[lbo-talk] Krugman: The existence of the Euro means massive falling wages

[Mike Beggs]

On Tue, May 18, 2010 at 5:03 AM, Michael Pollak <mpollak at panix.com> wrote:
>
> http://krugman.blogs.nytimes.com/2010/05/17/et-tu-wolfgang
>
>   WAGES IN THE PERIPHERY NEED TO FALL 20-30 PERCENT RELATIVE TO GERMANY.
>
>   How hard will it be to achieve this? Look at Latvia, which has pursued
>   incredibly draconian austerity. Unemployment has risen from 6 percent
>   before the crisis to 22.3 percent now -- and wages are, indeed,
>   falling. But even in Latvia labor costs have fallen only 5.4 percent
>   from their peak; so it will take years of suffering to restore
>   competitiveness.

It is bloody interesting, isn't it? One of those situations where
every possible outcome looks highly unlikely.

Mike Beggs