Greece

Micro review corner: "My Life in Ruins" is a Chick Flick romantic comedy that is enjoyable across genders. Screenplay by and starring Nia Vardalos (of Big Fat Greek Wedding fame), it has some superb performances and good pacing. Vardalos plays an American who returns to Greece and does not immediately appreciate its Old World charms. Quoting from memory: "Greece led the world in art, athletics and philosophy. We invented Democracy and Science! Then, we discovered 'the nap...'"

Today's bloggers' coffee klatch discussed the woes in Greece and whether enough Americans see the riots and fires as our potential future. The WSJ Ed Page lays it out well: What happens to countries that choose economic decline

To top it off, the technocrats in Brussels and at the IMF have misdiagnosed the crisis from the beginning. First, they thought Athens had a liquidity problem that could be eased by large infusions of loans, rather than a fundamental solvency problem. Second, they believed that what Athens needed most was a balanced budget and a smaller debt load, to be solved arithmetically with less spending and higher taxes. But Greece's real problem is the lack of economic growth, itself a product of policies that discourage private enterprise. That's why Greece ranks 100th on the World Bank's most recent rankings of "ease of doing business"--right behind Yemen.

In other words, the fires in Athens are the result of the combustible mix of a desiccated welfare state and the burning embers of Keynes's cigarette. Don't expect those fires to be put out by this latest round of austerity. In theory, Athens has agreed to carve €3.3 billion out of this year's budget (including €300 million out of pensions), slash the minimum wage by 22%, and eliminate 150,000 government jobs by 2015.

The piece ends "The larger question is whether the rest of Europe and America will learn from Greece's chaos before they experience the same fate. " To which we all agreed this morning that the investment advice of the day was to "go long European Tear Gas."

Economics and Markets Posted by John Kranz at February 14, 2012 12:59 PM