Greek Election (5 Viewers)
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What is the moral of this story, @Bjerknes?
What is the moral of this story, @Bjerknes?
I'd think they'd remain in the EU, just not in the Eurozone.
But essentially, that's the million dollar question nowadays. Greece would actually get a currency that reflects their economic capabilities, has a lot of onseuquences, some good, some bad, but no one can really claim to know exactly what will happen.
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In a nutshell:
1. Greek exports would rise
2. Greek consumption of domestic goods would rise
3. Greek inflation would be much higher
4. Greek debt would be much higher effectively (they're mostly in Euro)
5. Greek purchasing power would be much lower.
But the overall effect largely depends on the extent of each of these consequences, the reaction of the people, consumers, investors, politicians, economic development of Europe and the world as a whole,...
But essentially, that's the million dollar question nowadays. Greece would actually get a currency that reflects their economic capabilities, has a lot of onseuquences, some good, some bad, but no one can really claim to know exactly what will happen.
- - - Updated - - -
In a nutshell:
1. Greek exports would rise
2. Greek consumption of domestic goods would rise
3. Greek inflation would be much higher
4. Greek debt would be much higher effectively (they're mostly in Euro)
5. Greek purchasing power would be much lower.
But the overall effect largely depends on the extent of each of these consequences, the reaction of the people, consumers, investors, politicians, economic development of Europe and the world as a whole,...
But that's the problem:
1. The private sector won't invest.
2. They can't base themselves on exports due to the (compared to their capabilities) very strong euro
2.1. Even without the Euro they'd still be uncompetitive due to their overall relative lack of competitive industry
3. Consumers won't spend much 'cause they ain't got much left and wages/penions are abysmal.
Ergo, the only one who can invest and change the fate of the country is the state. That's why saving in recession (austerity) is so dumb economically speaking.
1. The private sector won't invest.
2. They can't base themselves on exports due to the (compared to their capabilities) very strong euro
2.1. Even without the Euro they'd still be uncompetitive due to their overall relative lack of competitive industry
3. Consumers won't spend much 'cause they ain't got much left and wages/penions are abysmal.
Ergo, the only one who can invest and change the fate of the country is the state. That's why saving in recession (austerity) is so dumb economically speaking.
Not sure I correctly understood your first question, but if you meant that the Greek companies don't have much, that's part of the problem I tried to point out. The Greeks can't invest, or it would be very difficult, while foreigners don't necessarily want to invest in Greece.
Concerning your second point, agreed. But that's not an issue that's going to get solved by austerity, on the contrary, evading taxes becomes much more tempting for the masses the poorer they get.
Concerning your second point, agreed. But that's not an issue that's going to get solved by austerity, on the contrary, evading taxes becomes much more tempting for the masses the poorer they get.
And then who gets taxed? The wealthy. This leads to wealthy people NOT wanting to invest their money in a society that is only going to take more from them.
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Whether you break it down to the individual to or smaller companies, they have little capital to invest so why risk losing the little bit you do have when there is little to support the risk is worth it?
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Whether you break it down to the individual to or smaller companies, they have little capital to invest so why risk losing the little bit you do have when there is little to support the risk is worth it?
Not usually. Usually it's the middle class that make enough income to be taxed. You also have to remember that in these countries are generally pretty corrupt so the wealthy don't pay taxes either. So you have a lot of privatization of infrastructure and industry.
So generally, you get nations with very little money in the bank. Trying to entice outside investment.
So generally, you get nations with very little money in the bank. Trying to entice outside investment.
Again, that's exactly my point. The money/investment is not going to come from anywhere else besides the state. Also, if the public hand does invest sensibly, it might incentivise other parties to invest as well, creating a positive spiral as for example with Roosevelt's New Deal or the Marshall Plan. It's a lot of mass-psychology as well, often the believe that the economy will be doing well is a self-fullfilling prophecy, and vice versa.
I see industries like food & retail doing well, perhaps kick-starting small parts of a national economy. That's one way an individual can contribute. We call it consumer confidence here, if I'm not mistaken. Buying small things like clothing, shoes, etc or food will have a positive impact if more people do it. Its a way an individual can contribute marginally. Then, if you look at things like buying new cars that also helps but as you say its a psychological game. If people are afraid their money will be taken unexpectedly they are going to hide it and keep it safe.