Europe's Populist Left

[Admiral Yi]

What does "effectively forced" mean?  Does it mean you'd like to make it sound really bad, but know it's not true?

[Martinus]

Utter codswallop.  Ireland did suffer for her own banks; Greece suffered for spending more than it could repay.

Greece was the middle man between European governments and their banks. It would have been far more honest for them to default, Germany and France to bailout their own banks and there to have been European/IMF support for a reforming Greek government that can't devalue but that has defaulted.

That would have, also, be subject to a much greater scrutiny based on state aid rules. So you can say that Germany and France fucked Greece up not to have to play by the rules everybody else in the EU does.

[Sheilbh]

I agree with this.  However, this does not mean Greece suffered for German and French banks.  Greece did not suffer because they got bailed out; they suffered because lenders were no longer willing to finance their deficits because they had borrowed too much.

Yes, except I think the structural issues mattered most at the time. Greece shouldn't have been let in to begin with and the Eurozone shouldn't have really gone ahead without a way of allowing a state to default, or a lender of last resort, or some form of banking union. Those considerations forced the issue of a bailout because the risk of Greece defaulting was too large for the Eurozone.

Greece needed debt relief or a default in 2010 - and the leaked minutes of the IMF show that they knew that. To buy the Eurozone time that couldn't happen so they were given more and more debt, a minimal amount of which was spent in Greece.

I think had they defaulted and had an IMF program the suffering would have been far, far less profound. I can't, but can you think of any other IMF programs that after five years have debt over 175% of GDP and have seen the economy shrink by more than a quarter? I mean if that sort of thing was how the IMF worked the Naomi Kleins of this world would have a point.

[Sheilbh]

I'm becoming more and more convinced that Poland probably did the right thing about cooling off its interest in joining the Eurozone asap. At least if we are hit by a crisis like that of Ireland (which we still may, given that the growth is bound to stop some day), we can quickly devalue zloty.

I think was Martin Wolf who said that joining the Eurozone in its current structure is the second worst monetary decision most of these economies can make. The first is forcing Greece out of the Eurozone and dealing with disorderly collapse

But yeah I think it would be insane to join until the rest of the structure is there. As I say there's still no real banking union for example.

What does "effectively forced" mean?  Does it mean you'd like to make it sound really bad, but know it's not true?

It is true though. The Irish and the Greek government came under immense pressure within the EU to accept a bailout. When the Greek PM suggested holding a referendum on bail out (or default effectively) the EU leaders called the President and other parties in Greece and asked them to hobble together a government of technocrats.

That would have, also, be subject to a much greater scrutiny based on state aid rules. So you can say that Germany and France fucked Greece up not to have to play by the rules everybody else in the EU does.

How so?

Edit: Incidentally Marti I've got forum whiplash your opinion's changed so quickly

[Admiral Yi]

Yes, except I think the structural issues mattered most at the time. Greece shouldn't have been let in to begin with and the Eurozone shouldn't have really gone ahead without a way of allowing a state to default, or a lender of last resort, or some form of banking union. Those considerations forced the issue of a bailout because the risk of Greece defaulting was too large for the Eurozone.

Greece needed debt relief or a default in 2010 - and the leaked minutes of the IMF show that they knew that. To buy the Eurozone time that couldn't happen so they were given more and more debt, a minimal amount of which was spent in Greece.

I think had they defaulted and had an IMF program the suffering would have been far, far less profound. I can't, but can you think of any other IMF programs that after five years have debt over 175% of GDP and have seen the economy shrink by more than a quarter? I mean if that sort of thing was how the IMF worked the Naomi Kleins of this world would have a point.

Yes as in your line about Greek suffering was codswallop, or a different yes?

I'm unaware of any IMF program that generated the kinds of results as we're seeing in Greece, in part at least because your typical developing market IMF client doesn't have the ability to reach 120% debt to start with.  But there are a lot of smart cookies at the Fund who can do basic math, and who I'm sure knew that injecting fresh loans on top of 120% was not sustainable.

Which, since we're on the subject anyway, is a good chance for me to remind you and and others of something I've been saying all along: debt levels matter.

[Sheilbh]

Yes as in your line about Greek suffering was codswallop, or a different yes?

Yes as in Greek suffering was also because they were spending too much.

But there are a lot of smart cookies at the Fund who can do basic math, and who I'm sure knew that injecting fresh loans on top of 120% was not sustainable.

And yet they get every sum wrong in every prediction they make in Greece. You might almost think it was a load of bollocks to justify the Fund in joining a politically motivated save the Euro project rather than anything to do with Greece.

Which, since we're on the subject anyway, is a good chance for me to remind you and and others of something I've been saying all along: debt levels matter.

Debt sustainability matters.

[Admiral Yi]

It is true though. The Irish and the Greek government came under immense pressure within the EU to accept a bailout. When the Greek PM suggested holding a referendum on bail out (or default effectively) the EU leaders called the President and other parties in Greece and asked them to hobble together a government of technocrats.

Well, I guess if they got an actual call, like on the phone, then they really had no choice.

[The Minsky Moment]

And it is striking how much of Germany's policies (especially on banking) seem very informed by a particular reading of the 20s and 30s.

That's putting it generously.  At least as filtered through the A-S press the view seems to be that Nazis rose to power in 1923.  Bruening, or at least Brueningism, enjoys a present day rehabilitation.

[Martinus]

I'm becoming more and more convinced that Poland probably did the right thing about cooling off its interest in joining the Eurozone asap. At least if we are hit by a crisis like that of Ireland (which we still may, given that the growth is bound to stop some day), we can quickly devalue zloty.

I think was Martin Wolf who said that joining the Eurozone in its current structure is the second worst monetary decision most of these economies can make. The first is forcing Greece out of the Eurozone and dealing with disorderly collapse

But yeah I think it would be insane to join until the rest of the structure is there. As I say there's still no real banking union for example.

What does "effectively forced" mean?  Does it mean you'd like to make it sound really bad, but know it's not true?

It is true though. The Irish and the Greek government came under immense pressure within the EU to accept a bailout. When the Greek PM suggested holding a referendum on bail out (or default effectively) the EU leaders called the President and other parties in Greece and asked them to hobble together a government of technocrats.

That would have, also, be subject to a much greater scrutiny based on state aid rules. So you can say that Germany and France fucked Greece up not to have to play by the rules everybody else in the EU does.

How so?

Edit: Incidentally Marti I've got forum whiplash your opinion's changed so quickly

I'm a flighty bitch.

But under the EU state aid rules, any aid given by a government to an enterprise must be approved by the European Commission. Obviously, this does not apply to aid given by a government to another government.

[Martinus]

It is true though. The Irish and the Greek government came under immense pressure within the EU to accept a bailout. When the Greek PM suggested holding a referendum on bail out (or default effectively) the EU leaders called the President and other parties in Greece and asked them to hobble together a government of technocrats.

Well, I guess if they got an actual call, like on the phone, then they really had no choice.

Yi believes that every decision is taken in an entirely unfettered fashion by a whole rational individual enjoying absolute freedom.

[Zanza]

It is true though. The Irish and the Greek government came under immense pressure within the EU to accept a bailout. When the Greek PM suggested holding a referendum on bail out (or default effectively) the EU leaders called the President and other parties in Greece and asked them to hobble together a government of technocrats.

Greece has been a sovereign nation throughout this whole mess and had ample opportunity to go a different route if they had thought that was better for them. I don't buy that any Greek politician had the interests of German or French banks in mind. Immense pressure alone cannot explain the policy accepted by Greece's politicians. They must have been convinced this is in their best interest as well.
I said it three years ago and will say it again: They should have defaulted. Unilaterally if necessary.

[Razgovory]

Well, as sovereign as any Eurozone state is...

[Zanza]

Well, as sovereign as any Eurozone state is...

According to the narrative, everybody but the silly Germans always knew that austerity wouldn't work. That would presumably include the Greek politicians. Yet "immense pressure" somehow made them sacrifice their countrymen on the altar of French and German bank stability despite them supposedly knowing that it wouldn't work. Were they really this powerless? If so, why? What mechanism of the EU or Eurozone takes away so much sovereignty from the member states that they would ever be forced to go through what Greece went through against their better knowledge? I am not aware of any such mechanism. The EU must be the weakest federal government anywhere - which happens to be part of the problem. If there is no such mechanism either the Greek politicians are all traitors or they seriously believed what they did was the best out of many bad alternatives.

[Admiral Yi]

Yi believes that every decision is taken in an entirely unfettered fashion by a whole rational individual enjoying absolute freedom.

One would think, that after 10 years of posting on Languish, and 5 years of posting on Paradox, that you would have been disabused of the brain dead notion that this kind of "no such thing exists" straw man is an effective argument, or any kind of argument.  But no, just like a finely crafted Polish clock you trot it out for virtually any debate.

[CountDeMoney]

lol, Polish clock