Friday, April 23, 2010

The End Of Debtopia

April 26, Monday morning update: Greek 5-year CDS reaches 700 pts. (see chart below).  Assuming a 67% recovery, this works out to a cumulative probability of default (CPD) of 67%.  At 80% recovery, CPD rises to 82%.  These are daunting odds, indeed, and mean that Greece will not likely avoid some sort of "credit event".

Two-year Greek government bonds are quoted 86-87 to yield 12.4%, meaning that the bond market is already pricing in a significant part of such an eventuality. 

Chart: CMA

Greece is turning into history's first failed debtopia, an economy that thoroughly eviscerated its production and earned income foundations to replace them with consumer spending on cheap imported goods and asset inflation, both fuelled by massive foreign debt.  Naturally, GDP growth kept zipping ahead for a while, but so what? To arbitrarily extend the ketchup economics of Larry Summers, Greeks shut down all of their tomato-processing factories,  borrowed a ton of foreign money to turn factories and farmland into expensive condos and bought cheap imported ketchup, instead.  Naturally, there were lots of  domestic jobs in home construction at first, but as soon as credit conditions turned sour it was game over.

Greeks no longer make anything that anyone else wants to buy at the price Greeks demand (see chart below), cannot earn enough money to service their debt properly and - quite obviously - cannot maintain a lifestyle that rose to unsustainable levels because of that ever-higher debt.  Furthermore, they cannot devalue their currency to increase competitiveness and inflate their way out of debt.  Their only choice is domestic deflation and even the head of IMF has pointed this out: "The only effective remedy that remains is deflation" he said a few days ago.

 Table: Eurostat 2009 Yearbook
Greek Labour Productivity Extremely Low

Of course, what Mr. Strauss-Kahn means when he says "deflation" is fresh loans in exchange for a reduction in the domestic cost of production, i.e. lowering workers' wages and benefits, plus a healthy dose of deregulation.  In other words, the standard IMF medicine administered many times with dubious results (think Argentina).

Quite apart from the obvious retort of "lower the cost of making what?", since the Greeks no longer make ketchup, I fear that the IMF's plan for Greece will prove an utter failure, at least as it is envisioned right now.  While I agree that deflation is absolutely necessary, since being a member of the eurozone Greece cannot perform a competitive currency devaluation,  I strongly disagree with the type of deflation that is needed.  To wit, I would recommend debt and asset deflation,  to bring fixed costs in line with what the economy can earn.  

For example, residential and commercial real estate prices should come down enough so that wages and business earnings may once again comfortably cover its purchase or rent.   Right now they don't,  and by a wide margin (e.g. an apartment in Athens can cost several times more than the average single-family house in the U.S.).  Similarly, the country's total debt load should be reduced - instead of increased with more loans from the EU or IMF - to a level where it can be serviced properly by the real economy.

And as an aside maybe I should point out the debtopic similarities between Greece and the United States?  Ah, but the U.S. has its own currency and can devalue at will, you may retort.  Can it, really?


  1. Now the question is: If the path followed is the IMF one (and not yours), what will be the result?

    I am afraid of the answer.

    Note that asset inflation is still seen as a good thing, sacred in these countries [Humans rational?]. People cheer when house prices go up. I am convinced that people will put in place active policies to protect asset values.

    How bad can it go?

  2. Let's try to be "rational", but from a different viewpoint.

    Why should house prices going up be a good thing? Isn't affordability of the second most basic human need (shelter, food being first) a primary goal of organized society?

    Ah,,, but I forgot. We are STILL playing under Chicago BS rules. The (otherwise lunatic) Mr. Market knows everything.

  3. Of course the another view is that markets are irrational and that is precisely why we need markets.

    Be well

  4. Hell,

    Try to explain that to 90% of the people that I know.

    In another front: of course, "rationality" depends on the starting premises. Most of them happen to be unconscious. And yes, I am using the word quite abusively: What I mean is something in like "being able to take perfect, absolute decisions" (whatever that is). Tough philosophical stuff for which sometimes good wording fails.

  5. It's not only rational in that sense, it's ration in the sense that there are hundreds if not thousands of outcomes that we all want and many are mutually exclusive.

    While I don't think you ever can making rational decisions for one outcome, still even if you could, there is the old adage "be careful what you wish for"

    This is medicine in a nutshell. You fix one problem only to create 50 more you never saw were being prevented from emerging from the problem you just solved. NO you solve one, it is unclear the others aren't worse.

  6. Thai,

    Markets are surely better then some vanguard making the "right" decisions.

    But another protection for stupidity that I would trigger in, would be _small_ markets. A globalized market is a massive opportunity to blow up everything at once with so much opaque complexity (even if the actors are fully transparent - which they never are - complexity makes everything difficult to see).

    Of course world government would be even worse.

    Small is beautiful. Humans cannot handle big.

    Joseph Tainter, "The collapse of complex societies" comes to mind.

  7. The notion we can separate local from global is absurd. It's like pretending we have towels to ward off the gaze of the Ravenous Bugbladder Beast of Trall in Hitchiker's guide to the Galaxy: "arguably the most insanely idiotically dense creature in existence. It believes that if you can't see it, it can't see you."

    The people who think we can solve systemic risk by breaking big things into smaller pieces are smoking plastic gonja sold at Wal Mart in my opinion.

    Think global warming- if you think its real- or if not then nuclear weapons or influenza or global energy markets, or world wind patterns or a meteors hitting the planet, etc...

    Everything is connected to everything else whether you like it or not. There is no such thing as small isolated from large.

    There is only change/rates of change and the desire we all have to keep things as they are.

    You may personally want your own illusions to be put back into matrix, and I completely support your right to do so and I'll honestly help you to the degree I can, but that solution won't work for at least some of the rest of us. And for some like me, it's like sipping Jim Jones Kool-Aid as it solves nothing imo.

    Be well my friend

  8. Hell,

    I have to disagree with you.

    The outcome in Greece will not be an "utter failure" at least not from the perspective of the IMF. Things will go exactly as intended and will be perceived in IMF policy circles as a total success.

    It is important to keep in mind that the megalomaniacs running the show at the IMF, i.e. the Globalists, enjoy making people miserable in their quest to control everything.

  9. Thai,

    Things are not black and white. Of course there will be some level of interconnection always. but one can strive to increase autonomy of parts.

    There was a time where my boots were produced in my country, now they come from China. If we reverse this (and reverse it will be via transport costs - oil) we still have some connectivity, but highly increased autonomy.

    There are many alternatives between full connectivity (which will never happen) and none (which will never happen also).

    I prophetize this: protectionism will be raised. Unfortunately it will be not because people understand that less connectivity is better (to current over-connectedness) but because of attrition.

    Anyway the argument that less connectivity is not possible is the exact opposite of what happened through 99.99% of the history of humankind. You might not desire it (I do), but do not confuse it with possibility

  10. The bomb is part of my reality and no towel will change this fact

    Make boots if you will but in my own moral list of budgeting priorities, I'll never pay as much for them, no desire them as much, as better solutions to repair the effects of head and spine truama.

    People have different values and even shoe cobblers get into car and mountain bike accidents.

    When they are not spending their free time on stuff like this :-(

  11. Re: transportation costs going up via expensive oil.

    Don't hold your breath. The greatest enabler of globalization, other than free cross-border capital flows, was that oh-so-boring container box. One of these days someone will write a book about it (smile, someone already has, I'll put it up on my Amazon sidebar).

  12. There is an old joke in computer science which says: Don't underestimate the the network bandwidth of a truck full of tapes.

    I might be overestimating the energy cost of one of those Maersk shipping containers, granted.

    But why would the Chinese keep sending boots over here? What to they get in return that is worth it?

    And many of the things that are transported are either energy intensive on production or on consumption.

    But I might agree with you on this one: I might need to do some belief revision on the cost of slow transportation of goods.

  13. This post has brought up many questions for me:

    1. How does the U.S. compare in terms of labor productivity per person employed and per hour worked?

    2. I thought that the fashionable economic theory of the day was the Austrian school instead of the Chicago school. Both are Libertarian, but is this another area where they diverge (besides the gold standard)? That is to say that Austrians want to allow asset prices to fall, whereas the Chicago school adherents do not?

    And, on a related note, does this reflect an area where Republican / Conservative thought has dominated macroeconomic policy? If true, that gives more credence to Naomi Klein's Shock Doctrine.

  14. Okie, re: comparative productivity

    Make sure that when you ask that question, you don't make this mistake. ;-)

    Be well

  15. Splendid post.

    "Asset deflation = bankruptcy." No practical and humanly possible way way out. Are you asking for a "liquidate" stance by Strauss Kahn ? The guy will never call for that.

    Do not expect a Hoover here. Not a single chance. Remember SK is, first and foremost, a potential French socialist president soon. And will resist as long as necessary to staff, facts logic.

    Everyone is buying time. He will.

    The EURO currency will tank significantly. That may help US sovereign markets for a while. Looks like it is on the agenda.

    But anyway not a single chance IMHO that int'l bond markets survive in the way we know them know.

    IMVHO within five to ten years, trust in international money agreements will have disappeared. At least for long ones. We have historical precedent here...

    No trust, no credit. Every currency zone will be closed again.

    The int'l bond markets will disappeared. And inter-zone exchanges will start looking the old way. The very old one.

    Starting with raw material swaps and prudently improving towards more sensible solution.

    Call that monetary regression. Do not believe that I like it or call for it. It's just on its way.

  16. some comments:
    A. Labour productivity is very well known to have as a major component the assets invested.
    B. Asset prices in open markets cannot fall by central decisions, so this cannot be a policy. They can fall though through reduction of purchase power.
    C. A Greek apartment cannot be compared to a US one because it needs to be and is quite stronger being an earthquake hit area.
    D. A typical greek apartment has 40% the price of a typical spanish apartment, although the work-hour does not differ so much.
    E. One does not need to produce everything, including ketchup, in order to live. He can produce olive oil, transport your goods or provide you with medical or other services.
    F. your tables (of unknown origin) also show that greeks work more than most europeans, not noted in the post.

  17. Sorry abt. the lack of reference to the table. It's from Eurostat. I'll put it up.

    And no it doesn't mean that Greeks work more. In fact, the country has one of the lowest labor participation rates (percentage of population in the labour force).

  18. Nicos, Nicos,

    Being also a proud, PIG, I very much doubt that Hell's idea is to offend PIGS (be Hell can surely speak for *self)...

    I want to note two things:

    Your point F, hours worked: The number of hours worked means nothing. It is how much wealth you produce (definition of wealth is up to you). I notice that us, Southern Europeans work quite long hours compared to Northerners or even Americans (I have work experience with both)... I see no benefit from it.

    Regarding home prices, I don't know how it operates in Greece (maybe the prices are fair, I do not know), but in Portugal (where prices are crazy for average income) with an open market (barely no social housing), if I was the govt, I would lower the price in months. How? By having a property tax (which is really dimes in PT).

    If houses that are vacant were subjected to some kind of property tax, speculators who have houses vacant for YEARS would be (economically) forced to sell.

    The average council tax in the UK (see wiki) is 1.100 Pounds. If one keeps a house "parked" for 5 years, that is 6.6000 GBP for the average house. A good incentive to sell a vacant house.

  19. The first think that crossed my mind when reading this post was the whole issue of labour participation and hours worked per individual.

    I refrained to comment due the the fact that it is a side issue of the post, but it keeps creeping in...

    My pick (suggestion): it is really complex (cultural differences and income differences really creep in - really difficult to make a cross-cultural comparison in my opinion). I think it would be better to avoid the topic for now as it is not the main issue...

  20. "Why should house prices going up be a good thing? Isn't affordability of the second most basic human need (shelter, food being first) a primary goal of organized society?"

    Hell, I can't believe you are so clueless. Government relies on taxes, a large fraction of which comes from the prices of various assets. Property tax is the most direct one, but sales tax is also similar. If all car prices fall by 50%, sales taxes collected from car sales would also go down by 50%.

    You probably noticed that the primary goal here is to save Greek government bonds, not Greek people. How can an effort to save government bonds start with something that lowers taxes?

    By now you should have understood that banks do not give a shit about people. Rentier class wants to extract its rent either directly from people, or from various bailouts (indirectly from people). Rest of the shell games are just to stop people from revolting. In any case, if things come to worst, people will be put against each other so that they do not start shooting their masters.

  21. Amen

    I have an idea!

    Maybe we should take more of a "government is a privileged" attitude?

    So if you prove you can drive with one responsibly, then you get to keep it (say like Danes in Denmark) but if you can play responsibly with one (say like Greeks), then "friends don't let friends have governments". ;-)

  22. Oops, obvious typo

    meant to say ..."if you can't play responsibly with one (say like Greeks),..."

  23. Tiago
    first :) (as a co piig)

    There is property tax in greece, and you are right, taxing can help press properties down. But difficult to decide to add to the downfall market momentum.

    my view of the productivity difference is in my point A.-per capita investments.

    I also agree about the labour participation. There are several factors as if one lives longer than average, percentage of family business, black labor, etc.

    But the main point of the article, the end of debtopia, is true and to most peoples surprise, one could find that there is no "resistance" among the usually prone to loud noise greeks.

  24. Hellasious says:

    "Why should house prices going up be a good thing? Isn't affordability of the second most basic human need (shelter, food being first) a primary goal of organized society?"

    To me, the only relevant question is whether it is politically/econmically feasable to get another housing bubble or some sort of echo bubble going.

    If not, then affordability will increase as a function of the failure to reinflate a bubble.

    Given the fact that private credit origination has dried up (with the popping of the housing bubble bezzle) and soverign debt origination does not seem to be able to fill in the breach, the answer to the question of housing bubble reinflation seems to be "No."

    The question of whether it is a "good thing" is moot if the governments lack the ability/political will to reinflate housing prices.

  25. This is all so seriously **cked up.

    It's quite impossible to lower wages and at the same time prop up artifially asset prices.

    Unless they outright ban building new houses, it will become cheaper to build a house instead of buying artifially overpriced one after wage deflation.

    What they can do is keep things running with more debt for a few years. Enough to get re-elected or exit "gracefully" from the stage.

  26. Time to say goodbye.
    I have really enjoyed hanging out here.
    But it's time to move on, specially as I've already said everything that needs to be said.
    Check out Joe's current piece at
    He says it at least as well as I.
    Our little democratic experiment in the saloon is about as healthy as the big democratic experiment.
    Democracy is born and continues from the bottom up, and not the top down.
    Some people are worrying about when fascist totalitarianism will show up to the U.S.
    They might like to know that Adolf was a great admirer of the North's industrial experiment, and that TPTB financially and technologically advanced Adolf right up to the eve of the U.S.'s entry into the war (and maybe beyond, who knows ?).
    Puts fascism in perspective. Gotta learn your history, and not from the textbooks.
    Check out Roman Polanski's "The Ghost Writer", and you will see why Roman is being punished for this film. And why fascist totalitarianism is already "here".
    Ironic that Greece is the focus of the vultures these days. It WAS.... the cradle of our civilization. A coincidence ?
    But.. WE don't know anything about that any more.
    And we don't even have the grace to be.... confused or feel a twinge of shame about knowing diddly shit about it either.
    Greece produced a myth that we would do well to ponder. The Midas myth, which is taking our culture down, way down.
    Look it up on Wiki.
    I thank the blog for making me acutely aware of just what many people outside the U.S. are currently feeling as they watch an American culture worthy of Herbert's last Dune books bulldozer over their fields, their minds, their hearts, submerging them with tawdry junk, and slick, cynical culcha.
    If I didn't have my... FAITH, and an understanding of what GRACE is, it would motivate me to put a bullet in myself.
    Check out my piece in the saloon called "Letters from Westerbork" about Etty Hillesum, a Dutch Jewess who was an angel of mercy in the transit camps farming people out to Auschwitz. She says "there should be no more words like God, country, hate. There should be no more words. We should be content to just BE".
    I'm hearing you, Etty.
    And I'm gonna work lots on being.
    "May the Lord bless you and keep you
    May the Lord make his face to shine upon you.
    May the Lord lift up his countenance upon you
    And give you peace." Saint Francis, I think.

  27. And Hell ?
    From one writer to another, and as someone who likes and appreciates you, I think that you have too much talent to be wasting your literary gift whoring as a temple prostitute for the God of Mammon.
    Even with 11 000 hits on your name on blogger, and the notoriety the blog is bringing you, you COULD do better. At least, expand your terrain. Into REAL ARISTOCRATIC CULTURE.
    Give yourself the luxury of.. fiddling while Rome burns.
    And read the "Merchant of Venice".
    I will not be blogging any more, I think.
    I'm gonna catch up on my housework. The house is a pigsty.
    That's all folks. I promise.

  28. Dear Debra,

    This being Spring and the house needs cleaning, please come back after you're done and the summer breezes beckon.


    PS.. and thank you for the compliment. I think?

  29. Thank you for your invitation and kind words, Hell, they are balm on my still bleeding wounds. I will remember them.
    You have true grandeur d'âme, but I have already told you this.
    One last repeat : be wary of cynicism and sarcasm. They masquerade as humor, but are not the same thing. They take us down. And right now we definitely don't need this...
    I don't know if I really have found out yet what true humor is :-(, but I definitely know that on this one, I have too much company...
    As I have said to a former English lit prof...
    Keep warm, my friend. (Or... keep cool in summer ? ;-) )

  30. by the way, find here a list of the greek ketcup producers, with phones and everything:
    Easy writing...

    Anyone knows i think that the whole world by now produces mixed products. You don't have to provide everything fully by yourself. Chips from Mexico or Malaysia, on Taiwanese boards with Us Software shipped with Greek ships to Latvia to be sold through a German chain store, maybe using some immigrant sellers..

    By the way Hellas is the official name of Greece, so Hellasious could be interpreted more easily as Greekish :)

  31. "Greece is turning into history's first failed debtopia"
    Failed? They just scored a major bailout. From the looks of it there'll be many more bailouts in the future. Looks to me like the debt gravy train is under full steam.
    Living within their means is for suckers. Live it up, spend, spend spend and let some other dumb sucker pay for it, that's the new mantra.
    When will it end? Either the world runs out of suckers or the suckers run out of money themselves. Either way, until then the party is on!

  32. "Greece is turning into history's first failed debtopia"
    Failed? They just scored a major bailout. From the looks of it there'll be many more bailouts in the future. Looks to me like the debt gravy train is under full steam.
    Living within their means is for suckers. Live it up, spend, spend spend and let some other dumb sucker pay for it, that's the new mantra.
    When will it end? Either the world runs out of suckers or the suckers run out of money themselves. Either way, until then the party is on!

  33. "They just scored a major bailout."


  34. Is Greece really NOT producing anything ?
    Or is Greece just not producing anything that shows up on the radar screen ?
    Since Brussels showed up and the bureaucracy of the EMU, added to the bureaucracy of national government, started getting on everybody's nerves, and actually working to discourage and destroy work and individual initiative, I suspect that the uncharted economy MAY be doing better than some people think. (Don't think that I demonize Brussels, but I don't believe that big is beautiful, and I think that lots of people agree with me on this one. And yes, I know that the uncharted economy ALSO includes some very unsavory practices that I do not condone. But I still say... too many laws, and too much bureaucracy kills the law. And destroys people's desire to cooperate.)
    But... no way to count, or measure it...
    As things progress, more and more of the LIVING economy (what remains...) may move into uncharted territory leaving the... DEAD economy for the bankers, governments and financial paradise people to play with.
    Until their game is up.

  35. Dear Debra,

    If I am not mistaken, you are a psychologist. Here is an excerpt from an email by Fabrice Tourre, the now infamous young Goldman Sachs trader who put togethe r the Abacus deal. The following is from a Reuters story.

    Please analyze, from the shrink's perspective...
    Earlier in 2007, in an e-mail to a friend, Tourre shares his fears that the product he helped create is crumbling -- and he has a sense of humor about it.

    "It's bizarre I have the sensation of coming each day to work and re-living the same agony - a little like a bad dream that repeats itself," Tourre writes. "In sum, I'm trading a product which a month ago was worth $100 and which today is only worth $93 and which on average is losing 25 cents a day ...That doesn't seem like a lot but when you take into account that we buy and sell these things that have nominal amounts that are worth billions, well it adds up to a lot of money."

    He added, "When I think that I had some input into the creation of this product (which by the way is a product of pure intellectual masturbation, the type of thing which you invent telling yourself: "Well, what if we created a "thing", which has no purpose, which is absolutely conceptual and highly theoretical and which nobody knows how to price?") it sickens the heart to see it shot down in mid-flight... It's a little like Frankenstein turning against his own investor ;)"

    Tourre, 28 when he wrote the emails, reflects on the strangeness of being so young, yet being in such a critical role with pressures from those above him at the firm to make money.

    "... I am now considered a "dinosaur" in this business (at my firm the average longevity of an employee is about 2-3 years!!!) people ask me about career advice. I feel like I'm losing my mind and I'm only 28!!! OK, I've decided two more years of work and I'm retiring."

  36. "Please analyze from the shrink's perspective".
    I am a firm believer in thinking by juxtaposing paradoxes.
    Compare Tourre's bizarre impressions of being obsolete at 28 in the middle of his abstract erector set toys to my piece on the lilies in the saloon.
    The one you already read.
    What goes around... comes around.

  37. Upon reflection...
    Playing with abstract erector set toys is a noble and aristocratic occupation which corresponds to a basic human need.
    Running an economy based on that activity is another ballgame completely.

  38. Hello Debra,

    I’ve written about 10 articles in the last year that were 95% done… Just needed to be edited, rearranged or cleaned up. …and then…


    I freeze up and say: “why do I care? Why am I still doing this?”

    I was atop the mountain early, with regards to screaming out to a public that wasn’t listening, trying to let everyone know about the doom and the crime. I reached a point of disgust with everything as I came to the full realization of how bad thing “actually” are… …and what I should/could/would do about it.

    That frustration led to me abandoning the blogsphere for a while… but I did come back. I couldn’t help it. …but the difference now, is that I no longer put the same effort in. I write articles mostly for self satisfaction. I do analysis (that is killer) and don’t share it or even invest on it. I don’t care. Those 95% done article are my way of venting.

    …and the 5% of incompletion is me keeping my sanity. …because it would be insane to think that my, or anybody’s work is going to really make a difference on the reality that we are no longer in control of. My guess… you be back.

    …but not as a cynic. …but rather as the same slave you were before, but just with a better understanding of why.

    All the best, Miss America – Rich Hartmann

    p.s. I started doing what you proposed Hell should do, and use my power for good. I started spending most of my time trying to bring light to the crime, and keep my eye on progress (alt – e and whatnot) A while back you brought up Thorium. (I had never heard of it. One of my 95% -ers was an article on it. Maybe if I get the strength I finish it? …but know that you put that seed in me.)

  39. Rich, it is my firm belief that there will be a time in the not to distant future when collective trustworthiness commands a far higher premium than it does to day.

    Until that time comes

    Be well

  40. the eurostat numbers are here

    and seem not to match your tables...

  41. Hey Rich,
    Thanks for sharing what you just wrote there.
    Would it make you feel better to know that...
    Francis of Assisi said the same thing to HIMSELF way back in 1200, or so ?
    I am in no way trying to make light of the way you feel, as I have often felt the same way myself.
    That is why I feel that we must learn to be as contented as possible with the seemingly LITTLE things that we do, that IN OUR OWN EYES are worth diddly shit, perhaps, but...
    JUST HOW MUCH is the smile of a child, or a stranger WORTH, for example ?
    Please know that you definitely brightened MY day, and that is certainly WORTH a lot to me.
    And.. get out that 95% stuff and get it down somewhere so we can read it (if you haven't already, and if you have, you should stick an address down, at least).
    On the subject of corruption...
    I may be one of the few people who constantly harps on the fact that we are pulling the wool over our eyes on the corruption story.
    Corruption has been around forever. It will always be around.
    And it serves a purpose... innovation and change arrive because of corruption.
    What is more interesting is the way we are getting all worked up about it now.
    Like it is a kind of... decoy for us to keep our minds off our dulled and tired imaginations.
    Too little imagination these days.
    We have dulled down our creativity, AND our imaginations, and THIS is the number one reason why our economy is doing so shitty, Rich.
    And while that 28 year old dude using HIS imagination to invent a new erector set tool MIGHT be "inventing", I say...
    "The expense of spirit in a waste of shame is
    Lust in action".
    Dixit William (Shakespeare) in one of his sonnets, that will blow you away.
    I don't know if you will find it in Wiki though...
    Wiki is SUCH a plebian act...
    (My apologies to the plebe there. They are worth MORE than Wiki, in my book...)

  42. @Rich:

    Did you ever finish that article where you were going to use my quote?

    If you did, I would still like to see it.

    By the way, I more or less gave up blogging for much the same reason. I figured that I had to expend all of my energy trying to figure out how to save myself from the deluge. (And it doesn't seem to be working, anyway.)

  43. Hell,

    If you were asked to lend some of your own personal money today to the Greek government to be paid back in one year what interest rate would you charge them?

    Let's assume you are considering lending euros that you own so no exchange rate considerations.

  44. Dear Nicos,

    The table in your eurostat reference is per person employed only. Mine, also from eurostat is both per person and per hour worked.

    When per person productivity is significantly higher than per hour worked, as it is in Greece (104 vs. 72) it means that Greeks spend a lot of time "working", i.e. spinning their wheels.



  45. To complexify the picture a little bit, news is out that the Belgium government has gone under in YET ANOTHER squabble over the language problem.
    This is indeed rather serious news.
    At least... as serious as the Greek crisis, particularly since Belgium can't seem to work its way out of this linguistic tar pit.
    Can't pretend that politics are not important next to that, ugh, filthy lucre.
    Cause they ARE.
    VERY important, indeed.
    Sure wish our European leaders had figured that out sooner, and before they got stars in their eyes over the EMU.

  46. That spinning wheels reminds me of a history (PIG history)...

    I have a friend, she is very punctual when regarding work: Arrives on time, finishes on time. She happens also to be very productive: She finishes her IT work ahead of the manager's schedule.

    Her line manager then decides to propose her for a bonus. On-time delivery in IT is actually quite rare.

    Response from senior management: denied - She never puts in extra hours.

  47. I hate the language in your article Thai.
    Basically, the ideology behind that science, junk or not, is paternalistic.
    In "1984", the society of Big Brother was paroxystically paternalistic. Which means that you get totalitarianism shoved down your throat FOR YOUR OWN GOOD, of course. Naturally...
    A cage, whether someone offers you a carrot, or hits you with a stick, REMAINS a cage.
    Not for me.

  48. i think this is interesting (if u haven't seen it yet, on LA water and power employees)

  49. (in some parts of the public it might be worse, in greece or the eastern you go)
    To my view is not simply public sector mismanagement. It is not just less strict cultures.
    It is big structures that have similar problems.

    (if it was published twice please delete it :) )