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Re: Euros discarded as impoverished Greeks resort to bartering
There's an historical tipping point on taxation as well, which when reached, drives the economy underground.Originally posted by BadJuju View Post -
Re: Euros discarded as impoverished Greeks resort to bartering
A Greek friend was in Greece for a few weeks in November. He said the bars, restaurants, and malls in and around major cities are packed. However, outside the cities consumer activity seems to have come to a halt.Originally posted by don View Post
He explained several perverse economic incentives of the EU. For example, Farmer A who has 50 acres of land is paid 50,000 euros to not produce olive oil and sell it on the open market and drive the price down in the bargain. His neighbor Farmer B who has 10 acres is also paid 50,000 acres.
How can Farmer B possibly grow as many olives to produce as much olive oil as Farmer A when he has 1/5th as much land?
Because the EU uses a clever method to determine the productive capacity of a farm independent of size that accounts for other differences in productivity, or so they think: electricity demand.
The size of your subsidy depends on how much electricity your farm consumes.
So, clever farmers install heat lamps and other electricity consuming devices in hidden areas such as cellars in order to consume enough electricity to qualify for a larger subsidy to not produce olive oil.
The Greeks might do better if they split from the EU and produce and sell as much olive oil and other agricultural goods on world markets as they can that they are now paid to not produce.
Just an idea.Comment
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Re: Euros discarded as impoverished Greeks resort to bartering
It would seem more advantageous to outfit your cellar with grow lights and cultivate another more profitable crop indoors.Originally posted by EJ View Post
Amazing that the greek political bureaucracy makes ours look (almost) stellar by comparison.Comment
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Re: Euros discarded as impoverished Greeks resort to bartering
Hell if you're going to waste the energy anyways, I can think of some plants you might grow with indoor lights for EU consumption.
Moreover, you might power a motor to do any useful (but less profitable) thing you can conceive of.
There just might be something to these perverse Greek incentives.Comment
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Re: Euros discarded as impoverished Greeks resort to bartering
Small indoor studios with lots of lighting may be just perverse. You need space for a bed.There just might be something to these perverse Greek incentives.Comment
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Re: Euros discarded as impoverished Greeks resort to bartering
Fair enough. This was the sort of thing I was envisioning:
Coming from a 625 sqft apartment in the city myself with the two of us, I can imagine plenty of tight closet space that could be put to use...if it weren't for my pride and our $12 monthly utility bills.Comment
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EU lunacy is contagious!
When Poland joined the EU there were college students running around the farms counting how many hens were laying eggs. The egg price support had to be rationed, otherwise the farmers would produce infinite eggs and bankrupt the EU.The Greeks might do better if they split from the EU and produce and sell as much olive oil and other agricultural goods on world markets as they can that they are now paid to not produce.
Let farmers make thier own decisions based on market determined pricing? Horrors !
I hope this country never gets like that, at least any more than it already is!Comment
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Re: Euros discarded as impoverished Greeks resort to bartering
Don't bet on that.....Originally posted by swgprop View Post
A cargo train filled with biofuels crossed the border between the US and Canada 24 times between the 15th of June and the 28th of June 2010; not once did it unload its cargo, yet it still earned millions of dollars. CBC News of Canada was the first to pick up on this story on the 3rd of December 2012, and began their own investigation into the possible explanations behind this odd behaviour.
CN Rail, the operator of the train, stated their innocence in the matter as they had only “received shipping directions from the customer, which, under law, it has an obligation to meet. CN discharged its obligations with respect to those movements in strict compliance with its obligations as a common carrier, and was compensated accordingly.” Even so, they still managed to earn C$2.6 million in shipping fees.
During their investigation CBC managed to obtain an internal email which stated that the cars of the train were all reconfigured between each trip but that the cargo was never actually unloaded, because “each move per car across the border is revenue generated”, the sale of the cargo itself was inconsequential.
http://oilprice.com/Latest-Energy-Ne...er-Unload.htmlComment
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Re: Euros discarded as impoverished Greeks resort to bartering
metalman's greece econ crisis solution...Originally posted by swgprop View Post
1 legalize pot
2 grow
3 export
.
.
.
4 profit
lamps consume electricity... qualify farmer for $$$ subsidy for not growing olives... pot for cash...
ya, man!Comment
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Re: Euros discarded as impoverished Greeks resort to bartering
http://www.washingtonpost.com/blogs/...-on-austerity/
via fark ( see, I'm out scouring the web for you)
An amazing mea culpa from the IMF’s chief economist on austerity
Posted by Howard Schneider on January 3, 2013 at 12:17 pm
Consider it a mea culpa submerged in a deep pool of calculus and regression analysis: The International Monetary Fund’s top economist today acknowledged that the fund blew its forecasts for Greece and other European economies because it did not fully understand how government austerity efforts would undermine economic growth.
The new and highly technical paper looks again at the issue of fiscal multipliers – the impact that a rise or fall in government spending or tax collection has on a country’s economic output.
IMF chief economist Olivier Blanchard writes that the fund misjudged the impact of austerity on European economies. (Stephen Jaffe/IMF)
That it comes under the byline of fund economic counselor and research director Olivier Blanchard is significant. Fund research is always published with the caveat that it represents the views of the researcher, not the institution itself. But this paper comes from the top, and attempts to put to rest an issue that has been at the center of debate about how fast countries should move in their efforts to tame large debts and deficits.
If fiscal multipliers are small, countries can cut spending faster or raise more in taxes without much short-term damage. If they are large, then the process can become self-defeating, at least in the short run, with each dollar of government spending cuts, for example, costing the economy more than a dollar in lost output and thus actually increasing debt-to-GDP ratios.
That is what has been happening with a vengeance in Greece, where fund forecasters, as part of the country’s first bailout program in 2010, predicted that the nation could cut deeply into government spending and pretty quickly bounce back to economic growth and rising employment.
Two years later, the Greek economy is still shrinking and unemployment is at 25 percent.
Of course no two circumstances are alike. Shut out of international bond markets, Greece had little choice but to begin bringing its public finances into line or face a catastrophic default. Financing wasn’t available to sustain prior spending levels. For an economy that has been reeling for several years, however, a billion or two in extra government programs or investment could have kept a few small businesses open and kept a few more families employed and spending.
“Forecasters significantly underestimated the increase in unemployment and the decline in domestic demand associated with fiscal consolidation,” Blanchard and co-author Daniel Leigh, a fund economist, wrote in the paper.
That somewhat dry conclusion sums up what amounts to a tempest in econometric circles. The fund has been accused of intentionally underestimating the effects of austerity in Greece to make its programs palatable, at least on paper; fund officials have argued that it was its European partners, particularly Germany, who insisted on deeper, faster cuts. The evolving research on multipliers may have helped shift the tone of the debate in countries like Spain and Portugal, where a slower pace of deficit control has been advocated.
But the paper includes some subtle and potentially troubling insights into how the fund works. Blanchard – effectively the top dog when it comes to economic science at the fund – writes in the paper that he could not actually determine what multipliers economists at the country level were using in their forecasts. The number was implicit in their forecasting models – a background assumption rather than a variable that needed to be fine-tuned based on national circumstances or peculiarities.
Heading into a crisis that nearly tore the euro zone apart, in other words, neither Blanchard or any one of the fund’s vast army of technicians thought to reexamine whether important assumptions about the region would still hold true in times of crisis.
That, it turns out, was a big mistake. Multipliers vary over time: They may be low in a country where the economy is growing, interest rates are normal and the banking system is sound. As this research showed, they get larger if interest rates are low, output is falling and the banking system is creaky – conditions that make everyone, from households to investors, less likely to spend, and thus makes the role of government-generated demand that much more important.
Blanchard and Leigh deduced that IMF forecasters have been using a uniform multiplier of 0.5, when in fact the circumstances of the European economy made the multiplier as much as 1.5, meaning that a $1 government spending cut would cost $1.50 in lost output.
What are the implications for the future?
This paper may not be an official position of the IMF, but coming from the agency’s top economist, it is bound to change how the agency generates forecasts.
As for fiscal policy – an issue of interest as the U.S. debate turns towards austerity – Blanchard and Leigh said a better understanding of multipliers does not produce any definitive conclusions.
Many countries still need to cut their deficits – some faster, some slower, depending on a host of other factors.
“The results do not imply that fiscal consolidation is undesirable,” the two write. “Virtually all advanced economies face the challenge of fiscal adjustment in response to elevated government debt levels and future pressures on public finances from demographic change. The short-term effects of fiscal policy on economic activity are only one of the many factors that need to be considered in determining the appropriate pace of fiscal consolidation for any single country.”Comment
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Greece to borrow more?
I don't see how Greece is better off in 2023 by borrowing more money in 2013.
I could see them better off by repudiating their debt.
Do they need to run a deficit for a few years to recover? how much deficit, and how should it be spent?
Given thier past history, they will borrow too much and spend it on cushy retirements. Where is the counter example to that, ie, a country which borrowed money and subsequently balanced it's budget?Comment
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Re: Greece to borrow more?
Never ask what might be good for Greece, always ask what is good for the banks & politicians involved.Originally posted by Polish_Silver View Post
It never ceases to amaze me how stupid politicians are who always assume that perverse incentives created by their poorly planned confiscatory tax policies will not result in equally perverse actions by the tax subjects.Justice is the cornerstone of the world
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