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Devaluation means lower wages and lower profits denominated in a hard currency.
I've lived through two major devaluations. The effect on the ostensible quality of life was negligible. This time it is worse than war.

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Mon Feb 20th, 2012 at 01:44:58 PM EST
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Well, if you don't have much trade I suppose that might be the case. But I do think you might have noticed something about the price of food, gasoline, and so on. Furthermore, profits denominated in hard currency do not matter to corporations, as their owners usually have costs in the same currency as the corporation sells in. Further, furthermore, corporations are the main winners in devaluations as they can mark prices up for domestic consumers to compensate for imported goods, while become more competitive in the export markets. Indeed, boosting corporate profits is the main idea behind devaluations.

Now, I could talk about the corrosive effects of serial devaluations in the long run (reduced competitive pressure etc), but I won't as those thing clearly are not relevant in the current situation. or rather, worrying about them right now would be like worrying about a blocked up toilet when the house is on fire.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid on Mon Feb 20th, 2012 at 01:59:49 PM EST
[ Parent ]
"But I do think you might have noticed something about the price of food, gasoline, and so on"

Compared to now, it was minimal, at the time people whined about it, sure. But unemployment wasn't much affected (or it was absorbed in the black economy - now even that is dwindling), regressive taxes didn't shoot up the roof, rents were not much affected, streets were not emptied of shut down shops etc. Now we live, I repeat, through a disaster of a scale one usually associates with a war.

As for profits: take tourism. Salaries in tourism (not uncompetitive vis a vis the real competitors to begin with) have plummeted while the "opening" of professions has reduced what was once jobs you could make a living off to hobbies... At the same time the large units that work with foreign tourism, are not seeing any decrease in revenues (internal tourism is a different issue, it has been wiped out). So the big hotel owners are making money at the expense of their workers...

The road of excess leads to the palace of wisdom - William Blake

by talos (mihalis at gmail dot com) on Mon Feb 20th, 2012 at 05:45:15 PM EST
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Price of gas, yes. That gets more expensive.

Frankly, Greece and especially Athens could stand a revamp on that score since there are far too many cars on the road.

But food?

Greece went from 20% imports to 80% in a decade. Greece is the largest importer of French beef, and 15 years ago, Greeks were not beef eaters at all (relatively). In other words, the dynamic has very quickly changed Greek eating habits as well as Greek agriculture. Greece would revert in any devaluation.

Oil is a big concern, of course.

by Upstate NY on Tue Feb 21st, 2012 at 10:10:26 AM EST
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Devaluation means lower wages and lower profits

Funny you should say that.



tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Mon Feb 20th, 2012 at 03:09:38 PM EST
[ Parent ]
A nice illustration on what labor reform means. Where is the chart from?

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Wed Feb 22nd, 2012 at 12:45:29 PM EST
[ Parent ]
It accompanied an article in the Spanish pink-sheet newspaper Cinco Días.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Wed Feb 22nd, 2012 at 01:06:33 PM EST
[ Parent ]
Data from Spain's INE (National Institutute of Statistics).

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Wed Feb 22nd, 2012 at 01:07:37 PM EST
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