May 7, 2010
Óχi Euro
Until fairly recently the Greek debt crisis wasn't so much in the news. Now, it's roiling markets and a lot of commentators are wringing their hands over the possibility that it could precipitate another world-wide financial crash. That's probably a baseless fear. Greece is mainly a Eurozone problem and, in fact, the damage Greece does to the Euro may turn out to be a blessing, for everybody. To get at some of these issues I turned, once again, to the seasoned and very progressive-minded investment banker Marshall Auerback. Ours may be a minority view but I have a high level of confidence that it's the right one. Total runtime thirty three minutes. Beware Greeks bearing Greeks!
Comments
Now, if you want to know WHY Marshall thinks (well, knows) what he does, it's because he's a Modern Monetary Theorist (MMT). To find out what MMT is about, you'd want to interview either Prof. L. Randall Wray or Prof. Bill Mitchell, who together are the academic force most prominently advancing MMT. Why does MMT matter? Because it's the only body of economic work capable of defeating (crushing, actually) the theories people like Pete Peterson and the neoliberals are using to attack Social Security and other "entitlements". Something not even the Keynesians can do.
Posted by: Benedict@Large | May 9, 2010 2:46 AM
I don't enough about MMT to comment on it, though what Marshall was saying fits fairly easily into Post-Keynesian theories.
But the theories of people like Pete Peterson can be crushed using simple accounting. They're based upon fraudulent accounting, highly dubious assumptions (basically that growth will be virtually zero for the next forty years) that they don't apply to the private options. And so forth. There is no social security crisis, its rubbish. There is a health care crisis looming, but there's a fairly simple solution to that...
Posted by: Cian | May 9, 2010 11:05 AM
George,
While broadly agreeing with Marshall about Greece, I think he underplays the part Greece has played in this. They have a highly dysfunctional, very corrupt state. Tax evasion is endemic (particularly by the rich and well off), and the public sector is filled with bogus, very well paid, patronage jobs. They also spend a huge chunk of their GDP on the military. From memory it's higher than either France, or the UK.
There are countries which have been really screwed by this crisis through little fault of their own. Then there are other countries like Greece and Iceland where they are at least equally responsible for their misfortunes.
[I wouldn't put Iceland on par with Greece, but I take your point about the Greek government. g.]
Posted by: Cian | May 9, 2010 11:14 AM
I don't mean that there are any similarities, just that Iceland is solely responsible for its problems. If there's a country that nobody should feel particularly sorry for its Iceland.
[If you were an Icelandic citizen but weren't banking at one of the failed Icelandic banks, and then your government turned to you to demand a large percentage of your disposable income in order to bail out the bank, wouldn't you think that that was unfair? I would. g.]
Posted by: Cian | May 13, 2010 2:48 PM