If the Greek government is for it, then it's probably a bad idea. :hmm:
http://www.spiegel.de/international/europe/0,1518,761201,00.html
Quote
05/06/2011
Athens Mulls Plans for New Currency
Greece Considers Exit from Euro Zone
By Christian Reiermann
REUTERS
A protest against austerity measures in Athens. Greece is considering leaving the euro zone, according to sources in the German government.
The debt crisis in Greece has taken on a dramatic new twist. Sources with information about the government's actions have informed SPIEGEL ONLINE that Athens is considering withdrawing from the euro zone. The common currency area's finance ministers and representatives of the European Commission are holding a secret crisis meeting in Luxembourg on Friday night.
Info
Greece's economic problems are massive, with protests against the government being held almost daily. Now Prime Minister George Papandreou apparently feels he has no other option: SPIEGEL ONLINE has obtained information from German government sources knowledgeable of the situation in Athens indicating that Papandreou's government is considering abandoning the euro and reintroducing its own currency.
Alarmed by Athens' intentions, the European Commission has called a crisis meeting in Luxembourg on Friday night. The meeting is taking place at Château de Senningen, a site used by the Luxembourg government for official meetings. In addition to Greece's possible exit from the currency union, a speedy restructuring of the country's debt also features on the agenda. One year after the Greek crisis broke out, the development represents a potentially existential turning point for the European monetary union -- regardless which variant is ultimately decided upon for dealing with Greece's massive troubles.
Given the tense situation, the meeting in Luxembourg has been declared highly confidential, with only the euro-zone finance ministers and senior staff members permitted to attend. Finance Minister Wolfgang Schäuble of Chancellor Angela Merkel's conservative Christian Democratic Union (CDU) and Jörg Asmussen, an influential state secretary in the Finance Ministry, are attending on Germany's behalf.
'Considerable Devaluation'
Sources told SPIEGEL ONLINE that Schäuble intends to seek to prevent Greece from leaving the euro zone if at all possible. He will take with him to the meeting in Luxembourg an internal paper prepared by the experts at his ministry warning of the possible dire consequences if Athens were to drop the euro.
"It would lead to a considerable devaluation of the new (Greek) domestic currency against the euro," the paper states. According to German Finance Ministry estimates, the currency could lose as much as 50 percent of its value, leading to a drastic increase in Greek national debt. Schäuble's staff have calculated that Greece's national deficit would rise to 200 percent of gross domestic product after such a devaluation. "A debt restructuring would be inevitable," his experts warn in the paper. In other words: Greece would go bankrupt.
It remains unclear whether it would even be legally possible for Greece to depart from the euro zone. Legal experts believe it would also be necessary for the country to split from the European Union entirely in order to abandon the common currency. At the same time, it is questionable whether other members of the currency union would actually refuse to accept a unilateral exit from the euro zone by the government in Athens.
What is certain, according to the assessment of the German Finance Ministry, is that the measure would have a disastrous impact on the European economy.
"The currency conversion would lead to capital flight," they write. And Greece might see itself as forced to implement controls on the transfer of capital to stop the flight of funds out of the country. "This could not be reconciled with the fundamental freedoms instilled in the European internal market," the paper states. In addition, the country would also be cut off from capital markets for years to come.
In addition, the withdrawal of a country from the common currency union would "seriously damage faith in the functioning of the euro zone," the document continues. International investors would be forced to consider the possibility that further euro-zone members could withdraw in the future. "That would lead to contagion in the euro zone," the paper continues.
Banks at Risk
Moreover, should Athens turn its back on the common currency zone, it would have serious implications for the already wobbly banking sector, particularly in Greece itself. The change in currency "would consume the entire capital base of the banking system and the country's banks would be abruptly insolvent." Banks outside of Greece would suffer as well. "Credit institutions in Germany and elsewhere would be confronted with considerable losses on their outstanding debts," the paper reads.
The European Central Bank (ECB) would also feel the effects. The Frankfurt-based institution would be forced to "write down a significant portion of its claims as irrecoverable." In addition to its exposure to the banks, the ECB also owns large amounts of Greek state bonds, which it has purchased in recent months. Officials at the Finance Ministry estimate the total to be worth at least €40 billion ($58 billion) "Given its 27 percent share of ECB capital, Germany would bear the majority of the losses," the paper reads.
In short, a Greek withdrawal from the euro zone and an ensuing national default would be expensive for euro-zone countries and their taxpayers. Together with the International Monetary Fund, the EU member states have already pledged €110 billion ($159.5 billion) in aid to Athens -- half of which has already been paid out.
"Should the country become insolvent," the paper reads, "euro-zone countries would have to renounce a portion of their claims."
Bring back the Franc. And the Reichmark.
Glad we didn't join that crap.
I don't see what objections Sweden could have to European policy. I mean, really, every stupid thing that the EU does, Sweden does worse.
How would they tell whether one Euro is a Greek Euro rather then say a French Euro or German Euro?
The Euro zone (and the EU for that matter) would have worked a lot better if it was just France, Germany and the BeneLux.
Quote from: Razgovory on May 07, 2011, 11:10:37 AM
The Euro zone (and the EU for that matter) would have worked a lot better if it was just France, Germany and the BeneLux.
Even that would have been difficult - France likes to use monetary tools to stimulate the economy, while Germany places a strong focus on keeping inflation as low as possible.
The French surrender all the time too.
If only divine Xerxes had won. :(
So, what will the global economic repercussions be to this?
Quote from: jimmy olsen on May 08, 2011, 12:46:54 AM
So, what will the global economic repercussions be to this?
Ouch. Harsh, man.
Quote from: jimmy olsen on May 08, 2011, 12:46:54 AM
So, what will the global economic repercussions be to this?
Nobody knows.
European economies will take a slight hit as they build a wall along the Greek border.
Quote from: jimmy olsen on May 08, 2011, 12:46:54 AM
So, what will the global economic repercussions be to this?
Doesn't the article you posted already answer this question?
Tim only reads the titles of his articles :D
Quote from: Zanza2 on May 08, 2011, 12:50:35 PM
Quote from: jimmy olsen on May 08, 2011, 12:46:54 AM
So, what will the global economic repercussions be to this?
Doesn't the article you posted already answer this question?
I want Minsky's opinion. :contract:
Well now, Greece has a GNP somewhat smaller than New Jersey's............so who gives a shit?
OTOH I guess we can set up some sort of fiscal domino theory that could be consequential :hmm:
It's a rather weak plan, though.
We have debts. In Euros.
Hmm. If we get a new currency and stop using Euros...?
Good idea! Let's do that! Tie it to kalamata olives and yoghurt!
Quote from: Richard Hakluyt on May 08, 2011, 07:00:47 PMOTOH I guess we can set up some sort of fiscal domino theory that could be consequential :hmm:
That's the only reason anybody cares.
Greece has enough public and private foreign debt to wipe out a considerable part of the capital of foreign banks if it restructures or defaults on its debt. Some of the most exposed countries are themselves in dire straits, so there could be the necessity to recapitalize banks in other countries. Which might be too expensive for those countries too. If Portugal restructures, Spain will be hit worst. If Spain restructures, Germany, France and Britain will be hit badly. If Ireland restructures it's the same.
All of these countries have way more debt and obligations than Lehman Brothers and the exposure will mean that the interbank lending market will freeze up again.
And of course there is the direct cost to the ECB, which is now the lender of last resort to all of these countries. But the ECB has very little capital and gigantic leverage. If they have to write down their lendings, they'll need new capital quickly, i.e. tax money from the Eurozone countries. Unlike the Fed, the ECB can't just create money from thin air.
Quote from: Razgovory on May 07, 2011, 11:10:37 AM
How would they tell whether one Euro is a Greek Euro rather then say a French Euro or German Euro?
In coins, the reverse has a national sign of the country that minted them. See them for yourself:
http://www.ecb.int/euro/coins/2euro/html/index.en.html
In banknotes, although they're theoretically competence of the ECB, in fact each one indicates which nation printed them. It's the first letter in the banknotes' code. Greek notes start with 'Y', German ones with 'X', Portuguese ones with 'M', and so on.
Here is the complete letter and country:
Z Belgium
Y Greece
X Germany
W Denmark (when it joins)
V Spain
U France
T Ireland
S Italy
P Netherlands
N Austria
M Portugal
L Finland
K Sweden (when it joins)
J United Kingdom (when it joins)
H Slovenia
G Cyprus
F Malta
E Slovakia
D Estonia
Well, the Euro is a bad idea (or at least a good idea badly implemented), so maybe Greece's idea isn't so bad after all. :hmm:
Quote from: Caliga on May 09, 2011, 08:24:44 AM
Well, the Euro is a bad idea (or at least a good idea badly implemented), so maybe Greece's idea isn't so bad after all. :hmm:
I thought so to but the fact that the hilarious inept Greek government is against it makes me think it must actually be a good idea.
Quote from: Martim Silva on May 09, 2011, 08:20:31 AM
Quote from: Razgovory on May 07, 2011, 11:10:37 AM
How would they tell whether one Euro is a Greek Euro rather then say a French Euro or German Euro?
In coins, the reverse has a national sign of the country that minted them. See them for yourself:
http://www.ecb.int/euro/coins/2euro/html/index.en.html
In banknotes, although they're theoretically competence of the ECB, in fact each one indicates which nation printed them. It's the first letter in the banknotes' code. Greek notes start with 'Y', German ones with 'X', Portuguese ones with 'M', and so on.
Here is the complete letter and country:
Z Belgium
Y Greece
X Germany
W Denmark (when it joins)
V Spain
U France
T Ireland
S Italy
P Netherlands
N Austria
M Portugal
L Finland
K Sweden (when it joins)
J United Kingdom (when it joins)
H Slovenia
G Cyprus
F Malta
E Slovakia
D Estonia
So what happens to Greek Euros if Greece leave the Eurozone? Also what about the Euros that exist only on banksheets and in computers? How do you divvy up these virtual Euros?
Quote from: Martim Silva on May 09, 2011, 08:20:31 AM
K Sweden (when it joins)
J United Kingdom (when it joins)
How do you like your rosy-tainted glass, Candide?
Pity Sulla is not still around to put Athens in its place.
Quote from: Valmy on May 09, 2011, 09:12:12 AM
Pity Sulla is not still around to put Athens in its place.
I'd go with Lysander of Sparta, he did a more bang-on job when Athens was being a real pain in the ass. Sulla just dealt with the leftovers.
Quote from: Caliga on May 09, 2011, 08:24:44 AM
Well, the Euro is a bad idea (or at least a good idea badly implemented), so maybe Greece's idea isn't so bad after all. :hmm:
It's a good idea in theory, as is the rest of the EU. But they expanded far to quickly.
Quote from: Valmy on May 09, 2011, 09:12:12 AM
Pity Sulla is not still around to put Athens in its place.
Sulla. :wub:
I think the problem is they have no deal mechanism to deal with countries that abuse the system.
Quote from: Monoriu on May 09, 2011, 09:47:52 AM
I think the problem is they have no deal mechanism to deal with countries that abuse the system.
The correct mechanism is 'blitzkreig'. But the Germans haven't regrown the hair that the Allies shaved off their balls in 1945 yet. :(
Hoppa!
Yes! Opa!
Quote from: Caliga on May 09, 2011, 09:48:56 AM
The correct mechanism is 'blitzkreig'. But the Germans haven't regrown the hair that the Allies shaved off their balls in 1945 yet. :(
Maybe they need to bring the Ukraine in and then use hordes of Cossacks.
Quote from: Valmy on May 09, 2011, 09:52:42 AM
Quote from: Caliga on May 09, 2011, 09:48:56 AM
The correct mechanism is 'blitzkreig'. But the Germans haven't regrown the hair that the Allies shaved off their balls in 1945 yet. :(
Maybe they need to bring the Ukraine in and then use hordes of Cossacks.
Maybe the Wops could invade again from Albania.
Quote from: Valmy on May 09, 2011, 09:52:42 AM
Maybe they need to bring the Ukraine in
:bleeding:
Maybe they just hire the Cossacks as mercenaries? :)
Quote from: Razgovory on May 09, 2011, 09:10:18 AM
So what happens to Greek Euros if Greece leave the Eurozone? Also what about the Euros that exist only on banksheets and in computers? How do you divvy up these virtual Euros?
That's really the smallest problem. The cash will just stay valid currency in the remaining Eurozone and they will phase it out slowly. Reducing the amount of cash in circulation is easy for a central bank.
As far as money that only exists in accounts is concerned, you can just leave those accounts in Euro for a while and pay the equivalent amount in the new currency (depending on daily exchange rate of course). Meaning that all money in Greek banks can only be withdrawn or transferred as if it was drachma.
Wouldn't that cause Greeks to transfer their money to non-Greek banks to prevent their money from wildly fluctuating in value?
How should a union expect to survive long term without a common currency?
Not sure what you mean. If you take the customs union part of the EU, for example, it doesn't require a common currency, and the same goes for most of the other stuff the EU does.
Quote from: Pat on May 09, 2011, 02:01:48 PM
Not sure what you mean. If you take the customs union part of the EU, for example, it doesn't require a common currency, and the same goes for most of the other stuff the EU does.
Common customs union, constitution, parliament, diffusion of laws, etc etc etc.
It's not hard to spot where this is going, and it needs to come to its natural conclusion. EU wil be USE before the end of the 21st century or it will be fractured.
Quote from: Zanza2 on May 09, 2011, 03:16:32 AM
Unlike the Fed, the ECB can't just create money from thin air.
??
Well I look forward to you chanting U-S-E! U-S-E! U-S-E!
Quote from: Razgovory on May 09, 2011, 09:19:27 AM
Quote from: Caliga on May 09, 2011, 08:24:44 AM
Well, the Euro is a bad idea (or at least a good idea badly implemented), so maybe Greece's idea isn't so bad after all. :hmm:
It's a good idea in theory, as is the rest of the EU. But they expanded far to quickly.
Where the Euro fails is that it doesn't take into account the different policy requirements across the EU.
Quote from: Neil on May 09, 2011, 02:42:49 PM
Quote from: Razgovory on May 09, 2011, 09:19:27 AM
Quote from: Caliga on May 09, 2011, 08:24:44 AM
Well, the Euro is a bad idea (or at least a good idea badly implemented), so maybe Greece's idea isn't so bad after all. :hmm:
It's a good idea in theory, as is the rest of the EU. But they expanded far to quickly.
Where the Euro fails is that it doesn't take into account the different policy requirements across the EU.
Indeed. France, Germany and the Benelux have similar economies. While Syt is correct there would still be difficulties, they could probably hammer those out. Countries like Estonia or Bulgaria are worlds apart in their economic methods and goals.
The best thing the EU and the EURO could do is make trade simpler and less expensive. They could gradually let in more countries, but not like in the last decade where they invited almost everyone in.
Quote from: Razgovory on May 09, 2011, 01:36:02 PM
Wouldn't that cause Greeks to transfer their money to non-Greek banks to prevent their money from wildly fluctuating in value?
Of course. Greece would probably have to institute capital controls for some time, which would violate the single market regulations. So they would basically not just quit the Eurozone, but also quit the single market for some time.
Quote from: Admiral Yi on May 09, 2011, 02:23:47 PM
Quote from: Zanza2 on May 09, 2011, 03:16:32 AM
Unlike the Fed, the ECB can't just create money from thin air.
??
If I understand it correctly, they have to sterilize their quantitative easing by increasing deposits from the member banks.
Quote from: Zanza2 on May 09, 2011, 03:32:20 PM
If I understand it correctly, they have to sterilize their quantitative easing by increasing deposits from the member banks.
I don't see how that's possible. That means when the EU economy is growing the ECB would be pursuing a permanently deflationary policy.
Quote from: Neil on May 09, 2011, 02:42:49 PM
Quote from: Razgovory on May 09, 2011, 09:19:27 AM
Quote from: Caliga on May 09, 2011, 08:24:44 AM
Well, the Euro is a bad idea (or at least a good idea badly implemented), so maybe Greece's idea isn't so bad after all. :hmm:
It's a good idea in theory, as is the rest of the EU. But they expanded far to quickly.
Where the Euro fails is that it doesn't take into account the different policy requirements across the EU.
What about this is untrue of ANY currency?
Is a common monetary policy in the US going to work equally well in every region?
Quote from: Admiral Yi on May 09, 2011, 03:39:23 PM
Quote from: Zanza2 on May 09, 2011, 03:32:20 PM
If I understand it correctly, they have to sterilize their quantitative easing by increasing deposits from the member banks.
I don't see how that's possible. That means when the EU economy is growing the ECB would be pursuing a permanently deflationary policy.
They increase lending to the member banks to increase the amount of money in the system. That's easily doable by lowering the interest rate so that borrowing becomes more attractive to the member banks.
The problem right now is that the collateral posted by Irish or Greek banks is probably junk - but now it is the ECB's junk and not the Irish banks' junk. ;)
Quote from: Slargos on May 09, 2011, 03:43:32 PMWhat about this is untrue of ANY currency?
Is a common monetary policy in the US going to work equally well in every region?
This. The optimal monetary policy for Michigan probably looks different than for some booming region. However, the USA has a much stronger federal government than the EU and redistributes way more wealth across the nation so that the differences are level much more. But that's exactly what the richer countries in the EU don't want.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fpolpix.sueddeutsche.com%2Fpolopoly_fs%2F1.1095201.1304954961%21%2Fimage%2Fimage.jpg_gen%2Fderivatives%2F860x860%2Fimage.jpg&hash=988bc2cc391c52b1a72b6980f6facdac615f0019)
Quote from: Zanza2 on May 09, 2011, 03:54:09 PM
Quote from: Slargos on May 09, 2011, 03:43:32 PMWhat about this is untrue of ANY currency?
Is a common monetary policy in the US going to work equally well in every region?
This. The optimal monetary policy for Michigan probably looks different than for some booming region. However, the USA has a much stronger federal government than the EU and redistributes way more wealth across the nation so that the differences are level much more. But that's exactly what the richer countries in the EU don't want.
Yep. This kind of bitching I simply can't relate to. Any growing country will suffer through the process of assimilating the new population and integrating the entire economy. Either we're in this project 100% or we might as well break it off and just form a military- and toll union.
Of course, when it comes to countries like Greece and Portugal, perhaps they simply shouldn't be in the union to begin with, given their fantastic financial acumen. It's far easier to convince people to support their neighbour in a time of need if the neighbour isn't a belligerent drunk who considers begging and whining to be honest work.
Quote from: Zanza2 on May 09, 2011, 03:51:43 PM
They increase lending to the member banks to increase the amount of money in the system. That's easily doable by lowering the interest rate so that borrowing becomes more attractive to the member banks.
The problem right now is that the collateral posted by Irish or Greek banks is probably junk - but now it is the ECB's junk and not the Irish banks' junk. ;)
Now I'm completely lost. The starting point of this particular discussion was you saying the ECB can not create money out of thin air.
Quote from: Slargos on May 09, 2011, 04:00:16 PM
Of course, when it comes to countries like Greece and Portugal, perhaps they simply shouldn't be in the union to begin with, given their fantastic financial acumen. It's far easier to convince people to support their neighbour in a time of need if the neighbour isn't a belligerent drunk who considers begging and whining to be honest work.
The problem with that is that it's not really a question of Portugal and Greece being inept and France and Germany responsible. It's more like France and Germany are less inept. There's no rule written in stone that a country that has graduated from being a serial defaulter cannot return to the world where default is a possibility. Portugal is probably the fist of many examples of this ahead. It's a game of trust. The only way anyone can issue debt is if people are willing to buy it. Eventually, the perception of the bond market will be that Euro sovereigns are all a bunch of drunks in general. That's why the lazy drunks of today are important.
Quote from: MadImmortalMan on May 09, 2011, 04:11:44 PM
Quote from: Slargos on May 09, 2011, 04:00:16 PM
Of course, when it comes to countries like Greece and Portugal, perhaps they simply shouldn't be in the union to begin with, given their fantastic financial acumen. It's far easier to convince people to support their neighbour in a time of need if the neighbour isn't a belligerent drunk who considers begging and whining to be honest work.
The problem with that is that it's not really a question of Portugal and Greece being inept and France and Germany responsible. It's more like France and Germany are less inept. There's no rule written in stone that a country that has graduated from being a serial defaulter cannot return to the world where default is a possibility. It's a game of trust. The only way anyone can issue debt is if people are willing to buy it. Eventually, the perception of the bond market will be that Euro sovereigns are all a bunch of drunks in general. That's why the lazy drunks of today are important.
Well. My point was that the Greeks in particular are spending other people's money like it's going out of fashion, and with that kind of game it's no wonder that people don't want to play.
A Greek has to work 35 years to earn a full pension. A German has to work 45. Why should the German worker be happy about spending 5 years of his life working for the Greek?
Quote from: Admiral Yi on May 09, 2011, 04:05:34 PM
Quote from: Zanza2 on May 09, 2011, 03:51:43 PM
They increase lending to the member banks to increase the amount of money in the system. That's easily doable by lowering the interest rate so that borrowing becomes more attractive to the member banks.
The problem right now is that the collateral posted by Irish or Greek banks is probably junk - but now it is the ECB's junk and not the Irish banks' junk. ;)
Now I'm completely lost. The starting point of this particular discussion was you saying the ECB can not create money out of thin air.
They can't create money out of thin air to buy government debt. They can create money out of thin air to lend to member banks.
Moody's is talking about multi-level downgrades on Greek sovereigns. I don't think going back to drachmas is going to work if they've still got all this existing debt still denominated in Euros. In order for any plan to leave the Euro to actually relieve the pressure, they will have to migrate those bonds over to drachmas too. Otherwise, the revaluation is going to double their debt. Of course, if they can move it over, the revaluation will give the bondholders a 50% haircut, but that's pretty much the point.
Greece's current rating implies a 67% chance of default. Any further downgrades would be academic.
Quote from: Admiral Yi on May 09, 2011, 06:21:10 PM
Greece's current rating implies a 67% chance of default. Any further downgrades would be academic.
This.
Greece is bust. The sooner it's debts are restructured (say, a 50% writeoff at the very minimum), the better. Greece moves on with the euro but can only spend what it earns basically.
Quote from: Legbiter on May 09, 2011, 07:13:52 PM
Quote from: Admiral Yi on May 09, 2011, 06:21:10 PM
Greece's current rating implies a 67% chance of default. Any further downgrades would be academic.
This.
Greece is bust. The sooner it's debts are restructured (say, a 50% writeoff at the very minimum), the better. Greece moves on with the euro but can only spend what it earns basically.
How can a European government in the shitty part of Europe possibly get by on spending what it earns? Living in Athens would be like living in Dachau.
Quote from: Neil on May 09, 2011, 07:54:56 PM
How can a European government in the shitty part of Europe possibly get by on spending what it earns? Living in Athens would be like living in Dachau.
Ideally, they'll start, you know, earning something.
:P
Quote from: MadImmortalMan on May 09, 2011, 10:08:56 PM
Quote from: Neil on May 09, 2011, 07:54:56 PM
How can a European government in the shitty part of Europe possibly get by on spending what it earns? Living in Athens would be like living in Dachau.
Ideally, they'll start, you know, earning something.
:P
These are modern, Turkic Greeks, they're not the kind of Greeks that can create, build or earn anything. You fucking byzantophiles are 700 years behind on this.
Quote from: Slargos on May 10, 2011, 01:18:41 AM
Quote from: MadImmortalMan on May 09, 2011, 10:08:56 PM
Quote from: Neil on May 09, 2011, 07:54:56 PM
How can a European government in the shitty part of Europe possibly get by on spending what it earns? Living in Athens would be like living in Dachau.
Ideally, they'll start, you know, earning something.
:P
These are modern, Turkic Greeks, they're not the kind of Greeks that can create, build or earn anything. You fucking byzantophiles are 700 years behind on this.
Calling the Greeks Turks is insulting to the Turks isn't it? Turkey has a growing and more well balanced economy doesn't it?
Quote from: jimmy olsen on May 10, 2011, 01:26:04 AM
Quote from: Slargos on May 10, 2011, 01:18:41 AM
Quote from: MadImmortalMan on May 09, 2011, 10:08:56 PM
Quote from: Neil on May 09, 2011, 07:54:56 PM
How can a European government in the shitty part of Europe possibly get by on spending what it earns? Living in Athens would be like living in Dachau.
Ideally, they'll start, you know, earning something.
:P
These are modern, Turkic Greeks, they're not the kind of Greeks that can create, build or earn anything. You fucking byzantophiles are 700 years behind on this.
Calling the Greeks Turks is insulting to the Turks isn't it? Turkey has a growing and more well balanced economy doesn't it?
I don't mind insulting the Turks.
But yes, it is a good indictment on the Greeks, the fact that the Turks are much more successful than them.
I think this is divine karmic retribution for the fact that those goatfucking layabouts are filing defamation lawsuits against women who've been raped there while on vacation.
The drachma used to devalue by about 10% or so a year, it was a weak currency so Greece was a cheap tourist destination. The Greeks, while not poor, seemed to have about a third less money than the likes of Germans or Brits. On my most recent visit (2007 IIRC), prices had converged with general Western European levels but not with the standards, hotel prices were particularly bad. The Greeks themselves were apparently well-off and had no problems with the prices........I wondered where they had found this wealth :lol:
Quote from: Slargos on May 09, 2011, 04:15:41 PM
Quote from: MadImmortalMan on May 09, 2011, 04:11:44 PM
Quote from: Slargos on May 09, 2011, 04:00:16 PM
Of course, when it comes to countries like Greece and Portugal, perhaps they simply shouldn't be in the union to begin with, given their fantastic financial acumen. It's far easier to convince people to support their neighbour in a time of need if the neighbour isn't a belligerent drunk who considers begging and whining to be honest work.
The problem with that is that it's not really a question of Portugal and Greece being inept and France and Germany responsible. It's more like France and Germany are less inept. There's no rule written in stone that a country that has graduated from being a serial defaulter cannot return to the world where default is a possibility. It's a game of trust. The only way anyone can issue debt is if people are willing to buy it. Eventually, the perception of the bond market will be that Euro sovereigns are all a bunch of drunks in general. That's why the lazy drunks of today are important.
Well. My point was that the Greeks in particular are spending other people's money like it's going out of fashion, and with that kind of game it's no wonder that people don't want to play.
A Greek has to work 35 years to earn a full pension. A German has to work 45. Why should the German worker be happy about spending 5 years of his life working for the Greek?
The problem with this view is that it is very simplistic. It's not about what is fair. It's about what works. For Germany, being able to sell their superior products (while being protected with pan-European tariffs from the competition from the US or China) to the rest of Europe generates much more wealth than it pays into the common pot to let a Greek worker retire earlier. And because of letting the Greek worker retire earlier, a German worker is not facing as much competition from the Greek one (who is still able to afford German products).
It's like in a national economy with a welfare system. Technically the well-off pay a part of their wealth to let the poor live off the welfare. Many decry it unfair, as often the well-off work much harder than the poor, so why should they also be the ones paying? But in the end, this creates a system where the hard working can get to status and wealth, without having to worry about social costs of having poor starving masses revolt.
Quote from: jimmy olsen on May 10, 2011, 01:26:04 AM
Quote from: Slargos on May 10, 2011, 01:18:41 AM
Quote from: MadImmortalMan on May 09, 2011, 10:08:56 PM
Quote from: Neil on May 09, 2011, 07:54:56 PM
How can a European government in the shitty part of Europe possibly get by on spending what it earns? Living in Athens would be like living in Dachau.
Ideally, they'll start, you know, earning something.
:P
These are modern, Turkic Greeks, they're not the kind of Greeks that can create, build or earn anything. You fucking byzantophiles are 700 years behind on this.
Calling the Greeks Turks is insulting to the Turks isn't it? Turkey has a growing and more well balanced economy doesn't it?
Err, I wouldn't say that a country where outside of two big cities and a handful of tourist destinations, people live in abject, dirt-hovel poverty has a "balanced economy".
Quote from: Martinus on May 10, 2011, 02:25:38 AM
Quote from: jimmy olsen on May 10, 2011, 01:26:04 AM
Quote from: Slargos on May 10, 2011, 01:18:41 AM
Quote from: MadImmortalMan on May 09, 2011, 10:08:56 PM
Quote from: Neil on May 09, 2011, 07:54:56 PM
How can a European government in the shitty part of Europe possibly get by on spending what it earns? Living in Athens would be like living in Dachau.
Ideally, they'll start, you know, earning something.
:P
These are modern, Turkic Greeks, they're not the kind of Greeks that can create, build or earn anything. You fucking byzantophiles are 700 years behind on this.
Calling the Greeks Turks is insulting to the Turks isn't it? Turkey has a growing and more well balanced economy doesn't it?
Err, I wouldn't say that a country where outside of two big cities and a handful of tourist destinations, people live in abject, dirt-hovel poverty has a "balanced economy".
It's well balanced for the Haves.
Quote from: Martinus on May 10, 2011, 02:25:38 AM
Quote from: jimmy olsen on May 10, 2011, 01:26:04 AM
Calling the Greeks Turks is insulting to the Turks isn't it? Turkey has a growing and more well balanced economy doesn't it?
Err, I wouldn't say that a country where outside of two big cities and a handful of tourist destinations, people live in abject, dirt-hovel poverty has a "balanced economy".
The Turkish economy overheating
http://www.economist.com/node/18651739 (http://www.economist.com/node/18651739)
QuoteOne factor which makes Turkey stand out from many of its regional peers is that it is not overly export-dependent and has a dynamic domestic economy which complements the export sector. This means that the Turkish economy basically stands upright, and on both feet, and that, despite the recent loss of export competitiveness the impetus behind GDP growth is much more broadly-based than in the other, heavily-indebted countries which can be found in the surrounding region. In addition, the underlying strength of domestic demand means the Turkish government has a far broader, and ever-growing, potential tax base. This makes it much easier to attain longer term fiscal stability, and means that the country does not have to continually stagger forward on the basis of a series of "one off" measures to keep the deficit under control.
http://seekingalpha.com/article/245549-turkish-economy-has-surpassed-pre-crisis-levels-in-recovery-mode (http://seekingalpha.com/article/245549-turkish-economy-has-surpassed-pre-crisis-levels-in-recovery-mode)
Quote from: jimmy olsen on May 10, 2011, 01:26:04 AM
Calling the Greeks Turks is insulting to the Turks isn't it? Turkey has a growing and more well balanced economy doesn't it?
Greece is twice as rich as Turkey.
Not for long
Quote from: Martinus on May 10, 2011, 02:22:17 AMThe problem with this view is that it is very simplistic. It's not about what is fair. It's about what works. For Germany, being able to sell their superior products (while being protected with pan-European tariffs from the competition from the US or China) to the rest of Europe generates much more wealth than it pays into the common pot to let a Greek worker retire earlier. And because of letting the Greek worker retire earlier, a German worker is not facing as much competition from the Greek one (who is still able to afford German products).
The problem with all that wealth generation is that thanks to the free capital market of the EU, all that money directly flows back into Spanish and Irish real estate or Greek sovereign bonds. Which are now worthless.
If selling something means that the German worker has to pay for it later by recapitalizing the German banks or some EU facility or by directly bailing out the Greek government, he certainly hasn't made a profit on this. Someone else (German bankers, Greek yacht-owners, the international cabal of evil) might have, but you can't really blame the normal wage earner for feeling shafted in this whole situation.
QuoteIt's like in a national economy with a welfare system. Technically the well-off pay a part of their wealth to let the poor live off the welfare. Many decry it unfair, as often the well-off work much harder than the poor, so why should they also be the ones paying? But in the end, this creates a system where the hard working can get to status and wealth, without having to worry about social costs of having poor starving masses revolt.
I don't know if you have read any economic news about Germany in the last decade or so. In the early 2000s, we were the sick man of Europe. But then came harsh reforms to the social and labour market combined with a decade of below inflation income increases. The problem really is that Germany is no longer rich compared to its European neighbours and doesn't have a lavish social state anymore either. It was cut back a lot to make Germany competitive again. That's why Germans don't want to pay for other country's welfare systems.
It doesn't matter if it may not be wise in economic terms, but in political terms it is impossible for Germany to accept anything less than massive reforms of the respective economies. That's too bad because it has a moralistic component to it that has no rational basis, but that's the political reality. The alternative is really that Germany gets a party like the True Finns or perhaps more likely that the conservatives and liberals rebel against Merkel.
I disagree. This money is not flowing in a sterile environment - when it flows back to Germany, it increases the living standards of people there, even if some of it flows back to Greece as you say.
I think what you are saying is really an expression of populist crap fed to the German public by the politicians there than anything real. Saying this is a "political reality" is perhaps true, but that just shows how divorced from reality your politicians are in their attempt to get votes.
Quote from: Martinus on May 10, 2011, 04:06:49 AM
I disagree. This money is not flowing in a sterile environment - when it flows back to Germany, it increases the living standards of people there, even if some of it flows back to Greece as you say.
I think what you are saying is really an expression of populist crap fed to the German public by the politicians there than anything real. Saying this is a "political reality" is perhaps true, but that just shows how divorced from reality your politicians are in their attempt to get votes.
Standard of living is only artificially increased by money itself, since it will always come at the cost of SoL for foreigners. Sheiks in Dubai building airplanes of gold comes from labour in their own countries and the imported labour in exchange for the export of oil.
All real increase in standard of living comes from the increase in efficiency of product, and the decrease of total amount of dependents vs total amount of gainfully employed.
Hence, no matter how you slice it, the german workers are paying for the greek pensioners, and in effect they are giving several years of their lives in order to prop up the greek system. Now, it might well be true that this is a form of protection money paid out to the plebes in order to keep them from rioting, but it doesn't change that the people making the payments are the same plebes that are receiving them, it's just that the german plebes are actually working hard to support the less productive greek plebes. Like Zanza noted, the gains from the export of goods to Greece mainly line the pockets of the Capitalists, while the costs are shouldered by the Plebes.
With all this in mind, frankly, I sometimes wonder how I can not be a rabid communist.
Quote from: Martinus on May 10, 2011, 04:06:49 AM
I disagree. This money is not flowing in a sterile environment - when it flows back to Germany, it increases the living standards of people there, even if some of it flows back to Greece as you say.
I think what you are saying is really an expression of populist crap fed to the German public by the politicians there than anything real. Saying this is a "political reality" is perhaps true, but that just shows how divorced from reality your politicians are in their attempt to get votes.[/
But you do know that Germany has a gigantic current account surplus (more than China in relative terms), which in turn means it is exporting capital because that surplus is not invested at home? And that it had by far the lowest investment rate in the EU in the last decade? And that German incomes basically stagnated in real terms during the 2000s or went down for the lowest deciles? The lopsided trade balance sounds great, but it isn't as the money isn't invested in Germany, but elsewhere. This is slowly changing as the realization is that Germany is a lower risk compared to other potentially more lucrative destinations.
These numbers are not from politicians by the way, they are from economic institutes. Politicians don't like to tell stuff like that. They prefer to bask in the glory of being "export world champion" or so.
Do you have any numbers that support your claims? If not, you just show how divorced from reality you are.
Quote from: Martinus on May 10, 2011, 02:22:17 AM
The problem with this view is that it is very simplistic. It's not about what is fair. It's about what works. For Germany, being able to sell their superior products (while being protected with pan-European tariffs from the competition from the US or China) to the rest of Europe generates much more wealth than it pays into the common pot to let a Greek worker retire earlier. And because of letting the Greek worker retire earlier, a German worker is not facing as much competition from the Greek one (who is still able to afford German products).
It's like in a national economy with a welfare system. Technically the well-off pay a part of their wealth to let the poor live off the welfare. Many decry it unfair, as often the well-off work much harder than the poor, so why should they also be the ones paying? But in the end, this creates a system where the hard working can get to status and wealth, without having to worry about social costs of having poor starving masses revolt.
I do think the european union is a tremendous benefit to Germany. Investing in infrastructure in less developed nearby countries where relatively small investments can do a lot of good (such as Poland) will probably be of long term benefit to Germany. But it is very hard for me to accept that the reduced competition from Greek workers at all justifies paying the benefits of early retirees there. Most Greek workers don't directly compete with Germans, so why pay the upkeep for multiple Greeks to keep a percentage from competing with Germans? Surely there are more effective ways to benefit Germans.
Subsidizing long term deficit spending in Greece is not analogous to welfare spending. I'm happy to pay welfare (generally) because people on welfare tend to unable to support themselves (due to illness, injury, economic conditions, or just poor education/life skills). None of those apply to the Greek nation. From a more selfish perspective, I don't want a bunch of poor people desperate for food spreading disease in my community or driven to crime. For the most part, Germany doesn't have to worry about those problems from Greece either.
Quote from: Martinus on May 10, 2011, 02:25:38 AM
Quote from: jimmy olsen on May 10, 2011, 01:26:04 AM
Quote from: Slargos on May 10, 2011, 01:18:41 AM
Quote from: MadImmortalMan on May 09, 2011, 10:08:56 PM
Quote from: Neil on May 09, 2011, 07:54:56 PM
How can a European government in the shitty part of Europe possibly get by on spending what it earns? Living in Athens would be like living in Dachau.
Ideally, they'll start, you know, earning something.
:P
These are modern, Turkic Greeks, they're not the kind of Greeks that can create, build or earn anything. You fucking byzantophiles are 700 years behind on this.
Calling the Greeks Turks is insulting to the Turks isn't it? Turkey has a growing and more well balanced economy doesn't it?
Err, I wouldn't say that a country where outside of two big cities and a handful of tourist destinations, people live in abject, dirt-hovel poverty has a "balanced economy".
But enough about Poland.
Hyuk hyuk.
The Germans and Greeks don't compete. The Germans do manufacturing, finance and services, while the Greeks do theft, fraud and tourism.
The solution is for the Greeks to devalue and for millions of Germans to visit Greece, eat and drink vast quantities and stop the Brits from bagging the sunloungers. Unfortunately this is not consistent with euro membership.
Quote from: Neil on May 10, 2011, 07:55:58 AM
Quote from: Martinus on May 10, 2011, 02:25:38 AM
Quote from: jimmy olsen on May 10, 2011, 01:26:04 AM
Quote from: Slargos on May 10, 2011, 01:18:41 AM
Quote from: MadImmortalMan on May 09, 2011, 10:08:56 PM
Quote from: Neil on May 09, 2011, 07:54:56 PM
How can a European government in the shitty part of Europe possibly get by on spending what it earns? Living in Athens would be like living in Dachau.
Ideally, they'll start, you know, earning something.
:P
These are modern, Turkic Greeks, they're not the kind of Greeks that can create, build or earn anything. You fucking byzantophiles are 700 years behind on this.
Calling the Greeks Turks is insulting to the Turks isn't it? Turkey has a growing and more well balanced economy doesn't it?
Err, I wouldn't say that a country where outside of two big cities and a handful of tourist destinations, people live in abject, dirt-hovel poverty has a "balanced economy".
But enough about Poland.
Hyuk hyuk.
Poland has TWO cities! :o
Quote from: Neil on May 10, 2011, 08:03:46 AM
The Germans and Greeks don't compete. The Germans do manufacturing, finance and services, while the Greeks do theft, fraud and tourism.
:lol:
I don't care if it's just a schtick. You are a wonderful person. :hug:
Quote from: Zanza2 on May 10, 2011, 03:32:06 AM
Quote from: jimmy olsen on May 10, 2011, 01:26:04 AM
Calling the Greeks Turks is insulting to the Turks isn't it? Turkey has a growing and more well balanced economy doesn't it?
Greece is twice as rich as Turkey.
Per capita, yes. Total GDP of Turkey is larger.
Quote from: Zanza2 on May 10, 2011, 03:46:54 AM
I don't know if you have read any economic news about Germany in the last decade or so. In the early 2000s, we were the sick man of Europe. But then came harsh reforms to the social and labour market combined with a decade of below inflation income increases. The problem really is that Germany is no longer rich compared to its European neighbours and doesn't have a lavish social state anymore either. It was cut back a lot to make Germany competitive again. That's why Germans don't want to pay for other country's welfare systems.
Yet even after those "harsh" reforms, your welfare system is a lot more generous than those in question.
Welfare is not really the root of the Greek problem. Lack of income is. And that comes down to a bloated public sector, artificially privileged groups and massive tax evasion. Nobody there is honest about what they earn. Not even the government.