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> No developed country has ever defaulted to the Bretton Woods institutions. How is this different to the https://en.wikipedia.org/wiki/Nixon_Shock https://en.

> No developed country has ever defaulted to the Bretton Woods institutions. How is this different to the https://en.wikipedia.org/wiki/Nixon_Shock https://en.wikipedia.org/wiki/Nixon_Shock?

logicallee 12y ago
it's similar; getting off the gold standard allows you to print money, and insofar as they don't have the right to print Euros and therefore it is like Gold (can't be created by fiat, by them at least, they have to get it from somewhere), introducing their own floating money is very similar. A better solution would be to integrate the Greek economy into a paneuropean federal country, that simply eats the losses of Greece. I am certain some states in America are net beneficiaries of federal spending (more government dollars flow into it than are retrieved through taxes.) This is likely a lot better solution than local currencies: I would back a (metaphorical) 'civil war' (being on the side of the North of course) in Europe in which countries are really kind of shoehorned back into a federal European country under centralized rule, a central constitution, and with limitations on 'state rights'. (Note that all the while, as in the analogy, this central federal paneuropean country would remain democratic.) I've never heard anyone else express this opinion though. EDIT: I don't mean civil war literally of course, and have edited to clarify. I was just drawing an analogy with the South seceding from the union. Obviously there is 0 chance of any actual war, nor would anyone want one for a minute. The difference between past wars is that there actually are democratic European institituions - i.e. the EU - just as America remained democratic through and after its civil war.
- youngtaff 12y ago
  So much for democracy and the will of people to choose their own course. What you're suggesting is a United States of Europe, which many of use in Europe don't want and certainly not by force.
- lifeisstillgood 12y ago
  The goal of sharing wealth to encourage social betterment is a laudable and positive goal. The idea of closer political union to avoid another war is also a good one. However they are not necessarily going to go hand in hand - but I cannot think of a case where they did not. Mostly cos political conquest in empires lead to wealth "sharing" - the common idea was transaction costs dropped under one empire increasing the wealth beyond taxation costs. This is something Eurozone has done well without actual war - but it seems to have reached the point where we are either all in for the Euro (total fair wealth sharing) or just give up. However selling "total state level socialism" (from States that have to states that do not) is a hard sell - even if right here and now, that's how Greece looks the best solution. However every country thinks it needs to keep it's own wealth and not give up it's sovereignty - but this is like tribes who used to live in the countries themselves - they have up Independance for security and prosperity. It's a hard sell.
- anilg3 12y ago
  Different languages and cultures across Europe will prevent formation of a Federal Paneuropian country. US benefitted from English being primarily the common language across different states. Dissolution of EU and abandonment of common currency is the only long-term solution for situations like Greece.
  - lifeisstillgood 12y ago
    No, we can write off the debts in intelligent ways and manage the cost over the whole EU. It's just a costly political decision.
  - logicallee 12y ago
    Long-term, would people really mind if their politicians speak English when participating at the 'federal' level? I can't imagine there would be such a large objection, and as a rule in my experience with Germans (the largest EU economy by a large margin, followed by the UK), they are proud English speakers, and English is a requirement for serious business or political participation. Germany and the UK would almost certainly be all right with federal English, and together account for 39% of the EU economy. The French (third-largest) have different feelings but I doubt that they would object to the simple fact of their leaders speaking English at the federal level. Just Germany, France, and UK, together account for 55% of the EU economy. Smaller countries would have more trouble adapting, but, really, how many leaders need to be involved at the 'federal' level? Local government can, of course, remain in its own language. I don't see why this isn't the correct solution long-term.
- philwelch 12y ago
  I think Greece deserves to be more than just the Mississippi of Europe.
  - adventured 12y ago
    Why do you think that? Greece would be fortunate to have Mississippi's economy about right now, they have a 26% unemployment rate; Mississippi is 7.x%. Greece has 100 times as much government debt as Mississippi. Greece has a ~$200b economy, $20k per capita GDP, and 11 million people. Mississippi has a $110b economy, with just 3 million people, and a per capita GDP of about $37k or soon to be twice that of Greece. If Greece does everything right for 30 years, they might catch back up to Mississippi. Their actions so far are rapidly leading them toward being a second tier European economy, in the category with Slovakia, Czech, Slovenia, Russia, Poland etc. instead of being with eg France, Italy and Germany. In fact they're already there, the question now is how much further are they going to fall - the likely answer is they'll lose at least another 1/3 of their real economy.
    - icebraining 12y ago
      There's more to life, and to the proposed federal country, than the economy.
      - adventured 12y ago
        That depends on how badly off you are. Greece has an amazing history. That history won't feed or employ people, or keep Greece economically competitive such that their children have a good future. When you talk to people from Bulgaria, Ukraine, Moldova, Macedonia, etc. they tend to be very focused on economy and money, and there's a good reason for that - they're trying to survive.
  - smoyer 12y ago
    Mississippi is poor but solvent ... that's likely to be where Greece ends up.
- rmc 12y ago
  There have been numerous wars in Europe over control of the continent. No thanks. No more wars.
- m12k 12y ago
  IMO one of the main reasons why US democracy is so dysfunctional is because they've centralized so much power in a single location, Congress. Because the people making the laws are so far removed from the people that the laws affect, transparency and accountability go out the window, the door is wide open to corruption, and even when they do try to fix problems, the one-size-fits-all approach makes for crappy solutions that don't take into account the nuances of different regions. I sure as hell don't want this for Europe. To give a couple other examples - why is 'separation of concern' better than a 'god object' in programming? Why is democracy better than monarchy? Why is an ecosystem of smaller companies better than a monopoly? Because centralization is unmanageable (too many dependencies in one place), brittle (single point of failure), inefficient (lack of locality means solutions are sub-optimal) and (when humans are involved) creates perverse incentives.
- xmjee 12y ago
  >A better solution would be to integrate the Greek economy into a paneuropean federal country, that simply eats the losses of Greece. I am certain some states in America are net beneficiaries of federal spending (more government dollars flow into it than are retrieved through taxes.) Better -- for whom? You will already find that debtor states (at the national level) find it much harder to generate sympathy within the nation if they consistently, repeatedly and unchangeably show that they cannot manage their finances. So please, explain it to me like I'm five: How do you think those with money would be willingly convinced to part with it, if they don't even give it up for their own kin?
dimitar 12y ago
The "Nixon shock" was suspending dollar convertibility to gold that lead to the dissolution of the Bretton Woods system of fixed exchange rates. The Bretton Woods institutions that were put in place to support the system - the IMF and the World Bank, survived, albeit with new interpretations of their missions.

> No developed country has ever defaulted to the Bretton Woods institutions. How is this different to the https://en.wikipedia.org/wiki/Nixon_Shock https://en.wikipedia.org/wiki/Nixon_Shock?

logicallee 12y ago

it's similar; getting off the gold standard allows you to print money, and insofar as they don't have the right to print Euros and therefore it is like Gold (can't be created by fiat, by them at least, they have to get it from somewhere), introducing their own floating money is very similar. A better solution would be to integrate the Greek economy into a paneuropean federal country, that simply eats the losses of Greece. I am certain some states in America are net beneficiaries of federal spending (more government dollars flow into it than are retrieved through taxes.) This is likely a lot better solution than local currencies: I would back a (metaphorical) 'civil war' (being on the side of the North of course) in Europe in which countries are really kind of shoehorned back into a federal European country under centralized rule, a central constitution, and with limitations on 'state rights'. (Note that all the while, as in the analogy, this central federal paneuropean country would remain democratic.) I've never heard anyone else express this opinion though. EDIT: I don't mean civil war literally of course, and have edited to clarify. I was just drawing an analogy with the South seceding from the union. Obviously there is 0 chance of any actual war, nor would anyone want one for a minute. The difference between past wars is that there actually are democratic European institituions - i.e. the EU - just as America remained democratic through and after its civil war.

youngtaff 12y ago
So much for democracy and the will of people to choose their own course. What you're suggesting is a United States of Europe, which many of use in Europe don't want and certainly not by force.
lifeisstillgood 12y ago
The goal of sharing wealth to encourage social betterment is a laudable and positive goal. The idea of closer political union to avoid another war is also a good one. However they are not necessarily going to go hand in hand - but I cannot think of a case where they did not. Mostly cos political conquest in empires lead to wealth "sharing" - the common idea was transaction costs dropped under one empire increasing the wealth beyond taxation costs. This is something Eurozone has done well without actual war - but it seems to have reached the point where we are either all in for the Euro (total fair wealth sharing) or just give up. However selling "total state level socialism" (from States that have to states that do not) is a hard sell - even if right here and now, that's how Greece looks the best solution. However every country thinks it needs to keep it's own wealth and not give up it's sovereignty - but this is like tribes who used to live in the countries themselves - they have up Independance for security and prosperity. It's a hard sell.
anilg3 12y ago
Different languages and cultures across Europe will prevent formation of a Federal Paneuropian country. US benefitted from English being primarily the common language across different states. Dissolution of EU and abandonment of common currency is the only long-term solution for situations like Greece.
- lifeisstillgood 12y ago
  No, we can write off the debts in intelligent ways and manage the cost over the whole EU. It's just a costly political decision.
- logicallee 12y ago
  Long-term, would people really mind if their politicians speak English when participating at the 'federal' level? I can't imagine there would be such a large objection, and as a rule in my experience with Germans (the largest EU economy by a large margin, followed by the UK), they are proud English speakers, and English is a requirement for serious business or political participation. Germany and the UK would almost certainly be all right with federal English, and together account for 39% of the EU economy. The French (third-largest) have different feelings but I doubt that they would object to the simple fact of their leaders speaking English at the federal level. Just Germany, France, and UK, together account for 55% of the EU economy. Smaller countries would have more trouble adapting, but, really, how many leaders need to be involved at the 'federal' level? Local government can, of course, remain in its own language. I don't see why this isn't the correct solution long-term.
philwelch 12y ago
I think Greece deserves to be more than just the Mississippi of Europe.
- adventured 12y ago
  Why do you think that? Greece would be fortunate to have Mississippi's economy about right now, they have a 26% unemployment rate; Mississippi is 7.x%. Greece has 100 times as much government debt as Mississippi. Greece has a ~$200b economy, $20k per capita GDP, and 11 million people. Mississippi has a $110b economy, with just 3 million people, and a per capita GDP of about $37k or soon to be twice that of Greece. If Greece does everything right for 30 years, they might catch back up to Mississippi. Their actions so far are rapidly leading them toward being a second tier European economy, in the category with Slovakia, Czech, Slovenia, Russia, Poland etc. instead of being with eg France, Italy and Germany. In fact they're already there, the question now is how much further are they going to fall - the likely answer is they'll lose at least another 1/3 of their real economy.
  - icebraining 12y ago
    There's more to life, and to the proposed federal country, than the economy.
    - adventured 12y ago
      That depends on how badly off you are. Greece has an amazing history. That history won't feed or employ people, or keep Greece economically competitive such that their children have a good future. When you talk to people from Bulgaria, Ukraine, Moldova, Macedonia, etc. they tend to be very focused on economy and money, and there's a good reason for that - they're trying to survive.
- smoyer 12y ago
  Mississippi is poor but solvent ... that's likely to be where Greece ends up.
rmc 12y ago
There have been numerous wars in Europe over control of the continent. No thanks. No more wars.
m12k 12y ago
IMO one of the main reasons why US democracy is so dysfunctional is because they've centralized so much power in a single location, Congress. Because the people making the laws are so far removed from the people that the laws affect, transparency and accountability go out the window, the door is wide open to corruption, and even when they do try to fix problems, the one-size-fits-all approach makes for crappy solutions that don't take into account the nuances of different regions. I sure as hell don't want this for Europe. To give a couple other examples - why is 'separation of concern' better than a 'god object' in programming? Why is democracy better than monarchy? Why is an ecosystem of smaller companies better than a monopoly? Because centralization is unmanageable (too many dependencies in one place), brittle (single point of failure), inefficient (lack of locality means solutions are sub-optimal) and (when humans are involved) creates perverse incentives.
xmjee 12y ago
>A better solution would be to integrate the Greek economy into a paneuropean federal country, that simply eats the losses of Greece. I am certain some states in America are net beneficiaries of federal spending (more government dollars flow into it than are retrieved through taxes.) Better -- for whom? You will already find that debtor states (at the national level) find it much harder to generate sympathy within the nation if they consistently, repeatedly and unchangeably show that they cannot manage their finances. So please, explain it to me like I'm five: How do you think those with money would be willingly convinced to part with it, if they don't even give it up for their own kin?

dimitar 12y ago

The "Nixon shock" was suspending dollar convertibility to gold that lead to the dissolution of the Bretton Woods system of fixed exchange rates. The Bretton Woods institutions that were put in place to support the system - the IMF and the World Bank, survived, albeit with new interpretations of their missions.