Their Assumptions are Getting Very Ugly
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Ben Shahn Mecca 1937 Movie theater in Crossville, Tennessee We are now just over two months into that oft-dreaded year of 2012, and the economi
[See the full post at: Their Assumptions are Getting Very Ugly]“The thing is, anyone who’s been paying attention knows that a Greek exit from the EMU is only a matter of time, as in less than two years from now.”
Gosh, you are awfully optimistic Ash. With an election coming in April, with the long list of Troika extorted demands scheduled over the course of the coming months and years, I fail to see how further bailouts and austerity will be remotely possible to sustain. Maybe they’ll (TPTB) surprise me with their perfidy and manipulation, and keep this spectacle going longer than I could possibly imagine, lord knows they already have even in the face of macro-economic circumstances that have degenerated considerably. I can only imagine that the longer they keep this thing going, the faster and more severe will be the inevitable unraveling. Eventually that last straw will fall and the poor camel will have to be put out of his misery.
mrawlings,
Personally, I think things could start unraveling for Greece as soon as Thursday if the PSI doesn’t go through as planned (95% participation). The PSI would have a higher chance of success if Greek creditors, mainly hedge funds that are holding out, thought that Greek would last more than a year or two with the bailout and debt restructuring. But I would consider them to be people who have been “paying attention”, and therefore they are certain that Greece won’t make it two more years. Their assumptions about Greece have worsened, and that feeds back into what actually happens.
Good article and interesting graph. I would like to hear more about the indicators on the graph as to how Ashvin or others see the graph, I would also like to see a graph that includes Ireland, Spain, Greece, Portugal, Italy, France, England by comparison. Maybe the data is unavailable? I would also like to hear more about Sweden’s economy. We see the dip from the austerity years. What has changed and are they or Denmark, or Switzerland more insulated from the Euro woes?Iceland is also of interest. I feel I would have a more complete picture if instead of continuing at look at the train wreck in Greece and the Eurozone I could have a basis of comparison with those nations making other choices. The core question being this: are there nations making better choices as regards the end of growth who are likely to have a less painful transition to a post growth world?
jonabark,
I would highly recommend you go through the Netherlands Report referenced and linked to in the article. It actually touches on a lot of the comparative issues you have raised. Although, your comments also raise another important issue for me.
The reason I used the word “their” in the title is because the article is meant to be only about how these conventional, mainstream institutions view the global economic situation, in terms of growth, costs, benefits, etc. Regardless of what we think of that perspective (most here would agree its very narrow and short-sighted), its undeniable that the views/actions of those in positions of power/influence will affect short-term economic/financial outcomes. That’s why it’s important to keep tabs on how their perspective is changing with time.
However, if you frame the question as you did at the end of your comment, i.e. what are the best choices for various countries when adopting a big picture perspective of the predicaments relating to a system that requires never-ending growth, then we would have to consider many more factors such as those relating to private debts, demographics, social issues, energy, the environment, geopolitics, etc.
In that sense, we can’t really say Sweden and Denmark are light years ahead of everyone else simply because they avoided the Euro, or Iceland simply because it defaulted on external debts. Nevertheless, both of those things have materially benefited their populations over the last decade and will expose them to fewer financial (and perhaps sociopolitical) risks in the near future.
We in the EU are not as stupid as TAE seems to assume. Just because we do things our way do`s not make us wrong.
Perhaps the assumption is that we are as bullheaded as the US but not as bright.
I accept that we may be slower getting out of the slump but my guess is that we will emerge more united and stable than many other nations.@coffejohn
Who’s ‘we’? We as citizens dont have much say in the EU, while the people running the EU and its countries into the ground are exactly as stupid as imagined here. The way of doing things preferred by politicians and banking technocrats is not representative of any ‘we the european people’.
Instead, criticism of the financial policies of member-states usually assumes that these policies are against the peoples popular will and against their best interests, and that the people know this. Its reasonable to assume europeans are smart enough to recognise econometric deception, but that their leaders are less so, or may perperate such deception for political gain.This ‘slump’ is a deflationary depression and an inflection of the centennial megatrend of growth. This is then also a huge political crisis for europe and the US because of the complete political dysfunction in acknowledging the severity of the change in economic prospects and the refusal to examine its causes outside the usual statist narrative.
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