but I’m gong to a demonstration against the ESM today.
One always can hope……
but I’m gong to a demonstration against the ESM today.
One always can hope……
Well if you look through this blog you always could read warnings. Just one example http://mises.org/Community/blogs/fdominicus/archive/2010/02/22/f-b-ailouts.aspx
But let’s see at the Situation without malice. For austrian economics the problems in Greece are crystal clear. What we see is the end of a boom introduces by manipulated interest rates.
Yes and it’s one hallmark of why the help from EU can not work. The greek politicians have took every cent they could get from the EC. That’s what keeping ones house means in politics. All the
expenses for things were not driven by need and sound money. But driven by the way it works in politics. You must throw out the money, otherwise you will get less next year.
Well in normal economics activities it does not work that way. You invest while you a) see some need for your services and b) you want happy customers… However you do invest usually much more careful. You do know exactly if the customers will not buy your stuff you are finished. So you alway try to get you needs in sync with the things you can offer. There is not automatic payment it’s the customer who decides. Now let’s see how this is not done in political economics. If you ever have visited Greece you know this land is beautiful but harsh. Many live in very small villages, and quite a lot of them are on islands. So transportation is a problem. Anyway if Greece is strong on one area it’s in seafaring. And indeed even many of the Italy ships are manned by Greeks. But now the trouble starts it does not make (unfrortunatly) much sense to build big streets over the islands. But this is what happened with money from the EU. That’s bad. There was money burned, because the ways can not be used economically. They are too big, but now they are there and the trouble starts. They were oversized and therrefor overprizes, and it needs much more even to just maintain them as one could answer for. And it does not help in anyway. The jounger still have left and just the elderly are living there. So who will use the streets in the future?
This are the catastrophies triggered by subsedies. Yes agreed there must be some kind of boom in infrastructure building and maybe even housing. But Greece just has somewhat around 11 million inhabitants. So you can not build an infrastructure suitable for 30 or more millions and hope this can be sustainable. It’s impossible. Another problem in Greece is the corruption and way to large bureacracies. Again countries which more than 5 as many inhabitants do not spend that much mone yon their diverse ministries. (I read somewhere Greece has 49 of them !!!) and politicians, and it seems they are even higher paid than in many other countries with much larger population. Corruption and too large government are a clear sign mark of destruction.
So what can we hope for for the Greek? Well we just can hope they get rid of their functionaries. They must put harsh punishments on corruption (and or just take the responsibiity aware from the bureaucrats), and they needs sound money. I’m afraid this latter will not happen and there for if Greece should leave the Euro the normal population will suffer severly under extreme inflation. This will destabilize the country even more. So I’m afraid the Greece just are at the beginning of the end. And it will (unfortunatly) get much worse. As one can read the decline starts to accelerate. Hundreds and thousands of businesses are driven out of business. How could one expect from less working to have more “money”.
IMHO Greece has spiraled out of control and any “imagination” of control can be burried. No one in Greece will be able to regain it any time soon. The bureaucrats and delebets do not even see it. Of they see it and won’t. But reality strikes and it will strike the harder the longer the wrong ways are followed. Von Mises has put it:
“There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved.”
Greece was at the edge 2 years ago. I’m afraid they are beyond it now. So yes you can see exemplarily what happens to unsustainable systems driven by unsound money and too big governments. Will Greece be a warning ot the other countries? I’m afraid the answer is no, And therefor the end of Greece is just the sad beginning….
Here we got new attacks on rationality.
Ideas to end democracy
There was a reason that the US did not have a central bank up from the start. There was a reason to not trust paper-money, there was reason to not trust big corporations. All this gone. And Obama does not stop. he does even more to abolisch any rest of responsibility. And Geither just the helpful, just follows suite. People if you think about unfriendly words about deledefs insert them here NOW:
Ok the debt ceiling was risen and surprise surprise Obama want a new program of around 300 billions to “stimulate” the economy.
The Addicted get another round of their stuff, and they are using it. This time for “something” good….
As if there ever was anything else but “good”
I stick to my opinion about Obama. He’s a liar and has no clue about real economics. He lives in the same land-of-plenty, where one just prints money and everyone get more rich.
I’m really fed up with this deledefs
So here we go again the State can not initiate productive work, just conuming, and of we let us assume we need 100000 USD for a new jobs you can “calculate” how many news there might be. Don’t forget to count those loosing their job because the state thinks, it knows better….
The highest court in Germany will start “thinking” about the lawsuits tomorrows. This were initiated a year ago before the first money was transferred. Just imagine you know a defrauder, he is caught and one year “nothing” happens. That’s the situation of the “greece helpers”. It’s illegal, it’s against the no-bailout clause. and guess what nobody cares.
In fact Germany violates the treaties for the Eu convergence critera. Just hat anyone can remember. 1) not more than 60% debt of the GDP, b) not more than 3% new deficits a year. Nearly no-one fullfilles this things and what happens? Exactly nothing. Greece is beyond 150% new debt of the GDP and probably that’s the most after Japane which over 200% debt /GDP.
Just imagine you will among the richest men in Germany with 12 Billions. Probably among the top ten earner. And at the top of this earners Aldi stands. And they exist for now 50 years. So the worth of 50 years of work and service to the people gone today. For scammers. And still the same responsible for the scam are in charge in Greece. Everything they have done was lying and stealing but giving them more money is without alternative?
I’m suprised that a debts rate of is calculated with the GDP.
I know “every” does it. But if are at the edge of a canyon, and everyone is marching on, makes this march not less stupid
Let’s translate it into our “world” (the non government world) So I’M living in Heidelsheim around 5000 inhabitants. Now what the produce can be seen as “my” GDP.
So let’s assume I have 100 000 EUR debts. But all i all the 5000 people would produce an GDP of 1 000 000. So my debt/GDP ratio is just 10%. According to this I guess my finances would be sound.
But know we get back into reality. I do not have access on the money of my neighbours. I’ve my income. So let’s calculate with an income of 25000. So I’d need at least 4 years to pay back all my debts. Would you think my financial situation is sound? Well you would ask what else does he have to “secure” the liability. So let’s be generous and give me 200 000 EUR . So in reality I’d just have 100 000 EUR (assuming I could make my property to money at an immediate notice)
Still the question are my finances sound? We still don’t know.
Now let’s switch back to the state analogy. As we know states do not have a balanced balance sheet. Each year they need extra credit. Now let’s assume I’m one of the better one’s and just need 10% extra debts on my income. That means each year I’d add another 2500 EUR debts. So let’s calculate with an interest of 5%. So my payments currently are around 5000 EUR. Next year I’ve to pay 1375 EUR interest. No let’s calculate if I do that for 50 years. I than have a debt of 600 000 EUR (if I could bear at lest all the interest) and my interest payment would be around: 30000. Which is absolutly impossible. So now you can say, my situation is all but sound.
But now back to the case of the government. Let us assume a GDP groswoth of the Heidelsheimer inhabitants of around 2.5%. So in 50 years we’d have a GDP (without inflation!!!!) of 3 437 109. EUR and my debt/GDP ratio just would be:
0,174565311 that are 17,5%. Still for states this is sound?
So I do not think that Debt/GDP is a wortwhile measure. We should just allow governments do calculate their debts with their income. Just imagine what 160% debt of the GDP means … So I can not see how e.g Greece could “bear” that and in fact it’s getting more and more obvious… they can’t….