Euro-Greece: crashing their economy
WHAT YOU WON’T GET FROM CORPORATE MEDIA: AN INSIGHTFUL ALYSIS OF THE GREEK ECONOMIC COLLAPES AND ITS CURRENT DILEMMA. Most of those in Congress know what time it is, only they are part of the problem, not the cure. Liberal Democrat Allan Grayson, has the education to analyze the complex problems created by the EU and its shadow backer big banking. “ Grayson worked his way through Harvard College as a janitor and night watchman, and graduated with a Bachelors of Arts summa cum laude degree in economics in 1978.[6][7] After working two years as an economist, he returned to Harvard for graduate studies” Wiki. His paper makes sense of the Greek dilemma. What happened to Argentina contained banking’s blueprint for Greece, and Greece contains banking’s blue print for US, Canada, and Mexico. The TPP (Trans Pacific Pack Partnership) will finish building a EU type coffin. When reading the article think of the US--jk. https://en.wikipedia.org/wiki/Trans-Pacific_Partnership In These Time 7/14/15 – Rep. Alan GraysonRep. Alan Grayson: The Euro Is a Burning House with No Exit
The superficial problem in Greece is the external debt. The deeper problem is the relinquishment of national sovereignty and the tools that are needed to raise domestic demand and bring about an economic recovery.
William Hague, the U.K. Conservative opposition leader and Foreign Secretary, once referred to the euro, the European Union currency, as a “burning house with no exit.” That sounds about right. If Greece leaves the euro, it will suffer the tortures of the damned. And if Greece stays in the euro, it will suffer the tortures of the damned.
Listen, I love Greek tragedy as much as the next theatre-goer--especially Sophocles. But this is ridiculous. Consider how we came to this point. Virtually all of the world’s economies got whacked, very, very hard, by the Crash of ’08. Essentially, “aggregate demand,” the total demand for goods and services, collapsed, because much of that demand had been sustained by borrowing against wealth (think, “home equity loans,” “margin loans,” etc.), and then wealth collapsed. When aggregate demand drops, there are only four ways out of that hole:
That’s it. There are no other solutions to that problem. So let’s look at what happened to Greece after the Crash of ’08, when aggregate demand collapsed. When Greece joined the European Community/Union in 1981, it had to agree to zero tariffs and the unencumbered movement of goods between Greece and other EC/EU members, as well as an external trade policy that is uniform throughout the EC/EU. So after the crash, Greece couldn’t impose tariffs, subsidize exports, establish import quotas, or anything like that.
Trade policy—no: After Greece adopted the euro as its currency in 2001, it could no longer expand the money supply in order to spur domestic production. The European Central Bank had that authority, not Greece. Nor could Greece impose any capital controls to keep euros circulating within its borders. And as Greece’s economic problems deepened, capital fled the country.
Monetary policy—no: A government accepting the euro as its currency must commit to keeping its annual budget deficit below a certain ceiling. Fair enough. But what happens if large chunks of government revenue are shipped outside the country to pay external debt, rather than circulating within the country? That just depresses aggregate demand more and more. Greece went into the Crash of ’08 with an external debt of around 300 billion euros—for a country of 11 million people. The mere interest on that debt (forget about principal) sucks an enormous amount of money up out of Greece each year, and sends it elsewhere. That made it impossible for the Greek government to borrow more money and spend it domestically, to restore aggregate demand (think “American Recovery Act”). And Greece’s creditors have insisted that the government run a “primary surplus,” meaning that net of the debt payments, the government actually removes money from the domestic economy.
Fiscal policy—no: With no trade policy, no monetary policy and no fiscal policy, the Crash of ‘08 and the ensuing turmoil utterly crushed Greece’s aggregate demand. Gross domestic product has dropped 25%—the largest peacetime collapse in any advanced economy since the Great Depression. Unemployment in Greece was more than 25% before this month—imagine what it is now, after the banks were closed. That left desperate Greeks only one option: to leave. And, in fact, the population dropped by 1.5% in just four years. But there are very stiff barriers to exit; among other things, you have to learn a new alphabet. And the population drop further depressed aggregate demand, especially in the housing market.