Over at Grasping Reality: David Glasner: Weekend Reading: Ludwig von Mises’s Unwitting Affirmation of the Hawtrey-Cassel Explanation of the Great Depression: “The parallels with the antinomies of the thought of the Ludwig von Mises of today–John Taylor–are, I think, rather striking:

David Glasner: “In looking up some sources for my previous post on the gold-exchange standard…

…I checked, as I like to do from time to time, my old copy of The Theory of Money and Credit by Ludwig von Mises. Mises published The Theory of Money and Credit in 1912 (in German of course) when he was about 31 years old, a significant achievement. In 1924 he published a second enlarged edition addressing many issues that became relevant in the aftermath the World War and the attempts then underway to restore the gold standard. So one finds in the 1934 English translation of the 1924 German edition a whole section of Part III, chapter 6 devoted to the Gold-Exchange Standard…

Over at Grasping RealitySteve Randy Waldman: Weekend Reading: Greece: “I’ll end this ramble with…

…a discussion of a fashionable view that in fact, the Greece crisis is not about the money at all, it is merely about creditors wresting political control from the concededly fucked up Greek state in order to make reforms in the long term interest of the Greek public. Anyone familiar with corporate finance ought to be immediately skeptical of this claim. A state cannot be liquidated. In bankruptcy terms, it must be reorganized. Corporate bankruptcy laws wisely limit the control rights of unconverted creditors during reorganizations, because creditors have no interest in maximizing the value of firm assets. Their claim to any upside is capped, their downside is large, they seek the fastest possible exit that makes them mostly whole. The incentives of impaired creditors are simply not well aligned with maximizing the long-term value of an enterprise…

Over at Grasping RealityArthur Goldhammer: Weekend Reading: The Old Continent Creaks: “Austerity and the failures of the technocratic elite have created the current populist backlash. France’s experience is instructive—and, possibly, ominous:

What’s the matter with Europe? Wherever one looks these days, there are signs of deep trouble. Economic growth has stagnated. Deflation threatens. Unemployment is rampant in many member states of the European Union. Support for the former mainstream parties of the center-right and center-left is waning. Populist parties of the far right and far left are on the rise. Anti-Islamic movements such as PEGIDA in Germany have attracted worrisome support, while in France the xenophobic National Front has topped all other parties in recent polls. Terrorist attacks by native-born citizens in Paris and Copenhagen have raised fears that the social fabric has irreparably deteriorated—fears compounded by the flight of several thousand young Europeans to join the Islamic State in Syria. And to top it all off, Ukraine has been racked by civil war and threatened with disintegration since Russian-backed separatists rejected the rule of the government in Kiev…

Must-Read: Max Galka: The Housing Value of Every County in the U.S.:

Thomas Piketty: Germany Has Never Repaid: “What struck me while I was writing is that Germany…

…is really the single best example of a country that, throughout its history, has never repaid its external debt…. However, it has frequently made other nations pay up…. The history of public debt is full of irony. It rarely follows our ideas of order and justice…. When I hear the Germans say that they maintain a very moral stance about debt and strongly believe that debts must be repaid, then I think: what a huge joke! Germany is the country that has never repaid its debts. It has no standing to lecture other nations…

Must- and Should-Reads:

• Must-Read: Simon Wren-Lewis: The Ideologues of the Eurozone
• Paul de Grauwe: “Accepting that the (restructured) Greek debt is sustainable opens the door to both a softening of the austerity programme and to liquidity support of the Greek banking sector…”
• Duncan Wheldon: “Syriza has transformed from ‘end austerity’ to ‘implement austerity in a left wing redistributionary way’ to ‘slightly tweak existing austerity’. That’s quite a journey in a matter of weeks…”

Might Like to Be Aware of:

• Duncan Black: “Policy positions of Republicans have no bearing on whether the Villagers love them, it’s all about whether they play the ‘serious’ part well. Have the policies of Ted Cruz, just don’t act like him. You’re a moderate!…”
• Imran Rasul: Imran Rasul
• Imran Rasul: Vita

Angel Ubide writes:

@mark_dow Good points.Sadly we'll never know if pre-Syriza growth sustainable. Bberg consensus thought so cc:@delong pic.twitter.com/QpQ1m4vcwN

— Angel Ubide (@AngelUbide) July 4, 2015

Ummmm…

“Pre-Syriza growth” would return Greek GDP to its 1975-1999 trend… never.

“Pre-Syriza growth” was at a pace that would not return Greek real GDP to the 2007 level of the 1975-1999 trend (if you think that was Greece’s “real” potential output in 2007) until… 2023.

“Pre-Syriza growth” was at a pace that would not return Greek real GDP to the 2007 level of potential output (if you think that was Greece’s “real” potential output in 2007) until… 2037.

Splitting the difference, “pre-Syriza growth” would not return Greece to the center-point of estimates of 2007 potential output until 2030. And “pre-Syriza growth” would reduce Greek unemployment from its current levels… never:

Must-Read: Simon Wren-Lewis, who is very smart and has followed the Eurozone crisis much more closely than I have, seems to have joined the Ancient, Hermetic, and Occult Order of the Shrill: “Ph’nglui mglw’nafh Euro R’lyeh wgah’nagl fhtagn!”. We wish him luck with his new appointment at Miskatonic University in picturesque Arkham, Massachusetts. And we are seriously considering, after reading him, whether the Euro project needs to blown up–indeed, whether the fundamental flaw was in U.S. occupation authorities allowing the formation of the Bundesrepublik, because a European Union that now had five members named “Brandenburg”, “Saxony”, “Bavaria”, “Rhineland”, and “Hanover” would be likely to have a much healthier politics and economics than our current one, with one member named “Germany”:

Simon Wren-Lewis: The Ideologues of the Eurozone: “It was all going so well…

…True, Greek GDP did shrink by 25% over 4 years, unemployment rose to 25% and youth unemployment to 50%, but before Syriza’s election Greek GDP had actually stopped falling. Further austerity was planned so that Greece could start to pay interest on its enormous debts, together with various ‘reforms’ that were so obviously in the interests of the Greek economy, and the consensus forecast was that the Greek economy might start to grow at a pace that would also stop unemployment rising. Who knows, in a decade or so it might even fall below 20%. But then disaster struck. The Greek people went and spoilt everything by electing a government that suggested that there might be an alternative…. The real blame must lie with the ‘populist’ politicians who pretended there could be an alternative. The ever patient and understanding Troika negotiators then had to deal with ‘adolescent ideologues’… cheered on by pundits and economists on the left in the UK and US who wanted nothing more than to use Greece as part of a ‘proxy war’ to get more Keynesian policies in their own countries.

If you think the above parody is over the top, click on the two links. The hypocrisy of some of the commentary on Greece is amazing. When the ‘adolescent ideologue’ Mr Tsipras shows a statesman-like maturity in being prepared to compromise… he is accused of inconsistency…. When those who he is negotiating with push him further than he is prepared to go, he is accused of ‘taking Greece to the brink’ by having the temerity to ask the Greek people to choose…. The OECD estimate that the output gap in Greece is currently well over 10%. In plain English that means that those currently unemployed could be producing something useful and GDP could easily expand by at least 10% without generating any increase in inflation. (Greek inflation is currently around -2%)…

• Philip Stephens: Greece should vote for the rule of law
• Angel Ubide: A Political and Intellectual Proxy War over Greece

Must- and Should-Reads:

• James Galbraith: Greece: Only the ‘No’ Can Save the Euro: As Greece prepares for a referendum on its creditors’ demands for austerity, the future of Europe hangs in the balance
• Cardiff Garcia and Diane Coyle: Camp Alphaville videos: Is GDP losing its relevance?
• Simon Wren-Lewis: The Greek people have paid for their governments’ mistakes – and for the errors of the Troika
• Joseph Cotterill: “It’s a Greek debt sustainability analysis by IMF staff… the frankest effort… so far to acknowledge the straits Greece is in regarding its debt to official creditors, and accordingly, their most radical proposal yet to euthanise large parts of that official debt…”
• Phillip Inman and Larry Elliott: IMF says Greece needs extra €60bn in funds and debt relief, issues strong message to Europe by warning that Athens’ debts are unsustainable and it needs 20-year grace period on debt repayments
• Must-Read: Mark Thoma: Austerity: The Public-Sector Jobs Gap
• Must-Read: Miles Kimball: Bruce Greenwald: The Death of Manufacturing
• Must-Read: Mark Thoma: The Problem with Completely Free Markets
• Must-Read: Angel Ubide: A Political and Intellectual Proxy War over Greece
• Must-Read: Paul Krugman: Europe’s Many Economic Disasters

Must-Read: Paul Krugman: Europe’s Many Economic Disasters: “It’s depressing thinking about Greece…

…So let’s talk about something else… Finland, which couldn’t be more different from that corrupt, irresponsible country to the south… a model European citizen; it has honest government, sound finances and a solid credit rating, which lets it borrow money at incredibly low interest rates. It’s also in the eighth year of a slump that has cut real gross domestic product per capita by 10 percent and shows no sign of ending…. If it weren’t for the nightmare in southern Europe, the… Finnish economy might well be seen as an epic disaster. And Finland isn’t alone. It’s part of an arc of economic decline that extends across northern Europe through Denmark–which isn’t on the euro, but is managing its money as if it were–to the Netherlands. All of these countries are, by the way, doing much worse than France…. And what about southern Europe outside Greece?… Spain… real income per capita that is still down 7 percent from its pre-crisis level. Portugal has also obediently implemented harsh austerity — and is 6 percent poorer than it used to be….

What’s striking at this point is how much the origin stories of European crises differ…. The Greek government borrowed too much…the Spanish government didn’t… private lending and a housing bubble… Finland’s story doesn’t involve debt… [but] weak demand for forest products… and the stumbles of Finnish manufacturing…. What all of these economies have in common, however, is that by joining the eurozone they put themselves into an economic straitjacket…. [Was] creating the euro… a mistake? Well, yes. But that’s not the same as saying that it should be eliminated now that it exists. The urgent thing now is to loosen that straitjacket… a unified system of bank guarantees… a willingness to offer debt relief… a more favorable overall environment… by renouncing excessive austerity and doing everything possible to raise Europe’s underlying inflation rate–currently below 1 percent–at least back up to the official target of 2 percent. But there are many European officials and politicians who are opposed to anything and everything that might make the euro workable, who still believe that all would be well if everyone exhibited sufficient discipline. And that’s why there is even more at stake in Sunday’s Greek referendum than most observers realize.