Perma-slump and Project | 114 comments (114 topical, editorial, 0 hidden)

Re: Perma-slump and Project (4.00 / 2)

A couple of rounds of competitive devaluation would provide such short-term relief.

But would we get that?

Historical experience points to "yes."

Absent shared physical coin and note, it is basically impossible for the states under deflationary pressure to deflate sufficiently to avoid depreciation.

"Political will" does not really matter when it is the will to accomplish mathematical impossibilities.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu May 29th, 2014 at 05:06:22 AM EST
[ Parent ]

Re: Perma-slump and Project (4.00 / 2)

I think Cyrille meant, would our elites choose competitive devaluation? I think recent evidence in non-Eurozone countries points to "no". Austerity is the solution for every economic problem here, too. (In Hungary, the last competitive devaluation was combined with the most severe austerity up to then, in 1995; at least three more rounds of austerity without devaluation came since.)

_{*Lunatic*, n.

One whose delusions are out of fashion.}

by DoDo on Thu May 29th, 2014 at 06:47:41 AM EST
[ Parent ]

Re: Perma-slump and Project (4.00 / 2)

The difference between austerity under a common currency and austerity under a unilateral exchange rate peg is that it has to get a lot worse before a country is ejected from a common currency than it has to get before a country can no longer defend its unilateral peg.

That's the difference between the depression of the American trade bloc following the panics of 1929, and the depression of the Asian developing economies following the end of the Yen carry in 1998.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu May 29th, 2014 at 09:07:27 AM EST
[ Parent ]

There already is competitive devaluation. (4.00 / 3)

We need to understand that the Euro project is essentially a competitive devaluation for Germany.

As long as the current architecture stays in place, German industrial exports will profit from an undervalued currency, while the rest of us struggle with what is for us an overvalued currency.

End the Euro, let the DM float, you will see what happens. And, for the rest of us, it will be the best thing we can do to kick-start exports.

The Hun is always either at your throat or at your feet. Winston Churchill

by r------ on Fri May 30th, 2014 at 03:47:38 PM EST
[ Parent ]

Perma-slump and Project | 114 comments (114 topical, 0 editorial, 0 hidden)

Top Diaries

Ireland 13 South Africa 8

UNGA: West Censors the South and East

EU VDL State of the Union -- Managing Decay

Rugby World Cup 2023 Week 1 review

Reactionary Visions and eNtiTiES

Sovereignty 2040

Recent Diaries

UA Laboratory NATO First Space War

United Nations In Stalemate Position

Biden's Headache in Middle East: Israel

EU as Client State of Joe's America

Canada's Trudeau Honoring an Ukrainian Nazi Collaborator

Ireland 13 South Africa 8

UNGA: West Censors the South and East

A Tale by Benjamin Franklin

Fail in Democracy Return to Authoritarianism

Yemen From Ceasefire to Peace Talks?

Huge Cost Proxy War of Choice

EU VDL State of the Union -- Managing Decay

Reactionary Visions and eNtiTiES

Top Military War Planning Under Joe Biden - Ukraine

Rugby World Cup 2023 Week 1 review

Joe's Fuck the EU -- Showdown

Modi G20 One Earth, One Family, One Future

Conflict In Syria's Deir Ezzor Province

Sovereignty 2040

Some September Food/Ag Events

Occasional Series