On Thu, 26 Mar 2015 09:23:52 -0500, dpb wrote:

On 03/26/2015 7:32 AM, Ed Huntress wrote:
...

To give you an idea of how much all of this upends common sense, note
that Luxembourg, a tiny country with a very successful economy, has a
per-capita external, national debt that is THIRTY-FOUR TIMES that of
the United states. How do they manage that? By holding comparably
large amounts of the debt of OTHER countries.

...

To show how it _does_ make sense, on a per GDP basis, Luxemborug ranks
down at 50+ on the above list where the PIGS are almost consonant to the
top tier.

Which "above list" are we talking about here?


They (Loux) have plenty of national economic engine comparatively to be
able to service what they've got and hence they _can_ refinance it
because the markets aren't concerned they will default.

While these events aren't necessarily the end of the world market-wise,
these "crises" at best add volatility to world markets and potential
large retractions at worst; how much is dependent upon all kinds of
things including just what the overall state of the global economy is at
the time as well as other unstabilizing events which may/may not occur
at or near the same time. The key thing they do, however, is continue
to keep confidence in the particular economy from growing which is, as
noted before, the bane of solving the problem for the longer term by
growing investment and venture; folks just tend to find more stable
places to try to do that.

Is this a total explanation? Of course not; it is, as you say an
extremely complicated system. OTOH, that these particular countries
have a specific common characteristic isn't chance; it's indicative of
endemic problems in their basic economies/social structures.

Well, yeah. I thought that our disagreement here, though, was, first,
over government employment:.

The two data points are connected - Greece has far more government than
is healthy or affordable.

This, as we saw from actual figures, is hardly the cause of Greece's
problems, and Greece's percentage of government employees is not
especially high.

Regarding government debt, there are several ways to measure it, but
the *amount* of debt, relative to GDP or per-capita, has only a slim
relationship to a country's growth or per-capita income.

What does have a lot to do with it is the culture of a country and the
management capability of its government. That that "management
capability," in this sense, is measured in "Washington consensus"
economic terms.

Apart from that, the rest of the debt issue is, as I said, not
something that I think we can resolve here in any way. The
interactions in large economies are enormously complex and they don't
succumb to any simplistic interpretation.

--
Ed Huntress