Greece 3
I don’t pretend to understand the nuts and bolts of what’s going on with the EU, Germany, and Greece, and I’ve been busy studying BSD because it’s fun.
Bad Tux, though, has studied up on it and thinks it’s not just about the money.
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July 8, 2015 at 9:13 pm
I never thought the Euro was a good idea. It’s difficult to have a sovereign monetary policy without sovereign currency and the situation in Greece proves that to be true.
With sovereign currency, a country can go as deeply into debt as they like as long as they can keep the printing presses running, print more money, and sell more bonds (sound familiar?). Even then, at some point the wheels will most likely come off. People will realize the country is too debt ridden. The country will have to offer higher interest rates to entice bond sales. The country will suffer inflation (and possibly hyper-inflation) due to the higher interest rates and being forced to devalue their devalue the currency because of the debt load. It’s basically the natural order of governmental over borrowing.
But Greece can’t print more money or devalue its currency because Greece uses the Euro and the Euro is out of Greece’s control. Basically, Greece is like a US consumer over extended on personal credit.
One of the smartest things Great Britain did was join the Eurozone but keep the Pound Sterling. By doing so they kept control of their monetary policy and interest rates. Pretty smart for a country where a meal of bangers and mash is considered a delicacy.
July 9, 2015 at 11:03 am
Most of the little comment I’ve read on this issue from persons I consider responsible leans towards the idea that the economies of different European countries are so different that a single currency was likely a questionable idea from the start.
I do rather think that Germany is acting less as an “economic partner” than as a usurer in this instance, but that’s more a gut impression than an informed opinion. In any event, attempting to starve a people into submission is seldom productive in the long term.
July 9, 2015 at 7:55 pm
I heard an economist this morning discussing this. One of the issues is population. The “northern” European countries have a much lower population than the “southern” European countries. The countries with the worst economies are in southern Europe. The northern European countries are afraid of the cost of bailing out the more populace southern countries. It’s a mess – but China could be a far bigger house of cards.