tag:blogger.com,1999:blog-5882645467378797266.post7079922431343263596..comments2023-07-17T11:55:51.363+02:00Comments on ObservingGreece: Excellent ZDF discussion!kleinguthttp://www.blogger.com/profile/12491174042954678023noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-5882645467378797266.post-6416942635589225892013-03-08T22:08:37.913+01:002013-03-08T22:08:37.913+01:00Reforms, what reforms?
Like you said, the only th...Reforms, what reforms?<br /><br />Like you said, the only thing that has happened so far is fiscal consolidation.<br /><br />I want to stress though that once the damage has been transferred to the real economy, private borrowing and private investment won't take place, due to wounded balance sheets and wounded demand respectively.<br /><br />So what is to happen? Public spending.<br /><br />Public spending will restore balance sheets and aggregate demand. Only then will private borrowing and private investment take place. When that happens, the government is free to retrench and do it's fiscal consolidation.<br /><br />And to not repeat the mistakes of the past, investments and borrowing should be of external (rather than internal) orientation. This is where reforms would be important.<br /><br />So here's an idea for European reform. Maastricht abandons the deficit target, and adopts a current account target. Oh boy, the Germans won't like that.Jim Sliphttps://www.blogger.com/profile/15325962115410722474noreply@blogger.com