The recent public debt crises in Greece and Ireland have put forward the issue of sustainable public debt in many of the developed industrialized countries. This crisis, like the mortgage crisis of 2008 and many other crises, stems from the extensive low cost flow of credit in recent years. Debt growth seemed harmless and innocent enough in an era of optimism, rising assets’ valuations and seemingly robust economic development. Unfortunately, for different inherent reasons, these debt bubbles started to burst for Greece and Ireland and the future looks gleam for many other heavily indebted countries in Europe, North America and Asia. The European Union, acting rather sluggishly, has, finally, put in place the European Financial Stability Facility (EFSF), a mechanism for dealing with bailouts of heavily indebted EU countries that are a threat to the economic stability of the Union and the Euro. As it is common for economic policy in the European Union, member states and the corresponding institutions that are responsible for designing it, act in panic or on undisclosed agendas. The last example is the proposed by France and Germany “competitiveness pact” that includes, among many others, increasing retirement age limits even for the countries that face no pension fund problems, setting minimum corporate tax rates across-the-board within member countries and applying constitutional provisions in all member states for implementing balanced budgets. These arrangements in the “competitiveness pact” may be problematic for two reasons: Continue reading The Proposed E.U. “Competitiveness Pact”
We have been losing our manufacturing base at an ever increasing rate to overseas competitor nations. Large portions of American manufacturing have experienced a sharp drop in their domestic and world markets. Let me illustrate by looking at three pivotal industries: motor vehicles; electronic computing equipment; and machine tools. In the past couple decades the share of the domestic market held by domestic manufacturers producing in domestic plants has declined from approximately 80% to about 50% for motor vehicles, from 90% to below 60% for computing equipment, and from 80% to below 60% for machine tools. Exports have also fallen more dramatically in each of these industries.
It is hoped that we can find a way to put our talents together to deal with the very real problems facing manufacturing in the USA. My purpose here is to suggest ways to do so.
Continue reading THE FUTURE OF AMERICAN MANUFACTURING (4th article in a series on US Manufacturing articles)
Dr. Periklis Gogas is an invited contributor to The Business Thinker magazine. He is a faculty member at Democritus University of Thrace, Greece, teaching Macroeconomics, Banking and Finance
The public debate over Greek debt is in the headlines for months now ever since the first issues with regard to Greece’s fiscal problems were raised. Political and ideological confrontations on the subject are inevitable. Accusations over culpability are an everyday occurrence between members of the two major political parties PASOK and ND that ruled Greece by turns since democracy was restored in 1974. Academic economists in Greece follow these developments closely and they are often at the epicenter of heated discussions in the media with journalists and tax payers indirectly or directly accusing them for the current situation. People are wondering why all the economists that now stress the shortcomings of Greece’s fiscal policy remained silent or at least they did not criticize that strong the same policies in the past. The truth of course is that no politician ever asked them and no one ever listened to their warnings. Politicians were busy accusing each other for creating the debt. Thankfully, numbers can tell the truth impartially without subjective political judgments and deception: a simple graph like the one in Figure 1 depicts the truth. Continue reading The Making of The Greek Fiscal Crisis