At 12:09 04/11/2011, Barry wrote:
Very interesting analysis. Any thoughts on Iceland and how that may
(or may not) set a pattern for other European countries?
Icelanders are, of course, to be applauded for the way they're now
prosecuting their bankers* (and devising a new Constitution) but I
hardly think it will set a pattern (even if it's a good one) that
other European countries will follow, at least in the near future.
Together with other Nordic countries, with which it shares a great
deal culturally (e.g. very high educational standards), Iceland will
probably remain fairly distinct for generations. Until the 2008/9
Credit Crunch, Iceland was intending to join the Eurozone -- but,
given the present farce, I doubt whether it has any intentions now!
And, by the time that Iceland finally gets on its feet again, the
Eurozone might not exist at all!
(*During one severe financial panic in 18th century England, when
some bankers had devastated the savings of thousands of depositors,
it was seriously proposed in Parliament that the bankers should be
bagged up and thrown into the River Thames. No doubts similar
thoughts are engaging many Icelanders' minds at the present time.)
Iceland's main problem is, paradoxically, that it has two exceedingly
strong economic advantages -- geothermal power and highly productive
fisheries in its cold territorial waters. It nurses these two
industries very carefully and, accordingly, has had one of the
highest standards of living in the world until 2008 (which it will no
doubt regain within the next few years). However, this means that
Iceland has devoted most of its financial investment and the
innovative potential of its best scientific minds into just those two
industries. If, in future years, its fisheries were to decline from
disease or were plundered by other more powerful countries then its
export income -- and standard of living -- would be in trouble.
Even though Iceland's population is small (320,000), even when
compared with other small countries such as Singapore, Finland and
Israel (at around 5-7 million each), it will probably follow them in
diversifying in the coming years (and, like them, get to the leading
edge in at least one or two technologies).
Keith
On Nov 4, 2011, at 5:30 AM, Keith Hudson wrote:
I can see no hope for Greece now. Even if Mr Papandreou manages to
form a Coalition government later today and get a vote of
confidence, I cannot see how the majority of Greek people are
going to accept many more years of even more austerity than they
have already suffered.
It's no use saying that the Eurozone has been pampering them for
many years and they must now buckle down and get used to reality.
When it comes to human emotions, there are no absolutes. It's all
relativity. As Krushchev once said when he'd retired from being
the President of Russia: "It's easy to govern starving peasants.
But once they have food in their bellies then it's another matter."
Two years ago, most Greeks had already gained as high a standard of
life as most Germans, French, Italians, etc. It's already declined,
and even this part-way step has produced a country that's barely governable.
Any more attempts at austerity, then daily riots and national
strikes every few weeks will produce a revolutionary situation. Or,
rather, not so much revolutionary (because there is no conceivable
alternative in sight) but total breakdown. At an intuitive level
that ordinary Greeks probably understand, even though they can't
articulate, they know they face a choice of more austerity for at
least 10 years in the Eurozone or yet even more austerity for a
only a couple of years or so if it, like Argentina in 2000, it
decides to default. In the latter case, it could leave the
Eurozone, restore the drachma, and regain the self-respect and
cultural independence which the bureaucrats of Brussels took away
from them years ago.
I can see no other immediate future for Greece, even if it has to
have a draconian government -- maybe even with military backing --
for a few years. China will help. It is already building massive
port facilities at Piraeus and won't want to see these held up.
Furthermore, Greece could immediately start offering wonderful
holidays to tens of millions of the Chinese middle-class whom the
Chinese government is already encouraging to spend more. In four or
five years' time, if not before then, the average Greek will be
scratching his head in wonder that his country ever entered the
Eurozone in the first place.
Keith
Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/10/
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Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/10/
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