Hacker News Reader

Comment by k__ | Hacker News Reader

Wasn't the problem of countries like Greece and Italy corruption?

Austerity didn't help. The R&R paper that they based the austerity on turned out to not be properly peer reviewed, and surprise, had a some arthmetic errors that when fixed contradict the original result.

Wait what? Could you expand on that?

That seems to be very stupid "mistake" from some very important economists.

https://en.wikipedia.org/wiki/Growth_in_a_Time_of_Debt

Yeah... everyone I talked at the time to said austerity is the wrong tactic.

Italy and Greece have always had corruption. But they didn't always have recession.

Countries get recessions when they pile double-digit deficits and triple-digit sovereign debts hidden from the world with years of accounting fraud, and suddenly banks cease lending them the money they need to keep burning through the cash they don't have.

Greek debt crisis begun when they had 160% of GDP debt, after years of recession, "bailing" packets and the heroic efforts by EU/IMF they now are at 190% of debt. Great success.

You're somehow leaving out the fact that Greece's debt/GDP ratio went up in good part because the true extent of Greece's sovereign debt and structural deficit was uncovered after the inception of thr bailout program, which by itself led to a higher debt ratio.

Also, having to reign in a double-digit deficit by cutiting the state's chronic overspending also lowered the GDP that was kept artificially high by injecting into the greek economy all that borrowed cash.

So, it's disgenuous to insinuate that Greece's bailout program caused any problem when you're actually referring to the natural consequences of:

1) finding out the true extent of Greece's overspending by fixing their accounting incoherences

2) the impossibility of continuing overspending well over 10% of the nation's GDP.

But they did pass ever higher, unsustainable debts to the next generation, which eventually forced them to face reality and stop paying for the corruption with seed corn.

Germany’s byzantine buearoucracy and regulations spilling over the whole EU at this point are a corruption, just different form of it.

Are you saying Germany succeeded in economics where war had failed?

That's... too broad a brush to paint with? Greece

Nope, I think corruption is more of an easy scapegoat. The corrupts are always the entrpreneurs and the politicians, which means the rich and powerful, which means someone else different from the people. Of course corruption is nothing positive and doesn't help, but it doesn't explain the huge amount of missing wealth.

The problem is the lack of free float. Nobody in Europe is as productive as the Germans, therefore they become uncompetitive while being tied to the same currency.

The corruption narrative is just a diversion from the fact that the whole Euro concept was a bad idea to begin with.

Improperly conceived is more accurate. A strong political union is important for a common currency. They should have stuck with free trade and visa free movement ( not permanent relocation) for the level of political union they have.

Reply on news.ycombinator.com