Monday, June 29, 2015

Jean-Claude Junker hurls insults at Greece


Jake C said...

What do you think the risks are for denominating currency and debts.if not just defaulting on them.

Some people are arguing that going to the drachma would be a disaster leading to inflation/hyperinflation and the only way to counter this would be to restrict spending to IMF austerity spending levels anyway.

So ultimately their is no choice anyway.

I would have thought that by going to the drachma and simply issueing currency.they would be be able to stimulate their economy.

What do think the inflation risk would be if they did that?

Would they suffer from exchange rate caused inflation?

Couldn't they simply reverse all of the austerity policies that they have been forced to undergo,what would be the real limitations on spending in their new currency?

NeilW said...

The Europhiles have discounted the Drachma option as a matter of ideology. When you question them on the actual mechanism by which disaster will strike and show them how the fears are dealt with they get all uppity and refuse to talk to you.

There Is No Alternative to the Euro in there eyes.

Now where have we heard that before...

John said...

"When you question them on the actual mechanism by which disaster will strike and show them how the fears are dealt with they get all uppity and refuse to talk to you."

i think it's worse than that and the mental disorder goes deeper. Talk to the lunatic simpletons who are, no matter what the evidence, still in favour of joining the euro and they'll stay stupid shit like "You don't have to change your money when you travel to Europe". "Alright, you dimwitted lazy shit", you reply, "any other advantages?" And then total deafening silence. Then, in between mouthfuls of bruschetta or sipping their fu**ing java, skinny macchiato with almond syrup and a hint of cinnamon or booking their seventh holiday of the year and trendy lefty mutterings of "Goa has been so ruined by, you know, those awful people, those chavs", they'll say something even more lunatic about "feeling European" and that it'll "bring us all together" in some weirdo happy family.

These people can't be reasoned with, not least because they've messed up a perfectly good black coffee by adding all that nonsense. They're fanatics, and dimwitted fanatics with some strange superiority complex at that. They remind me of the comedy character Nathan Barley.

Broll The American said...

Either in the Euro or with the Drachma, Greece is the Mississippi of Europe. The US Federal Government directs a lot of money towards Mississippi to keep it going. Folks from New Jersey and California have a rather benign attitude towards this arrangement. I don't see any way for Europeans to get over their centuries old feelings towards each other to come up with some system to redistribute funds towards their weaker neighbors. Drachma or Euro makes no difference without some sore of central spending authority to even things out.

Jake C said...

The people putting forward the argument that Greece will run a great risk of inflation or have to run austerity budgets even with a new Greek issued currency were actually true blue Tories who were outraged that tspiras was confronting his creditors with a referendum and that Greece might abandon its obligation to foreign bondholders.

I suppose the fear is exchange devaluation causing the cost of eurozone imports and therefore the price level in the rest of the economy.

Yes John your funny because it's so true.Reminds of when I tried to explain to a farage hating Tory voting high earning city girl why a 23 yr old labourer from portsmouth might be persuaded to vote ukip considering his wages as a full time worker since he started working will have halved from 80 quid to 40 thanks to an increase to foreign workers.she simply said "he can just work more hours".

@Broll-The capacity to issue your own currency is everything,with that I don't see any reason for fiscal transfers.Although the eurozone will only work if it becomes a fully federalised United States of Europe with the matching federal institutions to facilitate those fiscal transfers.Wynne godley wrote as mush aswell back in '92

Broll The American said...

@intajake - If the system will only work when "fully federalised" then issuance of one's own currency is not "everything." California, NJ, NY, MA don't issue their own currencies. If Mississippi issued its own currency, who would accept it? Seems like the federalization and institutions capable of redistribution are the important pieces here and the main thing the Eurozone lacks. Greek can go back to issuing the drachma if it wishes but the currency will be worthless compared to other currencies.

Random said...

Broll, do you have a big pile of new drachma you can sell to make it go down? :)
It seems to me the 'Drachma will crash' crowd are overdoing it. It could do, but they never supply any evidence.
What about all the people who will pay debts and property taxes in drachma? Conversion from euro to drachma.
Greece used its own currency until entry to the euro before and can do it again.
What Greece needs to do is ban bank borrowing to short drachma. You want shortest to settle with old drachmas, not new.
And regardless, the US is not forcing permenant 25%+ unemployment on Mississippi.
I think this depends on a viewpoint. The world IS a closed system. Greece's losses from running balanced trade (which the austerity plans tried to do anyway) will be balanced by expansion of output.

Jake C said...

@brollThat's an interesting question,How would missippi fare with it's own currency.
Yes NY,NJ,,MA,and Cali don't and they have large healthy economies.

But Greece did function with its own currency,the EMU is relatively new,Greece joined in 2002.