The European Union and the IMF have the money and the ability to engineer a recovery based on counter-cyclical policies in Greece as well as the Baltic states. If it involves a debt restructuring -- or even a haircut for the bondholders -- so be it. No government should accept policies that tell them they must bleed their economy for an indeterminate time before it can recover.
Friday, April 30, 2010
Mark Weisbrot, "Greece: Who Needs 'Success Estonian Style'"
Wednesday, April 28, 2010
Rick Wolff, @ MRZine "Greece, Again: Demystifying 'National Debt'":
"...Yet again, business leaders, politicians, academics, and media are blowing smoke around Greece's efforts to cope with "national debt" problems. Something far more important for the world than this small country's financial travails is at stake. Indeed, what is at stake affects us all. What is happening in Greece parallels developments everywhere; only details and timing vary...
...Today, the employer class is anxious that its long-successful use of national debts to avoid taxes is in difficulty. The risks of that indirect way to manipulate states into serving its class needs while charging the working classes have risen sharply. Employers now reckon that states must restore their credit worthiness first, before new lending can resume. And the way for states to do so -- in the employers' view -- is to levy more taxes on the working classes and/or cut state programs serving those classes. The alternative, taxing employers and the rich while cutting state supports for them, is largely omitted from public discussion.
That is the meaning and content of today's Greek debt crisis and tomorrow's parallel crises in Ireland, Spain, and Portugal and future crises in most other capitalist economies. In each case, particular conditions and past histories will shape the specifics. Most important, the political organization and mobilization of the working classes will shape how far (and perhaps whether) those crises get resolved at the workers' expense."
Saturday, April 24, 2010
Rainer Kattel, "Should Greece Follow Estonia's Example?":
...Simply put, the eurozone assumed and still tacitly assumes either growing German wages or growing productivity in the rest of Europe. Neither has been the case.
The Baltic economies with pegs, and with its insistence on keeping the pegs, have simply tied the noose around their own necks, trading monetary stability for, first, high financial fragility, and second, very probably long-term high unemployment and debt deflation in the private sector. This will probably result in waves of emigration, growing social problems, and the like. In other words, the costs have been shifted to the future, and they are more than likely to equal Greek troubles in fiscal terms. Estonia is Greece in disguise. It remains to be hoped that the EU and the IMF recognize that and refrain from simplistic fiscal retrenchment that makes problems only worse as the Greek domestic demand and, accordingly, government fiscal position will only weaken further. This results, as we have seen in Estonia, in real economic depression, which is GDP contraction in double digits.