The PIIGS still fly

[dcarrigg]

Re: The PIIGS still fly

Five years ago we were all anticipating the demise of the Euro.
Things were bad, and it was obvious that countries in southern Europe would bring down the whole EU.
The fashionable buzzword was "PIIGS", indicating Portugal, Ireland, Italy, Greece, and Spain.
Two quotes from that time still resonate with me. First is iTulip's EJ, who said:



The other was from Mario Draghi, president of the ECB, who said:



Here we are five years later. The Euro stands. Interest rates are pretty reasonable for bonds in Italy, Spain, and Portugal.
Yesterday Greece floated 3 billion euros in new bonds, and investors snapped them up at under 5% yield.
Remember the "Troika" - IMF, ECB, and Germany -lording it over Greece imposing harsh policies doomed to fail?
Germany turned a profit on their loans to Greece and Greece appears stable now.

Self-refection can be profitable when we adjust our old incorrect views.
While the PIIGS fly on, maybe we should talk about how we got that one wrong.

I think in the end things ended up how they are for a few reasons:

1. Much like a subprime car dealership, they stretched out the terms beyond historic norms. 72 month loan on a used car? Bad credit? No problem!
2. In Italy and Greece they baldly defied democratic and legal norms and unilaterally installed bankers as leaders in Monti and Papademos without a vote (or a revolt).
3. The Irish and the Portuguese voluntarily took their medicine. The Irish worst of all. To the tune of 9,000 euro per person.
4. In the end, whether the medicine was forced or taken voluntarily, the austerity has worked its magic. There are fewer than half the hospital beds per person there were before the bailouts, for example. The life expectancy, health, education and other declines in metrics will take years to show up. But they will be real. Ireland had 9 beds per 1,000 people in 1980. It has 4 today. The UK has 10. The US has 9. Greece is down to 3. Portugal is nearing 2. These little stats cause real human suffering. And lots of them are all going to hell either way. It just turns out people are willing to take it and nobody has the will to fight. By the way, Iceland? They told the banks to screw and they're still at 10.

There is real pain going on. But it's being felt by the people they don't care about. Workers. Nurses. The sick. The elderly. The proles. It ain't like the billionaires aren't flying to the US for private concierge medicine at Mass General anyways. I bet the real future in private space travel is 2 hour medevacs from Dubai to Boston.

http://www.iaem.ie/wp-content/upload...ing-160117.pdf
http://www.irishmirror.ie/news/irish...spital-8773475
http://www.irishexaminer.com/breakin...ds-753007.html
https://www.irishtimes.com/news/heal...rugs-1.3087705
http://www.independent.ie/irish-news...-35727959.html

[jk]

Re: The PIIGS still fly

i think that's a great question, and a difficult one. the situation certainly appeared dire enough. i think we expected the greeks to pull the ripcord, or rebel against the harsh regime being imposed. and although they made noises to that effect, ultimately they folded. greece, in the meantime, is too small a fish to precipitate a systemic crisis. spain and italy are more important, and italy at least remains in play. [i haven't been following spanish politics to comment on that.] so it ain't over til it's over. the eurozone is still not a natural currency area and the north-south problems remain unresolved. everything takes 10 times longer than we expect. otoh, there's that "gradually, then suddenly" quote.

[thriftyandboringinohio]

Five years ago we were all anticipating the demise of the Euro.
Things were bad, and it was obvious that countries in southern Europe would bring down the whole EU.
The fashionable buzzword was "PIIGS", indicating Portugal, Ireland, Italy, Greece, and Spain.
Two quotes from that time still resonate with me. First is iTulip's EJ, who said:

...The euro zone member states locked themselves in a cage in 1999 and threw away the key. A fire erupted in the cage after elections in Greece last fall. ..

The other was from Mario Draghi, president of the ECB, who said:

...Within our mandate, the ECB is ready to do whatever it takes to preserve the Euro. And believe me it will be enough..

Here we are five years later. The Euro stands. Interest rates are pretty reasonable for bonds in Italy, Spain, and Portugal.
Yesterday Greece floated 3 billion euros in new bonds, and investors snapped them up at under 5% yield.
Remember the "Troika" - IMF, ECB, and Germany -lording it over Greece imposing harsh policies doomed to fail?
Germany turned a profit on their loans to Greece and Greece appears stable now.

Self-refection can be profitable when we adjust our old incorrect views.
While the PIIGS fly on, maybe we should talk about how we got that one wrong.