Yep, the traditional answer is to cut the knot rather than untangling it or the modern version. Just go out shoot something.
REH From: [email protected] [mailto:[email protected]] On Behalf Of Arthur Cordell Sent: Saturday, November 05, 2011 10:11 AM To: 'Keith Hudson'; 'RE-DESIGNING WORK, INCOME DISTRIBUTION, EDUCATION'; 'de Bivort Lawrence' Subject: Re: [Futurework] Grecian wonder This is a very high risk time for economies. I worry about an unexpected event that triggers the catastrophe. Something like the assassination of one of the key players. Think what triggered WW1. Low probability but high impact scenarios should be considered at this time. Arthur From: [email protected] [mailto:[email protected]] On Behalf Of Keith Hudson Sent: Saturday, November 05, 2011 3:37 AM To: RE-DESIGNING WORK, INCOME DISTRIBUTION, , EDUCATION; de Bivort Lawrence Subject: Re: [Futurework] Grecian wonder Lawry, You may well be right -- that Uruguay is a better default-model for Greece than Argentina. But in practice models don't come into it. Governments are usually forced into a default when the balance of creditors/investors turns against them, and not as a result of a rational decision. Most countries of any size are as much subject to economic success or failure as any business or city, and over time will experience both. Investors may be angry if a country defaults but they know that investment anywhere always has an element of risk and, at bottom, they must take the responsibility. But also most countries of any size and longevity have some features, whether geographical, geological or skill-wise, to be able to improve its standard of living by exchanging its most efficiently made products or services for those that it wants from others. The assets of a country are always vastly greater than its national debts and once governments of failed countries learn, or are forced, to reduce their size, cost, bureaucratic corruption, and currency inflation, then prosperity will inevitably resume and outside investors (if they are needed) will start to pay attention. You ask at the end of your message "Will Greece be in a greater hurry to separate from the Euro, than the Eurozone eager to shed Greece, the deadweight partner?" Neither really wants to default. The question is really hypothetical. It will be the balance of investors (and potential investors) which will decide. I can't imagine that this will be delayed for much longer. Keith At 17:41 04/11/2011, Lawry wrote: A better model for Greece than Argentina or Iceland may be Uruguay. Creditors accepted a relatively modest give-back, austerity was implemented, a short term international cash infusion was set-up, and the whole thing was worked out cooperatively. Led by an effective government intent on maintaining Uruguay's credibility, Uruguay focused on exports that were in demand (beef, soybeans, IIRC) With surprising rapidity, Uruguay regained normal access to international capital markets. Argentina, thanks to Jeffrey Sach's nonsense recommendations, balked at meeting their debt obligations, went into default and has been a financial pariah ever since, with a limping economy even now. Argentina's strategy has not led to 'self-respect' and while Greece's would enjoy a period of heady self-assertion were they to default they would soon learn -- as has Argentina -- that even greater and inescapable pain lay ahead. Even Zorba woke up with a massive hangover after his life-affirming but reality-denying debauche of the night before. Iceland nationalized its banks and the Icelandic people dug deep to spread the misery, but, with good government, the blow was absorbed and the Icelandic economy has been thriving. This took, as it did in Uruguay, social cohesion and discipline. Will Greece be able to find that discipline, or will oratory-based politics merely inflame the Greek sense of victimization? Greece lacks the fiscal terms that countries normally have due to their tie-in to the Euro. Will Greece be in a greater hurry to separate from the Euro, than the Eurozone eager to shed Greece, the deadweight partner? Cheers, Lawry On Nov 4, 2011, at 8:09 AM, Robert Stennett wrote: Very interesting analysis. Any thoughts on Iceland and how that may (or may not) set a pattern for other European countries? Barry 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/ _______________________________________________ Futurework mailing list [email protected] https://lists.uwaterloo.ca/mailman/listinfo/futurework _______________________________________________ Futurework mailing list [email protected] https://lists.uwaterloo.ca/mailman/listinfo/futurework Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/10/
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