"It is easy to confuse what is with what ought to be, especially when what is has worked out in your favor."
- Tyrion Lannister

"Lannister. Baratheon. Stark. Tyrell. They're all just spokes on a wheel. This one's on top, then that's ones on top and on and on it spins, crushing those on the ground. I'm not going to stop the wheel. I'm going to break the wheel."

- Daenerys Targaryen


"The Lord of Light wants his enemies burned. The Drowned God wants them drowned. Why are all the gods such vicious cunts? Where's the God of Tits and Wine?"

- Tyrion Lannister


"The common people pray for rain, healthy children, and a summer that never ends. It is no matter to them if the high lords play their game of thrones, so long as they are left in peace. They never are."

- Jorah Mormont


"These bad people are what I'm good at. Out talking them. Out thinking them."

- Tyrion Lannister


"What happened? I think fundamentals were trumped by mechanics and, to a lesser extent, by demographics."

- Michael Barone

"If you want to know what God thinks of money, just look at the people he gave it to."
- Dorothy Parker

Monday, October 28, 2013

Greece

Interesting pushback by Krugman and DeLong on "Greece!," capital flight and debt crises. The European periphery were constrained by the Euro. In the late 90s Asian crisis, the crisis nations had their debt denominated in foreign currencies.

DeLong links to "Bernard" and Robert Waldmann:

Monday DeLong Smackdown Watch: When Were Expectations of Inflation Forward-Looking? Weblogging

Bernard:
Just to set the historical record straight: Inflation in France topped under the previous (conservative) administration that Mitterands' election threw into opposition. Inflation fell throughout Mitterands first term from 13.4% to 2.7% (see http://france-inflation.com/inflation-depuis-1901.php), even though there were devaluations of the FRF against the DEM (inside what later would become known as the ERM).

Of course any economic historian will remember that the second oil shock linked to the Iranian Revolution took place in 1979-1980 and was rather instrumental for inflationary trends on the one hand, and that the conservative government in France led by R. Barre in the late seventies had abolished price controls on most things.

What Mitterand's election in May 1981 did produce was not inflation, it was instant massive capital flight, which in turn led to a serious current account financing problem by the summer of 1981 as forex reserves collapsed, and that was the immediate reason for the devaluation and the imposition of capital controls. The capital flight of course was linked to political fears as the first socialist administration involved a number of Ministers from the communist party - four as I recall, mostly in junior positions - and a number of industries (mostly banks) were to be nationalised.

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