until they had a comeback. Is this how long Greece has to wait?
So Krugman has a post that suggests it may be even longer than that.
"And we’re talking about huge costs here. Look at the crude Phillips curve I estimated for Greece a few days back, shown in the chart.
Credit"It suggests that it takes about 4 point-years of output gap to reduce prices relative to baseline by 1 percentage point. So suppose that you are 25 percent overvalued, and get no help from higher inflation in the core. Then “internal devaluation” requires sacrificing around 100 percent of a year’s GDP. Let’s repeat that: given what we now know about the rules of the game, countries as overvalued as much of the European periphery became thanks to the lending boom are supposed to sacrifice a full year’s economic output as part of a process of beating prices and wages down."
http://krugman.blogs.nytimes.com/?_r=0
If Greece society is truly a slave society then surely they will fix it themselves. But to return to the days of occupations-the first European occupation since Germany-again-occupied France can't but be seen for what it is-a shocking retrogression.
P.S. The Greeks and the French and their rivalry is who we have to thank for the euro.
P.S.S I do think it's time for liberal to admit that the future is much brighter in the US than Europe as long as the euro reigns.
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