ECB and Inflation

[Martinus]

One of my impressions is that it a German bank was the first to go under.  One last question:  Do you believe that a moral factor should be considered in Greece's case?

I think several moral factors should be considered.  They lied about their deficit when applying to join the EU.

They didn't lie to join the EU. They applied creative accounting - and this was tolerated by the other EU countries because they wanted Greece in so turned a blind eye to that. The narrative that somehow Greece managed to pull one on the hapless and innocent EU is just patently false - EU wanted Greece in for political reasons (and they were right, imo). If the bank knows that the borrower has lied on his loan application and decides to lend the money anyway, the bank bears as much responsibility for the negative outcome as the borrower does.

Besides, that's quite a weird morality to punish a country now for what it did 35 years ago.

Greeks cheat on their taxes.

Mainly the big oligarchs (or is it not cheating, when the super rich do it under the guise of "tax planning"?) - and Syriza government is the first one to declare they want to put a stop to that. So shouldn't you be supporting them?

All that nonsense about German reparations was pure demagoguery.

This one is laughable - "Greeks said something stupid, so let's run their country into the ground for that".

They promised to do a number of things as conditions of their bailout and didn't do many of them.

Can you give examples?

They haven't demonstrated an ounce of gratitude to their creditors.

This one is mind-boggling. Why would anyone demonstrate gratitude to one's creditors? Loans are not charity - they are a transaction (and the risk is well factored into the price). That would be like expecting you to demonstrate gratitude to your ISP or your grocer.

[Monoriu]

This one is mind-boggling. Why would anyone demonstrate gratitude to one's creditors? Loans are not charity - they are a transaction (and the risk is well factored into the price). That would be like expecting you to demonstrate gratitude to your ISP or your grocer.

Because nobody in their right mind will lend money to Greece.  It isn't an arms-length, commercial transaction.  It is help in the name of a loan.  It is like when I am about to default on my mortgage, lose my flat, and a relative of mine "lends" me money.  Sure, the relative may have other reasons for lending me the money, but if not for him, my situation would be a lot worse. 

[Razgovory]

I'll admit I find your stance both surprising and unsurprising.  It fits with my "homo economicus" view I have, but contrasts with my "almost libertarian" view of you I have.

I'll admit I find your effort to change the subject from Greece to me totally unsurprising.

I have done no such thing.

[Martinus]

This one is mind-boggling. Why would anyone demonstrate gratitude to one's creditors? Loans are not charity - they are a transaction (and the risk is well factored into the price). That would be like expecting you to demonstrate gratitude to your ISP or your grocer.

Because nobody in their right mind will lend money to Greece.  It isn't an arms-length, commercial transaction.  It is help in the name of a loan.  It is like when I am about to default on my mortgage, lose my flat, and a relative of mine "lends" me money.  Sure, the relative may have other reasons for lending me the money, but if not for him, my situation would be a lot worse.

You are wrong. The lenders were acting out of their self-interest, mainly to prevent the contagion from spreading to our Eurozone countries, and (in the case of national lenders) to bail out their own banks heavily exposed to Greek bonds.

[The Brain]

Greeks don't want to live in a functioning society. If they did they would (it's a democracy). For instance, they want to have insane regulations that make running a business a chore and a state that can't collect taxes. I say let them live in their own private hell or Idaho.

[The Larch]

This one is mind-boggling. Why would anyone demonstrate gratitude to one's creditors? Loans are not charity - they are a transaction (and the risk is well factored into the price). That would be like expecting you to demonstrate gratitude to your ISP or your grocer.

Because nobody in their right mind will lend money to Greece.  It isn't an arms-length, commercial transaction.  It is help in the name of a loan.  It is like when I am about to default on my mortgage, lose my flat, and a relative of mine "lends" me money.  Sure, the relative may have other reasons for lending me the money, but if not for him, my situation would be a lot worse.

You are wrong. The lenders were acting out of their self-interest, mainly to prevent the contagion from spreading to our Eurozone countries, and (in the case of national lenders) to bail out their own banks heavily exposed to Greek bonds.

And they were also imposing rather severe austerity measures that caused a great deal of pain for the Greek citizens, hardly a case for showing gratitude.

[Zanza]

The narrative that Germany was helping itself out with the various bailout programs is incomplete. Of course the bailouts served to stop contagion. But contagion in the affected countries would have been much worse than in Germany. Every single Greek bank would long be bankrupt without the bailouts. If Germany had just recapitalized its own banks, that would not have had the same effect as bailing out the banks in other countries.

The problem with the bailouts is that they were completely accounted for in the fiscal position of the respective national governments. Instead they should have been distributed across the EU - but the EU lacked (and probably still lacks despite EBA) the framework that would allow that.

[Admiral Yi]

They didn't lie to join the EU. They applied creative accounting - and this was tolerated by the other EU countries because they wanted Greece in so turned a blind eye to that. The narrative that somehow Greece managed to pull one on the hapless and innocent EU is just patently false - EU wanted Greece in for political reasons (and they were right, imo). If the bank knows that the borrower has lied on his loan application and decides to lend the money anyway, the bank bears as much responsibility for the negative outcome as the borrower does.

Besides, that's quite a weird morality to punish a country now for what it did 35 years ago.

That's not what I've read, and who said anything about punishing anyone?

Mainly the big oligarchs (or is it not cheating, when the super rich do it under the guise of "tax planning"?) - and Syriza government is the first one to declare they want to put a stop to that. So shouldn't you be supporting them?

Not what I've read.

This one is laughable - "Greeks said something stupid, so let's run their country into the ground for that".

Who said anything about running them into the ground?

Can you give examples?

Privatization, public jobs, pensions, tax collections.

This one is mind-boggling. Why would anyone demonstrate gratitude to one's creditors? Loans are not charity - they are a transaction (and the risk is well factored into the price). That would be like expecting you to demonstrate gratitude to your ISP or your grocer.

What Mono said.  No one else is lining up to lend Greece money at 2.04%.

[Valmy]

And they were also imposing rather severe austerity measures that caused a great deal of pain for the Greek citizens, hardly a case for showing gratitude.

The case for showing gratitude is they are not getting shit from anybody else.

[Martinus]

And they were also imposing rather severe austerity measures that caused a great deal of pain for the Greek citizens, hardly a case for showing gratitude.

The case for showing gratitude is they are not getting shit from anybody else.

I guess that's like being grateful to mafia loan sharks.

[Valmy]

I guess that's like being grateful to mafia loan sharks.

Do mafia loan sharks usually loan well below market rates?

I mean less than 3% is so low that inflation will likely mean the lenders will lose value on this deal.

[Admiral Yi]

It's a lot like being thankful to a loan shark that charges below market rates and doesn't break your knees.

[Syt]

"Final help for Greece: EU ties new rescue package!"

[Syt]

Courtesy BBC:

[Valmy]

Only 11.3 billion? Oh good I thought we were talking about real money here.