Greece, markets satisfied by EU-IMF Greek debt deal

Comments (3)
DeanMJackson wrote:

The Greek economy has shrunk by nearly 25 percent in five years yet prices haven’t fallen! Why? Because of the European Central Bank’s (ECB) low “stall mode” interest rate policy. Interesting how the ECB and the Federal Reserve continue similar interest rates polices that DON’T WORK. So why would a known policy failure be the policy?

Ladies and gentlemen, until interest rates are allowed to increase to their market-oriented levels, which is way higher than they are now, there can be no recovery, as all economists know. Interest is expected future profit. Low interest = low profit = little investment. High interest = high profit = greater investment. If there is no expected future profit, there won’t be investment, hence there won’t be a recovery.

People save more for investment when interest rates are relatively higher, NOT when the rates are low. If rates are high, people will restrict present consumption for the grater future consumption that investment offers, which the higher return on savings (higher interest rate) makes possible. That isn’t too hard to understand, is it? So why do you think the politicians on both sides of the Atlantic Ocean are doing their best to maintain Western economies on “stall mode”? Anyone out there know the answer?

Of course, when interest rates do rise there will be the natural “correction”, where malinvestments/bad dept are cleared from the economy, allowing the general price level to reach its REAL lower level. Can’t have investment when no one knows what the real general price level is! THEN, after the correction, those high interest rates, commensurate with higher rates of return on investment, will see greater investment, because naturally people like getting better returns for their savings/investments, don’t they?

Ladies and gentlemen, it’s time to throw out the political parties that are destroying our economies in the West in order to encourage fewer Western dollars going to China’s massive military buildup. All that ludicrous policy says is that the West is in panic mode and doesn’t know what it’s doing. China and her ally the USSR could care less about the West’s stupid policy. Why? Because they’ve naturally compensated for it long before the West intentionally imploded its economy. You see, Communists also have brains and are known to come up with contingency plans/strategies.

Nov 27, 2012 11:29am EST  --  Report as abuse
rossryan wrote:

Right…because the last several times they did something to ‘satisfy’ the market, it certainly stayed satisfied a few days later. Because it’s obvious that the market’s biggest concern is a political one, namely keeping keeping the Euro zone unified, and not a fiscal one, namely ensuring that risks / rewards are distributed appropriately. /s.

In short, they’re desperate for good news, and they’re fooling no one. Look forward to the next Greek / Euro crisis in the near future, where they try once again to appease the market, and fail.

Nov 27, 2012 1:09pm EST  --  Report as abuse
potatohead wrote:

Wow! Are they also going to forgive Spanish, Italian, Irish, and Portugese debt?

Nov 28, 2012 1:02am EST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.