Economics and similar, for the sleep-deprived
A subtle change has been made to the comments links, so they no longer pop up. Does this in any way help with the problem about comments not appearing on permalinked posts, readers?
Update: seemingly not
Update: Oh yeah!
Monday, May 14, 2012
You must go on; I can't go on; I'll go on
Comment posted on the Krugman blog ... On this post, claiming that Greek exit from the euro wouldn't be too bad.
This isn't really all that convincing.
1. On shipping, since any Greek exit would necessarily involve the imposition of capital controls, and since shipping companies necessarily have legal entities and bank accounts all over the world, what is the likelihood that these hard currency revenues will be brought back home to Greece?
2. On tourism "as long as the political situation isn't too chaotic" is a bit of a big ask, and remember that a large proportion of Greece's hotel and tourism infrastructure is owned by German companies who have financed it with Euro-denominated debt (and who are therefore bankrupt on day 1 of the exit).
3. Most importantly, you can't eat shipping or tourism, and you can't heat or air-condition your house with them. The mix of Argentine vs Greek *imports* also matters. Argentina was an exporter of fuel and food. Greece is a net importer of both, and would end up having to impose fuel rationing. As a way of avoiding "austerity", Euro exit seems to involve a hell of a lot of austerity.
What I don't understand at this point in the crisis is why "default and remain in the euro" isn't being given more consideration since it is actually the economic policy of SYRIZA. I have a horrible feeling we're sleepwalking into an outcome that will be awful for the Greek people, for no better reason than Keynes' "relentless urge to action rather than inaction". Actually, the current situation could be sustained as an equillibrium for a very long time, if policymakers wanted to. That damned stupid "kicking the can down the road" metaphor has a lot to answer for, particularly as no bugger ever explained precisely why you can't carry on kicking a can down a road indefinitely. Strikes me as the sort of thing you could do all day and why I was six I probably did.
Update: Also see this excellent comment on Larry Elliott's attempt to push the same idea. If Argentineans had an unconditional right to emigrate and work in the USA, the recovery would surely have taken a very different path.
this item posted by the management 5/14/2012 11:08:00 PM