asterisk2a + goldstandard   3

The euro crisis: We haven't forgotten how to make depressions | The Economist
GREECE is in a depression. A real deal, no kidding, bad-as-the-1930s depression.

The Greek economy is imploding for no other reason than that the prices are wrong.

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sticky wages = sticky price for everything else

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1930's Depression was excaserbated by countries sticking to the Gold standard.
The Euro is today Greece's, Spain's and so forth (PIIGS) Gold Standard that is ruinous.
EU Politicians made a grave error of judgement and assumptions - and are too stuck up as always to admit mistakes and revert course, OR drive full steam ahead with fiscal integration and assuming liabilities as a whole.

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http://www.economist.com/node/21560252
book  Brussels  policy-makers  politics  economic-thought  goldstandard  gold  sticky-wages  economics  supply-demand  demand-curve  economic  history  Euro  EMU  Europe  policy  folly  policy  error  depression  2012  sovereign  debt  crisis  austerity  Greece  greatrecession  greatdepression 
august 2012 by asterisk2a
All the bail-out systems under the sun cannot make the eurozone work - Telegraph
Their costs are 30-40pc out of line with Germany's. It is a fantasy to believe that such a gap can be closed by "reform". Whereas money values can move up with dazzling speed, the real economy can be improved only slowly.
Consequently, when nominal values get out of line, the problem can only be solved by a price or exchange rate adjustment. Theoretically, this could be through internal deflation but that would increase the real value of debt and depress aggregate demand still more. Deflation is the road to catastrophe.

Throwing yet more money at the vulnerable countries and calling this by a fancy name is not an answer. Just as with the Gold Standard and with Bretton Woods, the system has to break.

There will be more summits and bail-outs, more fudge and mudge, and more money poured into a black hole. But the end is approaching inexorably.

Roger Bootle is managing director of Capital Economics.
bailout  2012  Grexit  default  scenario  default  economic  history  brettonwoods  goldstandard  sovereign  debt  crisis  Europe  EMU  Cyprus  PIIGSFB  PIIGS 
june 2012 by asterisk2a

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