The shitstorm moves up the ladder. As I like to point out to anyone who will listen, poorer poor folks eventually make for poorer rich folks!
Greece as VictimBy PAUL KRUGMAN
Published: June 17, 2012
Ever since Greece hit the skids, we’ve heard a lot about what’s wrong with everything Greek. Some of the accusations are true, some are false — but all of them are beside the point. Yes, there are big failings in Greece’s economy, its politics and no doubt its society. But those failings aren’t what caused the crisis that is tearing Greece apart, and threatens to spread across Europe.
No, the origins of this disaster lie farther north, in Brussels, Frankfurt and Berlin, where officials created a deeply — perhaps fatally — flawed monetary system, then compounded the problems of that system by substituting moralizing for analysis. And the solution to the crisis, if there is one, will have to come from the same places.
So, about those Greek failings: Greece does indeed have a lot of corruption and a lot of tax evasion, and the Greek government has had a habit of living beyond its means. Beyond that, Greek labor productivity is low by European standards — about 25 percent below the European Union average. It’s worth noting, however, that labor productivity in, say, Mississippi is similarly low by American standards — and by about the same margin.
On the other hand, many things you hear about Greece just aren’t true. The Greeks aren’t lazy — on the contrary, they work longer hours than almost anyone else in Europe, and much longer hours than the Germans in particular. Nor does Greece have a runaway welfare state, as conservatives like to claim; social expenditure as a percentage of G.D.P., the standard measure of the size of the welfare state, is substantially lower in Greece than in, say, Sweden or Germany, countries that have so far weathered the European crisis pretty well.
So how did Greece get into so much trouble? Blame the euro.
Fifteen years ago Greece was no paradise, but it wasn’t in crisis either. Unemployment was high but not catastrophic, and the nation more or less paid its way on world markets, earning enough from exports, tourism, shipping and other sources to more or less pay for its imports. more
Worrying New Data
Euro Crisis Reaches German IndustryGerman companies believe the euro crisis has damaged their prospects for growth in 2012, according to new figures released on Thursday. Manufacturing activity hit a three-year low and export orders have also seen a sharp drop. The data suggest the crisis is starting to hit the previously robust German economy.
For a long time, the German economic powerhouse seemed immune to the effects of the European debt crisis. In recent weeks, however, economic indicators have begun to suggest that dark clouds may be gathering over Germany.
The latest bad news came on Thursday. New figures showed that Germany's private sector shrank in June for the second month in a row, and manufacturing activity hit a three-year low.
The purchasing managers' index compiled by the research institute Markit based on a survey of 1,000 firms fell by 0.8 points to 48.5 percent -- the lowest figure since June 2009, and below the 50-point mark which is considered to separate growth from contraction. The index for the whole of the euro zone was 46, the same as last month and the lowest level in three years.
Markit's Tim Moore said in a statement that there seems to be "a deepening consensus among German businesses that the euro area turbulence has already damaged their growth prospects for the latter half of 2012." Business outlook in the service sector fell sharply from 55.9 in May to 47.0, the biggest drop in the survey's 15-year history.
The purchasing managers' index for industry also fell by 0.5 to 44.7 points, the lowest value in three years. "German manufacturers were at the forefront of the downturn as a worsening global economic backdrop and the ongoing euro crisis weighed heavily on export demand," Moore said.
In June, export orders saw their biggest drop since April 2009. As a result, industry cut the largest number of jobs in two-and-a-half years. Although the sector sector is still taking on workers, the number of new hires was relatively low in June.
"It is a worryingly steep downturn we are seeing (in Europe) and it is spreading from the periphery, which has been falling at an increased rate, through to Germany," said Chris Williamson, chief economist at Markit. more