The Day After... Italy.

[opebo]

How can this euro thing work without a common fiscal policy?  And if all of this lending by banks to the sickie countries had not occurred, would it be a problem to just let them default?  Someone needs to educate me on this. I feel at sea.

How would the lending 'not have occurred'?  I suppose if it hadn't occurred then there would be nothing to default upon, right?

Actually the don't really need to have a fiscal union, just 100% responsibility for each others bonds.

[opebo]

They need to change the entire structure of their economy, if not their entire national culture.

The rule of the neo-liberal world is that all pleasant cultures are to be destroyed and made Calvinist racks of misery.

But after all that is completely unnecessary:

The European Central Bank, the only effective bulwark against market attacks, wasted no time intervening to buy Italian bonds in large amounts.

"The ECB is buying aggressively," one trader said.

[opebo]

Italy must refinance 200 billion euros in the next year

So.. all of this is over a piddling amount like that?  The ECB could print that in a nanosecond, and everything would be fine.

[opebo]

The markets are jealous gods, and their wrath is not easily assuaged.

Actually they are an illusion.  Behind them are specific government policies, not some kind of 'natural forces' independent of the State.

[opebo]

@opebo: The ECB is not allowed to buy debt directly from governments. Unlike some of its other, errr, unusual traits, that one is actually fairly standard among world central banks. It can only buy on secondary markets.

Interesting, Beet.  That is a predictable limitation, I suppose, but it seems it would be one that could be easily gotten 'round - if the ECB bought up the existing debt at such a rate that it drove up the price, and if 'the markets' had confidence that they would continue to do so with alacrity, then private investors would happily buy all the bonds the Italian government could issue, in order to re-sell them to the ECB at a profit.  Problem solved.

[opebo]

I would point to Greece's glorious 170-year run from 1830 to 2000 when it went from a backward agrarian province of the Ottoman Empire to a modern, industrialized country with a per capita GDP of 90% of France as evidence that not only was the Drachma sustainable, the modern Drachma era was by far the best in the entire history of Greece.

Edit: And as to default, Greece did not default under the Drachma either since WWII.

Precisely, Beet.  The responsibility for the destruction of Greece lies with the Germans, not with the Greeks.

The Euro and the accompanying neoliberal leaning policies have destroyed much of Europe, just as neoliberalism applied though other mechanisms throughout the world has destroyed most of the world economy.

[opebo]

Also I don't think anybody can really dispute the fact that the ECB just broke the law and intervened in the Italian debt auction.

Sweet!  Finally, an actual solution is implemented.

[opebo]

Really? As I've said before if the public sector was as efficient as the private sector it would be true for every business in an economy as well and the Soviet Union, North Korea, Cuba, etc. would have worked.

Does every business in the capitalist world 'work'?  No, I believe many of them fail.

Then explain to me how its a good deal for the median individual in this country to only receive approximately a 2% return a year on the money they put into social security?

That's a fantastic return, Wonk.  Risk-free because it comes from the State.

Compare the fact that the vast majority of government entities can't take debit or credit cards with the fact that you can walk into many restaurants in a developing country and they will accept both of them.

Why should they accept those things, Wonk?  It isn't necessary and doesn't add any benefit.

[opebo]

Guys, this 'efficiency' you honk on about is bought at the cost of 1) lack of access to the products or services for people without money, 2) misery and even death for the toilers within such organizations, and 3) enormous social problems disrupting society as a whole.  Your case is not made (even if it were true that 'privates' are more efficient than 'publics', which is very dubious in the first place).

[opebo]

It is absurd to suggest that technology comes from the 'private sector'.

[opebo]

It is absurd to suggest that technology comes from the 'private sector'.

the windfall profits go to the private sector while the public absorbs the downside risk, standard practice.

Unbelievably naive. At least when a company is allowed to fail it ceases to impact the country. When the public sector does business they end up producing loss after loss after loss that just get picked up by taxpayers via unlimited access to the treasury.

Um.. Wonk, he was talking about the fact that most technology is developed by the State and then 'private industry' just makes off with it risk free.

[opebo]

First that is unbelievably stupid. Every single day there are thousands of little innovations occurring in the private sector because by definition anything that you do, create, or change that allows you to be more efficient is an innovation even if its a tiny change in a system(aka way of doing things).

And all those little cheap, minor innovations are based on the incredibly expensive basic research and development carried out by the State.  (that's what I was getting at with the 'make off with' comment).

Second, what does "downside risk" have to do with technology?

Um, are you kidding me?  Obviously the risk of investing large amounts in technologies that don't 'pay off'.  This investment risk is borne by the State, not the rip-off corporations (in most cases).

[opebo]

This is a confused off-topic discussion, but it's true that there is a problem of externalities involved in scientific research. That is why we have intellectual property rights.

However, intellectual property rights to most technological innovations should by rights be held by the US government.

[opebo]

...Things like interest rates, growth, efficiency, budgets, etc. aren't topics picked because they are "limits of the elite". They are picked because they are reality!

No, they're State policies.

[opebo]

They aren't "designed" they are mathematics. What your essentially saying is that you refuse to believe that 2+2=4 is beneficial for society and so wouldn't it be so much more awesome if 2+2=5. The only difference is with an economy this math spans a lot more areas and is more complicated. I mean you apparently have no desire to have a clue as to what is reality in the world and instead just want continue to say that you believe in economic unicorns.

The legal structure (the force behind) capitalist economy is an act of the State, Wonk.  Nothing about the economic affairs and events you see before you today is a 'natural' phenomenon, and it has no similarity to a mathematical equation.  It is simply political choice - the bad choices of the neo-liberal era since Reagan.

[opebo]

there has actually been a large-scale academic revival of Marxism since the fall of the USSR.

Haha! Not in economics, there hasn't. Not that Marx didn't contribute back in the day, but referring to him in modern economics is like referencing Freud in modern psychology (well, worse actually).

Whether or not a particular school of thought is in fashion, or not, need not effect our own preference for that philosophy, Gustaf.

I deplore most 'modern' thought, and after all that is a sign of good taste, humanity, and a healthy skepticism.  I suggest you cultivate the same qualities, and you may be able to grow up into a worthy man.

[opebo]

Well, you're moving in territory that is largely alien to me. In economics all theories try to explain something.

Sort of like painting-by-numbers?

Since we aren't marxists the outcomes aren't pre-determined, so no.

Oh good lord.  You think you right-wingers don't bring your pre-conceived agenda to your 'studies'?