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Rephrasing Reagan, R.
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... a guy asks another: "have we really achieved full Neoliberalism? Is this it? Is this now full Neoliberalism?" and the other one says: "hell no!!! things are gonna get a lot worse"
This post is an attempt to use my rather inexperienced and naive instinct in economics in order to respond to the allegations of the necessity of austerity and tight monetary policy. More specifically, I post my reply to the arguments presented in "The Live arguments of austerity right now: A bestiary" by Mr. DeLong . Please, forgive me if I am wrong. The first group stresses the importance of tight monetary policy. "The Jeremy Stein argument" : Stein ignores the other element of GDP; the consumption. With lower interest rates households can more easily substitute future for current income. Secondly, risk premium is added to the risk-free rate both when the risk-free is 0% and when it is higher, e.g. 10%, and hence risky assets yield by definition higher returns regardless the level of the risk-free rate. Therefore, bank managers will always prefer more risky assets due to the higher returns they offer anyway. Thirdly, there is always the Basel Accord tha...
There is something I need to admit... I am sick of the so called "success story" and the naive- false and deceitful, if you are as malicious as I am- declarations of the opposition. Here are the facts: During 2008, Greece produced goods and services of 240 bn euros. During the period April 2012- March 2013 GDP in current prices was 190 bn euros ( EL.STAT .). By the end of March 2013 the debt of the Central Government was 309 bn euros ( Ministry of Finance ), i.e. 161% of Greek GDP. Additional measures need to be taken in order to make sure that the Central Government debt will be less than 110% of GDP by 2022. The most auspicious scenario is that the current taxation will remain unchanged for at least until 2015 with the hope that recession will deescalate. Anyway, I do not really believe that there is any more space left for heavier taxation. On the other hand, we are still missing the big picture: while oscillation between anemic growth and periods of recessions ten...
Perhaps, I am seeing things the wrong way, but here is my thought: Following the 5th review of the IMF and Athanasoglou (2011, Chart4, p.11) on "The role of product variety and quality and of domestic supply in foreign trade" it is more than obvious that Greek firms are the largest importers. That is to say, Greece imports, heavily, factors of production other than labor. So, if Greece's non-labor production factors come from abroad, their prices are, also, set abroad... Therefore, the Greek firms may find it rather difficult to reduce their costs - no matter how labor cost might (?) be reduced - since the non-labor costs are set abroad. With firms finding difficult to reduce their costs, they will, subsequently, find it difficult to reduce their prices. This is a reason why prices did not deflate as wages did, so far, and why the the trade balance ameliorated mostly by the reduction of imports following the contraction of income and economic ...
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