Posted on 04/25/2010 7:41:20 PM PDT by blam
The Greeks Are About To Be Sacrificed At Europe's Altar
Joe Weisenthal
Apr. 25, 2010, 9:03 PM
Ambrose Evans-Pritchard at The Telegraph has some characteristically sober observations about the state of Greece and the EU as a whole.
The nut of the piece is that typically an IMF bailout wouldn't be devastating, but when an IMF bailout comes under EU rules -- strictly speaking the Maastricht treaty with its no bailouts rules -- the effects will be quite rough.
The EU-IMF "therapy" of deflation for Greece repeats the catastrophic errors of Chancellor Heinrich Bruning in the early 1930s and must lead to a depression, he said.
Yet that is what IMF chief Dominique Strauss-Kahn is preparing for Greece, against the better judgment of his own experts. "Greek citizens shouldn't fear the IMF; we are there to try to help them," he said over the weekend. Yet a week ago he told Greece that devaluation and default are non-starters. "The only effective remedy that remains is deflation. That will be painful. That means falling wages, and falling prices. There is no other way."
[snip]
(Excerpt) Read more at businessinsider.com ...
Coming to a country really really really close to you soon.
We are already in a serious deflationary spiral. We don’t notice it as much as other countries, but it continues.
Beware of Greeks bearing bonds
I wonder if the Russkies could move in and help out their Orthodox brethren.
Interesting that you say deflationary spiral. My husband and I were just talking about the economy this evening and thot we were seeing signs of inflation—raise in interest rates, consumer prices going up....Frankly, I see no prices going down with the exception of the housing sector. What do you see that is deflationary besides real estate? Just wondering.
I think the anger should be directed at the politician who traded votes for the public dollar
That's like blaming someone else for your punishment after you've committed a crime. The Greeks brought everything upon themselves by their out of control spending, unsustainable pay, pensions and benefits for their overstaffed government workers, and their constant fudging of their accounts to make it appear they were complying with EMU regulations, when they were not.
The Greeks can always leave the EMU if they think the conditions are too onerous of course. No one is forcing them to stay inside. In fact some in the German government coalition want the Greeks to leave the EMU.
Or a state near you.
California maybe?
There's a possibility this year's climate will prove as cold as last years and that will raise food prices. At the moment what you are looking at are higher prices brought on by winter temperatures in Florida, Southern Texas and California.
If you recall Nixon's wage and price control deal, you saw a phenomenon of average prices rising as low cost products simply disappeared, and comparable products previously sold at a higher price continued to be sold.
With deflation you find something similar ~ the loss of previously low priced items that are then replaced by previously higher priced items.
This is a consequence of "restocking" costs. Manufacturers lower their prices much slower than the retail side in a deflationary regime.
ping
Interesting about restocking....had not heard that; however, some say that housing and to some extent stocks were in a bubble.
The manufacturers then turn to higher cost items to stay in the market. They can do that as long as supplies hold out, but eventually the higher priced products disappear too.
One of the major characteristics of the Great Depression was that people had money but there was nothing to buy! Moreover, if they put it in a bank there was no interest paid!
Manufacturing ground to a halt and the government took over the home loan industry.
We are not out of the deflationary woods yet.
Economics / Inflation
Apr 25, 2010 - 01:40 AM
By: Gary North
Have you ever seen a documentary where the herd of zebras is at the river's edge? The lions are behind them. The crocodiles are in front of them. What's a wise zebra to do?
Most of them wait. Then, without visible warning, they either run like mad or else plunge into the river.
Sometimes the lions win. Sometimes the crocs win. Most of the zebras survive: the ones in the middle of the pack.
This phenomenon is also known as regression to the mean.
It is easier to move forward than backward. Monitoring the lions at your rear is important mainly to know when to take your chances with the crocs.
What you should be looking for is a place in the river where there is a shallow land bridge. You can get across faster, and the crocs will have a harder time grabbing you.
The trouble is, you can't get onto the submerged land bridge fast enough if you're in the middle of the herd.
INFLATION OR DEFLATION?
[snip]
I think the inflation is starting. There’s another thread today saying food is up 2 percent last month.
Winter happened. It affected the growing areas. Nothing new.
And the Gods were offended at being offered nothing of value.
“I’m from the government, and I’m here to help”.....
hh
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.