Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
This has to be read in its entirety to be believed, but here is a quote

Greek adjustment program is working, insists ESM's Regling:

Leaving aside the academic debate of multipliers, there has been much criticism regarding the general direction of the fiscal policy in the eurozone. Some are saying that the continuation of deflationary and contractionary policies in the eurozone is self-defeating. I mean that the eurozone cannot really achieve its fiscal targets because of the recession and that the mixture of measures adopted throughout the crisis, and especially in the South, is wrong. I was wondering what your reaction is to this criticism

You are right, there is a debate on that. It is partly coming from the academic world. The Eurogroup has a very clear view on that. The strategy is the right one, and the strategy is working, because there is progress. The population doesn't see that, because they look at their income, they look at the employment situation, and it's very difficult, and we know that, it is painful. But when we, as economists, look at the overall developments, one can see real progress, in Greece, but also in the other Southern European countries, in Portugal and Spain, and of course in Ireland. Competitiveness is improving, also in Greece, because of the drop in income and cuts in nominal wages and salaries. As competitiveness is improving, exports are growing again, despite the fact that the overall economy is shrinking, and the trade deficit is falling. The fiscal deficits are coming down too.

He says more, this is someone who either has absolutely no clue as to the record of real world implications of the policy he supports (and he's the managing director of the European Stability Mechanism) - thus falling victim to his own propaganda; or is cynically propagating this argument to help extend plunder and disaster as much as possible, with no regard to the economic desert he is helping create...
In an ideal world he's be sitting in the docks at a new fiscal Nuremberg along with his superiors and buddies from the policy and banking elites...

[BTW competitiveness (what ever it means) is actually falling ever since the ordeal started]

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

by talos (mihalis at gmail dot com) on Sun Feb 17th, 2013 at 04:48:06 PM EST
Regling is such a moron.

I distribute. You re-distribute. He gives your hard-earned money to lazy scroungers. -- JakeS
by Carrie (migeru at eurotrib dot com) on Sun Feb 17th, 2013 at 05:50:01 PM EST
[ Parent ]
Oh my

You can find the same when you look at the Latin American debt crisis in the 80s and early 90s. Brazil looked hopeless at that time. But for the last 10 years, it has been another star performer in the world economy.

Wow -and no mention of the fact that Latin America recovered by throwing to the dustbin the very policies that this guy is telling us must be applied come what may ("we did not agree with IMF and anyway what difference would it make?").
Well, there might be some logic to it: if you do it long enough, the population will be so fed up that it will go full Venezuelan, with added beheading of the banksters. Therefore bringing a nice period of growth. QED.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Mon Feb 18th, 2013 at 02:39:08 AM EST
[ Parent ]
Brazil actually did pay enough debt (to the tone of federal superavits of 4.5%/year) to get rid of IMF. The part of the federal budget dedicated to pay debt is still monstrous.

Indeed, they might be following different policies, but first they had to get the creditors boot out of their neck. And they decided to do it the "creditor-friendly" way.

In any case, in Southern Europe, I think both avenues are closed: "creditor-friendly" = mathematically impossible. "creditor-unfriendly" = disaster consequences (as I bet there will be political will to make any country that follows that path an "example").

by cagatacos on Mon Feb 18th, 2013 at 05:44:21 AM EST
[ Parent ]
OK -but that's why I said "Latin America". The continent as a whole has been showing progress, and of course it's an economic zone.
I must admit that I have not run through the data to make a completely qualified statement, but I would guess that good performances between Latin America countries are somewhat correlated. So the general good performance of the continent explained some of the good performances of individual countries.

Also, while they did have to get the creditors off their necks, the whole of the last 10 years (and a bit) have been spent under a Lula presidency or that of her formet chief of cabinet. Whose inclinations are totally at odds with the EU elites.

So, it feels a bit rich to give the fiscal consolidation in the first year of his presidency credit for the entirety of the performance, and none to a move towards more left-wing policies and lower inequalities (not saying that there are no other factors). Especially since Argentina and Venezuela did quite decently over the period as well.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Mon Feb 18th, 2013 at 08:59:09 AM EST
[ Parent ]
Actually it is worth mentioning that Lula himself has never missed an opportunity to slam the IMF and IMF type policies whenever he has had the chance. I.e.:
Lula... urged Portuguese policymakers to reject any austerity measures.  "The IMF won't resolve Portugal's problems, like it didn't solve Brazil's" he told Portuguese reporters on Monday, making the point that accepting an EU-IMF bailout would results in stricter austerity measures which would hamper growth, according to The Washington Post.

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Mon Feb 18th, 2013 at 10:52:45 AM EST
[ Parent ]
They were anti-IMF that is for sure.

But that is not the issue. The issue is how did they get rid of it? They opted for paying. Super-avits of 4.5% year over year.

Brazil's model is not one of "sticking the finger to creditors", au contraire.

I am not saying that it is a good model to follow (I actually think it is an IMPOSSIBLE model to follow).

But in name of getting the history correct (my only point here, nothing more), the Brazilian case is not one of defaulting or anything like that.

by cagatacos on Mon Feb 18th, 2013 at 11:31:01 AM EST
[ Parent ]
Yes, but my point is that the claim that "the foundation was laid for very good economic developments in subsequent years" through the IMF programmes is denied by Lula himself. Brazil pushed through despite the IMF programme, not because of it, according to those in charge at the time. Plus of course, as you say, the numbers are very different...

The road of excess leads to the palace of wisdom - William Blake
by talos (mihalis at gmail dot com) on Mon Feb 18th, 2013 at 12:58:02 PM EST
[ Parent ]


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