Just getting started.
Who — I’m being serious, seriously — didn’t see this coming?
If you have successfully arranged an economic union to be a favorable zone for your own exports, and you allow those countries importing your goods — which have favorable prices for a host of savory — economies of scale! declining average costs! — and less savory reasons — artificially depressed wages! temporary work permits that come with even lower wages and don’t come with healthcare! — and then you lend those sovereign states a bunch in order to import those goods, which boosts your current account balance at the expense of Portugal’s, Italy’s, Greece’s, etc, while you are simultaneously investing in bubbles in Iceland, Ireland, Spain, the US, and elsewhere (but I digress), and then you start demanding that those greedy piggy PIIGS start paying for their folly at whatever the cost (to the point of giving kids up for adoption because parents can’t afford them), at some point, your customers will stop importing your manufacturing sector’s output. I’m sure that Keynes said something about this, but a more contemporary source puts it well, too.
Here’s an extended quote from Ha-Joon Chang:
It is increasingly accepted that these policies are not working in the current environment. But less widespread is the recognition that there is also plenty of historical evidence showing that they have never worked. The same happened during the 1982 developing world debt crisis, the 1994 Mexican crisis, the 1997 Asian crisis, the Brazilian and the Russian crises in 1998, and the Argentinian crisis of 2002. All the crisis-stricken countries were forced (usually by the IMF) to cut spending and run budget surpluses, only to see their economies sink deeper into recession. Going back a bit further, the Great Depression also showed that cutting budget deficits too far and too quickly in the middle of a recession only makes things worse.
As for the need to cut social spending to revive growth, there is no historical evidence to support it either. From 1945 to 1990, per capita income in Europe grew considerably faster than in the US, despite its countries having welfare states on average a third larger than that of the US. Even after 1990, when European growth slowed down, countries like Sweden and Finland, with much larger welfare spending, grew faster than the US.” (6/4/12, The Guardian)
(Go read his whole piece here.)
(See this for reference)
It’s nothing new (I-don’t-think) for me to say this, but here goes:
(1) Those GD credit ratings agencies oughtn’t to have the authority that e-v-e-r-y-o-n-e seems to bestow them with. Have we learned nothing, think of the children, etc … and yet, there they are, continuing to act in concert to punish those that bore the least of the responsibility for getting each particular country (in this case, Spain) into trouble.
(2) Seems (to me) like another instance of the EU powers that be saying something like: ‘Oh jeez things are bad oh no they’re so bad what will we do let’s push some more on” in tandem with insecurity and the misplaced (or is it) urge of the country in question’s leaders to show, against all evidence, that they can really be self-reliant, all combining to, yet again, result in a policy that (see above) punishes those that bore the least of the responsibility for getting that particular country into trouble. If Spain is any bit like Greece in this respect, much of that bailout is going to paying down interest to the rentiers, and not to stuff like paying for a jobs program.
(3) And then the $64,000 (adjusted for inflation, I don’t know how many) question — why are the governments still on the hook for bad banking decisions by the financial powerhouses of the EU? Germany? France? UK? Bueller?
Thinking about this article —
What if Ozzie Guillen had said that he liked Castro because of Cuban health care? Or education? I mean … I realize that life is full of contradictions, and I’m not so foolish as to ignore civil rights records etc. of dictators, but, I mean, you know. I have *zero* opinions about Guillen as a player, but there are so many worse and/or more stupid things that he could have done and/or said. Since when has off-the-cuff intelligence been a standard for sports figures?
Anyone know of some good data sources for which German, UK, and French financial intermediaries and/or institutional investors own Greek, Irish, Italian, Portuguese, or Spanish bonds?
This is freaking amazing.
… thought about writing a sweet little piece comparing the writing of Kate Atkinson’s Jackson Brodie books and David Peace’s Red Riding books? If you’ve any interest in reading different sorts of ‘detective fiction’ set in different parts of ‘The UK’ (I’m sorry Scotland — the British Island?), they’re well worth reading, though so … different.
They’re interesting, and hard to read as they often focus on the terrible things that people (97% if the time men) do to women or the even more helpless, and yet, at the end of Peace’s books, I want to die or disappear or brood for the rest of my life, while at the end of Atkinson’s I do such cliched things as closing my eyes, pressing the book against my heart, and sighing happily. (The fact that Peace’s books have resolutely dark endings and that Atkinson’s have happy endings may play a role in this.) Also? Ian Rankin likes both of them.