tag:blogger.com,1999:blog-1814467024485189561.post7724674170218165215..comments2024-03-29T00:15:07.421-07:00Comments on Euronomist<br>: The Original Sins: EU's entry decisionsEuronomisthttp://www.blogger.com/profile/09172739717345263308noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-1814467024485189561.post-40316680857615670912013-12-21T16:15:19.247-08:002013-12-21T16:15:19.247-08:00I think the issue here is that countries like Gree...I think the issue here is that countries like Greece did not see that they couldn't compete with countries like Germany when it came to mass production of cheap goods. To be fair, that was Germany's comparative advantage.<br /><br />The problem is that Greece focused on wrong things. If they can make it Germany for 0.01 cents then why make it in Greece for 0.10? <br /><br />Regarding your last paragraph I couldn't agree more. But I think politics came before economics in that decision. And to be honest, Greece could have done much worse than now if it didn't join. I especially like the East Germany simile. It should have made them take a closer look to it but it seems like they chose to look at the positives and not the negatives. Up to the point where it hit them hard...Euronomisthttps://www.blogger.com/profile/09172739717345263308noreply@blogger.comtag:blogger.com,1999:blog-1814467024485189561.post-90628520855372865762013-12-21T10:20:24.080-08:002013-12-21T10:20:24.080-08:00the Merchant banks and their counterparty politici...the Merchant banks and their counterparty politicians who hatched this stitch up under the knowing gaze of the ECB deserve to be held accountable for the losses.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1814467024485189561.post-75220584629084708832013-12-21T10:05:27.413-08:002013-12-21T10:05:27.413-08:00I am surprised that you wouldn't mention the F...I am surprised that you wouldn't mention the Four EU Freedoms among the sins. In my opinion, that’s where the crux of the problem was. The free movement of people and services is ok, BUT: the free movement of products and capital can only be ok among countries which are half-way competitive. To expose an economy like that of Greece, back in 1981, to the free movement of products and capital was an invitation for trouble. For some years, the exchange rate could counterbalance the consequences but with the arrival of the Euro, even that last counterbalance disappeared.<br /><br />You cannot blame a Greek family head for buying foreign toothpaste when it is cheaper (and better?) than Greek toothpaste. You cannot blame him for putting his money, legally that is, in a foreign bank to avoid risks in Greek banks. On a micro level, that is totally rational and justifyable behavior. Regrettably, it’s the kind of micro behavior which gets the macro economy totally out of whack.<br /><br />A country can meet the Maastricht criteria ten times over, as far as I am concerned. If it doesn’t have a competitive economy, it’s going to be blown out of the water once it is exposed to open, international competition at a fixed exchange rate.<br /><br />How anyone could have thought, back in 1981, and particularly in 2001 when Greece changed to the Euro, that the Greek economy could compete successfully with other economies of Europe beats me! This is even more surprising when considering that the EU had a classic precedent to look at --- German unification. There, too, it was thought that if one gives the East Germans a hard currency and money, they will immediately jump on the bankwagon of competitive capitalism. Well, those East Germans who could moved to the West and the others are still struggling even today after over 2 trillion Euros of transfers. The East Germans only had to catch up 40 years of social development relative to the West. The Greeks had to catch up much more!!!kleinguthttps://www.blogger.com/profile/12491174042954678023noreply@blogger.comtag:blogger.com,1999:blog-1814467024485189561.post-18229934802918194772013-12-21T04:39:19.508-08:002013-12-21T04:39:19.508-08:00"The accumulated sins of the Eurozone structu..."The accumulated sins of the Eurozone structures were bound to come and haunt us. They just did sooner than ANYONE expected."<br /><br />Except Milton Friedman and assorted other eurosceptics. But they were obviously mad and xenophobic so don't count. Obviously.Anonymousnoreply@blogger.com