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WSJ Discussion

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July 7, 2015

The Wall Street Journal hosted a Q&A for chief European commentator Simon Nixon today.  It has some very interesting information and forecasting in regards to the Greek debt crisis that may be of interest for students.

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Greece decides

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July 7, 2015

The Greek government was hoping for a “no” vote on the referendum they sent to their citizens last week – and they received it.  The question posed was whether Greece should accept the offer from the Eurozone on restructuring the crushing debt owed.   This decision will most probably lead to a departure from the European Union and a return to the drachma.

The Toronto Globe and Mail has an article stating that the No vote on the referendum is “a perfect example of politics trumping economics”.  The article, contributed by economist Andre Gerolymatos of Simon Fraser University, gives a very succinct and helpful outline of why European countries such as Greece, Portugal, and Italy felt they had to sell debts to third parties, to “keep the illusion of solvency”.  Time and again, restructuring the Greek debt has not solved the problem.

The Jerusalem Post offers a different look at the referendum itself, and the argument on whether this No vote automatically means a release of Greece from the Eurozone.  They point out that four out of five Greeks want to stay with the Euro, and Europe’s leaders don’t want Greece to leave the Eurozone for various reasons.

The Brookings Institute calls for a deal to be made, and there are widespread concerns that Greece did not come to the table today with a viable plan (NY Times, USA Today, and BBC).

This unfolding story is an excellent time to review UFR Lesson 4.4 and the guiding question on Greece: When is one country’s problem everyone’s problem?

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The political cartoons included in this blog are selected as tools to teach about public policy issues. Their inclusion does not in any way constitute an endorsement by Teachers College, Columbia University, of their point of view.

Political cartoons can be a powerful way to teach and talk about public policy issues in the classroom. They engaging, often funny, and they teach very complex ideas in a quick and intuitive way. We are so convinced of the value of political cartoons that, in addition to including them in many of our blogs, we feature posts that are all cartoons.

Using cartoons presents an opportunity to teach students media literacy, including the ability to detect point of view or bias. As a sequence, we strongly encourage students to study the cartoon carefully, analyze the specific context of the cartoon, and determine the cartoonist’s point of view. See the blog post of October 8, 2013 for a guide to using the political cartoons we have selected. The Library of Congress also has a a very useful Cartoon Analysis Guide.

 

Marian Kemensky - Slovakia - Two hemlocks two Socrates - English - tsipras,varoufakis,greek crisis,referendum

Joep Bertrams - The Netherlands - free choice - English - greece, grexit, referendum, free choice, euro

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Time Magazine has a comprehensive article regarding the referendum in Greece this weekend.  The referendum is a question to Greek citizens on whether to accept the offer from the Eurozone on restructuring the debt the country owes.  The Greek government is hoping for a “no” vote from the people, and it is possible the government itself will collapse if citizens vote “yes”.  A no decision, however, would mean a departure from the European Union and a return to the drachma, the traditional Greek currency.

The Wall Street Journal also has a succinct video on the process.  The video itself would be very user friendly for students, and spends some time explaining the background of the Eurozone as well as potential consequences of a “Grexit”.

Bloomberg Business gives an analysis of what a return to the drachma might mean for Greece, and it isn’t all roses, the way the Greek Prime Minister may see it.  There are comparisons to other countries whose currency lost extensive buying power, such as Mexico and Argentina in the 1990’s.

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ACA & King v. Burwell Political Cartoons

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The political cartoons included in this blog are selected as tools to teach about public policy issues. Their inclusion does not in any way constitute an endorsement by Teachers College, Columbia University, of their point of view.

Political cartoons can be a powerful way to teach and talk about public policy issues in the classroom. They engaging, often funny, and they teach very complex ideas in a quick and intuitive way. We are so convinced of the value of political cartoons that, in addition to including them in many of our blogs, we feature posts that are all cartoons.

Using cartoons presents an opportunity to teach students media literacy, including the ability to detect point of view or bias. As a sequence, we strongly encourage students to study the cartoon carefully, analyze the specific context of the cartoon, and determine the cartoonist’s point of view. See the blog post of October 8, 2013 for a guide to using the political cartoons we have selected. The Library of Congress also has a a very useful Cartoon Analysis Guide.

 

 

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King v. Burwell decision

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Today, the Supreme Court of the United States handed down it’s decision on the King v. Burwell case. The case focused on the wording of President Obama’s Affordable Care Act, most specifically the phrase “established by the state” in terms of state marketplaces for health insurance versus the federal marketplace and tax incentives.  The concern was that Congress set up something “for the state” to determine, but with federal intervention, had bypassed its own guidelines and overstepped its own powers.

The Tennessean has a really helpful overview of the case, including answers to the questions “What is a health insurance exchange?” and “Will I lose my tax credit?”.

The Supreme Court’s decision states that because of the incentives in the wording of the ACA bill, Congress meant the “state or federal” marketplaces were both valid.  It not only preserves benefits for thousands of people in the country, but “deals a crippling blow” to Republican lawmakers.  The NY Times adds that this will probably mean the dismantling of the state-based marketplaces that exist at the moment.

See other background on the Affordable Care Act on the blog.

 

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What if Greece leaves the EC?

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I came across an interesting tweet today from The Economist, who shared an article from January about potential consequences of Greece leaving the European Union.    Although it focuses on Greek elections, the information is valid and interesting for those wondering what could happen at the end of June, with Greece potentially defaulting on billions of Euros worth of loans.

This made me curious on what the web is saying about a possible “Grexit”.  Business Insider uses Bank of American Merrill Lynch analysts to posit that Greece would suffer an “unprecedented” economic contraction with double-digit inflation.  This is also the opinion of Forbes, the BBC, and the Wharton School of Business.

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Greece debt talks at a stall

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Greece’s debt crisis and the country’s relationship with the rest of the Eurozone are both in danger of collapsing.  Bloomberg states that Greek Prime Minister Alexis Tsipras is facing a Catch-22 situation:  either follow demands made by the Eurozone or leave completely.  The New York Times reports that many in the Eurozone are already giving Doomsday reports on what could happen should Greece default – again – and what ripple effects could be felt across Europe.

It looks as if Greece will be forced into default on June 30, when they owe the International Monetary Fund (IMF) a debt payment of 1.6 billion euros, which is doe snot have.  If they were to leave the Eurozone, they would be the first country to do so.

At the same time, Greece is refusing to cut pensions or raise taxes, which the IMF has insisted upon to pay their debts.

The European stock market took a dive after talks between Greece and their creditors stalled.

UFR Lesson 4.1 asks whether countries should take loans from the IMF.  With this increased tension between Greece and their debt holders, I’d flip that question with students and look at how a debt bailout, or a country’s bankruptcy, could affect other countries.  How could this affect us here in the United States?

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The issue of public debt

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June 9, 2015

There’s a lot in the news lately about a public debt crisis worldwide.  Stepping outside of the massive US debt to look at other countries, the most common measure of if there is “too much” debt is debt as a percentage of GDP.

Recently, the International Monetary Fund (IMF) released a paper on public debt with a surprising twist:  they suggest that nations do nothing to decrease the debt ratio to GDP.  The exception are countries such as Greece and Ireland that have such a huge debt that is owed to other countries and puts their economy at severe risk.  For countries such as the United States, however, the message is: Don’t Sweat the Debt (from The Fiscal Times).

The World History section of the UFR curriculum is a great way to start discussions on this issue of whether public debt really matters.  Lesson 4.1 asks “Should developing nations accept loans from the IMF?”, and Lesson 4.2 questions the relationship and balance of power between countries who may be lender/debtor nations.

 

 

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Greek Standstill

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June 9, 2015

Efforts to determine a bailout for the Greece debt crisis seem to be at a standstill.  Opinions differ across the board – German Prime Minister Merkel would like to work something out that could keep Greece in the Eurozone, while German Finance Minister Schaeuble is okay with Greece leaving the Euro and therefore is unwilling to make certain concessions in any deal.

 

 

At the same time, Greece suggested their own deal, which was quickly set aside by the EU.  Today, however, another suggestion came out of Greece, and CNBC reports that this may be accepted by Eurozone officials.  Details are not yet available on the bailout proposal.

Shifting from UFR Lesson 4.4 just a little (on Greece), Lesson 4.2 is an interesting one to pull into the classroom with these current discussions on how (or if) to restructure the Greek debt and economy.  4.2 focuses more on the balance of power between countries in the case of international debt, and poses the essential dilemma: Does foreign debt create a dangerous imbalance of power between creditor and debtor nations?  Bring this lesson to students with the focus on current issues between Greece and the Eurozone.  Is this a huge imbalance of power?

 

 

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