The Eurozone crisis, Is there a way out?

[liveco]

I was just reading now on LA times (McManus: Europe's continental drift), and a phrase really captured my attention; The author, while describing how bad the situation is in Europe (especially the southern countries) goes as far as saying:

"
Southern Europe is experiencing its worst drop in living standards since World War IITo anyone who has been

Comments

[liveco]

Well, I can sense a little bit of sarcasm here, :), economists usually argue what is the best approach to a fast recovery from an economic crisis. Austerity measure seem to cut the expenses, but also indirectly have negative effect on the economic growth, on the other hand, sound economic investments and reforms and restructuring seem to have high cost in the start but pay off on the long run

[mikeyxw]

It's also a dose of realism. Greece, Italy, and Portugal are already over 120%, which is generally the amount where one expects that they won't be able to pay back what they owe. There are exceptions, such as countries after WWII where the economy was dedicated towards a war effort that could be changed back, but this is not the case for these countries.

Because they are unlikely to be able to pay back what they owe, folks are not all that eager to loan them more and more money. Because folks with extra money aren't willing to support their attempt to borrow their way out of debt, austerity is the only alternative. You can criticize the Germans for being too prescriptive about where cuts need to take place, but cuts need to be made somewhere. Of course, if you'd be willing to invest your money in Greek government bonds, knowing you probably won't get your money back, feel free. Criticizing those who aren't so willing to do so seems hypocritical unless you're willing to put your money up first.

[farmerz_agent]

Educate me:

What are the successful European countries? German? Are there any others that are doing well? What is Germany doing differently than these other countries?

[htpcl]

I'm guessing the most basic stereotype is: "Germans work like crazy; also, Germany actually produces stuff".

[liveco]

it is actually true, I had some German and Austrian Colleagues and their dedication and work ethics are admirable.

[htpcl]

It is.

[meus_ovatio]

There is a surefire way out of these problems.

Tell the banks and creditors that they lost out on bad bets and bad investments. Cancel the debt. Withdraw from the euro. Re-nationalize the currency and the central banks for those countries.

This is the only way out of the mess. But it won't happen because:

A)It makes sense, and the technorati refuse to do anything that makes sense, ever, at all, not even once,
B)Too many very powerful people stand lose a lot of money, and they are more important than an entire generation of Europeans lives and livelihoods.
C)People inherently believe that slavery is ok, and enslaving an entire populace into paying off bad debt taken on by foolish banks is morally honorable.

[farmerz_agent]

If we re-nationalize their currency and start over why would these countries not just continue to over spend?

C) Who is responsible for this debt, the people and governments they elected right? Is it morally honorable to borrow money and spend then blame the people you borrowed the money from? Did the Greeks, Italians, Spaniards and Portuguese really think they could spend and spend without consequences?

Eventually you run out of other people's money.

[meus_ovatio]

If we re-nationalize their currency and start over why would these countries not just continue to over spend?
The problem isn't that they were overspending. The problem is that they gave up sovereignty to their economies and currencies. They would've been fine. They would've dealt with thing as needed. Quit turning everything into some simplistic pabulum about a morality tale. It just isn't reality.

C) Who is responsible for this debt, the people and governments they elected right?
No, those who take the risks are responsible for it. There is no moral guarantee in lending money. If you lend money and they don't pay it back, tough, that's business. You take that risk. It's called risk in the first place, for a reason. If the financial overlords want guaranteed returns, then they don't get any interest. Them's the rules.

Did the Greeks, Italians, Spaniards and Portuguese really think they could spend and spend without consequences?
No, they didn't think that at all. Do you really think that they thought this? Are you insane?

[liveco]

The problem isn't that they were overspending. The problem is that they gave up sovereignty to their economies and currencies. They would've been fine. They would've dealt with thing as needed.

Let me take an example out of the four countries we are discussing. Greece, are you aware of the level of corruption in Greece? The Greek economy has been struggling way before it joined the Eurozone. Joining the eurozone did harm the Greek economy, not because it lost its sovereignty but because the Greek exports became more expensive and less competitive in the international markets after year 2001 and because Greek Tourism was harmed by the expensive euro vs the old drachma

[rimpala]

Maybe the Euro just doesn't work, the EU is fine and all but maybe there is just too many different countries to keep track of economically. I'm just guessing don't get me wrong, it's going to take me a while to fully assess what the problem is since I don't live over there and cannot fathom what its really like.

[rimpala]

Well there you go.

[sophia_sadek]

The southern countries all have orthodoxy on their side. Perhaps that is why people leave them for a more heretical climate.