顺德区看守所电话:Leave The Euro To The Pigs

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Allan H. Meltzer
Lending more money to Greece will not end Greece's problem. Greece cannot meet the budget targets set by its agreements with the European Union and the International Monetary Fund (IMF). A core problem is the wide gap between average worker's productivity and the average real wage. The difference is about 15% to 20%; that's the amount by which productivity must increase or real wages must fall to achieve equilibrium.
Since there is no chance that in Greece's state-controlled economy productivity can increase enough to close the gap, there are two outcomes left. One is to remain with the euro and deflate prices and wages 2% or 3% a year for six to 10 years. The other is to devalue the currency (as Greece has done several times in the past). Good luck to those who think any government could endure six or more years of deflation.
One thing is certain: Higher real-estate taxes or income taxes, among other proposals being floated in Athens, will not solve the Greek problem. Nor will a few sales of state-owned assets followed by large layoffs.
Another proposed alternative is another loan from the International Monetary Fund. Yet that delays resolution without solving any problem, and it shifts part of the cost to the countries that pay large shares into the IMF, such as the U.S., Britain and Japan, which have their own severe problems.
And then there is Italy, which has had low growth for a decade or more. Asian competition was too much for many small manufacturers of shoes, textiles and other products that Italy used to export. Italy continues to waste its potential by spending on low-productivity, politically-determined transfer programs. A currency devaluation would help to align Italy's costs with current world conditions. Government spending reductions would free resources for higher productivity uses.
Although the European Central Bank treaty does not permit devaluation, there is a way for Greece, Italy, Portugal and perhaps others (known by the acronym PIGS) to devalue while remaining part of the euro. The northern countries can start a new currency union limited to those who adopt common, binding or enforceable fiscal arrangements like those that German Chancellor Angela Merkel and France's President Nicolas Sarkozy discussed last month. The new currency could float against the euro, allowing the euro to devalue. Once devaluation restored competitive prices in the heavily indebted countries, they could be admitted to the new currency arrangement if, and only if, they made an enforceable commitment to the tighter fiscal arrangement. If all countries rejoined, the old system would restart with a more appropriate, binding fiscal policy rule.
Bondholders would suffer losses from devaluation. Banks that are threatened with insolvency should be permitted either to fail or to borrow from their governments on loans that must be repaid.
We have had enough clever schemes to protect bankers by shifting the cost of profligacy to the prudent citizenry. A permanent solution to the European debt problem requires a lot less finger pointing and much greater efforts to bring an end to the excessive debt and deficit spending. Spare the taxpayers, not the bankers. Let the market work to end the problem by devaluing the troubled currencies.
(Editor's Note: Mr. Meltzer is a professor of public policy at the Tepper School, Carnegie Mellon University, a visiting scholar at the Hoover Institution and author of 'A History of the Federal Reserve' (University of Chicago Press, 2003 and 2009.))
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