Give Hercules some time – a spectacular improvement of the Greek trade balance
from Merijn Knibbe
According to Kash Mansoori deficits on the current account were more important sources of the present crisis in Greece and Spain than government deficits. According to Aaron Tornell and Frank Westermann Greece is not making any progress with improving the indeed ‘whopping’ deficit on its current account. Mansoori is right. And Tornell and Westermann are wrong (as they base themselves on 2009 and 2010). In the first six months of 2011 the trade balance (part of the current account) of Greece has improved dramatically (see graph). This improvement was by far the largest of the entire EU, even in absolute terms. As Greece already had a surplus on the services balance (tourism…) which probably also improved in 2011 this means that the deficit has diminished in a spectacular fashion.
Source: Eurostat.
Warning: (hat tip to Jesse Frederik) the improvement came about as the consequence of a rise in exports of 37% and a decline in imports of 20%. As Greece is in a situation of internal devaluation and not of external devaluation this decline in imports does not (repeat: does not) indicate that the Greek have started to buy domestic food or other products instead of imported products as domestic products became cheaper (the textbook external devaluation scenario). Despite the present 3,7% year on year decline in Greek wages, inflation was still about 5% in the first months of the year – i.e. the domestic price level increased vis a vis the German or Dutch or Austrian or Italian one. Price levels need quite some time to adapt, in a case of internal devaluation. The decrease of imports might well have come about as a consequence of the ‘income effect’: Greek people who can’t afford to pay for life saving imported medicines (or Mercedeses) anymore.
Let’s not fool ourselves: even after the improvement the deficit is still very large (the graph only shows the improvement, not the actual deficit/surplus). But the change does indicate that Tornell and Westermann are wrong to plead for even more harshness. Give Hercules some time (to get out of the Euro).
Leave a Reply
—– look inside —– $5.94 / $20.00
—– look inside —– $4.90 / $8.00
—– look inside —– $15.99
—– look inside —– $5.99 / 12.99
—– look inside —– $5.93 / $12.99
—– look inside —– $4.97 / $9.90
—— Ugarteche, Puyana and Madi ——
Gerson Lima / Maria Alejandra Madi
Edward Fullbrook and Jamie Morgan
————— Michael Hudson ————–
Maria Alejandra Madi / Jack Reardon
————- Edward Fullbrook ————-
—————— Steve Keen —————–
————— Richard Smith —————
————– Gustavo Marques————
– Victor Beker and Beniamino Moro –
————– Lars Pålsson Syll ————-
—————– Stuart Birks —————-
Edward Fullbrook and Jamie Morgan
———— Armando Ochangco ———-
Shimshon Bichler / Jonathan Nitzan
————— Mauro Gallegati ————–
————— Herman Daly —————-
————— Asad Zaman —————
—————– C. T. Kurien —————
————— Robert Locke —————-
Real-World Economics Review Blog 
I wonder how much of this change is due to creative accounting?
The Greeks are reportedly very good at it.
A cursive study of monetary history, alternative currencies, and international exchange via Wikipedia combined with a reveiw of the material available courtesy of the brilliant (if slightly eccentric) S Zarlenga (go to: http://www.monetary.org ) shows that creative accounting is fundamental to the criminal enterprises of Club Fed & Co. You cannot have a Free Market for savvy NeoLib predators unless you have factional reserve banking + fiat currency with floating values + international currency trade + structured investment instruments (futures contracts, options & inevitably complex derivatives) all based on fraudulent deception. All this sophisticated Lilliputian Shell Game jabber is to con the dazed, confused suckers. For a graphic education on the modern history of global corruption, I recommend Adam Curtis’ BBC series “The Trap: What happened to our dream of freedom?” at Youtube. Wikipedia had a great little synopsis that covers the basic principles. And, yes, Helge, it seems the Greeks have been at it for over 3 millennia. They were also adept at cultural & philosophical larceny & plagiarism, especially of Buddhist cultural & philosophical innovations. For more on that, see D Ikeda’s “Buddhism: The first Millennium.” And a deep study of the Chinese & Arabic histories of money & banking will probably help immensely. In what is now China there was a city of 500,000 population that had paper, money, banks, checks, newspapers, etc., 3000 years ago. Sorry, I forgot the name of the city and the big river, but it was pretty far south, if I remember correctly.
PS: Ooops! Instead of “this” Lilliputian Shell Game jabber, I meant to write “the” (jabber AKA dominant NeoLib N-CE BS). Also, I meant to write “paper money” without an intervening comma. Sorry. Oh, by implication, we can’t have a fair, generally equitable, sustainable economy without a stable money system based on a fixed standard of relative values, but without a large majority of honest participants, any system–no matter how pure–can be abused & exploited by determined sociopaths. That is why I see the necessity of a transitional hybrid, a dual system with a nonprofit community credit system as an alternative to Club Fed’s Ponzi Casino scam. Otherwise, there is no alternative for folks who just want a nice relatively simple life & modest affluence for themselves & their kids. The only reason they can’t have that now is because the ecocidal Plutocrats don’t want them to have a nice middle-class lifestyle and a reasonably accurate understanding of reality and the political power that sustains. Why? Because the ‘super-rich’ elitists do, say, and think everything they do because of fear, mostly the fear of pain & loss, especially loss of the illusion of control. That makes them sociopathically obsessed with maintaining control, which is impossible, they can’t really control the world or anybody else & they learn that (sooner or later). So, they become maniacally obsessed with gaining ever greater illusory control (acquired with the aid of the bamboozled masses). Then, after awhile (after so many years & billions it becomes truly meaningless), the thrill is gone. Then they get religion & that usually means a new charity (like the B&M Gates Fdn, etc.). Then they drift ever closer to the ranks of the horrified, bewildered crew of the Titanic and watch their minions scrambling for the best deck chairs. Yes, I do think that THIS IS The End Game phase of predatory capitalism and its unFree Market Economy (AKA Plutonomy). Why else would Congress and Club Fed be doing nothing? In the context of their paradigm, with their stunted world-view there is nothing else left to do. As I’ve suggested for years, if you still don’t get it, try play “Monopoly” by Club Fed rules (with a Goverment-IRS player, calculators, etc.). Go ahead, it won’t take long. Then we should talk about implementing the alternative, outside The Box.
Slow down a bit, Michael! Until we listen to each other and, through understanding, agree on an alternative, it won’t happen. If we are busy agreeing an alternative which doesn’t threaten them, the plutocrats will still want to know what we are up to, and if reduced to Religion, may well be converted. Especially when the alternatives turn out to be essentially the Christian ones (a “transitional hybrid” surviving the Romans, then combining work, art and education locally in Benedictine communities). Especially seeing idiots, like Gadaffi, preferring to go to Hell fighting.
The original graph can be found here: