Individuals and societies are not the same thing. It's the old problem you and I have had in the past around mega systems and small systems. I contend that mega systems have different rules and that Democratic choices must be worked out or walked away from. When you have rich people who are entitled, you have a capital resource but you also have a diminishment in merit choice since the poor are not pawns in a game but talent pools. The poor are usually more motivated than the rich to benefit the society as a whole through their willingness to work. There is merit to the cliche of the "idle" rich.
REH From: [email protected] [mailto:[email protected]] On Behalf Of de Bivort Lawrence Sent: Monday, June 04, 2012 11:28 AM To: EDUCATION RE-DESIGNING WORK INCOME DISTRIBUTION Subject: [Futurework] Fwd: [Ottawadissenters] A little more on the Euro Begin forwarded message: From: de Bivort Lawrence <[email protected]> Date: June 4, 2012 11:27:47 AM EDT To: [email protected] Subject: Re: [Futurework] [Ottawadissenters] A little more on the Euro Thanks, Ed, I understand the interconnected nature of the financial industry. In part, if I am not mistaken, it is a result of individual financial institutions wanting to lay off risk by selling debts to others (and sometimes misrepresenting the value of those debts to the buyer). The interconnectedness is, as I understand it, a matter of financial strategy and choice. So let's say that the general consequence, from your note, of a borrowing country defaulting is that other potential lenders will not want to lend to the defaulter. You ask what this might mean to the peace, stability and living standards of the defaulter. I would guess that the stability and living standards would suffer. I doubt that "peace" would be affected, but I may be misunderstanding what you mean by this term. So with regard to the stability and living standards of the defaulter, which -- yes -- would suffer int he case of a default, I'll ask another naive question: so what? I have a friend who once cheerfully told me that she had considerable personal savings. Later, she disclosed that she also had considerable debt, which exceeded her "savings." And yes, her standard of living dropped for a while as she both used those savings and a larger portion of her income to rid herself of those debts. The key point is that while she rejoiced in the size of her savings, it was a deluded joy: in fact she had few net assets. She could have kept on running up debt, and enjoyed a delusional higher standard of living, but this only exacerbated her situation, given her need to service her debt. Is it not the same with Greece? If the Greek people, collectively, have been living beyond their means, is this not a delusional financial stance? Does enjoying a higher stander of living temporarily outweigh in terms of social values the accumulation of greater and greater debt and its concurrent service obligations? My friend did not expect anyone to take pity on her; she simply knuckled down and accepted the temporary diminishment of her standard of living. Why not Greece? Cheers, Lawry On Jun 3, 2012, at 10:41 AM, Ed Weick wrote: ----- Original Message ----- From: Ed Weick <mailto:[email protected]> To: RE-DESIGNING WORK, INCOME DISTRIBUTION,EDUCATION <mailto:[email protected]> Sent: Sunday, June 03, 2012 10:38 AM Subject: Re: [Futurework] [Ottawadissenters] A little more on the Euro A couple of points, Lawry. One is that the banking system is highly connected internationally. To lend money to the Greek or Spanish governments, Greek or Spanish banks borrowed money from banks in other countries. The impact would likely be similar to that of the American sub-prime mortgage crisis of some four years ago. Via the widely traded Consolidated Debt Obligations it was not only American banks that lost a lot of money, but foreign banks as well. I think defaults by the highly leveraged members of the EU would have a much larger negative impact than the sub-prime crisis. The other point is that the EU governments of Greece, Italy, Spain, Ireland and perhaps others (France?) have kept themselves going by borrowing huge sums of money. If they defaulted, it is unlikely that anyone would want to lend to them. What might that mean in terms peace, stability and living standards in those countries? Ed ----- Original Message ----- From: de Bivort Lawrence <mailto:[email protected]> To: [email protected] Cc: 'RE-DESIGNING WORK, INCOME DISTRIBUTION,EDUCATION' <mailto:[email protected]> Sent: Sunday, June 03, 2012 10:17 AM Subject: Re: [Futurework] [Ottawadissenters] A little more on the Euro A simplistic question, but one that may, I hope, cut to the chase: What is the problem if Greece and perhaps Italy and Spain simply default on their debts, and do nothing else? I can readily see that lenders would subsequently shy away from making any new loans to those countries, of course, but...so what? Can we build a damage/risk tree out from this initial question? Cheers, Lawry On Jun 3, 2012, at 9:20 AM, Ed Weick wrote: There seemed to be some agreement yesterday that exit from the EU by Greece and perhaps others like Spain and Italy was inevitable. But is it really? Greece, Spain and a few other countries have huge debts -- but debts that are denominated in Euros. It is highly unlikely that creditors would accept repayment in far less stable currencies like the drachma or the peseta, and default by some of the larger EU debtors could wreak havoc with the international banking system. Exit from the EU is, IMHO, most unlikely unless someone steps in and provides the kind of bailout supports needed. Perhaps the IMF or, as Barry suggested, Russia? For a countries like Greece or Spain, would being beholden to Russia be better than being under Germany's thumb? 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