Europe's Populist Left

[Berkut]

Man, a common market and currency, what a great idea that was...

[Sheilbh]

I just went to check Marty's numbers--I doubted he was correct on the Greece/Poland comparison. It turns out Poland is actually ahead of Greece on the PPP standard, but well behind Greece on the nominal standard. Which is an interesting highlight--even in this time of severe crisis for Greece, it is the country with the overvalued currency.

That's kind of grim. The economy's shrunk by a quarter and their currency is still overvalued

[Razgovory]

Man, a common market and currency, what a great idea that was...

A common market wasn't a terrible idea.  The currency thing was though.

[Zanza]

Why would anybody even waste time negotiating with him then if the concept of external obligations doesn't even exist for this Greek government? 

As Pierre Moscovici put it, if elections don't change anything then what's the point?

You can win an election and still acknowledge the fact that you have both domestic and foreign obligations.

If your domestic and foreign obligations cover all of fiscal, labour and economic policy, what can you change?

Do they really? How specific are the policies "dictated" by the Troika? Anyway, my issue with the statement is not that they change policy or that they feel an obligation towards the voter and national interest. My issue with the statement is the word "only". A responsible government should try to have a balanced approach, never ignoring certain factions.

I think the worry that this would happen again. Is a Eurozone that's moved to de facto fiscal transfers better than Grexit?

Greece is hardly the shining beacon that other countries would want to emulate. Why would there be worries that there could be a repeat? The sheer shittiness of Greece's current situation should be motivation enough for all other governments never to go down that road.

However, a lot of parties can benefit from a debt reduction. Tsripas could show that he is a strong politician and acts in the Greek sovereign interest by defaulting on their obligations. The other EU politicians wouldn't have to sell this to their electorates. The parties that lose money are all far away from private citizens and fairly abstract. No one gives a shit about the balance sheet of the ECB or EFSF or whatever.

So why not negotiate a deal and get something back?

Everybody already gets what they want out of the scenario that I outlined. Negotiations won't achieve a better result. The only risk is that the financial markets might overreact to a Greek default, but that as long as they mainly default on debt held by IMF, ECB et al., that shouldn't be a major issue.

Not least that the entire weight of austerity has been placed on the shoulder of normal Greeks. Not those who evade their taxes and benefit from the corruption. As I say if they really do successfully take them on and succeed in even half their measures, that's a great result for Greece and Europe.

I wish them all the best for that. But that's really something they need to get in order. No one but the Greeks themselves will make them a country of taxpayers and enact policies to redistribute the considerable wealth the Greeks have.

[Zanza]

Poland is probably low because minimum wages are a bit "sticky" and Poland is catching up to Western Europe so fast. Also, Poland is having success with neo liberal economics, but Greece not so much.

Did Greece actually try neo-liberal economics?

I just went to check Marty's numbers--I doubted he was correct on the Greece/Poland comparison. It turns out Poland is actually ahead of Greece on the PPP standard, but well behind Greece on the nominal standard. Which is an interesting highlight--even in this time of severe crisis for Greece, it is the country with the overvalued currency.

The figures I find show Greece with a higher nominal and PPP per capita GDP than Poland. I looked at World Bank and CIA.

[alfred russel]

Greece is hardly the shining beacon that other countries would want to emulate. Why would there be worries that there could be a repeat? The sheer shittiness of Greece's current situation should be motivation enough for all other governments never to go down that road.

I disagree. Lets summarize two options as a) austerity, and b) compassionate debt forgiveness & aid.

If the experience of Greece ends up being made to suffer under a) for 6 years or so, and then blossoming under b) if it gets tried, I agree no one will want to go through what Greece has gone through and if they believe they will have to will be significantly deterred.

But, why would anyone think they would have to go down door a) for 6 years? Experience would have shown it doesn't work, while door b) does. A country could reasonably suspect the policy response will be straight to door b) next time.

[Zanza]

I just went to check Marty's numbers--I doubted he was correct on the Greece/Poland comparison. It turns out Poland is actually ahead of Greece on the PPP standard, but well behind Greece on the nominal standard. Which is an interesting highlight--even in this time of severe crisis for Greece, it is the country with the overvalued currency.

That's kind of grim. The economy's shrunk by a quarter and their currency is still overvalued

According to the CIA factbook, Greece's nominal GDP is slightly less than its PPP GDP, whereas Poland has a huge gap between the two. Doesn't that mean that Poland's currency is undervalued and not Greece's currency overvalued? This would be supported e.g. by the Economist's BigMac Index, which puts the Euro undervaluation at 11%, Zloty undervaluation at 48%.

[alfred russel]

Did Greece actually try neo-liberal economics?

The same way they try everything else, sure. 

The figures I find show Greece with a higher nominal and PPP per capita GDP than Poland. I looked at World Bank and CIA.

I went to wikipedia, which on further examination shows 2015 projections for Poland and 2014 for Greece. So that is probably the difference. I think the raw numbers are telling, would you agree?

Poland (2015 estimate):
PPP: $25,703
Nominal: $15,406

Greece (2014):
PPP: $24,574
Nominal: $22,594

[Martinus]

Their GDP per capita is comparable with that of Poland. Their minimum wage (which they still want to increase) is 150% that of Poland.

$400/month sounds awfully low.

Poland is probably low because minimum wages are a bit "sticky" and Poland is catching up to Western Europe so fast. Also, Poland is having success with neo liberal economics, but Greece not so much.

I just went to check Marty's numbers--I doubted he was correct on the Greece/Poland comparison. It turns out Poland is actually ahead of Greece on the PPP standard, but well behind Greece on the nominal standard. Which is an interesting highlight--even in this time of severe crisis for Greece, it is the country with the overvalued currency.

Well, zloty has fell substantially against euro over the last 6 months or so, so that could explain it.

[Martinus]

I just went to check Marty's numbers--I doubted he was correct on the Greece/Poland comparison. It turns out Poland is actually ahead of Greece on the PPP standard, but well behind Greece on the nominal standard. Which is an interesting highlight--even in this time of severe crisis for Greece, it is the country with the overvalued currency.

That's kind of grim. The economy's shrunk by a quarter and their currency is still overvalued

According to the CIA factbook, Greece's nominal GDP is slightly less than its PPP GDP, whereas Poland has a huge gap between the two. Doesn't that mean that Poland's currency is undervalued and not Greece's currency overvalued? This would be supported e.g. by the Economist's BigMac Index, which puts the Euro undervaluation at 11%, Zloty undervaluation at 48%.

Yeah, zloty is substantially undervalued. This is the same phenomenon as the one that caused US bonds to get cheaper as US economy got worse - so conversely, the better Poles are doing, the more zlotys they spend to buy dollars and euros.

[Norgy]

Keeping the zloty undervalued is good for your exports, though. Isn't it?

The NOK is, as far as I can tell, now at a low compared to euros and dollars. Which is actually good news, due to our export industry's importance.
And sort of bad for me as a consumer.

[Ed Anger]

So that is why I get dollar Polack cookie packages at Big Lots. THANKS ZLOTY.

[Martinus]

Keeping the zloty undervalued is good for your exports, though. Isn't it?

Yes, as long as you don't plan vacation abroad or shop at amazon, it is pretty sweet. Not to mention, helps work migration too, as people who save even some euro/pound abroad can really send a lot of moolah home.

I wonder when our sweet ride ends, but Poland has been doing pretty great over the last decade.

[Tonitrus]

My impression is that Poland's sweet rides usually end due to foreign invasion. 

[Martinus]

Well, one area where it sucks is legal services in a big law firm, as we charge our clients in euro, so it is hard to stay competitive. But when we get British, French or German clients, we are still very cheap compared to our colleagues in London, Paris or Frankfurt (the partner rate at a magic circle law firm in Warsaw is EUR 500-550, which is much less than that of Western Europe; mine is 475).