Comment by alephnerd

4 hours ago

> Where redistribution runs vertically and broadly, the welfare state absorbs global finance shocks...

If this was true, then the Eurozone crisis would not have been as severe as it was in Portugal, Spain, Italy, Greece, and France - all countries with broad and large social assistance programs.

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Also, the HN title is editorialized, the correct title is "Who the welfare state protects shapes a country’s financial openness"

18 comments

alephnerd

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dlcarrier  22 minutes ago

Fun fact: The 2008 financial crises resulted in the US bailing out foreign banks more than domestic ones. They prevented a larger Eurozone crisis, because it would have brought down the US, too.

mono442  4 hours ago

The crisis was largely artificially engineered because Germans believed that Southern Europeans were "lazy" and needed to be made an example of.

The ECB could have brought government bond yields down from the beginning and most of the problems could have been avoided.

  • gruez  4 hours ago

    >The ECB could have brought government bond yields down from the beginning and most of the problems could have been avoided.

    Is that sustainable? Argentina's predicament is basically caused by a variant of this. The Peronists gave handouts to buy votes, funded by money printing (ie. "The ECB could have brought government bond yields down"), but that has consequences and turned Argentina into an economic basket case. Of course, you might argue the EU doesn't have this problem because it's stronger economically and other states can prop them up, but that begs the question, why should member countries like Germany fund Southern Europeans's fiscal profligacy?

    • kingleopold  4 hours ago

      sorry but whatever Ger/FRA doing right now is %100 not sustainable. Future growth potential is so bleak and so low chance, along with population crisis, aging natives too. They literally need miracle, like one that exist in stories

      1 reply →

  • bodiekane  3 hours ago

    That populist narrative was popular on social media, but the truth is the exact opposite.

    Germany had relatively reasonable debt and government spending relative to taxes.

    Italy had entirely dysfunctional spending and Greece was essentially a house of cards built on fraud. Without the Eurozone, Greece would have faced bankruptcy and/or hyperinflation, but instead they got bailed out by the rest of the EU.

    Check out Michael Lewis's book Boomerang that covers the distinct problems Iceland, Ireland and Greece faced. The TL;DR on Greece is a country with massive social spending and tiny tax receipts, that took out massive and entirely unsustainable debt thanks to the other Euro countries and then inevitably was unable to pay it back.

    Germany was the hero who saved the EU from complete implosion, but instead of being thanked they get misplaced anger for being the only responsible ones in the room.