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The Europeans are a crafty bunch. This arrangement is by design, not by accident or ignorance. The main problem among EU members is the lack of reforms. Devalu

The Europeans are a crafty bunch. This arrangement is by design, not by accident or ignorance. The main problem among EU members is the lack of reforms. Devaluation has been used as a panacea for all manner of economic ills, but devaluation achieves nothing except inflation and decimation of income, savings and assets. Without the ability to devalue, members are in a vice, and the only way out is much needed reform. In the case of Greece, things are so broken that reform is very hard, but at least their suffering serves as a warning to others who thing they can get away with it in the long term.

RobertoG 8y ago
What those 'reform' means? Are you suggesting that Greece should become Germany? What about Portugal or Spain? Should all the countries to be net exporters at the same time? Sounds mathematically impossible. More interestingly, should Greece to become Germany without making any investments? only by reducing their economy? All this is craziness. In any currency union is going to be imbalances, that's unavoidable. I don't think I have to cite examples here, only think in your own country, whatever it is, and you will see that it's true. The solution is a fiscal capacity that compensate those imbalances. If you are not ready to finance those lazy Greeks, then you can't be in the same currency union that they are. So simple like that. I agree that the arrangement is probably by design. It makes it even more evil, in my opinion.
- Kurtz79 8y ago
  Reforms are generally intended as addressing overly generous social security programs, corruption, tax evasion. Portugal and Spain (and Ireland) implemented some of these reforms and, lo and behold, a few years later are some of the fastest growing economies in the Eurozone. https://qz.com/1207039/portugals-economy-is-growing-at-its-fastest-rate-for-17-years/ https://qz.com/1207039/portugals-economy-is-growing-at-its-f... https://www.ft.com/content/be9d3fdb-d2fd-335c-929a-09b69752efff https://www.ft.com/content/be9d3fdb-d2fd-335c-929a-09b69752e... https://www.irishtimes.com/business/economy/irish-economy-growing-three-times-faster-than-any-other-european-country-1.3383307 https://www.irishtimes.com/business/economy/irish-economy-gr... Why Greece should be any different (as an Italian, why Italy as well?)
  - TheOtherHobbes 8y ago
    Ireland's GDP lost almost an entire decade of growth. It may be growing relatively quickly now, but that's only after some very serious shrinkage. And let's not forget that to orthodox economists, any social security program is overly generous.
    - sergiosgc 8y ago
      Ireland's GDP growth is a fiction. Any serious economist would only have to look at the 25% GDP growth rate, in 2015, to state that something fishy is going on. And indeed it is: https://www.irishtimes.com/business/economy/ireland-s-gdp-figures-why-26-economic-growth-is-a-problem-1.2722170 https://www.irishtimes.com/business/economy/ireland-s-gdp-fi... Ireland is a tax haven.
  - RobertoG 8y ago
    Portugal and Spain (I don't know about Ireland) grow when they forget the austerity rules. Here is some prediction for you: you tell me that Spain and Portugal have reformed and that's the reason their economy is growing. At some point, this will change, do you want to bet what will be the proposed solution? More reforms. The reforms mantra is only a way of dismantling the welfare state. That is: of a way of avoiding redistribution to the people that need it more. If you think that can be done without a political backslash you are in for a surprise.
    - Kurtz79 8y ago
      How do you concile this view with the fact that other European countries (Germany, Austria, Netherlands, nordic countries) have very healthy economies and an expansive welfare state as well? Monetary devaluation and increasing national debt had long been used by Italy and other countries as a fig leaf to avoid addressing historical problems that these reforms try to address. The EU has removed this fig leaf. Errors have been made and the crisis should have been handled better, but it does not exempt these countries from having to fix their own problems.
- StavrosK 8y ago
  > those lazy Greeks I know you're satirizing the stereotype, I just want to mention this: https://data.oecd.org/emp/hours-worked.htm https://data.oecd.org/emp/hours-worked.htm
  - extra88 8y ago
    I assume you shared that because Germany has the lowest Total Hours/worker of the countries in the dataset (Greece is not included). The U.S. workers work 31% more hours, equivalent to 12 additional weeks (assuming 35 hours/week)! And yet Germany is very productive so I guess they work smarter, not longer.
    - StavrosK 8y ago
      Greece is the fourth highest in the ranking. It's a bit odd that the "lazy" stereotype is applied to countries that actually work the most (Mexico, Greece, Poland, etc).
    - RobertoG 8y ago
      "And yet Germany is very productive so I guess they work smarter, not longer." I don't understand how in a technology forum this idea is so popular. Germany is more productive because it has more technology. That technology is the result of investment, not of austerity. So, now, if you want to change Greece, you know what to do.
      - extra88 8y ago
        > German is more productive because it has more technology. Right, they work smarter by using technology. I did not address the policies that created that situation, let alone attempt to contrast Germany and Greece.
    - vageli 8y ago
      Greece is the fourth bar from the right. It's definitely present in that link.
- brohee 8y ago
  Look at the history of Greece land register (https://www.reuters.com/article/eurozone-greece-cadastre/insight-typically-greek-delayed-land-register-is-never-ending-epic-idUSL8N12E1Z520151018 https://www.reuters.com/article/eurozone-greece-cadastre/ins...). Or their huge issues with tax fraud and benefits cheating (e.g. The Isle of the Blind https://nationalpost.com/news/world/greece-zakyntos-island-of-the-blind-scam-822595 https://nationalpost.com/news/world/greece-zakyntos-island-o...) It's not about becoming Germany, it's about being less dysfunctional. The root of all that is that Greece should never have been accepted in the EU in the first place (when e.g. Serbia will get in, it will be in much better shape than Greece ever was), but was anyway to kind of ensure they would not turn to the Warsaw pact...
jampekka 8y ago
Funny how these "much needed reforms" pushed through antidemocratic means tend to screw over the majority for the benefit of the few at the top.
kartan 8y ago
> In the case of Greece, things are so broken that reform is very hard, but at least their suffering serves as a warning to others who thing they can get away with it in the long term. Their suffering and other countries suffering are empowering extremism around Europe. And the lesson people learn is to not trust the government and to not trust economists. And they learn that for good reasons. To punish people to make them learn does not work. Dog trainers have known for long that punishing dogs to change their behaviour only create abnormal behaviour. It is even worse. As citizens have been punished while bankers, the main culprits, have been saved creating a dangerous moral hazard. I agree with the post that "made a series of calamitous misjudgments in Greece, became euphoric cheerleaders for the euro project, ignored warning signs of impending crisis, and collectively failed to grasp an elemental concept of currency theory".
throwawaymanbot 8y ago
Had there not been reckless finance coowboys running about 2008 would never have happened. Somehow Europe Survived. No thanks to American Cowboy capitalism (Who triggered the worst recession in earths morderin history) and its main group of outlaws, Goldman sachs who basically lied and said Greek Finances were Fiiiiiiine! (Probably knowing that a crash was coming) "The main problem" with Europe eh?
petre 8y ago
Others don't need to get away with anything. They can simply choose not to join the EMU like the UK, Czech Republic, Poland and Hungary did, or to delay joining until the currently broken (by design) monetary union is fixed. It's easy to force reforms on other countries when somebody else is in the driver's seat.

RobertoG 8y ago

What those 'reform' means? Are you suggesting that Greece should become Germany? What about Portugal or Spain? Should all the countries to be net exporters at the same time? Sounds mathematically impossible. More interestingly, should Greece to become Germany without making any investments? only by reducing their economy? All this is craziness. In any currency union is going to be imbalances, that's unavoidable. I don't think I have to cite examples here, only think in your own country, whatever it is, and you will see that it's true. The solution is a fiscal capacity that compensate those imbalances. If you are not ready to finance those lazy Greeks, then you can't be in the same currency union that they are. So simple like that. I agree that the arrangement is probably by design. It makes it even more evil, in my opinion.

Kurtz79 8y ago
Reforms are generally intended as addressing overly generous social security programs, corruption, tax evasion. Portugal and Spain (and Ireland) implemented some of these reforms and, lo and behold, a few years later are some of the fastest growing economies in the Eurozone. https://qz.com/1207039/portugals-economy-is-growing-at-its-fastest-rate-for-17-years/ https://qz.com/1207039/portugals-economy-is-growing-at-its-f... https://www.ft.com/content/be9d3fdb-d2fd-335c-929a-09b69752efff https://www.ft.com/content/be9d3fdb-d2fd-335c-929a-09b69752e... https://www.irishtimes.com/business/economy/irish-economy-growing-three-times-faster-than-any-other-european-country-1.3383307 https://www.irishtimes.com/business/economy/irish-economy-gr... Why Greece should be any different (as an Italian, why Italy as well?)
- TheOtherHobbes 8y ago
  Ireland's GDP lost almost an entire decade of growth. It may be growing relatively quickly now, but that's only after some very serious shrinkage. And let's not forget that to orthodox economists, any social security program is overly generous.
  - sergiosgc 8y ago
    Ireland's GDP growth is a fiction. Any serious economist would only have to look at the 25% GDP growth rate, in 2015, to state that something fishy is going on. And indeed it is: https://www.irishtimes.com/business/economy/ireland-s-gdp-figures-why-26-economic-growth-is-a-problem-1.2722170 https://www.irishtimes.com/business/economy/ireland-s-gdp-fi... Ireland is a tax haven.
- RobertoG 8y ago
  Portugal and Spain (I don't know about Ireland) grow when they forget the austerity rules. Here is some prediction for you: you tell me that Spain and Portugal have reformed and that's the reason their economy is growing. At some point, this will change, do you want to bet what will be the proposed solution? More reforms. The reforms mantra is only a way of dismantling the welfare state. That is: of a way of avoiding redistribution to the people that need it more. If you think that can be done without a political backslash you are in for a surprise.
  - Kurtz79 8y ago
    How do you concile this view with the fact that other European countries (Germany, Austria, Netherlands, nordic countries) have very healthy economies and an expansive welfare state as well? Monetary devaluation and increasing national debt had long been used by Italy and other countries as a fig leaf to avoid addressing historical problems that these reforms try to address. The EU has removed this fig leaf. Errors have been made and the crisis should have been handled better, but it does not exempt these countries from having to fix their own problems.
StavrosK 8y ago
> those lazy Greeks I know you're satirizing the stereotype, I just want to mention this: https://data.oecd.org/emp/hours-worked.htm https://data.oecd.org/emp/hours-worked.htm
- extra88 8y ago
  I assume you shared that because Germany has the lowest Total Hours/worker of the countries in the dataset (Greece is not included). The U.S. workers work 31% more hours, equivalent to 12 additional weeks (assuming 35 hours/week)! And yet Germany is very productive so I guess they work smarter, not longer.
  - StavrosK 8y ago
    Greece is the fourth highest in the ranking. It's a bit odd that the "lazy" stereotype is applied to countries that actually work the most (Mexico, Greece, Poland, etc).
  - RobertoG 8y ago
    "And yet Germany is very productive so I guess they work smarter, not longer." I don't understand how in a technology forum this idea is so popular. Germany is more productive because it has more technology. That technology is the result of investment, not of austerity. So, now, if you want to change Greece, you know what to do.
    - extra88 8y ago
      > German is more productive because it has more technology. Right, they work smarter by using technology. I did not address the policies that created that situation, let alone attempt to contrast Germany and Greece.
  - vageli 8y ago
    Greece is the fourth bar from the right. It's definitely present in that link.
brohee 8y ago
Look at the history of Greece land register (https://www.reuters.com/article/eurozone-greece-cadastre/insight-typically-greek-delayed-land-register-is-never-ending-epic-idUSL8N12E1Z520151018 https://www.reuters.com/article/eurozone-greece-cadastre/ins...). Or their huge issues with tax fraud and benefits cheating (e.g. The Isle of the Blind https://nationalpost.com/news/world/greece-zakyntos-island-of-the-blind-scam-822595 https://nationalpost.com/news/world/greece-zakyntos-island-o...) It's not about becoming Germany, it's about being less dysfunctional. The root of all that is that Greece should never have been accepted in the EU in the first place (when e.g. Serbia will get in, it will be in much better shape than Greece ever was), but was anyway to kind of ensure they would not turn to the Warsaw pact...

jampekka 8y ago

Funny how these "much needed reforms" pushed through antidemocratic means tend to screw over the majority for the benefit of the few at the top.

kartan 8y ago

> In the case of Greece, things are so broken that reform is very hard, but at least their suffering serves as a warning to others who thing they can get away with it in the long term. Their suffering and other countries suffering are empowering extremism around Europe. And the lesson people learn is to not trust the government and to not trust economists. And they learn that for good reasons. To punish people to make them learn does not work. Dog trainers have known for long that punishing dogs to change their behaviour only create abnormal behaviour. It is even worse. As citizens have been punished while bankers, the main culprits, have been saved creating a dangerous moral hazard. I agree with the post that "made a series of calamitous misjudgments in Greece, became euphoric cheerleaders for the euro project, ignored warning signs of impending crisis, and collectively failed to grasp an elemental concept of currency theory".

throwawaymanbot 8y ago

Had there not been reckless finance coowboys running about 2008 would never have happened. Somehow Europe Survived. No thanks to American Cowboy capitalism (Who triggered the worst recession in earths morderin history) and its main group of outlaws, Goldman sachs who basically lied and said Greek Finances were Fiiiiiiine! (Probably knowing that a crash was coming) "The main problem" with Europe eh?

petre 8y ago

Others don't need to get away with anything. They can simply choose not to join the EMU like the UK, Czech Republic, Poland and Hungary did, or to delay joining until the currently broken (by design) monetary union is fixed. It's easy to force reforms on other countries when somebody else is in the driver's seat.