Europe's Populist Left

[Martinus]

That's the theory.  I actually lived under 5% deflation for a few years, and it was great.  Real wages went up, everything got cheaper as each month passed, I bought stocks at low prices.  Loved it.

Not so great for the rest of HK though - unemployment went up and real GDP down.
I understand the concept of "public good" is elusive for you.   

He is a civil servant. Is this a rhetorical question?

[Martinus]

That being said, the concept that it is great to buy stocks if their prices keep falling and the economy is contracting, is a novel one. 

Perhaps, I could interest you in a new bridge in Warsaw, Mono? It's very broad and not blocked by protesters.

[Sheilbh]

Surely the Troika's already dead following ECJ ruling?

[Martinus]

Surely the Troika's already dead following ECJ ruling?

What ruling?

[Sheilbh]

On OMT.

[Martinus]

Respected commentators have been referring of recent to Greece's stabilization, even of signs of growth. Alas, 'Greek-covery' is but a mirage which we must put to rest as soon as possible. The recent modest rise of real GDP, to the tune of 0.7%, signals not the end of recession (as has been proclaimed) but, rather, its continuation. Think about it: The same official sources report, for the same quarter, an inflation rate of -1.80%, i.e. deflation. Which means that the 0.7% rise in real GDP was due to a negative growth rate of nominal GDP! In other words, all that happened is that prices declined faster than nominal national income. Not exactly a cause for proclaiming the end of six years of recession!

Sorry, I may be tired/drinking wine but is this right? I thought the GDP growth needs to be adjusted for inflation - so in other words, if there is GDP growth and deflation, it means that the growth is actually higher than the nominal. 

[Martinus]

Dear readers, I understand that, behind your 'demand' that our government fulfills all of its 'contractual obligations' hides the fear that, if you let us Greeks some breathing space, we shall return to our bad, old ways. I acknowledge this anxiety. However, let me say that it was not SYRIZA that incubated the cleptocracy which today pretends to strive for 'reforms', as long as these 'reforms' do not affect their ill-gotten privileges. We are ready and willing to introduce major reforms for which we are now seeking a mandate to implement from the Greek electorate, naturally in collaboration with our European partners.

Didn't SYRIZA split off from PASOK? 

[Sheilbh]

No.

[The Brain]

Why didn't they hand Greece to Stalin?

[The Minsky Moment]

Respected commentators have been referring of recent to Greece's stabilization, even of signs of growth. Alas, 'Greek-covery' is but a mirage which we must put to rest as soon as possible. The recent modest rise of real GDP, to the tune of 0.7%, signals not the end of recession (as has been proclaimed) but, rather, its continuation. Think about it: The same official sources report, for the same quarter, an inflation rate of -1.80%, i.e. deflation. Which means that the 0.7% rise in real GDP was due to a negative growth rate of nominal GDP! In other words, all that happened is that prices declined faster than nominal national income. Not exactly a cause for proclaiming the end of six years of recession!

Sorry, I may be tired/drinking wine but is this right? I thought the GDP growth needs to be adjusted for inflation - so in other words, if there is GDP growth and deflation, it means that the growth is actually higher than the nominal. 

GDP can be stated either in real or nominal terms

Nominal GDP = Real GDP + Inflation.
So if there is deflation (inflation<0), then NGDP<RGDP

Assuming the numbers are correct, then Tsirpas' conclusion follows: total income is declining but there is still some real growth because prices are declining even faster.

[PJL]

Anyway, what is important regarding national debts is the nominal GDP figure. Real GDP may be increasing, but if the nominal value is falling, then the debt/GDP figure is still rising.

[The Minsky Moment]

Bingo,
Payments on debt have to be made in money.  They are nominal payments.  So declining nominal GDP means those payments are harder to make. 

[Admiral Yi]

Yi, I'm particularly interested what your take is on this.

There are some things I agree with, in particular that Greek debt was unsustainable when the program began.

He is in total denial when he says that the bailout imposed terrible austerity on the Greek people.  The troika financed deficits that Greece would otherwise have not been able to finance without the bailout.  The alternative to the bailout, with its strings attached, was even deeper cuts, those necessary to achieve a balanced budget.  When no one will lend you money, that's the only kind of budget you can run.

He is also being a bit disingenuous when he tells Germans that they don't have to worry.  If he does what he says he will, either they will get less of their loan back, get less interest on it, or get it back over a longer time.

[Admiral Yi]

Assuming the numbers are correct, then Tsirpas' conclusion follows: total income is declining but there is still some real growth because prices are declining even faster.

His conclusion, "all that happened is that prices declined faster than nominal national income," is not true.  An increase in real GDP, regardless of the inflation/deflation rate, means Greeks produced more in the current period than they did in the last.

[Monoriu]

On one hand I am frustrated that after Argentina and Greece, governments are still piling up massive debts and deficits.

On the other hand, when I see a new bond pop up with a nice 4-5% yield, issued by some non-African government, I can't stop myself from clicking the buy button.