4 ms·

Germany enjoys the lowest unemployment rate in history, while Greece has a humanitarian crisis and Spain has also extremely high unemployment. That's not a coin

by atmosx 11y ago

Germany enjoys the lowest unemployment rate in history, while Greece has a humanitarian crisis and Spain has also extremely high unemployment. That's not a coincidence. > Germany's improvements have more to do with Germany's changes to industrial reform than to do with Southern Europe [...] Then let Greece default (as a Greek I believe that's best for my country in the long term) and see how that plays out. BTW the lack of understanding of 101 macro-economics by Scheuble is disheartening[1]. Every time he speaks, he is comparing economy-wise countries to businesses and/or households, which coming from a FinMin is plain ridiculous[2]. [1] http://www.brookings.edu/blogs/ben-bernanke/posts/2015/04/03-germany-trade-surplus-problem http://www.brookings.edu/blogs/ben-bernanke/posts/2015/04/03... [2] COMPETITIVENESS - A DANGEROUS OBSESSION P. Krugman, 1994, Foreign Affairs Magazine http://www.pkarchive.org/global/pop.html http://www.pkarchive.org/global/pop.html

mkesper 11y ago
Let Greece default ... and see how that plays out. I'm horrified of the carelessness with which that option seems to be considered by the Greek government.
- Someone 11y ago
  I'm not saying it is the best option, but IIRC, the current alternative is to have the country on life support until at least 2050. The Greek government doesn't need to be carelse's to consider a default the better option.
- mcv 11y ago
  It's not a great option, but considering the circumstances, the Greek government doesn't really have a lot of options. Ideally, the debt would be reduced in a controlled manner to a point where Greece can afford to pay off the remainder, but Germany seems to be set on steering towards a Greek default.
- michael2l 11y ago
  A default is a horrible outcome, but "that which can't be paid back won't". It's been pretty clear for a while now that the debt load for the Greek economy is too great and some sort of bankruptcy(default) is required. The ECB and others have conspired to hide this with the collusion of previous Greek leaders, by heaping on more onerous debt and calling it a bailout. It will have to end at some point. What's occurred up until now is fraud with the intent that someone further down the road will have to deal with ensuing mess. But it's likely the game of kick the can will continue.
nhaehnle 11y ago
Germany enjoys the lowest unemployment rate in history This is simply false, and I wonder where you got this idea from. During the 1960s, the (West) German unemployment rate hovered around 1%, i.e. much lower than today. There's no doubt that Germany is doing well compared to other countries today, but be careful about such statements about history. Germany could be doing even better.
- atmosx 11y ago
  Well, you have a point there. It's Germany's lowest unemployment rate because since 1989. Also take a good look at the slope[1]. [1] http://www.tradingeconomics.com/germany/unemployment-rate http://www.tradingeconomics.com/germany/unemployment-rate
jdonaldson 11y ago
If you're going to say it's not a coincidence, you should have evidence. Spain's unemployment is largely due to overinvestment in construction-related industries. It was a stupid, greedy move (that the USA made as well), but it's one they can recover from. That's completely different from the problems facing Greece. Greece just cannot sustain itself based on its current GDP, tax, and retirement arrangement. Unless that changes, they're a lost cause. I'm sure there were some mistakes made by the euro policy makers in drafting austerity measure agreements for Greece, but I wouldn't let that distract from the main issue, which is that Greece just does not have a sustainable economy without continual devaluation of the currency they use.
- atmosx 11y ago
  > If you're going to say it's not a coincidence, you should have evidence. The EURO is a common currency. If one country has better infrastructures, geographical position to begin with, etc. It's impossible for countries lagging behind to compete. The 'developed' country will always produce XYZ products at a lower price because it has better technology. So the weaker country will accumulate an export deficit while the stronger country will accumulate a surplus. Now, the 'strong country' will start employing more and more man-power, driving down unemployment because it becomes more and more competitive at product/service 1, product/service 2 and so on and so forth. At the same time in the weak country will be harder and harder to produce (primary sector or secondary sector) and sell because products flowing in from 'strong country' are in the same currency and being at the same union, there's no import tax. Now a 2nd year economics student, who has studied macro-economics, would tell you that at this point, the surplus sitting in 'strong country' should become investment in various forms in 'weak country' in order to allow 'weak country' to somehow cope with the difference. Indirectly 'strong country' injects money in it's primary market which is (if we're talking mainly about an exporting economy) the 'weak country' in form of direct or indirect investment. What Germany does is accumulate money. Greece is the weakest link, but if Greece goes out of the picture, you'll see how Italy, Spain, Portugal and ultimately even France will look a lot like Greece in the long run because they can't compete with the Germans having the same currency. The above scheme underlies the biggest EUR caveat: You can't have a common currency without having political integration. It's simply impossible because in the long you will always have situations like this. While Greece is a small country so no one cares, when Italy's of France's turn comes, the repercussions and turmoil will be far greater and no matter what the media outlets say, the general feeling I'm getting from all over Europe is that the EUR didn't integrate sh*t. The common currency achieved the exact opposite: It highlighted the worst part of every nation. I urge you to read Bernanke's article: http://www.brookings.edu/blogs/ben-bernanke/posts/2015/04/03-germany-trade-surplus-problem http://www.brookings.edu/blogs/ben-bernanke/posts/2015/04/03... Also: http://www.theguardian.com/business/2014/jul/24/germany-surplus-part-blame-eurozone-stagnation http://www.theguardian.com/business/2014/jul/24/germany-surp... There are numerous other articles mainly by academics and of course Varoufakis from 2013: http://yanisvaroufakis.eu/2013/11/01/the-us-treasury-is-right-about-germanys-eurozone-policies-here-is-why/ http://yanisvaroufakis.eu/2013/11/01/the-us-treasury-is-righ...

by atmosx 11y ago

mkesper 11y ago

Let Greece default ... and see how that plays out. I'm horrified of the carelessness with which that option seems to be considered by the Greek government.

Someone 11y ago
I'm not saying it is the best option, but IIRC, the current alternative is to have the country on life support until at least 2050. The Greek government doesn't need to be carelse's to consider a default the better option.
mcv 11y ago
It's not a great option, but considering the circumstances, the Greek government doesn't really have a lot of options. Ideally, the debt would be reduced in a controlled manner to a point where Greece can afford to pay off the remainder, but Germany seems to be set on steering towards a Greek default.
michael2l 11y ago
A default is a horrible outcome, but "that which can't be paid back won't". It's been pretty clear for a while now that the debt load for the Greek economy is too great and some sort of bankruptcy(default) is required. The ECB and others have conspired to hide this with the collusion of previous Greek leaders, by heaping on more onerous debt and calling it a bailout. It will have to end at some point. What's occurred up until now is fraud with the intent that someone further down the road will have to deal with ensuing mess. But it's likely the game of kick the can will continue.

nhaehnle 11y ago

Germany enjoys the lowest unemployment rate in history This is simply false, and I wonder where you got this idea from. During the 1960s, the (West) German unemployment rate hovered around 1%, i.e. much lower than today. There's no doubt that Germany is doing well compared to other countries today, but be careful about such statements about history. Germany could be doing even better.

atmosx 11y ago
Well, you have a point there. It's Germany's lowest unemployment rate because since 1989. Also take a good look at the slope[1]. [1] http://www.tradingeconomics.com/germany/unemployment-rate http://www.tradingeconomics.com/germany/unemployment-rate

jdonaldson 11y ago

If you're going to say it's not a coincidence, you should have evidence. Spain's unemployment is largely due to overinvestment in construction-related industries. It was a stupid, greedy move (that the USA made as well), but it's one they can recover from. That's completely different from the problems facing Greece. Greece just cannot sustain itself based on its current GDP, tax, and retirement arrangement. Unless that changes, they're a lost cause. I'm sure there were some mistakes made by the euro policy makers in drafting austerity measure agreements for Greece, but I wouldn't let that distract from the main issue, which is that Greece just does not have a sustainable economy without continual devaluation of the currency they use.

atmosx 11y ago
> If you're going to say it's not a coincidence, you should have evidence. The EURO is a common currency. If one country has better infrastructures, geographical position to begin with, etc. It's impossible for countries lagging behind to compete. The 'developed' country will always produce XYZ products at a lower price because it has better technology. So the weaker country will accumulate an export deficit while the stronger country will accumulate a surplus. Now, the 'strong country' will start employing more and more man-power, driving down unemployment because it becomes more and more competitive at product/service 1, product/service 2 and so on and so forth. At the same time in the weak country will be harder and harder to produce (primary sector or secondary sector) and sell because products flowing in from 'strong country' are in the same currency and being at the same union, there's no import tax. Now a 2nd year economics student, who has studied macro-economics, would tell you that at this point, the surplus sitting in 'strong country' should become investment in various forms in 'weak country' in order to allow 'weak country' to somehow cope with the difference. Indirectly 'strong country' injects money in it's primary market which is (if we're talking mainly about an exporting economy) the 'weak country' in form of direct or indirect investment. What Germany does is accumulate money. Greece is the weakest link, but if Greece goes out of the picture, you'll see how Italy, Spain, Portugal and ultimately even France will look a lot like Greece in the long run because they can't compete with the Germans having the same currency. The above scheme underlies the biggest EUR caveat: You can't have a common currency without having political integration. It's simply impossible because in the long you will always have situations like this. While Greece is a small country so no one cares, when Italy's of France's turn comes, the repercussions and turmoil will be far greater and no matter what the media outlets say, the general feeling I'm getting from all over Europe is that the EUR didn't integrate sh*t. The common currency achieved the exact opposite: It highlighted the worst part of every nation. I urge you to read Bernanke's article: http://www.brookings.edu/blogs/ben-bernanke/posts/2015/04/03-germany-trade-surplus-problem http://www.brookings.edu/blogs/ben-bernanke/posts/2015/04/03... Also: http://www.theguardian.com/business/2014/jul/24/germany-surplus-part-blame-eurozone-stagnation http://www.theguardian.com/business/2014/jul/24/germany-surp... There are numerous other articles mainly by academics and of course Varoufakis from 2013: http://yanisvaroufakis.eu/2013/11/01/the-us-treasury-is-right-about-germanys-eurozone-policies-here-is-why/ http://yanisvaroufakis.eu/2013/11/01/the-us-treasury-is-righ...