Greece, Texas, and Manhattan

July 6th, 2015 at 10:49 am

PK correctly reminds me (as did a commenter) that in fact, Manhattan did bail out Texas. But my key point (really, the key point of the German economist who made this argument to me), as Paul notes is this:

But of course Manhattan was never asked to bail out Texas; we had a national system of deposit insurance [which the eurozone, of course, does not–JB], and the big Lone Star bailout was automatic.

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11 comments in reply to "Greece, Texas, and Manhattan"

  1. purple says:

    Germany quite obviously wants to scale up its export model to the EZ as a whole. Use the collapse of Greece to enforce a Hartz plan on the EZ (Hartz being the basis for Germany’s export surplus).

    I’m curious why the US is going to allow this since it will be clearly on our backs and will clearly wreck the world economy. It’s bad enough with China running huge trade surpluses.

    Time for Obama to be much more forceful on this issue because, for one, without doing so means his trade dreams will go up in smoke.


  2. Wondering says:

    I wish Obama knew the right thing to do, but I don’t think he does. Few of our world leaders do understand what needs to be done.

    He tries, but he has bad advisors. He has always had bad advisors.

    Why did Biden select Jared as an advisor? Because Jared is a smart, good guy, and Biden is a good guy and a good leader. Obama is a good person, but as an economic leader he’s really bad. He never understood the things that Biden understood.

    Obama’s trade plans will fail to produce what he believes in. We might as well have put Friedman in office. Thomas or Milton? Doesn’t matter. Same difference.


    • Smith says:

      For clarity Friedman advocates conservative policies that are an anathema to mainstream (moderate and liberal) economists (Krugman, Bernstein) who don’t ignore 80 years of accepted wisdom (General Theory published 1936 ) Thomas or Milton

      Milton Friedman (July 31, 1912 – November 16, 2006), came to oppose basic Keynesian economics, fiscal stimulus in the face of recession or depression. While his positions on some matters might have appeared moderate by today’s crazy standards, supporting monetary expansion, and thus presumably perhaps quantitative easing, he represents mainstream conservative economics, supporting deregulation, privatization, and a host of other right wing doctrines.

      Times columnist Thomas Friedman supported Simpson Bowles and is one of the few voices still advocating cuts to Social Security and Medicare, the latest argument made being the most ludicrous, means test them turning them into welfare programs.

      Supporting Simpson Bowles
      http://www.nytimes.com/2012/05/27/opinion/sunday/friedman-president-obama-should-seize-the-high-ground.html

      My Choice for President? None of the Above
      By THOMAS L. FRIEDMAN Published: June 17, 2015
      “And we should be pairing that with phased-in entitlement trims and means-testing to Social Security and Medicare to make sure that these safety nets, as well as discretionary spending on education and research, will be there for the next generation.”
      http://www.nytimes.com/2015/06/17/opinion/none-of-the-above.html

      Sorry, Kids. We Ate It All.
      By THOMAS L. FRIEDMAN Published: October 15, 2013
      “Druckenmiller urges young people to design their own solutions, but, when asked, he recommends: raising taxes on capital gains, dividends and carried interest — now hugely weighted to the wealthy and elderly — to make them equal to earned income taxes; making all consumers more price sensitive when obtaining health care; means-testing Social Security and Medicare so they go to those most in need; phasing in higher age qualifications for entitlements and cutting corporate taxes to zero, so the people who actually create jobs will have more resources to do so.”
      http://www.nytimes.com/2013/10/16/opinion/friedman-sorry-kids-we-ate-it-all.html


      • Wondering says:

        Hey, Smith, Milton was not worthy of his standing. Thomas is just unintelligent.

        These are not smart people.

        That is the similarity.


        • Smith says:

          I would argue they were conservative, they were wrong, or they unable to grasp fundamental consequences of their misguided world view. I wouldn’t argue they weren’t smart.

          In the case of Friedman is interesting. His friend and colleague at the Times, Paul Krugman has written specifically about the fallacy of treating Social Security and Medicare with exactly the same measures Friedman repeatedly promotes.

          Friedman wasn’t just smart, but awfully influential as well, orders of magnitude more than Friedman, and really more than Krugman too.


    • Wondering says:

      Oh my god, the world has lost its wheels!

      Thomas Friedman preaches trade and doesn’t know it means. Milton preached free markets and didn’t know what they meant.

      Milton was not dumb, but he was way too influential for his contribution. His contribution wasn’t large, it was small.

      Thomas talks out of the wrong side of his body, and just lives on the work of others. He has no connection to the productive society he reports on.

      As an anti reporter, I check out now.

      Antireporter Dude, reporting on location in Antimatter Mars, I give it back to you, Delusionist.


  3. Wondering says:

    I’m going to offer my opinion about what Obama should do. It is one thing to criticize bad advisors, it is another to offer better advice. Here I go:

    Obama should talk to Greece directly, bypassing Germany. Talk to them directly and assure them that the US will help them with any shortages in basic necessities. If the US is to lead western capitalism, it has to ignore Germany for the time being.

    Who am I? My brother works on software to help the Deuche Bank. I told him he should quite that job, but he thought I was crazy. But I think he’s coming around. He might leave his job.

    I’m just a guy that understands stuff.

    The US has to help Greece. If Greece is smart, they should play Putin against the west. It is the right thing for them. They’re being demolished by bankers, German and US.

    Stand up to the banks! Bypass them and form a new relationship between the US and Greece.

    It will take a lot more, but it is a start. This kind of advice cannot work in the long term outside a broader strategy, but hopefully he can find that broader strategy somehow.

    Jared, perhaps you need to get back into the admin? I don’t know.


  4. Smith says:

    1) Do German leaders really believe in austerity? If so, there is no deal to be made. Greek restructuring (tax enforcement), or debt write-offs don’t enter the picture until after a way to reduce 25% unemployment appears in the form of less, zero, or complete reversal of austerity. An interesting follow-up would be why Keynesian is discredited.
    2) Do Germans understand the real politik? If they don’t except the Greek’s demand, they get nothing, zilch.
    3) What is the political story inside Germany. There calculations Merkel must make to stay in power, not be blamed for costing German taxpayers money given to Greece
    http://www.nytimes.com/2015/07/07/world/europe/angela-merkel-faces-monumental-test-of-leadership-after-greek-vote.html

    1) All of Europe including the leading nations Germany, France, and Britain, have rejected Keynesian economics and conform to policies of austerity to various degrees.
    2) The internal politics of Germany by necessity demand a Greek exit as the only solution, all but inevitable once leftists came to power promising something to alleviate endless decline.
    3) Due to anger by Germany at having to contribute a portion of a $100 to $200 billion write-off they will instead contribute to a portion of a $340 billion dollar write-off.
    4) The truly interesting question is how long until Greece starts to improve after Grexit, and how does this influence Spain and Italy?


  5. Wondering says:

    Let’s be clear. If clinton attacks Bernie, we’ll reject her.

    Be like Bernie and she’ll win. Play this middle field and she’ll lose again.

    The world has changed. A lot.


  6. Smith says:

    Krugman praises Porter while making important correction to history of German hyper-inflation and real reason for rise of fascism
    http://krugman.blogs.nytimes.com/2015/07/08/deflation-and-you-know-who
    Somehow, Krugman seems to have missed the Piketty interview of June 27 which became widely reported a few days ago
    https://medium.com/@gavinschalliol/thomas-piketty-germany-has-never-repaid-7b5e7add6fff
    and then that reporting itself became a story due to some copyright issues
    https://www.techdirt.com/articles/20150706/23151331566/copyright-takes-down-high-profile-translation-thomas-pikettys-comments-germany-greek-debt.shtml

    Thus the Washington Post, the Huffington Post, Quartz, Slate, Business Insider, Fortune, Marketwatch, and Vox, were reporting on the Piketty interview, while the Times printed a front page Business Section analysis piece afterwards with the same idea without so much as a mention of the currently the most famous internationally known economist of our time.

    But I digress. Greece should exit as Krugman wants, to prove to the world the fallacy of austerity and soundness of Keynesian economics.


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