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"If you ask me, it has been an act of monstrous folly on the part of the creditor governments and institutions to push it to this point." In Krugman's Nobel Pe
by thrill 11y ago
"If you ask me, it has been an act of monstrous folly on the part of the creditor governments and institutions to push it to this point."
In Krugman's Nobel Peace Prize world, it's folly that creditors expect to be paid back, or to even require that debtors show a workable plan for such payment.
- Sven7 11y agoYup, in Krugman's world there is no upper limit on credit.
- andybak 11y agoWhat a silly over-simplification of his actual views.
- jjtheblunt 11y agoNot really. More of a damning distillate?
- sgift 11y agoIn that case I'll provide a "distillate" of the typical "but, but, money must be paid back" view: Too dumb to understand the concept of "risk in lending".
- autokad 11y agoI generally agree with statements like that about krugman, but in this case I believe he is right. demanding a country raise taxes during a recession, with no less than 25% unemployment, is ... well i don't know the exact word, but its bad. its clear that nations in joining in this union gain some benefits, but they loose the control of their own money. and that has been show to be more than just paper, they loose their sovereignty.
- Confusion 11y agoIf you believe the proposed solution was 'increase taxes', you are uninformed and should have refrained from commenting on this topic.
- rockinghigh 11y agoThe offered deals included reducing pensions and increasing tax revenues.
- Confusion 11y agoYes, increasing tax revenues. That does not mean increasing taxes. A major problem in Greece is that taxes aren't being paid. Raising taxes does not solve that problem.
- pvaldes 11y agoIncreasing VAT means increasing taxes. The funny fact is that the experiment backfired totally in other countries and both Tsipras and the Troika know it. When Spain increased VAT forced by the Troika, revenues dropped instead to increase. People just started refusing to buy at the new prices and the government lost millions in its expected tax revenue, increasing the crisis instead to solving it. Maybe by design. The troika for instance force the government to raise VAT from 4% to 21% in barbershops. As result of this, more than 13.000 small beauty salons, otherwise doing reasonably well, closed in only two years. This means adding about 34.000 people to unemployment statistics (and also that VAT revenues from those business fell suddenly from 21% to 0%). Finally, as expected, troika nonsense is hurting also Deutschland. As companies were earning less and being taxed more, some closed or relocated and people get fired and stop buying as happily as before. German products are losing grip in the market at the new tax prices imposed by germany, just because China can always offer cheaper replacements. Germany industry was selling 'trust', not 'cheap', but troika repeated failures blowing up the middle class had damaged seriously the trust or the need to the germany expertise.
- deleted 11y ago[deleted]
- zurn 11y agoThis is also how the market participants see it. Or to put it in terms of art, the creditors are expected to estimate credit risk and price loans accordingly, and it is folly to underestimate it. When loaning to a government it is called "sovereign risk".
- gonvaled 11y agoCreditors charge a healthy premium risk for the eventuality that they will not be paid back. Sometimes, the risk materializes and they do not get paid back. It is their right to get mad and stop giving more credit, but it does not follow that it is not in their interest to give more credit, and try to solve the problems without forcing the debtor to bankrupcy.