Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Display:
Still, there are bank runs. The fact that there isn't an interbank market means there are runs on most banks, being papered over by the ECB.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Carrie (migeru at eurotrib dot com) on Sat Mar 17th, 2012 at 07:25:09 PM EST
[ Parent ]
well yes, back to the core problem, which is bankrupt banks whose bankruptcies have not yet been acknowledged. Zombie banks, and we are sacrificing our economies to save their creditors.

This is not a euro problem, this is a massive scale redistribution problem. The only euro problem I see is that we proved that we can't have euro-zone convergence the easy way, i.e. via private-debt fueled consumption. It needs t be public transfers for investment.

Wind power

by Jerome a Paris (etg@eurotrib.com) on Sat Mar 17th, 2012 at 07:28:10 PM EST
[ Parent ]
It needs to be public transfers for investment.

I submit this is, in practice, forbidden by the Eurozone's constituent regulations.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Carrie (migeru at eurotrib dot com) on Sat Mar 17th, 2012 at 07:30:34 PM EST
[ Parent ]
Even if you'd cancel out all the debt by having the banks write down their loans, you'd still have a number of periphery nations who just aren't competitive, and who won't bounce back until the EU lets them, or we wait out the grinding internal devaluation, which eventually will result in full employment. In the long run.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sat Mar 17th, 2012 at 07:31:06 PM EST
[ Parent ]
who won't bounce back until the EU lets them

I'm not holding my breath.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Carrie (migeru at eurotrib dot com) on Sat Mar 17th, 2012 at 07:31:41 PM EST
[ Parent ]
grinding internal devaluation, which eventually will result in full employment. In the long run.
Sorry, no.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Carrie (migeru at eurotrib dot com) on Sat Mar 17th, 2012 at 07:32:16 PM EST
[ Parent ]
Sooner or later the resistance to nominal wage cuts will fade (when the pain gets intense enough), salaries will fall, and you'll see an export-led resurgence. But if this will require 3 years of recession or 10, is an open question.

But I think it far more likely that before the levels of pain needed to achieve that are reached, countries will choose to leave the Eurozone.

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

by Starvid on Sat Mar 17th, 2012 at 07:36:44 PM EST
[ Parent ]
People will die f lack of health care before "competitiveness" is restored.

I have made the point repeatedly that the same worker is very much more productive with better physical plant. Therefore, there are two ways to "improve" accounting measures of worker productivity. To punish the worker for having to work with crap equipment, or to invest in improving their equipment.

The capitalists who decided to not invest in proper equipment in the first place are not punished, only the workers who had no say in the matter.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Carrie (migeru at eurotrib dot com) on Sat Mar 17th, 2012 at 07:39:41 PM EST
[ Parent ]
there are two ways to "improve" accounting measures of worker productivity

Which are not mutually exclusive.

The capitalists who decided to not invest in proper equipment in the first place are not punished, only the workers who had no say in the matter.

The capitalist which does not run a successful plant will go broke and lose the thing that makes him a capitalist: his capital.

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

by Starvid on Sat Mar 17th, 2012 at 07:42:26 PM EST
[ Parent ]
The capitalist which does not run a successful plant will go broke and lose the thing that makes him a capitalist: his capital.

Hmm, limited liability and political connections.

We're talking oligarchy here.

And when their country goes to hell the government borrows from the IMF in order to prop the exchange rate long enough for them to get their savings out at a favourable rate. Or, in the case of the Eurozone, the government refuses to institute capital controls and accepts "rescue" after "rescue" while the oligarchs decamp to Luxembourg with their money.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Carrie (migeru at eurotrib dot com) on Sat Mar 17th, 2012 at 07:45:52 PM EST
[ Parent ]
Also, after 3 to 5 years of depression the physical plant itself is degraded beyond repair (like a tissue starved of blood gets gangrenous or necrotic). Then there's no wage level that will restore competitiveness because the job is lost.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Carrie (migeru at eurotrib dot com) on Sat Mar 17th, 2012 at 07:43:49 PM EST
[ Parent ]
Low salaries beget new investment, and if the domestic capitalist are bled dry, it will come in the form of foreign direct investment.

Anyway, much plant (except in heavy industry) becomes outdated and is written off pretty quickly, even if not in 3 years.


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

by Starvid on Sat Mar 17th, 2012 at 07:48:22 PM EST
[ Parent ]
Low salaries beget new investment, and if the domestic capitalist are bled dry, it will come in the form of foreign direct investment.

Want to bet on how long it takes for FDI into Greece to pick up? Do you think it makes a difference how many people die of the effects of economic depression in the interim?

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Carrie (migeru at eurotrib dot com) on Sat Mar 17th, 2012 at 07:51:01 PM EST
[ Parent ]
This is a perfect instance of in the long run, we're all dead. For rather short values of long run.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Carrie (migeru at eurotrib dot com) on Sat Mar 17th, 2012 at 07:51:50 PM EST
[ Parent ]
If you can't fund basic services to the degree that it results in mass casualties, you'd better start raising taxes.

But this doesn't change what I say. Even if you get an increased mortality, you will eventually return to full employment via salary cuts. It won't be fun and it won't be pretty and most importantly it will be a really stupid way to do things, but eventually you will reach full employment.

I'm not arguing this is the good way to do things, I'm just saying that eventually that's what will happen, even if I also think the devaluation road is far more politically likely (and a lot smarter).

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

by Starvid on Sat Mar 17th, 2012 at 07:55:20 PM EST
[ Parent ]
If you can't fund basic services to the degree that it results in mass casualties, you'd better start raising taxes.

You know the reason basic services in Greece are failing is not the taxes have not been raised. But, of course, the middle of a recession is the wrong time to fire your doctors and nurses and raise taxes on everyone else.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Carrie (migeru at eurotrib dot com) on Sat Mar 17th, 2012 at 07:57:44 PM EST
[ Parent ]
You know I don't disagree with you here. I am after all a Keynesian.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sat Mar 17th, 2012 at 08:02:02 PM EST
[ Parent ]
You sound a lot like a Samuelsonian.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Carrie (migeru at eurotrib dot com) on Sat Mar 17th, 2012 at 08:02:33 PM EST
[ Parent ]
Who just happened to be one of the most influential Keynesian economists ever.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sat Mar 17th, 2012 at 08:06:07 PM EST
[ Parent ]


Friends come and go. Enemies accumulate.
by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Mar 17th, 2012 at 08:49:50 PM EST
[ Parent ]
Then, neither is Paul Krugman. But I suppose you prefer Joan "North Korea" Robinson?

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sun Mar 18th, 2012 at 09:39:11 AM EST
[ Parent ]
Krugman is indeed a neoclassical rather than a Keynesian.

I don't know Robinson, but from a cursory perusal of Google, her contributions to economic theory look respectable enough.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Mar 18th, 2012 at 11:29:34 AM EST
[ Parent ]
Sigh... It is not really helpful to the clarity of the debate to invent new definitions whom no one use, but yourself.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sun Mar 18th, 2012 at 01:51:00 PM EST
[ Parent ]
It's not conducive to debate to accept and repeat neoclassical newspeak.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Mar 19th, 2012 at 05:58:42 PM EST
[ Parent ]
What kind of an argument is that?

What if we call him Paul "Mahathir" Krugman?

Milton "Pinochet" Friedman was correct that monetary contraction made the Great Depression worse.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Carrie (migeru at eurotrib dot com) on Mon Mar 19th, 2012 at 04:56:27 AM EST
[ Parent ]
And still, people complain over Friedman advising Pinochet on economic issues, all the time.

While I haven't read any of Robinsons texts (and I should), I kinda find it hard to believe that someone who thought the Cultural Revolution was an excellent idea from a social and economic point of view, really has any reality-based advice to offer us,

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

by Starvid on Mon Mar 19th, 2012 at 08:22:38 AM EST
[ Parent ]
Wikipedia: Joan Robinson
Initially a supporter of neoclassical economics, she changed her mind after getting acquainted with John Maynard Keynes. As a member of "the Cambridge School" of economics, Robinson assisted with the support and exposition of Keynes' General Theory, writing especially on its employment implications in 1936 and 1937 (it attempted to explain employment dynamics in the midst of the Great Depression).

In 1933, in her book, The Economics of Imperfect Competition, Robinson coined the term "monopsony," which is used to describe the buyer converse of a seller monopoly.

In 1942 Robinson's An Essay on Marxian Economics famously concentrated on Karl Marx as an economist, helping revive the debate on this aspect of his legacy.

During the Second World War, Joan Robinson worked on a few different Committees for the wartime national government. During this time, she visited the Soviet Union as well as China. She developed an interest in underdeveloped and developing nations and contributed a lot that is now understood in this section of economics.

In 1949, she was invited by Ragnar Frisch to become the vice president of the Econometric Society but declined, saying she couldn't be part of the editorial committee of a journal she couldn't read.

In 1956, Joan Robinson published her magnum opus, The Accumulation of Capital, which extended Keynesianism into the long-run. Six years later, she published another book about growth theory, which talked about concepts of "Golden Age" growth paths. Afterwards, she developed the Cambridge growth theory with Nicholas Kaldor. During the 1960s, she was a major participant in the Cambridge capital controversy alongside Piero Sraffa.

Close to the end of her life she studied and concentrated on methodological problems in economics and tried to recover the original message of Keynes' General Theory. Between 1962 and 1980 she wrote many economics books for the general public. Robinson suggested developing an alternative to the revival of classical economics.

At least two students who studied under her have won the Nobel Prize in Economic Sciences: Amartya Sen and Joseph Stiglitz.

Also, Robinson made several trips to China, reporting her observations and analyses in China: An Economic Perspective (1958), The Cultural Revolution in China (1969), and Economic Management in China (1975; 3rd ed, 1976), in which she praised the Cultural Revolution. She also stated in reference to divided Korea that "[o]bviously, sooner or later the country must be reunited by absorbing the South into socialism." These statements caused significant damage to her reputation, and possibly cost her the Nobel Prize for Economics. During her last decade, she became more and more pessimistic about the possibilities of reforming economic theory, as expressed, for example, in her essay "Spring Cleaning".

Quite an intellectual trip, I must say.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Carrie (migeru at eurotrib dot com) on Mon Mar 19th, 2012 at 08:32:17 AM EST
[ Parent ]
...is a dangerous thing:

All PDF. Harcourt appears to be the author of a major book on Post-Keynesian economics: The Structure of Post-Keynesian Economics: The Core Contributions of the Pioneers in which Joan Robinson features majorly.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Carrie (migeru at eurotrib dot com) on Mon Mar 19th, 2012 at 08:46:11 AM EST
[ Parent ]
And still, people complain over Friedman advising Pinochet on economic issues, all the time.

Friedman was on the record as saying that he preferred a "free market"(sic) dictatorship over democratic socialism.

This bears pointing out, repeatedly, because there is this persistent mythology that right-wingers are pro-democracy.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Mar 19th, 2012 at 06:18:43 PM EST
[ Parent ]
Right-wingers are pro-Democracy™ - which has the same relationship to real democracy that Rupert Murdoch has to quality journalism.
by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Mar 19th, 2012 at 07:33:42 PM EST
[ Parent ]
How ducky wonderful the compares:

United States GDP per capita:  $48,147

Nasty socialist scumbags from the Frozen North:

Nordic countries GDP per capita: $62,959

My case.

It rests.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Mon Mar 19th, 2012 at 07:46:30 PM EST
[ Parent ]
Think that's household GDP, not per capita.

Unless both regions are doing a helluva lot better than I thought. :)

Be nice to America. Or we'll bring democracy to your country.

by Drew J Jones (pedobear@pennstatefootball.com) on Tue Mar 20th, 2012 at 05:50:54 AM EST
[ Parent ]
Are you implying the economic systems of the Nordic countries have more in common with North Korea than with the US?

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Tue Mar 20th, 2012 at 08:11:03 AM EST
[ Parent ]
That would be the Republican view.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Carrie (migeru at eurotrib dot com) on Tue Mar 20th, 2012 at 08:12:45 AM EST
[ Parent ]
As your signature mentions, the Republican story is not always the same as the truth.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Tue Mar 20th, 2012 at 08:37:33 AM EST
[ Parent ]
The Stockholm Syndrome Pt. 1 - The Daily Show with Jon Stewart - 04/21/09 - Video Clip | Comedy Central
The Stockholm Syndrome Pt. 1 Wyatt Cenac travels to Sweden to wake up their hauntingly thin citizens from their socialist nightmare.


Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Tue Mar 20th, 2012 at 08:37:39 AM EST
[ Parent ]
Sweden is often compared to Germany (high CA surplus, hi-tech manufacturing and so on), but one interesting difference is that while German real wages have stagnated for the last decade, Swedish real wages have increased by 20% during the same period.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Tue Mar 20th, 2012 at 10:09:27 AM EST
[ Parent ]
According to CIA facts 2011, GDP average per cap, USA = 48.000 bucks, Scandinavia + Finland = 42.000.

You can't be me, I'm taken
by Sven Triloqvist on Tue Mar 20th, 2012 at 08:33:56 AM EST
[ Parent ]
But of course by the time you throw in free education, free healthcare and affordable, practical public transportation, we Nordics are way ahead.

As usual, GDP doesn't tell us that much.

You can't be me, I'm taken

by Sven Triloqvist on Tue Mar 20th, 2012 at 08:36:59 AM EST
[ Parent ]
eventually you will reach full employment.
If you kill enough people, eventually the remainder will be employed
I'm not arguing this is the good way to do things, I'm just saying that eventually that's what will happen
Well, I am arguing the EU is acting as a force of evil, and in large part it is because the institutions are designed to act this way. It would take courageous civil servants and politicians to not do what they-re doing, since they could plausibly be accused of breaking the letter of the EU treaties and regulations.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Carrie (migeru at eurotrib dot com) on Sat Mar 17th, 2012 at 08:00:10 PM EST
[ Parent ]
I'm not arguing from a moral point of view here. If I did, well, sure, I agree that the ECB is acting very badly. And stupidly.

But that does not change the argument about what would eventually happen, as it is not a normative argument. And furthermore, you know just as well as I do that equilibrium would not be achieved by the unemployed starving to death.

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

by Starvid on Sat Mar 17th, 2012 at 08:04:39 PM EST
[ Parent ]
equilibrium would not be achieved by the unemployed starving to death

You're right: they are, and it isn't.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman

by Carrie (migeru at eurotrib dot com) on Sat Mar 17th, 2012 at 08:06:02 PM EST
[ Parent ]
Sooner or later the resistance to nominal wage cuts will fade (when the pain gets intense enough), salaries will fall, and you'll see an export-led resurgence.

No, you will see another wave of plant closures as the deflationary impact of protectionist wage dumping hits the balance sheets of firms that in any properly managed macroeconomy would be fundamentally sound.

And then you will see a trade war, not totally unlike the good, old-fashioned sort with import duties and customs barriers. Except instead of competing to see who can raise import duties higher before their domestic economy starts breaking for lack of raw materials, we'll be seeing who can raise unemployment higher before their democracy breaks from paramilitary organisations being the only viable career prospect for anybody born after 1990.

And unlike the counterfactual presented of the in the diary body, this is a repeatedly observed and well described phenomenon.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sat Mar 17th, 2012 at 08:48:29 PM EST
[ Parent ]

Display:

Top Diaries

Occasional Series