Another normal day at the Hellenic Statistical Authority. We learn that:
Greece's manufacturing output contracted by 15.5pc in December from a year earlier.Industrial output fell 11.3pc, compared to minus 7.8pc in November.Unemployment jumped to 20.9pc in November, up from 18.2pc a month earlier.
I have little further to add. This is what a death spiral looks like.
It is what can happen if you join a fixed exchange system, then take out very large debts in what amounts to a foreign currency, and then have simultaneous monetary and fiscal contraction imposed upon you.
Germany discovered this on the Gold Standard when it racked up external debt from 1925 to 1929 (owed to American bankers) in much the same way as Greece has done.
When the music stopped – ie, when the Fed raised rates from 1928 onwards – Germany blew apart in much the same way as Greece is blowing apart. This is not a cultural or anthropological issue. It is the mechanical consequence of capital flows into a country that cannot handle it, as Germany could not handle it in the late 1920s.
By the way, Greeks work an average 42 hours a week, one of the highest in Europe. Just want to put the record straight on that.