Comments on: Ireland And An Unstable Europe, Again http://baselinescenario.com/2009/01/14/ireland-and-an-unstable-europe-again/ What happened to the global economy and what we can do about it Sat, 21 Nov 2009 02:32:50 +0000 http://wordpress.com/ hourly 1 By: ppp http://baselinescenario.com/2009/01/14/ireland-and-an-unstable-europe-again/#comment-2649 ppp Thu, 15 Jan 2009 15:26:16 +0000 http://baselinescenario.com/?p=1969#comment-2649 Ireland and Greece have a combined GDP of only 360 Euro, that is less than the GDP of New Jersey, Pennsylvania, Illinois or Ohio. The EU could easily and quickly set up a loan facility to bail out Greece and Ireland should that become necessary. Everyone in the EU knows that. The Eurozone economy is in much better shape to weather a down turn than the U.S.economy. The larger Eurozone economies have strong automatic stabilizers and social safety nets. The banking systems in the larger Eurozone economies have been far more prudent in their lending than U.S. banks. Finally, the middle classes of the Eurozone are quite solvent unlike their brethren in the U.S.. On the other hand, the U.S. economy has been ravaged by excessive leverage, massive investment in unproductive assets (real estate), underinvestment in productive assets/activities (education, R&D, transportation, manufacturing) and widespread regulatory failure. The sectors of the U.S. economy that been been growing rapidly over the past eight years are the least productive (health care, government services, defense) sectors. The U.S. economy is now highly inefficient and uncompetitive globally. Many Americans are effectively bankrupt. Unlike the EU, the U.S. economy finds itself in very poor position to withstand a down turn. Ireland and Greece have a combined GDP of only 360 Euro, that is less than the GDP of New Jersey, Pennsylvania, Illinois or Ohio. The EU could easily and quickly set up a loan facility to bail out Greece and Ireland should that become necessary. Everyone in the EU knows that.

The Eurozone economy is in much better shape to weather a down turn than the U.S.economy. The larger Eurozone economies have strong automatic stabilizers and social safety nets. The banking systems in the larger Eurozone economies have been far more prudent in their lending than U.S. banks. Finally, the middle classes of the Eurozone are quite solvent unlike their brethren in the U.S..

On the other hand, the U.S. economy has been ravaged by excessive leverage, massive investment in unproductive assets (real estate), underinvestment in productive assets/activities (education, R&D, transportation, manufacturing) and widespread regulatory failure. The sectors of the U.S. economy that been been growing rapidly over the past eight years are the least productive (health care, government services, defense) sectors. The U.S. economy is now highly inefficient and uncompetitive globally. Many Americans are effectively bankrupt. Unlike the EU, the U.S. economy finds itself in very poor position to withstand a down turn.

]]> By: caustic http://baselinescenario.com/2009/01/14/ireland-and-an-unstable-europe-again/#comment-2647 caustic Thu, 15 Jan 2009 10:43:28 +0000 http://baselinescenario.com/?p=1969#comment-2647 Can the eurozone coordinate policy without the return of Napoleon? Seems to me like they can't even agree about things they obviously agree about. If coordination is as important as you seem to think, then Europe feels doomed to suffer. Can the eurozone coordinate policy without the return of Napoleon?

Seems to me like they can’t even agree about things they obviously agree about. If coordination is as important as you seem to think, then Europe feels doomed to suffer.

]]> By: engineer27 http://baselinescenario.com/2009/01/14/ireland-and-an-unstable-europe-again/#comment-2633 engineer27 Wed, 14 Jan 2009 15:47:51 +0000 http://baselinescenario.com/?p=1969#comment-2633 "Unless you really intend to bring in the IMF for loan discussions, I would suggest it is a bad idea to use those three letters in any conversation..." particularly if you are talking to Tim Geithner. Incidentally, didn't Simon work for the IMF at one time? “Unless you really intend to bring in the IMF for loan discussions, I would suggest it is a bad idea to use those three letters in any conversation…” particularly if you are talking to Tim Geithner.

Incidentally, didn’t Simon work for the IMF at one time?

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