But the attack on Ireland...

"If we don't do it you know somebody else will." and "While the music is playing you have to dance." That is high amongst the evil elements -- the entire business context in which they operate. And that environment was purchased at great expense and effort with significant amounts of their money. Unless it is somehow different in Germany. So, back to a three or a four.

"It is not necessary to have hope in order to persevere."

Actually, they are the #2 or #3 behind German in those states too, Lake Wobegon notwithstanding.  My paternal grandmother, born in Fargo, ND in 1899 spoke only Swedish at home, but she had to learn German when she went to school because it was the language spoken in the Fargo area schools at the time. She switched to English when she finally moved to Minneapolis after WWI. German language daily newspapers in those states had the highest circulation of all print media until WWI when English was compelled on everyone in an orgy of frontier nationalism.

Nietszche was German.

He always said that the errors win out. The strongest type of thinking is incorrect thinking. That's what rules are. Bad ideas win precisely because they are used as a cudgel by the weak over the strong. He was a social Darwinist but his version contained ironic twists. The strong are a product of their stupidity.

So you're saying there is still a chance for freedom fries?

I posted before seeing this other Reader' Comment

People forget to mention that under the euro the deficit problems can only get worse.

Portugal had practically zero net foreign debt and a balanced current account in 1995 - when it started adapting its economy to the single currency. Convergence to the euro with a common monetary policy (meaning easy credit with low interest rates) completely transformed the situation in the following decade. Net Foreign debt is now about 100% of GDP and this is only the accumulated stock. In 2010 this stock has probably increased by some 10 to 12% of GDP, which is the estimated amount for Portugal's current account deficit last year.

The basic accounting identities tell us that a foreign deficit implies either private sector or public sector deficits - or both. It´s amazing yet revealing that the euro zone convergence criteria concentrated on only one variable of this identity (public deficits) while forgetting the other two. Thus a revolutionary process that eliminated monetary sovereignty for the participating states was founded on a misconception of basic accounting concepts!

Most of the Portuguese foreign debt is owed to banks in the core euro zone plus Spain. No wonder then that France and Germany are pressuring Portugal into accepting the intervention of the EFSF. This would mean Portugal would change creditors - not private banks anymore (they would have guaranteed payment of their credits via the EFSF) but a sovereign Euro zone fund instead. The French and German governments would thus be absolved from injecting hundreds of billions of Euros to save their imprudent, lending-happy private banks. For Portugal, however, this solution would be less than attractive: History shows that Sovereign Institutions, contrary to private creditors, typically refuse to accept haircuts.

Portugal is thus rightly resisting the pressure to accept the EFSF "support". She does not want to be pushed into an Ireland-style package that will crush her with an impossible-to-pay debt burden maybe for decades to come - while at the same time tying the country's hands under a fixed exchange rate, no sovereign money regime that implies any adjustments will have to come through a 19th century style deflation.

It's simply unbelievable that Europe has reached this low point of forcing absurd aid-and-austerity packages plus inflexible fiscal and monetary policies on heavily indebted euro zone member states. These recessionary policies can only lead first the periphery countries and ultimately the core euro zone countries themselves into an economic cul-de-sac.

There is no light at the end of the tunnel under the present framework. The European leaders must decide as soon as possible on one of two possible exit scenarios. Either full integration by implementing a single European budget with receipts and expenses at a level of about 30% of the Euro zone's GDP (admitting this is politically feasible)- or else get back to the old system of national currencies that served Europe rather well from 1945 to 1999, at any rate much better than the ill-conceived Euro project.

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010

Satyajit Das: European Death Spiral - Communicable Diseases « naked capitalism

Russian writer Leo Tolstoy wrote that: "All happy families resemble one another, every unhappy family is unhappy in its own way." The same applies to beleaguered European countries.

Greece had a bloated public sector and an uncompetitive economy sustained by low Euro interest rates. Ireland suffered from excessive dependence on the financial sector, poor lending, a property bubble and an increasingly generous welfare state. Portugal has slow growth, anaemic productivity, large budget deficits and poor domestic savings. Spain has low productivity, high unemployment, an inflexible labour market and a banking system with large exposures to property and European sovereigns. Italy has low growth, poor productivity and a close association with the other peripheral European economies. Italy has recently started to rein in its budget deficit. The Italian banking system is relatively healthy but exposed to European sovereign debt. Belgium is really two ethnic groups that share a king and high levels of debt (about Euro 470 billion, 100% of GDP).

Portugal, Ireland, Greece and Belgium are also small, narrowly based economies which increases investor's risks. The countries have in common, very high and potentially unsustainable debt levels. They also have in common a reliance on foreign investors to purchase their debt.

Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman

That akes a LOOOOOOT of sense...

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

You're right...

A better version could be constructed from the equation here

In the absence of strong economic growth, inflation and a massive devaluation, the peripheral economies, such as Ireland and Greece, may be unable to shrink themselves to solvency.

A simple relationship demonstrates the unsustainable position:

Changes In Government Debt = Budget Deficit + [(Interest Rate - GDP Growth) X Debt]

In order to restore solvency, overburdened borrowers must stabilise debt and begin to reduce the level of borrowing. This requires GDP Growth exceeding interest rates, a budget surplus (through spending cuts and/or tax cuts) or a combination of these.

EU/ IMF assistance to Ireland was designed to address the high yields on Irish bonds, which curtailed the State's ability to borrow. But the 5.80% cost of the bailout debt requires an equivalent growth rate and a balanced budget simply to stabilise debt at current very high levels.

Of all the ways of organizing banking, the worst is the one we have today — Mervyn King, 25 October 2010

In this I disagree with Krugman.. for me gold-nonsense was intellectually hard... on the other hand the Keynessian feedback loop where activity is reduced by the reduction in cosnumption which reduces activity...leading to a large multiplier in the aggregate demand was dead easy to understand.

Actually, when I started reading macro, anything which was not Keynessianism was extremelly difficult for me to get... on the other hand...Keynnes was dead easy.

Then, I agree that understanding what money is nor easy at all , and the interaction of money, goods and inflation is much more complex that what even Krugman suggests. Liquidity trap is a good model , but the fact that there is no inflation in printing money seems general under certain general conditions.

For example, imagine that you print money purely to demand something which is made in two or three factories which are working at 50%  because there is not enough demand ..because people are making a shift in their customs. I will bet that this will not create inflation at all in any sector if the unemployment is not too low. Actually, even if unemployment is low or high, it would depend on the "unemployment-employment" on the market of people with the skills necessary to run the factory.

For example, I am not sure if printing money and transfering this money in the form of food stamps can create inflation. the food market right now has a huge amount of products which are not consumed, disregarded and a lot of possible iddle production. I would bet that food stamps would only put those idle resources at use with possible a reduction in the price of food. just think of a market where there is a barrier to increasing the production but once you cross that barrier, then the costs actually goes down faster than before.

I know I know.. this sound like physics, but I think this is how a lot of European microeconomy works.

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I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

Evil crystal clear... or just pure egoism?

In any case, this sets Germany from 5 to 10.

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

Don't set up a monetary union either.

Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman

It's even worse than that: elsewhere in this thread:

Portugal had practically zero net foreign debt and a balanced current account in 1995 - when it started adapting its economy to the single currency. Convergence to the euro with a common monetary policy (meaning easy credit with low interest rates) completely transformed the situation in the following decade. Net Foreign debt is now about 100% of GDP and this is only the accumulated stock. In 2010 this stock has probably increased by some 10 to 12% of GDP, which is the estimated amount for Portugal's current account deficit last year.

The Euro Convergence Criteria and the Growth and Stability Pact have turned healthier economies into basket cases. This should rightly be laid at the feet of Germany since those institutional constraints were designed by them as the nonnegotiable price of their joining the Euro.

Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman

what is a mercantilist inflation policy?

You are joining two ideas that I have in two different compartments...

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude