"insan haklari", "sosyal devlet", "isci haklari" "calisma saatleri", "asgari ucret", "toplu sozlesme"
ve buna benzer tonla geyik uzerinden, gercekten katma deger uretenlerin parasina ek sap olma alemi...
Adnan
The Simple Solution to the European Fiscal Crisis
October 17, 2011 by Dan Mitchell
The welfare states of Europe are in deep trouble. Decades of over-taxing and over-spending have sapped
economic vitality and produced high levels of debt.
The high debt levels, by themselves, might not be a problem if European governments implemented good policy.
After all, debt was even higher in many nations after World War II than it is today.
But Europe also faces a demographic problem. The population is aging, meaning that the fiscal situation will get
worse - in some cases, much worse. So international investors are appropriately worried that today’s high debt
levels will become tomorrow’s crippling debt levels.
And the cherry on the ice cream sundae of Europe’s fiscal nightmare is that many people have been lulled into
dependency thanks to excessive government handouts combined with a political culture that tells people there is
nothing wrong with mooching off others (as this cartoon aptly illustrates).
This sounds quite depressing, but there is a shred of hope. Simply stated, nations that hit rock bottom
presumably have little choice but to move in the right direction.
Actually, let me qualify that statement. Governments do have the ability to maintain bad policy if they have access
to bailout cash. And that’s been a problem in Europe. Nations such as Greece have very little incentive to reform
if they think the European Union (German taxpayers) or International Monetary Fund (American taxpayers) will
cough up some cash.
But that game, sooner or later, comes to an end. As Margaret Thatcher noted, the problem with socialism is that
sooner or later you run out of other people’s money.So what, then, should be done to address the European debt crisis? The European political elite in places such as
France and Germany say more bailouts are needed. Why? Because without more bailouts, there will be
contagion and the world will plunge into another 2008-style crisis.
But when you strip away the hysterical rhetoric, what they’re really saying is that bailouts are needed for the
banks in their own nations that foolishly lent too much money to reckless governments in other nations.
As you might suspect, this is self-serving nonsense that would simply create a bigger debt bubble that ultimately
causes bigger problems.
The right answer to the European debt crisis is simple. And it only requires two steps.
1. Do not give bailouts to nations, even if that means they default. This isn’t good news if you
bought, say, Greek or Portuguese bonds, but there are two big advantages of default. First, it means that
the bailouts come to an end so the debt bubble doesn’t get even worse. Second, it forces the affected
governments to move – overnight – to a balanced-budget rule.
So what’s the downside? There isn’t one. The aforementioned bondholders won’t be happy. They gambled
in the expectation that bailouts would enable them to get high returns, but that’s their problem. Overpaid
government workers and greedy interest groups in the affected nations doubtlessly will be very upset
because the gravy train gets derailed, but that’s a feature, not a bug.
2. If banks become insolvent because they recklessly lent money to governments that default,
those financial institutions should be allowed to fail. More specifically, they should be put into
something akin to receivership (similar to what the U.S. did 20 years ago with the S&L crisis and a few
years ago with WaMu and IndyMac, and also like what Sweden did in the early 1990s). This automatically
prevents financial crisis since the financial sector gets recapitalized, but without the moral hazard and/or
zombie bank problems associated with TARP-style bailouts.
So what’s the downside? There isn’t one, at least compared to the alternatives. Governments would be
holding harmless depositors at the failed banks, so there would be additional debt. But this debt would be a
one-time burden for a policy that actually stops the bleeding, and there would be no moral hazard since
shareholders, bondholders, and senior management at the failed banks would get nothing.
This raises an obvious question. If my proposed solution is so simple, why aren’t governments choosing this
option?
Part of the answer is that simple solutions aren’t necessarily easy solutions. We know how to fix America’s fiscal
crisis, for instance, but that doesn’t mean it will happen. Governments will sometimes do the right thing – but only
after they’ve exhausted every other option.
Europe isn’t quite at that stage. Yes, Greece is being allowed to default, which is a small step in the right
direction, but the political elite hope that the right blend of additional bailouts and patchwork reforms can fix the
problem.
I suppose that might happen, especially if the world economy somehow begins to boom. But don’t hold your
breath.
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