Krugman on Greece, the Euro and Lessons for the United States

George K

Two interesting columns, the first on how the Euro screwed Greece (the same is true, but less drastic, for Italy, Spain and other weaker economies), the second on Greece's lessons for the United States.

http://www.nytimes.com/2015/07/20/opinion/paul-krugman-europes-impossible-dream.html?action=click&contentCollection=Fashion%20%26%20Style&module=MostEmailed&version=Full&region=Marginalia&src=me&pgtype=article

http://www.nytimes.com/2015/07/10/opinion/paul-krugman-greeces-economy-is-a-lesson-for-republicans-in-the-us.html?rref=collection%2Fcolumn%2Fpaul-krugman&action=click&contentCollection=Opinion&module=Collection&region=Marginalia&src=me&pgtype=article

Ordinary people benefited mainly by not losing 1-3% of their money each time they crossed a border. This is not so true anymore now that most tourists use credit cards and the forex conversion fee usually is 1%, at least for cards issued here.

flytrap

Very interesting reads, George. Unfortunately, I've read so much contradictory commentary by/on economist/economy I'm coming to the conclusion none of them know what the hell they are talking about! Kind of like which side of the fence your on without know the fence forms a circle.

George K

I know several people who lived in Italy when the Euro came about. Prices rose much more than did wages, creating in effect a huge decrease in people's disposable income. Inept or corrupt government plays a large role also, but the primary beneficiary of the Eurozone system is Germany. A few other northern economies have benefited, but less so than Germany, and many are struggling now.

flytrap

I took a required economics course back in 1970, it baffled me then and it baffles me now. I do recall I passed it so bafflement must have been the goal. Anyhow, one of the points the two articles made that made sense is a unified currency requires a unified political unit. I can understand Germany wanting to avoid bailing out Greece, its the same thing (I think) as New Yorkers **** about their taxes being spent in, say, Mississippi. I'm assuming on an international level the scale is much larger.

Germany is the economic and industrial engine of Europe, and I guess the golden rule applies, they've got the gold, they make the rules. But, in reality, Greece is a relatively ****-ant country, its kind of hard imagining the ramifications of its going bankrupt having a major international effect, whereas a US, China, Russia, Japan, any of the major economies, yeah, that could happen.

George K

What would happen nationally if South Carolina - the state that gets $8 in federal "welfare" for every dollar it sends to Washington* - went teats up? North Dakota ($6) and Florida ($5) also are very, very good at being subsidized by the rest of us.

In the case of Greece and Italy it would have been better, IMO, had they remained with Drachmas and Lira.

* http://www.theatlantic.com/business/archive/2014/05/which-states-are-givers-and-which-are-takers/361668/

flytrap

We share that opinion.