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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 industri

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...
- jdonaldson 11y ago
  Heh, all those links are shown as visited for me. At least we're on the same page. I could argue that Greece had better infrastructure and geographical position to "begin with". Most Germans alive right now are going to remember when their country was divided into two parts under two wildly different political arrangements. You're arguing macro economics, but you're really having to shoehorn a timescale that works for your argument. In all of this, I'm not saying that Greece is "bad", and I don't think they should be demonized. You mention a number of "weak" countries that may be next to go, implying that the whole Eurozone will collapse. However, I don't see those countries as weak, just very different economically. I also don't think the rest of the Eurozone would collapse. In short, I think a good deal of the coastal mediterranean countries would make sense together, as part of their own union. As long as I'm playing armchair cartographer, I'd put Greece, Italy, Slovenia, Cyprus, and the coastal micronations together. I think Croatia and even Turkey would make sense there. The currency pressure could be relieved, and the governments could operate on more comfortable tax and inflation guidelines. I see France and Spain's problems as being more short lived. France should in all likelihood stick with the rest of the original Eurozone. Spain is complicated politically, with its three distinct cultures. I could see it going either way. I don't think it would be forced out though, it just might be a better match.

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...

jdonaldson 11y ago
Heh, all those links are shown as visited for me. At least we're on the same page. I could argue that Greece had better infrastructure and geographical position to "begin with". Most Germans alive right now are going to remember when their country was divided into two parts under two wildly different political arrangements. You're arguing macro economics, but you're really having to shoehorn a timescale that works for your argument. In all of this, I'm not saying that Greece is "bad", and I don't think they should be demonized. You mention a number of "weak" countries that may be next to go, implying that the whole Eurozone will collapse. However, I don't see those countries as weak, just very different economically. I also don't think the rest of the Eurozone would collapse. In short, I think a good deal of the coastal mediterranean countries would make sense together, as part of their own union. As long as I'm playing armchair cartographer, I'd put Greece, Italy, Slovenia, Cyprus, and the coastal micronations together. I think Croatia and even Turkey would make sense there. The currency pressure could be relieved, and the governments could operate on more comfortable tax and inflation guidelines. I see France and Spain's problems as being more short lived. France should in all likelihood stick with the rest of the original Eurozone. Spain is complicated politically, with its three distinct cultures. I could see it going either way. I don't think it would be forced out though, it just might be a better match.