Robert Samuelson
lays into the Greek debt problem with his usual clarity. Included in his article is this bit.
To some economists, Greece's situation is so dire that default is inevitable, though it may be a few years away. The required austerity would be too punishing, says Desmond Lachman of the American Enterprise Institute. Greece would need spending cuts and tax increases equal to 10 percent of GDP, he says. The resulting savage recession would worsen existing unemployment, already about 10 percent.
The Europeans
are so compassionate, aren't they? Much more so than we greedy, capitalist, social Darwinist Americans.
So funny - "The required austerity would be too punishing". Once they default they won't be able to raise anything in the bond market so the austerity is coming no matter what.
ReplyDeleteYeah, I thought that was a really strange logical discontinuity. Argentina after their default wasn't exactly a resounding success. It's not like there's some kind of easy way out once you've gotten yourself so badly behind the 8-ball.
ReplyDeleteBut it makes perfect sense. It's the difference between current and deferred pain.
ReplyDeleteAn interesting analogy is Global Warming. Today there seems to be no reliable data indicating global temperature increases (as the economic polices started there weren't any obvious issues either I'd bet). The day may well come when temperatures start to rise, and we won't really know why (today the economic problems and causes are clear). Eventually, the global environmental "punishment" may exceed anything we'd have to do today (see Greece in 2-5 years).
It makes me pause.