Poll
Question:
Greek Referendum
Option 1: The Greeks will vote No and should vote No
votes: 18
Option 2: The Greeks will vote No but should vote Yes
votes: 16
Option 3: The Greeks will vote Yes but should vote No
votes: 6
Option 4: The Greeks will vote Yes and should vote Yes
votes: 4
As you know, there'll be a referendum on the deal between the Troika and Greece on the weekend.
No means the deal is rejected
Yes means it is accepted
What do you think the outcome will be and what should it be?
Your poll is too confusing. :D
They should vote no because they really need to default and start all over again.
They will vote no because they think lifting the yoke of German oppression will usher in an era of rainbows and unicorns.
What exactly is going on with the capital controls? Have all bank accounts been frozen? Limited daily withdrawals?
Quote from: Admiral Yi on July 02, 2015, 04:20:56 PM
What exactly is going on with the capital controls? Have all bank accounts been frozen? Limited daily withdrawals?
Banks are closed. ATMs limited to 60 euro/day.
Greece will disintegrate and be reduced to isolated city-states, easy pickings for any major empire that happens to come along.
Greek tax laws are so full of loopholes, everything needs to be burned down to be fixed.
I voted for Hitler.
Interesting answers. I feel special being the only one in my category. :lol:
They should vote yes but they will vote no.
They'll never fix their problems if they go it alone. They need outside pressure to curb excessive spending, which is the fundamental problem. But they will vote no, because humans don't think in terms of the actual proposals on the table. Nobody cares about those. What matters is that "the big guys are bullying us, and we need to say no".
They should default, if only to weaken the banksters' cabal that runs Europe.
G.
Quote from: The Brain on July 02, 2015, 04:38:21 PM
Greece will disintegrate and be reduced to isolated city-states, easy pickings for any major empire that happens to come along.
Erdogan needs a popularity boost after the last election. This is his chance to unify cyprus with turkey. All of cyprus. Who will do anything?
Quote from: alfred russel on July 02, 2015, 10:44:21 PM
Quote from: The Brain on July 02, 2015, 04:38:21 PM
Greece will disintegrate and be reduced to isolated city-states, easy pickings for any major empire that happens to come along.
Erdogan needs a popularity boost after the last election. This is his chance to unify cyprus with turkey. All of cyprus. Who will do anything?
Cyprus is a EU member state. Why would Erdogan attack the EU?
Quote from: Syt on July 02, 2015, 11:05:49 PM
Quote from: alfred russel on July 02, 2015, 10:44:21 PM
Quote from: The Brain on July 02, 2015, 04:38:21 PM
Greece will disintegrate and be reduced to isolated city-states, easy pickings for any major empire that happens to come along.
Erdogan needs a popularity boost after the last election. This is his chance to unify cyprus with turkey. All of cyprus. Who will do anything?
Cyprus is a EU member state. Why would Erdogan attack the EU?
In reality, no. Also, it would help if russia backed him up, and russia wont do that over cyprus.
The thinking process is wrong. The Greeks keep thinking, well, I need $10 to pay pensions, to buy military hardware and train an army to fight the Turks, to hire civil servants to buy votes serve the country etc. I need to figure out how to finance these, i.e. find the $10 by borrowing, taxing, etc etc. This is wrong.
The correct way to think is, I have $3. The most important thing to me is xxx, and this costs $3. That's it, sorry folks, we don't have money for the rest. The Turks can take Cyprus if they want to.
Mono, you do realize that country budgets are not big household budgets right?
Quote from: Martinus on July 03, 2015, 12:42:50 AM
Mono, you do realize that country budgets are not big household budgets right?
You've raised this point about six times now. Each time someone asks you how is it different, you disappear, someone else says because households don't have central banks that can monetize debt, you say yeah! yeah! yeah!, someone points out Greece doesn't have a central bank that can monetize this debt, then you disappear again, until you can repeat your point two months later.
Quote from: Martinus on July 03, 2015, 12:42:50 AM
Mono, you do realize that country budgets are not big household budgets right?
If anything, running a national budget requires even more prudence.
Quote from: Admiral Yi on July 03, 2015, 01:03:30 AM
Quote from: Martinus on July 03, 2015, 12:42:50 AM
Mono, you do realize that country budgets are not big household budgets right?
You've raised this point about six times now. Each time someone asks you how is it different, you disappear, someone else says because households don't have central banks that can monetize debt, you say yeah! yeah! yeah!, someone points out Greece doesn't have a central bank that can monetize this debt, then you disappear again, until you can repeat your point two months later.
Well, the Greeks may well have a central bank now.
I voted no and no. It's still gonna be bad, but the chances of having a relatively acceptable solution to this probably went a few years ago. They need to default or have significant debt restructuring, all this kicking the can down the road is making things worse.
I'm surprised to see that most of the board thinks that Greece should vote no.
Quote from: The Larch on July 03, 2015, 03:38:07 AM
I'm surprised to see that most of the board thinks that Greece should vote no.
We love watching things burn.
The best solution for Greece would be an orderly exit from Eurozone. But Troika does not want it, because if (after a very bad 2-3 years) Greece bounces back thanks to becoming internationally competitive again for tourists and labour intensive industries, other PIGS may follow suit.
Quote from: Martinus on July 03, 2015, 03:51:51 AM
The best solution for Greece would be an orderly exit from Eurozone. But Troika does not want it, because if (after a very bad 2-3 years) Greece bounces back thanks to becoming internationally competitive again for tourists and labour intensive industries, other PIGS may follow suit.
Greece doesn't want it either. They want everything - stay in Euro, debt relief, no more austerity.
Quote from: Monoriu on July 03, 2015, 03:53:39 AM
Quote from: Martinus on July 03, 2015, 03:51:51 AM
The best solution for Greece would be an orderly exit from Eurozone. But Troika does not want it, because if (after a very bad 2-3 years) Greece bounces back thanks to becoming internationally competitive again for tourists and labour intensive industries, other PIGS may follow suit.
Greece doesn't want it either. They want everything - stay in Euro, debt relief, no more austerity.
That's right. Each side is playing hardball and standing by a position that is, ultimately, unacceptable to the other side. It is exactly a Greek tragedy (no pun intended) - two irreconceivable fundamental principles.
Troika wants more austerity - Greeks simply cannot accept it as contrary to the picture of lazy and well off Greeks, painted in nazi-antisemitic-propaganda-style tabloids, 25% of Greeks are without job, with the number being closer to 50% among the young; and 45% of pensioners receive less than the social minimum in pensions.
Greeks want debt reduction and an aid programme - Troika cannot accept it because this would simply cause Spaniards and Portuguese to line up for similar treatment (after they have elected Syriza-like parties in their countries).
Quote from: Martinus on July 03, 2015, 04:00:03 AMGreeks want debt reduction and an aid programme - Troika cannot accept it because this would simply cause Spaniards and Portuguese to line up for similar treatment (after they have elected Syriza-like parties in their countries).
That's not a good analysis, IMO. Portugal has no Syriza-like party around and Podemos in Spain has shown that they're not strong enough to carry a national election on their own, so nobody is going to demand a similar treatment if Greece gets its bailout conditions eased.
I mean, even the IMF has come out clean about their previous analysis being crap and debt reduction being basically essential for Greece's future financial wellbeing. Even with plenty of preferential treatment Greece is going to stay in the financial ER for a very long time. This is not something that is going to be solved easily and in a few years.
Quote from: The Larch on July 03, 2015, 04:57:07 AM
That's not a good analysis, IMO. Portugal has no Syriza-like party around and Podemos in Spain has shown that they're not strong enough to carry a national election on their own, so nobody is going to demand a similar treatment if Greece gets its bailout conditions eased.
In 2008, people probably said the same thing about Syriza. Now they are in power.
Quote from: Monoriu on July 03, 2015, 05:51:46 AM
Quote from: The Larch on July 03, 2015, 04:57:07 AM
That's not a good analysis, IMO. Portugal has no Syriza-like party around and Podemos in Spain has shown that they're not strong enough to carry a national election on their own, so nobody is going to demand a similar treatment if Greece gets its bailout conditions eased.
In 2008, people probably said the same thing about Syriza. Now they are in power.
I doubt they look that far ahead, but it has been clear that some EU governments have been going at it against Syriza to hit their national opposition parties by proxy. Spain (which was described in a woefully naive way by some analists as a potential ally for Greece in these negotiations) is very committed to not giving Greece the time of day as a way to be able to paint Podemos with the brush of innefective radicals that would push the country into bankruptcy.
Quote from: Admiral Yi on July 03, 2015, 01:03:30 AM
Quote from: Martinus on July 03, 2015, 12:42:50 AM
Mono, you do realize that country budgets are not big household budgets right?
You've raised this point about six times now. Each time someone asks you how is it different, you disappear, someone else says because households don't have central banks that can monetize debt, you say yeah! yeah! yeah!, someone points out Greece doesn't have a central bank that can monetize this debt, then you disappear again, until you can repeat your point two months later.
It still doesnt work. If you compare relatively affluent greece to an affluent family, greece needs to spend money on roads and the family on food. If they both have their budgets halved, the family can eat out less, buy cheaper foods, etc. They can still meet their needs.
In theory a country can halve their spending on roads. I dont know the quality of the road system in greece, but here i imagine the impact would be a disaster. I would imagine the economic impact would far exceed any savings. Even the government may not be financially better off as the economic impact of a crumbling road network and laid off workers would impact tax revenue.
Quote from: alfred russel on July 03, 2015, 08:29:26 AM
It still doesnt work. If you compare relatively affluent greece to an affluent family, greece needs to spend money on roads and the family on food. If they both have their budgets halved, the family can eat out less, buy cheaper foods, etc. They can still meet their needs.
In theory a country can halve their spending on roads. I dont know the quality of the road system in greece, but here i imagine the impact would be a disaster. I would imagine the economic impact would far exceed any savings. Even the government may not be financially better off as the economic impact of a crumbling road network and laid off workers would impact tax revenue.
Even accepting your logic, countries spend money on things besides roads, and households spend money on things besides food.
Quote from: celedhring on July 03, 2015, 01:46:43 AM
Quote from: Admiral Yi on July 03, 2015, 01:03:30 AM
Quote from: Martinus on July 03, 2015, 12:42:50 AM
Mono, you do realize that country budgets are not big household budgets right?
You've raised this point about six times now. Each time someone asks you how is it different, you disappear, someone else says because households don't have central banks that can monetize debt, you say yeah! yeah! yeah!, someone points out Greece doesn't have a central bank that can monetize this debt, then you disappear again, until you can repeat your point two months later.
Well, the Greeks may well have a central bank now.
I voted no and no. It's still gonna be bad, but the chances of having a relatively acceptable solution to this probably went a few years ago. They need to default or have significant debt restructuring, all this kicking the can down the road is making things worse.
They might but the media is reporting that there is strong support in Greece for staying with the Euro. Its a sort of have their cake and eat it too problem.
Quote from: Admiral Yi on July 03, 2015, 09:33:25 AM
Quote from: alfred russel on July 03, 2015, 08:29:26 AM
It still doesnt work. If you compare relatively affluent greece to an affluent family, greece needs to spend money on roads and the family on food. If they both have their budgets halved, the family can eat out less, buy cheaper foods, etc. They can still meet their needs.
In theory a country can halve their spending on roads. I dont know the quality of the road system in greece, but here i imagine the impact would be a disaster. I would imagine the economic impact would far exceed any savings. Even the government may not be financially better off as the economic impact of a crumbling road network and laid off workers would impact tax revenue.
Even accepting your logic, countries spend money on things besides roads, and households spend money on things besides food.
The point being, first world families spend to meet needs and desires, and at least the former can be met through significantly reduced spending.
Governments spend to provide services to the population, many of which are critical to the health of the country.
Government spending cuts also materially effect aggregate demand, while family spending cuts do not.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fwww.publicissue.gr%2Fen%2Fwp-content%2Fuploads%2F2015%2F07%2F3.jpg&hash=433b06371d7669553d27e596756dbfc54bae79b4)
Looks like it will be extremely close. If this goes down 51-49 either way, it will not have clarified anything at all...
http://www.publicissue.gr/en/2810/greek-referendum-2015/
http://www.theguardian.com/commentisfree/2015/jul/03/alexis-tsipras-promises-greek-crisis-referendum
QuoteAlexis Tsipras talks so much about democracy that one might think the Greek prime minister is a paragon of virtue when it comes to dealing with the voters. This is not the case. For a start, Tsipras has made a series of wild promises that he cannot deliver. Before January's election, he pledged that he would tear up the country's bailout programme while staying in the euro. The two are almost certainly incompatible goals, as the Greek people are now discovering at huge cost.
In advance of Sunday's referendum, he has given further assurances. One is that savers' bank deposits are safe. He also said he will have a deal with Greece's creditors within 48 hours of the plebiscite, if they vote no to the bailout plan. In fact, deposits are at risk and the chance of a deal in two days is virtually nil. A good democrat only promises what he or she can deliver. Tsipras is a demagogue.
Now look at Sunday's referendum. The people have been given eight days to take a decision that will have repercussions for a generation. What's more, the question is convoluted. The people are officially being asked whether to accept or reject an offer made by Greece's creditors on 25 June. They are then referred to two complex documents, which have been translated into Greek from English. One of these was mistranslated to say that the country's debt was unsustainable under all three scenarios considered, whereas it actually said it was unsustainable under only one of the three. The ballot paper also puts "No", Tsipras's favoured option, above "Yes".
[...]
Even worse, it's not at all clear what the two options mean. Yes cannot mean accepting the 25 June offer because it is no longer on the table. In practice, those who vote yes will think they are voting for Europe. And what does no mean? Tsipras says it means giving him stronger negotiating power with the creditors. In fact, it is likely to mean that Greece quits the euro – something he denies.
The Council of Europe, Europe's top human rights institution, told Associated Press this week that the referendum fell short of international standards. Its secretary general, Thorbjørn Jagland, said international standards recommend that a referendum is held with at least two weeks' notice to allow sufficient time for discussion, with a clear question put to the people and with international observers monitoring the vote.
If, despite all this, Tsipras loses the referendum and resigns, there will undoubtedly be a narrative presented that Europe undermined a democratic government because it didn't like the fact that it was so leftwing. The real explanation will be that Tsipras undermined himself with his undeliverable promises, confrontational approach towards creditors, inexperience and inability to read the situation properly.
Quote from: alfred russel on July 03, 2015, 02:33:52 PM
The point being, first world families spend to meet needs and desires, and at least the former can be met through significantly reduced spending.
Governments spend to provide services to the population, many of which are critical to the health of the country.
An excellent point. Another way to phrase this would be to say that families spend to provide services to its members, many of which are critical to their health. And that governments spend to meet needs and desires, and at least the latter can be met through significantly reduced spending.
QuoteGovernment spending cuts also materially effect aggregate demand, while family spending cuts do not.
If you aggregate them they sure do.
[/quote]
My impression is that Greece spends a lot on inefficiency, which isn't really awesome.
Quote from: Admiral Yi on July 03, 2015, 02:52:19 PM
An excellent point. Another way to phrase this would be to say that families spend to provide services to its members, many of which are critical to their health. And that governments spend to meet needs and desires, and at least the latter can be met through significantly reduced spending.
Family budgeting discussions are more like, "we can go to a nice steakhouse or go to the movies...which should we do, we can't keep doing both." Or, "we need to decide if we want to buy a really nice house, a really nice car, or maybe save on both and take international vacations every year." Ie, what do we want to do. At least among well off families that aren't facing major crises like major uninsured health care costs.
Government spending decisions are different. Politicians don't sell us on the idea of buying tanks because having lots of tanks is fun. It is sold as meeting a need of the nation, the same as education, public health, infrastructure, etc.
QuoteIf you aggregate them they sure do.
I don't think your typical family projects the effect of their budgeting decisions on the economy of the nation with assumption that others will behave similarly. Nor should they.
Governments need to consider the impact their fiscal policy will have on aggregate demand.
This is a clear difference between government and family budgeting.
Quote from: Zanza on July 03, 2015, 02:51:21 PM
http://www.theguardian.com/commentisfree/2015/jul/03/alexis-tsipras-promises-greek-crisis-referendum
QuoteAlexis Tsipras talks so much about democracy that one might think the Greek prime minister is a paragon of virtue when it comes to dealing with the voters. This is not the case. For a start, Tsipras has made a series of wild promises that he cannot deliver. Before January's election, he pledged that he would tear up the country's bailout programme while staying in the euro. The two are almost certainly incompatible goals, as the Greek people are now discovering at huge cost.
In advance of Sunday's referendum, he has given further assurances. One is that savers' bank deposits are safe. He also said he will have a deal with Greece's creditors within 48 hours of the plebiscite, if they vote no to the bailout plan. In fact, deposits are at risk and the chance of a deal in two days is virtually nil. A good democrat only promises what he or she can deliver. Tsipras is a demagogue.
Now look at Sunday's referendum. The people have been given eight days to take a decision that will have repercussions for a generation. What's more, the question is convoluted. The people are officially being asked whether to accept or reject an offer made by Greece's creditors on 25 June. They are then referred to two complex documents, which have been translated into Greek from English. One of these was mistranslated to say that the country's debt was unsustainable under all three scenarios considered, whereas it actually said it was unsustainable under only one of the three. The ballot paper also puts "No", Tsipras's favoured option, above "Yes".
[...]
Even worse, it's not at all clear what the two options mean. Yes cannot mean accepting the 25 June offer because it is no longer on the table. In practice, those who vote yes will think they are voting for Europe. And what does no mean? Tsipras says it means giving him stronger negotiating power with the creditors. In fact, it is likely to mean that Greece quits the euro – something he denies.
The Council of Europe, Europe's top human rights institution, told Associated Press this week that the referendum fell short of international standards. Its secretary general, Thorbjørn Jagland, said international standards recommend that a referendum is held with at least two weeks' notice to allow sufficient time for discussion, with a clear question put to the people and with international observers monitoring the vote.
If, despite all this, Tsipras loses the referendum and resigns, there will undoubtedly be a narrative presented that Europe undermined a democratic government because it didn't like the fact that it was so leftwing. The real explanation will be that Tsipras undermined himself with his undeliverable promises, confrontational approach towards creditors, inexperience and inability to read the situation properly.
It is grossly irresponsible, not to mention foolish, to have the plebiscite. It removes any trust left between EU creditors and the Greek government. It shoves a hugely complex problem at voters at unreasonably short notice. The Greeks elected him to solve the problem. Now that he can't solve the problem, he throws the problem back at the voters in way that people can't agree on what they are voting for. There is a place for plebiscites in a democracy but they aren't supposed to be used in this fashion.
Quote from: Monoriu on July 03, 2015, 07:52:48 PM
It is grossly irresponsible, not to mention foolish, to have the plebiscite. It removes any trust left between EU creditors and the Greek government. It shoves a hugely complex problem at voters at unreasonably short notice. The Greeks elected him to solve the problem. Now that he can't solve the problem, he throws the problem back at the voters in way that people can't agree on what they are voting for. There is a place for plebiscites in a democracy but they aren't supposed to be used in this fashion.
Democracy isn't contingent on the approval of accountants Mono... The sovereign people of Greece will decide if they wish to go through with the 'Austerity Program' (TM) or not. So far 'austerity' has been demonstrated to be beneficial only to the 'banksters' - not the people. When Jean-Claude Juncker, head of European Commission, speaks of being 'betrayed' - he who as PM of Luxemburg helped large corporations avoid paying their income taxes - it rings false. The Greeks should default on the entire debt, all 330B (more or less) of it. That would leave them with some breathing space and *then* they'll have to clean their own house - on their own term.
G.
How has austerity helped the banksters grallon?
Quote from: Admiral Yi on July 04, 2015, 12:11:12 AM
How has austerity helped the banksters grallon?
Are you really going to go through this shit again? It has been demonstrated over and over that austerity was detrimental to Greek economy and only helped funnel cash out of it so credit banks can be saved from exposure.
Quote from: Martinus on July 04, 2015, 12:12:56 AM
Are you really going to go through this shit again? It has been demonstrated over and over that austerity was detrimental to Greek economy and only helped funnel cash out of it so credit banks can be saved from exposure.
Austerity had nothing to do with banks, since they had already had all their debt bought up by EU sovereigns by the time it started. But don't let that dampen your outrage.
"No" means a lot of pain now and recovery later. "Yes" means less pain now but no hope of recovery ever.
Quote from: Admiral Yi on July 03, 2015, 01:03:30 AM
Quote from: Martinus on July 03, 2015, 12:42:50 AM
Mono, you do realize that country budgets are not big household budgets right?
You've raised this point about six times now. Each time someone asks you how is it different, you disappear, someone else says because households don't have central banks that can monetize debt, you say yeah! yeah! yeah!, someone points out Greece doesn't have a central bank that can monetize this debt, then you disappear again, until you can repeat your point two months later.
Well let's see. People don't live as long as governments. When people die the debt must be paid. Government debts can theoretically last indefinably. Families can't raise taxes or sell bonds. A government's debt is often to it's own people. Households don't normally owe themselves money. Debt can be quite beneficial to governments, the US took on the debts of it's member states to create credit. I don't think a household could do this.
The real question (and I believe it was asked last time and someone disappeared), insights does the household analogy grant us? None that I can see.
They'll vote no and become Venezuela I'm afraid.
Becoming Venezuela without oil? Also, Venice is not popular in Greece for obvious reasons (Venezuela=little Venice :nerd:).
Quote from: Duque de Bragança on July 04, 2015, 06:45:12 AM
Becoming Venezuela without oil?
Yeah in the sense of the Greeks will vote no, the aftermath of the vote is bungled by Syriza in the usual worst-case way and next month the Greek government will start paying salaries with it's own IOU's. A Venezuelan-style spiral of continual inflation and currency depreciation follows.
Anyone who's young and with half a brain should get out. Probably they already have.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fwww.heute.de%2FZDF%2Fzdfportal%2Fblob%2F39126684%2F1%2Fdata.jpg&hash=12c6f48bb2afc125e6ce6170474743f03a037c8c)
The often-mentioned "German taxpayer" has a pretty clear opinion on whether the EU should have made more concessions to Greece.
Quote from: Legbiter on July 04, 2015, 06:50:14 AM
Anyone who's young and with half a brain should get out. Probably they already have.
I haven't met Greeks in Germany, now that you mention it. Tons of Spaniards, Poles and Turks and a handful of people from the old Soviet block. But no Greeks yet.
Quote from: Iormlund on July 04, 2015, 09:41:23 AM
Quote from: Legbiter on July 04, 2015, 06:50:14 AM
Anyone who's young and with half a brain should get out. Probably they already have.
I haven't met Greeks in Germany, now that you mention it. Tons of Spaniards, Poles and Turks and a handful of people from the old Soviet block. But no Greeks yet.
There are lots of them, unlike Austria.
Quote from: Iormlund on July 04, 2015, 09:41:23 AM
Quote from: Legbiter on July 04, 2015, 06:50:14 AM
Anyone who's young and with half a brain should get out. Probably they already have.
I haven't met Greeks in Germany, now that you mention it. Tons of Spaniards, Poles and Turks and a handful of people from the old Soviet block. But no Greeks yet.
About 50k Greeks moved to Germany in the last five years. There are now 328k Greeks in Germany. Fifth biggest group of foreigners (Turks, Poles, Italians, Romanians are more numerous).
Quote from: Grallon on July 02, 2015, 08:22:41 PM
They should default, if only to weaken the banksters' cabal that runs Europe.
G.
if you think things are bad now, imagine with Greece unable to borrow for the next 2 years :)
Quote from: viper37 on July 04, 2015, 09:52:04 AM
Quote from: Grallon on July 02, 2015, 08:22:41 PM
They should default, if only to weaken the banksters' cabal that runs Europe.
G.
if you think things are bad now, imagine with Greece unable to borrow for the next 2 years :)
Are you saying Greeks are able to borrow now? :D
Quote from: Zanza on July 04, 2015, 09:04:31 AM
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fwww.heute.de%2FZDF%2Fzdfportal%2Fblob%2F39126684%2F1%2Fdata.jpg&hash=12c6f48bb2afc125e6ce6170474743f03a037c8c)
The often-mentioned "German taxpayer" has a pretty clear opinion on whether the EU should have made more concessions to Greece.
Perhaps the "German taxpayer" should ask why the losses of German banks, imprudently lending money to Greece, have been socialised? :)
Quote from: Legbiter on July 04, 2015, 06:50:14 AM
Quote from: Duque de Bragança on July 04, 2015, 06:45:12 AM
Becoming Venezuela without oil?
Yeah in the sense of the Greeks will vote no, the aftermath of the vote is bungled by Syriza in the usual worst-case way and next month the Greek government will start paying salaries with it's own IOU's. A Venezuelan-style spiral of continual inflation and currency depreciation follows.
Anyone who's young and with half a brain should get out. Probably they already have.
Syriza served a purpose in discrediting the far left. But in Greece, the center right and center left has already been discredited. I'm certain the far right will be the most disastrous of the group in the unlikely event they get a turn.
Quote from: Martinus on July 04, 2015, 10:11:12 AM
Perhaps the "German taxpayer" should ask why the losses of German banks, imprudently lending money to Greece, have been socialised? :)
Perhaps the German taxpayer did ask and didn't care nearly as much about that? We put in twice the money we currently have exposed to Greece into one bank, the Hypo Real Estate, alone and no one really gave a fuck.
The exposure that the German state now has to Greece is way higher than than what German banks had in 2010 (about 75 billion compared to 45 billion).
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fwww.nonconimieisoldi.org%2Fwp-content%2Fuploads%2F2015%2F06%2FEsposizione-banche.png&hash=842e6d084b0537d244ea2f4f1607bee9c7469d22)
Germany, but especially Italy and Spain suck at socializing losses. France on the other hand did marvelous. :frog:
Quote from: Grallon on July 03, 2015, 09:29:10 PM
Quote from: Monoriu on July 03, 2015, 07:52:48 PM
It is grossly irresponsible, not to mention foolish, to have the plebiscite. It removes any trust left between EU creditors and the Greek government. It shoves a hugely complex problem at voters at unreasonably short notice. The Greeks elected him to solve the problem. Now that he can't solve the problem, he throws the problem back at the voters in way that people can't agree on what they are voting for. There is a place for plebiscites in a democracy but they aren't supposed to be used in this fashion.
Democracy isn't contingent on the approval of accountants Mono... The sovereign people of Greece will decide if they wish to go through with the 'Austerity Program' (TM) or not. So far 'austerity' has been demonstrated to be beneficial only to the 'banksters' - not the people. When Jean-Claude Juncker, head of European Commission, speaks of being 'betrayed' - he who as PM of Luxemburg helped large corporations avoid paying their income taxes - it rings false. The Greeks should default on the entire debt, all 330B (more or less) of it. That would leave them with some breathing space and *then* they'll have to clean their own house - on their own term.
G.
so far, most of the measures that Greece should have adopted have not been. Even if they were, you don't go from bankrupt to billionaire in a few weeks.
If you look at our dear province, we are poorer than we were in the 1960s, we are poorer and less educated than most of our neighbours, the only US State comparable to us would be Mississipi, one of the poorest, yet we insist on doing the same thing we have been doing for the last 50 years with no results.
Quote from: Zanza on July 04, 2015, 10:22:43 AM
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fwww.nonconimieisoldi.org%2Fwp-content%2Fuploads%2F2015%2F06%2FEsposizione-banche.png&hash=842e6d084b0537d244ea2f4f1607bee9c7469d22)
Germany, but especially Italy and Spain suck at socializing losses. France on the other hand did marvelous. :frog:
That's because Eurozone countries ponied up money depending on their share of eurozone GDP, or something like that.
Quote from: Martinus on July 04, 2015, 10:11:12 AM
Quote from: Zanza on July 04, 2015, 09:04:31 AM
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fwww.heute.de%2FZDF%2Fzdfportal%2Fblob%2F39126684%2F1%2Fdata.jpg&hash=12c6f48bb2afc125e6ce6170474743f03a037c8c)
The often-mentioned "German taxpayer" has a pretty clear opinion on whether the EU should have made more concessions to Greece.
Perhaps the "German taxpayer" should ask why the losses of German banks, imprudently lending money to Greece, have been socialised? :)
Marty comes out for no more lending to governments ever again. Austerity forever. Well that would solve debt problems but might have other unintended consequences Marty :hmm:
Quote from: Razgovory on July 04, 2015, 02:18:00 AM
Well let's see. People don't live as long as governments. When people die the debt must be paid. Government debts can theoretically last indefinably. Families can't raise taxes or sell bonds. A government's debt is often to it's own people. Households don't normally owe themselves money. Debt can be quite beneficial to governments, the US took on the debts of it's member states to create credit. I don't think a household could do this.
Dead people with no net worth don't have to pay their debts.* Families can reallocate their income to different types of expenditure, just as states can reallocate their income to private consumption and government spending. So what if families can't issue bonds? Debt is debt. The government doesn't owe money to itself in the case of domestically held debt; it owes it to individuals. I don't know what you mean by "took on debt to create credit."
QuoteThe real question (and I believe it was asked last time and someone disappeared), insights does the household analogy grant us? None that I can see.
The insight it provides us is that in both cases you can borrow money now and live high on the hog, but eventually you have pay it back and live lower on the hog, or not pay it back and lose your ability to borrow.
Woops, forgot my footnote.
* Back when I was working for Student Loan Servicing, I got a call from a very old black women. I think she was about 85. She had just completed her degree, and wanted to know about repayment options.
Hoping that my call wasn't being monitored, I told her, in so many words, to just keep requesting forebearances until she kicked the can.
Quote from: Admiral Yi on July 04, 2015, 01:48:39 PM
Quote from: Razgovory on July 04, 2015, 02:18:00 AM
Well let's see. People don't live as long as governments. When people die the debt must be paid. Government debts can theoretically last indefinably. Families can't raise taxes or sell bonds. A government's debt is often to it's own people. Households don't normally owe themselves money. Debt can be quite beneficial to governments, the US took on the debts of it's member states to create credit. I don't think a household could do this.
Dead people with no net worth don't have to pay their debts.* Families can reallocate their income to different types of expenditure, just as states can reallocate their income to private consumption and government spending. So what if families can't issue bonds? Debt is debt. The government doesn't owe money to itself in the case of domestically held debt; it owes it to individuals. I don't know what you mean by "took on debt to create credit."
QuoteThe real question (and I believe it was asked last time and someone disappeared), insights does the household analogy grant us? None that I can see.
The insight it provides us is that in both cases you can borrow money now and live high on the hog, but eventually you have pay it back and live lower on the hog, or not pay it back and lose your ability to borrow.
Debts come out the estates of a dead person correct? If there is nothing to take then the debt is never recovered. It's one of the many differences between governmental debt and personal debt. Debts owed by a government of the people to the people are a debts owned to itself. There is no household anology. The insight you have gained from this analogy is exactly why it's a harmful analogy. Debt is not debt. Way back in Washington was President, the US founded the first bank of the United States. It took on the debt of the individual states in order to establish credit for the lending of money. In this way, debt was good. Household debt is almost never good. Debt owed by a individual or a family isn't much like the debt of a government. In fact, a government running surpluses can be harmful to the public as it often does so at the expense of the savings of the public.
Quote from: Razgovory on July 04, 2015, 03:32:28 PM
Household debt is almost never good.
Household debt is generally good. Very few are going to buy a house or a college degree with 100% cash upfront.
Quote from: Fate on July 04, 2015, 03:48:31 PM
Quote from: Razgovory on July 04, 2015, 03:32:28 PM
Household debt is almost never good.
Household debt is generally good. Very few are going to buy a house or a college degree with 100% cash upfront.
Right now, I'd be happy to have never bought my house or my college degree. :P
Quote from: Razgovory on July 04, 2015, 03:32:28 PM
Debts come out the estates of a dead person correct? If there is nothing to take then the debt is never recovered. It's one of the many differences between governmental debt and personal debt. Debts owed by a government of the people to the people are a debts owned to itself. There is no household anology. The insight you have gained from this analogy is exactly why it's a harmful analogy. Debt is not debt. Way back in Washington was President, the US founded the first bank of the United States. It took on the debt of the individual states in order to establish credit for the lending of money. In this way, debt was good. Household debt is almost never good. Debt owed by a individual or a family isn't much like the debt of a government. In fact, a government running surpluses can be harmful to the public as it often does so at the expense of the savings of the public.
The domestic borrower who is not repaid after a default is not going to be content with the explanation that the money was just owed to himself, and is likely not going to willing to lend money to himself in the future, or only at a very high interest rate.
I still don't understand what you mean by the states' debts were taken on to establish credit.
I don't understand what you mean by a government surplus can be at the expense of private savings.
Quote from: Admiral Yi on July 04, 2015, 04:51:04 PM
Quote from: Razgovory on July 04, 2015, 03:32:28 PM
Debts come out the estates of a dead person correct? If there is nothing to take then the debt is never recovered. It's one of the many differences between governmental debt and personal debt. Debts owed by a government of the people to the people are a debts owned to itself. There is no household anology. The insight you have gained from this analogy is exactly why it's a harmful analogy. Debt is not debt. Way back in Washington was President, the US founded the first bank of the United States. It took on the debt of the individual states in order to establish credit for the lending of money. In this way, debt was good. Household debt is almost never good. Debt owed by a individual or a family isn't much like the debt of a government. In fact, a government running surpluses can be harmful to the public as it often does so at the expense of the savings of the public.
The domestic borrower who is not repaid after a default is not going to be content with the explanation that the money was just owed to himself, and is likely not going to willing to lend money to himself in the future, or only at a very high interest rate.
Yes, this is a good reason why the analogy of household account doesn't work. It doesn't make sense.
Here's an article I found recapping what I was discussing with creating a national debt.
http://www.usnews.com/opinion/articles/2008/09/18/past-present-alexander-hamilton-and-the-start-of-the-national-debt
Here's one on the possibility of government surplus decreasing private savings.
http://www.forbes.com/sites/johntharvey/2012/07/18/why-you-should-love-government-deficits/
That's why it doesn't work. For people to lend a government money the interest rate has to be attractive and there has to be some likelihood of repayment. Lenders don't become indifferent to those things when the government in question is their own.
Now, granted, governments have coercive power of their own citizens that they don't have over citizens of other countries. Governments can simply steal private wealth if they want to, or if you prefer a slightly more ambiguous term, they can enforce savings. That's what Stalin did with the kulaks. However most governments have decided the long term repercussions of this policy are not worth the short term benefits.
Your article was interesting, but I still don't know what you meant by the US took on state debt to create credit.
Your Forbes blogger is a bit of a knucklehead. It's perfectly possible for a government to be in fiscal balance and for businesses to borrow (or to float shares, essentially the same effect) to finance expansion. It is also possible for parts of the population, say families buying their first house or paying for higher education, to borrow, and for other parts, say families with kids out of college, to lend. The fact that a government is in balance or running a surplus doesn't mean no one has the ability to invest.
I wish that the Greek army would get off its ass and coup these clowns.
Quote from: viper37 on July 04, 2015, 10:48:01 AM
so far, most of the measures that Greece should have adopted have not been. Even if they were, you don't go from bankrupt to billionaire in a few weeks.
If you look at our dear province, we are poorer than we were in the 1960s, we are poorer and less educated than most of our neighbours, the only US State comparable to us would be Mississipi, one of the poorest, yet we insist on doing the same thing we have been doing for the last 50 years with no results.
Yes, yes, yes, we're unworthy and thank all the gods Harper, the federal regime and the local Liberal crime syndicate are there to prevent us from sinking even deeper... Typical 'collabo' nonsense discourse.
You're a federast that ignores himself Viper: *whiny tone* We can't do it alone! We need to be handled by those 'who know'! It's fucking pathetic! You're talking to me about the debt of Qc? It has more than doubled under the filthy Liberals since 2003; it is now 274B and represents around 11B in yearly payments. Remove it, and its attendant payments, and Qc suddenly finds itself in positive territory, with money to spare... Oh look, who'd have thunk?!
G.
And here is why an Independent Quebec would just be Haiti 2.
I wonder if the EU might opt for a "Gremain" scenario, no matter how the results are. Donald Tusk's latest comment sounded a bit like that. Keep Greece in the Euro by increasing ELA so their banks don't collapse, but don't give any more loans to the Greek government. The Greek government would then probably have to use some kind of scrip to pay its obligations. That will be hugely unpopular and if they then make it legal tender, it was the Greek government that left the Euro not the EU that kicked them out.
Quote from: Zanza on July 05, 2015, 12:54:03 AM
I wonder if the EU might opt for a "Gremain" scenario, no matter how the results are. Donald Tusk's latest comment sounded a bit like that. Keep Greece in the Euro by increasing ELA so their banks don't collapse, but don't give any more loans to the Greek government. The Greek government would then probably have to use some kind of scrip to pay its obligations. That will be hugely unpopular and if they then make it legal tender, it was the Greek government that left the Euro not the EU that kicked them out.
The downside to that approach is that, if Greece leaves the Euro and do relatively well after the initial shock, the Euro will be in serious trouble. Next time something happens, people in some small Euro country will say, hey it is not the end of the world if we leave. Leaving is better than austerity.
It is better to keep Greece in and impose austerity on them.
Oxi, morons!
(okay, I just wanted to make that pun).
Paradoxically, probably the best solution for Eurozone would be if Germany went back to the Deutsch Mark.
Raz, debts do not come out of estate (or at least it would be weird if they did). At best, the heirs are not liable beyond the value of assets in the estate.
Quote from: Martinus on July 05, 2015, 02:55:39 AM
Paradoxically, probably the best solution for Eurozone would be if Germany went back to the Deutsch Mark.
I agree, then I would earn strong DM and be able to exchange them for weak Euros when I went back home.
Quote from: Zanza on July 05, 2015, 12:54:03 AM
I wonder if the EU might opt for a "Gremain" scenario, no matter how the results are. Donald Tusk's latest comment sounded a bit like that. Keep Greece in the Euro by increasing ELA so their banks don't collapse, but don't give any more loans to the Greek government. The Greek government would then probably have to use some kind of scrip to pay its obligations. That will be hugely unpopular and if they then make it legal tender, it was the Greek government that left the Euro not the EU that kicked them out.
The problem with this idea is if Greece doesn't get any fresh loans, they will have to default. Then the Greek debt that Greek banks are holding will be worthless, which means a) their capital ratios are shredded, which means they need to be recapitalized by an infusion of cash, which Greece doesn't have and can't get and b) Greek banks will no longer be able to use those bonds as collateral for borrowing from the ECB.
The best possible outcome for Greece would have been to ask for and get:
1. Serious debt write off. Like maybe enough to get down to 70-80% of GDP. So like a 67% haircut.
2. A fresh loan on top of that, enough to recapitalize Greek banks. Structure the deal so that the lenders make some money if the banks return to profitability sooner than expected. As a wild guess maybe that will mean 20% more debt/GDP on top of the written down debt. So you start over at 100% of GDP. Which is not much higher than the creditor nations.
3. Accept any and all austerity measures demanded by the troika. No more fucking around. The troika says hop on one foot with your thumb up your ass, that's what you do.
Quote from: Grallon on July 04, 2015, 07:01:55 PM
You're talking to me about the debt of Qc? It has more than doubled under the filthy Liberals since 2003; it is now 274B and represents around 11B in yearly payments. Remove it, and its attendant payments, and Qc suddenly finds itself in positive territory, with money to spare... Oh look, who'd have thunk?!
G.
So if Quebec were to become independent, it would just going to absolve itself of an obligation to pay its debts?
Quote from: Martinus on July 05, 2015, 02:55:39 AM
Paradoxically, probably the best solution for Eurozone would be if Germany went back to the Deutsch Mark.
What issue the Eurozone currently has is resolved by that?
Strange
http://www.theguardian.com/business/live/2015/jul/05/greeces-eurozone-future-in-the-balance-as-referendum-gets-under-way--eu-euro-bailout-live
Quote
John Hooper, the Guardian's southern Europe editor, writes:
First came Donald Tusk, the representative of the EU's member governments, who said that a 'No' vote was "not ... about beingin the euro zone or not". Then we had Wolfgang Schäuble telling the Greeks that the outcome of the referendum would merely decide whether their country kept the euro or would be "temporarily without it". And now, today, we get a member of the ECB's executive board, Benoît Cœuré appearing to say that, no matter which way the vote goes, "We will find the necessary instruments".
Odd. No?
All three gentlemen must surely understand that these remarks favour a 'No' vote. A lot of people those of us in the Guardian team here have spoken to in recent days have been in an agony of indecision: dare they vote for rejection of the terms if, as the 'Yes' camp has argued, it will in effect mean voting for Grexit? These comments will comfort and encourage them to put a cross by the OXI (Ochi).
Is this about regime change? Are Greece's creditors trying to engineer the downfall of their tormentor, Alexis Tsipras? It seems unlikely: a 'Yes' vote would surely see him out of office much more swiftly.
Or are they trying instead to create the conditions for Grexit? And reassure the Greeks that they will make it as painless as they possibly can?
Quote from: Zanza on July 05, 2015, 04:31:15 AM
Quote from: Martinus on July 05, 2015, 02:55:39 AM
Paradoxically, probably the best solution for Eurozone would be if Germany went back to the Deutsch Mark.
What issue the Eurozone currently has is resolved by that?
Germany has by far the largest and the most successful economy of the Eurozone - this alone is keeping Euro at an artificially high value, causing pain for pretty much everyone else, from Athens to Dublin and from Lisbon to Rome.
Eurozone without Germany would cause Euro to devalue to more reasonable levels, allowing Eurozone countries to become more competitive. It would also allow German mark to appreciate, lessening Germany's competitiveness, and thus restoring a more balanced foreign trade outputs across Eurozone.
Essentially, Germany in the middle of the Eurozone acts like a supermassive black hole for money.
Quote from: jimmy olsen on July 05, 2015, 05:58:36 AM
Strange
http://www.theguardian.com/business/live/2015/jul/05/greeces-eurozone-future-in-the-balance-as-referendum-gets-under-way--eu-euro-bailout-live
Quote
John Hooper, the Guardian's southern Europe editor, writes:
First came Donald Tusk, the representative of the EU's member governments, who said that a 'No' vote was "not ... about beingin the euro zone or not". Then we had Wolfgang Schäuble telling the Greeks that the outcome of the referendum would merely decide whether their country kept the euro or would be "temporarily without it". And now, today, we get a member of the ECB's executive board, Benoît Cœuré appearing to say that, no matter which way the vote goes, "We will find the necessary instruments".
Odd. No?
All three gentlemen must surely understand that these remarks favour a 'No' vote. A lot of people those of us in the Guardian team here have spoken to in recent days have been in an agony of indecision: dare they vote for rejection of the terms if, as the 'Yes' camp has argued, it will in effect mean voting for Grexit? These comments will comfort and encourage them to put a cross by the OXI (Ochi).
Is this about regime change? Are Greece's creditors trying to engineer the downfall of their tormentor, Alexis Tsipras? It seems unlikely: a 'Yes' vote would surely see him out of office much more swiftly.
Or are they trying instead to create the conditions for Grexit? And reassure the Greeks that they will make it as painless as they possibly can?
History has shown that outsiders trying to intervene in these referendums inevitably fail. The more they tell the Greeks to vote yes, the more they will vote no. It is human nature to be defiant to powerful outside forces. So they give softer lines. Nobody wants to be labelled "he was the one who said those words, sparked outrage in Greece, gave an extra percentage point to the no side, and murdered the Euro."
Quote from: Admiral Yi on July 05, 2015, 03:42:22 AM
3. Accept any and all austerity measures demanded by the troika. No more fucking around. The troika says hop on one foot with your thumb up your ass, that's what you do.
That won't happen. What's the point of this wishful thinking?
Poll on German satirical news site:
If you were Greek, how would you vote in the referendum?
- Σκύλλα
- Χάρυβδις
:lol: :odysseus:
:lol:
Quote from: Martinus on July 05, 2015, 07:15:40 AM
Germany has by far the largest and the most successful economy of the Eurozone - this alone is keeping Euro at an artificially high value, causing pain for pretty much everyone else, from Athens to Dublin and from Lisbon to Rome.
Eurozone without Germany would cause Euro to devalue to more reasonable levels, allowing Eurozone countries to become more competitive. It would also allow German mark to appreciate, lessening Germany's competitiveness, and thus restoring a more balanced foreign trade outputs across Eurozone.
Essentially, Germany in the middle of the Eurozone acts like a supermassive black hole for money.
:huh: How can Germany be a black hole for money when it has by far the biggest current account surplus in the world? That's the exact opposite of a black hole. It was German money that was fueling the asset bubbles across the Eurozone. If anything, you can complain that Germany spills out way too much money and should rather invest or consume at home.
In general, your talking point sounds like it was recycled from 2013 or so as by now Germany has balanced trade with the Eurozone and the Euro has lost massively in value over the last year. The Eurozone countries have also regained international competitiveness as can be seen in various trade balances.
Quote from: Martinus on July 05, 2015, 07:15:40 AM
Quote from: Zanza on July 05, 2015, 04:31:15 AM
Quote from: Martinus on July 05, 2015, 02:55:39 AM
Paradoxically, probably the best solution for Eurozone would be if Germany went back to the Deutsch Mark.
What issue the Eurozone currently has is resolved by that?
Germany has by far the largest and the most successful economy of the Eurozone - this alone is keeping Euro at an artificially high value, causing pain for pretty much everyone else, from Athens to Dublin and from Lisbon to Rome.
Eurozone without Germany would cause Euro to devalue to more reasonable levels, allowing Eurozone countries to become more competitive. It would also allow German mark to appreciate, lessening Germany's competitiveness, and thus restoring a more balanced foreign trade outputs across Eurozone.
Essentially, Germany in the middle of the Eurozone acts like a supermassive black hole for money.
That's like saying Germany is the best pupil in the class. Since this is making the lives of the worst pupils miserable, let's give Germany lower grades so that the other kids won't feel bad.
Quote from: Monoriu on July 05, 2015, 07:59:09 AM
That's like saying Germany is the best pupil in the class. Since this is making the lives of the worst pupils miserable, let's give Germany lower grades so that the other kids won't feel bad.
Not really. The value of a currency is, absent manipulation, proportional to how strong a economy is (or is perceived to be). One of the problems of the Eurozone is that we have 15 distinct economies tied to a single Euro value. The same happens when trying to fit a single interest rate adequate for all of them (which is impossible).
There is only one solution, to harmonize the Eurozone. Unfortunately, this is a massive political undertaking, and any capital we might have had for it was squandered long ago. What was decided instead was to propitiate internal devaluation to fight the symptoms rather than the illness. It seems Ireland and Spain have "succeeded" in this race to the bottom, while Greece failed.
Quote from: Iormlund on July 05, 2015, 08:15:15 AM
Quote from: Monoriu on July 05, 2015, 07:59:09 AM
That's like saying Germany is the best pupil in the class. Since this is making the lives of the worst pupils miserable, let's give Germany lower grades so that the other kids won't feel bad.
Not really. The value of a currency is, absent manipulation, proportional to how strong a economy is (or is perceived to be). One of the problems of the Eurozone is that we have 15 distinct economies tied to a single Euro value. The same happens when trying to fit a single interest rate adequate for all of them (which is impossible).
There is only one solution, to harmonize the Eurozone. Unfortunately, this is a massive political undertaking, and any capital we might have had for it was squandered long ago. What was decided instead was to propitiate internal devaluation to fight the symptoms rather than the illness. It seems Ireland and Spain have "succeeded" in this race to the bottom, while Greece failed.
Lots of other small, economically weak countries use the Euro. I don't hear, say, Estonia having a problem. I therefore think the problem lies with the Greeks.
Quote from: Syt on July 05, 2015, 07:33:48 AM
Poll on German satirical news site:
If you were Greek, how would you vote in the referendum?
- Σκύλλα
- Χάρυβδις
:lol: :odysseus:
:)
Quote from: Monoriu on July 05, 2015, 08:22:03 AM
Quote from: Iormlund on July 05, 2015, 08:15:15 AM
Quote from: Monoriu on July 05, 2015, 07:59:09 AM
That's like saying Germany is the best pupil in the class. Since this is making the lives of the worst pupils miserable, let's give Germany lower grades so that the other kids won't feel bad.
Not really. The value of a currency is, absent manipulation, proportional to how strong a economy is (or is perceived to be). One of the problems of the Eurozone is that we have 15 distinct economies tied to a single Euro value. The same happens when trying to fit a single interest rate adequate for all of them (which is impossible).
There is only one solution, to harmonize the Eurozone. Unfortunately, this is a massive political undertaking, and any capital we might have had for it was squandered long ago. What was decided instead was to propitiate internal devaluation to fight the symptoms rather than the illness. It seems Ireland and Spain have "succeeded" in this race to the bottom, while Greece failed.
Lots of other small, economically weak countries use the Euro. I don't hear, say, Estonia having a problem. I therefore think the problem lies with the Greeks.
The Greeks are to blame for many things, especially their dysfunctional economy.
But the Baltics, too, suffered badly at the start of the crisis. Though Estonia was able to recover pretty fast.
Like the other Balt governments, Estonian leaders decided to go the austerity route back when nobody was doing it. It worked for them mostly because they are so very tiny they could piggy-back on their much bigger neighbours, that were undertaking stimulus spending back then. For example, a sizeable portion of Estonia's exports at the time were produced in single Ericsson manufacturing plant.
Also, since they rejected responsibility for Soviet debt, they had little to start with. Private debt had grown fast, but it doesn't seem to have been transferred to the State, so maybe it was mostly a problem for foreign banks.
Despite this "successes", the Baltics are in a pretty bad demographic spot. Last time I checked, births declined about 20% when the crisis hit (about the same in Spain). Net migration of youngsters was massive for years. A significant portion of GDP comes from money sent home by them.
Isn't people moving to where the work is intentional in an economic union?
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fi.imgur.com%2Fi8JlvJx.png&hash=5aba1f00483c81f40523f35bcbc5d98efaba7dda)
:lol:
Quote from: Monoriu on July 05, 2015, 08:22:03 AM
Quote from: Iormlund on July 05, 2015, 08:15:15 AM
Quote from: Monoriu on July 05, 2015, 07:59:09 AM
That's like saying Germany is the best pupil in the class. Since this is making the lives of the worst pupils miserable, let's give Germany lower grades so that the other kids won't feel bad.
Not really. The value of a currency is, absent manipulation, proportional to how strong a economy is (or is perceived to be). One of the problems of the Eurozone is that we have 15 distinct economies tied to a single Euro value. The same happens when trying to fit a single interest rate adequate for all of them (which is impossible).
There is only one solution, to harmonize the Eurozone. Unfortunately, this is a massive political undertaking, and any capital we might have had for it was squandered long ago. What was decided instead was to propitiate internal devaluation to fight the symptoms rather than the illness. It seems Ireland and Spain have "succeeded" in this race to the bottom, while Greece failed.
Lots of other small, economically weak countries use the Euro. I don't hear, say, Estonia having a problem. I therefore think the problem lies with the Greeks.
You do realise that Estonia joined very recently, right?
Referendum is over. Normal polls, not exit polls, suggest that No is in the lead, but most of them are within the margin of error.
Quote from: Zanza on July 05, 2015, 10:56:37 AM
Isn't people moving to where the work is intentional in an economic union?
You seem to be deliberately obtuse here.
Quote from: Zanza on July 05, 2015, 11:06:16 AM
Referendum is over. Normal polls, not exit polls, suggest that No is in the lead, but most of them are within the margin of error.
Let's hope Greeks voted "No".
Quote from: Martinus on July 05, 2015, 11:06:22 AM
Quote from: Zanza on July 05, 2015, 10:56:37 AM
Isn't people moving to where the work is intentional in an economic union?
You seem to be deliberately obtuse here.
Not really. People moving to where they find work is a healthy development in a common market. What is missing is automatic stabilizers on the federal level (i.e. EU) that would make sure that the regions where people leave can keep up a decent level of government services. Even within countries, people moving from one region to another can cause disruptions.
I predict that Varoufakis claim that there will be a deal with 24 hours will not work out.
Live Result (http://ekloges.ypes.gr/current/e/public/index.html?lang=en#%7B%22cls%22:%22main%22,%22params%22:%7B%7D%7D)
Looks much clearer than expected. Currently about 60% no/40% yes.
With such an overwhelming "no" victory, yet the polls until very last moment reporting a really close vote, you can't help but think of some conspiracy theories...
Quote from: Martinus on July 05, 2015, 07:25:04 AM
That won't happen. What's the point of this wishful thinking?
I thought I already said. The most favorable outcome for Greece.
Quote from: Admiral Yi on July 05, 2015, 01:02:00 PM
Quote from: Martinus on July 05, 2015, 07:25:04 AM
That won't happen. What's the point of this wishful thinking?
I thought I already said. The most favorable outcome for Greece.
More austerity is the least favourable outcome for Greece. It has been proven already not to work. The best part, though, is that the Troika has really no way of forcing that on Greece. The worst they can do, unilaterally, is to cause Greece to default, while staying in the Eurozone - and they know this would be a disaster not just for Greeks.
Essentially, Greeks are Fremen now and they are threatening to blow up the entire supply of spice. The Troika (the Emperor, Bene Gesserit and the Space Guild) can just watch them do that or they have to negotiate. :P
Quote from: Martinus on July 05, 2015, 01:09:36 PM
More austerity is the least favourable outcome for Greece. It has been proven already not to work. The best part, though, is that the Troika has really no way of forcing that on Greece. The worst they can do, unilaterally, is to cause Greece to default, while staying in the Eurozone - and they know this would be a disaster not just for Greeks.
It is true that Greece hasn't yet tried the option of eliminating its banking sector. That could always turn out well.
Quote from: Martinus on July 05, 2015, 12:56:38 PM
With such an overwhelming "no" victory, yet the polls until very last moment reporting a really close vote, you can't help but think of some conspiracy theories...
or bad polling. Something we've seen plenty of the past few years
Quote from: Martinus on July 05, 2015, 01:09:36 PM
More austerity is the least favourable outcome for Greece. It has been proven already not to work. The best part, though, is that the Troika has really no way of forcing that on Greece. The worst they can do, unilaterally, is to cause Greece to default, while staying in the Eurozone - and they know this would be a disaster not just for Greeks.
Essentially, Greeks are Fremen now and they are threatening to blow up the entire supply of spice. The Troika (the Emperor, Bene Gesserit and the Space Guild) can just watch them do that or they have to negotiate. :P
What does Greece have that the Troika needs ("spice")? :huh:
Eurozone stability.
They could just let Greece default and stay in the euro. Everyone just goes on holiday and dosen't pick up the phone when Greece calls. :hmm:
Grimbo.
QuoteNigel Farage@Nigel_Farage
EU project is now dying. It's fantastic to see the courage of the Greek people in the face of political and economic bullying from Brussels
QuoteCarl Bildt
@carlbildt
Well, a clear majority in Greece doesn't want the help that other Euro countries have offered. Their choice. But tragic.
:huh: Help? I'm told the EU was herding Greeks into camps.
Quote from: Martinus on July 05, 2015, 01:50:07 PM
Eurozone stability.
:huh: You might want to reread the news of the last five years. Greece is not exactly a source of Eurozone stability.
Quote from: Legbiter on July 05, 2015, 01:54:30 PM
They could just let Greece default and stay in the euro. Everyone just goes on holiday and dosen't pick up the phone when Greece calls. :hmm:
Why would Greece even negotiate with the terrorists again? Anyway, there won't be a new deal anytime soon. The Greeks are on their own for now.
Quote from: Crazy_Ivan80 on July 05, 2015, 01:34:23 PM
Quote from: Martinus on July 05, 2015, 12:56:38 PM
With such an overwhelming "no" victory, yet the polls until very last moment reporting a really close vote, you can't help but think of some conspiracy theories...
or bad polling. Something we've seen plenty of the past few years
I think that with only a week of campaigning and decision making time there was probably a much higher proportion of people who ended up making their mind up at the last minute than would be normal for, say, a Greek general election. I think it's probably unfair to jump straight to "bad polling" in this specific case.
--------------
I'm surprised that the turnout was as low as 62% though. All the news reports in the UK were talking about queues at the polling booths.
"Staying in the euro" is something Greece doesn't really need permission to do. They could default and maintain the euro as the official currency. Panama uses the US dollar as its official currency. But their banks wouldn't have access to ECB financing.
Quote from: Admiral Yi on July 05, 2015, 04:04:06 PM
"Staying in the euro" is something Greece doesn't really need permission to do. They could default and maintain the euro as the official currency. Panama uses the US dollar as its official currency. But their banks wouldn't have access to ECB financing.
Which would force Greece out of the euro anyway. Unless Greece wants to make the events of the last week last indefinitely.
Quote from: PJL on July 05, 2015, 04:07:03 PM
Which would force Greece out of the euro anyway. Unless Greece wants to make the events of the last week last indefinitely.
I don't follow.
Quote from: Admiral Yi on July 05, 2015, 04:09:12 PM
Quote from: PJL on July 05, 2015, 04:07:03 PM
Which would force Greece out of the euro anyway. Unless Greece wants to make the events of the last week last indefinitely.
I don't follow.
Greece would have a full blown banking crisis if the ECB withdrew support. Once that happens (if it's not already happening), then distribution and supply networks would disintegrate, causing shortages everywhere. After that, it would go into full panic mode, with society disintegrating. In that scenario, printing a new currency (or at least stamping Euros with BoG stamps on them as a start) would be an absolute necessity just to run a basic economy.
Countries like Montenegro and Panama don't need their own currencies, as their banks are solvent, so no-one is worried about losing their money in the bank.
Σkατά!
This is madness!
Quote from: Agelastus on July 05, 2015, 03:59:51 PM
All the news reports in the UK were talking about queues at the polling booths.
practice for the communist hellhole many greeks seem to desire
Quote from: PJL on July 05, 2015, 04:14:47 PM
Greece would have a full blown banking crisis if the ECB withdrew support. Once that happens (if it's not already happening), then distribution and supply networks would disintegrate, causing shortages everywhere. After that, it would go into full panic mode, with society disintegrating. In that scenario, printing a new currency (or at least stamping Euros with BoG stamps on them as a start) would be an absolute necessity just to run a basic economy.
Countries like Montenegro and Panama don't need their own currencies, as their banks are solvent, so no-one is worried about losing their money in the bank.
Greece is going to have a full blown banking crisis either way, unless some sugar daddy restocks their banks. If they drop the euro banks will still be unable to pay back depositors.
Quote from: Admiral Yi on July 05, 2015, 04:33:20 PM
Quote from: PJL on July 05, 2015, 04:14:47 PM
Greece would have a full blown banking crisis if the ECB withdrew support. Once that happens (if it's not already happening), then distribution and supply networks would disintegrate, causing shortages everywhere. After that, it would go into full panic mode, with society disintegrating. In that scenario, printing a new currency (or at least stamping Euros with BoG stamps on them as a start) would be an absolute necessity just to run a basic economy.
Countries like Montenegro and Panama don't need their own currencies, as their banks are solvent, so no-one is worried about losing their money in the bank.
Greece is going to have a full blown banking crisis either way, unless some sugar daddy restocks their banks. If they drop the euro banks will still be unable to pay back depositors.
If Greece has an independent currency, they can restock their banks themselves. The depositors would probably take a haircut through devaluation though.
Fiscal policy as Calvinball.
QuoteSyriza sources say the Greek ministry of finance is examining options to take direct control of the banking system if need be rather than accept a draconian seizure of depositor savings - reportedly a 'bail-in' above a threshhold of €8,000 - and to prevent any banks being shut down on the orders of the ECB.
Government officials recognize that this would lead to an unprecedented rift with the EU authorities. But Syriza's attitude at this stage is that their only defence against a hegemonic power is to fight guerrilla warfare.
Hardliners within the party - though not Mr Varoufakis - are demanding the head of governor Stournaras, a holdover appointee from the past conservative government.
They want a new team installed, one that is willing to draw on the central bank's secret reserves, and to take the provocative step in extremis of creating euros.
"The first thing we must do is take away the keys to his office. We have to restore stability to the system, with or without the help of the ECB. We have the capacity to print €20 notes," said one.
Such action would require invoking national emergency powers - by decree - and "requisitioning" the Bank of Greece for several months. Officials say these steps would have to be accompanied by an appeal to the European Court: both to assert legality under crisis provisions of the Lisbon Treaty, and to sue the ECB for alleged "dereliction" of its treaty duty to maintain financial stability.
Mr Tsakalotos told the Telegraph that the creditors will find themselves be in a morally indefensible position if they refuse to listen to the voice of the Greek people, especially since the International Monetary Fund last week validated Syriza's core claim that Greece's debt cannot be repaid.
"It would be a pretty extreme position for Europe to say that the vote didn't matter. That is not what they did when Ireland voted 'No' to the Lisbon treaty," he said.
THIS IS SPARTA!
http://www.telegraph.co.uk/finance/economics/11719688/Defiant-Greeks-reject-EU-demands-as-Syriza-readies-IOU-currency.html (http://www.telegraph.co.uk/finance/economics/11719688/Defiant-Greeks-reject-EU-demands-as-Syriza-readies-IOU-currency.html)
(https://scontent-cdg2-1.xx.fbcdn.net/hphotos-xft1/t31.0-8/s960x960/11698977_10153529054254379_5412847352526697824_o.jpg)
I thought Languish would appreciate that. :)
PS: sorry, it's not me, nor my t-shirt
We are pleased. :showoff:
Now they need to nationalize the banks and (/grallonOn [execute all the banksters] /grallonOff)
G.
They will have no choice but to nationalize the banks.
Greece needs to get the presses going with drachmas soonest. I don't think they can forge any but the 20-euro note, so forging won't get them out of this mess.
I think the Greeks made the smart choice, though. They simply cannot compete on a level playing field with modern economies. They'll have to compete based on currency devaluation. That'll suck for pensioners and those who take expensive medicines, but it's the only way forward. It's probably a good thing that they have a populist government right now: mad inflation is inevitable, and the incompetence of the current government will probably extend the period of that inflation, but only a populist government (competent or not) could make the changes necessary without civil unrest.
I think Grexit is now likely. Based on this referendum result, the EU leadership can either cave in to Greek demands or take a hard line. I don't think the political climate in the rest of the EU allows the leadership to cave in, even if they want to. It only takes inaction to force Greece to issue its own currency in the next few weeks. At this point I don't think Greece is the main concern. The real worry is if Spain and Italy will follow Greece's path and elect far left, populist governments. Grexit is the choice that will better deter that.
There can still be a path to compromise. The greek government is insisting on restructuring being a part of any deal, and realistically that is inevitable one way or the other.
I suggest that all other Euro states should hold referendums to see if taxpayers there agree to bail out the Greeks on more lenient terms :menace:
Quote from: alfred russel on July 05, 2015, 08:24:09 PM
There can still be a path to compromise. The greek government is insisting on restructuring being a part of any deal, and realistically that is inevitable one way or the other.
FYI, the EU portion of the debt has already been restructured. Interest payments suspended, principle repayments pushed way back (2020?).
Greece had to choose between austerity and Grexit. They chose Grexit. They will have austerity.
They already had austerity, it failed to do what it was suppose to do. Just like it failed in Britain. I do wonder how much damage there will be the rest of EU.
Quote from: Admiral Yi on July 05, 2015, 08:47:37 PM
Quote from: alfred russel on July 05, 2015, 08:24:09 PM
There can still be a path to compromise. The greek government is insisting on restructuring being a part of any deal, and realistically that is inevitable one way or the other.
FYI, the EU portion of the debt has already been restructured. Interest payments suspended, principle repayments pushed way back (2020?).
They are going to get more restructuring, or someone to pay their bills, or a devalued currency to ease the debt burden, or some combination.
Quote from: alfred russel on July 05, 2015, 11:03:35 PM
FYI, the EU portion of the debt has already been restructured. Interest payments suspended, principle repayments pushed way back (2020?).
They are going to get more restructuring, or someone to pay their bills, or a devalued currency to ease the debt burden, or some combination.
[/quote]
When your debt is denominated in a foreign currency, i.e. the euro, devaluing doesn't help.
Who in the world is going to pick up the tab?
All the folks crying "no more austerity" don't seem to have considered what it entails. Where is Greece going to get the money to pay for more spending?
Quote from: Admiral Yi on July 05, 2015, 11:09:45 PM
When your debt is denominated in a foreign currency, i.e. the euro, devaluing doesn't help.
Who in the world is going to pick up the tab?
All the folks crying "no more austerity" don't seem to have considered what it entails. Where is Greece going to get the money to pay for more spending?
They aren't going to be able to pay all their debt without redonominating it in drachmas and leaving the euro. Eurozone countries and the IMF have already put in a lot of money, and it looks unlikely they are going to get it all back, so it seems others in the world are helping to pick up the tab.
I love how circular Yi is - we discussed this at least 2 or 3 times before - Greece will need to have a substantial part of its debt written off or it will default, which means all of its debt will be written off. Drachma devaluation is what will help them get by domestically, only.
I love how Marty slaps together words he doesn't understand, like "drachma devaluation is what will help them get by domestically," then says things like I'm being circular or--what was the other one? Something about minutiae.
Be ware of a greek asking for gifts.
Incidentally, I missed this earlier:
QuoteGreek non-payment of ECB bonds would not mean default rating-S&P
Failure by Greece to repay 6.7 billion euros worth of bonds held by the European Central Bank and maturing at the end of July would not constitute default under Standard and Poor's criteria, the ratings agency said on Monday.
It said its sovereign ratings criteria related to a government's ability and willingness to service obligations to commercial creditors and it considered the ECB as an official creditor.
It said nonpayment would be seen as a negative factor and could lead to a lower long-term rating than the current CCC rating but it would not constitute selective default (SD).
So it seems Greece has a way out without going bankrupt - it just needs to tell the Troika to fuck off. :lol:
They need to refinance 2 bn in T-Bills this Friday. If they can't that's a credit event.
QuoteGreece's upcoming commercial debt payments include €2.0 billion in treasury bills due on July 10; €83 million on a Japanese yen obligation, due on July 14; and €71 million in interest, due on July 17 on a three-year commercial bond the government issued in July 2014. About €39 billion of Greece's total medium- and long-term debt is commercial, representing 22% of GDP. All of the remaining €261 billion in debt (excluding €15 billion in treasury bills) is owed to official creditors.
http://www.bbc.com/news/live/business-33382332
QuoteVaroufakis to stand down as finance minister
Posted at 06:40
Yanis Varoufakis is standing down as finance minister. On his blog he says: "Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted 'partners', for my... 'absence' from its meetings; an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the Ministry of Finance today."
Personally, I tend to side with the IMF who say that much of Greek's debt is unrecoverable.
IMHO, there should be a rebuilding program for Greece:
- give them as much of a bailout as is the absolute minimum for functioning
- tier additional "bonus" payments based on progress in reforming their country's socio-economic structure into a functioning (mostly) non-corrupt state (which will also do wonders for public trust into the system)
- have said reforms evaluated/advised on by an independent council that's comprised in equal parts of Troika and Greek representatives
- be prepared that this will take 10, 20 years
Quote from: Martinus on July 06, 2015, 12:07:19 AM
So it seems Greece has a way out without going bankrupt - it just needs to tell the Troika to fuck off. :lol:
I am sure some private creditor will be willing to lend money to Greece, provided that the yield is high enough. Like insanely high. If Greece is able to get financing from the commercial market, they don't need to negotiate with IMF etc in the first place.
Interesting move by Varoufakis. Are they playing bad cop/good cop?
Quote from: Syt on July 06, 2015, 12:48:05 AM
Personally, I tend to side with the IMF who say that much of Greek's debt is unrecoverable.
IMHO, there should be a rebuilding program for Greece:
- give them as much of a bailout as is the absolute minimum for functioning
- tier additional "bonus" payments based on progress in reforming their country's socio-economic structure into a functioning (mostly) non-corrupt state (which will also do wonders for public trust into the system)
- have said reforms evaluated/advised on by an independent council that's comprised in equal parts of Troika and Greek representatives
- be prepared that this will take 10, 20 years
Why rebuild Greece?
Quote from: The Brain on July 06, 2015, 03:18:47 AM
Quote from: Syt on July 06, 2015, 12:48:05 AM
Personally, I tend to side with the IMF who say that much of Greek's debt is unrecoverable.
IMHO, there should be a rebuilding program for Greece:
- give them as much of a bailout as is the absolute minimum for functioning
- tier additional "bonus" payments based on progress in reforming their country's socio-economic structure into a functioning (mostly) non-corrupt state (which will also do wonders for public trust into the system)
- have said reforms evaluated/advised on by an independent council that's comprised in equal parts of Troika and Greek representatives
- be prepared that this will take 10, 20 years
Why rebuild Greece?
Have you looked at it recently?
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fwww.touristmaker.com%2Fimages%2Flandmarks-greece%2Fancient-ruins-delphi.jpg&hash=93c21ef755b5b14ed721f5f866caf4fbd1df4d84)
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fwww.bestourism.com%2Fimg%2Fitems%2Fbig%2F208%2FParthenon-in-Athens-Greece_Parthenon-ruins_968.jpg&hash=a3ed469c5e3e56dd28f8b34d3d95cacadd7b15c5)
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fwww.hellenicfoundation.com%2FCrete%2FAncient%2520Crete%2FRuins1-lg.jpg&hash=c34d492f46d4186619d4a1e281381762388d24a6)
Is that Detroit?
Quote from: The Brain on July 06, 2015, 03:33:08 AM
Is that Detroit?
It's gonna be nice soon. :)
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fpopcultureblog.dallasnews.com%2Ffiles%2F2012%2F07%2FDeltaCity.jpg&hash=eea7cf6ef7600d091017d24dfbd51e1f52b64baa)
Quote from: Martinus on July 06, 2015, 02:36:50 AM
Interesting move by Varoufakis. Are they playing bad cop/good cop?
Well, all Varoufakis managed to do was to piss everyone off, including the Euro finance ministers who were originally opposed to more austerity measures. Putting someone else in his chair could be very conducive to resuming constructive dialogue.
Quote from: Martinus on July 06, 2015, 12:07:19 AM
Incidentally, I missed this earlier:
QuoteGreek non-payment of ECB bonds would not mean default rating-S&P
Failure by Greece to repay 6.7 billion euros worth of bonds held by the European Central Bank and maturing at the end of July would not constitute default under Standard and Poor's criteria, the ratings agency said on Monday.
It said its sovereign ratings criteria related to a government's ability and willingness to service obligations to commercial creditors and it considered the ECB as an official creditor.
It said nonpayment would be seen as a negative factor and could lead to a lower long-term rating than the current CCC rating but it would not constitute selective default (SD).
So it seems Greece has a way out without going bankrupt - it just needs to tell the Troika to fuck off. :lol:
It's more or less the same with IMF payments. The IMF put up a Q&A when Greece missed the payment last week saying basically that they can stop paying for a whole year before it has any real consequences, besides being unable to get additional financing for them.
Maybe I'm inattentive but this is quite a crucial part and I don't remember it seeing mentioned in mainstream media.
Quote from: Martinus on July 06, 2015, 05:07:54 AM
Maybe I'm inattentive but this is quite a crucial part and I don't remember it seeing mentioned in mainstream media.
I found it at the IMF's website when they published their report last week supporting debt reduction for Greece. Here it is:
http://www.imf.org/external/country/grc/greecefaq.htm (http://www.imf.org/external/country/grc/greecefaq.htm)
And these are the key parts IMO:
QuoteQ2. What happens to Greece because of the failure to make a repayment when due?
The immediate effect is that Greece can no longer receive financing from the IMF under the existing extended arrangement and the IMF will not approve new financing to Greece until it clears its arrears. This is standard procedure when a member fails to repay the IMF. The IMF's Selected Decisions, 37th issue, page 912, spell out the procedures for a failure to repay and apply to all of its 188 members.
Greece remains a member of the Fund, with voting rights and representation on its Executive Board. The IMF's annual health check of a member country's economy (called surveillance) will continue to be an obligation. For the time being, Greece will also be eligible for IMF technical assistance — that is, access to IMF expertise on a range of economic issues, including tax administration and financial sector policies.
Q6. Are there penalties for a failure to repay?
The most immediate "penalty" is that the member can no longer receive IMF financing.
Within 12 months, the Executive Board may consider a declaration of ineligibility against Greece if Greece continues to incur arrears to the IMF. If the non-payment persists for more than 12 months, the IMF Executive Board may declare that the country is "noncooperative" in efforts to clear arrears, which could trigger a suspension of technical assistance, possibly followed by a suspension of voting rights and, ultimately—if the non-cooperation is extreme and protracted—compulsory withdrawal from the IMF. The timetable for these steps is flexible, as spelled out in the IMF's Selected Decisions, page 912.
Q7. What does being in arrears to the IMF mean for Greece's other creditors?
The implications of Greece accumulating arrears to the IMF are for other creditors to determine.
Basically, it means that, unsurprisingly, international organizations are rather flexible in the way they work, and that it's not automatic doom and gloom to miss a deadline.
I read somewhere that, prior to the 08/09 financial crisis, Greece allowed retirement at 55, and pensioners could receive 96% of their last year's salary indefinitely.
True?
Quote from: Monoriu on July 06, 2015, 05:50:55 AM
I read somewhere that, prior to the 08/09 financial crisis, Greece allowed retirement at 55, and pensioners could receive 96% of their last year's salary indefinitely.
True?
How dare you suggest that Greece is a joke?
Quote from: Monoriu on July 06, 2015, 05:50:55 AM
I read somewhere that, prior to the 08/09 financial crisis, Greece allowed retirement at 55, and pensioners could receive 96% of their last year's salary indefinitely.
True?
Yes it was part of the evil plot of the IMF to eventually ruin the country and grab all its riches.
Greece is kind of like Euro Argentina isn't it? Some countries never learn.
Quote from: Monoriu on July 06, 2015, 05:50:55 AM
I read somewhere that, prior to the 08/09 financial crisis, Greece allowed retirement at 55, and pensioners could receive 96% of their last year's salary indefinitely.
True?
That was true for selected "high risk" jobs (including hairdressers, justified by their exposure to chemicals!) but the average Greek retired at just slightly over the EU average age, from what i recall reading. I don't recall the percentage of salary that they collected in pensions, other than remembering that it was high.
I would need to see the European average to be properly outraged at that :P
Man those hairdressers had a good lobbyist.
Quote from: Valmy on July 06, 2015, 07:29:30 AM
Greece is kind of like Euro Argentina isn't it? Some countries never learn.
the stupid ones are the ones that keep giving them money.
You guys need to remember that the "lazy well paid Greeks" is to a large extent a myth perpetrated by tabloids in countries such as Germany.
Quote from: Martinus on July 06, 2015, 09:06:07 AM
You guys need to remember that the "lazy well paid Greeks" is to a large extent a myth perpetrated by tabloids in countries such as Germany.
Laziness has nothing to do with anything. It is about a political culture of fucking things up, making your own people suffer through your own incompetence, and then convincing them it was an evil outsiders fault. Then straighten up for a bit and then do it again.
Quote from: Valmy on July 06, 2015, 09:08:55 AM
Quote from: Martinus on July 06, 2015, 09:06:07 AM
You guys need to remember that the "lazy well paid Greeks" is to a large extent a myth perpetrated by tabloids in countries such as Germany.
Laziness has nothing to do with anything. It is about a political culture of fucking things up, making your own people suffer through your own incompetence, and then convincing them it was an evil outsiders fault. Then straighten up for a bit and then do it again.
Exactly
Quote from: Valmy on July 06, 2015, 09:08:55 AM
Quote from: Martinus on July 06, 2015, 09:06:07 AM
You guys need to remember that the "lazy well paid Greeks" is to a large extent a myth perpetrated by tabloids in countries such as Germany.
Laziness has nothing to do with anything. It is about a political culture of fucking things up, making your own people suffer through your own incompetence, and then convincing them it was an evil outsiders fault. Then straighten up for a bit and then do it again.
The problem is that Syriza is not an establishment party so they, at least formally, come from outside of that culture.
Quote from: Martinus on July 06, 2015, 09:40:58 AM
Quote from: Valmy on July 06, 2015, 09:08:55 AM
Quote from: Martinus on July 06, 2015, 09:06:07 AM
You guys need to remember that the "lazy well paid Greeks" is to a large extent a myth perpetrated by tabloids in countries such as Germany.
Laziness has nothing to do with anything. It is about a political culture of fucking things up, making your own people suffer through your own incompetence, and then convincing them it was an evil outsiders fault. Then straighten up for a bit and then do it again.
The problem is that Syriza is not an establishment party so they, at least formally, come from outside of that culture.
Its the political culture of the country, as you well know it.
Do you guys think Greece should get the same kind of deal as Germany did in 1953, i.e. having half of its debt written off and the other half being only repaid from export surplus?
I know that "political culture" of Greece is clearly worse than that of Germany in the 1930s/40s but still...
No, of course not.
Quote from: Martinus on July 06, 2015, 10:03:26 AM
Do you guys think Greece should get the same kind of deal as Germany did in 1953, i.e. having half of its debt written off and the other half being only repaid from export surplus?
I know that "political culture" of Greece is clearly worse than that of Germany in the 1930s/40s but still...
You answered your own question I think. If you let them off now you just postpone the crisis a few years.
Quote from: Martinus on July 06, 2015, 10:09:48 AM
Quote from: The Brain on July 06, 2015, 10:08:01 AM
No, of course not.
Why not?
Because Greece is a retarded country that should STFU. I'm sure my position on Greece is well known after a number of posts on this theme.
Quote from: The Brain on July 06, 2015, 10:12:53 AM
Quote from: Martinus on July 06, 2015, 10:09:48 AM
Quote from: The Brain on July 06, 2015, 10:08:01 AM
No, of course not.
Why not?
Because Greece is a retarded country that should STFU. I'm sure my position on Greece is well known after a number of posts on this theme.
So you are just racist. Ok. :)
Quote from: Martinus on July 06, 2015, 10:03:26 AM
Do you guys think Greece should get the same kind of deal as Germany did in 1953, i.e. having half of its debt written off and the other half being only repaid from export surplus?
I know that "political culture" of Greece is clearly worse than that of Germany in the 1930s/40s but still...
It is worse when it comes to managing its money. Less bad when it comes to trying world conquest. But Germany got off lightly because of the Cold War, lucky them. If it was not for that well...things would have gone very badly for them indeed.
Quote from: Martinus on July 06, 2015, 10:18:11 AM
So you are just racist. Ok. :)
Hey if you want to put all your money in Argentinian Bonds be my guest. At least then you wont be racist or something.
It looks like Euclid Tsakalotos will be new finance minister.
I guess that might mean there's an end to Non-Euclidean financial politics.
Also Germany was TBTF, whereas Greece isn't.
Quote from: Martinus on July 06, 2015, 10:18:11 AM
Quote from: The Brain on July 06, 2015, 10:12:53 AM
Quote from: Martinus on July 06, 2015, 10:09:48 AM
Quote from: The Brain on July 06, 2015, 10:08:01 AM
No, of course not.
Why not?
Because Greece is a retarded country that should STFU. I'm sure my position on Greece is well known after a number of posts on this theme.
So you are just racist. Ok. :)
Why do you say that I'm racist? Non-rhetorical.
Quote from: Syt on July 06, 2015, 10:24:25 AM
It looks like Euclid Tsakalotos will be new finance minister.
I guess that might mean there's an end to Non-Euclidean financial politics.
Looks like Syriza might now be pursing a triangulation policy WRT the debt solution.
Quote from: Syt on July 06, 2015, 10:24:25 AM
It looks like Euclid Tsakalotos will be new finance minister.
I guess that might mean there's an end to Non-Euclidean financial politics.
Beware the Lotos! :o
PS: Τσακα as in cut(ter) of Lotos or more (budget) cuts? :hmm:
I wonder when they will sell basing rights to the Russians.
Quote from: Razgovory on July 06, 2015, 11:23:00 AM
I wonder when they will sell basing rights to the Russians.
Won't that be fun?
Quote from: Martinus on July 06, 2015, 10:03:26 AM
Do you guys think Greece should get the same kind of deal as Germany did in 1953, i.e. having half of its debt written off and the other half being only repaid from export surplus?
I know that "political culture" of Greece is clearly worse than that of Germany in the 1930s/40s but still...
Oh Marti, you of all Languishites should know the answer to that. No need for the gratuitous reference to Nazi Germany. Aid to Germany in the 1950s was related to the Cold War.
Raz makes a good point further down the thread. In the old world both the USSR and NATO nations would have been racing to lend assistance to Greece.
Quote from: Razgovory on July 06, 2015, 11:23:00 AM
I wonder when they will sell basing rights to the Russians.
Well, the Russians will need an alternative after ISIS kicks them out of Tartus.
So far the Greeks have been very resistant to selling their islands. I want to see some rich crazy guy setting up a micro nation...as horrifying as it could be.
I wonder how much as the Olympics responsible for Greece's situation? Obviously not the main factor but it probably does come into things.
It would not surprise me if it played a significant role. People were commenting on how ruinously expensive it was for Greece at the time. But that was a long time ago.
Quote from: Valmy on July 06, 2015, 12:01:10 PM
It would not surprise me if it played a significant role. People were commenting on how ruinously expensive it was for Greece at the time. But that was a long time ago.
wasn't that 2004?
Quote from: Tyr on July 06, 2015, 11:58:13 AM
So far the Greeks have been very resistant to selling their islands. I want to see some rich crazy guy setting up a micro nation...as horrifying as it could be.
I wonder how much as the Olympics responsible for Greece's situation? Obviously not the main factor but it probably does come into things.
I certainly think Alcibiades having so many chariots was a wee bit over the top.
Quote from: The Larch on July 06, 2015, 05:13:11 AM
Basically, it means that, unsurprisingly, international organizations are rather flexible in the way they work, and that it's not automatic doom and gloom to miss a deadline.
The opposite I would say. The EU has already suspended interest and principle payments. The IMF for a long time had a policy of never forgiving loans. That only changed with the introduction of the Highly Indebted Poor Country initiative a while back, which let countries like Mozambique off the hook.
Dastardly huns! :mad:
http://www.slate.com/blogs/moneybox/2015/07/06/thomas_piketty_on_the_greek_crises_the_star_economist_explains_why_germany.html
QuoteThomas Piketty Explains Why the Germans Are Being Massive Hypocrites About Greece's Debt
By Jordan Weissmann
Sure, Thomas Piketty comes up a lot in conversations about income inequality. But the man is good at putting economic issues into world-historical context and has some very strong opinions about the madness currently transpiring in Europe over Greece. In an interview with the German newspaper Die Zeit, translated on Medium by Gavin Schalliol, he explains why European Union demands that Greece pay back its debts in full are more than a little hypocritical, especially coming from Germany—the 20th-century poster child for debt forgiveness.
ZEIT: But shouldn't they repay their debts?
Piketty: My book recounts the history of income and wealth, including that of nations. What struck me while I was writing is that Germany is really the single best example of a country that, throughout its history, has never repaid its external debt. Neither after the First nor the Second World War. However, it has frequently made other nations pay up, such as after the Franco-Prussian War of 1870, when it demanded massive reparations from France and indeed received them. The French state suffered for decades under this debt. The history of public debt is full of irony. It rarely follows our ideas of order and justice.
ZEIT: But surely we can't draw the conclusion that we can do no better today?
Piketty: When I hear the Germans say that they maintain a very moral stance about debt and strongly believe that debts must be repaid, then I think: what a huge joke! Germany is the country that has never repaid its debts. It has no standing to lecture other nations.
Later in the interview, Piketty explains that there are two ways a country can get out from beneath an unbearable debt load. Either it can take the long, slow, painstaking route of paying back what it owes bit by bit, which Britain did after borrowing to battle Napoleon, or it can use a combination of inflation, taxes on private wealth, and a bit of debt relief, like postwar Germany and France.
Piketty: After the war ended in 1945, Germany's debt amounted to over 200% of its GDP. Ten years later, little of that remained: public debt was less than 20% of GDP. Around the same time, France managed a similarly artful turnaround. We never would have managed this unbelievably fast reduction in debt through the fiscal discipline that we today recommend to Greece. Instead, both of our states employed the second method with the three components that I mentioned, including debt relief. Think about the London Debt Agreement of 1953, where 60% of German foreign debt was cancelled and its internal debts were restructured.
The whole interview is worth a read. Piketty argues that all of Europe needs to hold a conference in order to restructure its debts in a sustainable way—not just Greece's, but the entire region's. Fanciful? Maybe. But it'd almost certainly be more productive than what it's doing right now.
How is it hypocrisy? Germany was smack in the middle of Europe, devastated, and half-occupied by Stalin and his German cronies. The forward line had to be rebuilt ASAP, and not even France wanted Soviet communists knocking on its borders.
Greece... well, is not Germany; its current plight is largely self-inflicted through decades of shoveling problems forward. Nor is it on the frontier of anything threatening to Europe, save through Turkey.
Quote from: Martinus on July 06, 2015, 10:03:26 AM
Do you guys think Greece should get the same kind of deal as Germany did in 1953, i.e. having half of its debt written off and the other half being only repaid from export surplus?
I know that "political culture" of Greece is clearly worse than that of Germany in the 1930s/40s but still...
Wasn't Germany still under allied occupation in 1953? The allies had great control over the German government. If Greece let NATO occupy the country militarily, and the EU dictate its government policy, rewrite its laws, fire civil servants etc, then maybe parts of its debt could be written off :contract:
Quote from: Monoriu on July 06, 2015, 08:03:33 PM
Wasn't Germany still under allied occupation in 1953? The allies had great control over the German government. If Greece let NATO occupy the country militarily, and the EU dictate its government policy, rewrite its laws, fire civil servants etc, then maybe parts of its debt could be written off :contract:
West Germany got its sovereignty back in 1949, notwithstanding NATO bases laden throughout its territory.
Quote from: Drakken on July 06, 2015, 08:05:14 PM
Quote from: Monoriu on July 06, 2015, 08:03:33 PM
Wasn't Germany still under allied occupation in 1953? The allies had great control over the German government. If Greece let NATO occupy the country militarily, and the EU dictate its government policy, rewrite its laws, fire civil servants etc, then maybe parts of its debt could be written off :contract:
West Germany got its sovereignty back in 1949, notwithstanding NATO bases laden throughout its territory.
Wiki says 1955.
QuoteDespite the grants of general sovereignty to both German states in 1955, full and unrestricted sovereignty under international law was not enjoyed by any German government until after the reunification of Germany in October 1990.
https://en.wikipedia.org/wiki/Allied-occupied_Germany
Someone needs to tell Piketty this is not a morality play.
Quote from: Tyr on July 06, 2015, 11:58:13 AM
So far the Greeks have been very resistant to selling their islands. I want to see some rich crazy guy setting up a micro nation...as horrifying as it could be.
I wonder how much as the Olympics responsible for Greece's situation? Obviously not the main factor but it probably does come into things.
They seem to be resistant to selling anything. Perhaps nobody wants to buy. After all, who wants to pay billions of Euros for assets that will very soon be valued at whatever IOUs that the Greek government will have incentive to print in large quantities?
I recently heard that the US has higher rates of tax evasion then Greece. Could this be true?
Quote from: Razgovory on July 06, 2015, 09:30:36 PM
I recently heard that the US has higher rates of tax evasion then Greece. Could this be true?
https://en.wikipedia.org/wiki/Tax_evasion_in_the_United_States
A more recent study estimates the 2008 tax gap in the range of $450 to $500 billion, and unreported income to be approximately $2 trillion.[9] Thus, 18 to 19 percent of total reportable income is not properly reported to the IRS.https://en.wikipedia.org/wiki/Tax_evasion_and_corruption_in_Greece
The OECD estimated in August 2009 that the size of the Greek grey market to be around €65bn (equal to 25% of GDP), resulting each year in €20bn of unpaid taxes.[12] This was in comparison almost twice as big as the German black market (estimated to 15% of GDP).[13] Data for 2012[14] place the Greek "black market" at 24.3% of GDP, compared with 28.6% for Estonia, 26.5% for Latvia, 21.6% for Italy, 17.1% for Belgium and 13.5% for Germany. Hard to tell, but unless we know exactly what they were comparing and how they arrived at this assertion, I don't really know.
Say, do they count as tax evasion a corporation that bases its HQ in a US state with low or no corporate income tax?
Quote from: Drakken on July 06, 2015, 06:56:21 PM
Nor is it on the frontier of anything threatening to Europe, save through Turkey.
well, it's the reason they were fastracked into the Eurozone.
Quote from: viper37 on July 06, 2015, 11:05:51 PM
Say, do they count as tax evasion a corporation that bases its HQ in a US state with low or no corporate income tax?
No.
Neat. The amount of lost revenue from tax evasion in the US for one year could pay off the entire Greek debt! We could go a long way into reducing deficit spending if we just pumped up the IRS some more. With that amount of money being lost it seems deeply irresponsible to cut funding to the IRS.
Quote from: Razgovory on July 06, 2015, 11:23:40 PM
Neat. The amount of lost revenue from tax evasion in the US for one year could pay off the entire Greek debt! We could go a long way into reducing deficit spending if we just pumped up the IRS some more. With that amount of money being lost it seems deeply irresponsible to cut funding to the IRS.
But the law of diminishing return will kick in at some point. You can hire millions of IRS agents, but at some point, the marginal taxes collected will be less than the salaries and overhead of the additional agents.
Quote from: Drakken on July 06, 2015, 06:56:21 PM
How is it hypocrisy? Germany was smack in the middle of Europe, devastated, and half-occupied by Stalin and his German cronies. The forward line had to be rebuilt ASAP, and not even France wanted Soviet communists knocking on its borders.
Greece... well, is not Germany; its current plight is largely self-inflicted through decades of shoveling problems forward. Nor is it on the frontier of anything threatening to Europe, save through Turkey.
Germany's problems were self inflicted
Quote from: Drakken on July 06, 2015, 06:56:21 PM
How is it hypocrisy? Germany was smack in the middle of Europe, devastated, and half-occupied by Stalin and his German cronies. The forward line had to be rebuilt ASAP, and not even France wanted Soviet communists knocking on its borders.
Greece... well, is not Germany; its current plight is largely self-inflicted through decades of shoveling problems forward. Nor is it on the frontier of anything threatening to Europe, save through Turkey.
:lol:
Quote from: jimmy olsen on July 06, 2015, 11:48:08 PM
Quote from: Drakken on July 06, 2015, 06:56:21 PM
How is it hypocrisy? Germany was smack in the middle of Europe, devastated, and half-occupied by Stalin and his German cronies. The forward line had to be rebuilt ASAP, and not even France wanted Soviet communists knocking on its borders.
Greece... well, is not Germany; its current plight is largely self-inflicted through decades of shoveling problems forward. Nor is it on the frontier of anything threatening to Europe, save through Turkey.
Germany's problems were self inflicted
Maybe Germany was blameless in the same way men in the seduction community are not pathetic assholes?
Why is this between Germany and Greece anyway? The other seventeen countries (or more for the IMF part) don't matter? Even if Germany forgave its entire share of Greek debt, Greece would still have something like 140% of GDP in debt left. I wish Merkel would just unilaterally declare that we forgive half of it or so, just to see the other cowards that hide behind us squirm.
If the only right thing to do is Greek debt forgiveness, should not the other countries now at this extreme point act even without Germany and maybe shame it to follow?
By the way the debt Greece has to Germany (and our share of EFSF) is almost interest free and the principal must only be repaid very slowly over decades. That debt is not what hurts Greece at this moment.
QuoteAfter the war ended in 1945, Germany's debt amounted to over 200% of its GDP. Ten years later, little of that remained: public debt was less than 20% of GDP.
:lol: The mighty German economy of the year 1945. The perfect ground for a relative comparison. Did Germany even have a viable economy for most of the year? Athens in 2015 is roughly the same as Berlin in 1945, right?
Quote from: Zanza on July 07, 2015, 12:42:41 AM
Why is this between Germany and Greece anyway?
Because Germany's unchecked foreign trade surplus (something that should have been addressed at the time of Euro creation) is one of the reasons for eurozone problems. It is what exacerbates effects of the crisis across the PIGS and Ireland.
Quote from: Martinus on July 07, 2015, 01:05:09 AM
Because Germany's unchecked foreign trade surplus (something that should have been addressed at the time of Euro creation) is one of the reasons for eurozone problems. It is what exacerbates effects of the crisis across the PIGS and Ireland.
I don't understand the connection.
Quote from: Admiral Yi on July 07, 2015, 01:12:58 AM
Quote from: Martinus on July 07, 2015, 01:05:09 AM
Because Germany's unchecked foreign trade surplus (something that should have been addressed at the time of Euro creation) is one of the reasons for eurozone problems. It is what exacerbates effects of the crisis across the PIGS and Ireland.
I don't understand the connection.
That's okay, neither does Martinus.
Quote from: Admiral Yi on July 07, 2015, 01:12:58 AM
Quote from: Martinus on July 07, 2015, 01:05:09 AM
Because Germany's unchecked foreign trade surplus (something that should have been addressed at the time of Euro creation) is one of the reasons for eurozone problems. It is what exacerbates effects of the crisis across the PIGS and Ireland.
I don't understand the connection.
A country running a constant substantial trade surplus with another country is essentially generating huge amounts of cash (that it is siphoning from the weaker country) that it cannot sensibly spend on consumption or sustainable investment. The cash thus ends up being lent at increasingly speculative prices back to the weaker country, to maintain the trade surplus, thus creating a vicious cycle of sorts.
Normally, a weaker country can protect itself from that kind of predatory mercantilism by rising its tariffs (to decrease imports) or becoming more competitive, usually through price (to increase exports), usually by devaluing its own currency (this is what Poland has been doing for the last two decades) - but both of these tools are unavailable to a Eurozone member state protecting itself from another Eurozone member state's predation.
In essence, the mechanism is similar to the recent real estate bubble only that it is one country creating a bubble in another country. Once the bubble bursts, the weaker country is left with a huge debt and rapidly contracting economy. Sounds familiar?
Quote from: Martinus on July 07, 2015, 01:05:09 AM
Quote from: Zanza on July 07, 2015, 12:42:41 AM
Why is this between Germany and Greece anyway?
Because Germany's unchecked foreign trade surplus (something that should have been addressed at the time of Euro creation) is one of the reasons for eurozone problems. It is what exacerbates effects of the crisis across the PIGS and Ireland.
:lol: Did you ever check Ireland's current account? Almost as high as Germany's by the way. And neither has anything to do with Greece's short-term issues. And why not single out the Netherlands, which has an even higher current account surplus than Germany?
Quote from: Martinus on July 07, 2015, 01:44:51 AM
A country running a constant substantial trade surplus with another country is essentially generating huge amounts of cash (that it is siphoning from the weaker country) that it cannot sensibly spend on consumption or sustainable investment. The cash thus ends up being lent at increasingly speculative prices back to the weaker country, to maintain the trade surplus, thus creating a vicious cycle of sorts.
Normally, a weaker country can protect itself from that kind of predatory mercantilism by rising its tariffs (to decrease imports) or becoming more competitive, usually through price (to increase exports), usually by devaluing its own currency (this is what Poland has been doing for the last two decades) - but both of these tools are unavailable to a Eurozone member state protecting itself from another Eurozone member state's predation.
In essence, the mechanism is similar to the recent real estate bubble only that it is one country creating a bubble in another country. Once the bubble bursts, the weaker country is left with a huge debt and rapidly contracting economy. Sounds familiar?
That's a good description of what happened in Spain or Ireland. Not so much for what happened in Greece. There was no major asset bubble there. It was mostly consumption.
I think we may have found a new topic Mart thinks he's competent in but knows little about other than law
Quote from: Zanza on July 07, 2015, 01:51:51 AM
Quote from: Martinus on July 07, 2015, 01:44:51 AM
A country running a constant substantial trade surplus with another country is essentially generating huge amounts of cash (that it is siphoning from the weaker country) that it cannot sensibly spend on consumption or sustainable investment. The cash thus ends up being lent at increasingly speculative prices back to the weaker country, to maintain the trade surplus, thus creating a vicious cycle of sorts.
Normally, a weaker country can protect itself from that kind of predatory mercantilism by rising its tariffs (to decrease imports) or becoming more competitive, usually through price (to increase exports), usually by devaluing its own currency (this is what Poland has been doing for the last two decades) - but both of these tools are unavailable to a Eurozone member state protecting itself from another Eurozone member state's predation.
In essence, the mechanism is similar to the recent real estate bubble only that it is one country creating a bubble in another country. Once the bubble bursts, the weaker country is left with a huge debt and rapidly contracting economy. Sounds familiar?
That's a good description of what happened in Spain or Ireland. Not so much for what happened in Greece. There was no major asset bubble there. It was mostly consumption.
Edit: Sorry, now I can see my post was misleading. I didn't mean to say Germany created a real estate bubble in Greece. I meant the effect was similar to a real estate bubble, only that it all went into consumption. Essentially, Germans were lending to Greeks inordinate amounts of cash to buy more German products.
Incidentally, the method of competing Poland has been using (devaluing our currency in order to remain price-competitive) can also be a trap - it ends up creating a substantial pay disparity, which in turn causes people to migrate for job to the richer countries, thus turning the country from which they emigrate even more shitty.
It looks like the EU and the Eurozone were created by Germans to do what Otto III and Hitler did not manage - subjugate Europe to Germany. :P
I thought it was a reasonable explanation. By Marty standards it deserves the Riksbank Prize.
The problem I have with it though, is that even with liquidity sloshing around and rates low, no one is forced to over-leverage. I have not taken advantage of the currently low rates to buy a six bedroom McMansion. Greece was not obligated to put 19% of GDP on the credit card.
Quote from: Admiral Yi on July 07, 2015, 02:13:10 AM
I thought it was a reasonable explanation. By Marty standards it deserves the Riksbank Prize.
The problem I have with it though, is that even with liquidity sloshing around and rates low, no one is forced to over-leverage. I have not taken advantage of the currently low rates to buy a six bedroom McMansion. Greece was not obligated to put 19% of GDP on the credit card.
I haven't checked it but I assume this started as individual private debt (both taken by households and businesses) to fuel the consumption of imported products - this is something that the state cannot really affect with policy if it can neither set tariffs, print more money or set the interest rates. Once this debt got big enough, the state had to step in with its own money to ease the pain (or face a revolt) - so it started to borrow itself.
Oh, and let's not forget that in a normal country, there is also inflation to ease some of the debt pain - but not in Eurozone, thanks to the German masters who consider inflation to be the Great Satan.
Quote from: Martinus on July 07, 2015, 02:22:32 AM
I haven't checked it but I assume this started as individual private debt (both taken by households and businesses) to fuel the consumption of imported products - this is something that the state cannot really affect with policy if it can neither set tariffs, print more money or set the interest rates. Once this debt got big enough, the state had to step in with its own money to ease the pain (or face a revolt) - so it started to borrow itself.
Oh, and let's not forget that in a normal country, there is also inflation to ease some of the debt pain - but not in Eurozone, thanks to the German masters who consider inflation to be the Great Satan.
The Greek government saw its population taking on too much debt, so they responded by taking on too much debt?
You've lost me again. Why the hell would they do that?
This article has a nice chart that shows Greek debt as a percentage of GDP since 1977 :
http://dbfchicago.com/greek-exit-eurozone-mean/
I visited Greece in 1976 and can confirm that the infrastructure and general development level was very low compared to Western Europe. If we look at the graph we see debt rising from 20% to 100% in the period 1977-1990, subtantial modernisation took place during that period. The debt then remains fairly constant at 100% till the smash of 2008 where it moves rapidly upwards till 2012.
Interesting data. I suppose Greece should have reduced its debt ratio in the period 1992-2007, but the data is consistent with them being victims of the 2008 meltdown rather than being chronic wastrels :hmm:
Quote from: Admiral Yi on July 07, 2015, 02:26:13 AM
Quote from: Martinus on July 07, 2015, 02:22:32 AM
I haven't checked it but I assume this started as individual private debt (both taken by households and businesses) to fuel the consumption of imported products - this is something that the state cannot really affect with policy if it can neither set tariffs, print more money or set the interest rates. Once this debt got big enough, the state had to step in with its own money to ease the pain (or face a revolt) - so it started to borrow itself.
Oh, and let's not forget that in a normal country, there is also inflation to ease some of the debt pain - but not in Eurozone, thanks to the German masters who consider inflation to be the Great Satan.
The Greek government saw its population taking on too much debt, so they responded by taking on too much debt?
You've lost me again. Why the hell would they do that?
When the population is taking too much debt, people and companies are eventually starting to go bust, so people are thrown out of their homes, they have their assets seized, lose their jobs in failed companies etc. Surely, you see how stuff like that creates a need for a country to step in with its own money, right?
And that does not even address the fact that when it comes to people employed by the state, there is a growing pressure on the state as the employer to increase their pay, so they may afford more stuff.
Quote from: Martinus on July 07, 2015, 02:46:03 AM
Quote from: Admiral Yi on July 07, 2015, 02:26:13 AM
Quote from: Martinus on July 07, 2015, 02:22:32 AM
I haven't checked it but I assume this started as individual private debt (both taken by households and businesses) to fuel the consumption of imported products - this is something that the state cannot really affect with policy if it can neither set tariffs, print more money or set the interest rates. Once this debt got big enough, the state had to step in with its own money to ease the pain (or face a revolt) - so it started to borrow itself.
Oh, and let's not forget that in a normal country, there is also inflation to ease some of the debt pain - but not in Eurozone, thanks to the German masters who consider inflation to be the Great Satan.
The Greek government saw its population taking on too much debt, so they responded by taking on too much debt?
You've lost me again. Why the hell would they do that?
When the population is taking too much debt, people and companies are eventually starting to go bust, so people are thrown out of their homes, they have their assets seized, lose their jobs in failed companies etc. Surely, you see how stuff like that creates a need for a country to step in with its own money, right?
And that does not even address the fact that when it comes to people employed by the state, there is a growing pressure on the state as the employer to increase their pay, so they may afford more stuff.
:huh:
Quote from: Richard Hakluyt on July 07, 2015, 02:28:16 AM
This article has a nice chart that shows Greek debt as a percentage of GDP since 1977 :
http://dbfchicago.com/greek-exit-eurozone-mean/
I visited Greece in 1976 and can confirm that the infrastructure and general development level was very low compared to Western Europe. If we look at the graph we see debt rising from 20% to 100% in the period 1977-1990, subtantial modernisation took place during that period. The debt then remains fairly constant at 100% till the smash of 2008 where it moves rapidly upwards till 2012.
Interesting data. I suppose Greece should have reduced its debt ratio in the period 1992-2007, but the data is consistent with them being victims of the 2008 meltdown rather than being chronic wastrels :hmm:
I would be interested to see how much of that debt was domestic or bonds which, if Greece had its own currency, would be denominated in that currency. If that percentage was substantial (and I assume that initially, i.e. prior to the IMF's and the ECB's bail out of private creditors, it was) then once again it shows how Greece got into a trap by being unable to use inflation and devaluation to dig itself out of that hole.
Maintaining 100% GNP debt is a bit crazy during boom times - once bad shit happens and tax revenues crater because of a recession, you are fucked. We were at 30% during that time and we still ended up in the gutter.
Troika still made things worse, mind.
Quote from: celedhring on July 07, 2015, 02:58:33 AM
Maintaining 100% GNP debt is a bit crazy during boom times - once bad shit happens and tax revenues crater because of a recession, you are fucked. We were at 30% during that time and we still ended up in the gutter.
Troika still made things worse, mind.
Yes, but a lot of countries who did not go bust had 100% GNP debt or more, so while it may be imprudent in retrospect, you can't really say that they are themselves to blame if something bad happens - it's more bad luck.
Something bad always happens though. There was a bit of an illusion of a permanent boom in the 90s and 2000s, mind (same in Spain), which I think may have played a part.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fcdn.tradingeconomics.com%2Fcharts%2Fgreece-gni-ppp-us-dollar-wb-data.png%3Fs%3D%252Fgreece%252Fgni-ppp-us-dollar-wb-data.html%26amp%3Blbl%3D0%26amp%3Bv%3D201506300000&hash=c1fdf5a213cbf6203be91e150e9475ef31d747c1)
Almost 30 years of continuous growth. I can see why they thought they were immune.
It's really hard to make counter-cyclical policy during a recession, and meet all the safety need repayments, when your budget is taken over by debt repayment.
".......a bit of an illusion of a permanent boom in the 90s and 2000s.........." superb understatement there celery old chap :bowler: , do you have Englishmen in your ancestry :D ?
QuoteIt's really hard to make counter-cyclical policy during a recession, and meet all the safety need repayments, when your budget is taken over by debt repayment.
It's not just hard, it's impossible when you cannot print money, set interest rates or tariffs, and your creditors have tools to keep your inflation as close to zero as possible. :lol:
Quote from: Richard Hakluyt on July 07, 2015, 03:12:16 AM
".......a bit of an illusion of a permanent boom in the 90s and 2000s.........." superb understatement there celery old chap :bowler: , do you have Englishmen in your ancestry :D ?
I have always considered Celed a "Spanish Sheilbh". :P
Why? :D
Quote from: celedhring on July 07, 2015, 03:06:34 AM
It's really hard to make counter-cyclical policy during a recession, and meet all the safety need repayments, when your budget is taken over by debt repayment.
Difficult to handle any kind of event under those conditions. Best not to let it get that far from a risk-management perspective.
Quote from: celedhring on July 07, 2015, 03:46:34 AM
Why? :D
Dunno. I think it dates back to us playing EU RPG back on the Paradox forum - I think I had both of you confused initially, as you had similar writing style. :lol:
Quote from: Razgovory on July 06, 2015, 11:23:40 PM
With that amount of money being lost it seems deeply irresponsible to cut funding to the IRS.
Starve the beast!
Quote from: Monoriu on July 06, 2015, 11:26:15 PM
Quote from: Razgovory on July 06, 2015, 11:23:40 PM
Neat. The amount of lost revenue from tax evasion in the US for one year could pay off the entire Greek debt! We could go a long way into reducing deficit spending if we just pumped up the IRS some more. With that amount of money being lost it seems deeply irresponsible to cut funding to the IRS.
But the law of diminishing return will kick in at some point. You can hire millions of IRS agents, but at some point, the marginal taxes collected will be less than the salaries and overhead of the additional agents.
Yeah, at some point. But with well over 400 billion uncollected and a budget of less then 13 billion I think we have a long way to go.
http://www.usatoday.com/story/money/2015/06/17/irs-budget-cuts-hurt-services/28869343/
Quote
Budget cuts are taking a taxpayer-unfriendly toll on the federal agency Americans love to hate, a new report says.
Lower IRS budget funding and collection resources have led to declines in taxpayer service, tax case closures and collections of overdue federal taxes, according to a report Wednesday by the Treasury Inspector General for Tax Administration.
The IRS' annual budget was cut by more than $1.2 billion between federal fiscal years 2010 and 2015, the report said.
During that period, budget reductions and reassignments resulted in a 21% reduction of Automated Collection Service representatives, and a 28% decline in Field Collection revenue officers, staffers who pursue non-payment cases, the report said.
Since 2011, the personnel reductions resulted in a 25% drop in taxpayer phone calls answered by remaining IRS Automated Collection Service workers, the report said.
Taxpayers who managed to get their calls answered spent an average of 15.9 minutes waiting for a contact representative in 2014, up from 8.1 minutes in 2011, the report found.
IRS Field Collection personnel collected $3.02 billion in fiscal year 2014 revenue, a $222 million or 7% drop from the $3.244 billion collected in fiscal year 2011, the report said.
Additionally, revenue officers are closing fewer tax cases. In fiscal year 2011 they closed an average of 125 cases. The average closure total dropped to 110 cases in fiscal year 2014, the report said.
J. Russell George, head of the inspector general's office that oversees the IRS, drew a correlation between cuts in the collection budget and reductions in efficiency and effectiveness of the tax agency's collection efforts.
"The availability of key collection employees directly affects taxpayer service and the IRS' ability to take appropriate enforcement action on delinquent taxpayers," George said in a statement issued with the report findings. "Taxpayers may become frustrated and remain non-compliant if they are unable to reach a contact representative to resolve their tax issues."
The IRS said it streamlined leadership accountability of its collection program in fiscal year 2015, making the program more efficient.
"We will continue to look for ways to maintain taxpayer service and fulfill our mission of collecting unpaid taxes," Karen Schiller, head of the IRS' Small Business/Self-Employed Division, wrote in response to the findings. "But, as you acknowledge in your report, this will be increasingly difficult if staffing continues to decrease."
Congressional Republicans control both the U.S. House and Senate and have been leery of approving budget hikes for the IRS, an agency that has drawn criticism for allegedly singling out conservative political groups for greater scrutiny when the organizations applied for tax-exempt status.
President Obama proposed $12.9 billion in IRS funding for fiscal year 2016, a nearly $2 billion increase from this year's budget. House Republicans, however, answered with a proposed $838 million overall budget cut that they say would enable the IRS to perform its core responsibilities.
Milton Friedman apparently saw all the trouble coming in 1997:
http://www.afr.com/opinion/greece-debt-crisis-milton-friedmans-1997-prediction-of-the-eurozone-disaster-20150707-gi5tgk
QuoteThe drive for the Euro has been motivated by politics not economics. The aim has been to link Germany and France so closely as to make a future European war impossible, and to set the stage for a federal United States of Europe. I believe that adoption of the Euro would have the opposite effect. It would exacerbate political tensions by converting divergent shocks that could have been readily accommodated by exchange rate changes into divisive political issues. Political unity can pave the way for monetary unity. Monetary unity imposed under unfavorable conditions will prove a barrier to the achievement of political unity.
Quote from: Martinus on July 07, 2015, 02:00:17 AM
Edit: Sorry, now I can see my post was misleading. I didn't mean to say Germany created a real estate bubble in Greece. I meant the effect was similar to a real estate bubble, only that it all went into consumption. Essentially, Germans were lending to Greeks inordinate amounts of cash to buy more German products.
French were by far the biggest lenders, but your point still stands.
Loads of people were saying the same as Friedman. It wasn't exactly much of an insight since the project was always avowedly political. The Germans only agreed to support it as quid pro quo for France withdrawing its objection to reunification.
It's funny watching this play out in the British media where Greece is being used as a stick to bash the EU by the Europhobics on the right and the anti-capitalists on the left. At the same time I've been reading a history of the Britain between 1974 and 1979 including the referendum on EEC membership where exactly the same uncomfortable alliance was formed by the extremes.
Quote from: Richard Hakluyt on July 07, 2015, 02:28:16 AM
Interesting data. I suppose Greece should have reduced its debt ratio in the period 1992-2007, but the data is consistent with them being victims of the 2008 meltdown rather than being chronic wastrels :hmm:
The last few years of GDP growth (maybe about 2001-2007 when they were in the Euro) were fueled by a never-before-seen availability of cheap credit. That growth was built on sand, not sustainable. Greece could have done much better and build a slower, but more sustainable economic growth. So even if the debt/GDP ratio remained flat, that was only the case due to the dividend of that quotation growing "too fast".
Quote from: Martinus on July 07, 2015, 03:36:01 AM
QuoteIt's really hard to make counter-cyclical policy during a recession, and meet all the safety need repayments, when your budget is taken over by debt repayment.
It's not just hard, it's impossible when you cannot print money, set interest rates or tariffs, and your creditors have tools to keep your inflation as close to zero as possible. :lol:
You can easily do fiscal measures in boom times. All the stuff you name here are monetary or custom matters. :huh:
Quote from: Gups on July 07, 2015, 09:47:43 AM
Loads of people were saying the same as Friedman. It wasn't exactly much of an insight since the project was always avowedly political. The Germans only agreed to support it as quid pro quo for France withdrawing its objection to reunification.
This. It's the only reason why Greece was admitted.
The Greeks went to the especially called EU summit in Brussels WITHOUT a new proposal. :lmfao: :lmfao:
They are just epic trolls.
Do they think time is on their side? :unsure:
Quote from: Zanza on July 07, 2015, 10:01:22 AM
Do they think time is on their side? :unsure:
Playing chicken in the global financial markets?
Quote from: Zanza on July 07, 2015, 09:51:49 AM
Quote from: Martinus on July 07, 2015, 03:36:01 AM
QuoteIt's really hard to make counter-cyclical policy during a recession, and meet all the safety need repayments, when your budget is taken over by debt repayment.
It's not just hard, it's impossible when you cannot print money, set interest rates or tariffs, and your creditors have tools to keep your inflation as close to zero as possible. :lol:
You can easily do fiscal measures in boom times. All the stuff you name here are monetary or custom matters. :huh:
The problem taking appropriate fiscal measures in boom times is, of course, it is much more profitable to do nothing and take credit for the wonderful economy than become the bad guy for raising taxes and cutting benefits to pay down debt.
Yeah it is the same political forces that have governments enabling the bubbles that are so destabilizing. Do you want to be the guy who cools off the economy for the sake of something as silly as prudence?
Quote from: Martinus on July 07, 2015, 01:44:51 AM
Quote from: Admiral Yi on July 07, 2015, 01:12:58 AM
Quote from: Martinus on July 07, 2015, 01:05:09 AM
Because Germany's unchecked foreign trade surplus (something that should have been addressed at the time of Euro creation) is one of the reasons for eurozone problems. It is what exacerbates effects of the crisis across the PIGS and Ireland.
I don't understand the connection.
A country running a constant substantial trade surplus with another country is essentially generating huge amounts of cash (that it is siphoning from the weaker country) that it cannot sensibly spend on consumption or sustainable investment. The cash thus ends up being lent at increasingly speculative prices back to the weaker country, to maintain the trade surplus, thus creating a vicious cycle of sorts.
Normally, a weaker country can protect itself from that kind of predatory mercantilism by rising its tariffs (to decrease imports) or becoming more competitive, usually through price (to increase exports), usually by devaluing its own currency (this is what Poland has been doing for the last two decades) - but both of these tools are unavailable to a Eurozone member state protecting itself from another Eurozone member state's predation.
In essence, the mechanism is similar to the recent real estate bubble only that it is one country creating a bubble in another country. Once the bubble bursts, the weaker country is left with a huge debt and rapidly contracting economy. Sounds familiar?
Of course, you could easily give us a comparion of Greek bonds yeilds for the last 30 years, vs all other Eurozone countries? I'll make it easy and only ask for post 1995 bond yield when it comes to Eastern Europe.
It would then be easy to compare if Greece was abused by extremely high interest rates totally unjustified by her situation.
An even better picture would be drawn if you add a graph for debt to GDP ratio, for comparison purpose, for all countries aforementionned.
Quote from: Martinus on July 07, 2015, 02:00:17 AM
Edit: Sorry, now I can see my post was misleading. I didn't mean to say Germany created a real estate bubble in Greece. I meant the effect was similar to a real estate bubble, only that it all went into consumption. Essentially, Germans were lending to Greeks inordinate amounts of cash to buy more German products.
How does that work exactly? A German Banker goes to the Greek PM, puts a gun on the table and then says "I'll make you an offer you can't refuse" and so the Greek is forced to borrow the money when he doesn't want to? :)
Quote from: Valmy on July 07, 2015, 10:15:05 AM
Yeah it is the same political forces that have governments enabling the bubbles that are so destabilizing. Do you want to be the guy who cools off the economy for the sake of something as silly as prudence?
What's worse is that the nature of democracy turns it into a game of hot potato. If you aren't the one in office when everything falls apart you're golden.
Quote from: Baron von Schtinkenbutt on July 07, 2015, 10:28:23 AM
Quote from: Valmy on July 07, 2015, 10:15:05 AM
Yeah it is the same political forces that have governments enabling the bubbles that are so destabilizing. Do you want to be the guy who cools off the economy for the sake of something as silly as prudence?
What's worse is that the nature of democracy turns it into a game of hot potato. If you aren't the one in office when everything falls apart you're golden.
It's even worse that being a CEO works like this too.
Quote from: viper37 on July 07, 2015, 10:24:21 AM
Quote from: Martinus on July 07, 2015, 02:00:17 AM
Edit: Sorry, now I can see my post was misleading. I didn't mean to say Germany created a real estate bubble in Greece. I meant the effect was similar to a real estate bubble, only that it all went into consumption. Essentially, Germans were lending to Greeks inordinate amounts of cash to buy more German products.
How does that work exactly? A German Banker goes to the Greek PM, puts a gun on the table and then says "I'll make you an offer you can't refuse" and so the Greek is forced to borrow the money when he doesn't want to? :)
I thought I explained that. The lending was not done to the government at first.
Quote from: Martinus on July 07, 2015, 10:29:31 AM
It's even worse that being a CEO works like this too.
Mostly because a CEO can usually choose to "retire" or "move on" if they have forewarning of the shit hitting the fan. A politician is usually stuck in the position for some period of time.
Quote from: Zanza on July 07, 2015, 10:01:22 AM
Do they think time is on their side? :unsure:
Tspiras is buying time while he prepares the invasion of Sicily. It'll work this time, don't worry.
The guy is playing games again. He is making one huge gamble that, when he presents his proposals later, they'll be accepted unconditionally. He thinks the EU will cave in when faced with a Grexit or deal choice.
Who knows, maybe he is right and there will be another Munich.
Quote from: Iormlund on July 07, 2015, 10:12:37 AM
The problem taking appropriate fiscal measures in boom times is, of course, it is much more profitable to do nothing and take credit for the wonderful economy than become the bad guy for raising taxes and cutting benefits to pay down debt.
I guess Wolfgang Schäuble is in the enviable position that austerity is actually a rather popular policy in Germany.
Quote from: Martinus on July 07, 2015, 10:30:20 AM
I thought I explained that. The lending was not done to the government at first.
I can't find the figures right now and don't want to search them, but if I remember correctly, Greece was not as leveraged as other countries and the debt held by households, financial and non-financial corporations wasn't that high. It was really mainly the sovereign that was over-leveraged.
EDIT: Found something: http://www.mckinsey.com/~/media/McKinsey/dotcom/Insights/Economic%20Studies/Debt%20and%20not%20much%20deleveraging/MGI%20Debt%20and%20not%20much%20deleveragingIn%20briefFebruary%202015.ashx
Greece households had lowish debts before the crisis and didn't build much debt during the crisis either. It was really mainly sovereign debt in Greece's case. So a completely different story than in Spain.
Quote from: Monoriu on July 07, 2015, 10:49:11 AM
The guy is playing games again. He is making one huge gamble that, when he presents his proposals later, they'll be accepted unconditionally. He thinks the EU will cave in when faced with a Grexit or deal choice.
Who knows, maybe he is right and there will be another Munich.
That would end the careers of quite a few politicians in power atm. There's no more mandate to give more money to Greece in more than a few countries. Even worse: letting Greece of the hook would give the anti-EU-parties the wind in the sails.
Quote from: Zanza on July 07, 2015, 11:43:47 AM
Quote from: Iormlund on July 07, 2015, 10:12:37 AM
The problem taking appropriate fiscal measures in boom times is, of course, it is much more profitable to do nothing and take credit for the wonderful economy than become the bad guy for raising taxes and cutting benefits to pay down debt.
I guess Wolfgang Schäuble is in the enviable position that austerity is actually a rather popular policy in Germany.
No it's not. I pay enough taxes already! <_<
Quote from: Iormlund on July 07, 2015, 11:53:12 AM
Quote from: Zanza on July 07, 2015, 11:43:47 AM
Quote from: Iormlund on July 07, 2015, 10:12:37 AM
The problem taking appropriate fiscal measures in boom times is, of course, it is much more profitable to do nothing and take credit for the wonderful economy than become the bad guy for raising taxes and cutting benefits to pay down debt.
I guess Wolfgang Schäuble is in the enviable position that austerity is actually a rather popular policy in Germany.
No it's not. I pay enough taxes already! <_<
come to Belgium, and you'll be glad with your Original taxrate :p
Quote from: Martinus on July 07, 2015, 02:46:03 AM
When the population is taking too much debt, people and companies are eventually starting to go bust, so people are thrown out of their homes, they have their assets seized, lose their jobs in failed companies etc. Surely, you see how stuff like that creates a need for a country to step in with its own money, right?
And that does not even address the fact that when it comes to people employed by the state, there is a growing pressure on the state as the employer to increase their pay, so they may afford more stuff.
I still don't understand what you're talking about. What to you mean by "step in with its own money?"
I think he's suggesting the state should pay off citizens' household debt?
Quote from: MadImmortalMan on July 07, 2015, 12:39:02 PM
I think he's suggesting the state should pay off citizens' household debt?
He's talking about something that already happened.
Quote from: Admiral Yi on July 07, 2015, 12:34:52 PM
Quote from: Martinus on July 07, 2015, 02:46:03 AM
When the population is taking too much debt, people and companies are eventually starting to go bust, so people are thrown out of their homes, they have their assets seized, lose their jobs in failed companies etc. Surely, you see how stuff like that creates a need for a country to step in with its own money, right?
And that does not even address the fact that when it comes to people employed by the state, there is a growing pressure on the state as the employer to increase their pay, so they may afford more stuff.
I still don't understand what you're talking about. What to you mean by "step in with its own money?"
Surely you understand that if, say, more people are losing jobs, the state expenses increase right?
Quote from: Monoriu on July 07, 2015, 10:49:11 AM
The guy is playing games again. He is making one huge gamble that, when he presents his proposals later, they'll be accepted unconditionally. He thinks the EU will cave in when faced with a Grexit or deal choice.
Who knows, maybe he is right and there will be another Munich.
Good thing that Germany did not pull something like Munich. That would have completely destroyed any good will they had with the rest of Europe, so their debts would not be written off in the 1950s.
Hey Marty who was responsible for that? Wasn't a European country.
Nice to hear the American Imperialist Ruthless Capitalistic Pigdog policies being so firmly embraced by leftists across Europe. It makes me wonder if the Guardian was cheering us on at the time.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fmeedia.de%2Fwp-content%2Fuploads%2F2015%2F07%2F06-hb_meedia21.jpg&hash=28149f2d16cfb2da1d639c1d3888e46f96dc7d5a)
Quote from: Martinus on July 07, 2015, 01:08:22 PM
Quote from: Monoriu on July 07, 2015, 10:49:11 AM
The guy is playing games again. He is making one huge gamble that, when he presents his proposals later, they'll be accepted unconditionally. He thinks the EU will cave in when faced with a Grexit or deal choice.
Who knows, maybe he is right and there will be another Munich.
Good thing that Germany did not pull something like Munich. That would have completely destroyed any good will they had with the rest of Europe, so their debts would not be written off in the 1950s.
You're right, Greece should start a devastating war that brings together East and West to fight against them and results in a Cold War between the blocs with each side scrambling to bring "their Greeks" into the fold. Then we can write off their debts ten years after that war ended.
Quote from: Martinus on July 07, 2015, 01:06:32 PM
Surely you understand that if, say, more people are losing jobs, the state expenses increase right?
Shirley. Is that what you mean by "step in with its own money?" Paying unemployment benefits and the like?
Quote from: Admiral Yi on July 07, 2015, 01:42:30 PM
Quote from: Martinus on July 07, 2015, 01:06:32 PM
Surely you understand that if, say, more people are losing jobs, the state expenses increase right?
Shirley. Is that what you mean by "step in with its own money?" Paying unemployment benefits and the like?
Yeah. When people and companies fall on hard times, the state's expenses on social welfare (and other associated costs that, in the absence of poverty, are often met by the people themselves) increase.
All true, Marty, but in Greece, outsized state expenses were and are part of the problem, not just a symptom of issues in the private economy that need to be compensated. In Greece, the state spending especially when expressed in clientelism, nepotism or other forms of corruption was and still is so inefficient by itself that it caused issues.
While the greek have a spending problem. They have a way bigger problem.
A income problem. Too much un challenge fiscal evasion. That's what the EU should negotiate & push on. Forget the 96% avg on pension, forget the hundreds of dead pensionners. They need to fix tax loop holes & prosecute fiscal evasion.
Quote from: Martinus on July 07, 2015, 01:55:07 PM
Yeah. When people and companies fall on hard times, the state's expenses on social welfare (and other associated costs that, in the absence of poverty, are often met by the people themselves) increase.
I don't recall Greece experiencing any particularly notable economic problems prior to the collapse of Greek credit. You would need a pretty monumental collapse in employment to justify a 19% deficit.
Quote from: Grey Fox on July 07, 2015, 02:08:36 PM
While the greek have a spending problem. They have a way bigger problem.
A income problem. Too much un challenge fiscal evasion. That's what the EU should negotiate & push on. Forget the 96% avg on pension, forget the hundreds of dead pensionners. They need to fix tax loop holes & prosecute fiscal evasion.
It's all the same problem, really. Why would you want to pay taxes when you know most of it will be syphoned away by corruption and nepotism? The problem in Greece is that the State is not so much a vehicle to provide services to citizens as a way to leech on them. It's going to be awfully hard to turn that mentality around.
Quote from: Admiral Yi on July 07, 2015, 02:13:01 PM
Quote from: Martinus on July 07, 2015, 01:55:07 PM
Yeah. When people and companies fall on hard times, the state's expenses on social welfare (and other associated costs that, in the absence of poverty, are often met by the people themselves) increase.
I don't recall Greece experiencing any particularly notable economic problems prior to the collapse of Greek credit. You would need a pretty monumental collapse in employment to justify a 19% deficit.
A 30% of GDP black market.
Actually that number seemed kind of low to me. The stereotype in Latin America for example is that the only people who pay taxes are employees of the government and foreign companies.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fimages.scribblelive.com%2F2015%2F7%2F7%2F04dbf388-3b7f-4d79-8b9a-850d11f08ae6.png&hash=dfe2a088ef7cababd2e682dee86d87ef7e0ea02f)
The number for Greece is strange. I wonder what that contains.
Quote from: Zanza on July 07, 2015, 03:37:43 PM
The number for Greece is strange. I wonder what that contains.
I imagine Greek bonds held by Greek banks.
Doesn't match the figures I saw for those bonds earlier. Greek banks held less Greek debt than say those of Portugal? Doubtful.
Quote from: Zanza on July 07, 2015, 03:47:26 PM
Doesn't match the figures I saw for those bonds earlier. Greek banks held less Greek debt than say those of Portugal? Doubtful.
The Portuguese figure would also include the country-country debt.
The Economist thinks Grexit is imminent.
http://www.economist.com/news/europe/21657275-euro-zone-leaders-demand-alexis-tsipras-propose-deal-harsher-one-greek-voters-just-rejected
Quote
Greece and the eurozone
All latest updates
Bitter cup
Euro-zone leaders demand Alexis Tsipras offer them a deal harsher than the one Greek voters just rejected. Grexit seems imminent
Jul 7th 2015 | BRUSSELS | Europe
IT IS hard to sound threatening when you have bared your teeth so many times before. But Donald Tusk, the president of the European Council, pulled it off last night. Speaking after the euro zone's 19 heads of government had failed, yet again, to strike a bail-out deal with Greece's government, Mr Tusk declared that only five days remained to find common ground. Failure, he said, would be "most painful for the Greek people," and would also have a "geopolitical" impact on the entire EU. Anyone who believed otherwise, he added, was "naïve".
Grexit now appears to be the default position of most euro-zone leaders. All 28 of the European Union's heads of government, including the nine from non-euro zone countries, will meet on Sunday to discuss a humanitarian aid package that could be assembled from the EU budget, should Greece fall out of the euro and into what Mr Tusk called a "black scenario". Standing next to him, Jean-Claude Juncker, president of the European Commission, whose visible loss of patience with Greece has told its own story in the last two weeks, thumped his lectern before declaring that the government of Alexis Tsipras (pictured, with German chancellor Angela Merkel) had until 8.30am on Friday to produce a list of reforms it would commit to in exchange for a third bail-out programme.
Last week, as Mr Tsipras urged Greeks to vote against a bail-out proposal in a referendum he had suddenly called on June 26th, Europe's leaders warned that his negotiating hand would be weakened if voters heeded his call. Last night they made good on that pledge. Mr Tsipras, they made clear, will not be able to sign up to the deal his voters rejected, because the bail-out programme to which it was attached expired on June 30th. He will need to make yet more concessions to his creditors. If they are convinced by his proposal, then the euro zone's 19 leaders, who will meet immediately before the full EU's 28 on Sunday, will instruct the three "institutions" that monitor euro-zone bail-outs—the European Commission, the European Central Bank and the IMF—to begin serious discussions over a bail-out that could last two to three years. No figures were discussed in detail last night, but a senior commission official gave your correspondent a ball-park figure of €50 billion-€100 billion. Every day, he added, as Greece's shuttered banks and capital controls eat further into a battered economy, that figure will rise.
Two paradoxes: why Greece and its creditors are both negotiating against their own interests
Mr Tsipras and his new finance minister, Euclid Tsakalotos, had arrived in Brussels last night brandishing fresh demands—short-term financing deal to get them over a daunting summer of repayments—but no fresh reform proposals. That left some of their euro-zone peers perplexed. Instead, said Angela Merkel, Germany's chancellor, after the summit, a short-term deal could only be arranged once a long-term agreement had been secured. If Mr Tsipras does find the stomach to propose a deal worse than the one that 61% of Greek voters rejected on July 5th, the euro zone will doubtless find the will to help Greece through its imminent redemptions, including an ECB bond worth €3.5 billion on July 20th. The ECB itself provides the most obvious route to do so, perhaps by raising the amount of short-term debt Greece may issue.
But last night's events leave Mr Tsipras in an extremely tight spot, perhaps an impossible one. Greece's banks, gasping for breath after the ECB capped its emergency liquidity support on June 28th, may struggle on to the end of the week without more help, but for no longer than that. Politically, Mr Tsipras finds himself in a trap of his own creation. If he does his creditors' bidding, the voters who danced in the squares of Athens after delivering him his landslide referendum victory may scent a great betrayal—although they may direct their anger towards the creditors rather than the government. Hardliners in his party, too, will balk at supporting such a capitulation. Fresh elections might follow. Moreover, the Europeans are sticking to their line that even discussing a restructuring of Greece's vast debts, a key demand for Mr Tsipras, must wait until after the Greeks have started to implement their reforms (or, in the jargon, "prior actions"). October might be a reasonable time to start that conversation, said Mr Tusk. Campaigning for election at the start of the year, and again during his referendum last week, Mr Tsipras promised the Greeks champagne. Instead, he can hope only to deliver them gruel.
The unusual move to convene a full EU summit on Sunday may concentrate Greek minds. But after nearly half a year of battling with Mr Tsipras's government, the rest of the euro zone will be under few illusions about the prospects for success. The possibility of Grexit has left the abstract realm it has occupied for the last couple of months and now feels imminent. Mr Juncker said last night that the commission had a fully realised plan for a Greek departure from the euro; an official later said it was about an inch thick. Officials continue to hew to the line that they want to keep Greece within the euro zone. But it is increasingly hard to find one who believes that it is possible. "This is one of the most critical issues in the history of the EU," said Mr Tusk last night. He is not a man given to hyperbole.
Grexit would make sense if it is followed by a substantial reform of the Eurozone. I doubt it will happen.
Quote from: Martinus on July 08, 2015, 02:16:31 AM
Grexit would make sense if it is followed by a substantial reform of the Eurozone. I doubt it will happen.
I believe that under EU rules if Greece exits the euro it should (theoretically) also exit the EU?
In reality the rules will be ignored of course, as usual.
Quote from: Richard Hakluyt on July 08, 2015, 02:27:03 AM
Quote from: Martinus on July 08, 2015, 02:16:31 AM
Grexit would make sense if it is followed by a substantial reform of the Eurozone. I doubt it will happen.
I believe that under EU rules if Greece exits the euro it should (theoretically) also exit the EU?
In reality the rules will be ignored of course, as usual.
Rules are bourgeois chains on the working people.
Quote from: Tamas on July 08, 2015, 02:40:45 AM
Quote from: Richard Hakluyt on July 08, 2015, 02:27:03 AM
Quote from: Martinus on July 08, 2015, 02:16:31 AM
Grexit would make sense if it is followed by a substantial reform of the Eurozone. I doubt it will happen.
I believe that under EU rules if Greece exits the euro it should (theoretically) also exit the EU?
In reality the rules will be ignored of course, as usual.
Rules are bourgeois chains on the working people.
You mean the same rules that send the little people to jail for years for shoplifting but allow CEOs of large financial institutions to walk scott free when they wreck the economy with their swindles?
Quote from: Martinus on July 08, 2015, 06:10:07 AM
Quote from: Tamas on July 08, 2015, 02:40:45 AM
Quote from: Richard Hakluyt on July 08, 2015, 02:27:03 AM
Quote from: Martinus on July 08, 2015, 02:16:31 AM
Grexit would make sense if it is followed by a substantial reform of the Eurozone. I doubt it will happen.
I believe that under EU rules if Greece exits the euro it should (theoretically) also exit the EU?
In reality the rules will be ignored of course, as usual.
Rules are bourgeois chains on the working people.
You mean the same rules that send the little people to jail for years for shoplifting but allow CEOs of large financial institutions to walk scott free when they wreck the economy with their swindles?
Thanks, GraldeMoney
Someone needs to carry the torch of the revolution.
It seems only unmarried middle aged men have enough clarity of vision to call the spade a spade. :unsure:
We really need Seedy back for occasions like this.
According to Italian newspaper La Stampa this is the current setup of the Eurogroup regarding Grexit:
(https://scontent-mad1-1.xx.fbcdn.net/hphotos-xft1/v/t1.0-9/s720x720/11403392_10153450785468624_2637725515166086741_n.jpg?oh=687040b6f648862802f44346e5727f0c&oe=565BFC44)
Summary
Against Grexit: Italy, France, Cyprus, EU Commission and EU Parliament.
Would prefer to avoid Grexit: Spain, Ireland, Malta, Portugal and the Eurogroup president.
Ready for Grexit: Germany, Netherlands, Belgium, Austria, Slovenia, Slovakia, Finland, Estonia, Lithuania and Latvia.
Quote from: Martinus on July 08, 2015, 06:10:07 AM
Quote from: Tamas on July 08, 2015, 02:40:45 AM
Quote from: Richard Hakluyt on July 08, 2015, 02:27:03 AM
Quote from: Martinus on July 08, 2015, 02:16:31 AM
Grexit would make sense if it is followed by a substantial reform of the Eurozone. I doubt it will happen.
I believe that under EU rules if Greece exits the euro it should (theoretically) also exit the EU?
In reality the rules will be ignored of course, as usual.
Rules are bourgeois chains on the working people.
You mean the same rules that send the little people to jail for years for shoplifting but allow CEOs of large financial institutions to walk scott free when they wreck the economy with their swindles?
(https://s-media-cache-ak0.pinimg.com/736x/94/f0/cb/94f0cb21bd56b93e42b4e712200eced6.jpg)
In the Greek parliament today: old and new finance minister.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fzeit.superdesk.pro%2Fcontent%2Fmedia_archive%2Fimage%2F001%2F1009.euclid-tsakalotos-yanis-varoufakis-540x304.jpg&hash=97efdb6b35652aede37ff78acd4c1a163538b93d)
Varoufakis looks like he's saying, "And? Like the new job yet?" :menace:
Quote from: Martinus on July 08, 2015, 06:10:07 AM
You mean the same rules that send the little people to jail for years for shoplifting but allow CEOs of large financial institutions to walk scott free when they wreck the economy with their swindles?
There's a European court that sends people to jail for
years? :huh:
Quote from: Baron von Schtinkenbutt on July 09, 2015, 11:20:35 AM
Quote from: Martinus on July 08, 2015, 06:10:07 AM
You mean the same rules that send the little people to jail for years for shoplifting but allow CEOs of large financial institutions to walk scott free when they wreck the economy with their swindles?
There's a European court that sends people to jail for years? :huh:
According to the British tabloid press, yes, probably.
Quote from: Martinus on July 08, 2015, 06:10:07 AM
You mean the same rules that send the little people to jail for years for shoplifting but allow CEOs of large financial institutions to walk scott free when they wreck the economy with their swindles?
Are you still paying way less income tax than the average Pole?
Guy VErhofstadt losing it a little bit in parliament vs. Tsipras: https://www.youtube.com/watch?v=P84tN0z4jqM
Quote from: Syt on July 09, 2015, 02:02:00 PM
Guy VErhofstadt losing it a little bit in parliament vs. Tsipras: https://www.youtube.com/watch?v=P84tN0z4jqM
You're pretending to be a real parliament. Put on a tie FFS.
Quote from: Admiral Yi on July 09, 2015, 02:18:43 PM
You're pretending to be a real parliament. Put on a tie FFS.
Seems like more of a real parliament than the dog and pony show put on by the Congresscritters.
Quote from: Martinus on July 08, 2015, 06:18:09 AM
Someone needs to carry the torch of the revolution.
Who better than a corporate mergers and acquisitions attorney. :lol:
Quote from: Syt on July 09, 2015, 02:02:00 PM
Guy VErhofstadt losing it a little bit in parliament vs. Tsipras: https://www.youtube.com/watch?v=P84tN0z4jqM
Guy lost it years ago. Lots of words, lots of wind, but when push comes to shove he'll do as the PS says.
Quote from: Crazy_Ivan80 on July 09, 2015, 03:05:01 PM
Quote from: Syt on July 09, 2015, 02:02:00 PM
Guy VErhofstadt losing it a little bit in parliament vs. Tsipras: https://www.youtube.com/watch?v=P84tN0z4jqM
Guy lost it years ago. Lots of words, lots of wind, but when push comes to shove he'll do as the PS says.
Maybe he should stay off the ethnic food.
The signature of the new Greek finance minister:
(https://pbs.twimg.com/media/CJiXyjqVEAABm5j.jpg)
:perv:
So, Alexander, after being an asshole for a while, got conquered by Augustus, then Theodora took control of the region after Augustus was dusted by Bismarck and Napoleon, then Suleiman conquered Theodora, with Enrico Dandolo nosing everywhere, then Elizabeth liberated the region bringing Alexander back, and now Alexander is broke?
Did I get it right?
Quote from: MadImmortalMan on July 09, 2015, 02:49:50 PM
Quote from: Martinus on July 08, 2015, 06:18:09 AM
Someone needs to carry the torch of the revolution.
Who better than a corporate mergers and acquisitions attorney. :lol:
Best. Cover. Ever. :contract:
Quote from: Syt on July 10, 2015, 06:30:46 AM
The signature of the new Greek finance minister:
(https://pbs.twimg.com/media/CJiXyjqVEAABm5j.jpg)
:perv:
Reminds me of "A" in Aleister Crowley's signature.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Ftim.maroney.org%2FCrowleyIntro%2FImages%2FSignature.JPG&hash=4ae7f70e5be33a9b2268b3b3521808953f1a0a94)
Quote from: Martinus on July 10, 2015, 07:57:52 AM
Reminds me of "A" in Aleister Crowley's signature.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Ftim.maroney.org%2FCrowleyIntro%2FImages%2FSignature.JPG&hash=4ae7f70e5be33a9b2268b3b3521808953f1a0a94)
Yeah but that was an ancient Egyptian penis looking A that came from the Book of Thoth.
And this is Euclidean penis. :P
Markets seem to expect that a deal can be reached.
So the Krauts pussed out? Wonder how many bailouts it's going to take.
Quote from: derspiess on July 10, 2015, 09:58:28 AM
So the Krauts pussed out? Wonder how many bailouts it's going to take.
Yeah they lack the political will or the power to dictate to Greece.
Quote from: Valmy on July 10, 2015, 10:01:54 AM
Quote from: derspiess on July 10, 2015, 09:58:28 AM
So the Krauts pussed out? Wonder how many bailouts it's going to take.
Yeah they lack the political will or the power to dictate to Greece.
Or the politicians finally grew a pair and realized it was silly to do so.
Grew a pair and decided to puss out?
Quote from: derspiess on July 10, 2015, 11:10:35 AM
Grew a pair and decided to puss out?
Some times the most brave and mature decision one can take is to admit one was wrong, no?
Quote from: Martinus on July 10, 2015, 11:24:10 AM
Quote from: derspiess on July 10, 2015, 11:10:35 AM
Grew a pair and decided to puss out?
Some times the most brave and mature decision one can take is to admit one was wrong, no?
If one is wrong. But what has changed?
The people of Greece called Germany's bluff in an atmosphere of accusations of oppression and evil and so forth. Hardly a solid foundation to make this marriage work and establish trust between all parties.
Quote from: Valmy on July 10, 2015, 11:27:09 AM
Quote from: Martinus on July 10, 2015, 11:24:10 AM
Quote from: derspiess on July 10, 2015, 11:10:35 AM
Grew a pair and decided to puss out?
Some times the most brave and mature decision one can take is to admit one was wrong, no?
If one is wrong. But what has changed?
Nothing changed. Austerity doesn't work and never had.
Quote from: Martinus on July 10, 2015, 11:28:03 AM
Nothing changed. Austerity doesn't work and never had.
Whereas running up huge debts has led South America to glory.
Quote from: Martinus on July 10, 2015, 11:28:03 AM
Quote from: Valmy on July 10, 2015, 11:27:09 AM
Quote from: Martinus on July 10, 2015, 11:24:10 AM
Quote from: derspiess on July 10, 2015, 11:10:35 AM
Grew a pair and decided to puss out?
Some times the most brave and mature decision one can take is to admit one was wrong, no?
If one is wrong. But what has changed?
Nothing changed. Austerity doesn't work and never had.
If shoveling loaned money into your system like there is no tomorrow worked that well, Greece would have never gotten into trouble.
Quote from: Martinus on July 10, 2015, 11:28:03 AM
Nothing changed. Austerity doesn't work and never had.
It works very well when you consider its true purpose: to pauperize the middle classes and emasculate the nation states of the West.
G.
Quote from: Grallon on July 10, 2015, 11:37:41 AM
It works very well when you consider its true purpose: to pauperize the middle classes and emasculate the nation states of the West.
Man who knew having a balanced budget was such a tool of evil?
Quote from: Valmy on July 10, 2015, 11:40:57 AM
Quote from: Grallon on July 10, 2015, 11:37:41 AM
It works very well when you consider its true purpose: to pauperize the middle classes and emasculate the nation states of the West.
Man who knew having a balanced budget was such a tool of evil?
:D
Quote from: Martinus on July 10, 2015, 11:28:03 AM
Nothing changed. Austerity doesn't work and never had.
It has worked in Ireland, Spain, the UK, Latvia, the US, Iceland, Portugal, and countless other countries, but other than it has never worked.
Quote from: Admiral Yi on July 10, 2015, 02:36:41 PM
Quote from: Martinus on July 10, 2015, 11:28:03 AM
Nothing changed. Austerity doesn't work and never had.
It has worked in Ireland, Spain, the UK, Latvia, the US, Iceland, Portugal, and countless other countries, but other than it has never worked.
Its not clear to me that your claim is accurate. In many of those cases other factors contributed to economic well being and it may be the case that things worked out despite the austerity measures.
Quote from: crazy canuck on July 10, 2015, 02:56:41 PM
Its not clear to me that your claim is accurate. In many of those cases other factors contributed to economic well being and it may be the case that things worked out despite the austerity measures.
Well true, economics is complicated and it is hard to say for sure if a particular policy was responsible. You could say the same about every single economic policy ever implemented anywhere. That is what I was told by Republicans over and over again to explain why the economy was doing well despite Bill Clinton having disastrous economic policies.
Quote from: Admiral Yi on July 10, 2015, 02:36:41 PM
Quote from: Martinus on July 10, 2015, 11:28:03 AM
Nothing changed. Austerity doesn't work and never had.
It has worked in Ireland, Spain, the UK, Latvia, the US, Iceland, Portugal, and countless other countries, but other than it has never worked.
It didn't work in these we usually talk about economic policies working - i.e. increasing output. A simple plot shows an inverse relationship between harsher austerity and GDP. You can argue that is too simplistic and crude - probably so, but it makes it hard to argue the contrary proposition. The IMF has reversed itself with the benefit of hindsight on this issue.
Quote from: The Minsky Moment on July 10, 2015, 03:10:22 PM
It didn't work in these we usually talk about economic policies working - i.e. increasing output. A simple plot shows an inverse relationship between harsher austerity and GDP. You can argue that is too simplistic and crude - probably so, but it makes it hard to argue the contrary proposition. The IMF has reversed itself with the benefit of hindsight on this issue.
Really Joan, I expected better from you.
Of course cutting deficits doesn't create growth. That's not its purpose. It's purpose is to rein in deficits, reduce the growth of debt, and maintain creditworthiness and the ability to borrow in the future.
If the only criteria we're going to use to judge the efficacy of an economic policy is whether it directly leads to increased output, then we have to judge Volker's tight money an abject failure.
What matters for credit is debt/GDP ratio. You can have harsh austerity as in Greece and debt/GDP goes up because GDP takes a dive. Very counterproductive.
Creditworthiness is nice in theory but the name of the game for nations is increasing the economic pie. Historically creditors as a class have short memories. Strong economies always attract investment. And weak economies have problems regardless of their perceived probity.
Quote from: Grallon on July 10, 2015, 11:37:41 AM
Quote from: Martinus on July 10, 2015, 11:28:03 AM
Nothing changed. Austerity doesn't work and never had.
It works very well when you consider its true purpose: to pauperize the middle classes and emasculate the nation states of the West.
G.
Zizek makes a very good point about this (I posted his essay in the Piketty on German debt thread) - the point is humiliation and subjugation of sovereign nations by unaccountable and unelectable bodies (the Trojka or the dreaded "financial markets").
Quote from: Valmy on July 10, 2015, 02:59:36 PM
Quote from: crazy canuck on July 10, 2015, 02:56:41 PM
Its not clear to me that your claim is accurate. In many of those cases other factors contributed to economic well being and it may be the case that things worked out despite the austerity measures.
Well true, economics is complicated and it is hard to say for sure if a particular policy was responsible.
Which is why I wonder why some people insist that austerity is always the answer.
Quote from: The Minsky Moment on July 10, 2015, 03:29:49 PM
What matters for credit is debt/GDP ratio. You can have harsh austerity as in Greece and debt/GDP goes up because GDP takes a dive. Very counterproductive.
Creditworthiness is nice in theory but the name of the game for nations is increasing the economic pie. Historically creditors as a class have short memories. Strong economies always attract investment. And weak economies have problems regardless of their perceived probity.
Yes you can have austerity and tank the economy. You can also have austerity and GDP growth, as I pointed out.
If creditors are amnesiacs, why are Venezuela and Argentina paying 14%?
Quote from: Martinus on July 10, 2015, 03:30:16 PM
Zizek makes a very good point about this (I posted his essay in the Piketty on German debt thread) - the point is humiliation and subjugation of sovereign nations by unaccountable and unelectable bodies (the Trojka or the dreaded "financial markets").
Except that is what a currency union really entails - surrendering ultimate economic sovereignty.
One striking aspect of this whole crisis is the degree to which all sides are in utter denial about what it means to have a workable currency union across such a broad area. The "creditor states" don't get that the system is doomed to instability and crisis in the absence of credible automatic mechanisms to bolster troubled regions; the "debtor states" don't get that membership comes with a price in the form of truncated sovereignty.
Quote from: Admiral Yi on July 10, 2015, 03:38:14 PM
If creditors are amnesiacs, why are Venezuela and Argentina paying 14%?
Because their economies are lousy and their governments are sad jokes.
Replace Venezuela's government and economic policy mix with that of say Colombia and watch those yields go down quick. It's a new era, draw a line under the past, blah blah blah
Quote from: crazy canuck on July 10, 2015, 03:34:46 PM
Which is why I wonder why some people insist that austerity is always the answer.
Indeed. There is not anything that is always the answer.
QuoteZizek makes a very good point about this (I posted his essay in the Piketty on German debt thread) - the point is humiliation and subjugation of sovereign nations by unaccountable and unelectable bodies (the Trojka or the dreaded "financial markets").
Like how the Conservative States in the US were humiliated and subjugated by the unaccountable and unelectable Supreme Court of the United States? Man you sound like Ron Paul ranting on about the Fed.
Quote from: The Minsky Moment on July 10, 2015, 03:44:35 PM
Because their economies are lousy and their governments are sad jokes.
Replace Venezuela's government and economic policy mix with that of say Colombia and watch those yields go down quick. It's a new era, draw a line under the past, blah blah blah
To 7.26 on the 10 year. ;)
Quote from: Admiral Yi on July 10, 2015, 02:36:41 PM
Quote from: Martinus on July 10, 2015, 11:28:03 AM
Nothing changed. Austerity doesn't work and never had.
It has worked in Ireland, Spain, the UK, Latvia, the US, Iceland, Portugal, and countless other countries, but other than it has never worked.
:lol:
There was a very clear moment of inflexion for most of those countries: Draghi's OMT announcement. That's because the root problem had always been political, not economic. Empirical data does not support the notion that austerity has done anything but lengthening the crisis.
Yi subscribes to a school of economics that doesn't put a lot of faith in that sort of thing.
Quote from: Iormlund on July 10, 2015, 07:56:47 PM
:lol:
There was a very clear moment of inflexion for most of those countries: Draghi's OMT announcement. That's because the root problem had always been political, not economic. Empirical data does not support the notion that austerity has done anything but lengthening the crisis.
Your explanation doesn't work for the countries outside the eurozone, nor for Greece, which is inside the eurozone.
Nor does it explain what happens when and if the ECB stops buying bonds.
The fact remains that according to Marty and other posters, any country that engages in austerity is doomed. The evidence does not support this.
I can only speak for myself, not Marty or others. I don't think some austerity is bad. I do believe a balanced (on average) budget is the healthiest way.
The problem is relying exclusively on austerity as a tool for crisis solving, which was the doctrine in the Eurozone up till Draghi's speech. And has been shown not to work. Even the best examples, the Baltics, are terrible. Latvia, which you mention, receives 4.5% of GDP from migrant workers IIRC. It has "succeeded" by sending its youth abroad.
Quote from: Razgovory on July 10, 2015, 07:59:31 PM
Yi subscribes to a school of economics that doesn't put a lot of faith in that sort of thing.
Well he's right that the point of the austerity was not to create growth. That would be a very difficult assertion to defend.
Quote from: The Minsky Moment on July 10, 2015, 03:44:35 PM
Because their economies are lousy and their governments are sad jokes.
not unlike Greece's for the past century or so
Quote from: Crazy_Ivan80 on July 11, 2015, 01:40:44 AM
Quote from: The Minsky Moment on July 10, 2015, 03:44:35 PM
Because their economies are lousy and their governments are sad jokes.
not unlike Greece's for the past century or so
I think you are missing Minsky's point.
Quote from: Admiral Yi on July 10, 2015, 08:19:42 PM
Quote from: Iormlund on July 10, 2015, 07:56:47 PM
:lol:
There was a very clear moment of inflexion for most of those countries: Draghi's OMT announcement. That's because the root problem had always been political, not economic. Empirical data does not support the notion that austerity has done anything but lengthening the crisis.
Your explanation doesn't work for the countries outside the eurozone, nor for Greece, which is inside the eurozone.
Nor does it explain what happens when and if the ECB stops buying bonds.
The fact remains that according to Marty and other posters, any country that engages in austerity is doomed. The evidence does not support this.
What other posters ever made that argument?
The Economist explains
Alexis Tsipras's U-turn
Jul 12th 2015, 9:08 by S.N. | ATHENS
ON JULY 5th Greeks appeared to signal, through an overwhelming referendum result, that the reform demands made by Europe were too onerous to accept. Less than a week later, on July 11th, the Greek parliament passed a bill—with a majority of 251 out of 300 votes—giving the government of prime minister Alexis Tsipras authorisation to negotiate a bail-out deal with creditors, in light of a proposal that includes conditions harsher than those rejected at the referendum. The government did not need parliamentary authorisation for this, but now that it has it, the Greek political leadership appears to present an unusually united front. This extraordinary about face may not end up achieving anything; the European leaders now meeting in Brussels may decide that Greece cannot be trusted and must go. The reversal in the Greek stance is nonetheless remarkable. How did Mr Tsipras go from imploring Greeks to vote down a package of reforms proposed by the creditors, which 62% of voters dutifully did, to begging the Greek parliament to sign up to an even harsher package less than a week later, and what consequences will the U-turn have?
One explanation is that Mr Tsipras has an extraordinary gift for persuasion; the fact that Athens isn't currently being razed by betrayed "Oxi" (No) voters suggests as much. But the more compelling reason is that the Greeks have realised they cannot have their cake and eat it. The referendum promised the impossible: a less-harsh package of reforms and continued membership in the euro zone. But once it became clear that the euro zone creditors were in no mood to negotiate, Greek parliamentarians (and, it would seem, many Oxi voters) did not need long to determine that a Grexit would be more catastrophic than more austerity. "At least we had a go," seems to be a common attitude.
Mr Tsipras's conciliatory performance has surprised Mr Tsipras's critics and, perhaps, given them hope for the future. "He finally chose country over party," says one relieved member of the opposition. But it has cost him. Fifteen of his own MPs, including two ministers, revolted by voting against the bill, abstaining or staying at home, and another 15 signed a letter saying they only voted for the bill in order to protect the government's majority. Yanis Varoufakis, until last week Mr Tsipras's finance minister, skipped the vote entirely. Without the support of these defectors, To regain it he has a few options. He could reshuffle his cabinet and demand that the defectors resign and hand over their votes. He could call for a Mr Tsipras in effect no longer holds a parliamentary majority.new election, which he may do anyway later in the year. Or he could form a new coalition to make the numbers add up, most obviously with Potami and Pasok: two centre-left parties. Or European creditors may force his hand, calling for a technocratic government. They would certainly find a new, broader coalition more assuring of the Greek commitment to implementing reforms.
The show of support by opposition parties in the authorisation vote was a matter of pragmatism, rather than enthusiasm for the reform package. "Now is the time to do everything possible to keep Greece within the euro zone," said opposition MP Niki Kerameus. "Now is not the time to discuss why Syriza went from promising 12 billion euros in grants to proposing 12 billion euros in austerity measures." But such discussions will surely be had behind closed doors. The bill's passage will probably lead to what many moderates had hoped all along: a split within Syriza that forces Mr Tsipras to rid the party of its extreme-left flank. As long as the current armistice amongst Greek politicians lasts, Mr Tsipras can enjoy wide support from outside his party. All this, together with the lack of popular unrest for now, presents an impressive show of Greek unity. But once a deal is signed—or rejected—the knives will surely come out again before long.
Latest, EU/Troika demands sovereignty over Greece before more bailouts are done. In effect all reforms must be passed by the Greek Parliament in the next 48 hours before monies are given.
In other words, the EU/Troika/Germany just annexed Greece.
Seriously, I consider this about as reasonable as Austria-Hungary's demands on Serbia in 1914. If anything the latter was a bit more reasonable.
Nah, it's reasonable if you don't have faith in Greek political establishment. And who has? It's what it should have been done to pass structural reforms from the very start.
Quote from: PJL on July 12, 2015, 09:53:49 AM
Latest, EU/Troika demands sovereignty over Greece before more bailouts are done. In effect all reforms must be passed by the Greek Parliament in the next 48 hours before monies are given.
In other words, the EU/Troika/Germany just annexed Greece.
Seriously, I consider this about as reasonable as Austria-Hungary's demands on Serbia in 1914. If anything the latter was a bit more reasonable.
:huh:
Could we have the exact terms of the Troika "ulitmatum", rather than histrionic sophistry? How exactly is Greece's sovereignty being breached?
Also, the possibility of a "temporary" Grexit being denied, the EZ has basically gone all-in: Either Greece bends over and folds, or it exits the Euro.
The political goal here is clear, provoke a total explosion of the current Syriza-led coalition if it accepts, hopefully for a government which will be more "cooperative" in negociations, or put the blame on Syriza if it finds itself incapable of mustering a majority within 48 hours.
Quote from: Drakken on July 12, 2015, 11:20:45 AM
Quote from: PJL on July 12, 2015, 09:53:49 AM
Latest, EU/Troika demands sovereignty over Greece before more bailouts are done. In effect all reforms must be passed by the Greek Parliament in the next 48 hours before monies are given.
In other words, the EU/Troika/Germany just annexed Greece.
Seriously, I consider this about as reasonable as Austria-Hungary's demands on Serbia in 1914. If anything the latter was a bit more reasonable.
:huh:
Could we have the exact terms of the Troika "ulitmatum", rather than histrionic sophistry? How exactly is Greece's sovereignty being breached?
Here's the
14 12 point plan.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fi.imgur.com%2F4dXImRZ.png&hash=4ef21116981ae3c1bac029ec18700c52f4518092)
Quote from: PJL on July 12, 2015, 11:39:50 AM
Here's the 14 12 point plan.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fi.imgur.com%2F4dXImRZ.png&hash=4ef21116981ae3c1bac029ec18700c52f4518092)
Wow. You are correct. Greece will lose its sovereignty if ELSTAT can't produce partisan political statistics.
I assume that the points about Greece removing from office those who engaged in propaganda against the ECB and the one about the collaboration in Greece of representatives of the ECB for the suppression of the subversive movement directed against the integrity of the Euro were accidentally cropped by your source, imgur.com?
That plan would effectively turn Greece into a vassal of Euro technocrats. Complete with introducing a new code of law that only the technocrats will understand. There have been arguments that this is what the EU is in reality but now we see it in action stripped of any pretence of national government autonomy.
Quote from: grumbler on July 12, 2015, 11:49:17 AM
Quote from: PJL on July 12, 2015, 11:39:50 AM
Here's the 14 12 point plan.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fi.imgur.com%2F4dXImRZ.png&hash=4ef21116981ae3c1bac029ec18700c52f4518092)
Wow. You are correct. Greece will lose its sovereignty if ELSTAT can't produce partisan political statistics.
I assume that the points about Greece removing from office those who engaged in propaganda against the ECB and the one about the collaboration in Greece of representatives of the ECB for the suppression of the subversive movement directed against the integrity of the Euro were accidentally cropped by your source, imgur.com?
I thought some other points were more relevant than the ELSTAT one...
For example, saying that a country must conduct an "independent" (thus, not based on political will of the people) privatisation is quite outrageous.
Best not feed the Troll. I am assuming Grumbles is smart enough to know the plan contains points relevant to PJL's comment.
100+ years ago, the great powers would have their battleships off the coast of Greece to "protect their interests". The absence of battleships doesn't mean the substance of the situation has really changed. Full "sovereignty" for a nation and financial insolvency are incompatible in the long term.
Quote from: alfred russel on July 12, 2015, 01:41:52 PM
100+ years ago, the great powers would have their battleships off the coast of Greece to "protect their interests". The absence of battleships doesn't mean the substance of the situation has really changed. Full "sovereignty" for a nation and financial insolvency are incompatible in the long term.
Greece could exercise its full sovereignty and default at any time.
At this point, Grexit and a possible military coup looks like the better option, rather than the EU political coup. At least the military would be Greek.
And the parralells with the Treaty of Brest Litovsk are uncanny (other than of course it was in the middle of a war). Germany and radical leftists try and make a peace deal which are harsh. Leftists walk away but situation only gets worse. They are then forced to sign a deal which is even more harsh than the previous one.
Though at least Brest Litovsk left the Russians independent. What the Greeks are facing is effectively an unequal treaty between them and the EU.
Quote from: Martinus on July 12, 2015, 01:11:37 PM
Quote from: grumbler on July 12, 2015, 11:49:17 AM
Quote from: PJL on July 12, 2015, 11:39:50 AM
Here's the 14 12 point plan.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fi.imgur.com%2F4dXImRZ.png&hash=4ef21116981ae3c1bac029ec18700c52f4518092)
Wow. You are correct. Greece will lose its sovereignty if ELSTAT can't produce partisan political statistics.
I assume that the points about Greece removing from office those who engaged in propaganda against the ECB and the one about the collaboration in Greece of representatives of the ECB for the suppression of the subversive movement directed against the integrity of the Euro were accidentally cropped by your source, imgur.com?
I thought some other points were more relevant than the ELSTAT one...
For example, saying that a country must conduct an "independent" (thus, not based on political will of the people) privatisation is quite outrageous.
I was playing along with his (obviously not serious) claim that this was worse than AH's ultimatum. It wasn't intended to be taken seriously.
Quote from: PJL on July 12, 2015, 02:14:13 PM
And the parralells with the Treaty of Brest Litovsk are uncanny (other than of course it was in the middle of a war). Germany and radical leftists try and make a peace deal which are harsh. Leftists walk away but situation only gets worse. They are then forced to sign a deal which is even more harsh than the previous one.
Though at least Brest Litovsk left the Russians independent. What the Greeks are facing is effectively an unequal treaty between them and the EU.
Uncanny indeed
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fi.imgur.com%2Fqnc6ale.jpg&hash=28242e780c28e775b6c30a4031ba9b506dda4527)
Quote from: Admiral Yi on July 12, 2015, 01:50:09 PM
Greece could exercise its full sovereignty and default at any time.
Greece cannot have full sovereignty with no power to issue currency in accordance with its peoples' needs. Their government clearly needs that power, and should so state. Grexit today is obviously going to be more painful than Grexit five years ago would have been, but less painful than Grexit in five years will be.
Quote from: Martinus on July 12, 2015, 01:11:37 PM
For example, saying that a country must conduct an "independent" (thus, not based on political will of the people) privatisation is quite outrageous.
The idea is probably based on the East German Treuhandanstalt (https://en.wikipedia.org/wiki/Treuhandanstalt) which had the task to privatize the state-owned enterprises and other assets of the GDR.
Quote from: PJL on July 12, 2015, 02:14:13 PM
And the parralells with the Treaty of Brest Litovsk are uncanny (other than of course it was in the middle of a war). Germany and radical leftists try and make a peace deal which are harsh. Leftists walk away but situation only gets worse. They are then forced to sign a deal which is even more harsh than the previous one.
Though at least Brest Litovsk left the Russians independent. What the Greeks are facing is effectively an unequal treaty between them and the EU.
What would it take in your opinion to make a fair and equal agreement which doesn't infringe on Greece's sovereignty?
Quote from: Zanza on July 12, 2015, 03:18:18 PM
The idea is probably based on the East German Treuhandanstalt (https://en.wikipedia.org/wiki/Treuhandanstalt) which had the task to privatize the state-owned enterprises and other assets of the GDR.
heh, funny. Yesterday one of it's boardmembers (André Leysen) between 1990-1994 died. Probably the first time the Treuhandanstalt was mentioned on our radio... ever.
Quote from: Admiral Yi on July 12, 2015, 03:18:37 PM
Quote from: PJL on July 12, 2015, 02:14:13 PM
And the parralells with the Treaty of Brest Litovsk are uncanny (other than of course it was in the middle of a war). Germany and radical leftists try and make a peace deal which are harsh. Leftists walk away but situation only gets worse. They are then forced to sign a deal which is even more harsh than the previous one.
Though at least Brest Litovsk left the Russians independent. What the Greeks are facing is effectively an unequal treaty between them and the EU.
What would it take in your opinion to make a fair and equal agreement which doesn't infringe on Greece's sovereignty?
There isn't one. Greece should leave the Eurozone. No question about that now. It's either subservience and vassalage in the Eurozone, or independence outside of it.
That sort of is the point of the Eurozone, isn't it? The adoption of the Euro is more about binding the constitute states together rather than enjoying economic benefits. It might have even worked if they had a real federal government.
Quote from: Razgovory on July 12, 2015, 03:46:24 PM
That sort of is the point of the Eurozone, isn't it? The adoption of the Euro is more about binding the constitute states together rather than enjoying economic benefits. It might have even worked if they had a real federal government.
Well yes, but it should be done by consensus, not by submission.Which is what the current deal is.
I agree with PJL.
On the one hand Greek sovereignty should not be sold for financial stability.
On the other hand the Eurozone can't trust Greece to implement the policies anyway.
So neither side has anything to gain from another deal.
Too bad our politicians let it come to this point. Was not necessary or inevitable.
If only you had a Hamilton. :(
QuoteAnd the parralells with the Treaty of Brest Litovsk are uncanny (other than of course it was in the middle of a war). Germany and radical leftists try and make a peace deal which are harsh. Leftists walk away but situation only gets worse. They are then forced to sign a deal which is even more harsh than the previous one.
Though at least Brest Litovsk left the Russians independent. What the Greeks are facing is effectively an unequal treaty between them and the EU.
Well at least the Germans have progressed from Nazis to the Kaiserreich. Next this will be compared to Charlemagne's treatment of the Saxons.
Quote from: Razgovory on July 12, 2015, 03:46:24 PM
That sort of is the point of the Eurozone, isn't it? The adoption of the Euro is more about binding the constitute states together rather than enjoying economic benefits. It might have even worked if they had a real federal government.
Yep. They need a real federal government for this to work.
Looks like Germany may have overplayed their hand. I expect some sort of compromise deal now.
Quote from: Valmy on July 12, 2015, 04:20:23 PM
Yep. They need a real federal government for this to work.
That, and mobility of labor. If there is high unemployment in Greece and worker shortages in Germany, Greeks need to move to Germany, like Michiganders moved to Tennessee when the auto industry relocated there.
That's not so easy when language and customs barriers are so strong. I don't think even a federal government would resolve the basic problems with the Euro.
A lot of Greeks and Germans can speak English, so it's not a deal breaker.
Quote from: grumbler on July 12, 2015, 05:27:24 PM
Quote from: Valmy on July 12, 2015, 04:20:23 PM
Yep. They need a real federal government for this to work.
That, and mobility of labor. If there is high unemployment in Greece and worker shortages in Germany, Greeks need to move to Germany, like Michiganders moved to Tennessee when the auto industry relocated there.
That's not so easy when language and customs barriers are so strong. I don't think even a federal government would resolve the basic problems with the Euro.
There are not that many jobs for unemployed Greeks in Germany. Germany lacks qualified workers, but there's plenty of under-worked unskilled locals.
Quote from: Razgovory on July 12, 2015, 06:05:03 PM
A lot of Greeks and Germans can speak English, so it's not a deal breaker.
Greeks, maybe. If they worked in the tourism industry.
Germans? Definitely not. In my experience very, VERY few people speak it as well as Zanza or Syt. Many don't speak it at all. My doc, fortunately, does. You can get by in English but, in a typical workplace, you're going to be pretty lost at meetings and will need support for stuff like finding a place, opening a bank account, filling a medical history, buying insurance, etc.
Quote from: Iormlund on July 12, 2015, 06:20:08 PM
There are not that many jobs for unemployed Greeks in Germany. Germany lacks qualified workers, but there's plenty of under-worked unskilled locals.
I was talking in a more general sense. Eurozone labor is not very mobile, for very understandable reasons, and that's what makes a single currency problematic, IMO.
Well, Germany could always set up special camps for Greek workers where they can speak Greek and be, you know, concentrated. For efficiency.
Quote from: PJL on July 12, 2015, 05:11:17 PM
Looks like Germany may have overplayed their hand. I expect some sort of compromise deal now.
Perhaps they will say their earlier comments should not have been taken seriously
My experience is that Germans speak very good English. At least the ones I saw. Actually it is seldom a problem in Europe, with the notable exception of France. I am sure they speak good English. The problem is they expect me to speak French :sleep:
All people are born with knowledge of English but speak other languages out of spite.
Quote from: Monoriu on July 12, 2015, 07:45:07 PM
My experience is that Germans speak very good English. At least the ones I saw. Actually it is seldom a problem in Europe, with the notable exception of France. I am sure they speak good English. The problem is they expect me to speak French :sleep:
My experience two years ago in France is that they are delighted if you try to use French, but are happy to deal with you in English (or a mix) if your French isn't up to the purpose. That was quite a change from my experience 15 years ago.
I haven't been to Germany in more than a decade, but a good friend is German and he argues that the Germans are among the least cosmopolitan of the big European countries; they learn some English in school, but have forgotten it because they don't use it, and don't consume English-language media like other countries do.
Online, I find that the Germans I encounter have good English, so maybe my friend is over-stating the parochialism of Germans.
My experience is Krauts all speak English unless they're pretty old.
The obvious solution is for Tsipras to call a second referendum on the latest Eurozone proposals. If the Greeks vote no, he will have a better mandate to negotiate again.
There is no leeway for further negociations.
Future negociations have as prerequisite that Syriza and the Greek Parliamemt votes ALL these demands into law before Wednesday midnight, including privatizations and supervision by Euro-technocrats in Athens. Only when this is done that the EZ will consider opening up negociations for a possible bailout that is not even certain.
Calling another referendum will be taken as a no deal.
Quote from: Drakken on July 12, 2015, 09:10:24 PM
There is no leeway for further negociations.
Future negociations have as prerequisite that Syriza and the Greek Parliamemt votes ALL these demands into law, including supervision by Euro-technocrats in Athens. Only when this is done that the EZ will consider opening up negociations for a possible bailout that is not even certain.
I was messing around, trying to make an infinite loop ;)
I have never had a problem finding English speakers in France. Although on my last few trips I haven't had to since my wife and children speak French. I have had difficulty finding English speakers in Germany.
France is the biggest problem when it comes to languages because they take foreigners not speaking French as an insult, and react as such. Japan is also high on the list but the problem is different. Their problem is fear of making mistakes, so they refuse to try. The good news is they don't expect foreigners to speak Japanese. Japanese are perfectly willing to communicate with hand gestures, mobile phone translation apps, numbers on calculators etc.
Quote from: Monoriu on July 12, 2015, 09:11:50 PM
Quote from: Drakken on July 12, 2015, 09:10:24 PM
There is no leeway for further negociations.
Future negociations have as prerequisite that Syriza and the Greek Parliamemt votes ALL these demands into law, including supervision by Euro-technocrats in Athens. Only when this is done that the EZ will consider opening up negociations for a possible bailout that is not even certain.
I was messing around, trying to make an infinite loop ;)
You can read the whole document here :
https://twitter.com/EdConwaySky/status/620272062771429377
Now that I have read the exact terms and sitten to ponder about them, while some do feel reasonable others are indeed astonishingly harsh in this day and age, and a direct assault on Greece's sovereignty: Forced privatization of national-owned assets? Transfer of all valuable assets owned by the Greek governement to an external fund situated in Luxemburg? Oversight by international agents answering only to
Berlin the Troika? All of these in exchange only for possible negociations to a future-undetermined bailout that is not even certain?
This is not asking for a show of good will. And yes, I get that neither Tsirpas, his minions, or any member of the Greek parliament are considered to be trustworthy and in good faith, and yes I get they and their predecessors have literally surfed on the bailout money without lifting a finger for almost a decade. However, objectively, neither are these terms. No one will make me swallow that these disproportionate proposals were not made in Berlin and have been unanimously accepted even by France, Italy, Spain, and Portugal.
These do have a vibe to be thrown hereabout knowing full well these will be rejected, and these will be rejected. Which means the whole package deal will be rejected. Only madmen out of a bedlam (or hawks) would propose terms that purposefully designed to be rejected by any nation with a semblance of national pride even on the brink of autodestruction, totally expecting these to be accepted as a matter of course.
I naturally distaste hyperbolics when discussing politics (like the current comparing Merkel to Hitler and all that bullshit), but Greece accepting this would turn it into a protectorate, no if and buts. I can't see how accepting this will not lead to a coup d'État, civil war, or the Greek population throwing themselves arms wide open into the Golden Dawn.
Also, if I were a Spaniard, a Portuguese, an Italian, or a French citizen I would read these terms with shivers down my spine.
Quote from: Drakken on July 12, 2015, 10:35:19 PM
You can read the whole document here :
https://twitter.com/EdConwaySky/status/620272062771429377
Now that I have read the exact terms and sitten to ponder about them, while some do feel reasonable others are indeed astonishingly harsh in this day and age, and a direct attack on Greece's sovereignty: Forced privatization of national-own assets? Transfer of all valuable assets owned by the Greek governement to be transfered to an external fund in Luxemburg? Oversight by international agents answering only to Berlin the Troika?
These do have a vibe to be thrown hereabout knowing full well these will be rejected, and it will be rejected. Only madmen out of a bedlam would propose terms purposefully designed to be rejected by any nation with a semblance of national pride, even on the brink of autodestruction, expecting these to be accepted.
I naturally distaste in hyperbolics when discussing politics (like the current comparing Merkel to Hitler and all that bullshit), but Greece accepting this would turn it into a protectorate. I can't see how accepting this will not lead to a coup d'État, civil war, or the Greek population throwing themselves arms wide open into the Golden Dawn.
Maybe that's because Greece did not implement the necessary reforms in the past 5 years? If they didn't privatise in the past 5 years, then how can Europe trust that they will do so in the next 5 years? In this case mere promise isn't enough. There beeds to be assurances that Greece will reform, otherwise there is no point throwing good money after bad.
Quote from: Monoriu on July 12, 2015, 10:41:29 PM
Maybe that's because Greece did not implement the necessary reforms in the past 5 years? If they didn't privatise in the past 5 years, then how can Europe trust that they will do so in the next 5 years? In this case mere promise isn't enough. There beeds to be assurances that Greece will reform, otherwise there is no point throwing good money after bad.
But these are not asking for reasonable guarantees, the Eurogroup have effectively engaged a Melian dialogue with Athens (oh, the irony), under the guise of "showing good faith".
Quote
"For ourselves, we shall not trouble you with specious pretenses—either of how we have a right to our empire because we overthrew the Mede, or are now attacking you because of wrong that you have done us—and make a long speech which would not be believed; and in return we hope that you, instead of thinking to influence us by saying that you did not join the Spartans, although their colonists, or that you have done us no wrong, will aim at what is feasible, holding in view the real sentiments of us both; since you know as well as we do that right, as the world goes, is only in question between equals in power, while the strong do what they can and the weak suffer what they must" (Thucydides 5.89).
These few terms are so excessive, even for a country that has thrown dust into their bailout partners' eyes for half-a-decade.
And they have 48 hours to comply to each and every one of them. This is well within what I would define an strongarm ultimatum.
There would have been nothing wrong, per my opinion, with requesting a limited show a good faith by some limited action, like for instance (totally out of my ass) applying into law those demands that are not carving into Greece sovereignty like streamlining the VAT coupled with tax reforms to widen the tax base, in exchange for a short-term help bailout allowing the Greek banks some breathing space. If complied, the negociation table is open to more long-term solutions for a bailout. You know, carrots-and-sticks, tit-and-tat. The current set of demands is all sticks for not even a carrot certain in the future. They wouldn't be palatable even for Zimbabwe or North Korea, let alone Greece.
Too bad. If someone has broken a promise in the past, then it takes a lot more for a similar promise to be accepted now. Fool me once and all that. That is the price that Greece needs to pay for its word to be taken seriously again.
There is a huge carrot - the, what, 80 billion Euros that the Europeans will lend to Greece. With the almost certainty that these won't be repaid.
Quote from: Monoriu on July 12, 2015, 11:05:10 PM
Too bad. If someone has broken a promise in the past, then it takes a lot more for a similar promise to be accepted now. Fool me once and all that. That is the price that Greece needs to pay for its word to be taken seriously again.
There is a huge carrot - the, what, 80 billion Euros that the Europeans will lend to Greece. With the almost certainty that these won't be repaid.
Because Greece would be taken seriously by any country and by international bodies if they accepted the terms? Greece, of all countries, which has coined the term 'Molon Labe'?
This argument is spurious. For it to be valable it would need to have consistently been presented to countries which are notoriously in bad faith economically-wise. Zimbabwe, for instance, have ceased payments on all their debts since 1999 and have been suspended from the IMF. They have been allowed to run hyperinflation into the trillions of dollars on a single dollar bill. Yet even they, of all bad world partners, were never presented with proposals that were within a iota of what is proposed now to Greece.
http://www.voanews.com/content/imf-not-ready-to-resume-funding-to-zimbabwe/2674577.html
Besides, those 80 billion Euros are not even on the table as of yet. They don't exist, they MIGHT be discussed, someday god-knows-when, if Greece complies unconditionally with each and every term within the next 48 hours.
Quote from: Drakken on July 12, 2015, 11:21:35 PM
Quote from: Monoriu on July 12, 2015, 11:05:10 PM
Too bad. If someone has broken a promise in the past, then it takes a lot more for a similar promise to be accepted now. Fool me once and all that. That is the price that Greece needs to pay for its word to be taken seriously again.
There is a huge carrot - the, what, 80 billion Euros that the Europeans will lend to Greece. With the almost certainty that these won't be repaid.
Because Greece would be taken seriously by any country and by international body if they accepted the terms? Greece, of all countries, which has coined the term 'Molon Labe'?
This argument is spurious. For it to be valable it would need to have consistently been presented to countries which are notoriously in bad faith economically-wise. Zimbabwe, for instance, have ceased payments on all their debts since 1999 and have been suspended from the IMF. They have been allowed to run hyperinflation into the trillions of dollars on a single dollar bill. Yet even they, of all bad world partners, were never presented with proposals that were within a iota of what is proposed to Greece.
http://www.voanews.com/content/imf-not-ready-to-resume-funding-to-zimbabwe/2674577.html
Besides, those 80 billion Euros are not even on the table as of yet. They don't exist, they MIGHT be discussed, someday god-knows-when, if Greece complies unconditionally with each and every term within the next 48 hours.
So what do you propose for the Europeans? From their perspective, they lent money to Greece 5 years ago. Greece promised to reform. They didn't. Even held a referendum to say no to creditors. Their finance minister called the people who provided cash lifeline to Greece terrorists. Now Greece wants more money again. What do you do? Just accept their word again and give them billions and billions? Taxpayers will be in revolt.
Quote from: Monoriu on July 12, 2015, 11:27:06 PM
So what do you propose for the Europeans? From their perspective, they lent money to Greece 5 years ago. Greece promised to reform. They didn't. Even held a referendum to say no to creditors. Their finance minister called the people who provided cash lifeline to Greece terrorists. Now Greece wants more money again. What do you do? Just accept their word again and give them billions and billions? Taxpayers will be in revolt.
American and Iranian officials are negociating around a table right now. So are North Korean and South Korean officials. And they call each other terrorists and imperialists all the time, even today. Even countries officially at war have diplomats that discuss within parallel channels, through neutral states for instance. Besides, Varoufakis is gone. He is not the Finance Minister anymore. His 'demission' was well within what I consider a good gesture. No one was willing to discuss with that dickhead anyway, he was an extraordinary bad negociator and a buffoon.
I would propose exactly what I have said above: Athens immediately passes and votes those policies that do not directly encroach on its sovereignty (like streamlining the VAT, tax reforms, and abrogation of all these silly tax deductions that have been put into the Greek constitution) coupled with tangible actions, not words, put into practice. I'd ask Athens to present a public restructuration plan to attack the Greek's budget inbalance and fiscality issues within a reasonable time schedule (let's say a month), coupled with the establishment a permanent working committee to put this plan into action with observers from the IMF, the ECB, Eurogroup, and OCDE working in tandem with the Greek government, within the full respect of Greece's sovereignty.
In exchange, the ECB opens the valves with a very, very limited bailout (or extension of debt repayment) to allow the banks to function a bit, made wider conditionally to the continuation of said actions. Review every six months, with the due understanding that if results are not satisfactory or Greece shows bad faith again, the bailout will be shut down until they resume action.
As you may note, this is not very different from any financial service manager dealing with a client with a bad credit rating. The goal here is not to destroy the client, but find a way that he repays his loans. I fully understand the Eurozone partners (and their taxpayers) to want their money back, but putting Greece into a surrender-or-die posture is a sure way that they will never get to see that money again and build enormous amounts of distrust against Europe, which might profit to the far-right not only in Greece, but elsewhere (like Marine Le Pen in France - as an aside, I'd dare to predict that by the intransigeant language of the Eurogroup proposal, Merkel and her allies have made a Le Pen presidency in France scenario very realistic in the near-future; they have just acted in a way that proves her and the FN anti-Europe rhetoric right). Plus, the worst thing you can do to a partner you'll have to deal with in the future, even if he is unreliable, is to slap him in the face.
Which measures are the ones that are infringing on Greece's sovereignty?
Quote from: Admiral Yi on July 13, 2015, 12:21:21 AM
Which measures are the ones that are infringing on Greece's sovereignty?
- Imposition of privatizations of nationalized assets, like the state-owned electricity grid.
- Either transfer of all valuable assets owned by the Greek governement (of estimated value of 50 billion Euros) to an external fund situated in Luxemburg, or to be privatized and sold with the liquidity being immediately put on the Greek debt
- Oversight by agents
sent invited in Athens and answering only to the IMF, the Eurogroup committee, and the ECB
- That the Greek government must consult with these instutitions and get their agreements on all legislative drafts touching relevant areas before being submitted to either Parliament or the public
- All of the demanded measures have to be passed and approved in legislature, as a whole package, in the next 48 hours.
You may read it all in the link I have supplied. It is only 4 pages long, so TL;DR doesn't apply.
Quote from: Drakken on July 13, 2015, 12:28:56 AM
You may read it all in the link I have supplied. It is only 4 pages long, so TL;DR doesn't apply.
You're talking about those four camera pics on the Ed Conway site?
Quote from: Admiral Yi on July 13, 2015, 12:34:32 AM
You're talking about those four camera pics on the Ed Conway site?
Yep.
EDIT : If you fear it is some conspiratorial bullshit, you can read the final 4pm draft here:
http://blogs.ft.com/brusselsblog/files/2015/07/draft-eurogroup-4pm-Copy.pdf
Quote from: Drakken on July 13, 2015, 12:28:56 AM
Quote from: Admiral Yi on July 13, 2015, 12:21:21 AM
Which measures are the ones that are infringing on Greece's sovereignty?
- Imposition of privatizations of nationalized assets, like the state-owned electricity grid.
- Either transfer of all valuable assets owned by the Greek governement (of estimated value of 50 billion Euros) to an external fund situated in Luxemburg, or to be privatized and sold with the liquidity being immediately put on the Greek debt
- Oversight by agents sent invited in Athens and answering only to the IMF, the Eurogroup committee, and the ECB
- That the Greek government must consult with these instutitions and get their agreements on all legislative drafts touching relevant areas before being submitted to either Parliament or the public
- All of the demanded measures have to be passed and approved in legislature, as a whole package, in the next 48 hours.
You may read it all in the link I have supplied. It is only 4 pages long, so TL;DR doesn't apply.
Tomorrow I'm going to do a bunch of shit that I don't want to do, in a place I don't want to be, and do what other people I may or may not like tell me to do. In return, I'm going to be given money.
Maybe that is impinging on my freedom, but most people just consider it going to work. If you need other people to give you money, sometimes you have to do what they want.
Thanks for the link. It wasn't that I doubted the pics on the other site; I just couldn't read them.
I don't understand the fuss about the privatization. Privatization was part of the deal from the beginning of the first bailout.
My reading of the "valuable assets" clause is that Greece has a choice of either conducting the sales itself or handing over title of 50 billion euros worth of assets to that Luxembourg office, which will then conduct the sales. Did you read it differently?
Not sure I really get the impact on sovereignty of the other things you mentioned either. In a rational world Greece would be the one feeling the time pressure, but they've been dicking around for the last 3 months or so, with nothing to show for it.
Quote from: alfred russel on July 13, 2015, 12:48:41 AM
Maybe that is impinging on my freedom, but most people just consider it going to work. If you need other people to give you money, sometimes you have to do what they want.
If you want to play with rhetorical analogies and compare apples and oranges, you don't give out a copy of your keys to your boss to come in and make sure you come to work, or give your passwords to your accountant ensure you do your tax reports. Neither would you accept if they required so.
And, also, the elephant in the room: you are not a State, and you are not in an anarchic international system with rules that are repeatedly ignored, vetoed, or disrespected by the strong because they are strong.
Quote from: Drakken on July 13, 2015, 12:55:10 AM
Quote from: alfred russel on July 13, 2015, 12:48:41 AM
Maybe that is impinging on my freedom, but most people just consider it going to work. If you need other people to give you money, sometimes you have to do what they want.
If you want to play with rhetorical analogies and compare apples and oranges, you don't give out a copy of your keys to your boss to come in and make sure you come to work, or give your passwords to your accountant ensure you do your tax reports. Neither would you accept if they required so.
Exactly. I'd find another place to work.
But if no one else would hire me, I'd make due with the situation.
Quote from: Drakken on July 13, 2015, 12:55:10 AM
If you want to play with rhetorical analogies and compare apples and oranges, you don't give out a copy of your keys to your boss to come in and make sure you come to work, or give your passwords to your accountant ensure you do your tax reports. Neither would you accept if they required so.
You bet I will take that offer if that is the only way to feed myself.
It seems the advice received from the Onion does not seem so bad in comparison:
QuoteHow Greece Can Solve Its Debt Crisis
Currently in negotiations with the European Central Bank, Greece faces an uncertain future as it attempts to prevent financial collapse in the midst of its debt crisis. Here are some potential ways Greece could solve its economic woes:
Try renting out extra space above Thessaloniki to bring in more income
Avoid frivolous spending on things like health care and a national infrastructure
Appoint a special finance minister charged with groveling at Angela Merkel's feet
Increase number of hourly tours of Parthenon
See if populace can think up another new branch of science, form of government, philosophical mode of thought, or basis for Western culture that can be licensed for quick cash
Plunder the Turks
Place tourism ads in Golf Digest and Woman's Day magazines
Finally end Greece's outdated practice of paying Rome a 30 million denarii tribute each year
Patiently remind creditors that money is just a social construct that holds no intrinsic value
10.8 million cups of hemlock
There is now a deal among Eurozone members and Tsipras. Greek parliament will need to pass a list of reforms by Wednesday before formal talks on the third bailout will begin. Looks like we are heading toward the best case scneario where Greece will stay in the Euro and there will be more austerity. The question is whether the Greek parliament will pass the deal. I assume no means Grexit.
Bottom line is, if they don't want to hand over the keys, don't spend other people's money.
Quote from: Drakken on July 13, 2015, 12:28:56 AM
Quote from: Admiral Yi on July 13, 2015, 12:21:21 AM
Which measures are the ones that are infringing on Greece's sovereignty?
- Imposition of privatizations of nationalized assets, like the state-owned electricity grid.
- Either transfer of all valuable assets owned by the Greek governement (of estimated value of 50 billion Euros) to an external fund situated in Luxemburg, or to be privatized and sold with the liquidity being immediately put on the Greek debt
- Oversight by agents sent invited in Athens and answering only to the IMF, the Eurogroup committee, and the ECB
- That the Greek government must consult with these instutitions and get their agreements on all legislative drafts touching relevant areas before being submitted to either Parliament or the public
- All of the demanded measures have to be passed and approved in legislature, as a whole package, in the next 48 hours.
You may read it all in the link I have supplied. It is only 4 pages long, so TL;DR doesn't apply.
I'm guessing a lot less people will be calling for the european federal state now. Cause this is what more Europe looks like.
None of this would be an issue, if you guys would just let Germany reorganize the continent in her image.
But nooo, you have to fight wars against this progressive idea! :rolleyes:
Commentary from a few weeks ago, about the Greek crisis and the call for more integration of Europe. And the folly that this idea is. The english is horrible, blame Google Translate.
http://www.tijd.be/opinie/column/Brusselse_illusies.9649608-2337.art?highlight=het%20paleis%20der%20natie
QuoteThe Greek crisis has the democratic deficit in the EU and especially in the euro zone uncovered grim. It is questionable whether the monetary union, with all its social fault lines can function with a genuine democratic scrutiny.
Who would have thought? The solution to the problems being experienced by the European Monetary Union is even more integration, more Europe. As it says in the report that the President of the European Commission, Jean-Claude Juncker earlier this week explained to the population.
Three years ago, the then European President Herman Van Rompuy on his own to the same conclusion. This time they were five to address the pressing issue. Juncker was his thinking assisted by Mario Draghi of the European Central Bank (ECB), European Minister Donald Tusk, the chairman of the Eurogroup Jeroen Dijsselbloem and the President of the European Parliament Martin Schulz.
That Parliament President Schulz, not exactly a great thinker, brainstormed with is strange. The institution which he chairs, is deemed to control four fellow thinkers and if necessary call them to order. Schulz 'cooperation in the Juncker report suggests that the issue for the European Parliament is only a formality.
The integration advocated by the authors of the report, accompanied by an extensive transfer of sovereignty. There is also talk of the completion of the banking union and a single capital market. The proposed European deposit guarantee is part of that banking union.
According to Juncker and his group believe an independent advisory needs strict watch on the budgets of Member States. The investment fund Juncker earlier suggested the prospect, and it really amounts to little, would serve to cushion economic and financial shocks, but then only for Member States that comply with the neatly Brussels begrotingsoekazes.
If by chance appeared just before Juncker, the result of his thinking released its an open letter to European academics call for - you guessed it - more integration, more Europe. "The Europeans are counting on your leadership, responsibility and vision to get them and the Union out of this crisis," so ends the dramatic appeal.
This is what European propaganda trick transparent. The open letter was written by the Italian Professor Roberto Castaldi, whose international Centre for European and Global Governance by the European Commission, the European Council and the European Parliament is financed.
President Juncker That just now comes out with its report, of course, has to do with the ongoing Greek crisis. Nevertheless, Greece is with all its liabilities and completely collapsed economy just part of a much bigger problem: the gaping democratic deficit which Europe no way know it.
Debt Prison
Greece has borrowed itself bankrupt. The country needs to save himself to death now and taxing to cling to buoy the euro. That is about in the endless negotiations between the Greek government and creditors. If the government of Alexis Tsipras therein tit off and bends to the demands of the International Monetary Fund put on the table, the Greek population is indefinitely debt prison. Mind you, not all Greeks. Because there are Greeks who are scandalously rich despite everything, Juncker said in an interview with Der Spiegel. Thought maybe the President to shipping magnate Spiros Latsis, whose luxury pleasure cruiser his predecessor, Jose Manuel Barroso was already linger. Juncker was certainly disappointed when Tsipras dismissive responded to his proposal to introduce a property tax. Consequently, the average Greek pays the price of the debacle.
That Greek nor requested from the citizens of the other euro countries or they agree with the conclusions of Juncker report. The transfer of sovereignty is foreseen after 2017 prudence after the referendum on a possible brexit in the UK. July 1 is already started the practical implementation of the remaining claims.
That raises questions again at the proposals to formulate the rapporteurs attention to social consequences of all this. On working conditions, the elimination of social dumping, the leveling of systems of social security, minimum wage, there is nothing in the report about Juncker.
The priorities of Juncker and his co-rapporteurs are clearly elsewhere. They realize that, even though a tentative compromise worked out with the Greeks, the problems of the eurozone have not been resolved. The Greeks need to refinance in the coming months paying back billions and loans. In Brussels and in Washington they know that this is impossible and that a part of the Greek debt sooner or later must be remitted. And that the European taxpayer can willy nilly opdraait. This is the price for the reckless rush to the euro and the Greek mismanagement, says Ashoka Mody, an economist at Princeton.
The integration plans Juncker will not change anything. Former Commission President Jacques Delors launched the illusion that the single currency would develop a new dynamic and naturally would lead to European integration. That turned into a political farce format. There is not just Greece. Throughout southern Europe continues to face problems. Spain stands by Greece at the top of the list of eurozone countries with the highest unemployment. Italy and France are facing structural difficulties. And debt of the eurozone countries is more than 90 percent of GDP, which is a hefty cut above the targeted 60 percent.
Old European contradictions
Still want Juncker and the other rapporteurs impose integration without any democratic participation. And all that in the illusory hope that the single currency boosts the disadvantaged economies such as former ECB President Jean-Claude Trichet once claimed. Who still added that the single currency would equalize interest rates. The international money market recorded the statement of Trichet for good coin and gradually Greece and other southern European euro countries are treated as though they were dealing with Germany. Today, those creditors stuck with the Greek and other debt mountains. And just at a time when the Federal Reserve and the European Central Bank international bond markets have disrupted their spectacular quantitative easing. Draghi's massive buyout of bonds being only exchange blows bubbles and promotes a wave of cheap funded acquisitions. A revival of the labor market is far from complete.
In a commentary on the website of the think-tank Bruegel, whose chairman Trichet, was recently asked whether it would not be better to scale down the integration. There is something to be said.
The truth is that Europe, and especially the monetary union can not withstand an equalization of social systems. And even less resistant to a real parliament, where majority and opposition face each other and where the treatment of Greece and quickly whisked together reports like that are filleted inexorably Juncker. In such a parliament which is not deafened by conceit and propaganda funds, the old European antagonisms would soon resurface
QuoteAfter some 17 hours of summit talks eurozone leaders announced a new deal to rescue Greece - a third bailout.
There are still significant hurdles to clear, however. And after months of argument and delay between the Greek government and the lenders, the eurozone wants the new sense of urgency to be maintained.
The risk of Grexit - a Greek exit from the euro - has not gone away. So what are the key points of the deal?
◾The Greek parliament must immediately adopt laws to reform key parts of its economy - by Wednesday. The reforms include: streamlining the pension system, boosting tax revenue - especially from VAT, liberalising the labour market, privatising the electricity network, extending shop opening hours
◾The eurozone agrees in principle to start negotiations on a loan package for Greece worth €82bn-86bn (£59bn-£62bn; $91bn-$96bn)
◾The loan will come mainly from the European Stability Mechanism (ESM) - the eurozone bailout fund - but the International Monetary Fund will also be asked to make a contribution from March 2016
◾A new trust fund will be set up, managed by Greece, with €50bn of Greek assets. Half will be used to fund the recapitalisation of Greek banks, the other half will go towards reducing Greece's debt mountain - by privatising assets - and investing in Greece
◾Greece will get short-term bridge financing to avoid bankruptcy. The amount is estimated to be €7bn by next Monday and another €5bn by mid-August
◾Out of the total ESM loan about €10bn will be used immediately to recapitalise Greek banks
◾The European Central Bank and eurozone finance ministers will tightly monitor Greek compliance with the bailout conditions
◾Negotiations on the ESM bailout will begin only after the plan is approved by the parliaments of Finland, Germany and Greece
◾The eurozone is ready if necessary to extend the repayment period of Greek debt (by debt rescheduling), but debt will not be written off (so no "haircut")
◾The European Commission will try to mobilise €35bn - outside the ESM loan - to help Greece with growth and job creation.
I find the highlighted bit intriguing. One of the things that the most powerful heads of governments/states in Europe discussed in an all-night marathon meeting that decided the EU's future was...shop opening hours? I dunno, are these really that important in economics?
Quite some stretch goals in this Krautfunding campaign.
Quote from: Syt on July 13, 2015, 06:24:32 AM
Quite some stretch goals in this Krautfunding campaign.
Better call Chris Robers.
Quote from: Monoriu on July 13, 2015, 05:39:35 AM
QuoteAfter some 17 hours of summit talks eurozone leaders announced a new deal to rescue Greece - a third bailout.
There are still significant hurdles to clear, however. And after months of argument and delay between the Greek government and the lenders, the eurozone wants the new sense of urgency to be maintained.
The risk of Grexit - a Greek exit from the euro - has not gone away. So what are the key points of the deal?
◾The Greek parliament must immediately adopt laws to reform key parts of its economy - by Wednesday. The reforms include: streamlining the pension system, boosting tax revenue - especially from VAT, liberalising the labour market, privatising the electricity network, extending shop opening hours
◾The eurozone agrees in principle to start negotiations on a loan package for Greece worth €82bn-86bn (£59bn-£62bn; $91bn-$96bn)
◾The loan will come mainly from the European Stability Mechanism (ESM) - the eurozone bailout fund - but the International Monetary Fund will also be asked to make a contribution from March 2016
◾A new trust fund will be set up, managed by Greece, with €50bn of Greek assets. Half will be used to fund the recapitalisation of Greek banks, the other half will go towards reducing Greece's debt mountain - by privatising assets - and investing in Greece
◾Greece will get short-term bridge financing to avoid bankruptcy. The amount is estimated to be €7bn by next Monday and another €5bn by mid-August
◾Out of the total ESM loan about €10bn will be used immediately to recapitalise Greek banks
◾The European Central Bank and eurozone finance ministers will tightly monitor Greek compliance with the bailout conditions
◾Negotiations on the ESM bailout will begin only after the plan is approved by the parliaments of Finland, Germany and Greece
◾The eurozone is ready if necessary to extend the repayment period of Greek debt (by debt rescheduling), but debt will not be written off (so no "haircut")
◾The European Commission will try to mobilise €35bn - outside the ESM loan - to help Greece with growth and job creation.
I find the highlighted bit intriguing. One of the things that the most powerful heads of governments/states in Europe discussed in an all-night marathon meeting that decided the EU's future was...shop opening hours? I dunno, are these really that important in economics?
Yes, Sunday in Germany is sacred. :lol:
What a silly deal. Greece won't adhere it, it will not solve Greek economic malaise, it will only strengthen anti-EU forces everywhere, it has caused a rift between France and Germany, it will do nothing to make Greek debt sustainable etc. etc.
Quote from: Zanza on July 13, 2015, 11:17:40 AM
What a silly deal. Greece won't adhere it, it will not solve Greek economic malaise, it will only strengthen anti-EU forces everywhere, it has caused a rift between France and Germany etc. etc.
Agreed. This won't help Greece's economy recover but it will ensure that we are talking about the threat of Greece further defaulting for years to come.
Article from just about the only British author with sympathies for Germany. :P
http://www.ft.com/intl/cms/s/0/30e6bc60-2957-11e5-acfb-cbd2e1c81cca.html#axzz3fn6bJPzD
QuoteGermany's conditional surrender
Gideon Rachman
Rather than risk its reputation, the Merkel government has agreed yet another Greek bailout
Europe woke up on Monday to a lot of headlines about the humiliation of Greece, the triumph of an all-powerful Germany and the subversion of democracy in Europe.
What nonsense. If anybody has capitulated, it is Germany. The German government has just agreed, in principle, to another multibillion-euro bailout of Greece — the third so far. In return, it has received promises of economic reform from a Greek government that makes it clear that it profoundly disagrees with everything that it has just agreed to. The Syriza government will clearly do all it can to thwart the deal it has just signed. If that is a German victory, I would hate to see a defeat.
As for this stuff about the trashing of democracy in Greece — that too is nonsense. The Greek referendum on July 5 was in essence a vote that the rest of the eurozone should continue to lend Greece billions — but on conditions determined in Athens. That was never realistic. The real constraint on Greece's freedom of actions is not the undemocratic nature of the EU. It is the fact that Greece is bust.
Much of the comment about the loss of Greek sovereignty, in the outline deal just agreed, has focused on the idea that Greece will now have to privatise €50bn worth of assets, and that foreigners will supervise the Athens-based fund. Given the record of corruption and clientelism of successive Greek governments, that sounds like a very good idea. But Syriza's deep opposition to privatisation makes it unlikely that anything like €50bn will be raised.
Of course, the dilemma of ordinary Greek people is horrible. I was in Athens last week and felt very sorry for many of the individuals I met, who fear for their jobs, savings and future. But the notion that all this is the fault of cruel Europeans, who have mindlessly imposed austerity on an otherwise healthy country, is a neo-leftist fantasy. Greece has been badly governed for decades and was living well beyond its means.
When the crunch came, the Greek government was running a budget deficit of over 10 per cent of gross domestic product and the private sector was refusing to lend to the country. Without the loans extended to Greece by the International Monetary Fund and the EU, the adjustment to austerity would have been instant and much more brutal. The idea that Greece's creditors have been totally inflexible is also untrue. Private-sector creditors to Greece have already taken a "haircut" in 2012 — and Greek debt repayments have been extended long into the future.
Meanwhile, ordinary Germans, Dutch, Finns and others also have every right to feel aggrieved. When they joined the euro, they were told that there was a "no bailout" clause in the treaty setting up the single currency. That was meant to reassure taxpayers that they would never have to pay the bills of other eurozone countries.
Well, so much for that. There have already been bailouts for Spain, Portugal and Ireland — as well as three packages for Greece. A new loan of €85bn to Greece would be almost double the annual GDP of Serbia, a medium-sized country in the same region. And for all the talk that the Europeans are meanly refusing to write off Greek debts, it is actually well understood that it is highly unlikely that Greece will ever fully pay back the €320bn it already owes.
It is certainly striking that the most vocal denunciations of the eurozone's meanness, in refusing to write off Greece's debts, have come from economists based in countries whose own taxpayers are not on the hook.
This latest iteration of the Greek crisis has also seen a more open rift between France and Germany. The French government emerged as the champions of keeping Greece inside the euro and of easing austerity. France doubtless has honourable motives for sticking up for Greece, to do with European solidarity, geopolitics and the like. But if I were a German taxpayer, I would have been rather chilled by the sight of President François Hollande of France hugging Alexis Tsipras, the Greek prime minister, as they left the EU building.
For France also has self-centred reasons for trying to reverse austerity in Europe. This is a country that has not passed a balanced budget, even once, since the mid-1970s. French governments find it almost as hard to push through structural reforms of their economy as their Greek counterparts. After this latest crisis, the French are likely to return to the fray with bright ideas for "strengthening" the eurozone — such as EU-wide social insurance. I wonder who they think might pay for that?
As for the Germans, at the latest summit, they were clearly flirting with "Grexit" — the idea of forcing Greece out of the eurozone. They drew back after numerous warnings, such as the one issued by the foreign minister of Luxembourg, that such a course of action would be "fatal for Germany's reputation in the EU and the world".
Rather than risk such an outcome, the German government has agreed to yet another bailout for Greece. Yet, in reality, the euro is already poisoning Germany's attitude towards Europe and Europe's attitude towards Germany.
The whole saga brings to mind a saying of that great German, Karl Marx — "History repeats itself, first as tragedy, second as farce." The latest Greek debt deal manages to be both a farce and a tragedy, at the same time.
Yes, but. Greece tried to show the finger to Europe and hold the euro at gunpoint to get free money.
Instead, Merkel used Cipras to wipe the floor with - he agreed to a much worse deal IIRC that the one he promised to never sign, during the election.
It's a knockout victory for Angela, I think. Politically, at least.
Quote from: Zanza on July 13, 2015, 11:56:40 AM
Article from just about the only British author with sympathies for Germany. :P
http://www.ft.com/intl/cms/s/0/30e6bc60-2957-11e5-acfb-cbd2e1c81cca.html#axzz3fn6bJPzD
QuoteGermany's conditional surrender
Gideon Rachman
Rather than risk its reputation, the Merkel government has agreed yet another Greek bailout
Europe woke up on Monday to a lot of headlines about the humiliation of Greece, the triumph of an all-powerful Germany and the subversion of democracy in Europe.
What nonsense. If anybody has capitulated, it is Germany. The German government has just agreed, in principle, to another multibillion-euro bailout of Greece — the third so far. In return, it has received promises of economic reform from a Greek government that makes it clear that it profoundly disagrees with everything that it has just agreed to. The Syriza government will clearly do all it can to thwart the deal it has just signed. If that is a German victory, I would hate to see a defeat.
As for this stuff about the trashing of democracy in Greece — that too is nonsense. The Greek referendum on July 5 was in essence a vote that the rest of the eurozone should continue to lend Greece billions — but on conditions determined in Athens. That was never realistic. The real constraint on Greece's freedom of actions is not the undemocratic nature of the EU. It is the fact that Greece is bust.
Much of the comment about the loss of Greek sovereignty, in the outline deal just agreed, has focused on the idea that Greece will now have to privatise €50bn worth of assets, and that foreigners will supervise the Athens-based fund. Given the record of corruption and clientelism of successive Greek governments, that sounds like a very good idea. But Syriza's deep opposition to privatisation makes it unlikely that anything like €50bn will be raised.
Of course, the dilemma of ordinary Greek people is horrible. I was in Athens last week and felt very sorry for many of the individuals I met, who fear for their jobs, savings and future. But the notion that all this is the fault of cruel Europeans, who have mindlessly imposed austerity on an otherwise healthy country, is a neo-leftist fantasy. Greece has been badly governed for decades and was living well beyond its means.
When the crunch came, the Greek government was running a budget deficit of over 10 per cent of gross domestic product and the private sector was refusing to lend to the country. Without the loans extended to Greece by the International Monetary Fund and the EU, the adjustment to austerity would have been instant and much more brutal. The idea that Greece's creditors have been totally inflexible is also untrue. Private-sector creditors to Greece have already taken a "haircut" in 2012 — and Greek debt repayments have been extended long into the future.
Meanwhile, ordinary Germans, Dutch, Finns and others also have every right to feel aggrieved. When they joined the euro, they were told that there was a "no bailout" clause in the treaty setting up the single currency. That was meant to reassure taxpayers that they would never have to pay the bills of other eurozone countries.
Well, so much for that. There have already been bailouts for Spain, Portugal and Ireland — as well as three packages for Greece. A new loan of €85bn to Greece would be almost double the annual GDP of Serbia, a medium-sized country in the same region. And for all the talk that the Europeans are meanly refusing to write off Greek debts, it is actually well understood that it is highly unlikely that Greece will ever fully pay back the €320bn it already owes.
It is certainly striking that the most vocal denunciations of the eurozone's meanness, in refusing to write off Greece's debts, have come from economists based in countries whose own taxpayers are not on the hook.
This latest iteration of the Greek crisis has also seen a more open rift between France and Germany. The French government emerged as the champions of keeping Greece inside the euro and of easing austerity. France doubtless has honourable motives for sticking up for Greece, to do with European solidarity, geopolitics and the like. But if I were a German taxpayer, I would have been rather chilled by the sight of President François Hollande of France hugging Alexis Tsipras, the Greek prime minister, as they left the EU building.
For France also has self-centred reasons for trying to reverse austerity in Europe. This is a country that has not passed a balanced budget, even once, since the mid-1970s. French governments find it almost as hard to push through structural reforms of their economy as their Greek counterparts. After this latest crisis, the French are likely to return to the fray with bright ideas for "strengthening" the eurozone — such as EU-wide social insurance. I wonder who they think might pay for that?
As for the Germans, at the latest summit, they were clearly flirting with "Grexit" — the idea of forcing Greece out of the eurozone. They drew back after numerous warnings, such as the one issued by the foreign minister of Luxembourg, that such a course of action would be "fatal for Germany's reputation in the EU and the world".
Rather than risk such an outcome, the German government has agreed to yet another bailout for Greece. Yet, in reality, the euro is already poisoning Germany's attitude towards Europe and Europe's attitude towards Germany.
The whole saga brings to mind a saying of that great German, Karl Marx — "History repeats itself, first as tragedy, second as farce." The latest Greek debt deal manages to be both a farce and a tragedy, at the same time.
:hmm:
Quote from: crazy canuck on July 13, 2015, 11:23:07 AM
it will ensure that we are talking about the threat of Greece further defaulting for years to come.
Probably inevitable whatever happens. Some countries have the knack. See Argentina.
http://www.nytimes.com/2015/07/14/opinion/roger-cohen-the-german-question-redux.html
QuoteThe German Question Redux
Europe, once again at a moment of crisis, faces the quandary of how to deal with German power. The German Question is back.
It has existed, in different forms, since 1945, that moment of complete self-annihilation the Germans call "Stunde nul," or Zero Hour. How to rebuild the country while keeping it under American tutelage? How to ensure it remained a political pygmy even when it had grown from the ruins to become an economic titan? Whether to reunite it, and how to do so within the framework of NATO and the European Union? How to integrate Germany so completely in Europe that it would never again be tempted to stray down some wayward path, or "Sonderweg"?
By the early 21st century, these issues had been resolved. The United States had helped fashion the German Federal Republic and underwritten its security. The European Union had defused Franco-German enmity, Europe's perennial scourge; a tacit understanding gave France political primacy even if Germany had the economic muscle.
German unification had been achieved without German neutrality at a moment of Russian weakness and American deftness. A common currency, the euro, had been introduced that obliged Germany to give up the Deutsche mark, revered symbol of recovery, and bound the country's fortunes irrevocably to the rest of Europe. A united Germany, anchored in the West, its borders undisputed, existed within a Europe whole and free.
The heavy lifting was done. America could lay down its European burden. If a French intellectual had observed in Cold War days that he liked Germany so much he was glad there were two of them, now, slowly, Europeans were getting used to one of them.
But the euro was a poisoned chalice. Conceived to bind Germany to Europe, it instead bound far-weaker European countries to Germany, in what for some, notably Greece, proved an unsustainable straitjacket. It turbo-charged German economic dominance as Berlin's export machine went to work. It wed countries of far laxer and more flexible Mediterranean culture to German diktats of discipline, predictability and austerity. It produced growing pressure to surrender sovereignty — for a currency union without political union is problematic — and this yielding was inevitably to German power.
Two other developments thrust Germany into the very leadership role its history has taught it to mistrust. France grew weaker. De Gaulle's all-powerful presidency became an indifferent sort of office presiding over a country of sullen introspection. No fig leaf could disguise that the Franco-German partnership was no longer one of equals. Europe, perhaps to Henry Kissinger's belated satisfaction, had a phone number — in Angela Merkel's office.
The second development was that the United States decided it was time to leave Europe to the Europeans. In a matter of war and peace — President Vladimir Putin's annexation of Crimea and his stirring up of a small war in Eastern Ukraine — Washington is not even a party to the Minsk accords that constitute an attempt to clear up the mess. Germany, of course, is. How times have changed.
Precisely the thing that Germans were most uneasy about, and their neighbors, too, has now occurred. Germany dominates Europe to a degree unimaginable even 15 years ago. When I lived in Berlin around the turn of the century, Germans were still debating whether they could ever be a "normal" country and whether they could ever feel "proud." Now such rumination just seems quaint. Germany has decided it has no choice but to assume its power.
It wants to use it well. But its domination is stirring resentment, on a massive scale in Greece, where flip references to the Nazis are common; in France, where the feeling has grown that German severity with an already humiliated Greece is overblown; in Italy, where German-imposed austerity is resented; and in other countries of high unemployment and economic stagnation, where old anger toward Germany has not been entirely effaced by the passage of seven decades.
In Britain, the case for staying in the European Union has been complicated by the fact that, as a non-euro country, it will never be part of the inner sanctum of power, the German-dominated eurozone. Anti-European British politicians, not to mention the powerful anti-European Murdoch press, find plenty of fodder with this theme.
Yes, the German Question is back. Is German domination compatible with further European integration or will it prove a fracturing force?
Merkel has tried to tread a fine line between the rage at Greece within her center-right party and her determination to hold the euro — and Europe — together. She has resisted the many German voices saying, "To heck with Greece. Enough!" But, overall, notwithstanding the provisional Greek bailout deal reached after marathon negotiations, she had erred on the side of rigidity, austerity and responsibility lessons. German methods are good for Germans. But if Berlin now wants all Europeans to follow those methods, the Europe that offered postwar Germany a path to salvation will break apart.
:hmm:
Germany will bring order and discipline.
Just a tad dramatic.
Quote from: garbon on July 13, 2015, 01:04:47 PM
Just a tad dramatic.
August 1914 or August 2015?
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fs3-eu-west-1.amazonaws.com%2Flookandlearn-preview%2FM%2FM814%2FM814842.jpg&hash=be3596fd2eb480486835ee50384ceb0e2fa24061)
Quote from: alfred russel on July 13, 2015, 11:59:03 AM
Quote from: crazy canuck on July 13, 2015, 11:23:07 AM
it will ensure that we are talking about the threat of Greece further defaulting for years to come.
Probably inevitable whatever happens. Some countries have the knack. See Argentina.
The Technocrats could at least have proposed something which would have been realistic for Greece to achieve. This way it is easy to predict what is going to happen if Greece accepts this deal. Greece's economy will continue to perform poorly. It wont be able to meet its payment obligations. The Technocrats will claim that Greece was given a fair deal but have reneged and Yi will go on about why we should not blame the lender.
That it will even pass in legislature in the Greek parliament is not even certain : coalition partners are already turning on Syriza, the latter MPs are calling in sick or abstaining, and their supporters are imploding.
Finland is also throwing sand in the cog on its own, refusing to send any money into either the bailout or the bank relief bridge funds.
Did those retards seriously suggest that the "privatization fund" in Luxembourg should be the "Institution for Growth in Greece"? Which happens to be owned by the German state-owned KfW bank, which has Wolfgang Schäuble as its chairman? Why the fuck didn't they just create some new EU-operated institution? With a horde of lawyers at their call, that can't be too hard, no? Is there anything worse than a privatization fund headed indirectly by Schäuble from a political narrative perspective? What the fuck.
Quote from: Zanza on July 13, 2015, 01:44:47 PM
Did those retards seriously suggest that the "privatization fund" in Luxembourg should be the "Institution for Growth in Greece"? Which happens to be owned by the German state-owned KfW bank, which has Wolfgang Schäuble as its chairman? Why the fuck didn't they just create some new EU-operated institution? With a horde of lawyers at their call, that can't be too hard, no? Is there anything worse than a privatization fund headed indirectly by Schäuble from a political narrative perspective? What the fuck.
Or rather it fits this particular political narrative rather well. :D
Someone sent me this, they picked it up from Twitter.
QuoteIf only there were a Greek word for a victory that is in fact a defeat & a German word for pleasure derived from the misfortune of others.
:lol:
In other Southern untermenschen news, Spain has lost the voting for chairing the Eurogroup, Dijsselbloem will stay as leader. Our president had spent a lot of political capital on that.
Berlin proditoribus non premiae.
Is there anything to suggest that Dijsselbloem was only (or at least mainly) elected due to German political machinations?
Quote from: Zanza on July 13, 2015, 02:01:47 PM
Is there anything to suggest that Dijsselbloem was only (or at least mainly) elected due to German political machinations?
The fact he won :P
j/k. But Germany is going to be suspect for some time...
Quote from: Zanza on July 13, 2015, 02:01:47 PM
Is there anything to suggest that Dijsselbloem was only (or at least mainly) elected due to German political machinations?
Of course, you're evil. :P
Nah, the voting is secret so we'll never know, but Guindos was the "austerity is good, but let's not get carried away" candidate, while Dijsselbloem is total hardcore. I think I know which way Germany fell on.
To be honest, I'm not even annoyed, it's a massive slap on the face on our conservative pro-austerity government, and I'm happy with their face being slapped.
The Germans announced they were not supporting Dijsselbloem weeks ago. :huh:
Back in August last year Merkel publicly said she wants de Guindos. Schäuble preferred Dijsselbloem. I guess Merkel just did not want to overrule Schäuble on this. But the vote in the end was unanimous anyway.
Quote from: Zanza on July 13, 2015, 03:08:36 PM
Back in August last year Merkel publicly said she wants de Guindos. Schäuble preferred Dijsselbloem. I guess Merkel just did not want to overrule Schäuble on this. But the vote in the end was unanimous anyway.
The way it's reported here is that there was a first vote where Dijsselbloem won by a slim margin, and then they cast another one to give him unanimous backing.
Anyway, the result of this underlines the fact that we have extremely little political power within the EU, despite the fact we are the 4th largest EZ economy (and we have contributed to the Ireland/Portugal/Greece bailouts accordingly).
52% of Germans think Greece should get further support, 44% against
57% think the conditions of the deal are appropriate
78% don't believe Greece will actually implement them
Quote from: celedhring on July 13, 2015, 03:11:15 PM
Anyway, the result of this underlines the fact that we have extremely little political power within the EU, despite the fact we are the 4th largest EZ economy (and we have contributed to the Ireland/Portugal/Greece bailouts accordingly).
Maybe being Metkel's favorite was more of a curse than a blessing.
Quote from: Admiral Yi on July 10, 2015, 02:36:41 PM
Quote from: Martinus on July 10, 2015, 11:28:03 AM
Nothing changed. Austerity doesn't work and never had.
It has worked in Ireland, Spain, the UK, Latvia, the US, Iceland, Portugal, and countless other countries, but other than it has never worked.
Sort of worked in Sweden, which now spouts growth rates not seen since the golden days of Erlander and Palme. I don't think you can claim austerity "works" in the UK or that it saved Iceland, though. And Spain is closer to its Francoist past than ever. So, let's say it saved Latvia, that powerhouse of the Baltics.
Or something.
Quote from: Norgy on July 13, 2015, 04:13:51 PM
Quote from: Admiral Yi on July 10, 2015, 02:36:41 PM
It has worked in Ireland, Spain, the UK, Latvia, the US, Iceland, Portugal, and countless other countries, but other than it has never worked.
Sort of worked in Sweden, which now spouts growth rates not seen since the golden days of Erlander and Palme. I don't think you can claim austerity "works" in the UK or that it saved Iceland, though. And Spain is closer to its Francoist past than ever. So, let's say it saved Latvia, that powerhouse of the Baltics.
Or something.
And the austerity in the US was after a rather large stimulus.
Quote from: celedhring on July 13, 2015, 01:50:57 PM
In other Southern untermenschen news, Spain has lost the voting for chairing the Eurogroup, Dijsselbloem will stay as leader. Our president had spent a lot of political capital on that.
Berolinum proditoribus non præmia.
:lol:
Fixed! There are variants for the remainder of the sentence but Lusitanians would get the message I believe. :P
Quote from: Norgy on July 13, 2015, 04:13:51 PM
Sort of worked in Sweden, which now spouts growth rates not seen since the golden days of Erlander and Palme. I don't think you can claim austerity "works" in the UK or that it saved Iceland, though. And Spain is closer to its Francoist past than ever. So, let's say it saved Latvia, that powerhouse of the Baltics.
Or something.
What do you consider "austerity working" to be?
I think it is a maintenance or improvement in creditworthiness caused by a decrease in deficits.
Under the situation where a country:
+ has no central bank or control over monetary policy
+ exchange rate is fixed as with largest trade partners
+ faces severe recession and financial crisis that is global in dimension
A policy of hard austerity as that actually demanded of and implemented by Greece is insane. If you asked 1000 economists that hypo, 990 are going to say it's nuts.
You can talk blue in the face about whether austerity "worked" here or there. But is was predictable it would fail in Greece, it did fail, and it failed badly. And part of what is happening now is a consequence of that failure.
Quote from: Admiral Yi on July 13, 2015, 04:40:51 PM
I think it is a maintenance or improvement in creditworthiness caused by a decrease in deficits.
Flawed metric. Deficits are just one more factor for investors. What they want to know is if they'll get their money back. Tanking your economy via cuts is just as bad for that as a ginormous deficit.
To say that austerity (or anything else) has worked you need to consider the evolution of purchasing power, unemployment, demographics, investment ... and yes, also debt management. I wouldn't class a country with long-term 20+% unemployment a "success", for example.
The only examples I can think of where austerity worked are countries which undertook counter-cyclical cuts (when others could consume what the internal market would no longer be able to). This is not possible when everyone is cutting at the same time as the market keeps shrinking.
Quote from: Admiral Yi on July 13, 2015, 04:40:51 PM
What do you consider "austerity working" to be?
Germany?
Quote from: The Minsky Moment on July 13, 2015, 06:13:25 PM
Under the situation where a country:
+ has no central bank or control over monetary policy
+ exchange rate is fixed as with largest trade partners
+ faces severe recession and financial crisis that is global in dimension
A policy of hard austerity as that actually demanded of and implemented by Greece is insane. If you asked 1000 economists that hypo, 990 are going to say it's nuts.
You can talk blue in the face about whether austerity "worked" here or there. But is was predictable it would fail in Greece, it did fail, and it failed badly. And part of what is happening now is a consequence of that failure.
What are the other 10 going to say?
Quote from: The Minsky Moment on July 13, 2015, 06:13:25 PM
Under the situation where a country:
+ has no central bank or control over monetary policy
+ exchange rate is fixed as with largest trade partners
+ faces severe recession and financial crisis that is global in dimension
A policy of hard austerity as that actually demanded of and implemented by Greece is insane. If you asked 1000 economists that hypo, 990 are going to say it's nuts.
You can talk blue in the face about whether austerity "worked" here or there. But is was predictable it would fail in Greece, it did fail, and it failed badly. And part of what is happening now is a consequence of that failure.
Joan Minsky, correctly predicting 10 of the last 1 failed austerity programs. Remember what you were saying about Teh Fiskal Kliff?
I'll repeat the same question you declined to answer previously: let's assume everybody in the world gets on board with your program, and the decision is made to pursue "hard austerity as it was implemented in Greece." Who pays?
Quote from: Iormlund on July 13, 2015, 06:14:31 PM
To say that austerity (or anything else) has worked you need to consider the evolution of purchasing power, unemployment, demographics, investment ... and yes, also debt management. I wouldn't class a country with long-term 20+% unemployment a "success", for example.
As I've stated several times in the past, faulting austerity for not producing growth is like faulting video games for not giving women bigger boobs: reducing deficit spending will axiomatically decrease aggregate demand, contract the economy, reduce employment, etc.
OK, that analogy was Marty-esque but you get my drift.
Quote from: Admiral Yi on July 13, 2015, 06:42:23 PM
Quote from: Iormlund on July 13, 2015, 06:14:31 PM
To say that austerity (or anything else) has worked you need to consider the evolution of purchasing power, unemployment, demographics, investment ... and yes, also debt management. I wouldn't class a country with long-term 20+% unemployment a "success", for example.
As I've stated several times in the past, faulting austerity for not producing growth is like faulting video games for not giving women bigger boobs: reducing deficit spending will axiomatically decrease aggregate demand, contract the economy, reduce employment, etc.
OK, that analogy was Marty-esque but you get my drift.
:hmm: Marty, can you fix up Yi's analogy?
Quote from: DGuller on July 13, 2015, 06:50:09 PM
Quote from: Admiral Yi on July 13, 2015, 06:42:23 PM
Quote from: Iormlund on July 13, 2015, 06:14:31 PM
To say that austerity (or anything else) has worked you need to consider the evolution of purchasing power, unemployment, demographics, investment ... and yes, also debt management. I wouldn't class a country with long-term 20+% unemployment a "success", for example.
As I've stated several times in the past, faulting austerity for not producing growth is like faulting video games for not giving women bigger boobs: reducing deficit spending will axiomatically decrease aggregate demand, contract the economy, reduce employment, etc.
OK, that analogy was Marty-esque but you get my drift.
:hmm: Marty, can you fix up Yi's analogy?
I'll give it a try. Faulting austerity for not creating growth is like faulting a hangman for not saving lives. I thought that the idea behind Austerity was to end deficit spending, which is tantamount to "free money", that most monstrous of economic crimes. As far as I know this did not happen. The economy contracted drastically which led to decreased revenue which resulted in deficit.
Quote from: Admiral Yi on July 13, 2015, 06:37:57 PM
Joan Minsky, correctly predicting 10 of the last 1 failed austerity programs. Remember what you were saying about Teh Fiskal Kliff?
I can't even think of 10 austerity programs, much less predict them, much less predict correctly.
As for the Cliff, don't recall what I said. Although usually I'm not big on predicting. I'm confident that I said the sequester was idiotic and I stand by that. Total abdication of responsibility by Congress.
Other that that I would say if you are going to do fiscal consolidation, it helps if you can tank your currency and if you've got a central bank to willing to rev the presses to high speed
QuoteI'll repeat the same question you declined to answer previously: let's assume everybody in the world gets on board with your program, and the decision is made to pursue "hard austerity as it was implemented in Greece." Who pays?
Who pays now? The consequence of the policy was higher debt load.
Quote from: Razgovory on July 13, 2015, 06:34:23 PM
Quote from: The Minsky Moment on July 13, 2015, 06:13:25 PM
Under the situation where a country:
+ has no central bank or control over monetary policy
+ exchange rate is fixed as with largest trade partners
+ faces severe recession and financial crisis that is global in dimension
A policy of hard austerity as that actually demanded of and implemented by Greece is insane. If you asked 1000 economists that hypo, 990 are going to say it's nuts.
You can talk blue in the face about whether austerity "worked" here or there. But is was predictable it would fail in Greece, it did fail, and it failed badly. And part of what is happening now is a consequence of that failure.
What are the other 10 going to say?
Blah blah blah von Mises blah blah blah some crazy quote from Ayn Rand novel blah blah blah the magic Walrus told me it would be OK
In ascending order of relative lucidity and common sense. ;)
For the record, and save Yi the trouble of trying to mine 2012-13 era posts, the experience of the sequester/cliff has led me to give more credit to the view that monetary policy can offset fiscal impact, even when interest rates are very low. I give more credence to the Scott Sumner/market monetarist view of the world than I did before that episode.
But that really has no bearing on the Greece question.
OK Joan, if you don't want to answer the question I will. The rest of the EU pays.
*If* you want greater deficit spending by Greece *and* you don't want them to acquire an unsustainable debt load, they have to get free money from some one.
IIRC the original bailout allowed for something like 4% deficits in the first two years. What would have made you happy? 6? 8? For more than two years I assume?
So the inescapable result of your preferred policy is the rest of Europe gives Greece a gift of 6-8% of GDP for a number of years, because they feel that sorry for poor Greek pensioners, and because they value the inviolability of the eurozone that much, and because they feel that much solidarity with their EU brethren.
And of course the other PIIGs won't raise a stink because their situations are TOTALLY DIFFERENT.
Greece still has a per capital GDP that is double China's. The guys who retire early and receive 96% of their pre-retirement salaries as pensions are much richer than the Chinese who are willing to endure 14 hour, 6 day work weeks in factories with tight controls on how many toilet breaks each worker can take. Bankrupt Greece is still richer than China the economic powerhouse of the globe.
Quote from: Admiral Yi on July 13, 2015, 07:52:45 PM
OK Joan, if you don't want to answer the question I will. The rest of the EU pays.
*If* you want greater deficit spending by Greece *and* you don't want them to acquire an unsustainable debt load, they have to get free money from some one.
Incorrect.
The rest of the EU paid to take the debt off the hands of creditors. That was done *with* austerity. The cost was paid regardless.
Without austerity the only difference would have been the ECB writes off a big chunk. Just an accounting entry. And in the context of massive global central bank balance increases, totally immaterial.
Quote from: Monoriu on July 13, 2015, 09:32:10 PM
Bankrupt Greece is still richer than China the economic powerhouse of the globe.
Hate to break it but lots of countries are richer than "the economic powerhouse of the globe." Using the 2014 IMF numbers that would include Colombia, Serbia, Libya, the Dominican Republic, Algeria.
China is still a poor country. There are pockets of prosperity. And still huge swaths of grinding poverty.
Quote from: Admiral Yi on July 13, 2015, 07:52:45 PM
OK Joan, if you don't want to answer the question I will. The rest of the EU pays.
*If* you want greater deficit spending by Greece *and* you don't want them to acquire an unsustainable debt load, they have to get free money from some one.
IIRC the original bailout allowed for something like 4% deficits in the first two years. What would have made you happy? 6? 8? For more than two years I assume?
So the inescapable result of your preferred policy is the rest of Europe gives Greece a gift of 6-8% of GDP for a number of years, because they feel that sorry for poor Greek pensioners, and because they value the inviolability of the eurozone that much, and because they feel that much solidarity with their EU brethren.
And of course the other PIIGs won't raise a stink because their situations are TOTALLY DIFFERENT.
The rest of the EU is going to end up paying anyways, so what's the difference?
Quote from: The Minsky Moment on July 13, 2015, 10:36:24 PM
Incorrect.
The rest of the EU paid to take the debt off the hands of creditors. That was done *with* austerity. The cost was paid regardless.
I don't know what you're talking about here. It doesn't match the post you responded to.
QuoteWithout austerity the only difference would have been the ECB writes off a big chunk. Just an accounting entry. And in the context of massive global central bank balance increases, totally immaterial.
Well, that's certainly an interesting idea on where to find the free money. :huh:
Assuming for the sake of argument that ECB rules would permit such a write off, or that they could be changed to do so, how does one justify giving Greece free money in the amount of 6-8% of GDP but not the other indebted countries? Surely an equivalent gift to Portugal or Ireland would have a similarly negligible effect on the money supply and inflation and the exchange rate and asset values?
If other countries in the future got into a similar situation as Greece by partying like it's 1999, could they then expect similar treatment? If no, why not? All the arguments for monetizing Greek debt would apply to them as well.
Quote from: jimmy olsen on July 13, 2015, 10:46:54 PM
The rest of the EU is going to end up paying anyways, so what's the difference?
Check your tenses Timmy. We're talking about the hypothetical of no austerity.
And for God's sake please put a hard return after a post you quote. It's a pain in the ass to crop when you don't.
Quote from: The Minsky Moment on July 13, 2015, 10:40:35 PM
Quote from: Monoriu on July 13, 2015, 09:32:10 PM
Bankrupt Greece is still richer than China the economic powerhouse of the globe.
Hate to break it but lots of countries are richer than "the economic powerhouse of the globe." Using the 2014 IMF numbers that would include Colombia, Serbia, Libya, the Dominican Republic, Algeria.
China is still a poor country. There are pockets of prosperity. And still huge swaths of grinding poverty.
:yes:
I was browsing through my Economist "Pocket World in Figures" the other day and comparing the UK with China. China's total production is vast of course, but so is its population; I found that (in 2012) UK industrial production per capita was 3.5 times greater than China's, while services output was over 13 times greater per capita.........and Britain is only middle of the pack for Western nations.
I saw many wall posters in China asking people to take up jobs in restaurants and retail shops, and I was very surprised how little the front line workers made. A waiter in a decent restaurant would make like US$6-8k per year. (Unlike the US, there is no expectation for all customers to tip.) That is a big contrast with the image of mainlanders being big spenders and buying up all the luxury goods available everywhere in the world.
Quote from: Monoriu on July 14, 2015, 03:12:48 AM
I saw many wall posters in China asking people to take up jobs in restaurants and retail shops, and I was very surprised how little the front line workers made. A waiter in a decent restaurant would make like US$6-8k per year. (Unlike the US, there is no expectation for all customers to tip.) That is a big contrast with the image of mainlanders being big spenders and buying up all the luxury goods available everywhere in the world.
The population of mainlanders who leave the country in order to buy things are going to be the wealthier ones, not the service workers.
Late to the party, but do we have actual examples or highly endebted countries who got themselves out of a recession and to successfull growth by taking even more debt?
All of them?
Quote from: Grey Fox on July 14, 2015, 09:34:40 AM
All of them?
South America has managed to turn two centuries of peace and stability into disaster using that plan. Not sure it is all that fool proof.
Quote from: viper37 on July 14, 2015, 09:32:15 AM
Late to the party, but do we have actual examples or highly endebted countries who got themselves out of a recession and to successfull growth by taking even more debt?
Sorry but is anyone proposing that? It seems to me you are creating a strawman.
Quote from: Admiral Yi on July 14, 2015, 12:48:39 AM
I don't know what you're talking about here. It doesn't match the post you responded to.
Your post contains an assumption that Greece running less austerity would mean someone would have to pay money that otherwise was not paid.
The assumption is false. Greece did austerity. Its debt load went up. And the rest of the EU picked up the tab. The tab would not have been any different in the absence of austerity.
The only difference in the absence of harsh austerity would be that Greece's GDP and growth prospects would be better now.
QuoteAssuming for the sake of argument that ECB rules would permit such a write off, or that they could be changed to do so, how does one justify giving Greece free money in the amount of 6-8% of GDP but not the other indebted countries? Surely an equivalent gift to Portugal or Ireland would have a similarly negligible effect on the money supply and inflation and the exchange rate and asset values?
You've stated it elsewhere. Conditionality.
The pro-austerity crowd does not seem to get the fact that debt reduction or not, it is highly unlikely the creditors will see most of their money again. The Eurozone governments are engaging in the elaborate illusion of "extend and pretend" for political reasons, but Greece will never be in a position to repay all that debt. The only viable solutions are either a Greek default and Grexit, or debt haircut and allowing Greece to grow before it starts to pay off the rest of the debt. The latter would be clearly preferably from economic standpoint, but may be politically unviable for Eurozone governments.
Quote from: Martinus on July 14, 2015, 10:13:28 AM
The pro-austerity crowd does not seem to get the fact that debt reduction or not, it is highly unlikely the creditors will see most of their money again. The Eurozone governments are engaging in the elaborate illusion of "extend and pretend" for political reasons, but Greece will never be in a position to repay all that debt. The only viable solutions are either a Greek default and Grexit, or debt haircut and allowing Greece to grow before it starts to pay off the rest of the debt. The latter would be clearly preferably from economic standpoint, but may be politically unviable for Eurozone governments.
Yeah, the Germans are forcing the Greeks into more misery for a very dubious end result.
The fundamental difference is between different views on how heavily to weight moral hazard concerns. Yi (and those similarly inclined) weigh it very heavily, to the point where there is a willingness to let an entire small country collapse pour encourager les autres. I don't think it merits that level of concern.
Quote from: The Minsky Moment on July 14, 2015, 10:17:01 AM
The fundamental difference is between different views on how heavily to weight moral hazard concerns. Yi (and those similarly inclined) weigh it very heavily, to the point where there is a willingness to let an entire small country collapse pour encourager les autres. I don't think it merits that level of concern.
Agreed, its like the disciplinarian parent who goes over the top to demonstrate their disapproval to the rest of their children.
Quote from: Martinus on July 14, 2015, 10:13:28 AM
The pro-austerity crowd does not seem to get the fact that debt reduction or not, it is highly unlikely the creditors will see most of their money again. The Eurozone governments are engaging in the elaborate illusion of "extend and pretend" for political reasons, but Greece will never be in a position to repay all that debt. The only viable solutions are either a Greek default and Grexit, or debt haircut and allowing Greece to grow before it starts to pay off the rest of the debt. The latter would be clearly preferably from economic standpoint, but may be politically unviable for Eurozone governments.
It isn't about Greece any more. Greece is a goner. It is about Spain, Portugal and lots of others. There is a need to demonstrate what the result of voting in a pro-welfare, anti-austerity party, spending until the country is bankrupt, and blackmailing more prudent countries into giving them more money to spend, is.
Quote from: Monoriu on July 14, 2015, 10:20:43 AM
Quote from: Martinus on July 14, 2015, 10:13:28 AM
The pro-austerity crowd does not seem to get the fact that debt reduction or not, it is highly unlikely the creditors will see most of their money again. The Eurozone governments are engaging in the elaborate illusion of "extend and pretend" for political reasons, but Greece will never be in a position to repay all that debt. The only viable solutions are either a Greek default and Grexit, or debt haircut and allowing Greece to grow before it starts to pay off the rest of the debt. The latter would be clearly preferably from economic standpoint, but may be politically unviable for Eurozone governments.
It isn't about Greece any more. Greece is a goner. It is about Spain, Portugal and lots of others. There is a need to demonstrate what the result of voting in a pro-welfare, anti-austerity party, spending until the country is bankrupt, and blackmailing more prudent countries into giving them more money to spend, is.
So precisely what Minsky just said.
Quote from: Martinus on July 14, 2015, 10:21:41 AM
Quote from: Monoriu on July 14, 2015, 10:20:43 AM
Quote from: Martinus on July 14, 2015, 10:13:28 AM
The pro-austerity crowd does not seem to get the fact that debt reduction or not, it is highly unlikely the creditors will see most of their money again. The Eurozone governments are engaging in the elaborate illusion of "extend and pretend" for political reasons, but Greece will never be in a position to repay all that debt. The only viable solutions are either a Greek default and Grexit, or debt haircut and allowing Greece to grow before it starts to pay off the rest of the debt. The latter would be clearly preferably from economic standpoint, but may be politically unviable for Eurozone governments.
It isn't about Greece any more. Greece is a goner. It is about Spain, Portugal and lots of others. There is a need to demonstrate what the result of voting in a pro-welfare, anti-austerity party, spending until the country is bankrupt, and blackmailing more prudent countries into giving them more money to spend, is.
So precisely what Minsky just said.
:D
Quote from: viper37 on July 14, 2015, 09:32:15 AM
Late to the party, but do we have actual examples or highly endebted countries who got themselves out of a recession and to successfull growth by taking even more debt?
Yes. Most of Europe in fact. The US provided low interest loans to European countries after WWII. Germany after WWI is also an example, US loans stabilized the German economy in the 1920's. On the other side of the coin, Dutch loans to the already debt ridden US helped stabilized the economy here.
Quote from: The Minsky Moment on July 14, 2015, 10:17:01 AM
The fundamental difference is between different views on how heavily to weight moral hazard concerns. Yi (and those similarly inclined) weigh it very heavily, to the point where there is a willingness to let an entire small country collapse pour encourager les autres. I don't think it merits that level of concern.
I suspect they mistake moral hazards with morality.
Quote from: Razgovory on July 14, 2015, 10:26:10 AM
Quote from: The Minsky Moment on July 14, 2015, 10:17:01 AM
The fundamental difference is between different views on how heavily to weight moral hazard concerns. Yi (and those similarly inclined) weigh it very heavily, to the point where there is a willingness to let an entire small country collapse pour encourager les autres. I don't think it merits that level of concern.
I suspect they mistake moral hazards with morality.
Collective punishment very poor morality makes. Especially when you are punishing sons for the sins of fathers.
Quote from: The Minsky Moment on July 14, 2015, 10:17:01 AM
The fundamental difference is between different views on how heavily to weight moral hazard concerns. Yi (and those similarly inclined) weigh it very heavily, to the point where there is a willingness to let an entire small country collapse pour encourager les autres. I don't think it merits that level of concern.
The only reason the moral hazard concerns are a concern is because of the monetary union and the confederation. Everything is based on trust, political trust. Which is why these things never work.
QuoteYes. Most of Europe in fact. The US provided low interest loans to European countries after WWII. Germany after WWI is also an example, US loans stabilized the German economy in the 1920's.
In neither of those scenarios was Germany running up huge debts.
Quote from: Valmy on July 14, 2015, 10:28:26 AM
Quote from: The Minsky Moment on July 14, 2015, 10:17:01 AM
The fundamental difference is between different views on how heavily to weight moral hazard concerns. Yi (and those similarly inclined) weigh it very heavily, to the point where there is a willingness to let an entire small country collapse pour encourager les autres. I don't think it merits that level of concern.
The only reason the moral hazard concerns are a concern is because of the monetary union and the confederation. Everything is based on trust, political trust. Which is why these things never work.
QuoteYes. Most of Europe in fact. The US provided low interest loans to European countries after WWII. Germany after WWI is also an example, US loans stabilized the German economy in the 1920's.
In neither of those scenarios was Germany running up huge debts.
They created large amounts of debt from the war, and kept their governments afloat with more debt.
Quote from: Valmy on July 14, 2015, 10:28:26 AM
In neither of those scenarios was Germany running up huge debts.
Doesn't the aid it was receiving from the West mask the debt it otherwise would have incurred?
Quote from: crazy canuck on July 14, 2015, 10:42:52 AM
Quote from: Valmy on July 14, 2015, 10:28:26 AM
In neither of those scenarios was Germany running up huge debts.
Doesn't the aid it was receiving from the West mask the debt it otherwise would have incurred?
Due to reparations, sure. Which the loans were covering. The bankers were pretty sure Germany would recover and pay them back. Their powerful industry had not been physically hurt by WWI that much. It was an investment.
Post WWII was for different reasons. But again the US not only was sure the Germans would not run up huge debts with those loans but we were occupying them so we could be sure they would behave.
Neither of those scenarios is particularly relevant to this one.
Thomas Strobl, chairman of CDU Baden-Württemberg, deputy chairman of the CDU on federal level and son in law of Wolfgang Schäuble to journalists: "The Greek has annoyed us long enough." :bleeding:
I don't think this is over yet. I think Grexit is still a real possibility. I'll not be surprised if Tsipras announce any moment that he has changed his mind yet again and doesn't want to pass the reform laws before the deadline. Or support for his government breaks down. He needs to step down and fresh elections are held. A party that wants out of the Euro gets elected and so on. Grexit will be shock therapy, leading to short-term economic disaster but long term it is what Greece needs. That's bad for Europe, as the market will look for the next possible Euro exit candidate, say Portugal. The viability of the currency will be in doubt as existing members want out to save their economies, and other non-Euro countries hesitate to join. I can't see the UK abandoning the pound under these circumstances.
Quote from: Monoriu on July 14, 2015, 11:14:57 AM
I can't see the UK abandoning the pound under these circumstances.
:hmm:
Quote from: Valmy on July 14, 2015, 11:03:42 AM
Quote from: crazy canuck on July 14, 2015, 10:42:52 AM
Quote from: Valmy on July 14, 2015, 10:28:26 AM
In neither of those scenarios was Germany running up huge debts.
Doesn't the aid it was receiving from the West mask the debt it otherwise would have incurred?
Due to reparations, sure. Which the loans were covering. The bankers were pretty sure Germany would recover and pay them back. Their powerful industry had not been physically hurt by WWI that much. It was an investment.
Post WWII was for different reasons. But again the US not only was sure the Germans would not run up huge debts with those loans but we were occupying them so we could be sure they would behave.
Neither of those scenarios is particularly relevant to this one.
The Dawes plan wasn't considered an investment. " The question was: but do we have actual examples or highly endebted countries who got themselves out of a recession and to successfull growth by taking even more debt? " The answer is, yes. I gave three examples off the top of my head. Western Europe post WWII, Germany Post WWI and the US after the revolution. I think the US post 2008 is another example. US debt went up, but the recession ended and underemployment has fallen quite a bit from 2009.
Quote from: The Minsky Moment on July 14, 2015, 10:09:52 AM
Your post contains an assumption that Greece running less austerity would mean someone would have to pay money that otherwise was not paid.
The assumption is false. Greece did austerity. Its debt load went up. And the rest of the EU picked up the tab. The tab would not have been any different in the absence of austerity.
The only difference in the absence of harsh austerity would be that Greece's GDP and growth prospects would be better now.
Of course the tab would have been different. Less austerity means bigger tab.
QuoteYou've stated it elsewhere. Conditionality.
I don't understand. Conditionality means that Greece gets free money but Portugal doesn't?
Quote from: Admiral Yi on July 14, 2015, 11:39:04 AM
Of course the tab would have been different. Less austerity means bigger tab.
Really, if Greece's economy had not crashed as dramatically as it did in response to the austerity measures wouldn't there have been more tax revenue and less resulting debt - and particularly in the long run?
Quote from: The Minsky Moment on July 14, 2015, 10:17:01 AM
The fundamental difference is between different views on how heavily to weight moral hazard concerns. Yi (and those similarly inclined) weigh it very heavily, to the point where there is a willingness to let an entire small country collapse pour encourager les autres. I don't think it merits that level of concern.
You say moral hazard, I say perverse incentives.
Quote from: Admiral Yi on July 14, 2015, 11:39:04 AM
Of course the tab would have been different. Less austerity means bigger tab.
???
Austerity made the debt problem *worse*
QuoteI don't understand. Conditionality means that Greece gets free money but Portugal doesn't?
Conditionality means its not free.
Assuming that there was "free money". Which there wasn't except for former holders of Greek sovereign bonds.
What's the point of these comparisons to Germany after the World Wars? Is the argument that the situation that Greece is currently in is somehow comparable?
If so, the only conclusion one can draw from that is that Greece should just unilaterally default on its external debt and create a currency change (after WW2) and/or hyperinflation (after WW1) to destroy its internal debt. That's what Germany did after all. After WW1 it was only after Germany defaulted a few times already that its creditors lowered its debt. After WW2 Germany also didn't honor its debt and restructured it in the debt conference in 1953.
The Greek government doesn't seem to have the stomach for the consequences though. Which in Germany's case were actual occupation by the way, not just some kind of Troika sitting in ministries in the capital.
But I think the main difference is that Germany was actually able to finance itself after it got rid of its debt. Greece couldn't in 2010, can't now and most importantly won't for the time being. The Greeks know that. Otherwise they would never have come back to the negotiation table. No country takes a humiliation like the current deal if it doesn't have to.
Quote from: Zanza on July 14, 2015, 12:39:11 PM
The Greek government doesn't seem to have the stomach for the consequences though. Which in Germany's case were actual occupation by the way, not just some kind of Troika sitting in ministries in the capital.
But I think the main difference is that Germany was actually able to finance itself after it got rid of its debt. Greece couldn't in 2010, can't now and most importantly won't for the time being. The Greeks know that. Otherwise they would never have come back to the negotiation table. No country takes a humiliation like the current deal if it doesn't have to.
The main difference is that the Cold War no longer exists. Therefore there is no political will in the West to make sure Greece succeeds. Quite a different circumstance for Germany from about 1947ish on.
Quote from: The Minsky Moment on July 14, 2015, 12:26:45 PM
???
Austerity made the debt problem *worse*
So? This doesn't change the fact that no austerity means more money is needed.
QuoteConditionality means its not free.
Assuming that there was "free money". Which there wasn't except for former holders of Greek sovereign bonds.
So by conditionality you mean austerity.
And your ECB money would be free. If you don't earn it or pay it back, it's free.
Here is an interesting site I found. I compares the debt and deficits of all Eurozone Countries.
http://www.debtclocks.eu/public-debt-and-budget-deficits-comparison-of-the-eu-member-states.html
Quote from: crazy canuck on July 14, 2015, 12:42:52 PM
Therefore there is no political will in the West to make sure Greece succeeds.
Greece will only succeed if the Greeks want it to succeed. So far they haven't. No amount of Western money will change that if they Greeks themselves don't change their attitude towards their state. So why waste more money?
Quote from: Crazy_Ivan80 on July 14, 2015, 12:59:12 PM
Quote from: crazy canuck on July 14, 2015, 12:42:52 PM
Therefore there is no political will in the West to make sure Greece succeeds.
Greece will only succeed if the Greeks want it to succeed. So far they haven't. No amount of Western money will change that if they Greeks themselves don't change their attitude towards their state. So why waste more money?
You make a good German :)
Greece didn't succeed because they didn't want to? The extreme austerity of the past years had nothing to do with the failure?
:huh: Greece doesn't want to have healthy fundamentals. If it did it would (it's a democracy).
Quote from: Admiral Yi on July 14, 2015, 12:44:06 PM
So by conditionality you mean austerity.
No. Commitment to a structural reform program yes. But not a sharp decrease in net spending.
QuoteAnd your ECB money would be free.
What the ECB holds is a legal right to *receive* money from Greece. If it elects to alter that right so that it receives less, that is not the same as *paying* money to Greece.
QuoteIf you don't earn it or pay it back, it's free.
Countries don't earn money.
Quote from: crazy canuck on July 14, 2015, 01:10:15 PM
Greece didn't succeed because they didn't want to? The extreme austerity of the past years had nothing to do with the failure?
Greece was already very sick when the doctors from the Troika prescribed their blood-letting. Austerity surely made matters worse, but the root cause of Greece's malaise is way older than 2010.
Quote from: The Minsky Moment on July 14, 2015, 01:14:52 PM
No. Commitment to a structural reform program yes. But not a sharp decrease in net spending.
Then the perverse incentives remain. Belgium or whoever can go on a three year Visa card binge, then expect the ECB to pay it off, in exchange for new shopping hours laws.
QuoteWhat the ECB holds is a legal right to *receive* money from Greece. If it elects to alter that right so that it receives less, that is not the same as *paying* money to Greece.
It's exactly the same.
QuoteCountries don't earn money.
In most countries the residents who pay taxes do.
Quote from: Zanza on July 14, 2015, 01:18:24 PM
Austerity surely made matters worse, but the root cause of Greece's malaise is way older than 2010.
For example, there was an attempt to reform the much maligned pension system in 1998, in which various schemes were consolidated; however, the result was to increase the overall pension entitlements.
Response: Greece was then admitted into the Euro.
In my business we call that comparative negligence.
Quote from: Zanza on July 14, 2015, 01:18:24 PM
Quote from: crazy canuck on July 14, 2015, 01:10:15 PM
Greece didn't succeed because they didn't want to? The extreme austerity of the past years had nothing to do with the failure?
Greece was already very sick when the doctors from the Troika prescribed their blood-letting. Austerity surely made matters worse, but the root cause of Greece's malaise is way older than 2010.
No argument. I like your metaphor. Like Middleage medical practitioners, once the Troika became involved the chances of a positive outcome diminished significantly.
Quote from: Admiral Yi on July 14, 2015, 12:44:06 PM
Quote from: The Minsky Moment on July 14, 2015, 12:26:45 PM
???
Austerity made the debt problem *worse*
If you cut public spending in most European countries, you also take away purchasing power that keeps people in jobs in the private sector and amount to economic growth and tax base.
Austerity measures only worsen and excerberate the consequences of economic crisis. One things' declining exports, but if you can't keep national demand up, where are you going to get revenues?
Quote from: The Minsky Moment on July 14, 2015, 01:23:48 PM
Quote from: Zanza on July 14, 2015, 01:18:24 PM
Austerity surely made matters worse, but the root cause of Greece's malaise is way older than 2010.
For example, there was an attempt to reform the much maligned pension system in 1998, in which various schemes were consolidated; however, the result was to increase the overall pension entitlements.
Response: Greece was then admitted into the Euro.
In my business we call that comparative negligence.
Your point being? Greece and the Eurozone should solve their matters according to concepts of American private law? If so, it's Chapter 11 and liquidation for Greece I guess.
Quote from: Norgy on July 14, 2015, 01:25:32 PM
If you cut public spending in most European countries, you also take away purchasing power that keeps people in jobs in the private sector and amount to economic growth and tax base.
Austerity measures only worsen and excerberate the consequences of economic crisis. One things' declining exports, but if you can't keep national demand up, where are you going to get revenues?
Is this for me?
Quote from: crazy canuck on July 14, 2015, 01:10:15 PM
Quote from: Crazy_Ivan80 on July 14, 2015, 12:59:12 PM
Quote from: crazy canuck on July 14, 2015, 12:42:52 PM
Therefore there is no political will in the West to make sure Greece succeeds.
Greece will only succeed if the Greeks want it to succeed. So far they haven't. No amount of Western money will change that if they Greeks themselves don't change their attitude towards their state. So why waste more money?
You make a good German :)
Greece didn't succeed because they didn't want to? The extreme austerity of the past years had nothing to do with the failure?
extreme not implementing what they promised, not opening up their closed shop of an economy and not reforming their state-apparatus. As I've said in the other thread: the Greek state is a cesspool of clientilism and nepotism. It has been for a long time. Because of that -or maybe it's the reason why the greek state is so badly organised- the Greek citizenry has not reason to trust their state, and acts accordingly. The last few decades have not shown an inclination amongst the Greek electorate to elect parties that want to clean up this mess.
If Greece wants to stop defaulting every 30 years or so they'll have to change. A lot. This is going to be very hard. It would be much much harder, and the changed they'd need to make far more radical, if they had to get funding at normal market rates rather than the easy on the wallet rates they're getting from the other eurozone-members.
Quote from: Zanza on July 14, 2015, 01:29:16 PM
Your point being? Greece and the Eurozone should solve their matters according to concepts of American private law? If so, it's Chapter 11 and liquidation for Greece I guess.
That wasn't my point but now that you mention it Chapter 11 -- which is not a liquidation -- would be a big improvement.
Quote from: crazy canuck on July 14, 2015, 01:24:26 PM
Quote from: Zanza on July 14, 2015, 01:18:24 PM
Quote from: crazy canuck on July 14, 2015, 01:10:15 PM
Greece didn't succeed because they didn't want to? The extreme austerity of the past years had nothing to do with the failure?
Greece was already very sick when the doctors from the Troika prescribed their blood-letting. Austerity surely made matters worse, but the root cause of Greece's malaise is way older than 2010.
No argument. I like your metaphor. Like Middleage medical practitioners, once the Troika became involved the chances of a positive outcome diminished significantly.
The perverse thing was that the combined the Middle Ages practice with 21st century life support and homeopathic medicine.
Quote from: Zanza on July 14, 2015, 01:49:37 PM
Quote from: crazy canuck on July 14, 2015, 01:24:26 PM
Quote from: Zanza on July 14, 2015, 01:18:24 PM
Quote from: crazy canuck on July 14, 2015, 01:10:15 PM
Greece didn't succeed because they didn't want to? The extreme austerity of the past years had nothing to do with the failure?
Greece was already very sick when the doctors from the Troika prescribed their blood-letting. Austerity surely made matters worse, but the root cause of Greece's malaise is way older than 2010.
No argument. I like your metaphor. Like Middleage medical practitioners, once the Troika became involved the chances of a positive outcome diminished significantly.
The perverse thing was that they combined the Middle Ages practice with 21st century life support and homeopathic medicine.
:lol:
Quote from: Crazy_Ivan80 on July 14, 2015, 01:34:38 PM
Quote from: crazy canuck on July 14, 2015, 01:10:15 PM
Quote from: Crazy_Ivan80 on July 14, 2015, 12:59:12 PM
Quote from: crazy canuck on July 14, 2015, 12:42:52 PM
Therefore there is no political will in the West to make sure Greece succeeds.
Greece will only succeed if the Greeks want it to succeed. So far they haven't. No amount of Western money will change that if they Greeks themselves don't change their attitude towards their state. So why waste more money?
You make a good German :)
Greece didn't succeed because they didn't want to? The extreme austerity of the past years had nothing to do with the failure?
extreme not implementing what they promised, not opening up their closed shop of an economy and not reforming their state-apparatus. As I've said in the other thread: the Greek state is a cesspool of clientilism and nepotism. It has been for a long time. Because of that -or maybe it's the reason why the greek state is so badly organised- the Greek citizenry has not reason to trust their state, and acts accordingly. The last few decades have not shown an inclination amongst the Greek electorate to elect parties that want to clean up this mess.
I wonder how difficult it might be for any nation to reform its political system and politics in a period of a few years. And then I wonder how much more difficult it will be now.
Quote from: Crazy_Ivan80 on July 14, 2015, 01:34:38 PM
If Greece wants to stop defaulting every 30 years or so they'll have to change. A lot. This is going to be very hard. It would be much much harder, and the changed they'd need to make far more radical, if they had to get funding at normal market rates rather than the easy on the wallet rates they're getting from the other eurozone-members.
If they are that dysfunctional why the hell are they in the Euro? Kick them out, let them inflate away their debt and get their house in order and review their situation in 10-15 years. The rest of the Eurozone isn't going to get them to straighten up and fly right by forcing austerity down their throats, not unless they are willing to take direct control of the civil service and political system. It will succeed at making many people bitter and resentful of Germany, the Euro and the European system in general. This is a greater threat to the Euro than letting one state leave (or for that matter working out a less severe program for Greece's problems).
All of the bailouts have just been a way to prolong the pain without improving anything apart from the perspective of the original creditors. I'm predicting that even if Greece passes the set of reforms that things won't change much on the ground. There will still be widespread corruption, the Troika will have to decide if there is "enough" reform that it meets their demands or there will have to be another set of negotiations for even greater oversight/control versus Grexit.
Quote from: crazy canuck on July 14, 2015, 02:03:21 PM
I wonder how difficult it might be for any nation to reform its political system and politics in a period of a few years.
As Germany has been taken as an example before... :P
Four years between the end of the Third Reich and the establishment of Germany's current liberal democracy. The Greek crisis is already in its fifth or sixth year...
Quote from: frunk on July 14, 2015, 02:06:22 PM
Quote from: Crazy_Ivan80 on July 14, 2015, 01:34:38 PM
If Greece wants to stop defaulting every 30 years or so they'll have to change. A lot. This is going to be very hard. It would be much much harder, and the changed they'd need to make far more radical, if they had to get funding at normal market rates rather than the easy on the wallet rates they're getting from the other eurozone-members.
If they are that dysfunctional why the hell are they in the Euro? Kick them out, let them inflate away their debt and get their house in order and review their situation in 10-15 years. The rest of the Eurozone isn't going to get them to straighten up and fly right by forcing austerity down their throats, not unless they are willing to take direct control of the civil service and political system. It will succeed at making many people bitter and resentful of Germany, the Euro and the European system in general. This is a greater threat to the Euro than letting one state leave (or for that matter working out a less severe program for Greece's problems).
All of the bailouts have just been a way to prolong the pain without improving anything apart from the perspective of the original creditors. I'm predicting that even if Greece passes the set of reforms that things won't change much on the ground. There will still be widespread corruption, the Troika will have to decide if there is "enough" reform that it meets their demands or there will have to be another set of negotiations for even greater oversight/control versus Grexit.
I think you are preaching to the choir.
Quote from: Zanza on July 14, 2015, 02:08:26 PM
Quote from: crazy canuck on July 14, 2015, 02:03:21 PM
I wonder how difficult it might be for any nation to reform its political system and politics in a period of a few years.
As Germany has been taken as an example before... :P
Four years between the end of the Third Reich and the establishment of Germany's current liberal democracy. The Greek crisis is already in its fifth or sixth year...
But as you rightly noted before. That transition was enforced by the occupying forces - in both the West and the East. With the added benefit of having the support of the US in the West
Quote from: Zanza on July 14, 2015, 02:09:49 PM
Quote from: frunk on July 14, 2015, 02:06:22 PM
Quote from: Crazy_Ivan80 on July 14, 2015, 01:34:38 PM
If Greece wants to stop defaulting every 30 years or so they'll have to change. A lot. This is going to be very hard. It would be much much harder, and the changed they'd need to make far more radical, if they had to get funding at normal market rates rather than the easy on the wallet rates they're getting from the other eurozone-members.
If they are that dysfunctional why the hell are they in the Euro? Kick them out, let them inflate away their debt and get their house in order and review their situation in 10-15 years. The rest of the Eurozone isn't going to get them to straighten up and fly right by forcing austerity down their throats, not unless they are willing to take direct control of the civil service and political system. It will succeed at making many people bitter and resentful of Germany, the Euro and the European system in general. This is a greater threat to the Euro than letting one state leave (or for that matter working out a less severe program for Greece's problems).
All of the bailouts have just been a way to prolong the pain without improving anything apart from the perspective of the original creditors. I'm predicting that even if Greece passes the set of reforms that things won't change much on the ground. There will still be widespread corruption, the Troika will have to decide if there is "enough" reform that it meets their demands or there will have to be another set of negotiations for even greater oversight/control versus Grexit.
I think you are preaching to the choir.
:yes:
Now that's something Syriza should reform...
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fi.imgur.com%2FNwvOIXI.jpg&hash=1b9e6e1d349912c169e34459bfb23c9815d7b568)
Schäuble is now openly defying Merkel and is telling the press that Grexit would have been a much better solution. I wonder if she'll tolerate that for long.
The IMF says Greece will need a lot more debt relief and regular transfers from Mutti.
QuoteA secret International Monetary Fund study showed Greece needs far more debt relief than European governments have been willing to contemplate so far, as Germany heaped pressure on Athens on Tuesday to reform and win back its partners' trust.
The IMF's stark warning on Athens' debt was leaked as Greek Prime Minister Alexis Tsipras struggled to persuade deeply unhappy leftist lawmakers to vote for a package of austerity measures and liberal economic reforms to secure a new bailout.
The study, seen by Reuters, said European countries would have to give Greece a 30-year grace period on servicing all its European debt, including new loans, and a dramatic maturity extension. Or else they must make annual transfers to the Greek budget or accept "deep upfront haircuts" on existing loans.
The Debt Sustainability Analysis is likely to sharpen fierce debate in Germany about whether to lend Greece yet more money, while it will be seen by many in Greece as a vindication of the government's plea for sweeping debt relief. A Greek newspaper called the report a slap in the face for Berlin.
German Finance Minister Wolfgang Schaeuble made clear in Brussels on Tuesday that some members of the Berlin government think it would make more sense for Athens to leave the euro zone temporarily rather than take another bailout.
An orderly Grexit would be a bargain it seems.
http://www.reuters.com/article/2015/07/14/us-eurozone-greece-idUSKBN0P40EO20150714 (http://www.reuters.com/article/2015/07/14/us-eurozone-greece-idUSKBN0P40EO20150714)
Quote from: Admiral Yi on July 14, 2015, 12:44:06 PM
So? This doesn't change the fact that no austerity means more money is needed.
See, this is what confuses me. Yi talks about Austerity working if it actually increases debt, then exactly what is it accomplishing? Greece could increase it's debt without wrecking it's economy.
New technology discovered for: Greece
Technology: Taxing the fuck out of the rich
Effects: Getting actual tax revenue
Press TAB for more information or E to return to "EU - Playin' it by ear since 1992".
Quote from: Razgovory on July 14, 2015, 03:47:06 PM
See, this is what confuses me. Yi talks about Austerity working if it actually increases debt, then exactly what is it accomplishing? Greece could increase it's debt without wrecking it's economy.
I have no idea what you're talking about.
Quote from: Admiral Yi on July 14, 2015, 04:20:55 PM
Quote from: Razgovory on July 14, 2015, 03:47:06 PM
See, this is what confuses me. Yi talks about Austerity working if it actually increases debt, then exactly what is it accomplishing? Greece could increase it's debt without wrecking it's economy.
I have no idea what you're talking about.
This exchange.
Quote from: Admiral Yi on July 14, 2015, 12:44:06 PM
Quote from: The Minsky Moment on July 14, 2015, 12:26:45 PM
???
Austerity made the debt problem *worse*
So? This doesn't change the fact that no austerity means more money is needed.
QuoteConditionality means its not free.
Assuming that there was "free money". Which there wasn't except for former holders of Greek sovereign bonds.
So by conditionality you mean austerity.
And your ECB money would be free. If you don't earn it or pay it back, it's free.
Austerity makes the debt problem worse, your response was "so". If it makes the debt problem worse, what the hell is the point of Austerity?
Quote from: Zanza on July 14, 2015, 02:44:02 PM
Schäuble is now openly defying Merkel and is telling the press that Grexit would have been a much better solution. I wonder if she'll tolerate that for long.
It makes her look better to have some significant dissent that is more hard line than she is.
Raz, do me a favor and read the post Joan was responding to. I said "so" because "austerity increased Greece's debt/GDP" is not a response to the question who pays for nonausterity. It's totally orthogonal.
Second, watch your tenses. Joan said "austerity made the debt problem worse. I.e. in Greece's case it did. It does not in every case, which is what is connoted by you saying "austerity makes the debt problem worse. Bill Clinton austerely raised taxes, and the debt problem did not become worse. We austerely fell of the Fiscal Cliff and we austerely sequestered, and those did not make the debt problem worse. We austerely did not repeat Obamastimulus and that did not make the debt problem worse. Not all austerity makes the debt problem worse.
Quote from: Razgovory on July 14, 2015, 03:47:06 PM
Quote from: Admiral Yi on July 14, 2015, 12:44:06 PM
So? This doesn't change the fact that no austerity means more money is needed.
See, this is what confuses me. Yi talks about Austerity working if it actually increases debt, then exactly what is it accomplishing? Greece could increase it's debt without wrecking it's economy.
Not really. No one was going to lend Greece any more money when the bailouts were done. The alternative to the bailouts was not just making more debt and continuing as before. The alternative was immediate adjustment of Greece's gigantic state deficit to zero. Or drop out of the Euro and print to bridge the gap.
In hindsight that might have been better or the bailouts could have been done better, but "Greece could increase its debt" was not an option anymore back then.
And the gift just wouldn't stop giving. :lol:
IMF's director Christine Lagarde maintains the official IMF policy that it cannot legally give a cent to Greece until it has repaid its arrieries on IMF debts, despite the current deal stating black and white that any participation of the IMF will have to mandatory. She thus reitered that the Eurogroup, including Germany and Finland, will have to put more money to compensate.
Also, since the IMF still considers Greece's debt to be thoroughly unsustainable, solutions toward erasing part of Greece's debt will have to be considered, whether
Germany the Eurogroup likes it or not.
http://www.imf.org/external/pubs/ft/scr/2015/cr15186.pdf?hootPostID=2cd94f17236d717acd9949448d794045
QuoteThe dramatic deterioration in debt sustainability points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date—and what has been proposed by the ESM. There are several options. If Europe prefers to again provide debt relief throughmaturity extension, there would have to be a very dramatic extension with grace periods of, say, 30 years on the entire stock of European debt, including new assistance. This reflects the basic premise that debt cannot be assumed to migrate back onto the balance sheet of the private sector at interest rates close to the current AAA rates before debt levels have been brought to much lower levels; borrowing at anything but AAA rates in the near term will bring about an unsustainable debt dynamic for the next several decades. Other options include explicit annual transfers to the Greek budget or deep upfront haircuts. The choice between the various options is for Greece and its European partners to decide.
Quote from: Drakken on July 14, 2015, 09:26:16 PM
And the gift just wouldn't stop giving. :lol:
IMF's director Christine Lagarde maintains the official IMF policy that it cannot legally give a cent to Greece until it has repaid its arrieries on IMF debts, despite the current deal stating black and white that any participation of the IMF will have to mandatory. She thus reitered that the Eurogroup, including Germany and Finland, will have to put more money to compensate.
Also, since the IMF still considers Greece's debt to be thoroughly unsustainable, solutions toward erasing part of Greece's debt will have to be considered, whether Germany the Eurogroup likes it or not.
http://www.imf.org/external/pubs/ft/scr/2015/cr15186.pdf?hootPostID=2cd94f17236d717acd9949448d794045
QuoteThe dramatic deterioration in debt sustainability points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date—and what has been proposed by the ESM. There are several options. If Europe prefers to again provide debt relief throughmaturity extension, there would have to be a very dramatic extension with grace periods of, say, 30 years on the entire stock of European debt, including new assistance. This reflects the basic premise that debt cannot be assumed to migrate back onto the balance sheet of the private sector at interest rates close to the current AAA rates before debt levels have been brought to much lower levels; borrowing at anything but AAA rates in the near term will bring about an unsustainable debt dynamic for the next several decades. Other options include explicit annual transfers to the Greek budget or deep upfront haircuts. The choice between the various options is for Greece and its European partners to decide.
That's not impossible to solve. Euro group gives money to Greece so that Greece can repay its arrears to IMF immediately. IMF then lends a fresh round of money to Greece, part of which is to entirely repay the loan that I mentioned a sentence ago. Just a few accounting entries. There, no rule has been broken.
Quote from: Monoriu on July 14, 2015, 09:30:20 PM
That's not impossible to solve. Euro group gives money to Greece so that Greece can repay its arrears to IMF immediately. IMF then lends a fresh round of money to Greece, part of which is to entirely repay the loan that I mentioned a sentence ago. Just a few accounting entries. There, no rule has been broken.
I feel Lagarde's unwillingness to intervene stems from much deeper reasons that the mere legalism of unpaid arrieries. Behind this, the IMF's position is that it doesn't want to get dragged into the whole mess, and that the IMF isn't a printing press at the beak and call of the ECB and the Eurozone. Both the latter go from the principle that Greece's debt is solvable on the long-term, despite its present and future debt ratio increasing. The IMF does not, and refuses to go further unless the partners consider relieving part of Greece's debt as a long-term solution.
Also, votes in Parliaments aren't even done yet. It takes only one Parliament refusing to ratify to fuck the whole thing up. Lagarde's declarations in interview might be a spark that will make the powerkeg explode in any of the hardliner countries' legislatures. If the IMF refuses to lend, who will put the compensating money forth? And clearily, the IMF will lend only conditional to considerations of relieving Greece's debt in part, which all hardliners so far, Germany on the forefront, staunchily and vocally refuse even to consider.
Quote from: Drakken on July 14, 2015, 09:34:52 PM
Quote from: Monoriu on July 14, 2015, 09:30:20 PM
That's not impossible to solve. Euro group gives money to Greece so that Greece can repay its arrears to IMF immediately. IMF then lends a fresh round of money to Greece, part of which is to entirely repay the loan that I mentioned a sentence ago. Just a few accounting entries. There, no rule has been broken.
I feel Lagarde's unwillingness to intervene stems from much deeper reasons that the mere legalism of unpaid arrieries. Behind this, the IMF's position is that it doesn't want to get dragged into the whole mess, and that the IMF isn't a printing press at the beak and call of the ECB and the Eurozone. Both the latter go from the principle that Greece's debt is solvable on the long-term, despite its present and future debt ratio increasing. The IMF does not, and refuses to go further unless the partners consider relieving part of Greece's debt as a long-term solution.
Also, votes in Parliaments aren't even done yet. It takes only one Parliament refusing to ratify to fuck the whole thing up. Lagarde's declarations in interview might be a spark that will make the powerkeg explode in any of the hardliner countries' legislatures. If the IMF refuses to lend, who will put the compensating money forth? And clearily, the IMF will lend only conditional to considerations of relieving Greece's debt in part, which all hardliners so far, Germany on the forefront, staunchily and vocally refuse even to consider.
IMF's protests are not new. They have been saying this for a few weeks now. Lagarde was there in the Brussels marathon meeting. Hard to believe that she will overturn the entire thing a few days later. I don't think she wants to be remembered as the reason why Greece left the Euro. She will at least do the minimum to ensure that the deal won't fall through because of her.
I am not entirely convinced that the debt ratio is that big of a deal. It is just a number in the sky. Greece won't be able to get commercial financing any time soon. The EU will lend money to Greece regardless of that number. What really matters is how much interest that Greece needs to pay to service that debt. I have read somewhere that the interest is really low, way below market rate, and the maturities are already very long, like decades into the future.
Quote from: Admiral Yi on July 14, 2015, 05:44:52 PM
Raz, do me a favor and read the post Joan was responding to. I said "so" because "austerity increased Greece's debt/GDP" is not a response to the question who pays for nonausterity. It's totally orthogonal.
Second, watch your tenses. Joan said "austerity made the debt problem worse. I.e. in Greece's case it did. It does not in every case, which is what is connoted by you saying "austerity makes the debt problem worse. Bill Clinton austerely raised taxes, and the debt problem did not become worse. We austerely fell of the Fiscal Cliff and we austerely sequestered, and those did not make the debt problem worse. We austerely did not repeat Obamastimulus and that did not make the debt problem worse. Not all austerity makes the debt problem worse.
I think you are using the word "austerity" pretty broadly here. We are talking about Greece, and did the austerity programs decrease debt in Greece, not a slight decrease in spending in the US or the taxes for six guys in the US going up. If the question is "can you reduce the debt by not having massive stimulus package every year", then I don't think anyone will disagree with you. If when we talk about "austerity" we are talking about the programs enacted by the Greek government, you'll have fewer people agree with you. If it's true as JR says that not only did it increase debt but it was entirely predictable, why the fuck did they do it? Why did supergovermental entities push it, and why do they continue to push it? Why should the Greeks be grateful for being put through hell for no good reason?
I'm using austerity broadly because it's a broad word. Any decrease in government spending and/or increase in revenue fits the definition.
The US ran a deficit of 14% during Obamastimulus. The deficit has now shrunk to about 3.5. Feel free to explain to me how that's totally different than what Greece did. Or marginally different.
Quote from: Razgovory on July 14, 2015, 10:12:46 PMdid the austerity programs decrease debt in Greece
Yes. Just not in relation to GDP because it crashed that out. :P
http://www.nytimes.com/2015/07/15/upshot/the-imf-is-telling-europe-the-euro-doesnt-work.html?rref=homepage&module=Ribbon&version=origin®ion=Header&action=click&contentCollection=Home%20Page&pgtype=article&abt=0002&abg=0
QuoteThe I.M.F. Is Telling Europe the Euro Doesn't Work
It reads like a dry, 1,184-word memorandum about fiscal projections. But the International Monetary Fund's memo on Greek debt sustainability, explaining why the I.M.F. cannot participate in a new bailout program unless other European countries agree to huge debt relief for Greece, has provided the "Emperor Has No Clothes" moment of the Greek crisis, one that may finally force eurozone members to either move closer to fiscal union or break up.
The I.M.F. memo amounts to an admission that the eurozone cannot work in its current form. It lays out three options for achieving Greek debt sustainability, all of which are tantamount to a fiscal union, an arrangement through which wealthier countries would make payments to support the Greek economy. Not coincidentally, this is the solution many economists have been telling European officials is the only way to save the euro — and which northern European countries have been resisting because it is so costly.
The three options laid out by the I.M.F. would have different operations, but they share an important feature: They involve other European countries giving Greece money without expecting to get it back. These transfers would be additional to the approximately 86 billion euros in new loans contemplated in Monday's deal.
"Wait a minute," you might say. "The I.M.F. isn't calling for a fiscal union; it's calling for debt relief." But once a debt relief program becomes big enough, this becomes a distinction without a difference; they're both about other eurozone countries giving Greece money.
Indeed, one of the debt relief options proposed by the I.M.F. is "explicit annual transfers to the Greek budget," that is, direct payments from other governments to Greece, which it could use to make its debt payments. This, obviously, is a fiscal union.
A second option is extending the grace period, during which Greece would be relieved of the obligation to make interest or principal payments on its debt to European countries, through the year 2053. That's not a typo. Under this plan, Greece would make no more debt payments until Justin Bieber is 59 years old. This is a fiscal union by another name, since those lengthy and favorable credit terms would save the Greeks money at the expense of Greece's creditors, most of which now are other European governments or the I.M.F.
The third option floated by the I.M.F., a cancellation of a portion of Greece's debts, has been fiercely resisted by the German government, even though this is the option that least obviously constitutes a continuing fiscal union. Debt cancellation is a one-time fiscal transfer (if I lend you $100 and then forgive the debt, that's much like me simply giving you $100), but at least in theory it would be done only once, with Greece expected to stand on its own otherwise. The important exception is that Greece would still need to rely on European governments to lend it money at favorable rates, though not quite as favorable as under the Old Bieber scenario.
Unfortunately, however, this is not Greece's first bailout rodeo. Previous bailouts have had to be revised and enlarged, and as the I.M.F. notes in the section of its memo about "considerable downside risk," that could happen again. The plans for Greece to regain solvency rely on fast economic growth and sharp rises in labor productivity that outperform the rest of Europe — something that cannot be guaranteed. They also rely on the country's running a large primary surplus for an extended period — that is, collecting much more in taxes than it spends on government services, which typically does not prove popular with the voting public.
In other words, Europeans would have good reason to fear that a debt haircut given to Greece today would not be the last.
The memo makes clear what the real cost to Europe of continued eurozone membership for Greece is: If European governments want to keep Greece in, they're going to have to put up a lot of money in one non-loan form or another, money they will give Greece that they never get back.
Of course, the main alternative to a deal is a Greek exit from the euro, which would also be costly to European holders of existing Greek debt, who could expect to be repaid in devalued drachmas, if at all. That is a reason for European governments to be willing to pay the price prescribed by the I.M.F. to make a Greek deal work.
But the I.M.F. officials are saying they cannot pretend that a bailout deal will lead to an eventual payment in full from Greece. If Greece stays in the euro, it will need much more financial support from the rest of Europe than was admitted in Monday's deal, and the I.M.F. is asking European governments to put that admission on paper.
Quote from: Admiral Yi on July 15, 2015, 12:04:28 AM
I'm using austerity broadly because it's a broad word. Any decrease in government spending and/or increase in revenue fits the definition.
The US ran a deficit of 14% during Obamastimulus. The deficit has now shrunk to about 3.5. Feel free to explain to me how that's totally different than what Greece did. Or marginally different.
This is bit too broad, since it can refer to the government at pretty much any time. By this definition the US has been on a continuous track of "austerity" since it's founding. We generate much revenue then we did in 1790 or 1890 or even 1990.
As a percentage of GDP Raz.
Quote from: Admiral Yi on July 15, 2015, 01:57:45 AM
As a percentage of GDP Raz.
Okay, could you give me a good idea how many years the US was under "austerity" by your definition?
For what purpose?
http://money.cnn.com/2015/07/10/news/economy/greece-health-care-crisis/?sr=cnnitwr
QuoteInside Greece's health care crisis
Fakelaki means "little envelope" in Greek. As in a little envelope full of cash, given to a doctor in exchange for good care.
Sadly, it's a staple of the country's health care system.
"There are some doctors, even public health care doctors, who directly ask for money," Maro Kouri said. "They ask before running tests, they ask when you are supposed to get your results back," she said.
Fortunately for Kouri, Evangelisimos hospital in Athens is the exception.
Kouri was with her father at Evangelisimos. The day before, he had what felt like a heart attack and drove from his home town two hours away.
"In this hospital, doctors don't ask for money, this is a great hospital," Kouri said.
That alone illustrates the sorry state of Greece's hospitals.
In fact, experts say the country's health care system is on the brink of collapse. Government health spending fell 25% between 2009 and 2012, after the country's 2010 bailout package capped such spending.
Spending on drugs dropped by 32% since 2010. And the country owes international drug makers 1.1 billion euros ($1.2 billion), according to the European Federation of Pharmaceutical Industries and Associations.
With the country running out of cash, international organizations are warning that Greece could face medicine shortage within weeks.
Evangelisimos is the biggest hospital in Greece. With 1,000 beds, it is constantly running 10% to 20% over capacity.
The hospital resembles a massive maze, with tunnels and walkways connecting seven huge buildings. The narrow corridors are lined with patients in beds, most of them elderly people hooked to feeding tubes. Some are sleeping, others just stare into the ceiling.
They are waiting for hours for rooms to become available.
"There is just too many patients and not enough rooms," trainee nurse Anastasia Karkasina said.
Karkasina is three months away from becoming fully qualified. She is worried about getting a job.
"There are no available positions, because there is no money to pay for them," she said while taking a short break with fellow trainee Anna Karafoti in the sizzling heat outside the hospital. If the two manage to get jobs, they can expect monthly salaries of about 700 euros ($780).
Another young client of the hospital, 20-year-old Rigelda, sat waiting at one of the empty hospital beds on the fifth floor of the hospital. She came to the hospital with her mother, who -- she said -- "took too many pills."
"It wasn't exactly an accident," she said. She didn't want to go into details about what pushed her mother over the edge. "Family issues," she said. (CNNMoney is withholding the family's name.)
Her father is currently unemployed, so the atmosphere at home is tense. "My mother is a very emotional person. In Greece, right now, even very small things can make you feel hopeless," she said.
The number of suicides in Greece has increased. According to the British Medical Journal, the overall suicide rate rose by 35% between 2010, when the economic crisis first hit the country, and 2012.
The family traveled to Evangelisimos from Glyfada, which is around an hour away, because their local hospital wasn't accepting new patients.
Hospitals in Greece often have a policy of only accepting patients on "emergency days," two or three times a week. If it's not the right day, people who need medical attention have to travel to a different hospital.
The influx of patients puts extra pressure on the already struggling health care staff.
Surgeon George Kolovelonis works 10-hour shifts five days a week at Evangelisimos. Every couple of days, he is on call for 24-hour periods. His job is getting busier and busier.
"The number of patients is increasing, because people are no longer able to afford private care," Kolovelonis said.
Yet Kolovelonis' pay was cut from 2,200 to 1,500 euros a month in the last four years. On average, he performs three surgeries a day, spending six hours in the operating room.
On Sunday, he was doing breast cancer and bowel cancer operations and took a moment out for a Greek-style iced coffee and a cigarette -- Greece has the highest smoking rate in Europe.
"But don't get me wrong," he said between the sips, "I really, really like my job."
Clearly, what's needed are more budget cuts!
Quote from: Zanza on July 14, 2015, 02:38:09 PM
Now that's something Syriza should reform...
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fi.imgur.com%2FNwvOIXI.jpg&hash=1b9e6e1d349912c169e34459bfb23c9815d7b568)
The problem with Spain, and I suspect this will be Greece's case too, is that the bulk of benefit payments are directly correlated to how much you have contributed to the system. So, for example, the higher your salary, the more you have paid into payroll taxes, and the higher your unemployment insurance will be. Same with pensions; the more you earn during your active years, the more you have paid into SS, and the higher your pension will be.
Quote from: celedhring on July 15, 2015, 03:26:51 AM
The problem with Spain, and I suspect this will be Greece's case too, is that the bulk of benefit payments are directly correlated to how much you have contributed to the system. So, for example, the higher your salary, the more you have paid into payroll taxes, and the higher your unemployment insurance will be. Same with pensions; the more you earn during your active years, the more you have paid into SS, and the higher your pension will be.
There is an upper limit to that though right?
Ours works the same way and there's a cap. High-earning people often stop paying SS taxes partway through the year because they hit the annual max contribution.
Quote from: MadImmortalMan on July 15, 2015, 04:21:23 AM
Quote from: celedhring on July 15, 2015, 03:26:51 AM
The problem with Spain, and I suspect this will be Greece's case too, is that the bulk of benefit payments are directly correlated to how much you have contributed to the system. So, for example, the higher your salary, the more you have paid into payroll taxes, and the higher your unemployment insurance will be. Same with pensions; the more you earn during your active years, the more you have paid into SS, and the higher your pension will be.
There is an upper limit to that though right?
Ours works the same way and there's a cap. High-earning people often stop paying SS taxes partway through the year because they hit the annual max contribution.
There's a cap to pensions and insurance indeed, football managers don't go around getting hundreds of thousands in unemployment insurance if they get sacked :p
Obviously it's not working well enough in our case.
Ours works even better - there is no such thing as unemployment insurance :contract:
Mono, I checked about the statutes of the IMF lending to other countries. Seems that the IMF is also prohibited to lend to any country whose debt is considered unsustainable.
Since the IMF considers Greece debt to be unsustainable... well even if it pays its arrieries it still won't loan any money to Greece. A few accountant virtual transfers won't help in this case.
Quote from: Admiral Yi on July 15, 2015, 02:13:06 AM
For what purpose?
So as to understand the validity of your metric. If half the time we see increasing revenues as a % of Austerity, then you metric still needs work. We can't have "austerity" to mean " the way government functions almost all the time, can we? That makes the word useless.
Quote from: Monoriu on July 15, 2015, 04:32:46 AM
Ours works even better - there is no such thing as unemployment insurance :contract:
Yes, we already know that you don't care about others. Bit tiresome to continue to post that over and over in different ways.
Quote from: Drakken on July 15, 2015, 07:09:15 AM
Mono, I checked about the statutes of the IMF lending to other countries. Seems that the IMF is also prohibited to lend to any country whose debt is considered unsustainable.
Since the IMF considers Greece debt to be unsustainable... well even if it pays its arrieries it still won't loan any money to Greece. A few accountant virtual transfers won't help in this case.
If there is a political need to lend to Greece, the IMF will find a way. Call it sustainable tomorrow. Just a matter of writing another memo. Or they can set up a special purpose fund. Lend to that fund, which will lend to Greece. The possibilities are endless. If they want to do it, they'll find a way, and mere regulations will not stand in the way.
Quote from: Monoriu on July 15, 2015, 04:32:46 AM
Ours works even better - there is no such thing as unemployment insurance :contract:
Hong Kong has social and income discrepancies that would be unacceptable in a democracy. Your system does not work better, the people are just not able to change it.
Quote from: Zanza on July 15, 2015, 09:23:45 AM
Quote from: Monoriu on July 15, 2015, 04:32:46 AM
Ours works even better - there is no such thing as unemployment insurance :contract:
Hong Kong has social and income discrepancies that would be unacceptable in a democracy. Your system does not work better, the people are just not able to change it.
That is correct :yes:
Quote from: Drakken on July 14, 2015, 09:34:52 PM
Quote from: Monoriu on July 14, 2015, 09:30:20 PM
That's not impossible to solve. Euro group gives money to Greece so that Greece can repay its arrears to IMF immediately. IMF then lends a fresh round of money to Greece, part of which is to entirely repay the loan that I mentioned a sentence ago. Just a few accounting entries. There, no rule has been broken.
I feel Lagarde's unwillingness to intervene stems from much deeper reasons that the mere legalism of unpaid arrieries. Behind this, the IMF's position is that it doesn't want to get dragged into the whole mess, and that the IMF isn't a printing press at the beak and call of the ECB and the Eurozone. Both the latter go from the principle that Greece's debt is solvable on the long-term, despite its present and future debt ratio increasing. The IMF does not, and refuses to go further unless the partners consider relieving part of Greece's debt as a long-term solution.
Also, votes in Parliaments aren't even done yet. It takes only one Parliament refusing to ratify to fuck the whole thing up. Lagarde's declarations in interview might be a spark that will make the powerkeg explode in any of the hardliner countries' legislatures. If the IMF refuses to lend, who will put the compensating money forth? And clearily, the IMF will lend only conditional to considerations of relieving Greece's debt in part, which all hardliners so far, Germany on the forefront, staunchily and vocally refuse even to consider.
Yep, Lagarde is willing to say this is no solution and is bound to fail. Someone at the IMF must have been reading our comments on Languish :D
Every article written about this should have a paragraph dedicated to reminding people that Greece is a Balkan country.
Quote from: alfred russel on July 15, 2015, 10:39:42 AM
Every article written about this should have a paragraph dedicated to reminding people that Greece is a Balkan country.
What's wrong with Balkan countries? :unsure:
Quote from: MadImmortalMan on July 15, 2015, 04:21:23 AM
Quote from: celedhring on July 15, 2015, 03:26:51 AM
The problem with Spain, and I suspect this will be Greece's case too, is that the bulk of benefit payments are directly correlated to how much you have contributed to the system. So, for example, the higher your salary, the more you have paid into payroll taxes, and the higher your unemployment insurance will be. Same with pensions; the more you earn during your active years, the more you have paid into SS, and the higher your pension will be.
There is an upper limit to that though right?
Ours works the same way and there's a cap. High-earning people often stop paying SS taxes partway through the year because they hit the annual max contribution.
Incidentally this is one of the reasons why I get a good laugh when our conservative government crows about "reforms". Pushing retirement age to 67 and capping yearly pension increases are just accounting bandaids. Something more meaningful like looking at how pensions are calculated and how can we focus resources on those who need the most instead of wholesale cuts to the whole system? No man, that would be HARD.
Quote from: Monoriu on July 15, 2015, 10:51:50 AM
Quote from: alfred russel on July 15, 2015, 10:39:42 AM
Every article written about this should have a paragraph dedicated to reminding people that Greece is a Balkan country.
What's wrong with Balkan countries? :unsure:
No respect for the rule of law.
Quote from: Grey Fox on July 15, 2015, 11:02:28 AM
Quote from: Monoriu on July 15, 2015, 10:51:50 AM
Quote from: alfred russel on July 15, 2015, 10:39:42 AM
Every article written about this should have a paragraph dedicated to reminding people that Greece is a Balkan country.
What's wrong with Balkan countries? :unsure:
No respect for the rule of law.
I was thinking more along the lines of "not really europe". I mean, if you start talking about countries like Albania, Macedonia, and Bosnia and Herzegovina not having the status of France, Germany, Spain, etc. in the European Project, very few freak out that you are undermining the project by having a Europe at Two Speeds or something.
Greece had a good run a bit more than 2,000 years ago, but that isn't a reason to think they are typical europeans now. This thinking isn't new: see the post WWI decision to give them a part of Anatolia, and look at what happened there.
Greece should have marched on Constantinople instead.
Quote from: Valmy on July 15, 2015, 12:52:51 PM
Greece should have marched on Constantinople instead.
Instead they dicked around, committed some atrocities, their king got bit by a monkey, they started bickering amongst themselves, and then they got their butts spanked.
Basically what you would expect from a Balkan country given a windfall.
Quote from: Razgovory on July 15, 2015, 07:38:26 AM
So as to understand the validity of your metric. If half the time we see increasing revenues as a % of Austerity, then you metric still needs work. We can't have "austerity" to mean " the way government functions almost all the time, can we? That makes the word useless.
It definitely undercuts the thesis that austerity inevitably leads to catastrophe.
As I said before, feel free to explain what you think "real" austerity is.
Quote from: Admiral Yi on July 15, 2015, 02:11:38 PM
Quote from: Razgovory on July 15, 2015, 07:38:26 AM
So as to understand the validity of your metric. If half the time we see increasing revenues as a % of Austerity, then you metric still needs work. We can't have "austerity" to mean " the way government functions almost all the time, can we? That makes the word useless.
It definitely undercuts the thesis that austerity inevitably leads to catastrophe.
As I said before, feel free to explain what you think "real" austerity is.
Those debt reduction schemes used by the governments of Greece, Italy, Ireland, Portugal, France, the UK, Germany and Spain, beginning in 2009. This may not be the comprehensive definition, but seems the most Germaine to this discussion.
Quote from: alfred russel on July 15, 2015, 12:58:42 PM
Quote from: Valmy on July 15, 2015, 12:52:51 PM
Greece should have marched on Constantinople instead.
Instead they dicked around, committed some atrocities, their king got bit by a monkey, they started bickering amongst themselves, and then they got their butts spanked.
Basically what you would expect from a Balkan country given a windfall.
Never underestimate the monkey.
Quote from: Razgovory on July 15, 2015, 02:46:15 PM
Those debt reduction schemes used by the governments of Greece, Italy, Ireland, Portugal, France, the UK, Germany and Spain, beginning in 2009. This may not be the comprehensive definition, but seems the most Germaine to this discussion.
Does your concept of austerity attach to the schemes, or to the countries?
Because if it's the first, there's no reason to exclude countries like the US, who similarly reduced spending and/or raised taxes.
Quote from: Malthus on July 15, 2015, 02:48:37 PM
Quote from: alfred russel on July 15, 2015, 12:58:42 PM
Quote from: Valmy on July 15, 2015, 12:52:51 PM
Greece should have marched on Constantinople instead.
Instead they dicked around, committed some atrocities, their king got bit by a monkey, they started bickering amongst themselves, and then they got their butts spanked.
Basically what you would expect from a Balkan country given a windfall.
Never underestimate the monkey.
Indeed. There is a case that the 2500 year history of Greeks in Western Anatolia was ended because of a monkey bite.
Quote from: Admiral Yi on July 15, 2015, 02:53:07 PM
Quote from: Razgovory on July 15, 2015, 02:46:15 PM
Those debt reduction schemes used by the governments of Greece, Italy, Ireland, Portugal, France, the UK, Germany and Spain, beginning in 2009. This may not be the comprehensive definition, but seems the most Germaine to this discussion.
Does your concept of austerity attach to the schemes, or to the countries?
Because if it's the first, there's no reason to exclude countries like the US, who similarly reduced spending and/or raised taxes.
I think scale makes a difference. Three guys who now have to pay slightly higher taxes doesn't really make austerity. I would not consider the "fiscal cliff", austerity as it wasn't really a deliberate scheme but rather failure of compromise. In a discussion about Greece and more broadly the Eurozone I think when we refer to Austerity we refer to Greece and more broadly the Eurozone or perhaps the European Union not the US having slightly higher tax revenue then it did the previous year. So in this thread when someone says Austerity failed, they are talking the Greek debt reduction scheme or similar ones enacted in the EU and not the US reducing defict in 1998 or the personal austerity of monks.
Greek parliament has passed the reform bills. Tsipras, as expected, relied on opposition support. Some of his own MPs rebelled.
I wonder what makes the Greeks convinced that Grexit is the greater evil. These are the people who elected an explicitly anti-austerity far left party to take power, held a referendum on the rescue package at the risk of angering everybody else in Europe, voted "no" in defiance, then within a week, folded to creditor demands that are even harsher than the original proposals. They seem convinced that Grexit means ruin. Maybe they are right, but what makes them think that way?
Quote from: Razgovory on July 15, 2015, 03:14:37 PM
I think scale makes a difference. Three guys who now have to pay slightly higher taxes doesn't really make austerity. I would not consider the "fiscal cliff", austerity as it wasn't really a deliberate scheme but rather failure of compromise. In a discussion about Greece and more broadly the Eurozone I think when we refer to Austerity we refer to Greece and more broadly the Eurozone or perhaps the European Union not the US having slightly higher tax revenue then it did the previous year. So in this thread when someone says Austerity failed, they are talking the Greek debt reduction scheme or similar ones enacted in the EU and not the US reducing defict in 1998 or the personal austerity of monks.
If you want scale, how about an $800 billion stimulus package?
I don't see what difference a "deliberate scheme" vs. "failure of compromise" makes. Aggregate demand is aggregate demand whether it's the result of a "deliberate scheme" or a "failure of compromise."
Furthermore, operating just with your own narrow definition of austerity, the UK has among the highest growth rates in Europe, it has stabilized debt/GDP at 90%, and it has preserved its credit rating and is currently paying about 1.5% on long term bonds.
So no, you can't say "austerity doesn't work."
Quote from: Monoriu on July 15, 2015, 07:33:02 PM
Greek parliament has passed the reform bills. Tsipras, as expected, relied on opposition support. Some of his own MPs rebelled.
I wonder what makes the Greeks convinced that Grexit is the greater evil. These are the people who elected an explicitly anti-austerity far left party to take power, held a referendum on the rescue package at the risk of angering everybody else in Europe, voted "no" in defiance, then within a week, folded to creditor demands that are even harsher than the original proposals. They seem convinced that Grexit means ruin. Maybe they are right, but what makes them think that way?
Essentially, they fear that, while Grexit will eliminate debt, it will also eliminate savings. Anyone on a fixed income (e.g. pensioners) would have their incomes converted to a fixed number of Drachma, and soon would be worth a fraction of their current value. Ditto bank accounts. Personally, I think it's a bullet they have to bite, but maybe a miracle will happen and they can recover inside the Eurozone.
Quote from: Admiral Yi on July 15, 2015, 09:32:50 PM
Quote from: Razgovory on July 15, 2015, 03:14:37 PM
I think scale makes a difference. Three guys who now have to pay slightly higher taxes doesn't really make austerity. I would not consider the "fiscal cliff", austerity as it wasn't really a deliberate scheme but rather failure of compromise. In a discussion about Greece and more broadly the Eurozone I think when we refer to Austerity we refer to Greece and more broadly the Eurozone or perhaps the European Union not the US having slightly higher tax revenue then it did the previous year. So in this thread when someone says Austerity failed, they are talking the Greek debt reduction scheme or similar ones enacted in the EU and not the US reducing defict in 1998 or the personal austerity of monks.
If you want scale, how about an $800 billion stimulus package?
I don't see what difference a "deliberate scheme" vs. "failure of compromise" makes. Aggregate demand is aggregate demand whether it's the result of a "deliberate scheme" or a "failure of compromise."
Furthermore, operating just with your own narrow definition of austerity, the UK has among the highest growth rates in Europe, it has stabilized debt/GDP at 90%, and it has preserved its credit rating and is currently paying about 1.5% on long term bonds.
So no, you can't say "austerity doesn't work."
When did Britain stabilize debt/GDP? This year? Was it before or after the British government declare Austerity to be a failure? The difference between, "deliberate scheme" and "failure of compromise" is one of intent. A policy of Austerity implies intention. You can't have policy by happenstance.
When did the UK declare austerity a failure? It has worked for them and the government just got re-elected.
I missed that declaration of failure too.
So presumably if Greece had cut pensions by happenstance instead of on purpose, their economy would be hunky-dory right now?
Incidentally, the reason there wasn't a second Obamastimulus and the reason there was a sequester was concern about the debt.
I took at look at Britain's historical debt/GDP, and was surprised how low it was until fairly recently.
Our debt was around 30-40% until fun times started.
I remember analysts in 2008 saying we were in good shape to face the recession because of our low public indebtedness. Heh.
http://www.theatlantic.com/business/archive/2015/07/greece-crisis-banks-greedy/398603/?utm_source=SFFB
QuoteBlame the Banks
Why is Greece chastised for reckless borrowing while the financial institutions that profited for years seem to get off scot-free?
One of the first lessons I was taught on Wall Street was, "Know who the fool is." That was the gist of it. The more detailed description, yelled at me repeatedly was, "Know who the fucking idiot with the money is and cram as much toxic shit down their throat as they can take. But be nice to them first."
When I joined in Salomon Brothers in '93, Japanese customers (mostly smaller banks and large industrial companies) were considered the fool. My first five years were spent constructing complex financial products, ones with huge profit margins for us—"toxic waste" in Wall Street lingo—to sell to them. By the turn of the century many of those customers had collapsed, partly from the toxic waste we sold them, partly from all the other crazy things they were buying.
The launch of the common European currency, the euro, ushered in a period of European financial confidence, and we on Wall Street started to take advantage of another willing fool: European banks. More precisely northern European banks.
From '02 until the financial crisis in '08, Wall Street shoved as much toxic waste down those banks' throats as they could handle. It wasn't hard. Like the Japanese customers before them, the European banks were hell bent on indiscriminately buying assets from all over the globe.
They were so willing, and had such an appetite, that Wall Street helped hedge funds construct specially engineered products to sell to them, made of the most broken and risky subprime mortgages. These products—the banks called them "monstrosities" and later the media dubbed them as "rigged to fail"—only would have been created if they had reckless buyers, and the European banks were often those buyers.
When a bank buys an asset it is lending money; the seller is the borrower.In buying various assets European banks were doing what banks are supposed to do: lending. But by doing so without caution they were doing exactly what banks are not supposed to do: lending recklessly.
The European banks weren't lending recklessly to only the U.S. They were also aggressively lending within Europe, including to the governments of Spain, Portugal, and Greece.
In 2008, when the U.S. housing market collapsed, the European banks lost big. They mostly absorbed those losses and focused their attention on Europe, where they kept lending to governments—meaning buying those countries' debt—even though that was looking like an increasingly foolish thing to do: Many of the southern countries were starting to show worrying signs.
By 2010 one of those countries—Greece—could no longer pay its bills. Over the prior decade Greece had built up massive debt, a result of too many people buying too many things, too few Greeks paying too few taxes, and too many promises made by too many corrupt politicians, all wrapped in questionable accounting. Yet despite clear problems, bankers had been eagerly lending to Greece all along.
That 2010 Greek crisis was temporarily muzzled by an international bailout, which imposed on Greece severe spending constraints. This bailout gave Greece no debt relief, instead lending them more money to help pay off their old loans, allowing the banks to walk away with few losses. It was a bailout of the banks in everything but name.
Greece has struggled immensely since then, with an economic collapse of historic proportion, the human costs of which can only be roughly understood. Greece needed another bailout in 2012, and yet again this week.
While the Greeks have suffered, the northern banks have yet to account financially, legally, or ethically, for their reckless decisions. Further, by bailing out the banks in 2010, rather than Greece, the politicians transferred any future losses from Greece to the European public. It was a bait-and-switch rife with a nationalist sentiment that has corrupted the dialogue since: Don't look at our reckless banks; look at their reckless borrowing.
* * *
The European Union started with an economic agreement on coal and steel and good intentions. It was, at least in part, an attempt to diminish through shared economic incentives the nationalism that had led to past wars.
The economic unification became a currency union in 1999 with the creation of the euro zone. The common currency was adopted despite a lack of political union, a sequence which many at the time described as putting the cart before the horses.
Along with the common currency came a wave of regulatory changes that provided the banking sector with more opportunities for growth—and the chance to become the fool. The rule changes enabled the banks to treat the debt of all euro zone countries equally; Greece, as far as the rules were concerned, had the same risk as Germany.
The markets had thought differently, with Greece having to pay more to borrow than countries such as Germany. The northern banks, seeing easy money, started lending to Greece, happily receiving higher fees for the "same risk."
It was the beginning of a self-fulfilling feedback loop with the banks at the center. Southern Europe (especially Greece), started borrowing more, allowing them to buy more, which caused them to grow, which collapsed the cost of their borrowing, with led them to borrow more, and so on.
The buying spree benefited everyone, especially the northern European countries. The South boomed as things got built and bought, and the North boomed as factories churned out products to sell to the South. The banks sat in the middle, happily taking a spread.
This feedback loop was uniquely European, dependent on the false sense of stability provided by a common currency, which amplified the bankers' naive belief that a country could not default.
This loop kept going until the sheer weight of the debt amassed by Greece became too huge for the markets to ignore. It kept going until the markets, shocked by the U.S. housing crisis, prompted skepticism, which forced Greek borrowing fees to rise. The European banks, in too deep to stop, were still willing to lend, but others less so.
By 2010 this could go on no more. The markets refused to lend more to Greece and a bailout was necessary.
But the bailout was primarily focused on saving the banks, not Greece: Rather than forgive a portion of the Greek debt and hand the banks a loss, Greece was to continue paying its bills. New money was lent by a variety of public sector entities (i.e.The European Commission, the IMF, and the European Central Bank) to pay off the old bills. The banks were consequently made whole, with most of the money from the new loans passing through Greece right back to the banks. For acting as a conduit to a northern European bank bailout, Greece was asked to change its ways—to spend less, tax more, and restructure the public sector.
This did not work. Greece was plunged into an even more dire depression. Two years later it was once again unable to pay its bill and required a new bailout. This time Greece's debt was cut, roughly by 40 percent, but by then the banks had far less to lose, with many of the loans having already matured and been fully paid.
That first furtive bailout of the banks in 2010 introduced and encouraged a narrative of southern borrowers as the victims of only their own incompetence, sloth, and greed. It allowed the banks to play the role of upset parents to immature children.
That narrative was further encouraged and politicized by passing any future losses from Greece onto the European public, mostly the northern European public, encouraging an us-versus-them mentality. It was policy dressed in nationalism: the antithesis of everything the common currency was supposed to stand for.
Why were the banks, rather than Greece, bailed out in 2010? Why was Greece asked to change its ways and accused of reckless borrowing, rather than the banks accused of reckless lending?
One argument was that Europe was still not closely aligned enough, their regulators not coordinated enough, to pull off such an operation. The louder argument was that the European banks were too vulnerable, fragile, and essential, to suffer losses. Those losses would of propagated around Europe, collapsing other banks and other countries and, ultimately, breaking up the euro zone.
That argument continued: The banks were too central to the operation and health of the economy, no matter how recklessly they had behaved, to punish with losses. It is an argument one hears during a crisis in order to justify bank bailouts, to justify favoring the creditors over the lenders. It is a strong argument—because it is true.
Consequently it is also the strongest and best argument for why banks should be heavily regulated and controlled in the first place: to prevent exactly that sort of behavior—before it destroys countries and economies.
* * *
Politicians, regulators, and bankers can calculate the immediate costs of bank failures. They can't calculate the longer-term human toll that follows.
Greece is experiencing immense pain from a depression greater than that of the U.S. in the '30s. Poverty, homelessness, suicide, addiction—all have risen. A generation has seen the present diminished, and the future diminished even more.
It is a sad instance of a time-old routine: When lenders and borrowers are at odds, it is the borrowers who are blamed and the borrowers who suffer.
The reason the bankers lent money to Greece is because as part of the Eurozone they figured it was a safe bet. It all gets tagged as 'reckless' but there are not just a ton of fail-safe places to park money.
I mean geez if buying government bonds is criminally reckless what exactly are bankers supposed to do? Invest in jars to bury in the backyard?
And color me skeptical the Euros do not heavily regulate and control their banks. If they don't nobody does.
QuoteIt is a sad instance of a time-old routine: When lenders and borrowers are at odds, it is the borrowers who are blamed and the borrowers who suffer.
Bullshit. Borrowers are excellent at defaulting and printing increasingly worthless money to screw over the lenders. What a bunch of nonsense.
Just the Greeks cannot do this because of their agreements that nobody held a gun to their heads and forced them to enter into.
Banks can do what they want, I have no right to tell them what to do. Now governments on the other hand...
Quote from: grumbler on July 15, 2015, 09:37:58 PM
Quote from: Monoriu on July 15, 2015, 07:33:02 PM
Greek parliament has passed the reform bills. Tsipras, as expected, relied on opposition support. Some of his own MPs rebelled.
I wonder what makes the Greeks convinced that Grexit is the greater evil. These are the people who elected an explicitly anti-austerity far left party to take power, held a referendum on the rescue package at the risk of angering everybody else in Europe, voted "no" in defiance, then within a week, folded to creditor demands that are even harsher than the original proposals. They seem convinced that Grexit means ruin. Maybe they are right, but what makes them think that way?
Essentially, they fear that, while Grexit will eliminate debt, it will also eliminate savings. Anyone on a fixed income (e.g. pensioners) would have their incomes converted to a fixed number of Drachma, and soon would be worth a fraction of their current value. Ditto bank accounts. Personally, I think it's a bullet they have to bite, but maybe a miracle will happen and they can recover inside the Eurozone.
Right now their best option is the one set out by the IMF yesterday - a restructuring/partial elimination of the debt so that Greece has a reasonable probability of becoming solvent within the Eurozone. If that doesn't occur then I agree, they will have to exit and bite the devaluation bullet.
Quote from: Admiral Yi on July 16, 2015, 06:34:26 AM
I missed that declaration of failure too.
So presumably if Greece had cut pensions by happenstance instead of on purpose, their economy would be hunky-dory right now?
Incidentally, the reason there wasn't a second Obamastimulus and the reason there was a sequester was concern about the debt.
I seem to have misremembered the UK bit. If Greece cut pensions do to failure of the political situation would not be good, it would still be a failure.
Quote from: Syt on July 16, 2015, 09:31:41 AM
QuoteBlame the Banks
Why is Greece chastised for reckless borrowing while the financial institutions that profited for years seem to get off scot-free?
Trying to keep the damage away from the depositors, I suppose. Also prevent bank runs. I wonder how necessary that would have been if there weren't so few banks.
Quote from: crazy canuck on July 16, 2015, 10:59:29 AM
Right now their best option is the one set out by the IMF yesterday - a restructuring/partial elimination of the debt so that Greece has a reasonable probability of becoming solvent within the Eurozone. If that doesn't occur then I agree, they will have to exit and bite the devaluation bullet.
That's the best option for Greece, but it isn't their option. It's the creditors' option. Now, given that the result of Grexit is likely a default and the creditors taking a near-100% haircut, it's the best option for them as well, but I am not sure they'll see it that way, given the potential for a demand on the part of the other heavily-indebted countries for their haircut, as well.
The best overall solution may be a plan that includes both debt forgiveness and a phased Grexit. The latter would deter others from demanding it, and the timing could help make the transition tolerable. I just don't think the Greek economy can compete with other euro economies for both cultural and resource reasons.
Quote from: grumbler on July 16, 2015, 06:11:34 PM
Quote from: crazy canuck on July 16, 2015, 10:59:29 AM
Right now their best option is the one set out by the IMF yesterday - a restructuring/partial elimination of the debt so that Greece has a reasonable probability of becoming solvent within the Eurozone. If that doesn't occur then I agree, they will have to exit and bite the devaluation bullet.
That's the best option for Greece, but it isn't their option. It's the creditors' option. Now, given that the result of Grexit is likely a default and the creditors taking a near-100% haircut, it's the best option for them as well, but I am not sure they'll see it that way, given the potential for a demand on the part of the other heavily-indebted countries for their haircut, as well.
Greece's best option is to stay in the Eurozone long enough to give the other Eurozone countries long enough to realize that the IMF proposition is the best option for them all. ;)
QuoteThe best overall solution may be a plan that includes both debt forgiveness and a phased Grexit. The latter would deter others from demanding it, and the timing could help make the transition tolerable. I just don't think the Greek economy can compete with other euro economies for both cultural and resource reasons.
Probably the best solution from the point of view of a German technocrat who has a fear of moral contagion. Not so good for a Greek pensioner.
Quote from: Admiral Yi on July 15, 2015, 09:32:50 PM
Furthermore, operating just with your own narrow definition of austerity, the UK has among the highest growth rates in Europe, it has stabilized debt/GDP at 90%, and it has preserved its credit rating and is currently paying about 1.5% on long term bonds.
So no, you can't say "austerity doesn't work."
Didn't the UK economy only start to grow after they eased off on the austerity?
Quote from: jimmy olsen on July 16, 2015, 10:04:37 PM
Didn't the UK economy only start to grow after they eased off on the austerity?
Never heard anything like this.
Pretty please with a cherry on top Timmy, put a hard return after you quote someone.
Quote from: jimmy olsen on July 16, 2015, 10:04:37 PM
Quote from: Admiral Yi on July 15, 2015, 09:32:50 PM
Furthermore, operating just with your own narrow definition of austerity, the UK has among the highest growth rates in Europe, it has stabilized debt/GDP at 90%, and it has preserved its credit rating and is currently paying about 1.5% on long term bonds.
So no, you can't say "austerity doesn't work."
Didn't the UK economy only start to grow after they eased off on the austerity?
I'd say that Osborne's bark was worse than his bite, "austerity" has been pretty limited in these parts imo, borrowing has slowly fallen to about 4.4% of GDP pa..........with growth rates of 2.5 - 3.0% and core inflation of a couple of % that is hardly a problem of course.
Quote from: crazy canuck on July 16, 2015, 10:59:29 AM
Right now their best option is the one set out by the IMF yesterday - a restructuring/partial elimination of the debt so that Greece has a reasonable probability of becoming solvent within the Eurozone. If that doesn't occur then I agree, they will have to exit and bite the devaluation bullet.
there's no one stopping the IMF from making an example and eliminating the debt the Greeks have with it.
Quote from: jimmy olsen on July 16, 2015, 10:04:37 PM
Quote from: Admiral Yi on July 15, 2015, 09:32:50 PM
Furthermore, operating just with your own narrow definition of austerity, the UK has among the highest growth rates in Europe, it has stabilized debt/GDP at 90%, and it has preserved its credit rating and is currently paying about 1.5% on long term bonds.
So no, you can't say "austerity doesn't work."
Didn't the UK economy only start to grow after they eased off on the austerity?
Osborne reduced the level of cuts quite quickly once the economy began to sputter badly in 2011/12 (I think then). In the end by 2015, he implemented the pace of cuts recommended by Labour.
Quote from: Crazy_Ivan80 on July 17, 2015, 02:19:09 AM
Quote from: crazy canuck on July 16, 2015, 10:59:29 AM
Right now their best option is the one set out by the IMF yesterday - a restructuring/partial elimination of the debt so that Greece has a reasonable probability of becoming solvent within the Eurozone. If that doesn't occur then I agree, they will have to exit and bite the devaluation bullet.
there's no one stopping the IMF from making an example and eliminating the debt the Greeks have with it.
If only that was true
Quote from: crazy canuck on July 17, 2015, 07:24:22 AM
Quote from: Crazy_Ivan80 on July 17, 2015, 02:19:09 AM
Quote from: crazy canuck on July 16, 2015, 10:59:29 AM
Right now their best option is the one set out by the IMF yesterday - a restructuring/partial elimination of the debt so that Greece has a reasonable probability of becoming solvent within the Eurozone. If that doesn't occur then I agree, they will have to exit and bite the devaluation bullet.
there's no one stopping the IMF from making an example and eliminating the debt the Greeks have with it.
If only that was true
in which case they need to keep their mouth shut.
Quote from: Crazy_Ivan80 on July 17, 2015, 07:42:09 AM
Quote from: crazy canuck on July 17, 2015, 07:24:22 AM
Quote from: Crazy_Ivan80 on July 17, 2015, 02:19:09 AM
Quote from: crazy canuck on July 16, 2015, 10:59:29 AM
Right now their best option is the one set out by the IMF yesterday - a restructuring/partial elimination of the debt so that Greece has a reasonable probability of becoming solvent within the Eurozone. If that doesn't occur then I agree, they will have to exit and bite the devaluation bullet.
there's no one stopping the IMF from making an example and eliminating the debt the Greeks have with it.
If only that was true
in which case they need to keep their mouth shut.
What do you think is the role of the IMF?