Sovereign debt bubble thread

[Zanza]

Maybe you can try it yourself soon when you boldly take a step forward while standing on the edge of the fiscal cliff.

[MadImmortalMan]

For some reason despite discovering that they underestimated the fiscal multiplier of austerity the EU and IMF have chosen to use the old one in their latest report on Greece

Gee I wonder why.
Greece is proving to be a useful experiment in the limitations of austerity as a debt reduction program; too bad for the human guinea pigs who pay the price.

They benefited earlier from the debt so it's all good.

[Iormlund]

I doubt they did, actually. Unless "they" means the cleptocratic elite, that is.

[Iormlund]

ECB loans to Spanish banking system:

[The Minsky Moment]

They benefited earlier from the debt so it's all good.

I doubt that - I would suspect a good deal of that money was siphoned off in corruption and sweetheart deals and went disproportionately to a wealthy and powerful few.

[The Minsky Moment]

I doubt they did, actually. Unless "they" means the cleptocratic elite, that is.

Yeah - I meant this.

[Sheilbh]

The IMF seems to be digging in their heels about debt sustainability.  They've said that Greek of 120% or less by 2020 is a red line for their participation in the program and that the EU institutions 'must' take other actions to cut Greek debt.  Perhaps leading by example, or providing a hint for the ECB and ESM, they've extended their Greek debt maturity and cut rates for Greece.

[Richard Hakluyt]

Greece has now got a growing National Socialist party, this is getting way beyond the "idle Greeks borrowed the money so they should pay it back".

[Sheilbh]

Cypriot bailout is delayed again.  Apparently the IMF are refusing to participate unless there's direct bank recapitalisations from ESM, without them they think Cyprus would have unsustainable debt levels.

No banking union for a while, talks didn't end well today and the French are briefing that Germany arrived unwilling to agree. Apparently the small, regional banks are still a big sticking point.

I wonder how long markets will give Europe benefit of the doubt.

Edit: Also, Greece now has a primary budget surplus.

[Iormlund]

I'm reading that Rajoy has finally pledged to reconsider the insane austerity drive. No, he will still close hospitals and tax us to to death. He seems to be, however, backing down on his plans to reduce the number of local political posts and salaries ...

In other news the former chairman of the national business association, who clamored for lower salaries and living standards as the only way out of the crisis is under arrest for tax evasion, fraud and who knows how much more shit.

Man, sometimes I love this place.

[MadImmortalMan]

Man, if you have to choose between the salaries and the taxes, why would you choose to keep the taxes?

[Admiral Yi]

I doubt they did, actually. Unless "they" means the cleptocratic elite, that is.

Really?  I was under the distinct impression the money went to keep 2/3 of the work force on the public payroll and pay pensions.

[Iormlund]

Really?  I was under the distinct impression the money went to keep 2/3 of the work force on the public payroll and pay pensions.

I'm sure you envision us taking three-hour siestas clad in our matador outfits as well. Meanwhile, and I quote the OECD here:

Greece has one of the lowest rates of public employment among
OECD countries, with general government employing just 7.9% of the
total labour force in 2008

That's about half the OECD average.

[MadImmortalMan]

Huh. That piece in the Atlantic that came out around the time Greece started imploding said the public sector was 1 in 4 workers in Greece. I'm pretty sure I'm remembering that correctly. Is the difference a change since then, or are they measuring it differently?


Edit: Maybe it was Spiegel.

[Iormlund]

I'm pretty sure one can arrive at that figure if you put in the numerator every worker in a public or semi-public entity (thus including most healthcare and education workers) and use as denominator those who still have work rather than total available workforce.

It's the beauty of statistics.