12 points re Greek austerity, growth, competitiveness

November 27, 2012:

These are some thoughts I tweeted last night before and after the Eurogroup decision on Greece:

1) What is the elephant in the Eurogroup presser room? GDP growth!

2) Reminder: The best way to bring down any debt/GDP ratio is GDP growth. Not rocket science, is it, except for the Euro austerians!

3) The Euro crisis is now in its 4th season! So is Fringe, but it's its final season (for Fringe).

4)  If Greece had 1 cent (Ok, maybe 1 euro) for every time int'l media have mentioned Greece in connection to crisis 3 yrs now, it would have no debt by now!

5) In 2004, I wrote an article "after 2004, what?". Tonight I ask, after tonight, what? Greece always needs a real growth model, above all. As again I wrote before, in 2004, Greece needs to make exporting its new national sport.

6) Greece has been extremely loyal to the EU Single Market and the WTO. But alas mostly on the imports side! Needs growth and exports.

7) Greece has a great econ model. It's called Tourism. And assets such a climate. No sense being "Wall St yuppie" in "Jamaica" imho

8) Whether with euro or drachma, Greek economy has to grow. And that means more industry and much much more tourism revenues! And exports.

9) It also needs to develop the companies that will produce products that will replace imports, trade balance is one of the keys to GR growth.

10) Now, and always, Greece needs a growth model that fits it, not imports of models or parts of models from Ireland, Finland, Germany etc! The same applies to every country/economy imho.

11) For Greece, PIIGS and others to achieve growth, a key issue is: What will the Euro exchange rate v-a-v USD, Yuan etc be like 2012-2020/22

12) Romney-Ryan lost and now there seems to be accord on Greece. Seems the world moves in right direction after all!

7 points in defense of Greece

1) Greece does not use nuclear for energy thus does not risk the safety of others, as many other EU/Eurozone states (and others) do.

2) Greece does not use ultra low corporate taxation, thus does not take taxable income away from other EU/Eurozone and other countries/states.

3) Due to geo position (and lack of a US of E), Greece has to spend for defense per capita more than anyone in the EU. EU/Eurozone "paymasters" Germany, France, NL are among the main sellers of arms.

4) Greece has been too loyal a believer in the EU Single Market concept (but alas only on the imports side)

5) Greece joined the EEC and then the EMU/Euro primarily not for economic but other (especially security) reasons (many others did too).

6) Greece's geo location (no land borders with the rest of the EU until 2007 and none with the rest of the Eurozone even today) affects the competitiveness of its exports (existing and potential).  

7) Greece's geo morphology (islands etc) breaks its internal market into many local ones thus hindering economies of scale and competition.

Some things are not the Greeks' fault

Some things are not the Greeks' fault! 

 The Greeks/Greece have in the last 2.5 years been blamed by many analysts, commentators, media etc for the Eurocrisis. 

The main premise for the blame is their perennial government deficits and resulting national debt. One can debate that, but that's not the point of this post. 

 The point is: So many allegedly "successful" country (national) economic models are actually based on gimmicks, "piggybacking" on other countries, myths/stereotypes, etc! 

For example: Some countries over-rely on exports (trade surplus). While some exporting is of course a very good thing, there are limits. 

A country cannot and should not rely too much on the consumers of other countries (that a perennial trade surplus indicates). 

All in moderation. Some countries rely on tax competition (too low tax rates, off-shore tax heavens, etc). Nothing to be proud of. 

On the contrary. 'Some countries' economic model takes advantage of nuclear energy, putting into risk their neighbours and the whole planet! 

The same, but to a different extent and nature, applies to CO2 emitting industry. 

Past and present mega polluters (see global warming). 

Originally posted in https://npthinking.blogspot.com