Thursday, June 3, 2010

Beware of Greeks Demanding Gifts

Did they really think the company could operate at such a loss? It is a pretty simple economic concept; perhaps the failure to grasp those (like runaway deficit spending is a bad idea) is the reason they are having a financial crisis. (via

""Brutal blackmail" and "a violation of corporate social responsibility." That's how some diabetics in Greece are describing the recent decision by Novo Nordisk, a Danish pharmaceutical company, to stop selling certain insulin products in Greece.
Why? Because the government of Greece is trying to mitigate its financial crisis at pharmaceutical companies' expense by unilaterally ordering a 25% reduction in the price of all medicines. According to a Novo Nordisk spokesperson, "the price cut would force its business in Greece to run at a loss." Oh yes, there's also a little matter of $36 million that Greece already owes the company, with no certainty of payment in sight."


  1. An economy like Greeces was operating in deficits for years with no problems until the crises (causes by us) created a drain in aggregate demand. Further the percent of what they actually spent for services was much lower then ours, (despite getting much more benefits).

    Instead Greece has to fund itself in a currency it can't control, the Euro, which is bound in "hard money" policies of the type you would probably favor.

  2. @Ian Spencer Dubrowsky - I will not argue that the financial crisis speed up the process, but out of control deficit spending can only ever end one way, badly. It really is not something that takes a leap of faith either.

  3. " out of control deficit spending"

    the U.S. right now needs deficit spending. The only leap of faith here is the ideological contention that deficit spending is always ending in some kind of terrible night mare scenario no matter the a priori conditions of the economy. When if you actually look, there are very few periods in American history where the U.S. government wasn't operating at a deficit, and when it hasn't- it has tended to create the kind of nightmare scenario that you fear monger about -1937.

    Actually two weeks ago it was found that the U.S. is paying a lower interest rate now on its deficit then when the government had a surplus in the 1990s, which tells you that the bond markets are an irrational entity that doesn't care too much about deficit spending anyway. So why you would insinuate that policy should be based on an irrational entity- like private markets- is strange.

  4. @Ian Spencer Dubrowsky - "the U.S. right now needs deficit spending." So let's just barrow 100 trillion dollars, that will really boost the economy.

    "The only leap of faith here is the ideological contention that deficit spending is always ending in some kind of terrible night mare scenario no matter the a priori conditions of the economy." - never said always ends in disaster, but what we are doing now is not good.

  5. -Yes Actually sometimes conditions exist where maybe it would help if inflation went up. Its the same principle you are not realizing that say if the government does stop spending on something like Census worekers, then that is also a stop in consumption for the economy. The U.S. government is by far the biggest consumer.

    In China the government consumes 65 percent- not to say it shouldn't be less, I think there are arguments for that - but either way not having an open mind about it won't help. What would result in an acutal nightmare, and has already prompted massive protests and political disgruntlement, is if the government started laying people off wholesale.


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