The Euro collapsing - Stiglitz v Hendry 2

10 Feb 2010

Prof Joseph Stiglitz --
(He is advising the Greek government)
"The issue isn't a bailout -- Greece isn't Citibank, it is a country. There is solidarity.
A debt / GDP ratio of 130% together with real interest rates at 1% or 2%... that's a small fraction of GDP."

Hugh Hendry --
"Hello? Can I tell you about the real world? Greece is paying 7% on 2-year money. In real terms we are talking about 9%. You refer to the rate for the non-cheating countries.
You organize your country in a sensible manner and show fiscal restraint.....but Greece never used the good time to save money. It finds itself compromised because it spent all the money in the prosperity."

Category:

People & Blogs

Tags:

• The
• Euro
• collapsing
• Stiglitz
• v
• Hendry
• 2

[turbomango]

Stiglitz is such a crook. He advised Greece. That tells you plenty as to his competence. Damn crook!

[kaunas888]

With the luxury of hindsight Hugh Hendry looks mighty prescient and Stiglitz looks like a statu quo fool. Guess whose predictions have proven to be right?

[ericclaptonismygod31]

Stiglitz is a fucking moron.

[MrNChoudhury]

@turbomango

Do you really think I support the Euro?

Think about it. If the Euro collapses in a disorderly way there will be definite death spread across the continent. It will also directly lead to the Great Depression part 2 (we never really left part 1).

The answer has to be to hold 'it' together. Notice I did not mention the Euro in that last sentence. Maybe I did fall more on Stiglitz's side on this occassion. But that's not because he is right, it is because he is less wrong.

[turbomango]

@MrNChoudhury You are SO misguided! Why should people be enslaved to debt they did not incur? WHat the F is wrong with your mind?????????

[turbomango]

@RussMaxable Which ever what it's done, it's going to be bad. A State of Debt KILLS societies countries, people. They had no business lying to the European countries about the endgame intentions. Europeans joined as a Free Trade incententive, not to lose their sovereignty! Only Socialist Communism and Fascism (Totalitarian) regimes Socialize corporate debt while Privatizing Profits. They don't care if they go bankrupts. They make up their losses from our taxes. They keep profits.

[MrNChoudhury]

@RussMaxable

Yes Stiglitz clearly mentioned the need to keep the cost of borrowing - the interest rate - low. As long as that happened there would have been no problem. However it's a BIG RISK. If the rate is artificially kept too low for too long then a bubble can occur at the sovereign level. This is exactly what happened. So I do think Stiglitz is right but he turned out to be wrong. The countries should have taken austerity sooner rather than later and support could have been given.

[RussMaxable]

@turbomango you have to understand that he does not want the euro to collapse and all the problems will arise, it is not that he is a fool, it is just that what is going to happen is really bad and that it all has to do with how people think, if people believed that there was no problem it would actually help the interest rates the countries pay and might save the euro, as the thinking changes, so does the danger, it is that I think he is trying to avoid because it is bleak.

[theMAXILOPEZpsycho]

Nobel lauriate!...all you need to know!

[Wolfe3001]

Stiglitz - another idiot who thought he could tell the markets what to do.

[saitzyhorng]

Hugh.... when Greece default, there's great potential a windfall... and you know it. Your interests lie in the ability for markets and economies to do well so that money can be made and in times of financial difficulty, your interests again lie in opportunities when money can be made.

[MrNChoudhury]

@iglwy

You are right in some respects. Those who support the ‘European social model’ have a distrust of financial markets. Keynes said that the market can remain irrational longer than you can remain solvent and speculators who bet against the sovereigns got hit hard. But the euro is a flawed currency that relies on political cohesion across the Euro area to work. Ultimately even the Germans must realize change is needed.

The project will go on like you say. But there is a price to be paid.