Greek spending has actually been rising

[Gustaf]

Beet trying to debate Gustaf in this thread reminds me of the heroic, but ultimately futile, task undertaken by Ernest a few days ago when he tried to debate CARLHAYDEN.

I'm sorry, this is an adult conversation involving people who know something. I think you entered the wrong thread.

Seriously, you can't be disproven, run away like a little baby and then come back with some cheap insult. My posts proving you just made up stuff you had no idea about are still there. If you have proper responses to them, go ahead. Otherwise, it's really more appropriate for you to shut up.

[Gustaf]

Beet trying to debate Gustaf in this thread reminds me of the heroic, but ultimately futile, task undertaken by Ernest a few days ago when he tried to debate CARLHAYDEN.

I'm sorry, this is an adult conversation involving people who know something. I think you entered the wrong thread.

Seriously, you can't be disproven, run away like a little baby and then come back with some cheap insult. My posts proving you just made up stuff you had no idea about are still there. If you have proper responses to them, go ahead. Otherwise, it's really more appropriate for you to shut up.

See, this is what I mean. Posting funny pictures doesn't win you a debate in economics, since it's about facts and stuff. But that's all right. If posting pictures of Mussolini is what you need to do to feel good about yourself, I won't stop you.

Also, very Woody Allenesque move there.

PS: if you want to be taken seriously, learning how to post words instead of just pictures might be an idea.

[Gustaf]

Right, but I still think a sudden jump in wages would not compensate itself entirely.

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. You seem to be assuming the problem is that German wages are too low. Couldn't it be that Greek wages are too high?

As I've said, I think both are true. Remember, the question we are asking is whether every country should strive to be like Germany. It is physically impossible for every country to be like Germany, unless you think that countries should manufacture a great deal of products only to dump them into the ocean! On that point I would hope my position is indisputable.

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But why must you start at one end or the other? You accuse me of being ardently on the demand-side, but I actually treat both sides as equally bad. You're the one who insists on starting at one end.

What evidence do you have that Greek productivity growth has been running below its wage growth? It's not a question to challenge your premise but I am curious to see what metric you use.

Finally I do not follow that just because Germany had it bad in the early 00s, that it is doing things right today. If you pardon the expression, I think that to some extent they went out of frying pan and into the fire. They traded one problematic situation for another problematic situation, that seemed to solve some problems but has created new problems. Your link seemed to discuss Germany as having high wage growth from reunification until 1994, and the process of adjustment began in the late 1990s. That narrative is not contradictory to my preferred metric of trade balance, because in the 1990s Germany consistently ran a small trade deficit.

I think we're using slightly different definitions. When I say strive to be Germany I don't mean in the sense of running a huge trade surplus. That's obviously impossible. I mean it in the sense of controlling inflation, improve productivity, stimulate industries that can compete globally, etc. Of course, in the case of Germany, this has led to trade surpluses. If other Euro countries did the same Germany's trade surplus might well erode, but I still think everyone would be on average better off.

And I'm not accusing you - since I'm not that much of a supply-sider it's not really an insult. For me, it's a question of problem framing. I don't necessarily mean that Germany should change nothing and Greece should simply become like Germany. Rather, that for me it seems more natural to focus on changing the behaviour of the economy that is going to hell, rather than that of the economy that is doing well. Especially since I think the approach where success is villified and punished is not conducive for creating good economic policy, imo. I think any energy spent by Greece on criticizing or changing Germany has lower marginal return than energy spent on dealing with all of their home-made problems, to put it in silly economic jargon.

I posted a couple of links earlier in the thread, IIRC, where I noted Greek wage increases and productivity increases. They seemed to indicate the pattern I described.

I'm not following your last paragraph entirely. Germany didn't change a problematic situation for another - they traded a problematic situation for themselves for a problematic situation for Greece, no? But then again, I don't fully agree with that either. Had Greece pursued better policies, Greece wouldn't be so badly off (and I think that's the driving factor). I agree though that it does not follow from their earlier problems that they're doing things right now. Merely that it indicates they had to move in the direction they did. They might have moved too far, but I think the marginal effects at that point probably aren't the important stuff in this context.

[Gustaf]

PS, If anyone is interested, this paper will provide many answers about Greece, although admittedly it is a bit technocratic and does not take into account market chaos and street chaos"

http://www.imf.org/external/pubs/ft/scr/2011/cr11175.pdf

The paper, unfortunately, does not as far as I can tell address the reported rise in Greek primary spending, except to note that the definition excludes money spent by Greece to bail out its own banks on top of interest payments, and that projected spending for the year as of July was expected to be down to 50.4 billion euros from 51.7 billion euros. Total spending is still expected to rise.

The paper is slightly more satisfactory on the question of Greek inflation, noting that tax-adjusted inflation is well below the euro zone average. Productivity has fallen because output has fallen faster than employment, but labor costs have been adjusting downward and Greece has improved its competitive position in the euro zone.

Right, I wasn't talking about what Greece is doing now but what they did leading up to the current situation. One would hope they wouldn't still be losing competitiveness. (although given the track record it might be wise to not put too much stock in statistics out of Greece until a couple of years have passed...)

I do think we've reached the point of disagreement, at least. It seems to come down to a demand versus supply thing and wiser men than the two of us have disagreed on that, so I'm fine with agreeing to disagree there.

If you do want to carry the discussion into that general theme I'm fine with that too, though. But it wouldn't really be about Greece and Germany anymore.

I did like your debtor creditor thing though. What I would say in response though is that if we imagine the borders being closed and both countries suddenly falling into complete autarky, I think the creditor would still be better off than the debtor. Do you disagree?

[Gustaf]

Why not let Greece default, and just kick them out of the EU? Just asking.

Tiny Greece seems to be holding everyone hostage as it were, and it's annoying. They need to get a memo that the penalties will be severe. Just cut them loose is my visceral reaction, so tell me why that is unwise. It may well be, but I want to start a discussion on this. I want to get educated. Thanks.

Well, it's bank bailout writ large, really.

The fear is that if Greece fails markets will turn on Portugal, Spain and Italy and bring down the entire euro zone.

[Gustaf]

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.

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

[Gustaf]

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.

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

[Gustaf]

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.

You really have lost your touch, haven't you?

[Gustaf]

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.

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

You are talking about pedophilia ?

I'm talking about "playing with action man", if you catch my drift.