Tag: European Union

So is the Greek Crisis Over? Well…


Greece_Time_Shutterstock_500x293So Greece —  in a “pre-chaos state,” according to France’s finance minister  — is choosing the depression it knows over the depression it doesn’t. By all accounts, the new fiscal proposal from Greek Prime Minister Alexis Tsipras pretty much meets creditor demands in exchange for a $60 billion bailout to cover debt repayments between 2015 and 2018. The voters said “oxi,” but their leaders are saying “nai.”

As outlined by Bloomberg, the Tsipras government more or less conceded on budget targets, conceded on sales and corporate taxes (with some tax changes starting a year later), conceded on eliminating early retirement benefits for pensioners, and conceded on the sales of state assets. What’s more, according to the Financial Times, “none of the documents submitted to creditors, including Mr Tsakalotos’s letter and a separate missive from Mr Tsipras, contain any mention of debt relief.” And if debt relief does comes, it seems more likely Greece will be given more time to pay rather than less debt to pay.

Sounds like a mega-blink.

The Libertarian Podcast, with Richard Epstein: “The Crisis in Greece”


On this week’s installment of The Libertarian podcast from the Hoover Institution, Professor Epstein helps us navigate the thorny issues surrounding Greece’s ongoing debt problems, the consequences of last weekend’s plebiscite, and how the European Union should tackle this challenge going forward. And don’t worry — Richard still finds time to take a couple of shots at Paul Krugman.

You can listen in to the podcast below or you take us on the go by subscribing to The Libertarian via iTunes or your favorite podcasting service:

The Story of Greece’s Economic Crisis is More Than a Story About Debt and ‘Big Government’


shutterstock_243975121Greece has been to this dance before, as investment strategist Ed Yardeni notes today:

The first recorded default in Greek history occurred in the fourth century B.C. Back then, 13 Greek city states borrowed funds from the Temple of Delos. Most of the borrowers never made good on the loans, and the temple took an 80% loss on its principal. Greece has defaulted on its external sovereign debt obligations at least five previous times in the modern era (1826, 1843, 1860, 1894, and 1932).

So nothing since 1932? A pretty good run by Greek standards. Anyway, in my new The Week column I point out that Greece’s problem aren’t just about too much debt and crony capitalism. The economy has also suffered from bad macroeconomic policy in the form of a too-tight, inflation-phobic European Central Bank.

The Libertarian Podcast: Greece, Germany, and the European Union


In this week’s installment of The Libertarian podcast from the Hoover Institution, I talk with Professor Epstein about the ongoing debt crisis in Greece. How did they get there? Are Germany and other creditors running the risk of going too easy on Athens—or too hard? Is the collapse of Europe’s currency union only a matter of time? Those are among the questions we’re discussing. Listen in below or take us on your mobile device by subscribing with iTunes or your favorite podcasting app.

How Does Greece Recover?


In my new column for Defining Ideas from the Hoover Institution, I examine the negotiations over how Greece will get out from under its outsized debt to its creditors inside the European currency union. There is a delicate balance to be struck here. If Germany and the other lenders make financial advances on the same terms as the previous advances, they will be throwing good money after bad. The Greeks will again fund short-term consumption not long-term investment. Yet the terms should not be so onerous as to severely weaken Greece’s productive capacity or even push it towards social unrest. The only long-term solution? Greece has to liberalize its economy and unleash the engines of economic growth. As I write:

The solution is to undertake a comprehensive top-to-bottom structural reform of the Greek economy that rests on one simple position: Full steam ahead on deregulation in all markets dealing with capital and labor, which will unlock the productive capacity of the nation. It is here that the rubber hits the road. Greece is legendary for its elaborate set of entry barriers to various trades and professions. It is notorious for the extensive protections that it offers its current workers. And it cannot escape the grim wreckage of a 25 percent unemployment rate that stems as much from these dysfunctional market regulations as anything else.

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Open Markets Are Better Than Destroyed Borders


shutterstock_168752339The situation within Europe is alarming. The so-called Arab Spring — particularly the civil war in Syria — has displaced millions of people and further undermined the traditional system of working nation states in Europe. While not the original cause of Europe’s immigration problem, current events are accelerating them: after a dangerous crossing across the Mediterranean, these refugees are overburdening the European welfare system while leaving their own countries bereft of development.

There can be no doubt that immigration has played an important role in every era of human history. A developing culture depends on exchange: exchange of ideas, exchange of of markets, and exchange of people. Without the Roman invasions, Northern Europe would never have developed civilization. The founding of the United States — closer to our time — was essentially the product of unbounded ideas, a societal tabula rasa created by diligence and hope that lacked the burden of medieval Europe, but preserved the best of its thinkers from Cato, to Cicero, to Saint Augustine, to John Locke. Immigration is the driver of a flourishing culture.

But Europe’s open borders do not represent real exchange, and the problems faced by underdeveloped countries in North Africa and the Middle East cannot be solved by uncontrolled immigration into European welfare states. Indeed, even a short and superficial analysis of the European supranational state must concede that the European Union’s policy of a closed, internal market essentially causes the problems its underdeveloped neighbors face.

Post-Democracy Finds a Fan


Niall Ferguson is a brilliant historian with plenty of brilliant things to say, something that makes his recent article in the Financial Times all the more startling. He’s concerned by the rise of populist parties across the EU. That’s not a problem. But his solution is to have the parties of Europe’s establishment unite against the upstarts (in fact they long have done so, but let that pass):

Populism is back; it is not about to go away. The wrong response is for mainstream parties to pander to the populists. The right response is for the centrists to join forces, hard though it is to bury their ancestral rivalries. I have long been identified with conservatism, though on many issues I am in fact a liberal. The advent of a new era of grand coalitions is good news for me. From now on, I no longer need to deny my allegiance to the extreme centre.