Greek spending has actually been rising

[opebo]

Presumably the increase in spending is caused precisely by the fact that the Greek economy is shrinking - these are basic social payments to keep the poorest and unemployed from dying (after all it is a European country, so an American level of 'austerity' has been somewhat resisted).

Obviously the solution to this problem is 1) have the ECB buy up all the Greek debt with fiat money, and 2) institute the Euro-bond solution for future borrowing.

[opebo]

It seems to me that the Greek government is engaged in a massive farce to extract as much in subsidies from the rest of Europe before they go bankrupt.  The pretended 'austerity' in Greece is just a farce.

Predictable, inaccurate.

[opebo]

2) institute the Euro-bond solution for future borrowing.

So that we Germans can pay even more?

While it is a bit wrongheaded to call it 'paying', and after all in the world of Greeks and Germans it is the Germans who are the privileged, relatively speaking, the obvious point to you, Franzl, is what the devil are you Germans doing in the Euro if you don't want to deal with this sort of thing?

[opebo]

The Germans were forced into the Euro in exchange for French support for unification. The German people has never wanted the Euro.

Haha, well if that is the case then the situation is truly hilarious.  Revenge is a dish best served cold, took almost 70 years but there it is.

[opebo]

The European community would be better off to isolate Greece and instead concentrate on helping the other countries in financial straights that are at least making some real efforts to deal with their problems.

I agree with this... Greece should be suspended from the Eurozone as long as they have their budget and foreign debt consolidated and implemented several reforms, such as imposing a tax/budget discipline similar to the German/Austrian/Swiss/Dutch/Swedish etc. one, cracking down hard on corruption and work loopholes, cutting their military expenditures to 1% of GDP instead of 6% like it is now, strong reforms in their school/university system that's completely inefficient and incompetent and producing 50% youth unemployment. Further, they should sell their islands and government property to repay the debt to other countries and reform their pension system that favors big bonuses for government workers and even pays out pensions to dead people.

Um, why would they do all that stuff if they're not going to be bailed out?  The incentive to do all that draconian counter-productive stuff is the bail-out.  If you aren't going to be bailed out and are going to be suspended from the Euro, you just default.  Christ it would be stupid to sell off things you own to pay a debt you can simply repudiate.

[opebo]

Opebo,
The simple truth is that what is going on in Greece is a farce.
The Greek government is NOT taking real steps to deal with their fiscal irresponsibility.
They are just play-acting.

Well, that is encouraging if true.

[opebo]

It is a tough love approach, but it is ultimately correct.

Haha, yes.  Not only are national budgets of sovereign nation-states exactly like your own personal budget, their relationships with one another are exactly like that of a stern father and errant child.  Good luck with the over-simplification and mis-direction.

[opebo]

Germany took painful measures during the early years of this decade to increase competitiveness and they are now reaping the benefits of that.

Translation - they made life worse for the working class.

In fact of course the real problem with Europe isn't Greece, it is Germany.

[opebo]

Obviously. It's always good policy to punish success.

We traditionally do punish the successful - people who are very good at murdering, raping, stealing can all be punished with jail terms (except if they are 'soldiers', or bankers, or businessmen). 

Please remember that all economic 'success' is, under the current system, also a crime against others (and of course I don't mean 'crime' in the sense of a 'moral wrong' - I mean simply that the success was in utilizing power over others, not in some namby pamby 'skill' or 'talent').  And thus, in every society where there are social or economic problems resulting from the impoverishment of some members, the first thing we have to do to solve such problem is to jettison the idea that the poorer party caused the problem - only the richer can cause the problem.  In this case Germany by its 'success' is caught red-handed, and Greece by its 'failure' is completely acquitted.

[opebo]

The effect of Germany practicing wage restraint has not been good for the euro, because it is undercutting its neighbors.

I still disagree that the main problem for mismanaged euro countries is that other countries have been doing well.

But don't you see, this defintion of 'doing well' is not a reasonable one - it is destructive of the regional (and in some cases global economy).

Borrowing and spending, and paying people as much as possible is a postive boon to the world economy, but 'competing' and racing to the bottom is just a road to ruin and harkens back to mercantilism.  You might 'win' for a while playing that game, but in the end everyone loses if we don't install an anti-competitive inflationary Keynesian redistributionist regime.

[opebo]

I realize that it sucks for Southern Europe that they suck. I still think it's wrong to frame this problem as "Germany is too efficient. If they only produced less the world would be better off"

I'm sorry, but I just don't think economics works or should work that way.

Actually it does work that way.  If a country produces in excess of what it consumes, it creates a huge burden upon other countries to consume that production.

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This is precisely where you are wrong, Gustaf.  We have pursued this kind of world for the last thirty years - where wages are subjected to competitive pressures and end up in a downward spiral of deflation.

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Again, dead wrong.  A world of Germanies is a world of Depression and dearth of demand.

[opebo]

I realize that Germany is making more than it is consuming. My point is this: if we simplify the world a bit, we have Germany exporting and the troubled economies importing.... German wages are too low... Greece is too high..

...it seems reasonable for me to start at that end, rather than at the German end.

But you're very ardently on the demand-side here, I'm really not as much of a supply-sider as I might come off right now.

It is in fact extreme supply-sideism, Gustaf to want to start at the 'wages are too high' end rather than the wages are too low end.  Your recommendations are deflationary - infinitely more hazardous than to err on the side of 'wages are too low' and perhaps create a little inflation.

In a world where you have Germanies and Chinas, as well as Greeces and Americas, the problem children are the Germanies and Chinas.  They create a deflationary, depressionary spiral to the bottom.

[opebo]

I don't see the point of more bailouts. What will it happen when Italy ask for 10 times the same help?

Let's put it simple:

EU gives credit to EU to pay EU.

But that "x" amount because of inefficiency and devaluation returns as "x-1". And, in order to pay interests, the country will ask for more "x" ad infinitum.

It's a vicious circle. Politicians are only trying to save their asses for the upcoming elections, but sooner or later the bomb will explode.

You just print it, Peep.  The lesson of every debt-deflation depression is - replace everything with fiat.

Curtailing spending is madness in a depression, the Greeks are the heroes, and the Germans the villains.

[opebo]

Heroes and villains? What archaic and moralistic terms to use. Surely you do not believe in such comic book nonsense?

Good policy = hero, bad policy = villain.  They're just figures of speech, lunkhead.

[opebo]

youth unEmp in Greece is now over 40%.

The youths should be eliminated by the market soon.  'Market clearing' don't you know.

[opebo]

Good policy = hero, bad policy = villain.  They're just figures of speech, lunkhead.

It is almost moving to see such a simple mind at work. Like watching a little child playing with his first action man.

Your simplicity seems to be of the autistic variety, Gustaf.  It is a commonplace to refer to effective policies as 'good', and damaging policies as 'bad', and in the same way to refer to governments in the positive and the negative based on an overall assessment of their performance.  

Rhetorical flourishes are also common among the emotionally and cognitively normal.  Remember, your writing doesn't have to be as boring as it is.  Try harder, and we'll all try to give you encouragement.