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[mainiac]

Yes.  Which is an unusual step and very partisan of them to do.

[MetalSlimeHunt]

So, how long until armed robberies and Golden Dawn vs. KKE insurrections?

[Helgoland]

I hate to break it to you, but the 2% target refers to the whole Eurozone...

If Germany needs to have inflation above what Greece and Spain have and Greece and Spain aren't going to have cripplingly low inflation rates then Germany needs to have inflation above 2%.  So when Germany agrees to a 2% long term target and inflation is below target in the south due to a credit imbalance, Germany is required by it's treaty obligations to accept inflation above 2%.  That's how averages work, someone is above and someone is below.

I still don't get what responsibility Germany has for the innflation: It's the ECB's job to take care of that, right? And AFAIK they're trying hard - and failing. It's not like Germany can print new D-Marks to drive up inflation, just like Greece can't just print Drachmas to pay its bills.

[martinuzz]

Yuuuuup.  Too hard to mobalize that many people.

And more to the point, why should the rest of the world pay for Greece's pensions? So they can....not change a thing?

We should not pay for Greece's pensions, we should REpay Greece's pensions, since we (read: Draghi and EU consorts) took them away in the first place by forcing draconic reforms down their throats for years now, in exchange for... the right to borrow more money and get even more debt.

[Helgoland]

Wait, are you saying that if the Eurozone hadn't done squat the Greek economy and state would not be strapped for cash right now?

[MetalSlimeHunt]

I can't really remember a time in which foreign austerity measures ever helped a country.

[martinuzz]

IMO the only sensible solution would be to clear all of Greece's debts.

Don't forget. Europe is as finacially strong as it is now, mainly because the Allies absolved nearly all of Germany's war debt after WWII, as an important pillar of the Marshall plan.

Or more recently, when the Berlin Wall came down, all of the DDR's debts were absolved (and all Ossi's got a 100 Dmark "welcome gift"), which allowed Germany to remain the strongest economy in Europe.

Especially considering the latter, I think Germany should really plea for absovling Greece's debt.

[Reelya]

https://en.wikipedia.org/wiki/Marshall_Plan#Loans_and_grants

Here, it says that originally, all the Marshall Plan funds were to be repayed by Germany, but eventually they settled on repaying about 2/3rds of the amount. So they were not absolved of paying that back, just some were loans, other were grants. Do you have a source that says Germany's War Debt was absolved. If so, who did they owe money to for the war? Presumably to the other Axis nations. Saying they has accumulated War Debt to the US or Britain would seen counterfactual.

As for repaying Greek pensions, how much pensions were they supposedly going to be paying if they went totally broke?

[MetalSlimeHunt]

https://en.wikipedia.org/wiki/Marshall_Plan#Loans_and_grants

Here, it says that originally, all the Marshall Plan funds were to be repayed by Germany, but eventually they settled on repaying about 2/3rds of the amount. Do you have a source that says Germany's War Debt was absolved. If so, who did they owe money to for the war? Presumably to the other Axis nations. Saying they has accumulated War Debt to the US or Britain would seen counterfactual.

Blah blah blah you guys are ignoring the obvious real solution presented here, US invasion of Greece starts tomorrow.

[Reelya]

How do you guys feel about the Gold Standard btw? From what I'm reading, the Gold Standard sounds great. It gives every country the ability to be like Greece (no longer having any control of money supply when the economy overheats or crashes).

The real choices are between a stable commodity currency (either set by gold, or part of a bigger monetary union), where you have liquidity problems if things go south, vs having your own currency, and having the varagies of international exchange rates. In which case Greece would be having a hyperinflation scenario instead of the current situation.

[mainiac]

It's the ECB's job to take care of that, right? And AFAIK they're trying hard - and failing.

The key benchmark rates in the US and Europe are the overnight federal funds rate and the main refinancing option respectively.  Both underpin all bank lending activity in the economy.  Both represent a cost impossed in all debt financed activity in order to reduce the overall level of economic activity in order to fight inflation.  The US one bounces around a little because it's results while the Europe on is a target but the difference is minor enough for our purposes.

Europe:
http://www.tradingeconomics.com/charts/euro-area-interest-rate.png?s=eurr002w&d1=20070101&d2=20151231
US:
https://research.stlouisfed.org/fred2/graph/fredgraph.png?g=1mUZ

The very, very first, immediate, right out of the gate step that a central bank does if it's actually doing everything it can is lower the benchmark rate to 0-25 basis points (i.e. %0.0-%0.25).  There's more then that but if you aren't doing that then everything else is pretty irrelevant anyway.  It took the ECB four years to even get started.

How do you guys feel about the Gold Standard btw?

It has about as much place in economics as homeopathy has in oncology.  But I dont have time before work to get into why.

[SirQuiamus]

How do you guys feel about the Gold Standard btw?

http://www.321gold.com/fed/greenspan/1966.html

An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense - perhaps more clearly and subtly than many consistent defenders of laissez-faire - that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.

 

EDIT: Highlighted buzzwords for clarity.

[Owlbread]

Yes.  Which is an unusual step and very partisan of them to do.

I know I'm a terrible one for endorsing rational actor theory but I'm going to call bullshit on the IMF on that one. It just sounds like rhetoric/bluffing. It's in their interests and the interests of everyone to use the 30 day period.

[Sheb]

Not like they have much of a choice anyway, it's either they might get their money in a month, or they never get it at all.

[Zangi]

So lets not even take that chance?  YOLO