ECB and Inflation

[The Minsky Moment]

I think several moral factors should be considered.  They lied about their deficit when applying to join the EU.  Greeks cheat on their taxes.  All that nonsense about German reparations was pure demagoguery.  They promised to do a number of things as conditions of their bailout and didn't do many of them.  They haven't demonstrated an ounce of gratitude to their creditors.

Whenever economic issues are made into a morality play, sound analysis inevitably goes out the window.  This isn't about feckless Greeks charging their credit cards to someone else any more than it is about  Sieg Heiling Teutons bullying the little guy

Greece did fudge their finances when they joined the EZ (not the EEC).  And everyone knew it.  It was discussed openly in the newspapers at the time, and the decision was made to admit anyway on the theory that the Greek economy was too small to matter anyway.  In my business we call that assumption of risk.

Greeks cheat on their taxes as do Italians and Frenchmen.  The German reparation demand was a non sequitur when Syriza raised it in this context, and it still is when you raise it in this context.  The Greeks have no particular reason to show gratitude to "their creditors" - their actual creditors sold out their positions, and their current creditors bought to bail out bondholders - and then pressured Greece into a misguided and counter-productive adjustment program.

I know you disagree with the policy views and that's fine - this isn't an exact science and I may be wrong about all this.  But to elevate the policy difference to a moral stance is another thing - that's the sort of analysis one gets from the tabloids.

[Martinus]

Greece did fudge their finances when they joined the EZ (not the EEC). 

Yeah I also thought this was the case but didn't have time to check and didn't want to challenge Yi's statement without being sure.

[Martinus]

Anyways, I hope this is resolved one way or another by September, as I was planning to go there on vacation with my mother. I hope everything will be dirt cheap.

[Monoriu]

Anyways, I hope this is resolved one way or another by September, as I was planning to go there on vacation with my mother. I hope everything will be dirt cheap.

I also considered going to Greece next.  While things could be dirt cheap, another way to look at it is that things become so dire that the only way for many people to survive is to engage in criminal activities.  Like robbing cash-rich tourists 

[Zanza]

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

I think you can make a good argument that they did charge below market rates and still broke Greece's knees.

[Admiral Yi]

Whenever economic issues are made into a morality play, sound analysis inevitably goes out the window.  This isn't about feckless Greeks charging their credit cards to someone else any more than it is about  Sieg Heiling Teutons bullying the little guy

Greece did fudge their finances when they joined the EZ (not the EEC).  And everyone knew it.  It was discussed openly in the newspapers at the time, and the decision was made to admit anyway on the theory that the Greek economy was too small to matter anyway.  In my business we call that assumption of risk.

Greeks cheat on their taxes as do Italians and Frenchmen.  The German reparation demand was a non sequitur when Syriza raised it in this context, and it still is when you raise it in this context.  The Greeks have no particular reason to show gratitude to "their creditors" - their actual creditors sold out their positions, and their current creditors bought to bail out bondholders - and then pressured Greece into a misguided and counter-productive adjustment program.

I know you disagree with the policy views and that's fine - this isn't an exact science and I may be wrong about all this.  But to elevate the policy difference to a moral stance is another thing - that's the sort of analysis one gets from the tabloids.

I'm not writing a morality play.  Raz asked me a question about morality and I answered it.  I have never said that just because Greeks are lazy, ungrateful, spendthrift, lying leeches they should be punished.

Two points, or rather questions, about the self-serving nature of the bailouts.  Did the creditors come out ahead (as a nation) by cycling the money through Greece rather than giving it directly to their banks?  Did all countries who participated in the bailout have banks with exposure to Greece?

[Admiral Yi]

I think you can make a good argument that they did charge below market rates and still broke Greece's knees.

The only way you can sustain that argument is if you equate not paying someone's credit card bill for an extended period with breaking their knees.

[Martinus]

Two points, or rather questions, about the self-serving nature of the bailouts.  Did the creditors come out ahead (as a nation) by cycling the money through Greece rather than giving it directly to their banks?  Did all countries who participated in the bailout have banks with exposure to Greece?

The creditors wouldn't be able to give money directly to their banks without running afoul EU state aid rules - so such help would need to be pre-approved by the European Commission. Of course here it was done with the EU Commission's blessing as well (as it is a part of the Troika) but as you can see the political ramifications were quite different.

For example, if the EU Commission started to allow bailing out of French and German banks en bloc by their governments, Poland would get pissy about not being to do the same about our coal mines and shipyards, for example.

[Martinus]

I think you can make a good argument that they did charge below market rates and still broke Greece's knees.

The only way you can sustain that argument is if you equate not paying someone's credit card bill for an extended period with breaking their knees.

I think Zanza meant austerity measures as equivalent to breaking knees. Given the effects they had on Greek economy, I don't think this is so far fetched.

[Admiral Yi]

I think Zanza meant austerity measures as equivalent to breaking knees. Given the effects they had on Greek economy, I don't think this is so far fetched.

I understand that.  Try and think what no austerity would mean.

[Martinus]

And to add to my point there, there was also a risk of contagion and German and other banks were exposed to Italian, Spanish or Portuguese bonds as well (and in fact, if contagion spread, there was even a risk that France - now a Greece's creditor - would itself be in trouble). So if the creditor governments just bailed out their own banks and let Greece fall, there was a substantial risk that they will have to do this again very shortly with Italy, Spain and Portugal etc. and eventually run out of bail out money.

[Razgovory]

I think Zanza meant austerity measures as equivalent to breaking knees. Given the effects they had on Greek economy, I don't think this is so far fetched.

I understand that.  Try and think what no austerity would mean.

Positive economic growth and actual debt reduction?

[Admiral Yi]

Positive economic growth and actual debt reduction?

How was that working out for Greece before the crisis hit Raz?  Was that 19% deficit shrinking the hell out of their debt?

[Razgovory]

Positive economic growth and actual debt reduction?

How was that working out for Greece before the crisis hit Raz?  Was that 19% deficit shrinking the hell out of their debt?

I think they were closer to shrinking debt then they were with Austerity.

[Valmy]

Wasn't the debt accumulated in the first place because of deficit spending?

Economics makes no sense.