Good comparison of relative unit labor costs for EZ countries in this article by Paul De Grauwe. Germany is lowest at 85-90. Greece and Portugal highest at 110-115, with Italy, Spain and Belgium next at 105-110. Ireland has made the most spectacular recovery, falling to 95 from a high 115-120 in 2007.
The position of Germany stands out. During 1999-2007, Germany engineered a significant internal devaluation that contributed to its economic recovery and the build-up of external surpluses.
via The eurozone’s double-dip recession is entirely self-made. | EUROPP.
This article is yet another , written by some one who is totally disconnected from working people. All he knows is graphs and a set of jargon which he litters his article with. So Mr de Grauwe, how about you stand on a factory floor for an 8 hour shift year in year out , or clean toilets for a living, always worrying if you job will be here next week. It is time you stopped seeing people as just units of labour that only have one purpose in life and that is to keep the economy going.
And as for the point you are trying to make , why don’t you talk about the debt as an amount as opposed to a percentage of GDP, so we actually know how much we owe.
During a recession, debt ratio is not as important in bringing back a good economy. Nor are labor cost comparisons. Only reducing unemployment will create demand, which boosts the GDP and the tax base (i.e. fiscal stimulus). Only at that point should the debt principal repayment be addressed. This world recession has been too big for monetary stimulus, it’s time to set aside debt worries and pull out the big (fiscal) guns. Japan took austerity measures in the early 1990’s and has regretted it ever since. (London, are you listening?) Europe’s second dip should not be happening and could be reversed right now.
Sorry Chet you still don’t understand what is happening. A couple or three questions for you.
The amount of money/debt in circulation in the world is around US$3-400 Trillion ,why is it not circulating?
What happens to prices when the people that are sitting on that money start to spend it?
And finally what happens to all the jobs when the governments have to increase the slice of the budget that goes to service the ever ballooning debt.