Thursday, 19 March 2015
Drivel from the Financial Times on Grexit.
Today’s leading editorial in the FT argues against Grexit.
The first sentence says that the word “Grexit” is “ugly”. Gosh – so the FT’s personal taste in words says something about the underlying ideas does it? I find the word “gravity” ugly: which proves according to FT logic that apples don’t fall from trees, I suppose.
The second sentence says that “the decision to walk away from a currency is more akin to ripping up the rules of the game”. Oh yes? Well every single EXISTING member of the Eurozone “walked way” from its own national currency when joining the Euro. Looks like the FT hoists itself by its own petard there.
Plus the Scots are talking about “walking away” from the pound sterling if they become independent. Personally I don’t favour Scottish independence, but I don’t see a huge problem in quitting one currency block and joining another.
Well that’s the first two sentences of the FT article dealt with. Rest assured that the rest of the article is equally garbage strewn. But if you want a few details, read on.
The third para says that Grexit would constitute an “existential” threat for Europe. Ooooh, that’s an important sounding word: “existential”. The word used to refer just to Jean Paul Sartre’s existentialism. But sundry pseudo sophisticates and academic poseurs, like the ones who write for the FT reckoned the word sounded technical and important, since which time they’ve flogged the word to death.
Though credit where credit is due: important sounding words do fool about 90% of the population, so the FT’s use of the word “existential” is a good propaganda ploy.
Next, the article makes the extraordinary claim in connection with returning to the Drachma and devaluing that “If devaluation is so beneficial, Greece would never have joined the Euro in the first place”.
Well I wouldn’t expect the economic illiterates who write for the FT to know this, but given a fall in a country’s competitiveness in the Euro, the solution adopted is INTERNAL DEVALUATION in contrast to what might be called standard devaluation which is what happens to a country with its OWN CURRENCY given a fall in competitiveness. And there’s not much difference between internal and standard devaluation, except that internal devaluation takes much longer to effect and involves heavy social costs.
Thus the FT’s next point, namely that “A weaker currency makes imports more expensive” applies just as much to internal as to standard devaluations.
I keep trying to persuade the FT to have one of the snails in my garden write their editorials: that would work out cheaper than employing a human journalist. But they haven’t taken up the offer so far.