Sovereign debt bubble thread

[frunk]

No.  Follow one rule.  Don't let your debt get too high.  That's it.

I think you need a bit more than that.  It's pretty easy to have public policies that cause your economy to tank without technically going into debt.  Does North Korea have any government debt?

[Admiral Yi]

I think you need a bit more than that.  It's pretty easy to have public policies that cause your economy to tank without technically going into debt.  Does North Korea have any government debt?

Good point.  I left unspoken the assumption that you let markets work and don't try to manage anything.

[The Minsky Moment]

I am sure many Germans are aware of the deep cuts Greece had to endure.

However, Greece didn't reach a primary surplus yet.

There is still more work to be done.
The key is to get GDP down to zero, with zero government spending and no taxes collected.  Then they will reach primary balance.

[mongers]

I am sure many Germans are aware of the deep cuts Greece had to endure.

However, Greece didn't reach a primary surplus yet.

There is still more work to be done.
The key is to get GDP down to zero, with zero government spending and no taxes collected.  Then they will reach primary balance.

Yeah, it's not like country's can ever grow themselves out of problems; they need to consider themselves as a household with one single fixed income and maintain a rigid budget, never going even a cent into debt. 

[Admiral Yi]

Anyone who feels like financing the inevitable surge in Greek output is more than welcome to do so.

[Zanza]

Yeah, it's not like country's can ever grow themselves out of problems; they need to consider themselves as a household with one single fixed income and maintain a rigid budget, never going even a cent into debt. 

Maybe my recollection is wrong, but I was under the impression that Greece did in fact have a cent or two of debt. Didn't seem to have worked out that well for them. So I am not sure what your point here is.

For all I care, Greece can start borrowing again tomorrow to invest into its economy and show us all how austerity was just a big folly. 

[Zanza]

There is still more work to be done.

Seems so. I still haven't heard about a single meaningful reform Greece implemented to make its economy more competitive.

[The Minsky Moment]

Anyone who feels like financing the inevitable surge in Greek output is more than welcome to do so.

That's what Europe signed up to in 2001.  Now they want to run out when the check is due.

[The Minsky Moment]

There is still more work to be done.

Seems so. I still haven't heard about a single meaningful reform Greece implemented to make its economy more competitive.

As long as we are using private economy metaphors -  usually in a restructuring, more money has to be put in.  The altnernative is liquidation.  You can't liquidate and restructure at the same time. 

[Admiral Yi]

That's what Europe signed up to in 2001.  Now they want to run out when the check is due.

The check for all the fun and games Greece had stuffing their faces on deficit spending?  Why does Europe have to pick up that tab?  You eat it, you pay for it.

[Zanza]

No, that's not what we signed up to. It may be what we should have signed up to, but in the end, the monetary union didn't have policies in place for crisis or to handle imbalances.

[mongers]

Yeah, it's not like country's can ever grow themselves out of problems; they need to consider themselves as a household with one single fixed income and maintain a rigid budget, never going even a cent into debt. 

Maybe my recollection is wrong, but I was under the impression that Greece did in fact have a cent or two of debt. Didn't seem to have worked out that well for them. So I am not sure what your point here is.

For all I care, Greece can start borrowing again tomorrow to invest into its economy and show us all how austerity was just a big folly.

See the paradox of thift and how it interacts with the fallacy of composition.

More generally austerity isn't working in Greece either for the government or the majority of the people. 
I'm not suggesting they indulge in a reckless bout of pump-priming, but there has to be better alternative policies/mixes thereof, than the current grind everything into the dust approach.

[Zanza]

Yes. Default, print drachmas.

[The Minsky Moment]

No, that's not what we signed up to. It may be what we should have signed up to, but in the end, the monetary union didn't have policies in place for crisis or to handle imbalances.

Right.  You built a roller coaster without guard rails, seat restraints and brakes, and are shocked, shocked to find that the twerpy kid riding on the back has fallen out.  And while the kid is in mid-air falling, everyone is too busy pointing fingers of blame to catch him.

[mongers]

Yes. Default, print drachmas.

See, it wasn't too hard.