Languish.org

From the WSJ.  With extra charts:

QuoteHow a Radical Greek Rescue Plan Fell Short
By MARCUS WALKER

ATHENS—Two years after Europe bailed Greece out to protect the euro, the rescue has become a debacle that threatens to unravel the common currency.

After Greece's May 6 elections left pro-bailout parties too weakened to govern the country, more elections are likely in June, with no guarantee a stable government will emerge. By next month, Athens must identify €11.5 billion, or $15 billion, in fresh spending cuts or face suspension of the international loans it needs to pay pensions and run schools. If it doesn't get the money, it would eventually have to print its own.

Greece's growing turmoil is the culmination of a radical austerity experiment and botched economic overhaul that have pushed the nation to the brink of social and political breakdown. The story of the ill-fated bailout suggests that forcing deep austerity on individual member states won't save the euro and may worsen its crisis.

Above all, Greece's example illustrates the conflict between Germany's tough terms for aiding other euro members and the amount of pain other societies can bear. Greece's fate shows that what it takes to sell bailouts to a skeptical German public can be politically calamitous in Europe's indebted south.

"The program is suicidal, not only for Greece but for the euro," says Louka Katseli, a former Greek economy minister. "In Spain, Portugal, Italy—everywhere, the same mistake is being made," she says, referring to the European Union's insistence on slashing spending in a recession.

Germany reiterated on Wednesday that Greece needs to stick to its austerity promises; euro-zone governments decided on Wednesday to postpone part of Greece's next aid payment as a warning to Greek politicians.

Greece's bailout by the EU and International Monetary Fund is the costliest financial rescue of a nation in history, with paid or pledged loans totaling €245 billion. It has already involved the biggest-ever sovereign-debt default, a debt restructuring that wiped out more than €100 billion of Greek bond debt.

Yet the restructuring left Greece with two mountains to climb: curbing a still-rising debt more than 1.5 times the size of its economy, while forcing down wages and prices to make the country competitive.

Straining to keep Greece afloat, the EU and IMF doubled their bet in March, greatly expanding the loan program despite the country's deepening political paralysis.

Responsibility for the mess, many of those involved in the effort say, lies with a Greek political class that couldn't or wouldn't reform the country, an unrealistic program that assumed a quick economic recovery despite draconian austerity and crushing debts, and growing mistrust between Greece and its creditors.

"It was almost a mission impossible," says George Papandreou, the luckless Greek premier who negotiated the original bailout and then was forced out by a party revolt last fall.

Mr. Papandreou says that when he asked German Chancellor Angela Merkel for gentler conditions in 2010, she replied that the aid program had to hurt. "We want to make sure nobody else will want this," Ms. Merkel told him.

Greece's economy has already shrunk by 14% in the past three years, and IMF officials privately expect a further 6.5% contraction this year. Something has to give, and it could be the boundaries of the euro.

Europe fears that a Greek exit from the euro could spur massive capital flight from Portugal, Spain or other struggling euro members. Some European officials argue privately that the euro could cope with a Greek exit because markets understand that Greece's debt crisis is uniquely severe.

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Orange is actual, blue is IMF/EU projections.  From left to right: Change to GDP; Unemployment; Budget deficit; Government debt.

Others worry that by triggering runs on banks and government-bond markets it could endanger the currency itself. That would present Germany and Europe's north with a terrible choice: to watch the centerpiece of Europe's decades of political integration collapse or to rush into a deeper fiscal union, including common bond issuance, to save the euro.

When the IMF and European countries banded together in May of 2010 to offer Greece a €110 billion rescue, leaders believed they had acted boldly to avoid calamity.

The deal required Greece to get a grip on public spending and tax collection while revamping a bloated bureaucracy and jungle of laws that had rendered its economy internationally uncompetitive.

While everyone accepted that Greece needed fiscal retrenchment, the IMF argued for giving structural changes priority and making the spending cuts gradual, to protect the economy.

Germany said no: Structural reforms would take place at the same time as drastic austerity to bring down the budget deficit—15.8% of gross domestic product in 2009—to under 3% by 2014. The timetable proved unrealistic: Spending cuts and tax increases pushed the economy into such a deep recession that the deficit got stuck at around 10% of GDP.

Usually when the IMF imposes austerity, it makes a country devalue its currency, in the hope its cheaper exports will offset falling domestic demand.

But Greece no longer has a currency of its own to devalue. Its downward spiral bears increasing resemblance to Argentina's a decade ago. Argentina tried to maintain a fixed exchange rate to the dollar even as IMF austerity drove it deeper into recession, ending in social unrest and political breakdown.

From the start, Greece's surfeit of debt undermined its chances. Mr. Papandreou's financial adviser, Lazard Ltd., told him the country's bond debts were unsustainable and needed restructuring.

The head of the IMF at the time, Dominique Strauss-Kahn, was open to it. But Europe wasn't. France and the European Central Bank feared that a Greek default, even via a negotiated restructuring of bonds, would undermine trust in other euro members' debt. Germany thought debt forgiveness would relax the pressure on Athens to make other changes.

"I'd like to cut my debt in half too," Ms. Merkel told Mr. Papandreou during a meeting at the Berlin chancellery, according to the Greek premier.

Despite Greece's concerns over the plan, its efforts to change began strongly. Polls showed solid public support for taming bureaucracy, corruption and tax evasion, and scrapping the privileges various interest groups had won over the years. Lawyers, taxi drivers, railroad employees and many other groups enjoyed protection from competition or special tax or pension perks, creating cartels and waste.

Finance Minister George Papaconstantinou attacked the budget deficit. Sharp spending cuts and tax boosts brought the deficit down to 10.6% of GDP in 2010. But change quickly fell victim to party politics.

Firebrand opposition leader Antonis Samaras, head of the conservative New Democracy party, denounced the tough bailout terms and declared that local elections in November 2010 were a referendum on the ruling Socialist party, known as Pasok. Mr. Papandreou called on Greeks to back him or sack him. Pasok won the elections, but by a much smaller margin than before.

"Voter fatigue was obvious," says Haris Pamboukis, a cabinet member at the time.

Mr. Papaconstantinou found himself increasingly isolated in cabinet. The U.K.-trained economist was an outsider in Greek politics. He couldn't get other ministers to shut loss-making state industries and pointless army bases, or to ax thousands of civil-service jobs created in return for votes. Nor could he reduce Greece's chronic tax evasion, abetted by corruption among tax inspectors.

He did what he could: cutting pensions and public-sector pay, while raising sales taxes. But that sapped consumer spending. Shops and small businesses failed. Unemployment surged. Public hostility grew.

Civil servants facing pay cuts went on strike, including at the finance ministry. "It was a case of 'you pretend to pay me, I pretend to work,' " one minister says.

In spring 2011, austerity and collapsing business and consumer confidence pushed the economy into free fall. Protests rocked the center of Athens. There wasn't enough support in Parliament to pass the next set of austerity measures.

In June, Mr. Papandreou replaced his finance minister with the premier's biggest rival, Evangelos Venizelos. Europe's ebbing trust in Greece soon plunged.

Mr. Venizelos, who has been described as one of the most eloquent Greek orators since ancient times, took the finance job reluctantly, fretting that the unpopular task could destroy his political ambitions, colleagues at the time say.

Many Greeks hoped he would be a tough negotiator with Europe and the IMF. Mr. Venizelos's first foray was at a finance ministers' meeting in Luxembourg. His long speech hit all the wrong notes.

He told his euro-zone peers they needed to relax Greece's austerity targets, citing the growing political difficulties. He called privatization goals unrealistic and blamed EU law for making asset sales complicated. He suggested Europe had no choice but to lend more money because a Greek bankruptcy could destabilize the euro zone. Greece's crisis "is a European problem," he said.

Other ministers reacted with fury. To them, it sounded as if he was trying shirk hard decisions while blackmailing his creditors. They lambasted Mr. Venizelos until 2 a.m., saying Greece had to rebuild its credibility before it got any more aid.

Instead of releasing a quarterly loan payment as planned, the ministers put it on ice until Athens enacted more austerity.

As the meeting ended, the bruised Mr. Venizelos tried once more to secure the money, to allow him a political victory at home. "I'm here for the first time," he pleaded, according to people who heard him. "It would be a bad signal if the tranche is not released." Jan Kees de Jager, the equally burly Dutch finance minister, erupted in anger.

Part of the government's problem, Europe knew, was that Mr. Samaras was assailing the austerity measures, and his conservatives had overtaken Pasok in opinion polls as a result.

Ms. Merkel and other heads of European conservative parties summoned Mr. Samaras to Brussels on June 23. For three hours, they pressed him to back the program. Mr. Samaras told them the program would fail. "Then you will need a plan B, and I'm the one who can bring it about," he said.

Ms. Merkel asked Mr. Samaras what he proposed. He said he agreed with cutting the budget deficit—but he wanted to do it by cutting taxes to spur the economy.

A tax cut would create a bigger budget shortfall, other conservative leaders said. Only Viktor Orban, Hungary's maverick premier, sided with Mr. Samaras. "Some understand that we are right," the unbending Mr. Samaras told reporters after the meeting.

Mr. Venizelos tried again to force a relaxation of the bailout terms in September. At nighttime talks in his finance ministry, inspectors from the EU and IMF pressed him to lay off civil servants and shut loss-making state enterprises.

Mr. Venizelos refused. "I don't want to enter into a technical discussion with you. The issue is political," he said, according to people present. (Mr. Venizelos didn't return messages requesting comment.) The inspectors told him they couldn't offer any political concessions, and left town without recommending the release of Greece's next slice of aid.

The finance ministry had less than €1 billion left in its coffers. The monthly bill for public wages and pensions was around four times that. Greece's government avoided bankruptcy only by not paying its suppliers.

Mr. Venizelos had to appeal again to European finance ministers, who met in Wroclaw, Poland, in mid-September. The night before the meeting, Germany's Wolfgang Schäuble collared Mr. Venizelos in their hotel's cellar bar and made it clear over a bottle of fine wine that Europe was getting fed up with Greece.

"If you want to stay in the euro, you have to act," Mr. Schäuble said.

Greece did want to stay in the euro, Mr. Venizelos said.

Mr. Venizelos became more cooperative, euro-zone officials say. But the Greek program was badly off track. The government had made little headway on its long list of promised changes to reduce red tape, increase competition and attract investment.

In October, the IMF, now under the more stringent leadership of former French Finance Minister Christine Lagarde, forced Europe to recognize reality: The numbers didn't add up.

That forced European leaders to grant Athens debt relief. An EU summit on Oct. 26 led eventually to a 53.5% "haircut" in Greece's bond debt, coupled with more aid loans. But by this time most of Greece's debt was owed to euro-zone authorities and the IMF, rather than to private bondholders. A bond restructuring that could have worked at the outset had a limited effect: Greece's debt fell from €356 billion in 2011 to a projected €327 billion this year.

Ms. Merkel and other euro-zone leaders thought the haircut-and-new-loans deal had settled the Greek question. But in Athens, the government was falling apart.

Amid rising social unrest and fraying support in parliament, Mr. Papandreou proposed a referendum on the expanded bailout.

Ms. Merkel and French President Nicolas Sarkozy, angered by Greece's unpredictability, told the Greek premier in the French Riviera resort of Cannes on Nov. 2 that the referendum should make the choice facing Greeks clear: Implement the bailout program or leave the euro. He agreed.

On the government plane home that night, Mr. Papandreou suggested getting some sleep and rolled onto his side. Mr. Venizelos stayed awake, took out a sheet of paper and scribbled a news release denouncing the referendum. "Greece's position within the euro area is a historic conquest...that cannot be put in doubt," he wrote. On landing in Athens at 4:45 a.m., he released the statement without informing Mr. Papandreou.

Lawmakers close to Mr. Venizelos came out against Mr. Papandreou. His referendum and his majority were history. He resigned days later.

Euro-zone leaders' open talk of expelling Greece shocked the country. Consumer and business spending nearly came to a halt. Savers queued at banks to take their cash home.

Mr. Samaras, too, was shocked. After months of denouncing the program, he joined a bipartisan coalition supporting it. Messrs. Samaras and Venizelos became reluctant partners, propping up a new prime minister, former central banker Lucas Papademos.

But Mr. Papademos, a cautious former ECB board member, lacked the political clout to push the overhaul of Greece's economy and state through a reluctant Parliament. Instead, most reforms were on ice until the May elections.

It was Mr. Samaras who insisted on holding early elections. He rejected Pasok's entreaties to let Mr. Papademos govern until the parliamentary term ended in late 2013. Mr. Samaras was confident his New Democracy party could win. His advisers didn't believe the opinion polls, which showed collapsing support for both major parties—his and Pasok—and rising votes for Communists, neo-Nazis and other radical groups.

On May 6, New Democracy and Pasok fared even worse than opinion polls suggested. The nation blames the two established parties for getting Greece into a debt crisis, and for destroying it in the attempt to escape.

Write to Marcus Walker at [email protected]

Here's a few other charts which highlight Greece's problems:
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fwww.washingtonpost.com%2Frf%2Fimage_606w%2FWashingtonPost%2FContent%2FBlogs%2Fezra-klein%2FStandingArt%2Fausterity%2520in%2520euro%2520zone.jpg%3Fuuid%3DdvVxjJkyEeGs5Ajbv4Lf3A&hash=562a88cffc888a59d1ee729851f853acaf51272d)
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fmedia.economist.com%2Fsites%2Fdefault%2Ffiles%2Fimagecache%2Ffull-width%2Fimages%2F2012%2F05%2Fblogs%2Ffree-exchange%2Fexpenditure.jpg&hash=1f987ea2e59e1e58464224ba64c7f598a1d9126c)
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fwww.washingtonpost.com%2Frf%2Fimage_606w%2FWashingtonPost%2FContent%2FBlogs%2Fezra-klein%2FStandingArt%2Feurozone-structural1-590x379.jpg%3Fuuid%3Dd-KfmJkyEeGs5Ajbv4Lf3A&hash=f7b592d1161993700bb00aec47aa21b8aa8e8c7c)

Eh Giovanni Giustiniani had a better chance at rescuing Greece than we did.

If they manage to ship their Greeks to Madagascar they'll be fine.

Quote from: The Brain on May 10, 2012, 10:37:52 AM
If they manage to ship their Greeks to Madagascar they'll be fine.

The will find the port closed.

Those charts are an insidious form of bullshit.

Of course someone who was racking up credit card bills equal to 20% of his income is going to feel more pain when his credit gets cut than someone who was overspending by 10%.  Nobody has a right to credit.

http://www.abc.net.au/7.30/content/2011/s3361876.htm

http://www.abc.net.au/7.30/content/2012/s3439015.htm

Quote from: Admiral Yi on May 10, 2012, 11:43:21 AM
Those charts are an insidious form of bullshit.

Nobody has a right to credit.

Following opinions going about regarding the Greek and other crisises made me realize that your statement is not widely accepted.

Modern Western political thought centers around the idea of giving other people's money to non-hackers.

Quote from: Admiral Yi on May 10, 2012, 11:43:21 AM
Those charts are an insidious form of bullshit.

I think they're more aimed at the insidious bullshit that the Greeks haven't been cutting spending or going through austerity.  They were all from American authors targeting a National Review article that said there's not been any austerity in Europe yet.

QuoteBy now I am so annoyed by the negative perception of Germany's policy abroad that I regret we got involved at all. We should just have pointed out that the EU treaties forbid that and used the money to bail out our banks.

Isn't this an issue though?  Franco-German policy towards Greece has seemed far more concerned with saving their banking sectors than with helping Greece.  I've always thought that a lot of this looked like a roundabout way of bailing out French and German banks for their bad Greek debt.

QuoteWithout German pressure, the Greeks would perhaps have found a way to solve their 15.8% budget deficit that would not have involved the austerity and structural reform policies that Germany demanded and would thus not have led to political turmoil and a shrinking economy.

That's a false dichotomy.  The IMF repeatedly suggested proposals that did have austerity and structural reforms over a longer period - that was rejected by Germany and the Commission.  I think that was a mistake and the severity of economic shock and austerity was intensified because of it, which is partially what's led to the current political crisis.  The motivation I think was somewhere between the mainly political - I think Merkel's consensual style and probable eye on 2013 didn't help - and policy - so no other country would want to be bailed out. 

At the start the Greeks voted for the party promising to deliver the bailout terms and against the party that wanted a renegotiation.  I think the harshness of those terms cut the ground out from under them.  And Samaras's behaviour is clearly hugely at fault too - I had no idea how many fuck ups he'd made.

I have been working with Germans for 7 years I know their attitude toward people they consider their lessers, but still. They have been pouring money into Greece, HUGE amounts, they negotiate a partial default for them, and what they ask in return is them creating a reasonable budget, and letting their savoirs check if they are earnest. And they ask that after decades of Greek book-cooking.

How is that harsh?

Bah, I should think about whether I actually want to post anything first and not delete my posts later anymore... ;)

You know what I think was the mistake? That we got involved at all. In the bailouts. Or the Euro.

And I don't care what the Greeks vote for. Back in 2009, they voted for the guy that told them "There is enough money". But that's their business. If they want to vote for Syriza and Golden Dawn, fine. If they want to default, leave the Euro or somehow make do staying in, fine.

I just don't want my government and my country to be involved in all of that anymore. All of that includes the ESM/EFSF too and for all I care the ECB/Euro. I guess it's nice to have a devalued currency, but I am sceptical that its benefit is anywhere near the obligations we entered as part of the bailouts.

I wonder whether Greek society can survive the internal devaluation that's necessary to become competitive again.  :hmm: I know Estonia did so but they had very little public debt when it was implemented.

If the Greeks went off the euro the new drachma would curb imports, but jumpstart tourism and food/light industry. It wouldn't be a picnic by any means but it would get growth going.

Quote from: Zanza on May 10, 2012, 03:06:00 PM
Bah, I should think about whether I actually want to post anything first and not delete my posts later anymore... ;)

You know what I think was the mistake? That we got involved at all. In the bailouts. Or the Euro.

And I don't care what the Greeks vote for. Back in 2009, they voted for the guy that told them "There is enough money". But that's their business. If they want to vote for Syriza and Golden Dawn, fine. If they want to default, leave the Euro or somehow make do staying in, fine.

I just don't want my government and my country to be involved in all of that anymore. All of that includes the ESM/EFSF too and for all I care the ECB/Euro. I guess it's nice to have a devalued currency, but I am sceptical that its benefit is anywhere near the obligations we entered as part of the bailouts.

Considering that Germany used to be the sick man of Europe and it came back precisely because of the Eurozone and lending like crazy to the Southerners, it's a rather funny statement.

Quote from: Legbiter on May 10, 2012, 03:22:31 PM
I wonder whether Greek society can survive the internal devaluation that's necessary to become competitive again.  :hmm: I know Estonia did so but they had very little public debt when it was implemented.

If the Greeks went off the euro the new drachma would curb imports, but jumpstart tourism and food/light industry. It wouldn't be a picnic by any means but it would get growth going.

Yes, perhaps that's the way many Greeks want to go, the rejectionist parties look set to form some sort of narrow majority if there's another election.

Which reminds me Legbiter, how are you and how are your fellow Icelanders doing in the new economic reality up there ?

I ask, because I bumped into one of the occupy crowd today, and he was painting a very rosy picture of Iceland, but which wasn't been carried in the mainstream media.

So I said, I know an Icelander or two, I'll ask them; I'd be very interested in you personal view of the travails your country has been through in the last 4 years.

Anyway,
cheers
Mongers

I think the entire German-Greek tension comes from the same phenomenon we discussed recently with respect to growing work efficiency, only the relationship here is not between the upper and lower classes but the rich economies and the poor ones.

Essentially, as the work efficiency and automation increases, we are not able to get full employment anymore. This means that unlike in the past, it's the privileged (and, consequently, the rich) who get gainful employment and the poor who are idle. This creates a new (and somewhat counterintuitive) social contract which demands that the "busy" rich give some of their money to sustain the "lazy" poor. This is why the highflying City bankers have to pay higher taxes to make sure the chav octomoms get their welfare dole, and why Germany has to pay off the Greek debts.

But there is no alternative - except for a bloody rebellion. Deal with it.

Quote from: Martinus on May 10, 2012, 03:24:48 PMConsidering that Germany used to be the sick man of Europe and it came back precisely because of the Eurozone and lending like crazy to the Southerners, it's a rather funny statement.

The narrative here is that we went into the Eurozone at too high an exchange rate, weren't helped by too high interest rates and capital outflows to the South meant depressed investment in Germany for a decade. That we came back from being the sick man of Europe was - in our narrative - due to cuts to social state, labor costs and slowly regained competetiveness.

Quote from: Martinus on May 10, 2012, 03:32:32 PM
I think the entire German-Greek tension comes from the same phenomenon we discussed recently with respect to growing work efficiency, only the relationship here is not between the upper and lower classes but the rich economies and the poor ones.

Essentially, as the work efficiency and automation increases, we are not able to get full employment anymore. This means that unlike in the past, it's the privileged (and, consequently, the rich) who get gainful employment and the poor who are idle. This creates a new (and somewhat counterintuitive) social contract which demands that the "busy" rich give some of their money to sustain the "lazy" poor. This is why the highflying City bankers have to pay higher taxes to make sure the chav octomoms get their welfare dole, and why Germany has to pay off the Greek debts.

But there is no alternative - except for a bloody rebellion. Deal with it.

That argument screams of "rich-ass lawyer not in touch with realities on ground level", dude :P

Quote from: Zanza on May 10, 2012, 03:39:38 PM

Quote from: Martinus on May 10, 2012, 03:24:48 PMConsidering that Germany used to be the sick man of Europe and it came back precisely because of the Eurozone and lending like crazy to the Southerners, it's a rather funny statement.

The narrative here is that we went into the Eurozone at too high an exchange rate, weren't helped by too high interest rates and capital outflows to the South meant depressed investment in Germany for a decade. That we came back from being the sick man of Europe was - in our narrative - due to cuts to social state, labor costs and slowly regained competetiveness.

If you google ' Germany "sick man of Europe" ' you get X results and if you google a certain other country's name instead of Germany you get twice that amount.   :hmm:

Quote from: Tamas on May 10, 2012, 03:44:54 PM

Quote from: Martinus on May 10, 2012, 03:32:32 PM
I think the entire German-Greek tension comes from the same phenomenon we discussed recently with respect to growing work efficiency, only the relationship here is not between the upper and lower classes but the rich economies and the poor ones.

Essentially, as the work efficiency and automation increases, we are not able to get full employment anymore. This means that unlike in the past, it's the privileged (and, consequently, the rich) who get gainful employment and the poor who are idle. This creates a new (and somewhat counterintuitive) social contract which demands that the "busy" rich give some of their money to sustain the "lazy" poor. This is why the highflying City bankers have to pay higher taxes to make sure the chav octomoms get their welfare dole, and why Germany has to pay off the Greek debts.

But there is no alternative - except for a bloody rebellion. Deal with it.

That argument screams of "rich-ass lawyer not in touch with realities on ground level", dude :P

I don't know. I probably talk to many more people who have an idea about how the economy works than you do.

Quote from: Zanza on May 10, 2012, 03:39:38 PM

Quote from: Martinus on May 10, 2012, 03:24:48 PMConsidering that Germany used to be the sick man of Europe and it came back precisely because of the Eurozone and lending like crazy to the Southerners, it's a rather funny statement.

The narrative here is that we went into the Eurozone at too high an exchange rate, weren't helped by too high interest rates and capital outflows to the South meant depressed investment in Germany for a decade. That we came back from being the sick man of Europe was - in our narrative - due to cuts to social state, labor costs and slowly regained competetiveness.

But you must admit that
a) the euro and the EU helped you greatly. The continent would have been about German economic domination anyway, but harder.
b) the line pressed by Merkel is to make sure GERMANY comes out unharmed, not the other EU members. It can still be a better idea than Hollande's, but still.

Regarding point B, Germany has every right to follow her self-interest of course, but there is the problem of being the leader of a community. Yes, irresponsible countries fucked up something the Germans managed to handle well, but we are in this situation and no bickering will take us out, and the thing is such that at least two culprits are nearing the point where they personally would be easier off if they let the whole thing burn down. And when them and the others see that the strongest guy in the team is not wiling to risk injury for the team, they will ask "why should we?"

Quote from: Martinus on May 10, 2012, 03:48:35 PMI don't know. I probably talk to many more people who have an idea about how the economy works than you do.

Too bad you didn't learn anything from them yet.

Quote from: Martinus on May 10, 2012, 03:48:35 PM

Quote from: Tamas on May 10, 2012, 03:44:54 PM

Quote from: Martinus on May 10, 2012, 03:32:32 PM
I think the entire German-Greek tension comes from the same phenomenon we discussed recently with respect to growing work efficiency, only the relationship here is not between the upper and lower classes but the rich economies and the poor ones.

Essentially, as the work efficiency and automation increases, we are not able to get full employment anymore. This means that unlike in the past, it's the privileged (and, consequently, the rich) who get gainful employment and the poor who are idle. This creates a new (and somewhat counterintuitive) social contract which demands that the "busy" rich give some of their money to sustain the "lazy" poor. This is why the highflying City bankers have to pay higher taxes to make sure the chav octomoms get their welfare dole, and why Germany has to pay off the Greek debts.

But there is no alternative - except for a bloody rebellion. Deal with it.

That argument screams of "rich-ass lawyer not in touch with realities on ground level", dude :P

I don't know. I probably talk to many more people who have an idea about how the economy works than you do.

Yeah, Tamas is known for not wanting to debate economics on Languish.

Quote from: Martinus on May 10, 2012, 03:48:35 PM

Quote from: Tamas on May 10, 2012, 03:44:54 PM

Quote from: Martinus on May 10, 2012, 03:32:32 PM
I think the entire German-Greek tension comes from the same phenomenon we discussed recently with respect to growing work efficiency, only the relationship here is not between the upper and lower classes but the rich economies and the poor ones.

Essentially, as the work efficiency and automation increases, we are not able to get full employment anymore. This means that unlike in the past, it's the privileged (and, consequently, the rich) who get gainful employment and the poor who are idle. This creates a new (and somewhat counterintuitive) social contract which demands that the "busy" rich give some of their money to sustain the "lazy" poor. This is why the highflying City bankers have to pay higher taxes to make sure the chav octomoms get their welfare dole, and why Germany has to pay off the Greek debts.

But there is no alternative - except for a bloody rebellion. Deal with it.

That argument screams of "rich-ass lawyer not in touch with realities on ground level", dude :P

I don't know. I probably talk to many more people who have an idea about how the economy works than you do.

The privileged rich work more and more while the poor are idle? Yes, welfare makes a portion of the population idle, but the rest either works or want to work. But it still takes plenty a poor man's work to let the rich play king.

Quote from: Tamas on May 10, 2012, 03:50:58 PMBut you must admit that
a) the euro and the EU helped you greatly.

Definitely for the EU. As far as the Euro is concerned ...

Quoteb) the line pressed by Merkel is to make sure GERMANY comes out unharmed, not the other EU members. It can still be a better idea than Hollande's, but still.

Regarding point B, Germany has every right to follow her self-interest of course, but there is the problem of being the leader of a community. Yes, irresponsible countries fucked up something the Germans managed to handle well, but we are in this situation and no bickering will take us out, and the thing is such that at least two culprits are nearing the point where they personally would be easier off if they let the whole thing burn down. And when them and the others see that the strongest guy in the team is not wiling to risk injury for the team, they will ask "why should we?"

We already risked injury. When all this is over, we will have lost hundreds of billions of Euro. Which in turn makes you wonder about your point A.

Quote from: mongers on May 10, 2012, 03:29:19 PM

Which reminds me Legbiter, how are you and how are your fellow Icelanders doing in the new economic reality up there ?

I ask, because I bumped into one of the occupy crowd today, and he was painting a very rosy picture of Iceland, but which wasn't been carried in the mainstream media.

So I said, I know an Icelander or two, I'll ask them; I'd be very interested in you personal view of the travails your country has been through in the last 4 years.

Anyway,
cheers
Mongers

Compared to some other countries we had a pretty good recession. Still pretty terrible by modern standards but last year the economy grew by 2.9pc (according to the OECD) and unemployment is sitting at 7.1pc. Unless Europe blows up like a toilet and no major volcanic eruption hits we should see growth around 3pc a year for 2013-2014. Of course a lot of people and companies will struggle to rebuild their balance sheets but the fundamentals are largely sound.

Plus, we're right next door to Norway so many people who hit the skids in 2008 jumped over the pond at least temporaily. But overall society has held together pretty well as has health and education. You can still have a decent heart attack in Iceland.

As for me I just snapped up a nice...terraced house I think it's called in English for a bargain and the last 3 years have been some of my best, watching Olaf and Volund grow up (they're sitting at 3 and 5 respectively). Of course the exchange rate has restricted the Legbiter household to just 2 trips a year to Norway but we all have to do our bit.  :sleep:

Quote from: Legbiter on May 10, 2012, 03:55:51 PM

Quote from: mongers on May 10, 2012, 03:29:19 PM

Which reminds me Legbiter, how are you and how are your fellow Icelanders doing in the new economic reality up there ?

I ask, because I bumped into one of the occupy crowd today, and he was painting a very rosy picture of Iceland, but which wasn't been carried in the mainstream media.

So I said, I know an Icelander or two, I'll ask them; I'd be very interested in you personal view of the travails your country has been through in the last 4 years.

Anyway,
cheers
Mongers

Compared to some other countries we had a pretty good recession. Still pretty terrible by modern standards but last year the economy grew by 2.9pc (according to the OECD) and unemployment is sitting at 7.1pc. Unless Europe blows up like a toilet and no major volcanic eruption hits we should see growth around 3pc a year for 2013-2014. Of course a lot of people and companies will struggle to rebuild their balance sheets but the fundamentals are largely sound.

Plus, we're right next door to Norway so many people who hit the skids in 2008 jumped over the pond at least temporaily. But overall society has held together pretty well as has health and education. You can still have a decent heart attack in Iceland.

As for me I just snapped up a nice...terraced house I think it's called in English for a bargain and the last 3 years have been some of my best, watching Olaf and Volund grow up (they're sitting at 3 and 5 respectively). Of course the exchange rate has restricted the Legbiter household to just 2 trips a year to Norway but we all have to do our bit.  :sleep:

Thanks for that, good to here the family is blossoming.  :thumbsup:

Yes, interesting how real world experience doesn't quite square with the internet meme that somehow Iceland has declared financial UDI from the rest of the world.

Quote from: Tamas on May 10, 2012, 03:54:56 PM
The privileged rich work more and more while the poor are idle? Yes, welfare makes a portion of the population idle, but the rest either works or want to work. But it still takes plenty a poor man's work to let the rich play king.

Yes, but we "chose" (I realize there was little of actual conscious choice, but still) a set-up of widening wealth/wage differences because a situation like this is more efficient from the perspective of the economy.

But the downside is that in a "vertical" economy like that, people at the bottom cannot sustain themselves from their work anymore even if they are willing to work (and I never said they don't "want to work" - it's just that there just isn't enough gainful jobs for all the people willing to work). So it is disingenuous for the rich to now turn around, when the crisis happens, and say that they will no longer help the poor, because the poor don't work - we created the economy model where simply not all willing poor can work, so we have to deal with it now.

Quote from: Zanza on May 10, 2012, 03:55:07 PM

Quote from: Tamas on May 10, 2012, 03:50:58 PMBut you must admit that
a) the euro and the EU helped you greatly.

Definitely for the EU. As far as the Euro is concerned ...

Quoteb) the line pressed by Merkel is to make sure GERMANY comes out unharmed, not the other EU members. It can still be a better idea than Hollande's, but still.

Regarding point B, Germany has every right to follow her self-interest of course, but there is the problem of being the leader of a community. Yes, irresponsible countries fucked up something the Germans managed to handle well, but we are in this situation and no bickering will take us out, and the thing is such that at least two culprits are nearing the point where they personally would be easier off if they let the whole thing burn down. And when them and the others see that the strongest guy in the team is not wiling to risk injury for the team, they will ask "why should we?"

We already risked injury. When all this is over, we will have lost hundreds of billions of Euro. Which in turn makes you wonder about your point A.

Fair point.

But I am afraid we are drifting closer to experiencing what an EU-less Europe looks like. Like we didn't try it for the past millenias.

Yeah that is melodramatic, probably we just loiter around for a decade struggling than start growing again, but if not, we may very well end up repeating the 1930s, with probably France and Ms. Le Pen taking Germany's role, as the failed strong state.

Quote from: Martinus on May 10, 2012, 03:32:32 PM
Essentially, as the work efficiency and automation increases, we are not able to get full employment anymore.

I don't think it's automation doing that. The US had periods recently where we achieved it even with high efficiency and automation.

Quote from: Tamas on May 10, 2012, 04:01:20 PM
Fair point.

But I am afraid we are drifting closer to experiencing what an EU-less Europe looks like. Like we didn't try it for the past millenias.

Yeah that is melodramatic, probably we just loiter around for a decade struggling than start growing again, but if not, we may very well end up repeating the 1930s, with probably France and Ms. Le Pen taking Germany's role, as the failed strong state.

I doubt it. Keeping the EU around is beneficial to all involved. The only ones I could see leaving anytime soon are the British. And keeping the EU around has a much lower potential for economic costs than the currency union.

Quote from: Martinus on May 10, 2012, 04:00:43 PM

Quote from: Tamas on May 10, 2012, 03:54:56 PM
The privileged rich work more and more while the poor are idle? Yes, welfare makes a portion of the population idle, but the rest either works or want to work. But it still takes plenty a poor man's work to let the rich play king.

Yes, but we "chose" (I realize there was little of actual conscious choice, but still) a set-up of widening wealth/wage differences because a situation like this is more efficient from the perspective of the economy.

But the downside is that in a "vertical" economy like that, people at the bottom cannot sustain themselves from their work anymore even if they are willing to work (and I never said they don't "want to work" - it's just that there just isn't enough gainful jobs for all the people willing to work). So it is disingenuous for the rich to now turn around, when the crisis happens, and say that they will no longer help the poor, because the poor don't work - we created the economy model where simply not all willing poor can work, so we have to deal with it now.

Ok that has two parts. A literal argument, and an allegory to Germany and the PIIGS.

For the literal take - the rich, the REAL rich, never had the burden of the modern state. That fell on the middle class. The whole thing is about maintaining the status quo, which is most benefical to the people presently at top.

For your allegory, well, yeah but not really. If you want to go that way, then Germany is the rich guy, who decides to let the poor guy, Greece, open shop in town, and helped with a generous loan. He saw the Greek books were fishy at best, but he REALLY wanted that spa Greece opened, and what could possibly go wrong lending to that fellow right?
And just to be sure, poor-man Greece kept lying about his finances, taking up more and more loans, which he spent on living a nice life, instead of investing it and living within his own means.

After rich guy Germany got a bit of short on cash because his cousins Spain and Italy got burned on a ponzi scheme, free loan money started to dry up for poor Greece. He didn't like that. Not one bit.
Surely he wasnt to sell his car and take the bus to the pub now, would he? He was living his life for decades, what's this shit about the moneyflow stopping? How DARES Germany put him down like that? He has a run-down spa, no skills, no resources, and now Germany wants him, to live like a bloke who has no good business, skills, or resources? Seriously? Monstrous?!! So he sets out to light Germany's villa on fire, so they get to the homeless shelter together.

Quote from: Zanza on May 10, 2012, 04:08:13 PM

Quote from: Tamas on May 10, 2012, 04:01:20 PM
Fair point.

But I am afraid we are drifting closer to experiencing what an EU-less Europe looks like. Like we didn't try it for the past millenias.

Yeah that is melodramatic, probably we just loiter around for a decade struggling than start growing again, but if not, we may very well end up repeating the 1930s, with probably France and Ms. Le Pen taking Germany's role, as the failed strong state.

I doubt it. Keeping the EU around is beneficial to all involved. The only ones I could see leaving anytime soon are the British. And keeping the EU around has a much lower potential for economic costs than the currency union.

But the elimination of the currency union cannot be orderly and cannot be without major shocks. There will be victims, and scapegoats will have to be found. You'll see.

Quote from: mongers on May 10, 2012, 04:00:10 PM
Yes, interesting how real world experience doesn't quite square with the internet meme that somehow Iceland has declared financial UDI from the rest of the world.

Sorry, UDI?

Quote from: Legbiter on May 10, 2012, 04:12:14 PM

Quote from: mongers on May 10, 2012, 04:00:10 PM
Yes, interesting how real world experience doesn't quite square with the internet meme that somehow Iceland has declared financial UDI from the rest of the world.

Sorry, UDI?

Unilateral Declaration of Independence.

Not to be confused with a UTI.

Quote from: Barrister on May 10, 2012, 04:17:19 PM

Quote from: Legbiter on May 10, 2012, 04:12:14 PM

Quote from: mongers on May 10, 2012, 04:00:10 PM
Yes, interesting how real world experience doesn't quite square with the internet meme that somehow Iceland has declared financial UDI from the rest of the world.

Sorry, UDI?

Unilateral Declaration of Independence.

Not to be confused with a UTI.

:lol:

Ah, no not exactly. The exchange rate will remain unfavorable for the next decade at least while Iceland pays for the debt hangover from the bubble years. It'll be a slog for sure.

Quote from: Zanza on May 10, 2012, 03:06:00 PM
You know what I think was the mistake? That we got involved at all. In the bailouts. Or the Euro.

I agree.  As Gideon Rachman put it the Euro's a machine from hell Germany can't turn off.  I can't see any way that ends well for Germany.  There are more countries in support of a looser monetary policy, so that's probably the path of least resistance.  If there's fiscal union Germany will be out-voted and the NY to Greece's Mississippi.  If the current course continues then, through TARGET 2 and the ECB, Germany will be more and more tied into the system regardless.

QuoteI know Estonia did so but they had very little public debt when it was implemented.

I think Latvia's the main example.  Part of it is that it happened over two years.  I think most societies can survive shock therapy, but the Greeks are in year 3 or 4 of this.  The economy's shrunk by 20%, youth unemployment's up to over 50% and they're, at best, 3/4s of the way through - I don't know how many years that's socially sustainable for.  And politically all the mainstream parties supported it, so they're all equally discredited.  I think in Greece the 30s analogy works better than most.

QuoteThat we came back from being the sick man of Europe was - in our narrative - due to cuts to social state, labor costs and slowly regained competetiveness.

But that was in a context of global growth and loose credit within the Eurozone.  The periphery's doing the same, but quicker, when there's no global growth and the picture in other parts of the Eurozone's also not so healthy.  One country going through this is good for them, all countries doing it together's kind of harmful.  I'm fairly sure there's a proper name for this and it's something Keynes discussed...

QuoteYeah that is melodramatic, probably we just loiter around for a decade struggling than start growing again, but if not, we may very well end up repeating the 1930s, with probably France and Ms. Le Pen taking Germany's role, as the failed strong state.

It is melodramatic, but I've said before I think it's a risk that the EU is pitching useful policies - like austerity and structural reform - against national pride, because the latter will always, always win.

QuoteAnd when them and the others see that the strongest guy in the team is not wiling to risk injury for the team, they will ask "why should we?"

I think that's certainly the view in the UK, US and probably China as well.  There's no sense here that the Eurozone or Germany have done their utmost to help save the Euro so calls for us all to contribute to bailout funds via the IMF don't come over well.  I don't know how many times China's had to say they're not interested in buying EFSF or ESM bonds :lol:

QuoteI doubt it. Keeping the EU around is beneficial to all involved. The only ones I could see leaving anytime soon are the British. And keeping the EU around has a much lower potential for economic costs than the currency union.

I don't know if we'll be in the EU much longer.  I think we'll have a referendum in the next 5 years or so.  I don't know how they vote'll go :mellow:

Way I see it either the EU puts together some all-but-in-name Eurobond or Greece kills the euro dead by exiting.

This was inevitable, it should have been obvious that no country's population would just sit back and take a depression this deep and such a severe government austerity program for long.

Quote from: Zanza on May 10, 2012, 04:08:13 PM
I doubt it. Keeping the EU around is beneficial to all involved. The only ones I could see leaving anytime soon are the British. And keeping the EU around has a much lower potential for economic costs than the currency union.

You are completely right. Yet ideology and emotions have dominated policy decisions for the duration of the crisis. What makes you think it won't be the same when it finally blows up?

Quote from: Legbiter on May 10, 2012, 05:26:31 PM
Way I see it either the EU puts together some all-but-in-name Eurobond or Greece kills the euro dead by exiting.

Eurobonds would only cover the first 60% of GDP.  That won't save Greece.

Quote from: jimmy olsen on May 10, 2012, 05:27:16 PM
This was inevitable, it should have been obvious that no country's population would just sit back and take a depression this deep and such a severe government austerity program for long.

So what are they going to stand up and take instead Timmy?

You've bought in to the false dichotomy.

Quote from: Admiral Yi on May 10, 2012, 05:45:51 PM

Quote from: jimmy olsen on May 10, 2012, 05:27:16 PM
This was inevitable, it should have been obvious that no country's population would just sit back and take a depression this deep and such a severe government austerity program for long.

So what are they going to stand up and take instead Timmy?

You've bought in to the false dichotomy.

Someone who'll take them out of the Euro and back on the Drachma.

Quote from: jimmy olsen on May 10, 2012, 06:14:53 PMSomeone who'll take them out of the Euro and back on the Drachma.

They've still got a large deficit.  Without any access to credit they'd need to move that to an immediate surplus - so far more severe austerity.

Quote from: jimmy olsen on May 10, 2012, 06:14:53 PM
Someone who'll take them out of the Euro and back on the Drachma.

And how much of a budget deficit will they be able to run then Timmy?

Fucking Shelf.

We won the war you know.

Quote from: mongers on May 10, 2012, 03:45:44 PM

Quote from: Zanza on May 10, 2012, 03:39:38 PM

Quote from: Martinus on May 10, 2012, 03:24:48 PMConsidering that Germany used to be the sick man of Europe and it came back precisely because of the Eurozone and lending like crazy to the Southerners, it's a rather funny statement.

The narrative here is that we went into the Eurozone at too high an exchange rate, weren't helped by too high interest rates and capital outflows to the South meant depressed investment in Germany for a decade. That we came back from being the sick man of Europe was - in our narrative - due to cuts to social state, labor costs and slowly regained competetiveness.

If you google ' Germany "sick man of Europe" ' you get X results and if you google a certain other country's name instead of Germany you get twice that amount.   :hmm:

Greece is as much Europe as Turkey is.

(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fhistorywarsweapons.com%2Fwp-content%2Fuploads%2Fimage%2FOperation_Marita.JPG&hash=08338858f7408a30c7511024694097f82712adb4)
:contract:

NB: Reconstituting Yugoslavia first might be a bit of a challenge, dudes.

Quote from: Legbiter on May 10, 2012, 05:26:31 PM
Way I see it either the EU puts together some all-but-in-name Eurobond or Greece kills the euro dead by exiting.

I've been thinking about this and I generally think the Greek should leave - for their own sake.  I know everyone seems relatively confident that this could be handled.  But I personally worry that Portugal's not too far off that, I don't think Ireland - with their bank debt - could stay and I'm far from certain that the impact on Italy and Spain's banks wouldn't kill them off too.

If the Greeks are to leave - and I think Brussels should be getting lots of plans in for that eventuality - then it needs to be managed and orderly.  So ideally not prompted by the sort of political crisis we've seen the last week or so.

Quote from: Sheilbh on May 10, 2012, 04:49:00 PMBut that was in a context of global growth and loose credit within the Eurozone.  The periphery's doing the same, but quicker, when there's no global growth and the picture in other parts of the Eurozone's also not so healthy.  One country going through this is good for them, all countries doing it together's kind of harmful.  I'm fairly sure there's a proper name for this and it's something Keynes discussed...

Where does this idea of no global growth come from? All predictions I see are for about 3-3.5% global growth annually for the next few years. That's not much lower than what we saw in 2002-2007 when we did our structural reforms. 

(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fblogs.worldbank.org%2Ffiles%2Fprospects%2FJan13_Slide1.gif&hash=860fcae1c09cb838adfe97597bfb3ec157186df7)

I also don't get why structural reforms in all countries at the same time would be "kind of harmful". Either structural reforms make sense, in which case it should be virtuous if more countries do them as soon as possible, or they are useless and just a "beggar thy neighbor" policy in which case they shouldn't be done at all. Why would something like service sector liberalization or making the tax system more efficient be a problem even if it is done in many countries at the same time?

Quote from: Sheilbh on May 10, 2012, 09:00:29 PMI've been thinking about this and I generally think the Greek should leave - for their own sake.  I know everyone seems relatively confident that this could be handled.  But I personally worry that Portugal's not too far off that, I don't think Ireland - with their bank debt - could stay and I'm far from certain that the impact on Italy and Spain's banks wouldn't kill them off too.

If the Greeks are to leave - and I think Brussels should be getting lots of plans in for that eventuality - then it needs to be managed and orderly.  So ideally not prompted by the sort of political crisis we've seen the last week or so.

Germany's finance minister Schäuble was quoted today as saying that he thinks the Eurozone could cope with Greece leaving.

Quote from: Zanza on May 11, 2012, 02:24:11 AM

Quote from: Sheilbh on May 10, 2012, 09:00:29 PMI've been thinking about this and I generally think the Greek should leave - for their own sake.  I know everyone seems relatively confident that this could be handled.  But I personally worry that Portugal's not too far off that, I don't think Ireland - with their bank debt - could stay and I'm far from certain that the impact on Italy and Spain's banks wouldn't kill them off too.

If the Greeks are to leave - and I think Brussels should be getting lots of plans in for that eventuality - then it needs to be managed and orderly.  So ideally not prompted by the sort of political crisis we've seen the last week or so.

Germany's finance minister Schäuble was quoted today as saying that he thinks the Eurozone could cope with Greece leaving.

Does he believe it though?
Afterall, if there's one thing recent times have taught us its that fear of the markets diving is often a leading cause of markets diving.

Quote from: Zanza on May 11, 2012, 02:01:18 AM
I also don't get why structural reforms in all countries at the same time would be "kind of harmful". Either structural reforms make sense, in which case it should be virtuous if more countries do them as soon as possible, or they are useless and just a "beggar thy neighbor" policy in which case they shouldn't be done at all. Why would something like service sector liberalization or making the tax system more efficient be a problem even if it is done in many countries at the same time?

Structural reforms all at once are fine.  I meant all countries in the Eurozone going through a round of austerity at the same time.  In some cases for no good reason, like the Netherlands.

QuoteWhere does this idea of no global growth come from? All predictions I see are for about 3-3.5% global growth annually for the next few years. That's not much lower than what we saw in 2002-2007 when we did our structural reforms. 

True enough.  I didn't know that.  I suppose I'd split it up into major trading partners then.

QuoteGermany's finance minister Schäuble was quoted today as saying that he thinks the Eurozone could cope with Greece leaving.

I think I've read some of his comments.  He thinks the Eurozone built in enough protective mechanisms and that there's less risk of contagion.  Personally I think that's nonsense - there are no new protective mechanisms and given that Euro-exit would have become a possibility, I can't see why the markets wouldn't be concerned about whether the Eurozone would stay together in general.  It reminds me of the sort of statement that's been made throughout the past 3 years by Euro politicians, normally immediately before the crisis peaks and there's an extremely important summit.  On a purely individual level I imagine there would be inevitable and significant capital flight in Spain and Italy which could, at its worst, set off the sort of bank recapitalisations that would drive Spain to needing a bailout.

I do think he's right that because of the last 3 years the Eurozone is probably able to respond faster to any contagion.  But this Economist blog I think highlights the difficult options available to demonstrate that Greece was a one off:
http://www.economist.com/blogs/freeexchange/2012/05/euro-zone-contagion

Some reforms are easier to carry out at the same time than others. Any deep labour reform, for example, entails a very significant increase in unemployment and thus increase in uncertainenty and loss of demand.

Quote from: Martinus on May 10, 2012, 03:32:32 PM
Essentially, as the work efficiency and automation increases, we are not able to get full employment anymore.

This again?

Work efficiency and automation has been increasing forover 200 years.  If this causal relationship held, we should have 98.5% unemployment by now.

Indeed. Unemployment and under-employment were rife in the past. Economic development has opened more and more job opportunities. The current problems are merely a blip, wanting to increase manufacturing employment is like an 1850 philanthropist wanting to preserve the handloom weavers. The demand for services is effectively unlimited.

Sure, automation has enabled society to dedicate resources to more valuable tasks.

I do wonder, however, if we're near the point where those "relieved" of mindless jobs will not be capable of undertaking anything else. I mean, your average factory worker is not going to be able to design a car or develop a drug, no matter how hard he or she tries. Most people just don't have what it takes, just like I can't slam dunk with my towering 1.70m height.

Many people with "advanced" jobs still do some cooking, cleaning etc. Plenty room for the stupid classes to get jobs.

Quote from: Iormlund on May 11, 2012, 03:56:06 PM
Sure, automation has enabled society to dedicate resources to more valuable tasks.

I do wonder, however, if we're near the point where those "relieved" of mindless jobs will not be capable of undertaking anything else. I mean, your average factory worker is not going to be able to design a car or develop a drug, no matter how hard he or she tries. Most people just don't have what it takes, just like I can't slam dunk with my towering 1.70m height.

Meh. Somebody has to maintain the robot workforce. Once we stop requiring four year degrees for every peon job on the planet that kind of thing will work out naturally.

http://www.standaard.be/artikel/detail.aspx?artikelid=DMF20120512_022

article in dutch but basic gist is that if Greece doesn't cut it's expenses they'll be kicked out of the euro. Farage idol Van Rompuy apparently said something similar (but with him you really never know). This i light of the new elections Greece will have in June/July

Apparently SYRIZA's now polling around 30%.  If the election were held tomorrow they'd have over 100 seats and easily be able to form an anti-bailout coalition.

They still might be able to if their court challenge goes through.  From what I've read Greek law gives the party that wins an extra 50 seats.  SYRIZA are suing saying that the law says that doesn't happen if the winner gets under 20% (as ND did) in which case the 50 MPs are split proportionally.

Quote from: Iormlund on May 11, 2012, 03:56:06 PM
Sure, automation has enabled society to dedicate resources to more valuable tasks.

I do wonder, however, if we're near the point where those "relieved" of mindless jobs will not be capable of undertaking anything else. I mean, your average factory worker is not going to be able to design a car or develop a drug, no matter how hard he or she tries. Most people just don't have what it takes, just like I can't slam dunk with my towering 1.70m height.

Yeah I guess we could be at some kind or transitional period, but that could also mean the transitional period to real global economy.
For example I can't see the full merit in analyzing a country like Spain's problems and possible reasons to it strictly within it's borders, when for starters, they are part of a much-much larger economical unit, which in turn is also very closely attached to the whole globe as well.

Quote from: MadImmortalMan on May 11, 2012, 04:01:01 PM
Meh. Somebody has to maintain the robot workforce. Once we stop requiring four year degrees for every peon job on the planet that kind of thing will work out naturally.

:lol:
Working with robots requires extensive specialization and skills, from algebra to hydraulics. You don't want anyone unqualified to handle something that can easily crush a man when mistakes are made.

Quote from: Iormlund on May 12, 2012, 09:42:33 AM
You don't want anyone unqualified to handle something that can easily crush a man when mistakes are made.

We don't have that already with manual labor? :huh:

Quote from: garbon on May 12, 2012, 10:20:43 AM

Quote from: Iormlund on May 12, 2012, 09:42:33 AM
You don't want anyone unqualified to handle something that can easily crush a man when mistakes are made.

We don't have that already with manual labor? :huh:

When there's no way around it. Manual workers use the equipment, but they don't design or maintain it. Most of the work in safety systems is limiting what the user can do, replacing them entirely if possible. In the end that's where we're going. In a few decades you won't even be able to drive your own car outside a track.

Here's an interesting article reported more from the German perspective.  Honestly it reminds me of nothing so much as the bright young Heritage Foundation staffers going to privatise the stock market after the Iraq war:

QuoteInsight: Germany and Greece: a tale of estrangement
By Noah Barkin and Gernot Heller
BERLIN | Thu Jun 14, 2012 9:49am EDT

(Reuters) - In early October of last year, German Economy Minister Philipp Roesler landed in Athens on a plane packed full of corporate executives, carrying a message of hope.

Germany and its leading firms, the young minister told Greek leaders, stood ready to help Greece overcome the debt crisis that had plunged its economy into recession and pushed it to the brink of its second EU/IMF rescue in little more than a year.

The mood in the meetings that followed was described by German officials who participated as "euphoric". Roesler received assurances that commercial disputes with German firms would be resolved. As soon as they were, Roesler promised, German investments would flow, focused on Greece's solar sector.

Yet within weeks the relationship had sunk to a postwar low. From interviews with German and European officials, Reuters has traced how and why trust broke down, with grave implications for Greece and Europe's single currency project.

"The minister was held up as a messiah who would save Greece," said a senior German official who travelled with Roesler and sat in on the meetings. By the time Roesler boarded his plane back to Berlin, he and his Greek counterpart Mihalis Chrysohoidis were using the familiar "du" and "esy".

Just weeks after Roesler's visit, Greece's then Prime Minister George Papandreou shocked his European partners by announcing plans - swiftly reversed - for a referendum on Greece's new 130 billion euro bailout package.

That gambit, a half dozen senior German officials told Reuters, marked the start of a dizzying deterioration in ties between Berlin and Athens, characterized by misunderstandings, broken promises and highly unusual public attacks.

A little more than half a year later, with Greece poised for an election that could determine whether it stays in the euro or returns to the drachma, the level of frustration in Berlin with the country's entrenched political class is sky high and its confidence that Athens can get back on track abysmally low.

German officials, many speaking on condition of anonymity due to the sensitivity of the issue before Sunday's vote, speak of a broken Greek bureaucracy incapable of implementing decisions taken at the top. A drive to root out corruption and tax-dodging has largely failed, they say.

Looking back, however, some German officials also acknowledge that Greece's descent into disarray, and the resulting risks for the broader euro zone, cannot be blamed on the Greeks alone.

It is also a story of neglect by Greece's European partners, they say, including Germany, which reluctantly bailed out Greece over two years ago, but then proceeded to ignore it until late 2011, when its dire economy, unstable politics and abysmal finances forced it back onto the agenda.

Roesler's trip came nearly a year-and-a-half after Germany bankrolled an initial rescue for Greece. Yet that still made him the first member of German Chancellor Angela Merkel's cabinet to visit the country since the rescue.

European Commission President Jose Manuel Barroso has not been to Greece in three years and European Council President Herman van Rompuy visited once in April 2011, a year after the rescue, their aides confirmed.

"For a year after the first bailout, neither Berlin nor Brussels made any symbolic political gestures towards Greece. No one travelled there to take stock of the situation for themselves," said Markus Kerber, chief executive of the BDI industry federation and a former finance ministry official.

"There was a fundamental misunderstanding that this would end up with big countries like Spain and Italy in the sights of the markets. They didn't realize that a single currency zone doesn't work on auto-pilot."

Merkel's spokesman Steffen Seibert vigorously denied Germany had ignored Greece, saying Berlin had closely followed the work of the so-called "troika" - the European Commission, European Central Bank and International Monetary Fund - which was charged with monitoring the country's progress. He noted that Papandreou himself had praised Germany for its support and cooperation in meetings with Merkel in March 2010 and September 2011.

"DON'T WORRY"

Two months after Roesler's trip, Chrysohoidis came to Berlin to discuss progress on the joint plans the two had unveiled in Athens. In a 20-minute conversation between the two ministers on December 13th, Roesler expressed frustration with the lack of movement on the Greek side. None of the outstanding disputes with German firms, among them Siemens, Bayer and Deutsche Telekom, had been settled and promised regulatory changes that were seen as a precondition for new investments were stalled.

"Don't worry, I'll take care of every single case personally," Chrysohoidis assured Roesler, according to one German official familiar with the talks.

Ties between Germany and Greece run deep. More than 300,000 Greeks reside in Germany, and nearly one in ten Greeks has worked, studied or lived here. In past years more German tourists visited Greece than from any other country.

But these links mask diametrically opposed cultures, officials on both sides say. The clash between these two worlds has been at the root of much of the confusion and frustration on both sides over the past two years.

The Greeks placed huge importance on face-to-face meetings, while the Germans felt most issues could be resolved remotely by phone or email.

Some Germans also point to the model of the Prussian bureaucrat, whose sense of pride in ensuring decisions taken at the highest levels of government are implemented speedily and to the letter, still runs deep in German ministries. It took a while for Berlin and Brussels to realize that a similar ethos did not exist in Greece. Far from it.

Often Greek civil servants, whose wages and benefits were being slashed to meet austerity goals imposed by Greece's international lenders, actively undermined the ministers they worked for, or operated at cross-purposes with other ministries, with whom they had little or no contact, several German officials said.

Under the guidance of EU and IMF bailout inspectors, the Greek government also made the mistake, the Germans said, of cutting the salaries of civil servants across the board and then later firing a portion of them, when it should have fired first and raised wages for those that remained to keep them motivated.

"They did everything in the wrong order," a senior ministry official in Berlin said.

The result was gridlock that often seemed inexplicable to the Germans.

"There is a wonderful tendency in Greece to wait until the last minute to do anything," an EU official, who is a German national, said. "Five minutes before 12 is too early. It has to be 30 seconds before 12 before they step into action."

BOTTOMLESS PIT

When Papandreou resigned late last year, former central banker Lucas Papademos stepped in to lead a unity government. He too was a disappointment, German and EU officials said.

At an early meeting in Brussels, European Commission President Jose Manuel Barroso pressed him to announce that he would make the fight against corruption his personal mission. But the Greek technocrat demurred and said Athens was preparing a new ethics law.

As 2011 ticked over into 2012, and Greek politicians began dragging their feet on fulfilling the conditions needed to win approval of a second rescue package, German politicians took to chastising them in public. Finance Minister Wolfgang Schaeuble was often front and centre, denouncing Greece on several occasions as a "bottomless pit".

In late January, at his prompting, German finance ministry officials floated the idea with their euro zone partners of imposing a "Sparkommissar", or budget commissioner, on Greece that would take control of its finances.

"Given the disappointing compliance so far, Greece has to accept shifting budgetary sovereignty to the European level for a certain period of time," the one-page paper read.

The proposal got a sharp negative response from other member states and was quietly dropped. But when Reuters and the Financial Times broke news of it on January 27th, it hit Greece like a hurricane, re-opening wounds dating back to World War Two, when the country suffered atrocities at the hands of Nazi occupiers.

In the weeks that followed, Greek protesters took to burning German flags and newspapers began publishing computer-generated pictures of Merkel in a Nazi uniform. Publicly, the German government played down the jibes, but behind the scenes officials seethed.

"We stayed quiet, but we noticed," one senior official said.

A nervous foreign ministry, concerned the German ambassador who was suffering from health issues was not up to the growing challenge, quietly pulled him out of Greece after one-and-a-half years in the job and sent him into retirement, sources in Berlin and Athens said. The ministry said it could not comment on personnel matters and declined to put Reuters in touch with the diplomat, Roland Michael Wegener.

Roesler too had grown fed up with the lack of progress on the Greek cooperation deal he had hoped would bolster his own battered image and arrest a precipitous slide in support for his Free Democrats (FDP), Merkel's coalition partner.

He had been pressing for regular updates, but embarrassed aides had had little to show him. On February 17th he received a status report and it wasn't pretty.

"It seems clear that the implementation is not a priority for the Greek side," the internal ministry paper, which was obtained by Reuters, read. "From a German point of view this is unacceptable. We need immediate, clear signals from the Greek side that the country is ready to accept our offers of support."

Frank Asbeck, the chief executive of Germany's second biggest solar company SolarWorld, had accompanied Roesler on the trip back in October and pledged, along with many of his peers, to help Greece with its ambitious Helios project.

Named after the Greek sun god, its goal was to transform Greece into a "showcase" of photovoltaic development in Europe's sunbelt. But to get German firms on board, the Greek government had been told, it needed to sort out its crude regulatory framework. This hadn't happened.

"We can only support this project if we work hand in hand with the Greek government. They have to step up and deliver," Asbeck told Reuters this week.

A senior official in Roesler's ministry bemoaned the missed opportunity. "What was always important was to get a symbolic breakthrough investment. We told the Greeks we just needed some kind of stone laying ceremony, that we'd send a minister down and that would get things going. It never came."

In a speech on Ash Wednesday in southern Bavaria, Roesler dropped all pretence and slammed the Greeks for failing to deliver on the promises made back in October.

It didn't take long for Chrysohoidis to hit back. "I realize Mr. Roesler has a terrible problem in the polls that show his party at 1.5 percent and he attacks Greece to become popular with the Germans," he told Greek television.

NO FREE LUNCH

Even if Roesler's grand plan had borne fruit, it surely would have been too little and too late to prevent the economic and political upheaval that ensued and continues to haunt Greece. If the radical left party SYRIZA, led by bailout-opponent Alexis Tsipras, emerges victorious in Sunday's election, the risk will rise that Greece could leave the euro.

A confidential wire by the German embassy in Athens warns of "turmoil in the markets" if Tsipras wins and "trouble in the streets" if he doesn't, a senior German official said.

After the experiences of the past year, some euro zone watchers believe Germany will be the first to open the exit door and give Greece a nudge. But that analysis may be too simplistic. The German EU official said regardless of who wins the Greek vote, a new government would be given a final chance.

"There will be a very clear 100-day plan for a new government. If it's not implemented in full, then the game is over," the official said. "This is a very bitter election for the Greek people. They are being asked to support the old guard that got them into this mess."

Others believe the hurdles to an exit are higher. A top European central banker said there was no way to force Greece out of the euro zone if it wanted to stay.

"Europeans can decide to turn off the money taps, in which case Greece defaults by September but it would still stay in the euro," he said.

"There is absolutely no trust in Greek politicians and an awareness that whoever wins, the Greek program will need to be renegotiated after the election. The question is how much Germany is willing to pay to keep Greece in the euro zone. Only Merkel and the politicians can decide that."

Kerber at the BDI believes Merkel cannot afford to let Greece leave because that could trigger uncontrollable contagion in the euro zone, with devastating consequences even for its star member Germany, whose booming exports depend on the health of its European partners.

Like a married couple that have come to loathe each other but remain together for the good of the kids, Germany and Greece may be stuck with each other for a while. This is a message Merkel will need to begin sending more forcefully to her domestic constituents after the Greek vote, Kerber said.

"Germany has to realize that it can't sell its goods to everyone else and run huge trade surpluses without assuming more responsibility and leadership in Europe to hedge its national interests," he told Reuters. "Being export champion for free simply doesn't work. As Milton Friedman once said, there is no free lunch."

(Reporting by Noah Barkin, Gernot Heller, Annika Breidthardt in Berlin, Dina Kyriakidou and Harry Papachristou in Athens, Daniel Flynn in Paris; editing by Janet McBride)

Slaves.  Rowing boats.  Around the Mediterranean.

Quote from: The Minsky Moment on May 11, 2012, 02:54:33 PM

Quote from: Martinus on May 10, 2012, 03:32:32 PM
Essentially, as the work efficiency and automation increases, we are not able to get full employment anymore.

This again?

Work efficiency and automation has been increasing forover 200 years.  If this causal relationship held, we should have 98.5% unemployment by now.

The previous industrial revolutions are false analogues.

Unless you can name the jobs which will replace those now being lost to automation, or being devalued by a global army of labor, this assertion is only an article of faith, and one increasingly tattered, at that.

Quote from: Iormlund on May 11, 2012, 03:56:06 PM
Sure, automation has enabled society to dedicate resources to more valuable tasks.

I do wonder, however, if we're near the point where those "relieved" of mindless jobs will not be capable of undertaking anything else. I mean, your average factory worker is not going to be able to design a car or develop a drug, no matter how hard he or she tries. Most people just don't have what it takes, just like I can't slam dunk with my towering 1.70m height.

Precisely.  This is your business, Dr. Proteus, and it's your business to know your business.  But when I say it I'm a dumb commie.

Quote from: Sheilbh on June 15, 2012, 09:13:04 PM
Here's an interesting article reported more from the German perspective.  Honestly it reminds me of nothing so much as the bright young Heritage Foundation staffers going to privatise the stock market after the Iraq war:

That must be far more insulting to the Greeks than the Germans. This is the 21st century and Greece is an advanced western democracy in Europe. Surely they can work through telephone calls and emails.

The article mentions the legacy of the Prussian bureaucrat, but based on the article that legacy seems to be that decisions made are implemented. That isn't a uniquely German cultural trait: that is just a prerequisite to having an organization that isn't a clusterfuck.

Greeks are a people singularly unsuitable for democracy.

Quote from: The Brain on June 16, 2012, 09:32:21 AM
Greeks are a people singularly unsuitable for democracy.

The problem with the Greeks is that they have no word for democracy.

Somewhat sympathetic D.M. item about Drachmageddon:

http://www.dailymail.co.uk/news/article-2160022/Drachmageddon-Middle-class-poverty-Feral-gangs-Neo-Nazis-In-Athens-wait-volcano-explode.html?ICO=most_read_module (http://www.dailymail.co.uk/news/article-2160022/Drachmageddon-Middle-class-poverty-Feral-gangs-Neo-Nazis-In-Athens-wait-volcano-explode.html?ICO=most_read_module)

Quote from: alfred russel on June 16, 2012, 09:25:57 AMThat must be far more insulting to the Greeks than the Germans. This is the 21st century and Greece is an advanced western democracy in Europe. Surely they can work through telephone calls and emails.

It is more insulting to the Greeks.  But some stereotypes have a real basis.  Having said that I think after the bailout was made there should have been far more involvement.

QuoteThe article mentions the legacy of the Prussian bureaucrat, but based on the article that legacy seems to be that decisions made are implemented. That isn't a uniquely German cultural trait: that is just a prerequisite to having an organization that isn't a clusterfuck.

In part it's just making sure decisions are implemented.  But I think it takes a particular sort of dedications to implement decisions of the government that's just cut your wages, your pension, your benefit and fired your colleagues.  Plus there's always been issues with the capability of the Greek state.  I've mentioned before that most tax offices don't have computers yet.

This is, incidentally, a big worry if the Greeks leave.  I'd trust the Germans or the Brits or the French, or, say, the Austrians to implement relatively secretly the policies needed to withdraw from a currency union - and to get things like the printers and capital controls ready.  But the Greeks? :mellow:

Yeah. I can't imagine how the Greeks can pull an exit off.

Quote from: Ideologue on June 16, 2012, 02:29:18 AM
Precisely.  This is your business, Dr. Proteus, and it's your business to know your business.  But when I say it I'm a dumb commie.

Don't worry I'm on it, one redundant worker at a time. :P

Maybe they can ask De La Rue to print the banknotes for them and then pay with those same banknotes? ;)

Quote from: Zanza on June 16, 2012, 01:09:27 PM
Maybe they can ask De La Rue to print the banknotes for them and then pay with those same banknotes? ;)

That's the obvious answer.


But AR is right.

Quote
The Greeks placed huge importance on face-to-face meetings, while the Germans felt most issues could be resolved remotely by phone or email.

I mean, seriously. 21st century. Join it.

Quote from: MadImmortalMan on June 16, 2012, 05:24:22 PM
I mean, seriously. 21st century. Join it.

Well 21st century in our society, in a globalised economy I think being flexible and aware helps.  Especially if you're investing a lot in something.

I know from my old job that when we were going for work in the Middle East and India especially a lot of work had to go in on building up personal relationships with the people in charge of the business.  Which included lots of face-to-face meetings and lots of regular phone calls just to 'keep in touch' and often offer free advice - that was all necessary before getting them into a long-term contract.  Once that happened the client care people similarly had to make lots of trips for face-to-face meetings.  Similarly the MD talked about the change of sort-of cultural mindset when going for business in China.

The Scandinavian companies on the other hand mainly did business by e-mail with one annual trip and the odd phonecall in an emergency.

I think the one high-ranking civil servant we sent to Greece was called "Reichskommissar" in their press, so I am not sure if further visits would have brought much benefit.

Quote from: Zanza on June 16, 2012, 05:45:44 PM
I think the one high-ranking civil servant we sent to Greece was called "Reichskommissar" in their press, so I am not sure if further visits would have brought much benefit.

The press is the press.  If the UK were imposing those conditions on Ireland or India we'd get as bad a set of attacks.

But I think the criticism isn't the lack of face-to-face meetings but the lack of engagement in the first year or so of the first bailout by Berlin and Brussels and, as an aside, the lack of cultural understanding implied.

Edit:  I mean if there was a similar situation between Germany and the UK you'd get as bad or worse and we weren't even occupied.  You'd probably even get that if you beat England at football :lol:

There was and is a lot of resentment whenever Germany gives policy advice or expresses its wishes or conditions. Why do you think more engagement would somehow change that? It would just have amplified that.

I don't think it would change that.  Germany's the leader of Europe now, in particular the leader of the hard-line austerity wing of Europe and so they're going to be resented really no matter what they do.  Which is a shame because some of that resentment isn't deserved, and though some of it is I think it's all over the top. 

Though it doesn't help that Schauble's the guy who give advice.  He's the finance minister equivalent of Rumsfeld.  Everytime I see him on the TV I wait for the news of stock market declines after his latest blunt statement.

But I do think more engagement could helped make the program work, which matters considerably more than how Germany feels she's regarded.  But it's not just a Berlin problem, Brussels should have been far, far more engaged.  But look at that thing about how the Greeks decided to cut the civil service pensions and benefits and then fire a bunch - which German officials thought was the wrong way round.  If there was a more engaged, active IMF-style program then that could've been done the right way round (plus a raise) which wouldn't have made for such a demoralised staff implementing policy.

How do you get more engagement when the Greeks are a stone wall? They aren't interested.

The Greeks don't want to be saved. End of story.

Quote from: MadImmortalMan on June 16, 2012, 06:22:36 PM
How do you get more engagement when the Greeks are a stone wall? They aren't interested.

I have some commiseration with the Germans regarding why they should be expected to engage in the first place. Greece has maintained a primary deficit and can't seem to close it. It can either take the terms of a possible bailout--which only Germany is able to back up--or it can go on its own, which means more severe and immediate budget cuts than is currently on the table, plus possibly leaving the euro which will hurt Greeks far more than the rest Europe.

From an outsiders point of view, large parts of the Greek state seem to be in denial (at least publicly) about their situation, and seem to think that they have some leg to stand on to negotiate something.

Quote from: MadImmortalMan on June 16, 2012, 06:22:36 PM
How do you get more engagement when the Greeks are a stone wall? They aren't interested.

That's not entirely true.  The period we're discussing here was when Papaconstantinou was Finance Minister which was Greece at their most engaged.  But you help them design policies.  Frankly telling them to update their solar energy regulations probably isn't helpful in the context of severe budget cuts and a fall of 20% of GDP.  Providing a framework and support is more helpful.

There was a time when the EU sent in people to help improve tax collection - they came with computers and everything - and revenue collection increased by around 50%.

Quote from: alfred russel on June 16, 2012, 06:35:10 PMGreece has maintained a primary deficit and can't seem to close it.

Not just Greece. We'll be lucky to achieve a drop from 9% to 7% GDP deficit this year, after >5% or so GDP spending cuts and tax hikes.

Quote from: Sheilbh on June 16, 2012, 05:49:19 PM

But I think the criticism isn't the lack of face-to-face meetings but the lack of engagement in the first year or so of the first bailout by Berlin and Brussels and, as an aside, the lack of cultural understanding implied.

I am generally pretty damn skeptical of things being blamed on such "soft" causes like "Gosh, if only the German had spent more quality time with the Greeks, this could have been avoided!"

That is usually just an excuse to avoid looking at the actual hard factors involved.

How much is this entire monetary disaster seen by anyone in Europe as being a pretty good sign that the entire concept of the Euro was just a bad idea?

Some? A lot? Not at all?

Quote from: Berkut on June 17, 2012, 12:42:15 AM
How much is this entire monetary disaster seen by anyone in Europe as being a pretty good sign that the entire concept of the Euro was just a bad idea?

Some? A lot? Not at all?

Between some and a lot.

Quote from: Sheilbh on June 16, 2012, 06:04:05 PM
But look at that thing about how the Greeks decided to cut the civil service pensions and benefits and then fire a bunch - which German officials thought was the wrong way round.

Do you seriously believe that this level of micromanagement by Germany or the EU was feasible or even desirable? That would only work if we send hordes of civil servants to Greece and basically make this sovereign nation a province of the EU under federal administration.

When there were plans to send German and EU personel to Greece to monitor the enaction of agreed austerity, ie. giving it a personal touch from Germany, there was a huge uproar against it.

I do agree with Sheilbh that having someone other than the Greeks run Greece would have been a big help.

Quote from: Kleves on June 17, 2012, 08:48:29 AM
I do agree with Sheilbh that having someone other than the Greeks run Greece would have been a big help.

:hmm:

They just need their drachma back so that they can have 20% devaluation and 15% interest rates like they used to have. Should never have joined the Deutschmark in the first place.

Quote from: Zanza on June 17, 2012, 01:20:13 AM
Do you seriously believe that this level of micromanagement by Germany or the EU was feasible or even desirable? That would only work if we send hordes of civil servants to Greece and basically make this sovereign nation a province of the EU under federal administration.

Well that's not what it would have done.  And I wouldn't have sent Germans, to be frank.

The Greek state's never had a great deal of institutional capacity.  The workforce was cut and the remaining workers demoralised.  It isn't sufficient to say 'get going on those structural reforms' and then leave them for a year only to bemoan, later on, that it's not worked out.  I think a far greater degree of support could have been offered - especially as this was the period with the very positive FinMin.

The example of EU help with tax collection when the Greeks were coming up to their deadline is instructive.  It didn't create a massive furore and it was very effective.  What did cause issues was the suggestion of shifting budgetary sovereignty to the EU, which is always going to be controversial but especially in a proud country like Greece.

QuoteI am generally pretty damn skeptical of things being blamed on such "soft" causes like "Gosh, if only the German had spent more quality time with the Greeks, this could have been avoided!"

That is usually just an excuse to avoid looking at the actual hard factors involved.

It's quite lucky I didn't say that then.  We've got a 30-something page thread about the hard causes.  The soft factors matter too.  As I say the meeting thing isn't key it's just symptomatic of neglect of Greece from when they got their first bailout to when Papandreou's government fell.

Quote from: Richard Hakluyt on June 17, 2012, 11:50:45 AM
They just need their drachma back so that they can have 20% devaluation and 15% interest rates like they used to have. Should never have joined the Deutschmark in the first place.

Agreed, I'd add they should also never have been let in.  Everyone knew they were lying.  But I think the same actually goes for Spain, Portugal and Italy too.

Those countries also traditionally had pretty soft currencies. If the euro had been run more like the peseta then the Med countries would be doing fine, but of course people like the Germans and Dutch would be mightily peeved at the inflation rate that would have entailed.

What should had been done then Sheilbh? Constantly bowing to the Greeks on personal meetings an in Tv while begging them to take the aid AND try to come up with a manageable country?

Quote from: Tamas on June 17, 2012, 11:58:53 AMWhat should had been done then Sheilbh? Constantly bowing to the Greeks on personal meetings an in Tv while begging them to take the aid AND try to come up with a manageable country?

I think the IMF should have been allowed to take the lead.  They have experience of running these sort of programs that the EU, frankly, doesn't.  The program should have been more hands on to avoid errors like that with the civil service.  And there should have been high-level follow up and support for the government - so the odd visit by German ministers and at least one visit by the Presidents of the Commission and the Council would seem about right during a massive EU led bailout.  I mean if they're not engaged in that what exactly are they for? :bleeding:

My observation would be that the EU also got the tone wrong with Greece for a long time.  I've read that Greeks thought the EU position was softening because in their last communique they (after an argument at the summit dinner) included a sentence about the significant and difficult efforts ordinary Greeks have already made.  That sort of tone - with the acknowledgement that what we're asking the Greeks to do is very difficult because it's basically that they should bear the costs of their clientilist political masters for the last decade - would have helped.  I think too much time was spent moralising and calling them lazy.  It's not helpful and it fucks them off.

Sure it shouldn't have been more hands-on, and you are probably right that the IMF is way better in that.

But I am pretty sure the Greeks were too proud for that as well. And their poiticans too vary of losing control of their budget.

Quote from: Iormlund on June 16, 2012, 06:55:00 PM

Quote from: alfred russel on June 16, 2012, 06:35:10 PMGreece has maintained a primary deficit and can't seem to close it.

Not just Greece. We'll be lucky to achieve a drop from 9% to 7% GDP deficit this year, after >5% or so GDP spending cuts and tax hikes.

Well yeah, you are fucked too.  :P

Spain is a bit different than Greece. Before the crisis started Spain wasn't breaking the rules by spending too much and producing fraudulent books. Spain's government seems to be less dysfunctional than Greece, and Spain is too big to let collapse without bother.

Quote from: Richard Hakluyt on June 17, 2012, 11:58:10 AM
Those countries also traditionally had pretty soft currencies. If the euro had been run more like the peseta then the Med countries would be doing fine, but of course people like the Germans and Dutch would be mightily peeved at the inflation rate that would have entailed.

Let the Germans and the Dutch have expensive currencies, but let the good holiday destinations be cheap. This is my hope at least.  :P

Quote from: Tamas on June 17, 2012, 12:43:48 PMBut I am pretty sure the Greeks were too proud for that as well. And their poiticans too vary of losing control of their budget.

I'm not convinced that was so early in the Papandreou administration.  Papaconstantinou was a relatively successful FinMin (by the standards of the bailout) and like Monti he's that rare beast - a genuine liberal.  I think if there was sufficient outside support and help a lot more could've been done in that first year.  It still probably wouldn't have been enough to matter - the IMF have set out 5 necessary conditions for internal devaluation to work, by my count Greece maybe, possibly fulfils 1.  But I think it would have had a greater chance of success than neglect.

Edit:  And if the EU had given a €110 billion loan to build infrastructure Barosso and van Rompuy would've been down there every other week to remind everyone of what the EU does.

Quote from: alfred russel on June 17, 2012, 12:53:18 PM

Quote from: Richard Hakluyt on June 17, 2012, 11:58:10 AM
Those countries also traditionally had pretty soft currencies. If the euro had been run more like the peseta then the Med countries would be doing fine, but of course people like the Germans and Dutch would be mightily peeved at the inflation rate that would have entailed.

Let the Germans and the Dutch have expensive currencies, but let the good holiday destinations be cheap. This is my hope at least.  :P

I was wondering whether to go to Greece this year, but decided to wait a while as it is likely to be a lot cheaper next year  :(

Quote from: Iormlund on May 12, 2012, 11:30:55 AM
Manual workers use the equipment, but they don't... maintain it.

Utterly and completely wrong.

Quote from: Richard Hakluyt on June 17, 2012, 03:07:29 PM
I was wondering whether to go to Greece this year, but decided to wait a while as it is likely to be a lot cheaper next year  :(

I want to go and enjoy cheap Greece actually.  I'll say it's in the name of Euro-solidarity :P

I want to go to Tunisia too.  Still relatively cheap because of the revolution with none of the worries of a post-revolutionary situation.

I think that even if Barroso had gone to Greece every other week, nothing would have changed. The country would still be unreformable.

Quote from: Sheilbh on June 17, 2012, 04:01:07 PM

Quote from: Richard Hakluyt on June 17, 2012, 03:07:29 PM
I was wondering whether to go to Greece this year, but decided to wait a while as it is likely to be a lot cheaper next year  :(

I want to go and enjoy cheap Greece actually.  I'll say it's in the name of Euro-solidarity :P

I want to go to Tunisia too.  Still relatively cheap because of the revolution with none of the worries of a post-revolutionary situation.

You should do both.  I remember my one trip to NYC was November 2001 and was particularily memorable because it felt like being a part of history...

Quote from: Richard Hakluyt on June 17, 2012, 03:07:29 PM

I was wondering whether to go to Greece this year, but decided to wait a while as it is likely to be a lot cheaper next year  :(

On the other hand, this might be the last time to go to Germany for a while (if whatever currency they have appreciates quite a bit). I went to Norway last year, and the prices made it rather unpleasant. Well, along with the wind, rain, and cold, the prices made it unpleasant. :(

Quote from: Sheilbh on June 17, 2012, 04:01:07 PM

I want to go to Tunisia too.  Still relatively cheap because of the revolution with none of the worries of a post-revolutionary situation.

I'm thinking of taking a short holiday to Tunisia next year, actually.

Quote from: alfred russel on June 17, 2012, 07:01:42 PM
On the other hand, this might be the last time to go to Germany for a while (if whatever currency they have appreciates quite a bit). I went to Norway last year, and the prices made it rather unpleasant. Well, along with the wind, rain, and cold, the prices made it unpleasant. :(

East Germany's still surprisingly cheap.  At least when I last went Berlin was not only amazing fun it was really, really affordable.

QuoteYou should do both.  I remember my one trip to NYC was November 2001 and was particularily memorable because it felt like being a part of history...

If I can afford either I will :)

Quote from: Sheilbh on June 17, 2012, 07:05:48 PMIf I can afford either I will :)

Just borrow the money and spend it. That's the way out of this economic crisis!

Quote from: Zanza on June 18, 2012, 01:11:55 AM

Quote from: Sheilbh on June 17, 2012, 07:05:48 PMIf I can afford either I will :)

Just borrow the money and spend it. That's the way out of this economic crisis!

:lol:

Sad thing is that's indeed apparently the program of the "new wave" of the left in Europe.

Quote from: Zanza on June 18, 2012, 01:11:55 AM

Quote from: Sheilbh on June 17, 2012, 07:05:48 PMIf I can afford either I will :)

Just borrow the money and spend it. That's the way out of this economic crisis!

communolise your debt and let the rest of the family pay for your trip, that will help too and make your really popular. :p

Quote from: Zanza on June 18, 2012, 01:11:55 AM

Quote from: Sheilbh on June 17, 2012, 07:05:48 PMIf I can afford either I will :)

Just borrow the money and spend it. That's the way out of this economic crisis!

If someone was offering me loans with Gilt or Bund yields, I would :P

Just leadership and engagement Shelf?  Surely there must be some more catch phrases Germany lacks. :lol:

Anyone know what the minimum wages are in Greece, Spain, and Italy?

Quote from: Admiral Yi on June 18, 2012, 07:31:10 PM
Anyone know what the minimum wages are in Greece, Spain, and Italy?

€600 in Greece, down from €800.  I think Italy's one of those countries (like Germany, until recently perhaps?) that doesn't have a minimum wage, but minimum wages set by collective bargaining for different industries.

Edit:  Apparently Spain's is around €650.

I assume we're talking per month? :unsure:

Quote from: Admiral Yi on June 18, 2012, 07:43:34 PM
I assume we're talking per month? :unsure:

Yeah.  I think many Euro countries do a statutory minimum per month for full time workers rather than an hourly rate.

Quote from: Sheilbh on June 18, 2012, 07:47:14 PM
Yeah.  I think many Euro countries do a statutory minimum per month for full time workers rather than an hourly rate.

So what happens with part time workers?

Quote from: Admiral Yi on June 18, 2012, 07:51:06 PM

Quote from: Sheilbh on June 18, 2012, 07:47:14 PM
Yeah.  I think many Euro countries do a statutory minimum per month for full time workers rather than an hourly rate.

So what happens with part time workers?

I don't know :mellow:

I've found an EU briefing paper on it that lists the countries by system (Spain and Greece are monthly or daily rate) but I've no idea how they cover part-time workers.  Presumably as fraction of the working day/month? :mellow:

Read Yanis Varoufakis's blog.

Quote from: Zanza on June 18, 2012, 01:11:55 AM

Quote from: Sheilbh on June 17, 2012, 07:05:48 PMIf I can afford either I will :)

Just borrow the money and spend it. That's the way out of this economic crisis!

The irony being that it is?

Quote from: Sheilbh on June 18, 2012, 08:03:00 PM

Quote from: Admiral Yi on June 18, 2012, 07:51:06 PM

Quote from: Sheilbh on June 18, 2012, 07:47:14 PM
Yeah.  I think many Euro countries do a statutory minimum per month for full time workers rather than an hourly rate.

So what happens with part time workers?

I don't know :mellow:

I've found an EU briefing paper on it that lists the countries by system (Spain and Greece are monthly or daily rate) but I've no idea how they cover part-time workers.  Presumably as fraction of the working day/month? :mellow:

It's like that, the proportional part if they're not full time workers.

There's little point with it, as barely anyone makes minimum wage. You can't live with that.

Yes. If you take the UK minimum wage and assume a 40-hour week then it comes to 1300 euros, which actually helped some people and didn't seem to have much effect on unemployment.