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Greece

interfluidity.com

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Re: Greece

#31

Post by dredmorbius »

Far better one that turned up in my G+ feed a few days back:

http://faculty.chicagobooth.edu/anil.kashyap/research/papers...

"A Primer on the Greek Crisis: the things you need to know from the start until now", Anil Kashyap, University of Chicago, Booth School of Business, June 29th, 2015

1) How did Greece get into such trouble?...

To accompany that:

"Greek Debt Crisis: How Goldman Sachs Helped Greece to Mask its True Debt"

http://www.spiegel.de/international/europe/greek-debt-crisis...

Goldman Sachs helped the Greek government to mask the true extent of its deficit with the help of a derivatives deal that legally circumvented the EU Maastricht deficit rules. At some point the so-called cross currency swaps will mature, and swell the country's already bloated deficit.

Re: Greece

#32

Post by AndrewKemendo »

The TROIKA GDP Forecast graph is great! I think from now on I am going to send it to any investor who thinks asking pre-revenue companies for projections is a reasonable thing.

Re: Greece

#34

Post by RockyMcNuts »

tjradcliffe wrote: post #13
seliopou wrote: post #2

Interfulidity is one of the best economics blogs out there. Last year he did a five-part series on welfare economics[0] that, while quite lengthy, was very well-done. Anybody that's interested in political economy, but has a more traditional Econ 101 background, it's a good place to start. [0]: http://www.interfluidity.com/v2/5149.html

I'm not encouraged by statements like this: "There is nothing inherently more scientific about using an ordinal rather than a cardinal quantity to describe an economic construct. Chemists' free energy, or the force required to maintain the pressure differential of a vacuum, are cardinal measures of constructs as invisible as utility and with a much stronger claim to validity as 'science'." Utility is ordinal not out…

I believe Von Neumann showed that any consistent ordinal utility can be mapped to a cardinal utility. As long as you can rank your preferences, for cats, children, or whatever, you can come up with an equivalent cardinal utility.

So I think Waldman's statement is technically correct, the two are equivalent, and one isn't more scientific than the other.

There is this notion that it's bad form to say, a rich person gets less marginal utility out of a dollar than a poor person, or sum up utilities across people. And it's bad form to quantify the value of a human life for instance.

You can, however, say the rich person values leisure at more dollars than the poor person.

If you could sum up utilities across people I'm sure it would lead one to very bad conclusions, unlike some of the other simplifications economists make, which only lead to useful conclusions. Actually, I'm not really certain what it would change, if anything.

In any event it would appear that humans aren't very consistent with their preferences, c.f. behavioral economics, hence the notion of utility may lead one astray whether one views it as an ordinal ranking or cardinal quantity.

Re: Greece

#35

Post by westiseast »

telepheron wrote: post #11
msabalau wrote: post #6

The entire thing is worth reading, but the key take away: "Regulatory mistakes and agency issues within banks encouraged poor credit decisions. Spanish banks lent into overpriced real estate, and German banks lent to a state they knew to be weak. Current account imbalances within the Eurozone — persistent and unlikely to reverse without policy attention — implied as a matter of arithmetic that there would be loan flo…

So we just ignore the fact that the Greek government misrepresented their economic state, failed to implement the necessary changes and then puts up a completely bogus referendum?

I guess a lot of the analysis being offered recently is showing that the Greeks, if not being encouraged to lie, we're certainly being given a wink and a nod. At least, the current crisis should be seen as two separate issues - poor Greek governance, and poor bank governance.

Re: Greece

#36

Post by brohee »

DangerousPie wrote: post #17
telepheron wrote: post #11

Earlier quoted context omitted.

So we just ignore the fact that the Greek government misrepresented their economic state, failed to implement the necessary changes and then puts up a completely bogus referendum?

Yes, pretty much. The author's argument is that everybody knew that their economic state was misrepresented, so the banks should have never lend them money in the first place. The mismanagement leading up to the financial crises was of course the fault of the Greek government. However, the reforms that the EU has proposed/enforced since then seem to have been more about punishing the Greeks than about actually buildi…

Implementing a land registry and getting people to pay taxes is not punishment...

What part of the reform is actually punitive?

The history of the Greek land registry is kinda hilarious btw...http://openeurope.org.uk/blog/reforming-greece-easier-said-d...

Re: Greece

#37

Post by Amezarak »

mike_hearn wrote: post #24
DangerousPie wrote: post #17

Earlier quoted context omitted.

Yes, pretty much. The author's argument is that everybody knew that their economic state was misrepresented, so the banks should have never lend them money in the first place. The mismanagement leading up to the financial crises was of course the fault of the Greek government. However, the reforms that the EU has proposed/enforced since then seem to have been more about punishing the Greeks than about actually buildi…

The reforms are the only long term solution. They're reforms like, maybe Greeks should retire at the same age that other people in Europe do. Maybe hairdressing should not be considered a 'dangerous profession', thus unlocking various benefits. Maybe Greek train drivers should not be paid $130,000 a year to drive near-empty trains. Maybe Greece should be able to grow its own food instead of importing more than half o…

> Greece has no real alternative but to adopt severe reforms and that means severe "austerity", whereby "austerity" of course what people mean is shrinking the Greek state to a size more appropriate to the size of its economy.

Greece has a perfectly workable alternative in a Grexit. It would help them enormously and not require austerity but there are political reasons that won't allow it.

If Greece was using the drachma, this would not be a problem.

The other problem with austerity measures is that they have a tendency to inhibit growth or even shrink the economy; shrinking the government further certainly doesn't help that situation.

EDIT: I forgot to add that Greece has a primary budget surplus - meaning that if it wasn't for the debt they owe, they'd be doing fantastically budgetarily.

Re: Greece

#38

Post by cgio »

mike_hearn wrote: post #26
lhl wrote: post #15

This is an interesting take on things w/ a lot of merit, but I think Vox actually summed it up better here w/ a short video and a longer article: http://www.vox.com/2015/6/30/8867939/greece-economic-crisis Until/unless the rich European countries are willing to subsidize the poorer countries, as a financial union, the Euro is just a complete non-starter since the fiscal policies these states need are so far apart.

The notion that a country like Greece needs a different currency or fiscal policy to Germany isn't really true. Ultimately whether they print New Drachma and hyperinflate themselves into poverty or whether they accept massive pay cuts/import drops doesn't make much difference - they are two roads that lead to the same outcome. Greece could become competitive without leaving the Euro. However, it means actually tellin…

On a zero-based forecast the two are equivalent. It is different though to keep your stocks high while taking your flows down as if you keep a euro balance sheet and a de-valued euro p&l. They are two roads in the same direction but with totally different outcomes.

Re: Greece

#39

Post by digikata »

mike_hearn wrote: post #24
DangerousPie wrote: post #17

Earlier quoted context omitted.

Yes, pretty much. The author's argument is that everybody knew that their economic state was misrepresented, so the banks should have never lend them money in the first place. The mismanagement leading up to the financial crises was of course the fault of the Greek government. However, the reforms that the EU has proposed/enforced since then seem to have been more about punishing the Greeks than about actually buildi…

The reforms are the only long term solution. They're reforms like, maybe Greeks should retire at the same age that other people in Europe do. Maybe hairdressing should not be considered a 'dangerous profession', thus unlocking various benefits. Maybe Greek train drivers should not be paid $130,000 a year to drive near-empty trains. Maybe Greece should be able to grow its own food instead of importing more than half o…

The reforms may be a long term solution, but pushing austerity to far makes the end solution push out in time and actually make it less likely that the loans are able to be paid back in a reasonable time frame.

Re: Greece

#40

Post by rosser »

telepheron wrote: post #11
msabalau wrote: post #6

The entire thing is worth reading, but the key take away: "Regulatory mistakes and agency issues within banks encouraged poor credit decisions. Spanish banks lent into overpriced real estate, and German banks lent to a state they knew to be weak. Current account imbalances within the Eurozone — persistent and unlikely to reverse without policy attention — implied as a matter of arithmetic that there would be loan flo…

So we just ignore the fact that the Greek government misrepresented their economic state, failed to implement the necessary changes and then puts up a completely bogus referendum?

If Greece's creditors lent money to the country while knowing of its government's misrepresentations, then whose fault is that again?
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