Italy’s austerity-fueled crisis is a warning to the Eurozone • Hacker News Board

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#51

Post by mamon » Fri, Apr 12, 2019, 11:16 PM UTC

Consultant32452 wrote: post #20

johnzim wrote: post #7

The Eurozone was never intended to do the damage it has done to PIGS economies but it has. What is worse, is that it has unquestionably been of benefit to Germany, which has one of the strongest hands in shaping the future of the EU. If a macroeconomist had sat down to devise a currency that suffocated Italy, Portugal, Greece and Spain - export driven economies (remember that tourism is an export as you have to buy t…

In my opinion the long term goal is to transition the EU (over the course of multiple human generations) into a single nation, similar to the way the United States operates. In that case, the conditions you described are an expected part of the process. In the US the states and local municipalities have different economic situations, different taxes, etc. And if our states broke off into 50 currencies, some would ben…

The problem is that EU bureaucrats are too impatient to wait multiple generations, therefore they try to speed up the process by schemes like inviting few millions immigrants from Africa and Middle East and then forcing member states to take them, to undermine their national identity. Or try to enforce the same EU wide standards regarding controversial topics such as LGBT rights, abortion, etc. Which of course causes backlash, effectively being counterproductive.

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#52

Post by Udik » Fri, Apr 12, 2019, 11:17 PM UTC

avar wrote: post #29

Consultant32452 wrote: post #20

Earlier quoted context omitted.

In my opinion the long term goal is to transition the EU (over the course of multiple human generations) into a single nation, similar to the way the United States operates. In that case, the conditions you described are an expected part of the process. In the US the states and local municipalities have different economic situations, different taxes, etc. And if our states broke off into 50 currencies, some would ben…

The EU already has a version of this. Some countries in the Eurozone are net recipients of EU money. Just like California is a net contributor and Mississippi a net recipient. It can be argued that the Euro has certain structural issues, or that the wealth transfer is too big/small, but the EU demonstrates that you don't need to become one nation just to have wealth transfers.

But is the size of these wealth transfers comparable? I have the impression, maybe wrong (absolutely no data to confirm it, in fact) that wealth transfers within the EU are much lower than those that would take place between the regions of a single nation.

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#53

Post by monocasa » Fri, Apr 12, 2019, 11:18 PM UTC

rohit2412 wrote: post #48

monocasa wrote: post #27

Earlier quoted context omitted.

Austerity didn't help. The R&R paper that they based the austerity on turned out to not be properly peer reviewed, and surprise, had a some arthmetic errors that when fixed contradict the original result.

Wait what? Could you expand on that? That seems to be very stupid "mistake" from some very important economists.

https://en.wikipedia.org/wiki/Growth_in_a_Time_of_Debt

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#54

Post by Udik » Fri, Apr 12, 2019, 11:42 PM UTC

coryrc wrote: post #31

johnzim wrote: post #7

The Eurozone was never intended to do the damage it has done to PIGS economies but it has. What is worse, is that it has unquestionably been of benefit to Germany, which has one of the strongest hands in shaping the future of the EU. If a macroeconomist had sat down to devise a currency that suffocated Italy, Portugal, Greece and Spain - export driven economies (remember that tourism is an export as you have to buy t…

Floating currency is just a way to automatically renegotiate all of a country's contracts. It will not magically create more wealth or lower the costs of materials. In the end, if you're importing something for $1 and you earn $100/yr or it costs $3 because of your devalued currency but you earn $300/yr, nothing has changed. What sucks is the most productive people left and the already massive state obligations fell…

> It will not magically create more wealth or lower the costs of materials

No, but it will lower the cost of labour. If you have low productivity, you need to pay your workers less. If you can't devalue the currency, you have to lower wages. If you lower wages, you create deflation: your money will be more valuable tomorrow than it is today. And so you stop spending and start saving, and consumption falls.

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#55

Post by Udik » Fri, Apr 12, 2019, 11:47 PM UTC

mamon wrote: post #51

Consultant32452 wrote: post #20

Earlier quoted context omitted.

In my opinion the long term goal is to transition the EU (over the course of multiple human generations) into a single nation, similar to the way the United States operates. In that case, the conditions you described are an expected part of the process. In the US the states and local municipalities have different economic situations, different taxes, etc. And if our states broke off into 50 currencies, some would ben…

The problem is that EU bureaucrats are too impatient to wait multiple generations, therefore they try to speed up the process by schemes like inviting few millions immigrants from Africa and Middle East and then forcing member states to take them, to undermine their national identity. Or try to enforce the same EU wide standards regarding controversial topics such as LGBT rights, abortion, etc. Which of course causes…

Oh no, come on. And by the way, if things keep going like they have, we can't wait multiple generations. We have at most one decade to fix things before they explode.

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#56

Post by matt4077 » Sat, Apr 13, 2019, 12:50 AM UTC

k__ wrote: post #14

johnzim wrote: post #7

The Eurozone was never intended to do the damage it has done to PIGS economies but it has. What is worse, is that it has unquestionably been of benefit to Germany, which has one of the strongest hands in shaping the future of the EU. If a macroeconomist had sat down to devise a currency that suffocated Italy, Portugal, Greece and Spain - export driven economies (remember that tourism is an export as you have to buy t…

Wasn't the problem of countries like Greece and Italy corruption?

That's... too broad a brush to paint with? Greece

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#57

Post by BenoitEssiambre » Sat, Apr 13, 2019, 12:55 AM UTC

johnzim wrote: post #7

The Eurozone was never intended to do the damage it has done to PIGS economies but it has. What is worse, is that it has unquestionably been of benefit to Germany, which has one of the strongest hands in shaping the future of the EU. If a macroeconomist had sat down to devise a currency that suffocated Italy, Portugal, Greece and Spain - export driven economies (remember that tourism is an export as you have to buy t…

No it hurts Germany too, just not nearly as much as the rest of the eurozone. The only ones who were helped here were Russia an China from the ECB putting their main rivals in shambles.

Any gains Germany gets from overly tight money are temporary and transient. Running a disastrous monetary policy to indirectly improve Germany's loan terms is an insanely destructive thing to do both to the indebted countries and to the weaker parts of Germany's own economy.

Not allowing people to work and destroying their countries' economies greatly increases the chance these countries are going to default or restructure parts of their debt. This is not to Germany's advantage.

Having neighbors with poor economies is bad for your exports and your own businesses.

In the long run Germany would have had much to gain if people of Europe had functional investment markets and funding was available to buy the tools necessary for people to work and produce instead of strangulated markets.

Having a single currency could have worked (as it works in the US) if it was not managed like they were trying to destroy the west.

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#58

Post by BenoitEssiambre » Sat, Apr 13, 2019, 12:59 AM UTC

coryrc wrote: post #31

johnzim wrote: post #7

The Eurozone was never intended to do the damage it has done to PIGS economies but it has. What is worse, is that it has unquestionably been of benefit to Germany, which has one of the strongest hands in shaping the future of the EU. If a macroeconomist had sat down to devise a currency that suffocated Italy, Portugal, Greece and Spain - export driven economies (remember that tourism is an export as you have to buy t…

Floating currency is just a way to automatically renegotiate all of a country's contracts. It will not magically create more wealth or lower the costs of materials. In the end, if you're importing something for $1 and you earn $100/yr or it costs $3 because of your devalued currency but you earn $300/yr, nothing has changed. What sucks is the most productive people left and the already massive state obligations fell…

No but a currency can be managed as to put a gridlock in the investment and financial markets, which prevents wealth from being created. See this: https://medium.com/@b.essiambre/the-world-deserves-a-pay-rai...

This is what the ECB did.

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#59

Post by bromuro » Sat, Apr 13, 2019, 1:13 AM UTC

pif wrote: post #50

I am Italian. And I am happy to find out it was indeed the fault of EU. Wow, what a relief! I thought we Italian were the problem! I mean, we voted Democrazia Cristiana for decades, just because it had Cristiana in the name, and which party will do any effort to be re-elected when they know in advance they will be re-elected anyway? I mean, I always heard bad things about corruption, but the corrupted politicians wer…

Yes the Euro is to blame.

I’ve lived enough in Italy to see how generally Italians have absolutely no idea what’s going on in the global economy and why now the country is in regression now.

They are like “distracted” by a telenovela-like politics (you cite Berlusconi) that doesn’t explain anything about the state of the italian economy and why it goes this way down. And when they try, the political discussion is eaten by a calcio-style debate, at the paradox where socially worth maneuvers are now a fascist thing, while no left parties are there to embrace the economical revolution your country requires.

Politics has no role here, whatever the RAI is screaming in the news, whatever the party is at the government, Italians just accept whatever Europe or industrial lobbies want, and now here are the results. Yet still they continue to debate about useless political dramas.

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#60

Post by mhh__ » Sat, Apr 13, 2019, 1:26 AM UTC

gridlockd wrote: post #37

mhh__ wrote: post #13

Earlier quoted context omitted.

The difficulty is that the two "basic" schools of politics/economics, Capitalism and Socialism are so diametrically opposed in terms of assumptions and methods that objectivity itself becomes subjective. Socalists tend to look at the world differently to capitalists.

These are not "the basic schools" of economics. If I had to pick two camps, I would pick Keynesianism and Neoclassical economics. Politically, Keynesianism has won over both sides of the spectrum. There is no "diametric opposition", virtually all socialists of today agree that markets are to be favored over central planning. That part is settled by history. What socialists and non-socialists disagree over is generall…

I deliberately wrote basic and political/economics, in the sense that political debate regarding economics is divided into those basic catagories at least in Britain. Economic policy, the yes practically the decision is between some form of Keynesianism or something vaguely monetarist (Laissez-Faire)

How can a socialist (https://en.oxforddictionaries.com/definition/socialism) system have a market?

The point I was making is that in my experience, many socialists (as defined above, type of socialists) do not believe or understand how behaviour emerges from markets and how this is efficient where competition is possible: It's all government this, government that.

May I ask where you are writing from?