Saturday, June 27, 2015

Greece and Germany have Essentially only Four Things to Talk About.

Greece and Germany have essentially only four things to talk about.  And these are not the things they have been talking about.

1:  How big a piece of Greece do the Germans want?
2:  What percentage of the Greek GDP do the Germans want?
3:  How long do they want it for?

And since because the trade deficit, mostly with Germany, and austerity have damaged the Greek economy, perhaps beyond its ability to repair itself: 

4:  How much will Germany capitalize Greece to restore its industry so that it can pay Germany back?.

What the Greeks have to talk about among themselves is by how much, and for how long, they want to remain burdened by a corrupt aristocracy that essentially sold out the rest of the country to the Germans.

If these issues are not addressed, the Greeks will have to escape outside of the box they have apparently been thinking in, if they are to come to terms with the reality of their situation.

EDIT (4/4/2015) Apparently, many Greeks consider themselves part of their aristocracy.  A disproportionate number think themselves above paying taxes, and another disproportionate number think themselves deserving of government employment or support.  Do the Greeks think the benefits of civilization are not worth paying for? Consider this post:

 However, all this bad behavior seems to be enabled by the country running a trade deficit.  Only by running a trade deficit can the people of a country consume more than they produce.  With a country maintains balanced trade, one person’s profligacy can only be maintained at the expense of other citizens.  This provides a people with an important motive to discourage indolence in their fellows.  

Of course, as we have discussed elsewhere on this blog, running a trade deficit does more than encourage profligate behavior among the citizenry.
It progressively destroys productive capacity, making it ever more difficult to maintain living standards by domestic industry alone.  Further, the benefits of running a trade deficit are illusory.  Purchasing power declines more than the decline of prices of those imports which replace domestic production.     

The Germans are not innocents in this travesty.  They pursued policies destructive of their trading partner’s economies, so they themselves could profit and grow.  See Dr. Heiner Flassbeck discuss Germany’s beggar thy neighbor policies of the past 15 years or so.

Greece, being small, is just the first domino to fall.

1 comment:

  1. Yep, I agree with your framing here.

    Germany needs to remember their situation after WWII and consider how forgiving the rest of Europe was to them. At the worst it could be argued that Greece metaphorically "blew up" a few German and French banks, Germany on the other hand actually blew up much of Europe.