The Asian Crisis Versus The Euro Crisis

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#11
Greece is quite interesting. Ultimately, competitiveness should be restored with the current mode of austerity but via a different mechanism i.e. unemployment and deflation of wages.

Wages are slowly coming down from the days of inflated benefits/wages - as more and more people are unemployed (25% of the youth are jobless), demand>supply and hence wages go down.

Unfortunately, it's a very painful way to restore competitiveness.
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#12
Tourism is a major revenue and employer in Greece
http://articles.latimes.com/2013/may/25/...m-20130526

With the drop in Yen and AUD, people looking to tour there. Not so simple decision for Greece.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
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#13
I would like to look only at Indonesia as an Indian, since Greece is too different from any Asian country. The USD to IDR rate was 8,396 in 2000, just 2 years after the 1997 crisis and again in 2005 crisis the rates fell down to 9705 but the economy made a constituent growth 8,555 in 2010. Today Indonesia is considered as a fastest growing economy behind India and China , but this happend after a political clean up in the country. India is in need of great leadership and this is the demand arising from every corners of the country even from the business tycoons http://ibnlive.in.com/news/leadership-de...789-7.html

But Finance Minister Mr Chidambaram is about to introduce a 10 step plan ....and India should strike back with leaders who is a Harward Business School gradute and a Cambridge universtity graduate in economics Tripose in country's cabinet
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#14
(29-08-2013, 11:39 AM)AlphaQuant Wrote: Greece is quite interesting. Ultimately, competitiveness should be restored with the current mode of austerity but via a different mechanism i.e. unemployment and deflation of wages.

Wages are slowly coming down from the days of inflated benefits/wages - as more and more people are unemployed (25% of the youth are jobless), demand>supply and hence wages go down.

Unfortunately, it's a very painful way to restore competitiveness.

read the history about Greece.

What did they do when they were in recession before they joined EURO? You would find plenty of examples. Greece has constantly been in recession.

Competitiveness was never an option for the Greek in the past and all of sudden, you think they change for the better.
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#15
An article from Paul Krugman. Sharing those highlighted points...

Indonesia, Greece and the unsaved world

Why don’t we learn from financial crises? As Asian currencies fall and crisis strikes, we seem to be making the same mistakes made in the ‘90s.

The rupiah is falling! Head for the hills! On second thought, keep calm and carry on.

In case you’re wondering, the rupiah is the national currency of Indonesia, and, like many other emerging-market currencies, it has fallen a lot over the past few months. The thing is, the last big rupiah plunge was in 1997-98, when Indonesia was the epicentre of an Asian financial crisis. In retrospect, that crisis was a sort of dress rehearsal for the much bigger crisis that engulfed the advanced world a decade later.

So should we be terrified about Asia all over again?

I don’t think so, for reasons I’ll explain in a minute. But current events do bring back memories – and they are, in particular, a reminder of how little we learned from that crisis 16 years ago.

We didn’t reform the financial industry – on the contrary, deregulation went full speed ahead. Nor did we learn the right lessons about how to respond when crisis strikes. In fact, not only have we been making many of the same mistakes this time around, in important ways we’re actually doing much worse now than we did then.

Some background: The run-up to the Asian crisis bore a close family resemblance to the run-up to the crisis now afflicting Greece, Spain and other European countries. In both cases, the origins of the crisis lay in excessive private-sector optimism, with huge inflows of foreign lending going mainly to the private sector. In both cases, optimism turned to pessimism with startling speed, precipitating crisis.

Unlike Greece et al, however, the crisis countries of 1997 had their own currencies, which proceeded to drop sharply against the dollar. At first, these currency declines caused acute economic distress. In Indonesia, for example, many businesses had large dollar debts, so when the rupiah plunged against the dollar, those debts ballooned relative to assets and income. The result was a severe economic contraction, on a scale not seen since the Great Depression.

Fortunately, the bad times didn’t last all that long. The very weakness of these countries’ currencies made their exports highly competitive, and soon all of them – even Indonesia, which was hit worst – were experiencing strong export-led recoveries.

Still, the crisis should have been seen as an object lesson in the instability of a deregulated financial system. Instead, Asia’s recovery led to an excessive showing of self-congratulation on the part of Western officials, exemplified by the famous 1999 Time magazine cover – showing Alan Greenspan, then the Fed chairman; Robert Rubin, then the Treasury secretary; and Lawrence Summers, then the deputy Treasury secretary – with the headline “The Committee to Save the World.” The message was, don’t worry, we’ve got these things under control.

Eight years later, we learned just how misplaced that confidence was.

WHY IT’S WORSE THIS TIME AROUND

Indeed, as I mentioned, we’re actually doing much worse this time around. Consider, for example, the worst-case nation during each crisis: Indonesia then, Greece now.

Indonesia’s slump, which saw the economy contract 13 percent in 1998, was a terrible thing. But a solid recovery was under way by 2000. By 2003, Indonesia’s economy had passed its pre-crisis peak; as of last year, it was 72 percent larger than it was in 1997.

Now compare this with Greece, where output is down more than 20 per cent since 2007 and is still falling fast. Nobody knows when recovery will begin, and my guess is that few observers expect to see the Greek economy recover to pre-crisis levels this decade.

Why are things so much worse this time? One answer is that Indonesia had its own currency, and the slide in the rupiah was, eventually, a very good thing. Meanwhile, Greece is trapped in the euro.

In addition, however, policy makers were more flexible in the 1990s than they are today. The International Monetary Fund initially demanded tough austerity policies in Asia, but it soon reversed course. This time, the demands placed on Greece and other debtors have been relentlessly harsh, and the more austerity fails, the more bloodletting is demanded.

So, is Asia next? Probably not. Indonesia has a much lower level of foreign debt relative to income now than it did in the 1990s. India, which also has a sliding currency that worries many observers, has even lower debt. So a repetition of the 1990s crisis, let alone a Greek-style never-ending crisis, seems unlikely.

What about China? Well, as I recently explained, I’m very worried, but for entirely different reasons, mostly unrelated to events in the rest of the world.

But let’s be clear: Even if we are spared the spectacle of yet another region plunged into depression, the fact remains that the people who congratulated themselves for saving the world in 1999 were actually setting the world up for a far worse crisis, just a few years later. THE NEW YORK TIMES

ABOUT THE AUTHOR:

Paul Krugman is professor of economics and international affairs at Princeton University.

http://www.todayonline.com/world/asia/in...aved-world
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
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#16
Thx bro cf. good reading for econs idiots like me. Lol
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#17
The main reason why I said the Greeks are really long suffering and had it AT LEAST twice as bad as us, for those who actually experienced and remembers AFC. Paper and experience are very different. Notwithstanding of course that Greece basically lied their way into EU with the help of Goldman

"Why are things so much worse this time? One answer is that Indonesia had its own currency, and the slide in the rupiah was, eventually, a very good thing. Meanwhile, Greece is trapped in the euro.

In addition, however, policy makers were more flexible in the 1990s than they are today. The International Monetary Fund initially demanded tough austerity policies in Asia, but it soon reversed course. This time, the demands placed on Greece and other debtors have been relentlessly harsh, and the more austerity fails, the more bloodletting is demanded."
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
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#18
Considering the living standard between Greeks and Asians, is not harsh at all. Neither do they deserve living a life of luxury in the first place nor should they be allow to retire so early.

Just my Diary
corylogics.blogspot.com/


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