

If Italy Were a Small Business...(A Way to Understand the Euro Crisis) - cartnicnc
http://www.inc.com/constantine-von-hoffman/imagine-Italy-is-a-business.html

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ubasu
Given the title, it is not surprising that this analogy glosses over a key
point. It only tangentially refers to the main problem, which is that
currently Italy (and Greece and Spain) are tied to a single currency, and they
do not have a currency of their own to devalue to deal with this crisis. e.g.
see

[http://krugman.blogs.nytimes.com/2011/11/10/original-sin-
and...](http://krugman.blogs.nytimes.com/2011/11/10/original-sin-and-the-euro-
crisis/)

This seems to be the problem with the analogy of national finances=family or
small business finances, i.e. that nations typically can control their money
supply and value, and this is purely a macroeconomic hack, rather than a
morality issue.

~~~
paganel
> It only tangentially refers to the main problem, which is that currently
> Italy (and Greece and Spain) are tied to a single currency, and they do not
> have a currency of their own to devalue to deal with this crisis. e.g. see

Honestly, having your own currency wouldn't help one bit when all the credits
you've taken are in an another currency. Look at what happened to Argentina at
the end of the '90s, no matter how much they devalued the Peso they still had
to eventually default, because the credits they had were not in Peso.

I cannot understand why people like Krugman and most of the other economists
don't bring up this point when raising issues like "it would all have been
fine if the Greeks had stick to using their own currency".

~~~
roshanr
I thought pegging the Argentine peso to the dollar was what made the Argentine
debt crisis worse.

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csomar
I'm living in a third-world country, and making a living from the Internet.
Can someone with experience/knowledge tell me how much this will affect the
Internet business? I do web development (HTML5/WordPress/JavaScript)

~~~
jakeonthemove
Web development - I don't think it'll be affected. When s __t hit the fan in
2008 in the US, the only thing I lost were commissions from sales - even then
not by much - before, I was having a ~300% ROI, after it was around 200%, and
I had to drop PPC. Leads actually increased in numbers, and Content creation
still remains the same - I've got more clients than I can handle, although
there are many more from India and Germany right now (before, the US was
leading, too), so you'll be fine...

~~~
csomar
Thanks for reassuring. The 2008 crisis didn't affect my business at all and
I'm more linked to the USA than the EU. However, I thought this up-coming
crisis could be much worse.

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dotcoma
>Let’s pretend Italy is your business. No, you could never be that stupid.

This clearly does not apply to the person who wrote this brilliant "article".

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giulivo
also how much a "regional" crisis affects an internet business?

~~~
jaaron
The specific effects are local to the business. Broadly, the business will be
affected by the global economic environment, making everything from raising
money to executing sales more difficult.

Personally, I had an interent startup that went through a lot of challenges
due to the financial crisis in 2008, even though we weren't in finance or even
the US. But it made the funding environment so bad we had to change plans for
some time.

The current tech market is stronger than most other segments, but don't get
too comfortable. Internet businesses aren't divorced from real world
economics.

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Roboprog
Why is it that northern Europe is doing so well (relatively), and southern
Europe so badly?

Is it something more than corruption in Greece and Italy???

~~~
parfe
I heard the situation explained as Italy and Greece had systemic
spending/borrowing issues before joining the Euro zone. Everyone knew this and
thought once those countries no longer had their own currencies they would
shape up.

Unfortunately, the opposite happened and these nations started borrowing more
thanks to their new found access to cheap money Germany and France's economies
basically subsidized the borrowing.

Rather than cutting back on benefits, slimming corporate and government
budgets, ending nepotism hires and enforcing sane tax policies, Italy and
Greece just continued their lifestyles all while issuing more and more Euro
backed debt. Now the party ends.

