Let's hope not. I honestly have no idea what will happen next, but I'm worried for my elderly parents and not-very-well-off sister and her kids home in Ireland.
Da Boss wrote: Let's hope not. I honestly have no idea what will happen next, but I'm worried for my elderly parents and not-very-well-off sister and her kids home in Ireland.
What do you think the repercussions for Ireland could be?
Da Boss wrote: Let's hope not. I honestly have no idea what will happen next, but I'm worried for my elderly parents and not-very-well-off sister and her kids home in Ireland.
What do you think the repercussions for Ireland could be?
Invaded by greeks hiding in a giant wooden pint glass?
Frankly this HAD to happen. While moves were made to save a deal, I suspect that the European partners did not try hard.
Greece elected a government which raised a popular mandate on rejecting austerity. There is a lot of political mileage in standing on that bandwagon.
This essentially means. 'We the Greek government may well be responsible for the mess, but it profits us to ignore the debt and let it be someone else's problem.'
This leaves the European partners two choices:
1. Bail out Greece.
Greece will not make necessary savings because by avoiding these savings the people in power remain in power. Greece got into debt by making short term policies that garnered immediate votes rather than by making sound hard choices. Those advocating sound economics couldn't offer as much cake on the day, and didn't get elected.
2. Not bail out Greece.
Greece fails as an economy. his sucks for Greece its good for the Eurozone who manage to burn some dead wood, and for those governments in countries that desperately need austerity but face opposition parties who oppose austerity on a populist ticket.
It is also a warning the people that 'borrow and squander' economic policies are unsustainable and should end.
The kicker:
It is all too easy to hoodwink the people that a short term wasteful spending or revenue policy is wise, politicians have an easy path as short term benefits are visible.
Those with longer term viewpoints cant generate as much immediate short term benefit and thus ironically appear less competent while being considerably more.
Western politics doesn't favour long term planning, so a hard shock is required for perspective.
In a nutshell:
While Greece isn't being undermined, the Greek government is being left to do what the numbers say will happen, Greece must be allowed to fail to save other debt ridden economies. Immediately Ireland, Spain and Portugal, and ultimately France and the UK. The later two cant be allowed to fail, but have sizable anti-austerity parties. In the UK the SNP is heavily anti-austerity and wants to follow a heavy borrowing policy. The SNP has the horrible advantage that it can boor against a UK economy while squandering only for a partisan portion of the population. This is why SNP demands for extra borrowing powers under their 'mandate' are being strongly resisted by Whitehall.
Greece's fall may well save others by saving austerity and making it more palletable than the alternatives.
No idea, maybe higher cost of borrowing, speculation that we might be next to leave the Eurozone, general deepening of the recession at a time when we need growth badly- I have no idea. I'm just pretty worried.
Automatically Appended Next Post: Orlanth: I have to go to my school's prom right now, but there are elements of your argument that I strongly disagree with. The IMF was incredibly inflexible in these negotiations, and I feel there was a political element to keeping the left in Europe down across the majority of the Centre Right establishments.
The Greeks bear much responsibility too, though, for poor choices, poor borrowing and not being willing to face up to that responsibility, blaming Germany instead.
I believe Greece could have been saved if the political will had been there. It wasn't.
I find it mildly bemusing that the idea of taking the Greek decision to a democratic referendum is currently seen in the media as 'opposing the EU'. Either the Greeks want to accept the cuts in exchange for continued ability to make repayments, or they'll choose to default. Whichever it is, it's up for them to decide. What the EU wants in this scenario, has nothing to do with anything any more. A democratically elected government is holding a directly democratic referendum on a decision that will dictate the economic future of their country. That seems fair.
The IMF was incredibly inflexible in these negotiations,
As they should be, the Greek government stood on a ticket of non payment, and got elected.
Grrece will go bankrupt and will be in a better condition afterwards than if they tried austerity half measures while the people were too short sighted to back them, and the politicians too corrupt and greedy.
The Greeks bear much responsibility too, though, for poor choices, poor borrowing and not being willing to face up to that responsibility, blaming Germany instead.
That didn't endear them, it was also not so much Greece's opinion but the elected anti austerity government. They made it very plain to everyone they wanted no economic responsibility.
I believe Greece could have been saved if the political will had been there. It wasn't.
Greece rejected voting for those who had the will by concious decision. They expected a perpetual free pass and for the good times to keep on rolling. They were wrong and had to understand the consequences.
Put it this way:
If you were a bank manager and someone got a loan then went to a casino, then asked for another loan, would it be harsh, unfair or discriminatory to refuse?
I'm firmly in the Greek corner here. I applaud any government that's going to put the welfare of its people ahead of its economy , and stand up to the EU. Good on the PM for sticking to his guns, I hope the Greek public backs him.
No idea, maybe higher cost of borrowing, speculation that we might be next to leave the Eurozone, general deepening of the recession at a time when we need growth badly- I have no idea. I'm just pretty worried.
With all due respect DA, Im not sure where you are coming from. How or why is Ireland next on the list to leave the EU?
Every single report from the IMF to the ESRI to IBEC accept that Irelands growth both this year and next is projected at 3+ % which is a huge turnaround from the recession days.
Unemployment is down from 15% to 9.7%, we recently had our credit rating upgraded from at one point close to junk now to a-a+ (depending on the agency) and there have been a series of very big profile investment agreements from USMNs and EU companies of late.
Yes inflation rates are down again as of April which raises fears of sustained deflation but after the horrors of the pre 2008 prices (especially in the fething housing market) Im happy about it (short term).
I wish them all the best, although to come at this point it would seem a lot of the entities on either side have failed to do their task.
If you were a bank manager and someone got a loan then went to a casino, then asked for another loan, would it be harsh, unfair or discriminatory to refuse?
It would not surprised me to find out that he'd been given the loan, so he could buy the casino.
From my perspective, it looks like both parties are acting against their mutual interests.
Yes, in most ways, the Greeks did this to themselves and deserve to reap the consequences. The problem is, is that really the best outcome for Europe?
The big European powers are acting hamfistedly and without regard to potential geo-political consequences and the possible ramifications of what could happen if Greece were to exit the Eurozone and the EU, and the potential destabilizing effect that could have, in order to "stick it to 'em, they deserve it."
On the other hand, the current Greek government is acting like a band of amateur idealists who actually believe their own bs, like the sixteen year old wearing the Che Guevara shirt and espousing ideals of which they have no idea or the stereotypical college student who's taken a single politics course and believe they know it all, when they know almost nothing.
You've got the grumpy old man who can't see beyond his nose at the potential disaster awaiting him, fighting the unrealistic idealist who can't see the ground he's walking on is ready to give way.
Long and the short of it:
"The people" did not want to pay more ever as shown with any referendum or voting no matter how explained.
Decades of consistent spending more than earnings.
Public accepted practice of tax evasion.
Reforms that were required was to improve collection and improve political transparency due to corruption issues.
http://ec.europa.eu/economy_finance/publications/occasional_paper/2014/op192_en.htm
Mention of terms being inflexible makes me nuts, it shows many reasonable attempts were made earlier and now they have been deferred so long it now has to slip into painful to survive.
The people have spoken: they expect others to save them but will make few efforts to ensure they can stand on their own two feet for the future: debt load is to the point of no getting out from it.
Unfortunately, the only logical choice is to no longer extend loans and the debt holders to claim a default against Greece.
The consequences are theirs to bear.
Long and the short of it:
"The people" did not want to pay more ever as shown with any referendum or voting no matter how explained.
Decades of consistent spending more than earnings.
Public accepted practice of tax evasion.
Reforms that were required was to improve collection and improve political transparency due to corruption issues.
http://ec.europa.eu/economy_finance/publications/occasional_paper/2014/op192_en.htm
Mention of terms being inflexible makes me nuts, it shows many reasonable attempts were made earlier and now they have been deferred so long it now has to slip into painful to survive.
The people have spoken: they expect others to save them but will make few efforts to ensure they can stand on their own two feet for the future: debt load is to the point of no getting out from it.
Unfortunately, the only logical choice is to no longer extend loans and the debt holders to claim a default against Greece.
The consequences are theirs to bear.
It is also claimed that the Greeks and the EU at large cooked the books to ensure Greeces change to the Euro currency.
There is historic massive public funding and subsidy of pensions, the civil service etc. They deffo do not want to reduce their earning potential.
Yes this what is distressing:
Savings bonds were considered as a means to drum up money but surveys found people did not think the government would pay them.
Meanwhile they fully expect their pensions with retirement in your 50's.
With all this, the expectations of being owed bailout money is there when their own people think their government is not good for it and will not stand for any conditions to ensure future payment to those loaning the money?
The problem is that the consequences most likely will not be isolated to Greece, and opens up some potentially uncomfortable geopolitical issues.
Bankruptcy is never pretty.
Greece and it's citizens will have no financial worth in their state of whatever currency they are stuck with: no buying power and cut off from loans.
Multiple groups now have to write off money owed by Greece or pursue means of recupement.
The euro as a currency will take a big hit.
I hate to say though, the only alternative to not curbing spending or increasing income to live within your means is to have no money and all the regrettable things that condition entails. This was a predictable outcome, it's timing was solely based on lender's nerve.
The problem is you have to set boundaries. You can't just let Greece waltz off without paying its debts. It sets a horrible precedent for other struggling (much larger) economies in Europe. The EU (Germany in particular) has a vested interest in making the terms harsh enough as insurance against a Spanish or Portuguese attempt at the same thing.
The Greeks will never realistically pay off their debts. As it stands they owe 1.7 billion Euro by the 30th but that's just the tip of the iceberg. They owe a fourth 6 billion by the end of July and 7 billion by the end of August IIRC. It's a risky move to let Greece depart the eurozone, because other countries will closely watch how the Greek economy recovers. If their crashing out of the Eurozone isn't too disastrous, other countries might be tempted to do the same.
I'm a relatively uninformed spectator here, so I could be very very wrong.
Greece needs ( and needed) to make a fundamental shift in its economic base (massive civil service paymewnts/entitlements, dependance on tourism/food exports, upskilling into hitech service industries, focus on power (industry) restucturing/efficencies). I hope they do tbh but they have left it mindbogglingly late to make that shift and change.
The shared currencies is a fine safety net but cannot be a mechanism for abuse, as mentioned: why hold your end of the bargain at the cost of you citizens and political poll levels while others take the short term approach?
A partnership is only as fair as what is contributed.
I am angered by the Greek "entitlement" yet the suffering is real.
They deserve consequence for their actions but the magnitude is up to world conditions and it may exceed any feelings of justice.
Talizvar wrote: Yes this what is distressing:
Savings bonds were considered as a means to drum up money but surveys found people did not think the government would pay them.
Meanwhile they fully expect their pensions with retirement in your 50's.
With all this, the expectations of being owed bailout money is there when their own people think their government is not good for it and will not stand for any conditions to ensure future payment to those loaning the money?
The problem is that the consequences most likely will not be isolated to Greece, and opens up some potentially uncomfortable geopolitical issues.
Bankruptcy is never pretty.
Greece and it's citizens will have no financial worth in their state of whatever currency they are stuck with: no buying power and cut off from loans.
Multiple groups now have to write off money owed by Greece or pursue means of recupement.
The euro as a currency will take a big hit.
I hate to say though, the only alternative to not curbing spending or increasing income to live within your means is to have no money and all the regrettable things that condition entails. This was a predictable outcome, it's timing was solely based on lender's nerve.
All true, however there was a large willingness on the part of other EU nations and groups to overlook these problems when times were good to get Greece into the Eurozone for other reasons. Due diligence was not done in many cases, or in cases in which it was, often ignored. They accepted that risk with a fair idea that it was more than what was on paper, and now seem to be trying to shirk their part of it.
There are other issues however as well. Awkward situations can arise with all the refugees and migrants going through Greece. Greece could seek economic and political ties elsewhere. A destabilization in that area could potentially incite new conflicts in an area that's had something like a dozen wars in the last ~120 years. Confidence in the EU as a political institution and stabilizing force in Europe will take a major hit. These are all issues that should be paid some heed.
Don't get me wrong, the Greek government has acted insanely irresponsibly and in some ways continues to do so, and should bear the consequences. But others willfully enabled that behavior to suit their own ends, and there are now a lot of major considerations beyond just fiscal negligence.
All true, however there was a large willingness on the part of other EU nations and groups to overlook these problems. Due diligence was not done in many cases, or in cases in which it was, often ignored. They accepted that risk with a fair idea that it was more than what was on paper, and now seem to be trying to shirk their part of it.
ISIS and Taliban are fine examples of the predatory / opportunistic forces that can move in when countries are destabilized so they will still need to be assisted / managed for the sake of the region if bankruptcy is in their future.
ISIS and Taliban are fine examples of the predatory / opportunistic forces that can move in when countries are destabilized so they will still need to be assisted / managed for the sake of the region if bankruptcy is in their future.
Theres monetary destabilsation/disruption and then theres no working/legitimate government, ultra polarised factions, religious fanatacism, "Western hate motives", Jihadist ferver and absolute regional mayhem.
The comparison is seriosuly tenuous imo. Seriously.
Talizvar wrote: ISIS and Taliban are fine examples of the predatory / opportunistic forces that can move in when countries are destabilized so they will still need to be assisted / managed for the sake of the region if bankruptcy is in their future.
This is more than a wee bit of a ridiculous comparison.
Really, the concern should be that a force like them (or, more realistically, Golden Dawn) could take control in the event of a Greek collapse.
Ratius wrote: Theres monetary destabilsation/disruption and then theres no working/legitimate government, ultra polarised factions, religious fanatacism, "Western hate motives", Jihadist ferver and absolute regional mayhem.
The comparison is seriosuly tenuous imo. Seriously.
Not the threat of some organization less receptive to ethical behavior taking root, it is a fair comparison.
The comparison is not tenuous when you got a bunch of pissed off, unemployed, broke people looking for someone to blame other than themselves.
Some of the more charismatic and ruthless would smell the opportunity. Seriously.
Yeah, my country has been though hell in order to leave the gak hole we were in and pay our debts, so I'm not exactly sad if Greece has to pay them too.
Hell, there are arguments how Grexit can make the Euro stronger, but the economy looks like a giant lottery, who knows what'd happen. I'd love to see Euro getting close the £ again, because right now it's a mess.
Thanks for considering what I was saying.
I worry when hearing of people going through strife.
You try to leave it if you can.
If you are stuck, you try to fix it if you can.
If past the point of recovery you do something "radical".
Lash-out, steal from others to better your life, join a "gang" / group for support in uncertainty.
As a Greek (and by no means an expert) I feel obligated to say my own in this thread.
The vision of bankruptcy does not sit well with anyone, that's no secret I immagine, let alone people like me that have a family and a kid to look after.
Yes, I'm Greek, I consider myself an educated man speaking fluently two foreign languages and having a University degree, I'm also a bussinessman and owner of a Pharmacy and -guess what- Shieldwolf Miniatures. Must be some lazy guy doing two jobs, huh? I consider myself middle class and work hard to earn a living.
Greece has recently elected a left government saying no to austerity (which to me says very little since left nor right, politicians are all the same to me and capitalism thrives nicely -and so it should, as long as humanitarian rights are not violated).
For the past 5 years I've seen horrible measures taken against me as a civilian and tax payer, not to mention I've tollerated a bunch of foreign ignorants who say I don't pay taxes because their sold-out media says so, FYI I have almost doubled my hours of work since the crisis began depriving myself of almost all hobbys/activities I used to do and a lot of family time, yet despite my efforts my income has shrunk.
All I've seen is these nice "Institutions" that are so willing to "help us out" lending money to their banks, so they simply get them back. It is a fact I imagine most of you know that all this austerity and loaning money has not costed a single euro to any European tax payer, on the contrary almost every single European country in the E.U. has benefited from the fact Greece suffers. Yes, suffers!
MONEY ISN'T COMING TO GREECE IT COMES TO THE GREEK BANKS ONLY TO BE PAID BACK TO THE FOREIGN BANKS THAT LENT THE MONEY. A very isnignificant part enters a beaten up Greek economy, which is peanuts compared to what the economy truly needs.
We have children that pass out in public shools because of malnutrition. Do you know what it feels like not to have to provide to your children? I do because I have teachers and parents telling me about it.
We have unemployment at 30%+ when for ages 20-30 it's more than 60%! Do you know what it means when you want to work and you can't find a job? I do because I have people that have come to me literally begging me for work.
We have over 1.000 suicides per year (that's an average of 3 per day) because of debts towards the banks and loans people cannot pay. Do you know what it feels like learning that a person you knew has commited suicide for that? Because I know of two.
I do not have to prove to anyone I am not lazy, for I know I am not.
I do not have to prove to anyone I am not tax-evading, for I know I am not.
I do not have to prove to anyone I am not a thief, for I know I am not.
We have a saying in Greece. "It is hard to prove that you are not an elephant." That's what it feels like here for the past years. People have had enough. And although I fear of what may happen, I'm at least seeing one positive thing. Something is finally going to happen. Let's hope it's going to be TRUE European solidariety against their "so-precious" bank monetary system, instead of the pillaging that has took place in my country the past 5 years...
PS. Just to avoid any misunderstanings, I'm not saying by any means we are not also to blame for the fact many things do not work as they should in my country -far from it-, but pretending that EU is helping out is a shameless act.
Imo and from what life has tought me till now, there are other reasons all this is currently happening. Unexploited Greek oil, uranium, gas, gold are a few things that come to mind. Just saying...
(Edited to fix something not to be misinterpreted)
Shieldwolf Miniatures wrote: Let's hope it's going to be TRUE European solidariety against their "so-precious" bank monetary system, instead of the pillaging that has took place in my country the past 5 years...
PS. Just to avoid any misunderstanings, I'm not saying by any means we are not also to blame for the fact many things do not work as they should in my country -far from it-, but pretending that EU is helping out is a shameless act.
Firstly, I'd like to say that I have the deepest respect and sympathy for those who are just doing their best to weather what must be a horrendous economic climate, such as yourself. Being unemployed in a recession is never fun.
With regards to the money coming in and going out again though, there's a reason for that. Primarily that Greece borrowed tremendously, staggeringly large sums of money, and urinated them up the wall over the previous years. Then when the crunch came, they were unable to pay it back, and so many other governments and institutions had to step in and purchase that debt in order to stop it from smashing their own economies. A large amount of it has already been written off.
In a nutshell, I guess what I'm saying is that this isn't quite a case of an evil manipulative institution giving a loan to help repay another loan owed to it, so much as it is a group of institutions stepping in to buy up toxic debt at direct harm/risk to themselves and placing conditions on their continued financial support in helping to meet repayments of that toxic debt. I won't deny that they did so in self-interest (to stop the Greek collapse hammering their own economies), but accusing them of 'pillaging' Greece is somewhat unfair.
Sebster claims that expecting the full debt to be repaid is foolish. Considering Britain managed to pay off two World Wars over a protracted period, I personally see no issue with Greece making repayments for the next three quarters of the century if necessary. With regards to what is being demanded by Europe currently though (that Greece run a 4.5% budget surplus instead of the 1.5% it currently has) in order to make more repayments, I am somewhat less in favour. I think that asking for a slight increase in that demanded surplus is reasonable (perhaps another half a percent) as would a clause on further loans stating that any future surplus in Greek tax revenue goes to loan repayments first (or vice versa, with any fall in tax revenue lessening loan repayments). But the additional 3% at this precise time seems somewhat ludicrous.
Generally speaking, it feels like both sides are engaged in brinkmanship. And if nobody blinks, it may well send the whole stack of cards falling down. There is quite clearly plenty of room for reasonable negotiation, as there is with any loan repayment. Hopefully the children will stop lobbing rocks at each other and deal before it gets too late in the day.
As a ordinary Greek trying to make ends meat and keep a roof over your head, I feel bad for the everyday person struggling and having to face such hard times not seen in Europe in decades, counties falling apart is nothing to celebrate.
but your leaders and those in power caused one hell of a mess and loans to cover yet more loans is not working and never did. The debt totals are huge, billions owed all over the shop, IMF, euro banks, other acronyms, foreign investors, Greece has so much debt, and I don't,t think repayment is possible in a single persons working life.
Last time I saw in town holidays there are down 50% in price and still last minute deals.
Not a good sign, small but telling. No ones going to Greece.
The EU is a wreck, a despotic monolith of beuracrecy and problems who,s books are so bad acountents have refused to sign off in past.
Good luck for the next few days, big things are coming to a head. And its not going to be pretty.
Since the 20 February 2015 agreement of the Eurogroup on the extension of the current financial assistance arrangement, intensive negotiations have taken place between the institutions and the Greek authorities to achieve a successful conclusion of the review. Given the prolonged deadlock in negotiations and the urgency of the situation, institutions have put forward a comprehensive proposal on policy conditionality, making use of the given flexibility within the current arrangement.
Regrettably, despite efforts at all levels and full support of the Eurogroup, this proposal has been rejected by the Greek authorities who broke off the programme negotiations late on the 26 June unilaterally. The Eurogroup recalls the significant financial transfers and support provided to Greece over the last years. The Eurogroup has been open until the very last moment to further support the Greek people through a continued growth-oriented programme.
The Eurogroup takes note of the decision of the Greek government to put forward a proposal to call for a referendum, which is expected to take place on Sunday July 5, which is after the expiration of the programme period. The current financial assistance arrangement with Greece will expire on 30 June 2015, as well as all agreements related to the current Greek programme including the transfer by euro area Member States of SMP and ANFA equivalent profits.
The euro area authorities stand ready to do whatever is necessary to ensure financial stability of the euro area.
[1] Supported by all members of the Eurogroup except the Greek member.
Shieldwolf Miniatures wrote: As a Greek (and by no means an expert) I feel obligated to say my own in this thread.
The vision of bankruptcy does not sit well with anyone, that's no secret I imagine, let alone people like me that have a family and a kid to look after.
Its frankly easier. Handing over money to the Greek government is like handling over money to drug addicts, it will be grasped squandered and gone.
Bankruptcy levels the debt. Bailouts don't, and they dont solve Greece's problems either. Too many people play the system, and those who dont get played.
Greece needs an economic cold shower and an administrative bitchslap to clear out the corruption.
This will be accompanied very swiftly with welfare payments, moistly in materiel over money. Greece frankly is in the same state as an African junta where if you want to do any good send over milk powder and bags of grain, cash just gets squandered by the regime.
For the past 5 years I've seen horrible measures taken against me as a civilian and tax payer, not to mention I've tollerated a bunch of foreign ignorants who say I don't pay taxes because their sold-out media says so, FYI I have almost doubled my hours of work since the crisis began depriving myself of almost all hobbys/activities I used to do and a lot of family time, yet despite my efforts my income has shrunk.
All I've seen is these nice "Institutions" that are so willing to "help us out" lending money to their banks, so they simply get them back. It is a fact I imagine most of you know that all this austerity and loaning money has not costed a single euro to any European tax payer, on the contrary almost every single European country in the E.U. has benefited from the fact Greece suffers. Yes, suffers!
MONEY ISN'T COMING TO GREECE IT COMES TO THE GREEK BANKS ONLY TO BE PAID BACK TO THE FOREIGN BANKS THAT LENT THE MONEY. A very isnignificant part enters a beaten up Greek economy, which is peanuts compared to what the economy truly needs.
Banks are to governments like an abusive crack dealer and his henchmen are to addicts.
Yes all these loans are by banks and for banks, and the compounded human misery is linked to them. Pay the loan or go bankrupt, don't settle for the half measures of revolving debt and a government that refuses to face reality. Your economy is frankly undead.
We have children that pass out in public shools because of malnutrition. Do you know what it feels like not to have to provide to your children? I do because I have teachers and parents telling me about it.
We have unemployment at 30%+ when for ages 20-30 it's more than 60%! Do you know what it means when you want to work and you can't find a job? I do because I have people that have come to me literally begging me for work.
We have over 1.000 suicides per year (that's an average of 3 per day) because of debts towards the banks and loans people cannot pay. Do you know what it feels like learning that a person you knew has committed suicide for that? Because I know of two.
Decades of Greek governments went to the banks to give Greece a veneer of wealth beyond its measure. Buying good times for them and their supporters and anyone else who didn't know any better.
Lots of money thrown around, but little to come from it, and the banks, like crack dealers kept on feeding you the habit until you were hooked completely. They knew what they are doing and don't give a gak if your kids collapse in class from malnutrition, loaning money to government is business, and business is good if a country sells its people short.
However banks need paying their %. Hedge fund managers dont get to be the richest people on the planet by accident. Pay up, or burn the debt. But don't expect Europe to pay, we have our own debts to pay, and many countries are not far off your situation.
Greece isnt asking for a handout to feed its starving kids, to do that it would have to ask for so much money everyones kids would starve.
It is up to you to prevent this from not happening again, with political reform, and a way out of debt rather than having todays problems waved off to be tomorrows problems. Yesterday's tomorrow has come, and no one is deferring it any more.
Time to pay for the false good times of the 90's and 00's Greece had on borrowed money and misinvestment.
Ratius wrote: With all due respect DA, Im not sure where you are coming from. How or why is Ireland next on the list to leave the EU?
Every single report from the IMF to the ESRI to IBEC accept that Irelands growth both this year and next is projected at 3+ % which is a huge turnaround from the recession days.
Unemployment is down from 15% to 9.7%, we recently had our credit rating upgraded from at one point close to junk now to a-a+ (depending on the agency) and there have been a series of very big profile investment agreements from USMNs and EU companies of late.
Yes inflation rates are down again as of April which raises fears of sustained deflation but after the horrors of the pre 2008 prices (especially in the fething housing market) Im happy about it (short term).
Where are your fears arising from?
I haven't been paying a lot of attention to Ireland and the EU repayments since I moved, but like you I was under the impression that Ireland was doing well and had essentially gotten itself out of the recession.
Ireland has a special bailout from the UK which wiped out the Uk's austerity savings of 2011. but that was worth it.
A collapse of the Irish economy would result in unemployed irish looking for someone to blame, and I think that term is a bit too loaded/offensive. Reds8n would take full advantage. Besides it accmulates slow interet and by and large Ireland is a good credit risk, especially as austerity is now full measure.
To be fair the Irish government has handled things responsibly and while again some parties are standing on an anti-austerity ticket, notably Sinn Fein, they arent really getting thier way. The Us doesnt want the Irish economy to go tits up either. Sinn Fein would profit from a collapse, and profit from anti-austerity, so its a win-win for them, but Wall Street doesn't like it. Irish business is a traditional punt on Wall Street and the folks in Manhattan don't want to lose their investments.
Finally because Sinn Fein is anti-austerity the Ulster Unionists are all for it, they were anyway, but they are now bloody minded about making sure austerity works, so the hard measures required are actually getting some resolve behind them. As Belfast carries the de facto economy for both sides of the island, and is being bankrolled anyway by the UK under peace process agreements, and is under Unionist economic control things are fairly stable.
The above simplifies a lot of the situation into a few lines and so cant be comprehensive as to causes and effect, but is broadly accurate in the way things are going and why. So all in all Ireland is fairly safe, it got hit very hard by the collapse of 2008, but learned the lessons needed.
Automatically Appended Next Post: Seeing a lot of UK sourced packaged food products with Greek labels in UK supermarkets of late. Notably breakfast cereals.
Foreign language labels was always common in pound shops, and account for regular production overruns but Greek labeled goods are becoming evident in mainstream supermarkets which is more unusual.
Its a sign of the times, an expectation that goods packaged for the Greek market can't be sold or delivered to Greece.
Shieldwolf Miniatures wrote: As a Greek (and by no means an expert) I feel obligated to say my own in this thread. <snip>
It is good to hear from someone in the country seeing this massive issue first hand.
I am sorry for your hardship.
I liked the article I linked earlier made by a Greek such as yourself, this quote was of interest to me:
"Those officials and the plutocratic elite have escaped the crisis relatively unscathed. One minister, Akis Tsochadzopoulos, who stole an obscene amount of money from defense contracts, was sentenced to 20 years in jail. For the most part, however, the rich and powerful have been left alone even as small business owners and pensioners have been squeezed by huge tax hikes and massive cuts in benefits. For the vast numbers of Greeks in that category, it’s hard to appreciate why they should be more accountable than the government itself."
You have outlined that the way the system works now it does not reward honesty and doing the right thing. It was pointed out so many things that were the responsibility of government were poorly done or not at all.
So many citizens felt justified in not paying taxes for services they never received.
Why reward bad behavior?
So the "Mexican standoff" where government does not have enough money to meet it's commitments and citizens not wanting to pay for no or poor services.
But, there was documented info that 50% of some loans would have been forgiven if certain austerity conditions were met. I am still trying to find out the terms for why it was rejected (must have been severe).
The conditions you outline are correct for when a debtor can barely pay the interest on the loan.
You are being sucked dry, all money going to the loan holders but these were terms agreed to by the Greek government to benefit from the money loaned.
When the interest exceeds what can possibly be paid the only logical thing to do is to refuse and walk away.
The real question here is why was no line drawn in the sand by the banks and Greek government to stop the overspending?
The real question here is why was no line drawn in the sand by the banks and Greek government to stop the overspending?
No it isnt the real question, its the real answer, but requires a demand of culpability on a global scale that wont be forthcoming.
To help understand this directly we should take an analogy.
Why don't drug dealers only take as much money from drug addicts as the addict can afford to realistically pay, so they don't have to resort to self harm or crime to pay for their fix?
As a moral conundrum it is remarkably similar, though the latter is easier to comprehend, everyone knows drug dealers are amoral feth-heads, understanding this is true of the investment banking industry has political overtones, and honest people work for banks at various levels, and not all banking establishments are the same or work in the same environment. As as a result you cant come to the same conclusion as with the drug dealer so easily without being labeled a left wing radical agitator.
Ireland has the second highest debt per person in the world after Japan. It's a real job of work we have to pay back the bank debt (the debt in Ireland comes not from public overspend but the blanket guarantee of our banks we were pressured into by the ECB, which made private gambling debts public debts. Capitalism when there's a profit, socialism when there's a loss. Of course, we are responsible for the crappy oversight of the banks that allowed that to happen)
This to me is a worrying fact and our recovery may be quite fragile. I know Ireland is doing alright (I pay close attention to the news from home) but a shock to the economy could cause that recovery to reverse quite easily. We're still in a very precarious position with a very open economy that is vulnerable to general shocks.
Orlanth: snip. What the hell are you talking about. Seriously. You're in conspiracy theory land right now. The UK bailed out Ireland because of huge exposure to Irish banks and the huge level of interdependence in our economies. Worries over the "Fenians" (awful term) has nothing to do with it, just sober and clear headed economic analysis.
Da Boss wrote: Ireland has the second highest debt per person in the world after Japan. It's a real job of work we have to pay back the bank debt (the debt in Ireland comes not from public overspend but the blanket guarantee of our banks we were pressured into by the ECB, which made private gambling debts public debts. Capitalism when there's a profit, socialism when there's a loss. Of course, we are responsible for the crappy oversight of the banks that allowed that to happen)
Correct, the numbers are big but heading in the fright direction, and with enough will for the course.
This to me is a worrying fact and our recovery may be quite fragile. I know Ireland is doing alright (I pay close attention to the news from home) but a shock to the economy could cause that recovery to reverse quite easily. We're still in a very precarious position with a very open economy that is vulnerable to general shocks.
The UK economy, particularly via Belfast is a shock absorber for Ireland. Despite crippling mismanagement from Gordon Brown disasterous term in office the UK economy is likely to improve and strengthen, though the social price has been high.
Orlanth: What the hell are you talking about. Seriously. You're in conspiracy theory land right now. The UK bailed out Ireland because of huge exposure to Irish banks and the huge level of interdependence in our economies. Worries over the "Fenians" (awful term) has nothing to do with it, just sober and clear headed economic analysis.
Damn right. McGuiness has gone on record to state that the peace process was intended as a temporary ceasefire, while IRA and Sinn Fein leadership drank in the benefits of the process, however as time goes by longer term peace is more viable.. Things still need to be kept under a lid for a new generation to emerge without ingrained hatreds.
As for 'conspiracy land', you need to think more and see the obvious.. It is a standard consequence of an economic collapse for extremist organisations to thrive. Its happening in Greece right now. Golden Dawn is benefiting from the crisis, others will likely follow. It needs not be a rational trigger, radicals can easily for radicals to recruit the disenfranchised in an economic crisis.
Also Sinn Fein made big gains in Ireland on an anti-austerity ticket at expense of moder moderate parties. Sinn Fein was never big in the Irish parliament, it is now.
Also one of the sentiments during this recession has been that Belfast accounts for the bulk of the Irish economy, north and south, 'so why isn't it ours'. This does in part ignore the fact that Belfast is economically strong because it is not part of the Irish republic by tied to the far more robust UK economy. But these sentiments, from ordinary Irish blossom on the fringe into something darker. No one wants a return of the Troubles.
I'm on my cell and is difficult to quote the sayings above.
I appreciate this thread to make a voice heard and the responsible tone of those involved and do not know me. The whole thing is a mess and shouldn't be arrived here in the first place. Greece stood in great debt 5 years ago but had a valid economy. Now it stands at a huge debt without the previous economy that might have saved the day. Great job from both Greek government and loaners, I'm sure they felt great shame when pocketing their monthly fat wages, banks very pleased.
Also, I read the statement quoted above. That's very responsible what the Institutions officially stated.
Unfortunately that's not what our Prime Minister said in Live television when he announced the referendum. In fact, he said quite the opposite, the Institutions gave the Greek authorities an ultimatum (yes, that's the word he used, twice) and literally forced our hand into accepting, in which case the Greek representatives were escorted out.
I don't know whom to believe tbh, but sure sounds funny to walk out of negotiations that are still on going having a problem so harsh to deal with back home...
Money goes to the banks, the people suffer. In Greece there was elevated wealth disproportionate to what it should have been. I agree. Actually, I totally agree. Bear with me for a second. Here comes a government that has a healthy economy and prosperity is guaranteed for the years to come. Let's say that country is yours. The government decides to start taking loans and provides even more than it should. On top of that it hands out more benefits and lessens taxes. And all this goes on for many years. Would you have taken the streets to protest? If you are honest, you are going to lol and say of course not. Everyone is happy. Then comes a time when "oh my gosh" the government realizes it cannot pay back the loans (you don't say? Enter sarcastic tone here)
Bear with me a moment. Do you think, even for a split second, that the people loaning the money did NOT know?
Of course they did.
Now comes the fun part. Remember when I told you to pretend that the country is yours? Good. Do you feel responsible for the mess? I say yes, you do, but only at a minor part. The real fault lies at the government that took the loans and equally the loaners who (supposedly) didn't do their homework right and are equally to blame. So please do not say Greece but use instead Greek government, it's more tolerable that way.
One last thing regarding the pillaging comment above; Europe and the IMF isn't losing any money, let's be clear on that. These are interests that will not be paid, interest upon interest, we owed 180 billion € back in 2010, now it's over 400.
If -hopefully not because it means our suffering was for nothing- bankruptcy does occur, European banks didn't hand out 220 billion euros, that's the money they claim out of the absurd interest rates Greece has been forced into signing to avoid bankruptcy. I don't have the numbers nor am I in a position to know for a fact, but I'll explain this the same way I explained it to my employee last year.
I loan you 100€ and pretend interest. Fair enough. Then I see you are in trouble and hand you another 100€. Interest is elevated however. This happens another 3 times, each of which I generously put another 100€ each time making you sign new contracts pretending always more, for a total of 500€. In the meanwhile you have repaid me something like 800€, but due to the absurd interest rates you still owe me money, even more than before, actually you owe me now another 1000€.
Doing the math, I gave 500€, took back 800€ and you still owe me 1000€. I feel 'pillaging' is a great term. How would you feel?
The phrase loanshark seems apt there. Your nearly paying back 4 times the original debt, and that's minus future interest payments if you can afford to make the first paymnetd even
The European Central Bank is expected to end emergency lending to Greece's banks on Sunday, the BBC understands.
The country's banks depend on the ECB's Emergency Liquidity Assistance (ELA). Its governing council is meeting later.
Greece will probably have to "announce a bank holiday on Monday, pending the introduction of capital controls", a source told the BBC's Robert Peston.
The bailout for heavily indebted Greece expires on Tuesday and talks have broken down
The real fault lies at the government that took the loans and equally the loaners who (supposedly) didn't do their homework right and are equally to blame. So please do not say Greece but use instead Greek government, it's more tolerable that way.
First, that's not how sovereign debt works. It is not personal debt and they do not stop lending money and say "enough". They set the interest rate and give the money. The loans given by the ECB and IMF were at a lower rate than would otherwise be lent, on the expectation that the Greek government would reform its economy and be able to pay. The Greek government started this, and tried to make changes, but the Greek people voted for a party that promised to stop these changes. These changes are not about "kids starving" but about things like implementing propper tax collection and raising the retirement age. From 55... To people outside, the people putting the money in (and yes, it is costing tax payers in the rest of the EU money) the refusal to raise tax rates and retirement ages in line with the rest of the EU rather stings. To me, it's not an issue, as the UK is not very exposed, and we may win, or may lose, from the outcome, but I can see why, for example, the German government and people are a little annoyed.
One last thing regarding the pillaging comment above; Europe and the IMF isn't losing any money, let's be clear on that. These are interests that will not be paid, interest upon interest, we owed 180 billion € back in 2010, now it's over 400.
If -hopefully not because it means our suffering was for nothing- bankruptcy does occur, European banks didn't hand out 220 billion euros, that's the money they claim out of the absurd interest rates Greece has been forced into signing to avoid bankruptcy. I don't have the numbers nor am I in a position to know for a fact, but I'll explain this the same way I explained it to my employee last year.
I loan you 100€ and pretend interest. Fair enough. Then I see you are in trouble and hand you another 100€. Interest is elevated however. This happens another 3 times, each of which I generously put another 100€ each time making you sign new contracts pretending always more, for a total of 500€. In the meanwhile you have repaid me something like 800€, but due to the absurd interest rates you still owe me money, even more than before, actually you owe me now another 1000€.
Doing the math, I gave 500€, took back 800€ and you still owe me 1000€. I feel 'pillaging' is a great term. How would you feel?
Your completely ignoring the cost of lending, banks do not have a massive pile of cash to loan somone. To lend money banks have to borrow. They have to pay this back, and if the loan is not repaid they have to find it from elsewhere. You either don't understand how loans work, or are wilfully ignoring the other side of the equation.
Da Boss wrote: It's a real job of work we have to pay back the bank debt (the debt in Ireland comes not from public overspend but the blanket guarantee of our banks we were pressured into by the ECB, which made private gambling debts public debts. Capitalism when there's a profit, socialism when there's a loss. Of course, we are responsible for the crappy oversight of the banks that allowed that to happen)
Same here in Britain. And no jail time for anyone. We even had a whip round to pay their bonuses( I'm looking at RBS here). And as long as politicians get funded by Banks and hedge funds, nothing will change.
Dear Steve,
I'm pretty sure the UK media is lying to you just as much the Greek media is lying to me.
What I do know is what I see around me. And people did not vote for a party that said no to logical reforms, they voted for someone who would bring something humane in the process.
You feel some people are annoyed? German tax payers for example, with what they are being told should be furious! Strange thing for their government when German enterprises have 90% ownership of Turkish hotels where they charge 3%VAT, and pretend to bring "better and more strict reforms" to raise the already high tax in Greece from 13% to 23%? Strange how you think that will help the Greek economy reform, Greece will again not be able to pay up and the Institutions will cry how reforms are not being applicated :-/
See where I'm going with this?
As for the 2nd part of your comment, I fully understand how the bank system works, but there is a difference between lending someone 500€ and asking for 800€ back, and another lending 500€ and asking 1800. I don't know about you, but I call usurer. That's the polite term. Otherwise I can use terms Red moderator will surely find offensive and thus retain myself from naming them as they should.
Greeks never refused to pay, as no one should if borrowed money are not being returned. Need to see the conditions of how this came to an end and is irresponsible claiming it's only one party's fault. The lender had the responsibility of checking whom they lend the money to, saying if they cannot pay we will take it from the people is pathetic. Something like Leehman Brothers back in 2008. Still haven't seen any golden boys in jail though...
I ask this back to you: you owe money, want to repay but in the meanwhile your people are starving. You ask for better terms of repayment and the loan holders deny you the possibility. What would you do? Give them what few funds are available and let your people and economy die? Probably not (I hope) but that's not how you put it now, is it?
I'll put it in easier words. If I owe you money, I tell you I want to pay you back but my child is starving and I will postpone payment and you pretend the money now, you are sure to get something from me but you can bet what you hold most precious it isn't going to be money...
Anyway, I don't know what the media is telling you, I only wish tomorrow you don't find yourself in the same position as ours, where the whole world suddenly discovers how lazy the UK has become out of the sudden and you having to prove to the Danish and Austrians how you are not what the media are telling you are. (Here comes the prove you are not an Elephant part again...)
PS. Sorry for not quoting, on my cell phone again :-/
Orlanth: You are really going out on a limb with a lot of this stuff. I have never, ever, ever heard anyone make an economic argument for Belfast being "ours". It's extremely rare for ANYONE in mainstream discourse to think that taking the North on would do anything other than tank the economy. I'm also extremely skeptical that Belfast is economically more important to Ireland than Dublin, that seems like total bollocks to me.
Finally, yes, Sinn Féin are on the rise. But no one wants a return to violence, and I think you'll see that support melt away when it comes to voting for an actual government. Honestly, you're saying stuff that really paints the situation with a broad brush and quite a lot of it comes across as patronizing and ignorant.
Anyway. All this is OT I guess when Greece is facing down the barrel of an exit from the Eurozone.
Shieldwolf: I always think of Greece when I see you posting, and I always think "There's a Greek guy just trying to get by, making money from innovation and creativity and hard work. Bucking all the stereotypes of Greece as a Welfare Basket Case state."
I can't imagine how you must be feeling about the whole thing.
The idea that "Greece" or "Ireland" or "Portugal" owes all this money is pure politics. The banking systems racked up this debt which was nationalised. Greece (AFAIK) has more issues than average with overly protectionist economic policies, heavy public spending and tax evasion among the rich. For those reasons the economy was particularly vulnerable to the shock of the banking crash, leading us to where we are right now.
What I see is the IMF vultures trying to leverage this weakness into privatisation of Greek assets, slashing working conditions for people and generally pursuing their neoliberal agenda. The fact that all of these banks got us into the mess seems to be nowhere on the agenda, and honest to god it makes me furious.
Of course, and I am saying this for emphasis, the governments were lax in not regulating their banks correctly and not having enough oversight. But governments across Europe were lax in this regard, and the suffering and debt is being concentrated in a few vulnerable countries who don't have enough negotiating power to say no. And then the entire thing is being spun as a morality play by the Right, blaming public spending for what is a systemic failure of their neoliberal deregulate everything ideology.
There's more nuance and depth to it all of course, and many of the criticisms raised here have a lot of validity, but I can totally see and understand why Greek people feel the way they do. If I lived in Ireland I'd be furious that my taxes instead of paying for services for my fellow citizens go to servicing the bank debt of an untouchable class of total spankers who have not suffered nearly enough for what they wrought on the rest of us.
It is bad business to get a debtor to a point of bankruptcy, this is why it is somewhat surprising.
It is better to get them to a point that is "comfortable" and have them always in debt paying compound interest for years.
All those elections really nailed Greece for confidence levels.
Both for government bonds going up close to 30% in 2012 (6% or more is high risk) I am still trying to see what the interest rates were for the bailouts, they can't be pretty since they are high risk.
The wiki is surprisingly detailed: https://en.wikipedia.org/wiki/Greek_government-debt_crisis.
Statistical accuracy was brought up, it was noted figures submitted often were revised much worse later on: internal data gathering methods were very inaccurate:
Spoiler:
Statistical credibility: Problems with unreliable data had existed ever since Greece applied for membership of the Euro in 1999.[110] In the five years from 2005 to 2009, Eurostat each year noted a reservation about the fiscal statistical numbers for Greece, and too often previously reported figures got revised to a somewhat worse figure, after a couple of years.[111][112][113] In regards of 2009 the flawed statistics made it impossible to predict accurate numbers for GDP growth, budget deficit and the public debt; which by the end of the year all turned out to be worse than originally anticipated. Problems with statistical credibility were also evident in several other countries,[114][115][116][117][118][119][120][121][122][123][124][125][126] however, in the case of Greece, the magnitude of the 2009 revisions and its connection to the crisis added pressure to the need for immediate improvement. In 2010, the Greek ministry of finance reported the need to restore the trust among financial investors, and to correct previous statistical methodological issues, "by making the National Statistics Service an independent legal entity and phasing in, during the first quarter of 2010, all the necessary checks and balances that will improve the accuracy and reporting of fiscal statistics".[109]
Debt to GDP ratio was %120 in April 2010 so it was pretty dire and unsustainable at that point.
Statistics showed in 2013 that the Greek government collected less than half the taxes due it for the 2012 tax year (!!??).
Brutal.
Government hiding their debt:
Spoiler:
To keep within the monetary union guidelines, the government of Greece had also for many years misreported the country's official economic statistics.[165][166] At the beginning of 2010, it was discovered that Greece had paid Goldman Sachs and other banks hundreds of millions of dollars in fees since 2001, for arranging transactions that hid the actual level of borrowing.[167] Most notable is a cross currency swap, where billions worth of Greek debts and loans were converted into Yen and Dollars at a fictitious exchange rate by Goldman Sachs, thus hiding the true extent of Greek loans.[168]
The austerity measures were having a significant impact:"Overall the two debt restructuring measures accounted for a 40.7 percentage point debt-to-GDP decline, so that it only ended at 156.9% ultimo 2012, down from the 197.6% it would have ended on if no debt restructure measures had been performed."
A rather telling quote here: "irresponsible borrowers can't exist without irresponsible lenders. Germany's banks were Greece's enablers.[333]".
What is interesting is still the debt is so high that any money injection is just to pay creditors: "German and other financial institutions have scooped a huge chunk of the rescue package: "more than 80 percent of the rescue package is going to creditors—that is to say, to banks outside of Greece and to the ECB. The billions of taxpayer euros are not saving Greece. They're saving the banks."
Overall, Greece should have defaulted long ago so that Germany could "benefit" from it's unethical lending practices.
Bailouts are only benefitting Germany banks.
@Daboss
Appreciate the kind words and also agree with the rest of what you're saying.
Actually it's not just one person, with the release of the Mountain Orcs a total of 4 people were involved to handle distribution.
Therefore that gave jobs/work to another three people, even for a small period of time.
Same goes with the Kickstarters, two more people get employed by me as we speak, again as part-time in order to meet requirements and honor the backers. We are working very long hours I assure you, I see no other choice to run the business as I want it being run.
I cannot tell you how I feel for I do not know what will become of all this nor do I know what to vote for (as I am not voting for myself alone but the future of this country and toddlers), but putting blame on an entire nation is rarely justified. If ever.
:-)
@Talizvar
Your view is the same as mine, only you put it in better English :-)
Da Boss wrote: Orlanth: You are really going out on a limb with a lot of this stuff. I have never, ever, ever heard anyone make an economic argument for Belfast being "ours". It's extremely rare for ANYONE in mainstream discourse to think that taking the North on would do anything other than tank the economy. I'm also extremely skeptical that Belfast is economically more important to Ireland than Dublin, that seems like total bollocks to me.
Finally, yes, Sinn Féin are on the rise. But no one wants a return to violence, and I think you'll see that support melt away when it comes to voting for an actual government. Honestly, you're saying stuff that really paints the situation with a broad brush and quite a lot of it comes across as patronizing and ignorant.
Anyway. All this is OT I guess when Greece is facing down the barrel of an exit from the Eurozone.
There's more nuance and depth to it all of course, and many of the criticisms raised here have a lot of validity, but I can totally see and understand why Greek people feel the way they do. If I lived in Ireland I'd be furious that my taxes instead of paying for services for my fellow citizens go to servicing the bank debt of an untouchable class of total spankers who have not suffered nearly enough for what they wrought on the rest of us.
This is the same for everyone.
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Talizvar wrote: It is bad business to get a debtor to a point of bankruptcy, this is why it is somewhat surprising.
It is better to get them to a point that is "comfortable" and have them always in debt paying compound interest for years.
Yes its in the bank interest for nations to pay. But Greece's debt has already been parsed onto the EU economy and not the banking sector. This was the purpose of previous bailouts, to absolve the banking sector.
Failure at this point is desireable because otherwise other nations will present an anti-austerity agenda, and sooner or later one of them will be too big to actually fail, and if it falls down comes the whole house of cards.
Shieldwolf Miniatures wrote: As a Greek (and by no means an expert) I feel obligated to say my own in this thread.
Thankyou for posting that, it was excellent.
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Ketara wrote: Sebster claims that expecting the full debt to be repaid is foolish.
And I spend fething countless fething posts explaining over and over again that the current insistance of primary surpluses has collapsed Greece GDP, and actually worsened the debt to GDP ratio. And it just bounced back at me over and over again, because people that don't want to understand something will always succeed.
And then I explained that insisting Greece must repay all its debt is idiotic when they've already seen considerable debt relief (for political purposes the face value has not been reduced, but the terms changed so massively that the real value of the debt is much reduced). And once again, people who didn't want to understand something succeeded very well.
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Orlanth wrote: Its frankly easier. Handing over money to the Greek government is like handling over money to drug addicts, it will be grasped squandered and gone.
Greece is running a primary surplus, with cyclical adjustment. You don't know what you're talking about.
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Steve steveson wrote: First, that's not how sovereign debt works. It is not personal debt and they do not stop lending money and say "enough". They set the interest rate and give the money. The loans given by the ECB and IMF were at a lower rate than would otherwise be lent, on the expectation that the Greek government would reform its economy and be able to pay. The Greek government started this, and tried to make changes, but the Greek people voted for a party that promised to stop these changes. These changes are not about "kids starving" but about things like implementing propper tax collection and raising the retirement age. From 55...
Not quite. One of the ECB arguments was actually that primary surplus requirements were met somewhat through a different balance of tax increases and spending cuts than Greece actually implemented. Everyone gets understandably very prickly about the ECB dictating domestic policy, except now with Greece the ECB isn't just limited to insisting on a target number, but is allowed to dictate to Greece how that target number is to be met.
And while I agree long term Greek stability needs strong pension reforms, it really, really isn't an essential part of resolving the immediate issue. The structure of the Greek government's budget is now insanely positive, and the real issue is how that positive structure can be maintained given the economic mess.
I think Greece is now at the point it just has to reject capitalism, burn down the banks, kill the parasites (bankers are pure 100% evil), take all their wealth and use it to fuel a huge industrialisation of the country and give everyone a job. It worked very well for Russia in 1917 (okay, there was a civil war first, but lets just ignore that). Russia changed from poor backwards agricultural state into the worlds second-largest industrial powerhouse within a few decades. ¡Viva la Revolución!
In all seriousness, If things aren't going to improve in the near future I do think Greece should seriously look into possible alternatives to the EU and the capitalist system. I mean, even if they screw up, things could hardly get any worse... (and even if it does make things worse, giving the finger to the bankers would be totally worth it ) Alternatively, Greek debts should either be forgotten or put off until the country is strong again. First priority is getting the Greek economy back on track and giving people jobs and reasonable salaries again. Stopping the suffering of the Greek people comes first, debts can wait. Even if the Greeks caused this all by themselves (which I doubt) they are EU and so we are all in this together. In either case, Greece needs a strong, powerful leader.
Personally I think Greece is fairly fethed if it stays in the Euro and works to pay off the debt, but much worse fethed to go out of the Euro and repudiate the debt. It is also much better for the rest of the Eurozone to keep Greece in, otherwise there is a strong chance of the rot spreading to Italy and Spain as well as the creditors getting nothing of their money back.
Therefore there will be some kind of fudge worked out. The deadline will be postponed for this to happen.
Alternatively, Greek debts should either be forgotten or put off until the country is strong again. First priority is getting the Greek economy back on track and giving people jobs and reasonable salaries again. Stopping the suffering of the Greek people comes first, debts can wait. Even if the Greeks caused this all by themselves (which I doubt) they are EU and so we are all in this together.
In either case, Greece needs a strong, powerful leader.
There was already a 50% write off of debts (aka 'Haircut') in 2012.
Also, Greece doesn't 'need' a "strong, powerful leader' it needs wholesale reform to end the decades of clientalism, tax-dodging and corruption that caused this mess in the first place.
It's hard to say what is right really, I see the news coming out about Tsipras insisting on a referendum and wonder why it wasn't done earlier, and complaining that the creditiors aren't coming up with enough plans to allow growth, which I kind of feel is his job to do.
Greece has been given loans and with that money they made cuts, then undid those cuts. They still haven't got to the heart of why they're insolvent, and I personally wouldn't lend money to someone like that, but I'm sure that's a huge oversimplification.
I somewhat sympathise with their government as they are an anti-austerity government voted in for that reason, if they commit to austerity then they're going against their own mandate, so I can see why they'd want a referendum. They should have done it before the deadline though.
The euro will take damage from a Greece default, and they don't want to throw good money after bad but isn't the known consequences of propping up Greece's economy better than the unknown of letting it slide.
The main problem with the EU is it dithers over what to do. It takes so long to get a decision out of it. The Russian annexation of Crimea and invasion of Ukraine is another example of its so reaction.
I do feel like the damage has been done to Greece already. The long time of uncertainty has damaged the Greek banks. They have high debt, they're just servicing it in an endless loop. Skilled people have moved abroad (brain drain) and now it's not a tempting prospect for a business to set up in.
If a country goes bankrupt is their debt written off forever?
It seems tempting but Greece doesn't make enough money to pay for itself from year to year it's not going to well with no access to credit, plus that'll mean businesses wont be able to get it either and wont set up there.
I don't know what the solution is really. Is there an equivalent of a country moving back to its parents and paying off its debts that way?
Kilkrazy wrote: It is also much better for the rest of the Eurozone to keep Greece in, otherwise there is a strong chance of the rot spreading to Italy and Spain as well as the creditors getting nothing of their money back.
Why? The "rot" in Greece is a mix of decades of corruption, tax evasion, public over-spending and no real export industry to speak of (and little of it that exists is apparently tax-exempt ).
No other country in the Euro suffers from all of those problems combined, so why would any "rot" from Greece spread anywhere?
There is a reason why Greece had to forge their public accounts in order to be eligible to enter the Euro, it was because their economy was nowhere near ready to allow them to do so (and still isn't). As soon as it was discovered that they had forged those numbers they should have left the Eurozone because then they would have a whole other set of financial mechanisms available that are only an option to a country with their own currency.
The real risk for the eurozone, though, is that Greek default and euro departure go relatively well, and after a year or so Greece is beginning a vigorous recovery on the back of a weak drachma. In that case, the people of Italy, Spain and Portugal would ask: “if Greece can do it that way then why can’t we?” And there wouldn’t be a good answer.
The euro will take damage from a Greece default, and they don't want to throw good money after bad but isn't the known consequences of propping up Greece's economy better than the unknown of letting it slide.
You seem to suffer from the misconception that money just shows up from thin air. Do you realize that after the "haircut" of 2012 that a large amount of the money that Greece borrowed comes from the taxes of all other citizens of the Eurozone?
Are you advocating that the citizens from Latvia, Portugal, Spain, Lithuania, Slovakia, Slovenia, etc, should keep paying their taxes to subsidize a country that refuses to make the reforms that all of them had to make?
Kilkrazy wrote: The real risk for the eurozone, though, is that Greek default and euro departure go relatively well, and after a year or so Greece is beginning a vigorous recovery on the back of a weak drachma. In that case, the people of Italy, Spain and Portugal would ask: “if Greece can do it that way then why can’t we?” And there wouldn’t be a good answer.
Forbes magazine, Jan 2015.
That would worry the Eurozone how?
Germany and France want the 'club med' economies out of the shared currency.
To Germany this outcome would be a golden path, and would quickly wish someone would roll out red carpets to Spain and Portugal at least. Italy is a tougher one, its half a modern industrialised state and half, not.
Kilkrazy wrote: The real risk for the eurozone, though, is that Greek default and euro departure go relatively well, and after a year or so Greece is beginning a vigorous recovery on the back of a weak drachma. In that case, the people of Italy, Spain and Portugal would ask: “if Greece can do it that way then why can’t we?” And there wouldn’t be a good answer.
Forbes magazine, Jan 2015.
How does a Greek default and a euro departure goes "relatively well"? Have you passed through a non-euro default on your country by any chance? Because I have and its infinitely worse than whatever adjustments we had to make this time around.
My country went on default in 1984, taxes sky-rocketed, there was an immediate 30% devaluation of the currency and almost all lending private and public stopped.
This had the result that private companies couldn't pay their employees and went bankrupt so unemployment soared and there were people actually dying from starvation. The country only started recovering in the early nineties when we joined the EE.
And we are talking about a time when countries where relatively self sufficient. A currency devaluation coupled with a country that has to import the majority of its basic goods and foodstuffs? We have an example of one of those, its called Venezuela.
How does a Greek default and a euro departure goes "relatively well"? Have you passed through a non-euro default on your country by any chance? Because I have and its infinitely worse than whatever adjustments we had to make this time around.
You have a point, this is unlikely to end well, which is why I think Greece is being used as an object lesson on the need for continued austerity.
However on the off chance it does end well it would still not problem the Eurozone as its principle players want to downsize to core stronger economies.
The euro will take damage from a Greece default, and they don't want to throw good money after bad but isn't the known consequences of propping up Greece's economy better than the unknown of letting it slide.
You seem to suffer from the misconception that money just shows up from thin air. Do you realize that after the "haircut" of 2012 that a large amount of the money that Greece borrowed comes from the taxes of all other citizens of the Eurozone?
Are you advocating that the citizens from Latvia, Portugal, Spain, Lithuania, Slovakia, Slovenia, etc, should keep paying their taxes to subsidize a country that refuses to make the reforms that all of them had to make?
I'm not advocating anything really, I'm just asking the question. I'm not defending Greece or wanting to make light of what countries are going through
They've effectively wasted an entire year of money from what I've read.
What I mean is, the countries you list, if their banks are exposed to the sudden shock that there will not longer be money coming from Greece's repayments. If that makes another countries economy shaky there might be a domino effect and it starts happening somewhere else. Maybe propping up Greece until an effective buffer is in place is better.
We cant force Greece to stop acting recklessly with its budgets any other way that withholding money. Which means either Greece fails or it keeps spending other countries money. Entirely unfair yes, but who knows what will happen exactly otherwise.
Relapse wrote: This is very scary. What kind of further chaos does this open Greece up to? I find myself wondering if some degree of civil war is in it's future.
Doubtful. It will roil the markets but frankly Greece is not up to maintaining the standards of the EU. Unless you have a common central bank setting policy, the slower economies need different economic policies than the stronger ones. Else it locks in the disparity.
What the EU could do is allow Greek currency and policy to float, while maintaining the common weights/measures/standards. Thats what you should have done in the first place.
Relapse wrote: This is very scary. What kind of further chaos does this open Greece up to? I find myself wondering if some degree of civil war is in it's future.
Doubtful. It will roil the markets but frankly Greece is not up to maintaining the standards of the EU. Unless you have a common central bank setting policy, the slower economies need different economic policies than the stronger ones. Else it locks in the disparity.
What the EU could do is allow Greek currency and policy to float, while maintaining the common weights/measures/standards. Thats what you should have done in the first place.
That's the weird thing about the EU and the Eurozone.
Lots of different countries with different economies trying to work to the same set of rules. And the richest countries tend to have the most control.
It's not really very fair imo.
At least the UK isn't using the euro so was able to drop interest rates and manage things.
The euro will take damage from a Greece default, and they don't want to throw good money after bad but isn't the known consequences of propping up Greece's economy better than the unknown of letting it slide.
You seem to suffer from the misconception that money just shows up from thin air. Do you realize that after the "haircut" of 2012 that a large amount of the money that Greece borrowed comes from the taxes of all other citizens of the Eurozone?
Are you advocating that the citizens from Latvia, Portugal, Spain, Lithuania, Slovakia, Slovenia, etc, should keep paying their taxes to subsidize a country that refuses to make the reforms that all of them had to make?
Wow, I'm sorry to say this but you are quite misinformed. I suspect that comes from the fact any "intelligence" or "facts" you may have gathered comes exclusively from the media. That's sad.
For your better information now, not only have the tax payers from other countries not given a single cent, there is also a very very long list of how much money each EU country has made on the backs of the countries in trouble (Portugal being one of these countries in trouble)
Naturally Portugal being a much weaker country (do not take this offensively, no intention for that, simply without the natural resources/wealth nor other positive criteria Greece has in contrast), does not interest as much.
Germany profits more than everyone else, do not take this wrong, I have nothing against German people, heck not only are they n.2 most supportive clients of Shieldwolf (after the UK market), I have a brother in law from Leipzig and know quite a few Germans personally, I think they are great people.
But this has to stop, the economy is in ruins and austerity simply helps no one else but the banks maintaining their profit.
The Greek people have suffered enough I think, I don't think there's a single person among the 11 million Greeks today that witnessed a downfall today of the world markets and gave a damn about what the banks are going through in the stock markets. The general belief here is "they didn't care about us all these years, why should we care back? We have been drowning and they just watched, so let's make sure we drown together!"
(Not smart IMO, but stating how things feel ATM..,)
And that to my humble opinion is not what a "union" should be like. This is a financial war, and there are no just wars nor victors in them. There is only a new black page in Human history.
PS. As far as the "haircut" is concerned, I'm afraid that was only to make sure the Greek government got re-elected by people thinking something is finally being done to bring this to an end and to continue the ill-doing of the loan keepers.
What I mean is, the countries you list, if their banks are exposed to the sudden shock that there will not longer be money coming from Greece's repayments. If that makes another countries economy shaky there might be a domino effect and it starts happening somewhere else. Maybe propping up Greece until an effective buffer is in place is better.
But that is what has been happening since 2012.
Prior to 2012, most of the Greek debt was held by private banks and institutions. If Greece had defaulted back then, then this debt coupled with the lingering effects of the banking crisis could cause a significant percentage of those banks to collapse with all the unpredictable effects that that may have had in their respective countries national economies.
But since the second bailout of 2012, now most of Greeks debt is held directly by national governments and the BCE, combine that with the BCE's current plan to buy back national debts and that will further shield all remaining countries from a Greek default (hopefully).
But this has to stop, the economy is in ruins and austerity simply helps no one else but the banks maintaining their profit.
edit: ok, maybe best not go down this route.
Have to agree, these firms aren't making money from Greece ,they would have if Greece had paid back more than they'd borrowed but that's not the case.
Greece has had debt written off, and the money Greece has used to pay their repayments is also borrowed. And now they're not going to pay it by the looks of things.
I'm not sure how you can say people are making money. If I lend you £1000 , and you go broke before you pay back even £100 it just cant add up I make a substantial loss.
Sorry if I'm misunderstanding you but how ha made a profit here?
I'm not wanting to be adversarial but I am curious to know.
P.S Here's an interesting visualisation of Greece's debt and who it owes.
Do you believe that by cutting down e.g. salaries in the UK would benefit the economy of your nation?
(I'm not being sarcastic, I honestly fail to see what you mean)
Kilkrazy wrote: The real risk for the eurozone, though, is that Greek default and euro departure go relatively well, and after a year or so Greece is beginning a vigorous recovery on the back of a weak drachma. In that case, the people of Italy, Spain and Portugal would ask: “if Greece can do it that way then why can’t we?” And there wouldn’t be a good answer.
Forbes magazine, Jan 2015.
How does a Greek default and a euro departure goes "relatively well"? Have you passed through a non-euro default on your country by any chance? Because I have and its infinitely worse than whatever adjustments we had to make this time around.
...
That is a writer for Forbes, not my opinion. I think the Greeks would do very badly by defaulting. However someone queried why the rot might spread to the rest of the Eurozone and the Forbes quotation gives a possible explanation. Another danger though is that the loss of money in a Greek default would seriously affect the so-called Club Med countries due to contagion, since these countries are already in difficulties of their own and don't want the Euro structure to be shaken.
Wow, I'm sorry to say this but you are quite misinformed. I suspect that comes from the fact any "intelligence" or "facts" you may have gathered comes exclusively from the media. That's sad.
For your better information now, not only have the tax payers from other countries not given a single cent, there is also a very very long list of how much money each EU country has made on the backs of the countries in trouble (Portugal being one of these countries in trouble) Naturally Portugal being a much weaker country (do not take this offensively, no intention for that, simply without the natural resources/wealth nor other positive criteria Greece has in contrast), does not interest as much. Germany profits more than everyone else, do not take this wrong, I have nothing against German people, heck not only are they n.2 most supportive clients of Shieldwolf (after the UK market), I have a brother in law from Leipzig and know quite a few Germans personally, I think they are great people.
But this has to stop, the economy is in ruins and austerity simply helps no one else but the banks maintaining their profit. The Greek people have suffered enough I think, I don't think there's a single person among the 11 million Greeks today that witnessed a downfall today of the world markets and gave a damn about what the banks are going through in the stock markets. The general belief here is "they didn't care about us all these years, why should we care back? We have been drowning and they just watched, so let's make sure we drown together!" (Not smart IMO, but stating how things feel ATM..,)
And that to my humble opinion is not what a "union" should be like. This is a financial war, and there are no just wars nor victors in them. There is only a new black page in Human history.
PS. As far as the "haircut" is concerned, I'm afraid that was only to make sure the Greek government got re-elected by people thinking something is finally being done to bring this to an end and to continue the ill-doing of the loan keepers.
I'm sorry but it is you who seem to be woefully misinformed:
A default would have to be absorbed instead by official creditors, holding the remaining 83 percent of outstanding loans and bonds. These include euro-area governments (62 percent)
My country alone has 1.2 billion Euros tied up in Greek debt. That is about 0,5% of our GDP and we had to have a whole lot of pension fund cuts and pay cuts in our public and private sectors to cut our deficit by an extra 0,5%.
Speaking of which, I read the latest proposal that was "unacceptable" and an "insult to Greece" and guess what? The vast majority of those measures have been in effect in my country since 2011!
And lastly: "ill-doing of the loan keepers"? Really? After everyone that held Greek debt in 2012 suffered a 50% loss of their money but still loaned Greece and extra 109 billion? Pro-tip: people only profit from loans if those loans are paid, if they are defaulted on, then people lose their money.
And if you don't wan't to be at the mercy of those "ill-doing of the loan keepers": stop borrowing money.
Fair enough, allow me to explain then.
According to my knowledge and follow up on the matter, facts are:
Greece owed 180 billion € at the start of this mess.
Greece borrows a total of 220 billion € in an arc of 5 years.
Greece has repaid Germany alone over 80 billion € in the same timeline. (I do not know the total for the other countries but the lists are out there and as sure as light I can dig them up for you).
Greece has had a haircut of 50% in the surplus of the debt, equal to something around 90 billion €.
Greece currently owes more than 400 billion €.
I've explained it to the best of my abilities. Now please allow me to ask you to explain to me how banks do NOT profit from this...
:-/
Automatically Appended Next Post: One last question: if the banks (that according to me are making money) do not profit from this, and if Greece always owes more money... then WHO is cashing in from all this?
Fair enough, allow me to explain then.
According to my knowledge and follow up on the matter, facts are:
Greece owed 180 billion € at the start of this mess.
Greece borrows a total of 220 billion € in an arc of 5 years.
Greece has repaid Germany alone over 80 billion € in the same timeline. (I do not know the total for the other countries but the lists are out there and as sure as light I can dig them up for you).
Greece has had a haircut of 50% in the surplus of the debt, equal to something around 90 billion €.
Greece currently owes more than 400 billion €.
I've explained it to the best of my abilities. Now please allow me to ask you to explain to me how banks do NOT profit from this...
:-/
Automatically Appended Next Post: One last question: if the banks (that according to me are making money) do not profit from this, and if Greece always owes more money... then WHO is cashing in from all this?
It was explained to you already: they don't profit unless Greece pays back their loans. If they default on those loans then they loose the money that they have invested.
If I loan you 100 € and you pay me 10 € in interest and then default on the loan, I didn't profit 10 €, I just lost 90 €.
Iron_Captain wrote: I think Greece is now at the point it just has to reject capitalism, burn down the banks, kill the parasites (bankers are pure 100% evil), take all their wealth and use it to fuel a huge industrialisation of the country and give everyone a job. <snip>
So you are saying they need to go visit Cuba and see how it is done?
Automatically Appended Next Post:
Shieldwolf Miniatures wrote: PS. As far as the "haircut" is concerned, I'm afraid that was only to make sure the Greek government got re-elected by people thinking something is finally being done to bring this to an end and to continue the ill-doing of the loan keepers.
I think the difficulty in all this is still the Greek government has badly done a disservice to it's people.
I have to think of them as "adults" and to place blame squarely on the banks is foolish: of course they are not your friend, you want to go into debt to the point of slavery? sure!
I am not going back into the history of that link I had but it was a long good read.
They needed to decrease spending and improve efficiencies long ago and get a better handle on tax collection.
Privatization of government owned businesses and systems to combat corruption in government were also part of the "austerity" packages, many of the steps outlined were hard but showed significant improvement if followed.
My problem is if the Greek government had the chance to do it all differently, I do not think any lessons learned were made that they would do anything different.
Entertaining and painful article here: http://www.vanityfair.com/news/2010/10/greeks-bearing-bonds-201010 Back in 2010!
One last question: if the banks (that according to me are making money) do not profit from this, and if Greece always owes more money... then WHO is cashing in from all this?
IIRC the banks have mostly gotten out by now, if not with profit then at least with smaller losses than if taxpayers (ECB) and IMF hadn't bailed them out by giving Greece more cash. That's how it works - the "too big to fail" banks that play with risky loans and capital speculations have once again managed to make ordinary taxpayers pay for their clumsiness.
This is no longer about debt, it hasn't been since Siriza came to power.
It's about toppling a (democratically elected) government by any means necessary to show Spain and everyone else that the financial markets run the show, the last vestiges of national sovereignity in the EU are an illusion and absolutely no dissent against neoliberal ideology will be tolerated.
One last question: if the banks (that according to me are making money) do not profit from this, and if Greece always owes more money... then WHO is cashing in from all this?
IIRC the banks have mostly gotten out by now, if not with profit then at least with smaller losses than if taxpayers (ECB) and IMF hadn't bailed them out by giving Greece more cash. That's how it works - the "too big to fail" banks that play with risky loans and capital speculations have once again managed to make ordinary taxpayers pay for their clumsiness.
I heard it was Goldman Sachs helped the Greek government pretend it had more money than did so it could borrow more. It was down hill from there.
Damn. My wife and I were seriously talking about going to Greece this summer (tomorrow, in fact), but we decided on the US Virgin Islands instead. Soooo glad we did!
Things like "Greek cash machines were shut on Monday morning" would have been unpleasant. I hope they get their gak sorted out. I can't imagine how crappy that must be.
The European Commission chief, Jean-Claude Juncker, has said he feels "betrayed" by the "egotism" shown by Greece in failed debt talks.
He told a news conference that Greek proposals were "delayed" or "deliberately altered" and the Greek people "should be told the truth", but the door was still open to talks.
Greece has called a surprise referendum and Greek banks are closed for a week.
European stock markets saw big falls on Monday after the weekend's events.
The negotiations were not "a game of liar's poker", Mr Juncker said. "Either all win or all lose".
He said the talks were broken "unilaterally" by the announcement from the Greek Prime Minister Alexis Tsipras that he was calling a referendum for 5 July.
The Greek government responded to Mr Juncker's comments by saying: "An essential element in indicating good faith and reliability in negotiations is sincerity."
Mr Juncker said that he still believed a Greek exit from the euro was not an option and insisted that the creditors' latest proposal meant more social fairness.
German Chancellor Angela Merkel echoed those comments on Monday, saying Greece had received a "generous offer" but adding she would not be opposed to further talks with Greece after Sunday's vote.
Is Grexit nearer?
European press sees Greece on verge of exit
Existential threat to euro from Greek exit
Referendum question
The question which will be put to voters on Sunday will not be as simple as whether they want to stay in the euro or not - instead it asks Greeks to approve or reject the specific terms laid out by Greece's creditors:
"Should the agreement plan submitted by the European Commission, European Central Bank and the International Monetary Fund to the June 25 eurogroup and consisting of two parts, which form their single proposal, be accepted? The first document is titled "Reforms for the completion of the Current Program and Beyond" and the second "Preliminary Debt sustainability Analysis."
Not approved/NO
Approved/YES"
Analysis by the BBC's Chris Morris
It's hard to remember the last time a president of the European Commission used such blunt, undiplomatic and sometimes angry language about the government of a member state.
Jean-Claude Juncker said he felt betrayed, and suggested that Alexis Tsipras was lying to his people about cuts in wages and pensions.
There was no hint of a last minute deal before Greece's current bailout programme expires Tuesday evening.
Instead Mr Juncker appealed directly to the Greek people ahead of the proposed referendum this weekend.
And the message was clear - vote "yes" to our proposals and we'll support you. Vote "no" and you'll probably get kicked out of the euro.
Mr Juncker also said any criticism aimed at him or other senior politicians in the creditor institutions was unjustified.
It was an emotional appeal from the heart.
But it also felt like a pre-emptive effort to make his side of the story public in case this all goes very wrong.
On Saturday, the European Central Bank (ECB) decided not to extend emergency finance to the Greek banks, after the breakdown of talks on giving heavily indebted Greece the last payment of its international bailout.
Following the ECB announcement, Greece said its banks would remain shut until 6 July. Cash machines are now reopening, but customers can withdraw only limited amounts.
Transport Minister Christos Spirtzis announced that public transport will be free in the Athens area for a week while banks are closed.
Greece crisis - live coverage
Greek cash machines were shut on Monday morning
A critical deadline looms on Tuesday, when Greece is due to pay back €1.6bn to the International Monetary Fund - the same day the bailout expires. There are fears of a default and a possible exit from euro.
The French cabinet met on Monday in an emergency session. President Francois Hollande said afterwards that a deal was still possible if the Greeks wanted it.
"There are a few hours before the negotiation is definitively closed, in particular for the prolongation of the Greek aid programme."
'Resorting to barter system'
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Media caption Greeks in Athens gave the BBC their views on bank closures and the government
Athens resident Ilia Iatrou says the situation is "unbearable".
"My mother-in-law queued up for over an hour at the cash point just to be able to withdraw a small amount of money.
"I haven't tried to go to the cash machine myself, as we don't have much money left.
"My neighbours and I have now resorted to a sort of barter system among ourselves because we have no money left.
"We can't take any more of this, so we have to keep saying no to the EU masters.
"The EU can't afford to let us fail so we should continue to say no and they will blink and give us a better deal."
In its decree bringing in the bank restrictions, the Greek government cited the "extremely urgent" need to protect the financial system due to the lack of liquidity.
The main points are:
Banks closed till 6 July
Cash withdrawals limited to €60 (£42; $66) a day for this period
Cash machine withdrawals with foreign bank cards permitted
Pension payments not part of capital controls
Banking transactions within Greece allowed
In reaction to the crisis, the London, Paris, Frankfurt and Milan stock markets fell sharply in early trading on Monday, following similar falls in Asia.
The euro lost 2% of its value against the the US dollar. Government borrowing costs in Italy and Spain, two of the eurozone's weaker economies, have also risen.
The Athens stock exchange is also closed as part of the measures.
Days of turmoil
Friday evening: Greek prime minister calls referendum on terms of new bailout deal, asks for extension of existing bailout
Saturday afternoon: Eurozone finance ministers refuse to extend existing bailout beyond Tuesday
Saturday evening: Greek parliament backs referendum for 5 July
Sunday afternoon: ECB says it is not increasing emergency assistance to Greece
Sunday evening: Greek government says banks to be closed for the week and cash withdrawals restricted to €60
Eurozone finance ministers also blamed Greece for breaking off the talks, and the European Commission took the unusual step on Sunday of publishing proposals by European creditors that it said were on the table at the time.
But Greece described creditors' terms as "not viable".
The current ceiling for the ECB's emergency funding - Emergency Liquidity Assistance (ELA) - is €89bn (£63bn). It is thought that virtually all that money has been disbursed.
obsidianaura wrote: I heard it was Goldman Sachs helped the Greek government pretend it had more money than did so it could borrow more. It was down hill from there.
Aye, that was part of it. The bank got paid extremely well to help Greece shuffle numbers around - some technicalities with what kind of money countes as "debt" that should be reported. It worked for years and now it's all fallen on the ordinary people. Not just the Greek either, it'll cost us all in some way. And G/S and other big banks continue playing with risky money that doesn't exist, paying huge bonuses to their top chiefs while demanding central bank bailouts.
Okay, read the document.
Reasonable.
Just looking for eliminating waste and ensuring taxes are paid by EVERYONE not just the working stiffs who work for companies and have income reported.
Broad outline how to run a government or there is no hope of revenue to remain viable.
Terms:
- 22% cut in minimum wage from the current €750 per month.
- Holiday wage bonuses (one extra months of full wage being paid each year) are permanently cancelled.
- 150,000 jobs cut from state sector by 2015, of which 15,000 shall be cut by the end of 2012.
Odd though - public sector employment per capita was not as big a deal as I figured (2011 stats here)
- Pension cuts worth €300 million in 2012.
- Changes to laws to make it easier to lay off workers.
- Health and defence spending cuts.
- Industry sectors are given the right to negotiate lower wages depending on economic development.
- Opening up closed professions to allow for more competition, particularly in the health, tourism, and real estate sectors.
- Privatizations worth €15 billion by 2015, including Greek gas companies DEPA and DESFA. In the medium term, the goal remains at €50 billion.
"...they were still likely to exceed the 120% debt level in 2020"
What drives it all home is for every working adult in Greece a quarter million is owed.
So everyone has to give up a very nice house... each. Yikes!
One last question: if the banks (that according to me are making money) do not profit from this, and if Greece always owes more money... then WHO is cashing in from all this?
IIRC the banks have mostly gotten out by now, if not with profit then at least with smaller losses than if taxpayers (ECB) and IMF hadn't bailed them out by giving Greece more cash. That's how it works - the "too big to fail" banks that play with risky loans and capital speculations have once again managed to make ordinary taxpayers pay for their clumsiness.
Yes, they only had 50% losses instead of 100% if Greece didn't receive the 2nd bailout in 2012...
Automatically Appended Next Post:
lord_blackfang wrote: This is no longer about debt, it hasn't been since Siriza came to power.
It's about toppling a (democratically elected) government by any means necessary to show Spain and everyone else that the financial markets run the show, the last vestiges of national sovereignity in the EU are an illusion and absolutely no dissent against neoliberal ideology will be tolerated.
That is a load of bull.
If Europe really wanted to topple the Syriza government all it needed to do was to refuse to make the first deadline extension back in February / March or simply prevent the the ECB from raising the debt limit to the Greek banks the first time that they reached it.
Finally back home, it's a mess here, people running to the supermarkets and gas stations to supply themselves.
In my pharmacy today the same thing, this whole "European-we'll-work-something-out-or-then-again-we-might-not" has shuttered what little was left of the on going economy and stability.
Banks closed, people divided, a nation ruined from 5 years of austerity that has brought nothing than damage and unemployment.
For one more time, I'm not saying Greece (government/people, take your pick) are not to blame, but placing the entire fault on us is highly unfair.
I would too NOT come to Greece atm for holidays, things became unstable and imo it's everybody's fault but I couldn't care less about that, I care about how it's going to be fixed.
Fair enough, allow me to explain then.
According to my knowledge and follow up on the matter, facts are:
Greece owed 180 billion € at the start of this mess.
Greece borrows a total of 220 billion € in an arc of 5 years.
Greece has repaid Germany alone over 80 billion € in the same timeline. (I do not know the total for the other countries but the lists are out there and as sure as light I can dig them up for you).
Greece has had a haircut of 50% in the surplus of the debt, equal to something around 90 billion €.
Greece currently owes more than 400 billion €.
I've explained it to the best of my abilities. Now please allow me to ask you to explain to me how banks do NOT profit from this...
:-/
Automatically Appended Next Post: One last question: if the banks (that according to me are making money) do not profit from this, and if Greece always owes more money... then WHO is cashing in from all this?
It was explained to you already: they don't profit unless Greece pays back their loans. If they default on those loans then they loose the money that they have invested.
If I loan you 100 € and you pay me 10 € in interest and then default on the loan, I didn't profit 10 €, I just lost 90 €.
Unfortunately I'm a bit slow in comprehending these things, you didn't happen to change the numbers I previously stated now have you? Or maybe deliberately ignored it which is most probable.
Let me quote them for you again
One last thing regarding the pillaging comment above; Europe and the IMF isn't losing any money, let's be clear on that. These are interests that will not be paid, interest upon interest, we owed 180 billion € back in 2010, now it's over 400.
If -hopefully not because it means our suffering was for nothing- bankruptcy does occur, European banks didn't hand out 220 billion euros, that's the money they claim out of the absurd interest rates Greece has been forced into signing to avoid bankruptcy. I don't have the numbers nor am I in a position to know for a fact, but I'll explain this the same way I explained it to my employee last year.
I loan you 100€ and pretend interest. Fair enough. Then I see you are in trouble and hand you another 100€. Interest is elevated however. This happens another 3 times, each of which I generously put another 100€ each time making you sign new contracts pretending always more, for a total of 500€. In the meanwhile you have repaid me something like 800€, but due to the absurd interest rates you still owe me money, even more than before, actually you owe me now another 1000€.
Doing the math, I gave 500€, took back 800€ and you still owe me 1000€. I feel 'pillaging' is a great term. How would you feel?
Funny how you turned the 300euros of clean profit made already from my example to a 90 euro loss at yours. :-/
Not to mention the billions of euros that fled from many Greeks into foreign bank accounts. As I said, banks do NOT lose from this mess.
Also, nobody responded if my thinking is wrong WHO actually profits from this, I mean, WHERE are all these billions of euros sitting at?
Bottom line from someone you do not know and who has done you no harm:
I'm very worried about the future... :-(
Why did Greece want to join the Euro in the first place?
I don't believe Germany can be absolved from all responsibility, which has been pointed out by serious commentators who know what they are talking about.
That said, the UK said "no" to the Euro and has been saved from the aggro. (We have enough aggro from our banking industry without being stuck deep into the Euro as well.)
I mean in some sense the Greek government looks kind of financially incompetent whatever angle you are looking from.
Kilkrazy wrote: Why did Greece want to join the Euro in the first place?
For cheaper loans, basically. Before the Euro Greeks paid very high rates on any loan, often triple or more what Euro countries did. Greece just wasn't seen as stable enough to give them the better rates. After joining the Euro they could get the lower rates that people like the Germans were used to.
But they falsified their eligibility. With the help of banks like Goldman-Sachs hiding problems behind smokescreens of technically legal but morally dubious money manuevers, added to outright falsification of Greek state finances. If something looked bad they just left it out of the papers! Not that I'd blame all of it on the Greeks. The Euro group must have been filled with idiots too, letting their wish for a new Euro member cloud all judgement. They should have known something was fishy if they actually tried to go through any of the books.
UK is spit over euro, some want to leave, trade but leave EU as a institution.
We are slightly protected by not having such a link and own currency that's a buffer in some respect.
Deep into the Euro but not as deep as those using the Euro as a currency.
Things are getting bad, far as I read your atms are running out of cash, something like 40% only have cash in places according to some media.
Shieldwolf Miniatures wrote: Finally back home, it's a mess here, people running to the supermarkets and gas stations to supply themselves.
In my pharmacy today the same thing, this whole "European-we'll-work-something-out-or-then-again-we-might-not" has shuttered what little was left of the on going economy and stability.
Unfortunately instability largely hidden, not measured, ignored by the systems put in place by the Greek government.
Banks closed, people divided, a nation ruined from 5 years of austerity that has brought nothing than damage and unemployment.
I read what was written down specifically for austerity measures for at least 2012.
What did you see as one of the unfortunate people not "self employed" so hiding income is not even a consideration?
I do not mean that as a nasty thing, looking at the systems in place it would promote bad behavior from the best of people.
For one more time, I'm not saying Greece (government/people, take your pick) are not to blame, but placing the entire fault on us is highly unfair.
Agreed it is not the entire fault, in interdependent economies it would be hard to be the only one.
The systems in place for financial systems and government spending and revenue collection was badly flawed and by design and ignorance greatly contributed to Greece appearing to be not great but OK until real numbers could be figured out.
I would too NOT come to Greece atm for holidays, things became unstable and imo it's everybody's fault but I couldn't care less about that, I care about how it's going to be fixed.
Yes, a few vacationers stranded and not able to get at their funds, a mess for everyone.
How to "fix it" is default on the loans.
Its been done before by other countries.
The debt is too great for the Greek people to reasonably pay off.
Still follow through on as many of the recommendations the IMF had to say, I actually think they meant well.
At least then the efforts would be for the people and improving governance.
Not to mention the billions of euros that fled from many Greeks into foreign bank accounts. As I said, banks do NOT lose from this mess.
Oddly, recommendations were made to hold banks like the Swiss more accountable for them being used for tax evasion.
A great deal of money went to banks out of country due to "lack of trust" sound familiar?
So the Greek banks also were no good for issuing loans to their people contributing to the issues.
I heard it is uncommon in Greece for anyone to have a credit card or access to one: is that true?
Also, nobody responded if my thinking is wrong WHO actually profits from this, I mean, WHERE are all these billions of euros sitting at?
Largely now, interest payments (higher anywhere BECAUSE they were high risk of default...).
BUT the original money went to paying of bills the government could not due to inefficiencies.
Schools, government owned institutions, pensions, these "simple" things cost too much to pay for due to the HORRIBLE means of collecting taxes and managing spending.
It is not so much the who (rarely is) the systems for doing these things did not work and they still have not changed so they can continue to destroy the country's economy.
Bottom line from someone you do not know and who has done you no harm:
I'm very worried about the future... :-(
Bottom line, I am worried for you and your country's future.
It is a systemic problem.
If all debt was completely erased as of today, in one decade I would guarantee they would be back to this problem again if the systems do not change.
I personally get fed up for people looking to "blame".
Too late, the deed is done, what would we do different?
What can we do now?
No more handouts, bankrupt, switch to your own currency, make the money yours.
Government to be transparent in it's dealings and expenditures, the less complicated record keeping the better.
Simple tax laws, simple collection, ENFORCEMENT, demand / expect receipts in all things, tax collector cannot show where you ate, slept and bought your stuff: fines = more government revenue.
Privatize as much as possible to drive efficiencies, the less government "credits" the better, more public industry.
Being able to "print your own money" will allow the Greek banks to have money, the Americans have been doing it for years.
Look at my prior links, IMF auditors, people with names, professionals appeared to have some interest to get Greece on it's feet.
Even if it was COMPLETELY self interest, many recommendations make sense.
This is my two cents / simplification of a complicated problem.
I honestly hope for you the best in these troubled times.
Unfortunately I'm a bit slow in comprehending these things, you didn't happen to change the numbers I previously stated now have you? Or maybe deliberately ignored it which is most probable.
Let me quote them for you again
One last thing regarding the pillaging comment above; Europe and the IMF isn't losing any money, let's be clear on that. These are interests that will not be paid, interest upon interest, we owed 180 billion € back in 2010, now it's over 400.
If -hopefully not because it means our suffering was for nothing- bankruptcy does occur, European banks didn't hand out 220 billion euros, that's the money they claim out of the absurd interest rates Greece has been forced into signing to avoid bankruptcy. I don't have the numbers nor am I in a position to know for a fact, but I'll explain this the same way I explained it to my employee last year.
I loan you 100€ and pretend interest. Fair enough. Then I see you are in trouble and hand you another 100€. Interest is elevated however. This happens another 3 times, each of which I generously put another 100€ each time making you sign new contracts pretending always more, for a total of 500€. In the meanwhile you have repaid me something like 800€, but due to the absurd interest rates you still owe me money, even more than before, actually you owe me now another 1000€.
Doing the math, I gave 500€, took back 800€ and you still owe me 1000€. I feel 'pillaging' is a great term. How would you feel?
Funny how you turned the 300euros of clean profit made already from my example to a 90 euro loss at yours. :-/
Not to mention the billions of euros that fled from many Greeks into foreign bank accounts. As I said, banks do NOT lose from this mess.
Also, nobody responded if my thinking is wrong WHO actually profits from this, I mean, WHERE are all these billions of euros sitting at?
I don't know how you have arrived at those numbers. Greece's interest rates for its loans with the Eurogroup stand at 2,5% yearly. That means that on a 500€ loan you need to pay 12,5€ in interest each year which means that to achieve the numbers that you are quoting the loan would have to be in place for over 104 years. Even before the initial bailout, Greece had on average an interest rate lower than 5% which means that a loan would have to stand for over 50 years to reach those values and that is just not how things are done.
Greece has been living with government deficits since the eighties, you've only achieved a positive structural balance in 2012. That is close to thirty years of borrowing money and then borrowing more money to pay back those initial loans plus cover the still existing deficit. And every time you borrow money to pay back a loan, guess what? Your debt actually grows, it doesn't shrink, because you'll have to borrow a larger amount since you now have to pay not only the original loan but also its interest (and borrow even more because you still aren't making enough money to cover your expenses).
Also I don't know if that is your intention, but what is coming across is that you think that the people / banks / countries / whatever that have been lending you the money for all these years shouldn't profit from this activity for some reason.
Bottom line from someone you do not know and who has done you no harm:
I'm very worried about the future... :-(
I don't wish you or any of yours or anyone in Greece for that matter any harm and I sincerely hope that you guys manage to turn this around and get back on your feet and hope that your international business will at least help you weather all of this in the best possible way.
Is the debt now the interest that is killing them or if all debts were cleared would they still be running a deficit?
To loan money a profit is expected, return on investment or it could have gone somewhere else.
The root causes of the indebtedness have been identified and IMF has tried to "force" the Greek government to use sustainable systems to get back on it's feet. Either what they have chosen to implement or the method they chose is "unfair" enough to get many of it's citizens up in arms.
Loans are not a right.
Those that hold the money and fear to not have it returned have a right to withhold it.
As long as the government is responsible to provide services, the citizens MUST pay taxes or those services MUST be privatized so the government can "afford" what remains it is responsible for.
If tax evasion remains the primary issue, the government would be within it's rights to charge on usage for those services to ensure they get their money.
Is the debt now the interest that is killing them or if all debts were cleared would they still be running a deficit?
Greece's interest spending in 2014 was 4.3% of their GDP and that includes the interest payments to the CEB that would have to be given back to Greece if they fulfilled their previous agreements. If those are taken into account then that spending drops to 2.6%.
If we take last years numbers into account then yes, if all the Greek debt was wiped out then they would have a positive balance. But even before Syriza was elected, tax revenue dropped 1.048 billion Euros (23%) and if you add all the expenses that the previous governments had cut and that this Government re-instated then they would probably still be in the red even if all debt was wiped out.
Frazzled wrote: You seem to be acting like Greece is some poor innocent. When you spend more than you take in, for decades, there's a problem.
I do feel like Greece is kind of innocent though.
The people responsible aren't going to suffer, the Greek people certainly will and they have as much real control over what their governments do as you or I.
Frazzled wrote: You seem to be acting like Greece is some poor innocent. When you spend more than you take in, for decades, there's a problem.
I do feel like Greece is kind of innocent though.
The people responsible aren't going to suffer, the Greek people certainly will and they have as much real control over what their governments do as you or I.
The greek people -who seem to exist on nothing but tourism and government jobs-elected them. them.
Frazzled wrote: You seem to be acting like Greece is some poor innocent. When you spend more than you take in, for decades, there's a problem.
I do feel like Greece is kind of innocent though.
The people responsible aren't going to suffer, the Greek people certainly will and they have as much real control over what their governments do as you or I.
The greek people -who seem to exist on nothing but tourism and government jobs-elected them. them.
I'd rather go on vacation to Turkey anyway.
I assume you wont be joining in with the whip round then?
Frazzled wrote: You seem to be acting like Greece is some poor innocent. When you spend more than you take in, for decades, there's a problem.
I do feel like Greece is kind of innocent though.
The people responsible aren't going to suffer, the Greek people certainly will and they have as much real control over what their governments do as you or I.
If you continue to vote on the same people, that you know are corrupt, on every single election then shouldn't you take some of the responsibility as well? Isn't that kind of one of the basis of democracy?
And lets not kid ourselves, this is not an exclusive problem of corruption at the top, this is a society where tax evasion and bribery are completely ingrained from top to bottom.
23% of the people that paid taxes stopped paying them when a new government promised them that the austerity would end if they voted for them. This is completely bonkers!
Frazzled wrote: You seem to be acting like Greece is some poor innocent. When you spend more than you take in, for decades, there's a problem.
I do feel like Greece is kind of innocent though.
The people responsible aren't going to suffer, the Greek people certainly will and they have as much real control over what their governments do as you or I.
If you continue to vote on the same people, that you know are corrupt, on every single election then shouldn't you take some of the responsibility as well? Isn't that kind of one of the basis of democracy?
And lets not kid ourselves, this is not an exclusive problem of corruption at the top, this is a society where tax evasion and bribery are completely ingrained from top to bottom.
23% of the people that paid taxes stopped paying them when a new government promised them that the austerity would end if they voted for them. This is completely bonkers!
What you say is true.
When I went to Rhodes I saw that loads of the houses were built with rebar sticking out of them.
I asked why and they said that it was so that the house could be declared as unfinished and avoid tax.
The guy said he had 2 deeds for his house 1 real one and one for tax purposes and went on about bribes.
"Tim Jones, economist at the Jubilee Debt Campaign, said:
"The IMF’s loans to Greece have not only bailed out banks which lent recklessly in the first place, they have actively taken even more money out of the country. This usurious interest adds to the unjust debt forced on the people of Greece.”"
There is a reason for high interest rates: high risk.
So if Greece does indeed go bankrupt, how much profit did the IMF make?
The higher interest is a "hedge" against if they default and the money is lost.
If it all works out then yes bank capitalism wins in a big way and Greece loses.
"Tim Jones, economist at the Jubilee Debt Campaign, said:
"The IMF’s loans to Greece have not only bailed out banks which lent recklessly in the first place, they have actively taken even more money out of the country. This usurious interest adds to the unjust debt forced on the people of Greece.”"
There is a reason for high interest rates: high risk.
So if Greece does indeed go bankrupt, how much profit did the IMF make?
The higher interest is a "hedge" against if they default and the money is lost.
If it all works out then yes bank capitalism wins in a big way and Greece loses.
Exactly. While usury is indefensible it's not really applicable to Greece. This issue with Greece isn't hidden rate increases or high rates simply from avarice, the issue with Greece is that they trashed their credit rating. They vote in a goverment that refuses to reduce spending, have a populace that has turned tax evasion into an acceptable social norm and already owe billions of Euros that they can't really afford to pay back. The only way Greece was going to be able to intice foreign investment and get more loans is via high interest rates. The only alternative would be to not offer high rates, not get loans and let their government run out of money.
"Furthermore, without pressure from Brussels and the IMF, Greece might be tempted to dodge some of the structural reforms that its creditors maintain are necessary for long-term growth. A lack of such reforms could reintroduce inflation into the Greek economy."
This is assuming they default in the above statement.
""How many years before they would see the light at the end of the tunnel?" asks financial expert Paul Blustein.
Mr Blustein, who wrote a book on the Argentine default, is now writing one on the crisis in Athens. "Greece would go through a horribly wretched period," he says."
As was stated, Argentina was able to export so by having a devalued currency they were able to be very competitive.
Greece does not have that advantage even with more economical tourism (paraphrasing the article).
Root cause of the debt needs to be fixed no matter the outcome for Greece or we will see this again and again until it becomes a no-man's land.
In related news, a 29yr old shoe shop clerk is running an Indiegogo campaign to bail out the Greeks lol. 3euros for everyone else in Europe would pay it off lol
Greece is going to need a lot more than 120 euros to escape its current debt crisis.
But that’s all that three donors had given by Monday morning, a day after a British man named Thom Feeney set up a crowdfunding campaign on the site Indiegogo.
The goal: 1,600,000,000 euros (about $1.8 billion) -- and only eight days left before the unofficial funding campaign closes.
"I truly do believe it can be effective, remember it's a very small amount per person we're looking for," Feeney, a 29-year-old shoe-shop worker in London, told The Huffington Post in an email. "It also makes a statement, if a man who works in a London shoe shop can get closer to solving the Greek financial crisis than David Cameron and Angela Merkel, maybe we all need to take a good hard look at the world."
By Tuesday afternoon, donations soared into the hundreds of thousands, though the campaign was still far off from the target amount.
Resolving the crisis is no simple task. Greece has been negotiating with creditors for months to extend a bailout program and release a 7.2 billion euro ($8.03 billion) tranche of funds that the country could use to pay off its debts. Greece has refused to meet some of the strict austerity reforms demanded by lenders.
In addition, Greece's 1.6 billion euro ($1.8 billion) loan payment to the International Monetary Fund is due Tuesday. The country does not have the money to pay it.
On Friday, Greek Prime Minister Alexis Tsipras shocked lenders when he announced a July 5 referendum on the country’s bailout. Greek banks were closed on Monday, and residents were limited to ATM withdrawals of just 60 euros (roughly $66). Greeks queued up around the country, trying to pull out cash ahead of a potential financial collapse.
Moreover, it’s unclear how Greece could legally accept such a large transfer of money from Indiegogo to government coffers.
Still, Feeney appears to be holding out hope that a huge chunk of the EU’s citizenry will voluntarily part with a few euros, or at least pay up for a Greek-themed reward for donating: Three euros ($3.35) earns a postcard of Tsipras, sent from Greece; 6 euros ($6.69 U.S.) delivers a feta cheese and olive salad to a donor’s door; 10 euros ($11.15 U.S.) gets a voucher for a small bottle of ouzo, Greece’s signature aperitif (Indiegogo doesn’t allow alcoholic gifts); 25 euros ($27.89 U.S.) means a voucher for a bottle of Greek wine.
And for a donation for the full 1.6 billion euros, Feeney has vowed to find that donor her or his own private Greek island.
"Do I feel it will help? It can't harm, can it?" he said. "I'm confident the people of Europe will get this campaign and some time soon we'll all be raising a glass of ouzo and having a bloody great big celebration."
For now, it may be time to just pass the ouzo and wait for what happens next.
This story has been updated with comments from Feeney and a number that better reflects the amount of money donated so far.
It's the entire EU's problem. Letting everyone join without any good reason leads to problem like this. EU /= USA. That's something EU politicians just don't understand.
Greece has no industry and just lives on tourism. Romania. Croatia. Slovakia. What do they contribute? Exactly.
It said that if everyone in the EU had a whip around and gave 500 euros each, we could pay off all of Greece's debt.
How much has everyone got spare?
Let me get this straight... 500€, a value that's over my country's minimum wage of last year, this year I think it's actually 505€. 500€ that's actually over 50% what I get after all the taxes and discounts and it would all be to help pay the debt of a country that refused to implement measures that my own country has been doing for what, 3-4 years now in an attempt to get out of our own gak hole?
It said that if everyone in the EU had a whip around and gave 500 euros each, we could pay off all of Greece's debt.
How much has everyone got spare?
Burning 500€ and using the ash as fertilizer would be more useful than throwing it in the hands of one of the most incompetent governments since...uh..Greece?
Kilkrazy wrote: The interest rates on the major loans to Greece are 3.6% (IMF) and 2.75% (ESF) which is not very high.
All the more reason not to blame bankers and make accusations of usury.
And really even then, the lender never made you take out a loan you couldn't repay. You did that of your own free will.
Lol, like there was a choice! If Greece defaulted 5 years ago the international markets (totally unprepared) would have collapsed, I highly doubt you would have maintained your job back then. The whole scramble was in order not to shatter world economy.
5 years later and still markets shake, despite their now being highly prepared.
"Here's the money so you may not default. Then again nobody is forcing you so you are taking it on your own free will. And oh, you must really not care about the fact we are only draining you, 89% of that we'll just take back as soon as we give it to you."
Get a grip... If you go tell a Greek upfront that they borrowed the last 5 years on their own free will you'll probably get punched in the face.
To a more serious point now, let's hope they work something out, the people are divided in half in Greece (half are at a point they no longer give a damn and want to see everything come crushing down, the other half don't wish 5 years of pain to go down the drain...)
Sigvatr wrote: It's the entire EU's problem. Letting everyone join without any good reason leads to problem like this. EU /= USA. That's something EU politicians just don't understand.
Greece has no industry and just lives on tourism. Romania. Croatia. Slovakia. What do they contribute? Exactly.
We contribute a market for your industry and a fresh economy for Germany and the rest of the EU oligarchy to plunder with the assistance of local traitors. That's the main problem Germany has with Syriza - they won't let you steal all their stuff.
It said that if everyone in the EU had a whip around and gave 500 euros each, we could pay off all of Greece's debt.
How much has everyone got spare?
Burning 500€ and using the ash as fertilizer would be more useful than throwing it in the hands of one of the most incompetent governments since...uh..Greece?
Not having my 400 pounds thanks, Greece got into this problem, its not our job to dig them out there own hole.
Right now if they default, or if they carry on and pay the IMF, its better than this limbo.
It said that if everyone in the EU had a whip around and gave 500 euros each, we could pay off all of Greece's debt.
How much has everyone got spare?
Burning 500€ and using the ash as fertilizer would be more useful than throwing it in the hands of one of the most incompetent governments since...uh..Greece?
Not having my 400 pounds thanks, Greece got into this problem, its not our job to dig them out there own hole.
Right now if they default, or if they carry on and pay the IMF, its better than this limbo.
I feel I now have to point out that I wasn't being serious
This article on the independent about where Greece's money was spent makes for an interesting read.
I hoped that story would explain what the money was spent on. But it only tells me most of the money was spent on paying back other loans.
Apparently it is a bad thing that the Greek government has been able to secure low cost loans to cover the 50% of their debts they are being asked to pay back. Which now they don't want to do.
However if they still owe 242 billion, what did they do with the 512 billion they must have borrowed in the first place? That is what I want to know.
There's loads of stuff saying that Greece received a bailout but I can't see a breakdown of where the money before that was spent.
Sorry I'm not talking about the Greek bailout debt I mean before that.
The money before that was spent because the Greek government has been running on a deficit since at least 1980. This as also already been stated.
Running on a deficit means that you don't have enough money for all your expenses, so you need to borrow money to cover the rest. Next year, if you are still running on a deficit, you'll need to borrow more money and since you now also have the original loan and interest to pay, the amount you have to borrow grows each year. And this has been going on for over 30 years = the huge debt that they have today.
Now if you wan't to know why the Greek government spent all that time running on a deficit it was because apparently tax evasion in Greece is more popular than football and also because of stuff like this:
(for those that don't speak Spanish)
- The Evangelismos hospital had a garden that consisted of 4 shrubs planted at its entrance. They had 45 gardeners on their payroll to care for them...
- More than 40.000 women received a lifetime pension of 1.000€ each month simply because they were the unmarried daughters of deceased civil servants...
- Several civil administration departments had more than 50 official drivers... and only 1 official car.
- The families of more than 4.500 deceased failed to report the death to Social Security so that they could keep cashing in the deceased's pension checks.
- Greece had more than 600 jobs that qualified for early retirement, among them were hairdressers, musicians of wind instruments and TV announcers...
- They also had numerous useless public institutes, the most famous of which was the Institute for the Protection of Lake Kopais. A lake that was drained in 1930!
Automatically Appended Next Post: So, that proposal that the Greek government refused to accept and that led them to walk out on the negotiations on the weekend... Well, now they accept it...
But at the same time Reuters is reporting that the referendum is still going ahead.
So what is it?! How can they accept a proposal and then still hold a referendum about it? Especially when in that referendum, Tsipras is campaigning for people to vote "No"?
As stated above twice (this is the 3rd time, hopefully the last), Greece is certainly also to blame, since examples like the ones posted above are all TRUE.
Despite that, it certainly doesn't mean that all haidressers in Greece retire earlier, heck I don't know of any and -trust me- I know a lot of people. Nor does it mean that Greeks were all gardeners or limo drivers, I remember myself working ever since I was 16!
Huge changes have taken place over the past 5 years, certainly even more must take place to fix all this.
I remember when going to Lisbon back in 2006, the taxi driver saying he worked in a taxi because it was the fastest way for Portuguese to make money. When asked "how much" he said something like 800€. Well, that didn't sound a lot, but when coffee there costs 0,60€ and 0,80€ when in Greece it's something like 3,00€, it comes as no surprise. When asked about why local life is not as expensive as in Greece he replied that corruption keeps the wealth and the people do all the work -but the system works and everyone is happy.
That sure reminded me of Greece, yet I do not pretend the taxi driver to be fully blamed for the fact Portuguese economy today is also a mess. He still holds some minor responsibility however, yes?
PS. I respect what you are saying and also replicate the wish, someone must be mad to wish for people to suffer. But austerity has helped little and damaged a lot, I fear for what their plan is and what the hidden agendas prove to be.
For it's hidden interests that the decision-makers have and none involve the well-being of the Greek population...
“Several measures that the institutions are suggesting will not be enforced immediately but in stages so that the government can find equivalent measures to replace them,”
And now they are already undermining their previous letter by stating publicly that the proposals that they are agreeing to are being delayed so that they won't even have to implement them! Are these guys for real?
As stated above twice (this is the 3rd time, hopefully the last), Greece is certainly also to blame, since examples like the ones posted above are all TRUE. Despite that, it certainly doesn't mean that all haidressers in Greece retire earlier, heck I don't know of any and -trust me- I know a lot of people. Nor does it mean that Greeks were all gardeners or limo drivers, I remember myself working ever since I was 16!
Huge changes have taken place over the past 5 years, certainly even more must take place to fix all this.
I remember when going to Lisbon back in 2006, the taxi driver saying he worked in a taxi because it was the fastest way for Portuguese to make money. When asked "how much" he said something like 800€. Well, that didn't sound a lot, but when coffee there costs 0,60€ and 0,80€ when in Greece it's something like 3,00€, it comes as no surprise. When asked about why local life is not as expensive as in Greece he replied that corruption keeps the wealth and the people do all the work -but the system works and everyone is happy. That sure reminded me of Greece, yet I do not pretend the taxi driver to be fully blamed for the fact Portuguese economy today is also a mess. He still holds some minor responsibility however, yes?
But that Tax driver was to blame for the mess that our economy was in. And in 2006 all of that was true for my country or at least partly true, that talk you had exemplified what was deeply wrong with my country and why we landed in all the trouble that we did. Our previous prime minister is even in jail right now waiting trial for corruption, tax evasion and embezzlement.
But since 2011 all of that started turning around. Several measurements were put in place that prevented tax evasion, courts were given extra powers and resources to help fight corruption and the people's mentality that not paying taxes is "ok" has really turned sharply as a result, especially in such a small time frame.
Our current government failed in a number of reforms that they really should have implemented to ensure our long term sustainability, but two areas where they held up was in fighting tax evasion and corruption and those two are the prime reason why we managed to keep to our agreements with the Troika and successfully ended our aid plan.
Quite so - but somehow there were a lot of gardeners and limo drivers listed for places that could have managed with one. Maybe someone was falsifying the number of workers and taking the money for himself? Or splitting it with the people he had listed while they in fact were working somewhere else?
Quite so - but somehow there were a lot of gardeners and limo drivers listed for places that could have managed with one. Maybe someone was falsifying the number of workers and taking the money for himself? Or splitting it with the people he had listed while they in fact were working somewhere else?
I am not going to deny that, on the contrary I confirmed it. It's closer to the 2nd case, these people involved cashed in the paychecks/salaries even if they never showed up for work or just showed up to punch the card. ALL of these people were involved -one way or the other- with the political party that ensured them their post. Not for nothing rest assured, some type of favor was made in return, not to mention the votes guaranteed in any upcoming elections. I can't tell you what type of favors since I sincerely do NOT know.
BUT the greatest part is NOT like that, people in my circle for example (and we are not lower class) retire around the age of 67 to 70 and don't imagine any 3000€ pensions. Having worked an average of 40 years each (and I mean WORK), they usually ended up with something like 1200€, which due to cuts it's currently something around 7-800€/month. Easy to unfairly do so on those who have no strength to protest.
Not that they are not also to blame mind you, for they are paying their being idle in the face of injustice. But the blame is not mainly theirs, that's what I'm saying...
Quite so - but somehow there were a lot of gardeners and limo drivers listed for places that could have managed with one. Maybe someone was falsifying the number of workers and taking the money for himself? Or splitting it with the people he had listed while they in fact were working somewhere else?
I am not going to deny that, on the contrary I confirmed it. It's closer to the 2nd case, these people involved cashed in the paychecks/salaries even if they never showed up for work or just showed up to punch the card. ALL of these people were involved -one way or the other- with the political party that ensured them their post. Not for nothing rest assured, some type of favor was made in return, not to mention the votes guaranteed in any upcoming elections. I can't tell you what type of favors since I sincerely do NOT know.
BUT the greatest part is NOT like that, people in my circle for example (and we are not lower class) retire around the age of 67 to 70 and don't imagine any 3000€ pensions. Having worked an average of 40 years each (and I mean WORK), they usually ended up with something like 1200€, which due to cuts it's currently something around 7-800€/month. Easy to unfairly do so on those who have no strength to protest. Not that they are not also to blame mind you, for they are paying their being idle in the face of injustice. But the blame is not mainly theirs, that's what I'm saying...
But no one is saying that the majority of Greek people are lazy, or don't work or anything like that. Those cases are being used as examples of wasted public funds, not of people that don't wan't to work.
And you keep talking about things being "unfair". This has nothing to do with fairness, its about numbers, your pension funds are rated the 8th worst in the world when it comes to sustainability (you where dead last when the first bailout was implemented). Your pensions cost your country 450 million € more each year than what people and employers are contributing to it. Don't you see that this is unsustainable?
(And when I say "you" I mean the Greek people, not you specifically)
(And when I say "you" I mean the Greek people, not you specifically)
Yes, I know :-)
And when I write, I speak for myself, nobody appointed me Greek representative of anything here.
I don't usually involve myself (nor allow my company members) in personal views, but this is a serious matter and I willingly let myself carried away.
And you are right, "fair" has nothing to do with this, and even if it does is not as important as numbers. Numbers to fix all this...
Greece would face an unsustainable level of debt by 2030 even if it signs up to the full package of tax and spending reforms demanded of it, according to unpublished documents compiled by its three main creditors.
The documents, drawn up by the so-called troika of lenders, support Greece’s argument that it needs substantial debt relief for a lasting economic recovery. They show that, even after 15 years of sustained strong growth, the country would face a level of debt that the International Monetary Fund deems unsustainable.
The documents show that the IMF’s baseline estimate – the most likely outcome – is that Greece’s debt would still be 118% of GDP in 2030, even if it signs up to the package of tax and spending reforms demanded. That is well above the 110% the IMF regards as sustainable given Greece’s debt profile, a level set in 2012. The country’s debt level is currently 175% and likely to go higher because of its recent slide back into recession.
The documents admit that under the baseline scenario “significant concessions” are necessary to improve Greece’s chances of ridding itself permanently of its debt financing woes.
Even under the best case scenario, which includes growth of 4% a year for the next five years, Greece’s debt levels will drop to only 124%, by 2022. The best case also anticipates €15bn (£10bn) in proceeds from privatisations, five times the estimate in the most likely scenario.
But under all the scenarios, which all assume a third bailout programme, looked at by the troika – the European commission, the European Central Bank and the IMF – Greece has no chance of meeting the target of reducing its debt to “well below 110% of GDP by 2022” set by the Eurogroup of finance ministers in November 2012.
In the creditors own words: “It is clear that the policy slippages and uncertainties of the last months have made the achievement of the 2012 targets impossible under any scenario”.
These projections are from the report Preliminary Debt Sustainability Analysis for Greece, one of six documents that are part of the full set of materials that comprise the “final” proposal sent to Greece by its creditors last Friday.
These, which the Guardian has seen, were obtained by Süddeutsche Zeitung after they were sent to all German MPs with the expectation that the deal would need to be approved by the country’s parliament.
A vote in the Bundestag never took place as the Greek prime minister, Alexis Tsipras, rejected the plans and called a referendum on whether to accept the creditors’ demands.
While the analysis underlines the fact that Greece has already benefited from a number of debt-reducing measures – maturities have been extended, interest payments are similar to those of less indebted nations and the PSI in 2012 cut debt by about €100bn – the document also admits that under the baseline scenario “significant concessions” would improve sustainability.
But despite the lenders’ admission that Greece cannot thrive without debt relief the documents provide no clarity about what such a package might look like, nor does it provide any detail of a third bailout programme despite assuming one would exist. They promise only a more detailed debt sustainability analysis in due course.
IMF's uneven dealings with Greece is saga of embarrassment
The documents also throw light on the €35bn investment package that several governments, including Germany’s, have this week pointed out was offered to Greece last week.
The second document in the pack of six, titled Reforms for the Completion of the Current Programme and Beyond, show there was less to this offer than suggested by commission president Jean-Claude Juncker and Germany’s vice-chancellor Sigmar Gabriel. The cash on offer is not an ad hoc investment but is actually an EU grant that is regularly available to all member states. And, as Süddeutsche Zeitung points out, accessing the cash requires a 15% co-financing in Greece’s case, which it cannot afford. Because of this, Greece has unspent sums from its €38bn 2007-2013 pot of available grants.
A third document outlines the “financing needs and draft disbursement schedule linked to the completion of the fifth review”, spelling out how Greece would have received €15bn to meet its obligations until the end of November. The cash would have been handed over in five tranches starting in June (as soon as the Greek parliament approved the proposals) to cover Greece’s financing needs. However, 93% of the funds would have gone straight to cover the cost of maturing debt for the duration of the extension.
The remaining documents cover the nuts and bolts of the actions that were expected to be taken by Greece in consultation with the EC/ECB/IMF. One of these papers was also published by the European commission over the weekend.
The plan is premised on a primary surplus target of 1%, 2%, 3%, and 3.5% of GDP in 2015, 2016, 2017 and 2018 respectively (both sides agree on these targets). It is anchored on VAT changes producing additional revenue of 1% of GDP and a reform of the pension system that leads to savings of 1% of GDP in 2016.
On VAT reforms, the proposal suggests broadening the tax base at a standard rate of 23%, and would include restaurants, and catering. There will be a reduced rate of 13% to cover a limited set of goods, that includes energy, basic foods, hotels and water (excluding sewage).
There was also to be a super-reduced rate of 6% on pharmaceuticals, books and theatres, an increase on tax on insurance and the elimination of tax exemptions on certain islands. The creditors had originally wanted only a two-tier VAT system.
In terms of pensions, which have been the stickiest point in the negotiations, the plan demands reforms to:
Create strong disincentives to early retirement, including changes to early retirement penalties
Adopt legislation so that withdrawals from the social insurance fund will incur an annual penalty, for those affected by the extension of the retirement age period, equivalent to 10% on top of the current penalty of 6%
Ensure that all supplementary pension funds are only financed by own contributions
Gradually phase out the solidarity grant (EKAS) for all pensioners by end-December 2019. This shall start immediately for the top 20% of beneficiaries with the details of the phase-out to be agreed with the institutions
Freeze monthly guaranteed contributory pension limits in nominal terms until 2021
Provide to people retiring after 30 June 2015 the basic, guaranteed contributory, and means-tested pensions only at statutory normal retirement age, currently 67 years
Increase the relatively low health contributions for pensioners from 4% to 6% on average and extend it to supplementary pensions
On Monday, Juncker insisted – incorrectly – that these measures did not amount to a cut in pensions. However, the creditors were correct in saying that they had compromised and the plans had some flexibility. They also suggested that Greece could provide alternative proposals as long as they are “sufficiently concrete and quantifiable”.
The creditors’ proposals also suggested that corporation tax rise only from 26% to 28%. Greece wanted the rate set at 29%.
It disgusts me that Junker, prime candidate for abetting corporate tax evasion, Lagarde, who pays no tax on her own income, Draghi, who comes from the broken financial system that caused the crash and Merkel, who has presided over the dramatic rise of inequality in her own country, can lecture anyone on these matters.
Greece has serious issues which have not been resolved, and corrupt actors who have not been punished. This is an indisputable fact. But there's a flip side to that and it's that the various banks and big investors of Europe were culpable in all kinds of twisted dodgey dealings throughout the lead up to the crisis, and in the main they have avoided any consequence bar a minor income drop. This disgusts me. I'm sure austerity measures would be easier to swallow if they weren't dictated by hypocrites protecting leeches.
Da Boss wrote: Merkel who has presided over the dramatic rise of inequality in her own country, can lecture anyone on these matters.
Lowest unemployment rates since several decades, minimum wage introduced, TTIP support and still being worked on, etc. Yeah...leftist ideology loses vs. reality.
Greece's main problem is...Greece. Zero industry. No natural ressources. Now, they realize that maybe, just relying on tourism alone isn't such a bright idea. Welp, too late. No sympathy. Corruption and open refusal to go after tax dodgers is a Greece-made problem. They refused the offer to let German officials help them out in doing their job. Well, I do hope that the Greece government at least regrets their poor choices. The only choice they have now is to bend over and pray for forgiveness. They had their chances, they refused them out of their blind arrogance. Too bad.
I said inequality, and minimum wage was only introduced when she was forced into a grand coalition with the SPD.
TTIP, don't make me laugh. I know your self interested stance on that, you've posted about it before, and it has zero to do with reducing inequality.
None of what you said bar minimum wage, which she didn't want to introduce, did anything to help inequality. Being employed in an unstable mini-job does not decrease inequality if the likes of the head of deutschebank are being massively overpaid for being obviously incompetent.
I also notice you have nothing to say about the rest of the cadre of hypocrites.
Da Boss wrote: I said inequality, and minimum wage was only introduced when she was forced into a grand coalition with the SPD.
Oh, so the conservative party voted against it and was overruled? I missed that.
TTIP, don't make me laugh. I know your self interested stance on that, you've posted about it before, and it has zero to do with reducing inequality.
I know that it's a hard matter to understand and that not everyone is willing to take the effort to delve into and fully comprehend it.
Being employed in an unstable mini-job does not decrease inequality
"A mini-job is as bad as being unemployed."
Yeah...re-read that. Think about it. Reconsider.
the head of deutschebank are being massively overpaid for being obviously incompetent.
Typical leftist "RICH PEOPLE ARE ZE EVIL" propaganda. Come on. Those evil, evil, evil people pay for the overly expensive welfare state Germany is. If you'd even force out half of the high rollers, Germany would have to cut most of its welfare features. If that's what you want...keep rocking the leftist way.
How about you re-read what I said? Because I did not, in fact, say that a mini-job is as bad as being unemployed. I am talking about inequality, which is the disparity between the rich and the poor. If some people are becoming disgustingly rich, and others are having wages and benefits lowered, then this increases inequality even if employment is high. I know it's hard to understand, but keep trying, you'll get there eventually.
And the banks are protecting us? Seems like they're the ones who exposed us to ridiculously large amounts of risk through unsound investment.
Also, I understand what the TTIP is perfectly well thank you.
The conservative party did nothing for the minimum wage until forced into coalition with the SPD, and it was not one of their policies, but an SPD policy. Compromise and unity with a coalition partner is common in politics.
Automatically Appended Next Post: Of course, you're free to argue that inequality is not a bad thing. I can accept that, but not that the CDU policies (which were originally SPD policies really, sadly) have not increased inequality.
Da Boss wrote: How about you re-read what I said? Because I did not, in fact, say that a mini-job is as bad as being unemployed. I am talking about inequality, which is the disparity between the rich and the poor.
Precisely. A has an income of 3000€. B has an income of 0€. C has an income of 500€. You claim that the A-B gap is as large as the A-C gap. Basic math.
If some people are becoming disgustingly rich
There's no such thing as being "disgustingly rich". If you're jealous, then that's your problem. Why aren't you in a better-earning job? Not qualified?
Facts. Use them. I know it's harder than just repeating leftist propaganda. Do it, though. Highly recommend it.
And the banks are protecting us?
Huh? Citation needed.
Seems like they're the ones who exposed us to ridiculously large amounts of risk through unsound investment.
Oh, they sure did. What everyone, no wait, every irrationalist, likes to forget, however, is that at the same time, they (among others) pay for everyone else. Have every big bank relocate abroad and let's see where Germany is going. I'll be glad to watch.
Also, I understand what the TTIP is perfectly well thank you.
Your posts on this matter portray the exact opposite.
The conservative party did nothing for the minimum wage until forced into coalition with the SPD, and it was not one of their policies, but an SPD policy. Compromise and unity with a coalition partner is common in politics.
Oh, so a compromise is the same as fully disagreeing?
If they wanted to increase minimum wage, why didn't they do it when they were in power before?
I believe there is such thing as disgustingly rich, though I am quite happy with my own income. I have enough to live on and buy
luxuries, and I'm qualified for my job, cheers!
Unfortunately, my German is not good enough to read your page of statistics, though I will give it a go if I have time.
As for the banks - where did I say I wanted them burned to the ground? I am a capitalist, but I believe that they are inadequately regulated and definitely do not suffer harsh enough consequences when they mess up and cause the rest of us massive problems. I believe this is a the fault of both public sector regulators who are "captured" by the banks and are too friendly to them, and the bankers themselves who utilise this light touch regulation to make a fast euro at the expense of long term profits.
I'm not some mad trotskyite dude. I just want a more just and equitable process.
Da Boss wrote: As for the banks - where did I say I wanted them burned to the ground? I am a capitalist, but I believe that they are inadequately regulated and definitely do not suffer harsh enough consequences when they mess up and cause the rest of us massive problems.
Now this is certainly a problem. One of those statistics pages posted earlier also had some nice stacks of dollars piled up next to banks. Nine of the biggest banks carried enough risks on derivaties trading (basically betting on future winnings) that it equals three years of the global gross product. They gamble on the wealth of the whole world! And when things go bad they cry for their national central banks to bail them out. In effect us taxpayers.
Pistols at Dawn wrote: Also, Greece doesn't 'need' a "strong, powerful leader' it needs wholesale reform to end the decades of clientalism, tax-dodging and corruption that caused this mess in the first place.
There was plenty of corruption in Greece, in both revenue collecting and expenditure, but Greece is hardly unique in that area. When this mess started, Greece's debt to GDP was at a bit over 100% and had been more or less flat for a decade. Debt was high but hardly terminal, countries can carry twice the debt and remain stable.
It's grown to catastrophic proportions since then because Greek GDP has collapsed. And it's collapsed because of a combination of the GFC and the subsequent austerity in Greece and the rest of the Eurozone.
Tax and spending reform are good reforms, but they aren't really part of the solution to this immediate problem. What was needed was a stabilisation of the Greek economy.
Automatically Appended Next Post:
PhantomViper wrote: Why? The "rot" in Greece is a mix of decades of corruption, tax evasion, public over-spending and no real export industry to speak of (and little of it that exists is apparently tax-exempt ).
No other country in the Euro suffers from all of those problems combined, so why would any "rot" from Greece spread anywhere?
There is a reason why Greece had to forge their public accounts in order to be eligible to enter the Euro, it was because their economy was nowhere near ready to allow them to do so (and still isn't). As soon as it was discovered that they had forged those numbers they should have left the Eurozone because then they would have a whole other set of financial mechanisms available that are only an option to a country with their own currency.
Exactly how a country ended up in debt is irrelevant to the fact that once you have debt, no-one likes paying it back. So Greece must not be let off, out of fear that Italy, Ireland, Portugal and everyone else with debt they don't want to pay back might also try for debt relief.
Germany and France want the 'club med' economies out of the shared currency.
Germany and to a lesser extent France have driven their economies in the last decade on exports to the rest of Europe, and that's been built on the competitiveness achieved through the Euro effectively undervaluing German and French labour.
Orlanth wrote: You have a point, this is unlikely to end well, which is why I think Greece is being used as an object lesson on the need for continued austerity.
And the need for find evidence for austerity anywhere and everywhere has stopped people learning the real lessons of this issue. But that's the way when you start with politics first, and then go looking to economics for evidence, it makes people stupid.
Anyhow, the real issue here is that the seperate countries with a single currency is actually a really unstable structure. Greece had an economic meltdown, that's not news at this point. But what flowed from that somehow managed to capture the worst issues of both a national and local economic collapse.
See, if a country with its own currency has an economic collapse, then the currency will deflate through both government actions and natural economic functions. The poor labour market will stop wage inflation, and the end result is basically a reduction in real wages that will more or less recover aggregate demand with a couple of years.
While if a single region in a country collapses, you can't deflate because the rest of the country has no issue. But instead, you see an automatic shift in transfer payments and taxes. If Wales was to collapse, for instance, then you'd see the situation offset somewhat by an increase in welfare payments in coupled with a reduction in taxes paid out - this would allow some level of stabilisation and give a grounding for eventual recovery.
But in Greece, and any other country with the Euro, neither of these things happened. The Euro doesn't shift based on Greek economic activity as it's dwarfed by France and Germany, so there's no relief in currency valuation. And what money comes in to Greece comes as debt, not as a natural part of budget transfers. And the result is, well, the Greek crisis.
It was a desperate move, but I'm not sure it was rash. The austerity already put on Greece is horrific and not working. Faced with more austerity or walking away, he's trying to prove how close Greece is to walking away.
No-one has any idea. Even the strongest proponents for austerity aren't even claiming that it will fix anything anymore, now they're just saying it has to be done. And people arguing for Greece to leave the Euro haven't considered what will happen when Greece sets up its own massively devalued currency, but at the same time owing a lot of debt nominated in Euros.
EDIT: I feel like Greece is foretelling what happens to the US' massive debt.
Totally different issue. The US owes debt in a currency it completely controls. Greece owes money in a currency in which it is a minor player.
So, in other words...
"Hey, Banks."
"Hey, Greece, what's up?"
"What is ever up, my main man? I need some dough."
"Sounds good, my lean Hellene, how much?"
"Eh, just enough to get a nice meal for my public sector. I'd say... slightly more than my GDP?"
"Aw, man, your public sector's just the cutest. Your GDP will get bigger when your economy grows, right?"
"Yeah, of course. I mean, what, is there going to be an unprecedented economic crisis the likes of which hasn't been seen since the 1930s?"
"Haha, that's why I like you Greece, you're hilarious. Here's your dough. Don't blow it all on one sinecure!"
----------------------------------------------------------------------------------------
"What the feth Greece, where's my money?"
"No, what the feth Banks, where's MY money? Actually, where's EVERYBODY'S money?"
"Hey, feth you Greece. gak happens. I owe a lot of money to a lot of people. I don't pay them back, we might as well not HAVE money."
"What the feth do you want from me Banks? My economy isn't producing. Its GDP hasn't been this small since it was a pup. I can't pay what I don't got."
"Well, then I guess I'll have to—"
"You'll have to WHAT, tough guy, you gonna—"
"Good morning Greece, good morning Banks."
"Oh, um hi, Mrs. Troika."
"Good morning Mrs. Troika."
"Now what's this I hear about you having a spat about money?"
"It's his fault!"
"No, it's his fault!"
"QUIET! I will hear you one at a time. Greece, do you owe Banks money?"
"Yes Mrs. Troika."
"Banks, did you lend that same money to your friends? And more importantly, all my friends?"
"Yes Mrs. Troika. Sorry Mrs. Troika."
sigh "Now this is very serious, Banks. Very irresponsible. I'm very disappointed, and I want you to promise it won't happen again."
"I promise Mrs. Troika."
"Now Greece, I'm going to give you the money to pay back Banks. But you're going to have to be very careful with it. Very austere. You must only use that money to pay back Banks."
"But Mrs. Troika, I also need money to fix my economy! It's not well"
"And why, Greece, is your economy unwell in the first place?"
"It's Banks' fault!"
"And..."
"Because I overfed the public sector."
"Yes. Now I don't see why I should give you more money when you've already shown you can't use it responsibly. Pay back Banks, and I'm sure your economy will be right as rain in the morning! Right as rain!"
"But it's not fair! Why doesn't Banks get in trouble?"
"Oh, look at the time, I'm late for yoga. You kids play nice now!"
----------------------------------------------------------------------------------------
"Mrs. Troika?"
"Yes, Greece?"
"My economy isn't getting better. I think it's sick."
"Greece, have you been overfeeding its public sector again?"
"I haven't! I promise I haven't!"
"Hmm, well let me take a look at OH MY WORD! Its tax system has completely collapsed! It's got corruption ALL THROUGH its public sector! Greece, when you enrolled in the Eurozone you said your economy was HEALTHY!"
"I had to! If I didn't say that, you wouldn't have let me enroll!"
"Greece, did you lie to me?"
"Um, maybe, a little? But what about my economy? Can't you—"
"Greece, get out of my office, go to your room, and think about what you've done! And do so AUSTERELY!"
"Yes, Mrs. Troika."
----------------------------------------------------------------------------------------
"Good morning, Italy."
"Good morning, Mrrrs. Trrroika."
"Good morning, Spain."
"Good morning Mithuth Troika."
sigh "Good morning Greece."
"Mrs. Troika, austerity isn't working for me! I need you to—"
"Quiet! Now Italy, have you been austere, and is your economy any better?"
"Yes, Mrrs. Trroika. A little imprrrovement."
"Spain?"
"Yeth, Mithuth Troika. No improvement, but it'th not any worsthe."
"Greece?"
"I've been austere just like you said, but it's MUCH WORSE! Now it's got civil unrest, and sagging foreign investment, and youth unemployment! I think I need to stop austerity! I'm not like the other kids!"
"Mithuth Troika, can I stop austerity too? My economy has youth unemployment real bad."
"Mrrs. Trroika, me too? Mine has... um southerrnerrs, I think? And corruption at the highest levels?"
"QUIET! ALL of you. Austerity is perfectly good for all of you, and I will hear NO COMPLAINTS! Spain, go to your room and reform your banking system. Italy, you should know better than to talk about corruption in front of Greece. Go to your room and write me two pages on Entrenched Cronyism. Greece, see me in my office. Everyone else, DISMISSED!"
----------------------------------------------------------------------------------------
"Greece, I'm very disappointed in you. Why don't you listen when—"
"No, why don't YOU listen Mrs. Troika! You KNOW my economy isn't like the other kids'! You KNOW it's special! You KNOW austerity isn't working! Why won't you loan me more money so I can make it better?"
"Greece, if you had shown you could handle the money responsib—"
"Don't bother, I KNOW why! It's because of GERMANY! It's because Germany's economy is so energetic, and Germany is always talking about austerity, and you don't have any opinions of your own it's all GERMANY GERMANY GERMANY. Well if you love Germany so much, maybe you should marry—"
"GREECE HELLENIC REPUBLIC. I will NOT tolerate that kind of—"
"You know what, maybe I shouldn't be in the Eurozone at all! Things were better when I was on my own, and if my economy got sick, I could inject Drachma whenever I needed!"
"Now Greece, you don't mean that. And besides, those days are over! You can't go back to giving your economy Drachma now. Why, you don't even have any Drachma anymore. You'd have to give it something shoddy that you threw together. Ha! Why, it would be worse than giving it Lira!"
gasp "Mrs. Troika did you just say the L word?"
"Uh, now, Greece, in a historical context it's perfectly acceptable to—"
"TROIKA SAID LIRA, TROIKA SAID LIRA!"
"Whåt, did yöu say ä teacher såid the L wörd?"
"I, uh, ohmy Sweden, I thought you weren't visiting until next week?"
"Whåt is this äbout the L wörd? And why does thåt student's econömy have youth unemployment? What kind öf place is this? I cän't enroll here."
"TROIKA SAID LIRA, TROIKA SAID LIRA!"
"Greece, go to your room!"
"NO! I don't have to do anything you say! I'm dropping out of the Eurozone, and I'll make new Drachma, and inject them until my economy feels better again! Then its tourist sector will get healthy, and it'll grow bigger and stronger than all your economies! Even yours! Especially yours, Germany!"
whimper sputter cough
"I know it's hard, now, economy, but you'll see, we'll do better on our own! We'll do way better."
"Greece, this is your last chance..."
"feth you Mrs. Troika, feth all the rest of you! ESPECIALLY YOU, GERMANY!"
slam
"You know, Mrs. Troika, this never happens where I'm from."
"Shut up, China."
So Does anyone here knows the existence of the 'Eurasian Union' headed by Russia? I've heard the news that Putin is creating this economic union of Eastern Europe and any Ex-Soviet countries to counteract 'The West'. The next membership is expected to be China and (possibly) Thailand (If Sinophillic Military Junta still runs the cuntry and not yet ousted by student protest)
Many Greeks are now bidding their future with their former patron. Russia, At the time modern Greece shows up (1820s) their ally was Russian Empire, not Western European powers.
Love the Greece and Mrs. Troika tale, though as my fiancee pointed out, Greece is more like "feth you Mrs. Troika, we're not paying back the banks and we don't want the Drachma either!"
On austerity, the comparison with the US would seem to suggest that Europes austerity policies prolonged the recession. Spend in a recession, austerity in the good times, should be how it works. But we have it all ass backwards.
Da Boss wrote: Love the Greece and Mrs. Troika tale, though as my fiancee pointed out, Greece is more like "feth you Mrs. Troika, we're not paying back the banks and we don't want the Drachma either!"
On austerity, the comparison with the US would seem to suggest that Europes austerity policies prolonged the recession. Spend in a recession, austerity in the good times, should be how it works. But we have it all ass backwards.
Keynesian economics don't work in open economies because the increased spending won't serve to bolster the local economy, it will only increase imports and consequently increase any foreign trade deficits.
This is why I don't like one currency and economy over several different countries of various economic strength. If we all had the economies of UK or Germany it would have been okay.
After a bit of thrashing around I realized the "euro" seems to be root cause so will spoiler below:
Spoiler:
"In general, those in Europe who own large amounts of euros are served by high stability and low inflation. Those who now need to earn euros, including those countries who need to pay interest on large debts, are likely better served with a slightly less strong euro leading to more export. Because with a lower euro, investors would see better chances for (companies in) southern European countries to grow themselves out of the crisis. As a result, investing there would become less risky, and that would push interest rates for southern countries more in line with the European average.[citation needed]
The contradiction here is that high macroeconomic stability in the form of ongoing historically low inflation over time leads to economic problems, creating higher interest rates and political and economic instability for the weaker partners."
I still have trouble wrapping my brain around how everything was "fine" till 2010 and then Greece "suddenly" became high risk easily viewed as double of Portugal.
What adds to this is the issue of unemployment and there are few means of fixing that and is unavailable using the euro:
"Returning to full employment at this point requires that the labor costs gap is somehow cancelled. If Spain and Greece had their own currencies, this would have easily happened through exchange rate adjustment. Since they don't, it can either happen through a decrease in nominal wages in Spain and Greece, also known as "internal devaluation", (an extremely difficult and slow process, since nominal wages, in general, exhibit downward rigidity), or through an equal increase in nominal wages (i.e. inflation) in Northern Europe, which does not happen because of active resistance from Germany."
So again, some measure of blame to Germany falls to them.
- Savings of about 1% GDP due to no currency exchange or "frictional costs".
- Eliminate exchange rate uncertainty.
- "Improved Inflation Performance" which the jury is still out since low growth and employment have been found to be an issue.
- Use the link to read further, some good benefits, the best one being creating a very currency stable environment for businesses to setup in.
- Interest rates went up to combat inflation in Germany in 2011 set by the ECB but was unsuitable / unsustainable for Portugal, Greece and Italy.
- All the members need to have similar levels of debt in order for a common monetary policy to work... obviously big problems here.
- Interesting quote here:
"Lack of Incentives. It is argued that being a member of the Euro protects a country from a currency crisis. Therefore, there is less incentive for countries to implement structural reform and fiscal responsibility. For example, in good years Greece was able to benefit from very low bond yields on its debt because people felt Greek debt would be secured by rest of Europe. But, this wasn't the case, and Greece were lulled into a fall sense of security."
- A ton of other stuff listed, use the link and read further.
You know, the euro is looking incredibly bad for Greece. It is like the loans they took out: short term gain/benefit, long term loss.
You could "blame" countries like Germany for dictating policy as the economic heavy hitter but this could be the same as taking out loans: you know what you are getting into.
Greece still needs to address it's civil and public institutions and policies but they need to cut the euro, specifically Germany's economic ties and I do not mean just the loans.
I see how Germany by it's very existence has damaged Greece economically but it is the choices made by Greece that has allowed this to happen: their responsibility more than anyone else.
Tough times ahead but precious little choice with the path given.
Is that something that you've thought about Shieldwolf?
Even if things go to hell, I will remain a couple of years. The miniature business is easy to transport in a foreign country, although our facilities here are great and I'd sure miss them, besides the fact I'd have to lay off the people of Shieldwolf.
Same goes for the pharmacy, I'd need to close it and fire my employees. One of which is 7 months pregnant.
Me and my wife are both pharmacists, we both have experience and speak a couple if foreign languages each. It shouldn't be hard to go abroad, from what I know it's usually unskilled/uneducated immigrants that face issues. Nonetheless immigration is never an easy choice.
I prefer not thinking about it and hoping all will be solved in the end.
I personally have already lived in 3 foreign countries due to the job of my father (Switzerland, Belgium and Italy) for a few years in each of these countries, so it's nothing new to me. My toddler would have to live a new life.
For me, I prefer he lives his life here, at his homeland.
This is more about my son than it is about me. Those of you who have children surely understand what I'm saying. Those of you who haven't, you will. Trust me. You will.
Is that something that you've thought about Shieldwolf?
Even if things go to hell, I will remain a couple of years. The miniature business is easy to transport in a foreign country, although our facilities here are great and I'd sure miss them, besides the fact I'd have to lay off the people of Shieldwolf.
Same goes for the pharmacy, I'd need to close it and fire my employees. One of which is 7 months pregnant.
Me and my wife are both pharmacists, we both have experience and speak a couple if foreign languages each. It shouldn't be hard to go abroad, from what I know it's usually unskilled/uneducated immigrants that face issues. Nonetheless immigration is never an easy choice.
I prefer not thinking about it and hoping all will be solved in the end.
I personally have already lived in 3 foreign countries due to the job of my father (Switzerland, Belgium and Italy) for a few years in each of these countries, so it's nothing new to me. My toddler would have to live a new life.
For me, I prefer he lives his life here, at his homeland.
This is more about my son than it is about me. Those of you who have children surely understand what I'm saying. Those of you who haven't, you will. Trust me. You will.
You won't have an issue finding pharmacist jobs here in the states.
Just sayin...
But, if you want your kid to grow up in Greece... well then, I understand that desire. (have have two squgigies myself )
It was more election cycle cuts than real austerity - cut just after winning office, then increase spending again in the lead up to election. Unsurprisingly growth returned as spending grew.
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PhantomViper wrote: Keynesian economics don't work in open economies because the increased spending won't serve to bolster the local economy, it will only increase imports and consequently increase any foreign trade deficits.
Wrong, and wrong for the better part of 100 years. Calculations of multiplier effects have factored in leakage effects including spending on imports since people first started to consider multipliers.
Anyhow, even with imports (and taxes, and saving) you still get a multiplier of somewhere between 1.5 and 2.0 for most developed countries, where there is no crowding out (ie, where you’ve hit the zero lower bound because no-one wants to borrow to invest in the current economy). And that’s a situation that most of the developed world was in for three or more years after the GFC.
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welshhoppo wrote: This is why I don't like one currency and economy over several different countries of various economic strength. If we all had the economies of UK or Germany it would have been okay.
It’s not so much the strength of the different economies, but the overall structure. The US has managed to include both Rhode Island and California within the same currency, for instance. The difference is that the US has a single currency and a single federal budget, while the Eurozone has a single currency but separate national budgets. This means that if Rhode Island collapsed there’d be an automatic stabiliser as tax flows out of the state would drop, while payments in would remain constant or even grow (education funds would remain constant, while welfare would grow). On the other hand, Greece gets no stabilisers like that.
Basically this means that individual nations in the Euro, even the big ones, are inherently unstable if there’s no large, over-arching federal policy to balance local shocks. Given a single Euro budget of the scale needed is basically unthinkable given Euro politics, it means the Euro may actually be a pretty bad idea.
People by and large are scapegoating Greece in order to avoid thinking about that.
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Shieldwolf Miniatures wrote: This is more about my son than it is about me. Those of you who have children surely understand what I'm saying. Those of you who haven't, you will. Trust me. You will.
I understand, yeah. And I don’t envy you the choices you’ve got ahead of you – very tough.
But once again thanks for your posts in this thread, having a human story of what’s happened in Greece has been excellent. I hope we haven’t been too obnoxious in talking about your country and therefore you life
welshhoppo wrote: This is why I don't like one currency and economy over several different countries of various economic strength. If we all had the economies of UK or Germany it would have been okay.
Indeed. This is a big problem. You simply can't have vastly different economies share the same currency. Currencies only really work when each individual economy has its own, and then you can value them against each other. When you have 1 currency and multiple economies its like having X equal dozens of different values when math only supports X having 1 value.
Separating currency reduces risk as the value of your currency isn't tied at the hip to other nearby economies, whereas if they are different you only are moderately concerned about the shape they are in in as far as the economies intermingle.
Grey Templar wrote: Indeed. This is a big problem. You simply can't have vastly different economies share the same currency. Currencies only really work when each individual economy has its own, and then you can value them against each other. When you have 1 currency and multiple economies its like having X equal dozens of different values when math only supports X having 1 value.
Separating currency reduces risk as the value of your currency isn't tied at the hip to other nearby economies, whereas if they are different you only are moderately concerned about the shape they are in in as far as the economies intermingle.
As I already said, you can have vastly different economies on the same currency, what matters is how the other ways in which those economies are connected. To re-use my example, Rhode Island and California can exist under the same currency, and there's no major issue. At which point you might think that it's nothing like Greece because they're individual states, while Greece is a whole country... but that's the point. Being states within a single nation means there is a powerful federal government which collects and distributes large sums from and to each state in the union, providing stability against local economic shocks. Whereas countries within the Euro, so there's no larger fiscal body to stabilise local shocks. So it's the structure of the EUro, no the size of individual member nations that matter.
The second part, about reducing risk, basically has everything ass-backwards. The point of currency isn't about being exposed to risk or reducing it, the point is that when you have your own currency you can control its value in order to manage the economy. On their own currency Greece would have devalued leading to increased competitiveness, and then could have printed more to further devalue internally, all leading to a recovery of competitiveness and therefore a much reduced recession. But absent that option Greece is stuck as is, and it ain't pretty.
Shieldwolf Miniatures wrote: This is more about my son than it is about me. Those of you who have children surely understand what I'm saying. Those of you who haven't, you will. Trust me. You will.
I understand, yeah. And I don’t envy you the choices you’ve got ahead of you – very tough.
But once again thanks for your posts in this thread, having a human story of what’s happened in Greece has been excellent. I hope we haven’t been too obnoxious in talking about your country and therefore you life
Nay, nobody has been obnoxious, everyone is simply saying their own piece of mind. :-)
PS. There's fear of violent riots from the "no" sayers in the centre of Arhens this evening. As we get closer to Sunday things are heating up dangerously. As I said, people have been stressed 5 years, and they don't want to see this (over-promising) new government fail. IMHO it already has.
Shieldwolf Miniatures wrote: Nay, nobody has been obnoxious, everyone is simply saying their own piece of mind. :-)
Cool.
PS. There's fear of violent riots from the "no" sayers in the centre of Arhens this evening. As we get closer to Sunday things are heating up dangerously. As I said, people have been stressed 5 years, and they don't want to see this (over-promising) new government fail. IMHO it already has.
Yeah, that seemed the risk with calling the referendum - it might incite a pretty tense situation. That said, I don't really know what alternative the government was left with. Like previous governments they came to power promising a better deal for Greece, but until they called for the vote they were basically facing the same decision as previous governments - give in to the demands of the troika.
I'm not saying this was a good call, I just don't know what the alternatives are.
Grey Templar wrote: Indeed. This is a big problem. You simply can't have vastly different economies share the same currency. Currencies only really work when each individual economy has its own, and then you can value them against each other. When you have 1 currency and multiple economies its like having X equal dozens of different values when math only supports X having 1 value.
Separating currency reduces risk as the value of your currency isn't tied at the hip to other nearby economies, whereas if they are different you only are moderately concerned about the shape they are in in as far as the economies intermingle.
As I already said, you can have vastly different economies on the same currency, what matters is how the other ways in which those economies are connected. To re-use my example, Rhode Island and California can exist under the same currency, and there's no major issue. At which point you might think that it's nothing like Greece because they're individual states, while Greece is a whole country... but that's the point. Being states within a single nation means there is a powerful federal government which collects and distributes large sums from and to each state in the union, providing stability against local economic shocks. Whereas countries within the Euro, so there's no larger fiscal body to stabilise local shocks. So it's the structure of the EUro, no the size of individual member nations that matter.
This has far more to do with the US Economy being a functioning thing for several hundred years that has grown into what it is now. Not because there is an overarching federal government to manage it. We added states bit by bit, and everything was connected together to begin with. The EU basically tried to artificially mash together disparate economies which had been only loosely connected together for well over a thousand years.
The second part, about reducing risk, basically has everything ass-backwards. The point of currency isn't about being exposed to risk or reducing it, the point is that when you have your own currency you can control its value in order to manage the economy. On their own currency Greece would have devalued leading to increased competitiveness, and then could have printed more to further devalue internally, all leading to a recovery of competitiveness and therefore a much reduced recession. But absent that option Greece is stuck as is, and it ain't pretty.
Being able to control your own currency is a mitigation of risk. Its not the primary reason for a separate currency to exist, but its something that comes with having one vs not. And trying to abandon an independent currency has the effect of eliminating that protection, something that is important enough to make merging all these economies together unfeasible.
Grey Templar wrote: This has far more to do with the US Economy being a functioning thing for several hundred years that has grown into what it is now. Not because there is an overarching federal government to manage it. We added states bit by bit, and everything was connected together to begin with. The EU basically tried to artificially mash together disparate economies which had been only loosely connected together for well over a thousand years.
No, that's just vague storytelling with absolutely no underlying economic mechanism to hold any of it together. The only way time and close ties matter is that it increases the likelihood of people being okay with pouring money in to regions in strife, which is the mechanism I already described.
And trying to abandon an independent currency has the effect of eliminating that protection, something that is important enough to make merging all these economies together unfeasible.
Yeah, that's what I just explained to you. You're repeating my point back at me as if it's new information.
Leave euro now or take bailout, get further in debt and leave euro later.
I honestly believe the debt is too high to pay off and are postponing the inevitable.
They may still be on the hook for some debt and have to negotiate something like a 30% payment deal so they are not completely cut off from the European economy.
That's my point, when you have differbwt countries under one currency, especially countries that were killing each other in living memory, things don't go very well.
It's quite clear that Greece needed help, whether by cutting corruption or having an influx of money.
When you have one state. Such as the US or UK, one country or state can support another. "Hmm, economic collapse in state A. Luckily the other states can give them support until it blows over.
In the Eurozone, state A has economic collapse and the other states aren't too keen on helping. Germany doesn't want to give away free money to anyone country, it's bad for Germanys economy, because it is spending money with no return, and its a bad impressions for poor countries who then expect free pick me ups when the going gets tough.
And trying to abandon an independent currency has the effect of eliminating that protection, something that is important enough to make merging all these economies together unfeasible.
Yeah, that's what I just explained to you. You're repeating my point back at me as if it's new information.
Sure, thats what I said in the first place. Not sure why you were trying to correct me when what I said was correct.
As Greeks go to the polls for their referendum, the BBC's economics editor Robert Peston says essentially that a No vote will plunge the Greek banking sector into an even worse position.
Greece is free to choose, rather hard for some governments they are giving away there own tax payers hard earned money basically free, money the could be spent on own citizens and services.
They have to think about voters and the bigger picture too.
They want to get relected and that means giving fortunes into a black hole is not going to win any favours in your own country.
jhe90 wrote: Greece is free to choose, rather hard for some governments they are giving away there own tax payers hard earned money basically free, money the could be spent on own citizens and services.
They have to think about voters and the bigger picture too.
Problem is the government had not tightened their belt as good as they should have or privatized as directed.
Also their people had been rather aggressive in avoiding giving their hard earned money to taxes.
Private businesses have largely been an issue for that.
They want to get relected and that means giving fortunes into a black hole is not going to win any favours in your own country.
The problem of wanting to be reelected has caused the spending deficits for decades.
The problem now is it is bordering on impossible to pay it off.
Increased interest rates to combat Germany's inflation is what caused this to happen sooner rather than later.
What is staggering is the amount of debt generated by a population of only 11 million.
Never mind the interest, or debt to pay interest: just the principal debts.
Looking at the dynamics of running the euro, it is in the best interests of the weaker economies to exit the currency.
True, quick answer you have a one speed currency yews there are 3 maybe 4 speeds of countries, and setting it at one speed hurts the others, the average speed is a compromise whichworks OK but its not fine tuned to anyone's economy.
Otherwise you may be stuck in a convoy at the slowest ship so to speak and that hurts the main fast ships that are not working at best efficiency. Or you leave the slower behind.
It needs a secondary euro, aloe speed and high speed, what's goods for Greece is not good for Germany and visa versa.
The "speed" is called your own currency.
Devalued enhances competitive pricing and gives some handle on labor rates.
Having control of printing more money or not is not to be underestimated.
Their citizens have been stashing their money out of country starving their banks and they are not allowed to put controls in place due to the rules for euro use.
The Greeks may have sunk anyway but at least they would have had full control and only themselves to blame.
It was already bad prior to joining the euro and made hiding their issues easier.
Hmmm... exit polls have done it again.
New results show
60% "no"
40% "yes"
Well, at least the result is more clear now.
Good luck to us all in the next 48 hours, Greek Prime Minister Tsipras has promised a deal within 48 hours, this means by Tuesday night.
Let's see how things work out, 11,000,000 Greeks are holding their breaths...
If true well alls on your Prime Minister, he started this gamble and he has to be the one to finish it.
But in slightly off topic is bodes interesting for UK as if Greece can decide to stand up to EU, our referendum and future chained to Brussels unelected burocrats may change.
Don't be quick to celebrate, the results of "NO" to austerity and the EU proposals have been kicked out, but that doesn't mean Tsipras has pulled this through yet. We still need to see what's the deal he'll be bringing back now. If any that is (although some deal will be struck imo)...
That's my point, when you have differbwt countries under one currency, especially countries that were killing each other in living memory, things don't go very well.
Sure, just you said it was different sizes causing the issue, and I pointed out it wasn’t size but the related fiscal policy that really mattered. But if we’re on the same page it’s all cool.
As a very small nitpick, though, I’d say it isn’t so much about being willing to help, as about the help that automatically happens. Puerto Rico is economic poo right now, but as it is fiscally attached to the US, there are automatic offset that happen automatically – less taxes paid to Washington, and more welfare money flowing from Washington. The result is economic hardship, but not catastrophe like Greece.
Grey Templar wrote: Sure, thats what I said in the first place. Not sure why you were trying to correct me when what I said was correct.
Much of the shocking revealation to me. Greece has been in an arms race (against Turkey) since 2009. by then BOTH countries are in Eurozone and the needs of arms race against each other should not exists.
http://www.wsj.com/articles/SB10001424052748703636404575352991108208712 While many in Thailand blams populism is responsible for Greek crisis, this recent revealations should provide different perspective on what brought the Greek crisis. Greece economy is NOT really quite strong, lack of manufacturing industry, low agricultural output in europe. heavily dependence on tourism industry (Many comes to Greece to see classical worlds, like Sparta, Athens, Oracle of Pythia, Olympus, etc.. i'm not sure how many greeks knew that these old world site within Helenic sphere exists not only WIHTIN the modern boundary of Greece, but also its neighbours such as Turkey, and Cyprus. (where it is said that Aphrodite Rock stands)
The serious competitions came when the rest of Balkans has been pacified and open for business. when these neighbouring countries began economic redevelopments.. inducing both tourists and investors. Greece governments, and the Greeks did very little to improve themselves to meet these challenges. Government budgets that should be allocated to infrastructure, manufacturing developments (including citizen competency against its rivals like Turkey) were misleadingly allocated to its Military. Some numbers of submarines bought from Germany (including one unfinished unit.... don't say that Greeks do have U-Boats!) intended to fight Turkish Navy, 1,400 or so Tanks (second only to the British Army, but i'm not sure if these tanks are modern or early cold-war era?) A high percentage compares to its weak GDP.... Remember that Greek Military Junta was long gone. why not the arms race which the Junta leaders earn kickbacks per each weapons purchase??.
if this aggressive military spending is not enough to ruin Greece. how about this...
This man said that aside of heavy military budget. Greek Burgeons aren't productive people (and not striving to improve themselves to become so)...that instead of working hard and self improvements, much of them invest so much in quick fortures of stock markets and speculation-based economy. in which real productions doesn't belong to. In Addition of the heavy military spendings i've said above, Greece is a country that has more number of bureaucrats and government agents than private-sector workforces....
The banks seem a bit messed up. The reason you charge higher or lower amounts of interest on a loan is because of the increased risk of it not being paid off.
That's how interest rates work isn't' it. If you're still going to make sure you're paid off anyway then there's no justification for higher rates of interest.
Greece was a bad bet and now I can't help feeling that its time for the banks to take the pain of losing that money.
Can Greece really recover with that debt in place. Would a better thing be to freeze the debt and interest. Then concentrate on getting Greece profitable again. Look at paying back the debt in 50/100 years or so?
I guess if you did that you'd have to do it other EU countries too. Greece can't be given a special pass and other countries have to stick at it... Glad I'm not in charge
Greece: Greece owes money and they want a bunch of it "forgiven" as well as better terms.
Other than the getting money forgiven they are pretty much over their head of what can be paid off.
Greece will now have to exit the euro if they are to have any chance of doing what they need to survive or we will be seeing this same thing happen in under a year.
EU / IMF / Germany-France Those who extended the loans now need to figure out how to get some measure of money out of the Greeks before they default / go bankrupt / go into sky-high inflation.
Luckily they increased interest rates to hedge against default (really to combat Germany inflation) while also ensuring it happened sooner.
They need to make it sufficiently painful (to make an example of them) so that other EU members do not get any ideas and toe the line... or else.
I think Greece is not aware that EU does not want to set any precedents so their "negotiations" will be less effective then they are hoping I think (Portugal is watching...).
As best I can tell, there was no official provision made on how to exit the euro so this will not be an amicable divorce.
Time is ticking, Greece cannot print it's own money, it's people have been funneling their money out of country for years so their banks will be tapped-out sooner rather than later.
There are just no tools for keeping euro coin in the country and commerce will stop dead, then the starvation will begin.
Greece should not be under the illusion they are in a position of dictating terms.
The "people have spoken" lord have mercy on their economy: it is on their heads.
If there are no Euros in the country, the government will have to print its own money or people will be unable to carry out transactions and the economy will cease except at the level of local barter, which doesn't function in a modern society. (The ancient Greeks had cash 2,500 years ago.)
I assume the Greek government can't just print more Euros or they would have done it already to pay back their debt. Therefore they will have to start printing drachmas.
Ironically, judging from the referendum result, a lot of Greeks might refuse to accept new drachmas as legal tender.
Kilkrazy wrote: If there are no Euros in the country, the government will have to print its own money or people will be unable to carry out transactions and the economy will cease except at the level of local barter, which doesn't function in a modern society. (The ancient Greeks had cash 2,500 years ago.)
I assume the Greek government can't just print more Euros or they would have done it already to pay back their debt. Therefore they will have to start printing drachmas.
It is all about having a common currency: strict controls on printing.
They are stuck with hemorrhaging euros out of their country faster than any going in, especially with tourists unable to get at their money there.
Ironically, judging from the referendum result, a lot of Greeks might refuse to accept new drachmas as legal tender.
This steams me up a bit.
They had not committed to fiscal responsibility for over a decade that were in the terms for euro use, they are up to their eyeballs in debt and by being tied to the euro is what nailed them with higher interest rates they could not afford.
The choice will be drachmas or local barter will be all they have.
I have not heard anyone take a run at this: Greece will lose use of the euro or will be a slave to continuous, unsustainable debt, is there really any other choice?
For those who claim they love their country they sure find every way to stick it to their own government or anyone they owe money or expect money from.
obsidianaura wrote: The banks seem a bit messed up. The reason you charge higher or lower amounts of interest on a loan is because of the increased risk of it not being paid off.
That's how interest rates work isn't' it. If you're still going to make sure you're paid off anyway then there's no justification for higher rates of interest.
Greece was a bad bet and now I can't help feeling that its time for the banks to take the pain of losing that money.
There is a point where you get so rich that you can't lose money. You don't have to pay taxes (but you demand that the poor do), you don't have to pay back loans (but you demand that the poor do) and you always get your own loans back (but you can deny that right to the poor). If your debtors can't pay you back, your government buddies will just force random other people to pay you back. And your media buddies will convince the rabble that you're the victim.
For the people who got weirdly angry when I said Greece couldn’t ever repay it’s debt – well the IMF’s just come out and said the same thing. Their draft statement was full if bits about Greece not meeting reforms and stuff, but that’s just political spin – the IMF is part of the troika afterall – but look past that and the IMF’s technical statement is plainly clear.
Anyway, it’s not as though I or anyone else who was talking about the need for Greek debt relief had any kind of special insight. What I was saying at the time was pretty fething obvious. But the troika and most of Europe didn’t like that reality so they ignored it, behind the scenes there was even a large fight to get this draft report quashed.
The result of that wilful ignorance was more calls for Greek austerity, which only collapsed the Greek economy further, making debt repayment even less likely.
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KiloFiX wrote: I don't understand why they had a referendum vote anyway.
People are sheep.
Except that Greece is a democracy. Previous governments in Greece came to power with promises to fight the troika’s demands, only to acquiesce once in power, and then getting booted at the next election. This current government isn’t caving, and the referendum was to show that their approach is popular in Greece and that the troika will have to deal with them.
Economists should figure out what to do and just do it.
Economists, and the political leaders who take or ignore their advice, are often just as ideological and well, stupidly wrong, as the common man.
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Talizvar wrote: This steams me up a bit.
They had not committed to fiscal responsibility for over a decade that were in the terms for euro use, they are up to their eyeballs in debt and by being tied to the euro is what nailed them with higher interest rates they could not afford.
The story about Greek fiscal irresponsibility is a myth. Debt was fairly close to static for 15 years;
Now, there’s a case that can be made that Greece should have been working its debt down over that period, but that’s hardly a unique failing to Greece, and certainly not a big enough mistake that Greece could be expected to end up like this.
Nah, the problem here is the Euro and the surrounding political structures. This isn’t something that can only happen to Greece.
Kilkrazy wrote: Would Greece have avoided the problem by sticking with the Drachma?
There still would have been a recession, but Greece would have been able to use the standard measures to escape - devaluing their own currency. That would have restored competitiveness, and also reduced the real value of the debt they owed (though it would have hurt the interest rates of new debt).
obsidianaura wrote: The banks seem a bit messed up. The reason you charge higher or lower amounts of interest on a loan is because of the increased risk of it not being paid off.
That's how interest rates work isn't' it. If you're still going to make sure you're paid off anyway then there's no justification for higher rates of interest.
Greece was a bad bet and now I can't help feeling that its time for the banks to take the pain of losing that money.
There is a point where you get so rich that you can't lose money. You don't have to pay taxes (but you demand that the poor do), you don't have to pay back loans (but you demand that the poor do) and you always get your own loans back (but you can deny that right to the poor). If your debtors can't pay you back, your government buddies will just force random other people to pay you back. And your media buddies will convince the rabble that you're the victim.
You would be surprised how much propaganda came out of the media in just a week. In fact it was so much, the government officials after the referendum results have come hammering down on them every chance they get, saying it in the face of these journalists. That's just so so so sweet :-D
And this comes from a person that voted "Yes". We'll see and hope what the future has in store for Greece.
I respect the final verdict of "No" and will back it 100%. Strength through unity.
According to OECD figures for 2010, 89.5% of the tax receipts due went uncollected.
Here's an experiment, burn 89.5% of your pay-cheque, each month but continue spending at the same rate, see how long it takes for your bank manager to pull your credit cards......
To generalise unfairly, the German electorate have come to regard Greece as a nation of lazy money grubbers (another unfair generalisation) who have sucked up more than enough German tax Euros and they want it back. Therefore Merkel is under pressure similar to the Greek prime minister but shoving in the opposite direction.
sebster wrote: The story about Greek fiscal irresponsibility is a myth.
Debt was fairly close to static for 15 years;
Now, there’s a case that can be made that Greece should have been working its debt down over that period, but that’s hardly a unique failing to Greece, and certainly not a big enough mistake that Greece could be expected to end up like this.
Nah, the problem here is the Euro and the surrounding political structures.
This isn’t something that can only happen to Greece.
I really cannot agree with "Greek fiscal irresponsibility is a myth." I had a bunch of links with the IMF audits and recommendations that showed otherwise.
Also it was admitted by Greece they cooked the books on their deficits (multiple times!) so the graph submitted may still have the "erroneous data" 1997-2003.
https://en.wikipedia.org/wiki/Greek_Financial_Audit,_2004 Just the tax collecting ineffectiveness alone raises a few eyebrows.
There were complaints of civil-service overspending but at least "per-capita" they do not have personnel bloat.
I DO agree however that the euro gave some temporary relief in some interest rate matters but would be the cause of their financial woes.
Some key dates for Greece:
1974 - Military dictatorship collapses.
1973-1993: High inflation.
1980-1993: Continual trend of deficit government spending to "jump-start" the economy (agreed with graph).
1981: Greece enters the "European Union".
1990-1999: Greece government focuses on bringing down inflation ending less than 5% (started at about 23%).
2001-2002: Greece adopts euro currency.
1995-2006: Economic growth period. Steady growth GDP per capita from ~$16,000 to ~$24,000.
1999: Greek government starts budgeting at a deficit and downward trend starts again (officially recognized).
1997-2003: Much deficit spending was "hidden" and 2004 an audit was conducted to investigate the reporting "irregularities".
2009: It was reported deficit was 6% of GDP then later admitted to be 12.6% (??!!) which caused Greek 10 year bonds to go to insane (>30%) interest rate levels.
2009-2010: Further EU audits were conducted due to irregularities in accounting practices: https://en.wikipedia.org/wiki/Greek_financial_audits,_2009%E2%80%9310
I strongly suspect if the debt was reported accurately it would have shown a straight line from 1980 to 2010.
Kilkrazy wrote: To generalise unfairly, the German electorate have come to regard Greece as a nation of lazy money grubbers (another unfair generalisation) who have sucked up more than enough German tax Euros and they want it back. Therefore Merkel is under pressure similar to the Greek prime minister but shoving in the opposite direction.
It may be unfair to categorize its people that way, but given what is happening its hardly unfair to begin treating the government as such. And begin demanding repayment/refusing any more loans.
It occurs to me that if Greece drops out of the Euro and returns to the Drachma, all the money that rich people stashed abroad will quickly become lots more valuable as the Drachma will rapidly devalue.
Greece will run out of money.
Another day will dawn.
Other countries will have little to worry about since Greece IS out of the euro: they have none to spend.
Greek citizens will be wondering what they will use to eat however.
They will also be wondering how they will contact the foreign banks they squirreled their money into.
The government will need to print something, assume drachma.
Drachma earnings may have the pleasant side effect of keeping currency in the country.
Greece wanted to leverage loan forgiveness which I would factor in as a high priority.
If they get kicked from the euro they will have squat for leverage.
Worse, they will need to be a cautionary tale for Portugal, Spain and Italy.
Say Greece then says they will default on ALL loans (backup plan if it goes real bad.).
I wonder what deals / forgiveness would be spun to get SOME money back rather than none for the losing countries / banks.
Kilkrazy wrote: It occurs to me that if Greece drops out of the Euro and returns to the Drachma, all the money that rich people stashed abroad will quickly become lots more valuable as the Drachma will rapidly devalue.
That's what makes me even more frustrated, the fact that the rich will become even richer.
Of course, there's the small chance people will get VERY upset so it might even be to the governement's interest to actually put some of these people behind bars.
I hope I don't get the chance to see all this happening...
Edit: Had to Google up what USCIS stood for!
United States Citizenship and Immigration Services (USCIS)
@TheDraconicLord: Thanks for that live feed link, it is interesting stuff.
I find out of the various organizations involved I "like" the IMF the most. They had appeared the most "realistic" of the bunch with their assessments and recommendations for Greece.
"Unsustainable debt" is one big problem identified, I like the quote "many are unwilling to recognize". So many groups are emotionally angry enough to not consider the "write-down" / forgiveness on loans that will be needed for a planned debt exit (carrot) or walking away will be the only viable alternative.
The recommendations of government owned organizations to be sold off and be privatized as well as tightening / enforcement of taxes had been outlined years ago and rightly pointed out that the Greek government has done little. "Easy" to tax citizens have taken the brunt of the few austerity measures that had been taken.
It boils down to: until Greece can run the country day to day without a budgetary deficit (not even including loan payment) the "bailout loans" are utterly pointless hence this playing "chicken".
I "think" Tsipras's plan is to keep hitting the "unsustainable debt" button to get forgiveness on loans while pointing to killing his corporate middle-class while downplaying the lack of general efficiencies. Backup plan is then exit the Euro so he is in a position to walk away from loans and negotiate from that standing. Last ditch effort is enter some "agreement" with Russia.
I hope Greece is not looking too hard at Russia, I think Putin would have a far less humane view on loan collecting.
jhe90 wrote: Putin, not one man I would like to owe.
He does not mess about and hardly one prone to not doing what he says unlike western flip flops.
I honestly think those in power in Greece think they are clever horse traders.
If Putin thought for a minute he was swindled, it would become personal real quick.
Yeah, lets hope Greece gets some traction in plan A or B.
Jihadin wrote: Putin might just start buying property in Greece soon Truth told I actually looked into it myself.
I am glad you have actual combat experience.
You may need it for the Greek real estate market.
There are more loopholes than you can shake a stick at.
Amusing reading here: http://www.athensguide.com/dorian/buying-property.htm
Most likely Putin will claim stranded vacationing Russians need protection from this economic unrest and he is sending a "humanitarian aid" convoy complete with a giant horse statue as a gift.
I don’t believe there was a lack of will – each time things have gotten desperate Germany and the rest of the EU has done what was needed to stabilise the situation.
I believe it’s more of an issue of really, really terrible economic policy. A lot of people are really surprised about how their fix for Greece has been so disastrous. People are now trying to forget, but when all this started the dominant economic belief was that austerity could fix deficits without impacting GDP and employment. The austerity camp was split between people who thought spending cuts wouldn’t impact GDP, and those thought it would actually increase GDP, but between the two they held broad popular support and overwhelming support in Brussels.
But the problem is those ideas were ridiculous from a technical point of view – they were based around a handful of minor papers that were quickly shown to be grossly flawed research. And in time reality came to show how ridiculous those ideas were as well - Greece slashed spending and raised taxes, and with no ability to devalue its own currency to offset that it’s GDP plummeted.
But this is politics, no-one is going to admit they screwed up. They either insist on doubling down and demand more austerity from Greece, or just quietly start talking about other solutions while making sure everyone believes this is all Greece's fault.
Talizvar wrote: I really cannot agree with "Greek fiscal irresponsibility is a myth."
I think you can make a fair point that I didn't state with complete accuracy - Greece has certainly been fiscally irresponsible. A more correct statement would be 'it is a myth that Greece's fiscal irresponsibility is the primary cause of its current meltdown, and there is a bigger myth that other Eurozone countries with better debt to GDP ratios aren’t at risk of similar meltdowns’.
I mean, you point out that there is a serious issue with tax avoidance in Greece, and that benefits are high. Those things are true and important and Greece will do well to address both, but they aren’t the driver of what collapsed Greek GDP.
Oh, and your theory that Greece actually had a steady growth in debt to GDP, uncaptured by the graph is very loose speculation, with little understanding for the numbers. The simplest thing you need to understand is that Greece has had a 25% fall in GDP since 2010, that alone will cause debt to increase by 33%, for instance from 105% to 140% even without the total nominal debt changing.
Here it is in graph form for you - the split between how much of Greece’s debt/gdp ratio came from increasing debt compared to how much from falling GDP;
Grey Templar wrote: It may be unfair to categorize its people that way, but given what is happening its hardly unfair to begin treating the government as such. And begin demanding repayment/refusing any more loans.
It's easy to think in morals and what is fair, but it's a really bad way of running economies. A collapsed Greece helps no-one. Even if we pretend that Greek lives don’t matter, we have to realise the basic reality that Greek collapse won’t help creditors get their money back, and it certainly won’t help business and industry in Europe that needs every buyer for goods it can find.
Talizvar wrote: I wonder what deals / forgiveness would be spun to get SOME money back rather than none for the losing countries / banks.
How DO you repossess from a country?
You don’t. If Greece genuinely threatened to leave the Euro and refuse debts, then Europe would counter with threats about trade bans. If those trade bans were put in place then that would really, truly collapse the Greek economy, to like North Korea levels.
But more likely the threat of trade bans would be just another piece of leverage in the on-going debate over what level of debt forgiveness Greece will be granted.
That’s really all this is about on a fundamental level – what level of debt Greece is going to be forgiven, and what Greece must do in order to get that level of debt forgiveness. The reason it’s spiralled to this point of brinkmanship is really because the Euro powers have maintained a very mistaken idea of what would work best to get Greece out of this problem- Greece has accepted those terms for a long time, and only seen the problem get worse as it led to a collapse in GDP.
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Talizvar wrote: The recommendations of government owned organizations to be sold off and be privatized as well as tightening / enforcement of taxes had been outlined years ago and rightly pointed out that the Greek government has done little. "Easy" to tax citizens have taken the brunt of the few austerity measures that had been taken.
Actually there have been massive spending cuts in addition to tax increases. The troika responded to that mix unfavourably, as it didn’t suit their personal idea of how an economy should be run – all spending cuts and privatisation was their preferred measure.
Leaving aside exactly how savings ought to be balanced (or whether it even matters), it simply is not the place of any European group to start dictating domestic matters. The whole idea of Europe is that individual countries are still left with discretion on domestic matters, and so the idea that an unelected group of financiers can dictate how a country makes its savings targets are met should have outraged all of Europe. But, you know, the Greece is irresponsible narrative had been sold already.
jhe90 wrote: Putin, not one man I would like to owe.
He does not mess about and hardly one prone to not doing what he says unlike western flip flops.
Also, proven success at national level finance and managing a national economy.
Despite not being exactly the world's most popular leader, and willing to use some fairly rough measures to get jobs done and sort out problems.
However he has managed to bring Russia from the ruins of communism to a fairly modern economy whilst not exactly perfect or ideal is many times better than what oit was before.
sebster wrote: I don’t believe there was a lack of will – each time things have gotten desperate Germany and the rest of the EU has done what was needed to stabilise the situation.
I believe it’s more of an issue of really, really terrible economic policy. A lot of people are really surprised about how their fix for Greece has been so disastrous. People are now trying to forget, but when all this started the dominant economic belief was that austerity could fix deficits without impacting GDP and employment. The austerity camp was split between people who thought spending cuts wouldn’t impact GDP, and those thought it would actually increase GDP, but between the two they held broad popular support and overwhelming support in Brussels.
But the problem is those ideas were ridiculous from a technical point of view – they were based around a handful of minor papers that were quickly shown to be grossly flawed research. And in time reality came to show how ridiculous those ideas were as well - Greece slashed spending and raised taxes, and with no ability to devalue its own currency to offset that it’s GDP plummeted.
This topic has become something of a hobby for me so the dialogue back and forth is appreciated (get that out of the way first).
Spending cuts and effect on GDP really boils down to "that depends".
Cutting civil service jobs and cutting retirement packages removes spending from the public so I would expect some downturn.
Firming up how taxes are applied, collected and enforced (the full package) should have been a priority for government "income" but raised taxes seemed to target those who were "doing the right thing" and not addressing the tax dodgers.
Minimizing civil spending I guess privatization was figured to be an easy button to push where you remove government run businesses and their lack of efficiencies from the equation.
Applying a "charge per use" of some kind may have been a serious consideration due to the losing battle of tax avoidance.
But this is politics, no-one is going to admit they screwed up. They either insist on doubling down and demand more austerity from Greece, or just quietly start talking about other solutions while making sure everyone believes this is all Greece's fault.
I will have to agree with this statement.
If I HAD to assign blame it really boils down to systems failing.
Greece determined they were able to float enough debt they were willing to get to this point.
Upon entry into the euro between financial reporting methods and conditional loan requirements by the banks, they were determined "good for it" which still seems insane to me.
Talizvar wrote: I really cannot agree with "Greek fiscal irresponsibility is a myth."
I think you can make a fair point that I didn't state with complete accuracy - Greece has certainly been fiscally irresponsible. A more correct statement would be 'it is a myth that Greece's fiscal irresponsibility is the primary cause of its current meltdown, and there is a bigger myth that other Eurozone countries with better debt to GDP ratios aren’t at risk of similar meltdowns’.
Primary cause of meltdown, like any complex problem it was a multitude of factors BUT I maintain the majority of those factors were within Greece's control.
Factors not within Greece's control appear to me to only have effected the timeline of being a crisis sooner rather than later.
I have beaten to death the various factors earlier but it all still boils down to Greece consistently spent more than it earned and borrowed to make-up the loss.
I mean, you point out that there is a serious issue with tax avoidance in Greece, and that benefits are high. Those things are true and important and Greece will do well to address both, but they aren’t the driver of what collapsed Greek GDP.
The driver of what collapsed Greek GDP is their main income is tourism and their spending outstripped what the market could provide.
I tried to compare Argentina as a possible guide to Greece becoming sustainable but they do not have the same resources to exploit to do so.
Oh, and your theory that Greece actually had a steady growth in debt to GDP, uncaptured by the graph is very loose speculation, with little understanding for the numbers. The simplest thing you need to understand is that Greece has had a 25% fall in GDP since 2010, that alone will cause debt to increase by 33%, for instance from 105% to 140% even without the total nominal debt changing.
Yes the GDP numbers are pretty grim:
http://www.tradingeconomics.com/greece/gdp It was already pretty much determined by the IMF as early as 2010 the debt was unsustainable even then.
The downturn has only augmented the debt to ridiculous levels and now makes the needed austerity measures a joke when trying for more 5 years too late.
Here it is in graph form for you - the split between how much of Greece’s debt/gdp ratio came from increasing debt compared to how much from falling GDP;
Spoiler:
Still trying to find what contributes the most to their GDP to see if any of this would have been "predictable", as best I could find their GDP is composed like this:
agriculture: 3.5%
industry: 16%
services: 80.5%
"Greece's main industries are tourism, shipping, industrial products, food and tobacco processing, textiles, chemicals, metal products, mining and petroleum."
What may have added to the "surprise" was that the GDP upturn prior to 2080 was considered an economic "miracle" and it would appear deficit spending and joining the euro were being depended on to try to restart that "magic".
Grey Templar wrote: It may be unfair to categorize its people that way, but given what is happening its hardly unfair to begin treating the government as such. And begin demanding repayment/refusing any more loans.
It's easy to think in morals and what is fair, but it's a really bad way of running economies. A collapsed Greece helps no-one. Even if we pretend that Greek lives don’t matter, we have to realise the basic reality that Greek collapse won’t help creditors get their money back, and it certainly won’t help business and industry in Europe that needs every buyer for goods it can find.
Problem is the line still needs to be drawn, the other countries need to cut their losses and give no more.
Bailouts only benefit the banks that gave out the bad loans (reward bad behavior? They can reap what they sow as well.).
Greece owes more money than it can ever repay.
A refusal to pay large portions of loans is inevitable, their credit rating shall be garbage.
Talizvar wrote: I wonder what deals / forgiveness would be spun to get SOME money back rather than none for the losing countries / banks.
How DO you repossess from a country?
You don’t. If Greece genuinely threatened to leave the Euro and refuse debts, then Europe would counter with threats about trade bans. If those trade bans were put in place then that would really, truly collapse the Greek economy, to like North Korea levels.
But more likely the threat of trade bans would be just another piece of leverage in the on-going debate over what level of debt forgiveness Greece will be granted.
That’s really all this is about on a fundamental level – what level of debt Greece is going to be forgiven, and what Greece must do in order to get that level of debt forgiveness. The reason it’s spiralled to this point of brinkmanship is really because the Euro powers have maintained a very mistaken idea of what would work best to get Greece out of this problem- Greece has accepted those terms for a long time, and only seen the problem get worse as it led to a collapse in GDP.
They initially followed the "plan" it was working, I had seen a drop from around 171% of GDP to 156% in 2013 when they were cracking down due to the audit finding issues.
I am beginning to question what this "mistaken idea" of what would work for Greece.
Working within the euro I must admit efficiencies of collection and spending is pretty much all you have.
Automatically Appended Next Post:
Talizvar wrote: The recommendations of government owned organizations to be sold off and be privatized as well as tightening / enforcement of taxes had been outlined years ago and rightly pointed out that the Greek government has done little. "Easy" to tax citizens have taken the brunt of the few austerity measures that had been taken.
Actually there have been massive spending cuts in addition to tax increases. The troika responded to that mix unfavourably, as it didn’t suit their personal idea of how an economy should be run – all spending cuts and privatisation was their preferred measure.
The response was unfavorable because the spending cuts and tax increases were applied in the least effective areas, it still helped the bottom line mind you.
Leaving aside exactly how savings ought to be balanced (or whether it even matters), it simply is not the place of any European group to start dictating domestic matters. The whole idea of Europe is that individual countries are still left with discretion on domestic matters, and so the idea that an unelected group of financiers can dictate how a country makes its savings targets are met should have outraged all of Europe. But, you know, the Greece is irresponsible narrative had been sold already.
The outrage I feel should be saved by those who entrust their money to banks that felt it was worthwhile risk to extend loans to Greece.
The EU as a body is softening the blow to those banks giving the message that they did the right thing.
So then the outrage is transferred to tax payers in other countries.
The EU have no mechanism to allow a "normal" country to devalue it's currency to be competitive so Greece was stuck on many mechanisms for recovery.
But the snowball was all started by Greek politicians who figured some cheap loans (at the time) can help smooth out economic issues but their political instability nailed them so many times with market "insecurities" which drove increasingly high interest rates for borrowing both now and prior to joining the EU.
Greek prime minister Alexis Tsipras will on Friday seek the backing of MPs for a harsh new round of austerity measures totalling €13bn in an attempt to break the deadlock over its bailout.
A 13-page document sent to Greece’s creditors on Thursday night outlines plans to cut fiercely protected privileges such as pensions, tax breaks for the country’s islands and military spending. In exchange, Greece wants a three-year €53.5bn loan deal to save the nation from bankruptcy and kickstart its wrecked economy.
hahahaha wow. What was even the point of all this push-back then? The Greeks that voted for this administration must be pissed.
PhantomViper wrote: Ok, I'm completely dumbstruck by this so maybe Shieldwolf could explain it.
What use was the referendum when what Tsipras is proposing now is almost an exact copy of what you guys voted against this past weekend?
How can he make a campaign for people to vote against the proposals and then in the very next week submit almost the exact same ones?
If one wants to be optimistic? It was a gamble for better terms that didn't pay off. If one wants to be a cynic? He can say he's listening to the will of the people and coming back with a "softer" counter-proposal even if it's largely identical. Probably a combination of both, maybe some other things.
Unfortunately, where Varoufakis was largely a hard driving realist coming at things from the approach of "this is what Greece can realistically do and not do", Tsipras himself really comes off as the naive amateur that really comes off as "well this is how we feel we're entitled to be treated" and has had an unfortunate wakeup call in that the other EU nations aren't buying that line.
Vaktathi wrote: Unfortunately, where Varoufakis was largely a hard driving realist coming at things from the approach of "this is what Greece can realistically do and not do", Tsipras himself really comes off as the naive amateur that really comes off as "well this is how we feel we're entitled to be treated" and has had an unfortunate wakeup call in that the other EU nations aren't buying that line.
I think the "realist" stance is the only type that would gain traction and international support.
Many EU members I think are still in denial that Greece can pay things off if they tighten their belt enough: it is too late.
It is a matter of Greece being able to follow "reasonable" restructuring of income and liabilities and piecing together what they can pay, they truly need to adhere to "reform".
Proposed measures here: http://www.amna.gr/english/articleview.php?id=10546
I personally think their government will still try to do the "easy" things like before which is what it looks like where they are headed.
Looking at the text in the "proposed measures" they appear to know what they need to do, what they mention appears correct for addressing spending and income.
I think for implementation they need to engage third parties to help with planning for the "watchdog" groups to fight corruption and collect taxes.
These are the areas I think are the source of their past failures and is key to their future success if there is any to be had.
They really need to foster a feeling of "no-one is safe from scrutiny" so the view of "everyone else is getting away with it, why not me?" has to end with the general public and the "elite". From reading many articles my impression is the big red button for the Greeks seems to be "fairness": if others are not held to the same standard why should I be held accountable?
Greece in general terms has committed to "responsible" measures.
EU: They need to recognize a write-down of Greek debt, possibly a special reduced interest rate for relief as well.
If I were them, I would also make it conditional that representatives of the banks be embedded in the top offices to monitor progress.
Gates or targets should be met to release batches of funds so it would be "their fault" if the needed money is not released.
I have a suspicion if big blocks of money are released there would be little pressure to meet the required goals as shown in the past: they need a sense of urgency at all times, not just crunch time (it destabilizes the economy with all this drama so spreading it out a bit may help).
I'll admit I'm an ignorant American, and don't follow the whole Greece is out of money again news too closely, but I heard they're out of money again, and Germany is bailing them out. Again.
Isn't this like the third time?
I guess the repeat has piqued my interest. How does Greece keep running out of money, and why does Germany keep bailing them out?
What, if any, effect does a bankrupt Greece have on Europe and the world?
Kap'n Krump wrote: I'll admit I'm an ignorant American, and don't follow the whole Greece is out of money again news too closely, but I heard they're out of money again, and Germany is bailing them out. Again.
Isn't this like the third time?
I guess the repeat has piqued my interest. How does Greece keep running out of money, and why does Germany keep bailing them out?
What, if any, effect does a bankrupt Greece have on Europe and the world?
Well for someone claiming ignorance you are asking the right questions.
Greece is spending more than it earns.
Greece is rather volatile so any loans it gets are high interest rate since they are "high risk" which the Greeks claim is "bleeding them dry" which is to some point correct.
For some reason, banks kept loaning them money well beyond what they are able to pay off both through lies by the Greeks and banks turning a blind eye.
In 2012 they owed 303,920,000,000 euros (303.92 billion).
For some interesting math, the average interest on those loans is 3% so they would owe: 9,117,600,000 euros (9.12 billion) just in interest per year not counting compound interest.
For a population of 11,300,000 in Greece (11.3 million), it looks like every man, woman and child would have to spend 807 euros per year just to pay interest on the loan.
To pay it all off, all of the above would need to pay 26,895 euros.
I think I did some very bad math earlier in one of my posts... this seems more correct to me (ah, confused old UK meaning "million million" 12 zeros as opposed to 9 used by USA).
807 Euros each doesn't sound too bad. Bear in mind we aren't actually talking about dipping into peoples' pockets, we are talking about diversion of general government income from regular spending to debt repayments. The money would not come purely from personal income tax.
The total debt repayment of course would be done over years or decades. This is standard procedure for government bonds.
However it would be important for the Greeks not to keep running a large deficit.
Greece debt crisis: Greek MPs to debate controversial reforms plan
Greek MPs are to debate new proposals sent to the country's creditors with the aim of getting a third bailout and averting a possible exit from the euro.
The plans contain elements, including pension reforms and tax rises, that were rejected in a referendum called by Prime Minister Alexis Tsipras. The EU and other creditors are studying the plans before a summit on Sunday.
France and Italy welcomed the proposals but Germany, Greece's biggest creditor, warned of little room for compromise.
Follow the latest updates here
With Greece's banks running out of money and its economy facing implosion, this weekend brings a series of emergency talks over the debt crisis.
On Saturday, eurozone finance ministers meet under the Eurogroup - a forum for discussing monetary policy - to address the Greek plans.
A meeting of eurozone heads of government is scheduled for Sunday afternoon, followed by a full EU summit two hours later.
Greece in numbers
€320bn
Greece's debt mountain
€240bn
European bailout
177% country's debt-to-GDP ratio
25% fall in GDP since 2010
26% Greek unemployment rate
Source: ECB, IMF, Greek National Statistics Agency
Reuters
EU leaders seem divided over the Greek proposals so far.
German finance ministry spokesman Martin Jaeger said Germany saw "very little leeway in terms of restructuring, [or] reprofiling [Greece's debt]", and would not accept any reduction in debt that caused Germany more losses. He said Finance Minister Wolfgang Schaeuble remained "sceptical"
Italian Prime Minister Matteo Renzi said he was optimistic and hoped a deal could be struck as soon as Saturday
French President Francois Hollande said the new proposals were "serious and credible" and that the "Greeks have just shown their determination to remain in the eurozone"
Eurogroup head Jeroen Dijsselbloem said the Greek proposals were "thorough" - but warned they would have to be fully reviewed.
If approved, the proposals must also be ratified by parliaments in several EU member states, where they may be challenged.
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Analysis: Robert Peston, BBC economics editor
Only a few days ago Mr Tsipras won an overwhelming mandate from the Greek people, in a referendum, to reject more-or-less these bailout terms.
And today, on the back of that popular vote, he is signing up to the supposedly hated bailout. This is big politics that would make Lewis Carroll proud.
But here's the point. If a way isn't found to allow the banks to reopen within days - and the ECB simply maintaining Emergency Liquidity Assistance won't come anywhere near to achieving that - the Greek economy will implode so that any bailout deal agreed this weekend will become irrelevant in weeks.
What was the point of the referendum again? Is Tsipras gaming his electorate?
The revised plan is almost the same as the previous plan that was rejected in the referendum.
All that the government has achieved is to delay everything and make their economic position even worse. They also will have pissed off everyone from the Germans to their own electorate. Oh, and lose their finance minister.
The revised plan is almost the same as the previous plan that was rejected in the referendum.
All that the government has achieved is to delay everything and make their economic position even worse. They also will have pissed off everyone from the Germans to their own electorate. Oh, and lose their finance minister.
I wonder if Greece just kept on trying to use the referendum to bluff at the table. Meanwhile the rest of the EU was ready to call the bluff. From the local news in Germany it seems like the official position each day was moving closer to "we will help Greece, but it will be in the form of humanitarian missions when they go broke this weekend to keep the population from starving and to fly in medications." Now it seems like Greece is ready to fold after holding out until the very end.
Puzzling? It's beyond bizarre.
I genuinely feel bad for the average Greek staring directly into the gaping maw of unrelenting debt repayments.
I've been there, it's not pretty. Debt is such a debilitating state if allowed to go beyond control. But everyone needs to master their own finances, personally or nationally. It's the only way out.
PhantomViper wrote: What use was the referendum when what Tsipras is proposing now is almost an exact copy of what you guys voted against this past weekend?
If one wants to be optimistic? It was a gamble for better terms that didn't pay off. If one wants to be a cynic? He can say he's listening to the will of the people and coming back with a "softer" counter-proposal even if it's largely identical. Probably a combination of both, maybe some other things.
It's just continuing what his government has been doing during the crisis. They have been begging for money abroad but talking tough at home. IIRC the previous bailout was presented as a major victory at home even if the government basically just accepted everything they were told to do. How and why escapes me - in a country dependent on tourism one would expect most of the people know some language(s) besides their own which would allow them to check out foreign news.
To be fair, if the new Financial minister knows what he's doing it's going to help. The previous one was massively distrusted by almost everyone in the EU. Also, new guy was born in Rotterdam, so that's a thing.
PhantomViper wrote: Ok, I'm completely dumbstruck by this so maybe Shieldwolf could explain it.
What use was the referendum when what Tsipras is proposing now is almost an exact copy of what you guys voted against this past weekend?
How can he make a campaign for people to vote against the proposals and then in the very next week submit almost the exact same ones?
If one wants to be optimistic? It was a gamble for better terms that didn't pay off. If one wants to be a cynic? He can say he's listening to the will of the people and coming back with a "softer" counter-proposal even if it's largely identical. Probably a combination of both, maybe some other things.
Unfortunately, where Varoufakis was largely a hard driving realist coming at things from the approach of "this is what Greece can realistically do and not do", Tsipras himself really comes off as the naive amateur that really comes off as "well this is how we feel we're entitled to be treated" and has had an unfortunate wakeup call in that the other EU nations aren't buying that line.
That's my guess also. The bet on the shaking of the stock markets. It happened but instead of a 15-20% it was something like 2,5%. That's not the Earthquake they thought the referendum would bring.
Being a first time Left government they also have to deal with what the last government commented "this is going to be a brief left parenthesis" (i.e. they would simply come and go).
Them failing/resigning/declaring new elections would simply prove the previous government correct (which is even worse for them!)...
The way I see it now they have 2 choices:
1.They start hunting down those who always evade taxes (ship owners, Orthodox church, gas/oil suppliers etc)
2. Beat the hell out of the rest of us.
If they go for option n.1, this means a hard fight and I'll be happy to support them.
If they go for option n.2, this means they are the same incapable/idle/chicken/sold out f*cks as the ones before them. Maybe even worse, since they are supposed to be "left".
Talizvar wrote: This topic has become something of a hobby for me so the dialogue back and forth is appreciated (get that out of the way first).
I've been enjoying it to.
Spending cuts and effect on GDP really boils down to "that depends".
Cutting civil service jobs and cutting retirement packages removes spending from the public so I would expect some downturn.
Firming up how taxes are applied, collected and enforced (the full package) should have been a priority for government "income" but raised taxes seemed to target those who were "doing the right thing" and not addressing the tax dodgers.
Minimizing civil spending I guess privatization was figured to be an easy button to push where you remove government run businesses and their lack of efficiencies from the equation.
Applying a "charge per use" of some kind may have been a serious consideration due to the losing battle of tax avoidance.
Well, if you cut spending and raise taxes you impact GDP, there's no 'that depends' about that. Exactly how much is subjective and situational, but there will certainly be an impact. And Greece's austerity has had an extreme impact on GDP, and one that was unexpected by the planners in Europe, because they'd forgotten that basic economic rule.
You make a good point on tax increases hitting the people who were already doing the right thing, and not the tax dodgers. The problem there is that such reform takes time, it can often be a decade before avoidance measures are effective.
If I HAD to assign blame it really boils down to systems failing.
Greece determined they were able to float enough debt they were willing to get to this point.
Oh for sure, Greece's debt was an issue. They failed to pay it down through their period of growth, and instead let it grow in relation to their booming economy, and that was a huge mistake repeated by multiple governments. But once that's happened, well then everyone with something at stake in the issue (which is all of the Eurozone) is part of the solution. And the solution decided upon was horrifically stupid.
The driver of what collapsed Greek GDP is their main income is tourism and their spending outstripped what the market could provide.
It was certainly a large factor. But once you have a major economic sector collapsing, then slashing spending and raising taxes is going to turn a problem in to a disaster.
It was already pretty much determined by the IMF as early as 2010 the debt was unsustainable even then.
Yeah, I said that in the other Greece thread. People freaked the feth out
Still trying to find what contributes the most to their GDP to see if any of this would have been "predictable", as best I could find their GDP is composed like this:
agriculture: 3.5%
industry: 16%
services: 80.5%
The make up of the economy doesn't really matter, it's really just about the basic economic formula; Gross Domestic Product = Consumption + Net Investment + Net Government Spending + Exports - Imports.
Now, when you've got a exports in serious decline (falling tourism), and there's little hope of increased in investment, then dropping net government spending is going to have a signficant additional impact on GST. This is even more true when you have monetary policy available to offset the impact, because you're stuck on the single currency.
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Talizvar wrote: I think the "realist" stance is the only type that would gain traction and international support.
Many EU members I think are still in denial that Greece can pay things off if they tighten their belt enough: it is too late.
It is a matter of Greece being able to follow "reasonable" restructuring of income and liabilities and piecing together what they can pay, they truly need to adhere to "reform".
Proposed measures here: http://www.amna.gr/english/articleview.php?id=10546
That's a good summary of the issue.
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r_squared wrote: I've been there, it's not pretty. Debt is such a debilitating state if allowed to go beyond control. But everyone needs to master their own finances, personally or nationally. It's the only way out.
Actually debt relief is very common. On both a personal and national level.
Hell, Germany had it's own debt relief in the 1950s, and it was essential to getting it's economy up and firing again.
Well, it seems to be an agreement to put in some interim funding to prevent Greece going down the lavatory pan in the next couple of weeks while they try to negotiate a third bailout in detail. Also, whatever deal is agreed then has to pass through Greek Parliament.
The comments by Newsnight eonomics editor are very trenchant. He feels everyone has ballsed it up to a greater or lesser degree and ultimately the Greek people are the losers.
I wouldn't want to be a Greek for the next few decades :S.
Germany got its way with Greece really. France was more in favour of writing off some of the debt but that wasn't in Germany's interest.
Seeing a lot of the hash tag #thisisacoup going round the internet at the moment. Which it is, sort of.
The Greek people conclusively decided something, and then the government was forced to go against it, and they had their finance minister removed by the EU.
This will be remembered when the UK referendum comes around
While this looks to be a good thing for everyone in the long run, I certainly wouldn't want to be a Greek for the next few years.
As one political commentator on my Twitter feed put it this morning 'The can has been kicked a bit further down the road.'
Another mentions 'Modest reforms on table. I suspect we'll be back here in six weeks.'
So I don't envisage this as being a complete solution. Plus as KK says, it has to pass through the Greek Parliament who may choose not to ratify any agreement especially in light of the recent referendum which on the face of it, seems to suggest the Greek public don't want a deal with Europe even more so if it comes with conditions that Tsipiras has caved in to.
The attempted asset strip is mind bogglingly poor politics. That's the worst fears of every vulnerable debtor nation confirmed- all we really want is your assets, give them to us, or else!
A sad day for Europe. No one comes out of this looking good.
Da Boss wrote: The attempted asset strip is mind bogglingly poor politics. That's the worst fears of every vulnerable debtor nation confirmed- all we really want is your assets, give them to us, or else!
A sad day for Europe. No one comes out of this looking good.
I would agree, however the alternative very potentially could have been worse, particularly as apparently the Greek government had done zero planning and preparation for reverting to the Drachma.
Da Boss wrote: The attempted asset strip is mind bogglingly poor politics. That's the worst fears of every vulnerable debtor nation confirmed- all we really want is your assets, give them to us, or else!
A sad day for Europe. No one comes out of this looking good.
I would agree, however the alternative very potentially could have been worse, particularly as apparently the Greek government had done zero planning and preparation for reverting to the Drachma.
I completely agree that the Greek Government has shown itself to be unreliable, untrustworthy and incapable of doing the right thing. In fact, the last three greek governments have been like this.
But I don't see how that justifies what is blatantly an asset strip by Germany. The original plan was to have the assets placed in a german public bank chaired by Schauble and stationed in Luxembourg. Not dodgey at all given Luxembourg's track record. Even if it was all innocent, it still LOOKS terrible, and feeds the narrative of the evil heartless creditors only protecting their super rich. It's terrible politics. Can only put it down to sleep deprivation.
Greece has been looking terrible for the last few years, but Germany did not cover herself in glory last night, sadly.
The Germans are not as keen on the Euro as some other people anyway. If the choices are between the Greeks keeping all the Germans' money and staying in the Euro, or the Greeks getting out of the Euro and the Germans getting none of their money back, I can see how a lot of Germans might be happy to settle for option 2. Quite a lot of Germans would welcome the Euro collapsing and the return of the Deutschmark
Perhaps Germany ought to buy Greece. The whole of the Greek economy is only 1.5% of European GDP. It would be a bit of a stretch but given Germany has the biggest currency reserves in the world it probably is doable. The thing is, what would they do with Greece afterwards?
The economy is back in recession and tourism has sharply declined after all this drama. Their economy shrank 25% in 5 years. Wait another 5 years and you get if for half price.
I hear New South Germany is lovely this time of year
I think that is a significant misrepresentation of the public mood in Germany, KK. I would say the Germans are sick of being insulted, compared to Nazis, whined at and generally made to be the bad guy in this discussion, while Greece avoids making needed reforms and shirks responsibility for it's role in the crisis.
I think there is too little discussion of the role of bankers generally in the crisis and financial "services" in particular. Merkel's Financial Transaction Tax was initially supposed to pay for this but was shot down by Britain (and Ireland, but we hardly had much say).
She is looking over her shoulder for the next round of elections in Germany next year, and does not want to be seen to be fiscally irresponsible with Greece. At the same time I think she (and especially Schauble) went too far.
But I have never encountered a single German who was not pro-Euro. Their Euroskeptics make up a tiny proportion of the total national vote.
The phrase throwing good money after bad comes to mind, Greece seems to be a money pit into which I can't see the debt will ever be paid off. It remains to be seen if Greece will abide by agreements given a referendum rejected further austerity measures.
Scary stuff, looks like you all see it the same as I do: just a means of drawing it out further so Germany can fill the coffers a bit further before Greece gets its needed write-downs or they pretend to walk away from the loans. I wish France could have forced things a bit more, this really is serious self-interest at play here so another upset as we catch up to the can down the road and see ourselves here again.
Commenting on this "summary" of the agreement here: http://www.bbc.com/news/world-europe-33504487 - Basically boost multiple revenue streams: VAT, privatization of government assets to be sold off...
- ... to go into a trust fund managed by Greece (uh-oh), half for Greek bank capitalization (smart move, makes sense), other half toward the debt "mountain". How do you eat an elephant? One bite at a time... in this case for years.
- ECB and Eurozone finance ministers will "tightly monitor Greek compliance to bailout conditions", ha! good luck with that. You need feet on the ground there imbedded since their internal monitoring is sketchy at best how on earth can you monitor outside looking in?
http://www.reuters.com/article/2015/07/13/us-eurozone-greece-idUSKBN0P40EO20150713
Cannot find the details but it appears some unpalatable "oversight" is going to happen in Greece, can't wait to see how those are carried out.
Looks like the bailout will be "doled out" as various key laws are passed in Greece, smart move and the only reasonable course to "force" change.
It is rather sad since it does show some measure of sovereignty is lost, I am tempted to think it is a good thing at this time.
"The Greek leader had to drop his opposition to a full role for the International Monetary Fund in the next bailout, which Merkel had insisted on to win parliamentary backing in Berlin."
I think if Greece has stuff to hide I too would be "afraid" of the IMF: they are a smart bunch from what I read and are realists plus they dig into the details by the look of their audits. They keep those folks there, not much will slide for long.
The hard enforcement is before Greece, less maneuvering room at their end which I can't help feeling is a good thing.
Maybe they can prevent them from hitting the easily taxed people (corp. employed and retired folk) and spread the pain a bit before they revolt.
The plan IS doable and the "severe austerity" was mainly on a limited group and not all people.
As mentioned earlier these reforms take around 10 years, they need to fit them in 6 months or so... I hope they have good civil service folks.
Da Boss wrote: The attempted asset strip is mind bogglingly poor politics. That's the worst fears of every vulnerable debtor nation confirmed- all we really want is your assets, give them to us, or else!
A sad day for Europe. No one comes out of this looking good.
I would agree, however the alternative very potentially could have been worse, particularly as apparently the Greek government had done zero planning and preparation for reverting to the Drachma.
I completely agree that the Greek Government has shown itself to be unreliable, untrustworthy and incapable of doing the right thing. In fact, the last three greek governments have been like this.
But I don't see how that justifies what is blatantly an asset strip by Germany. The original plan was to have the assets placed in a german public bank chaired by Schauble and stationed in Luxembourg. Not dodgey at all given Luxembourg's track record. Even if it was all innocent, it still LOOKS terrible, and feeds the narrative of the evil heartless creditors only protecting their super rich. It's terrible politics. Can only put it down to sleep deprivation.
Greece has been looking terrible for the last few years, but Germany did not cover herself in glory last night, sadly.
I think Germany has every right to want their money back. Sure, it sucks for the Greeks, but you can't borrow money beyond your means to pay and expect to get let off without paying. And you can't expect Germany to just take the loss on the chin. And it would set a poor example to other borrowers if the debt just got forgiven and more money was sent their way. That would make it no longer borrowing but just free money for any spending you want to use it on.
The only thing you are leaving out of that narrative is that it is nationalised private debt- this debt comes primarily from a private banking crash, and I have yet to see a good moral argument as to why it should be the responsibility of European taxpayers to clean that mess up. They weren't so keen on sharing the profits when they were there, but sharing the losses seems A-OK. That is what erodes legitimacy from the entire discussion.
Da Boss wrote: The only thing you are leaving out of that narrative is that it is nationalised private debt- this debt comes primarily from a private banking crash, and I have yet to see a good moral argument as to why it should be the responsibility of European taxpayers to clean that mess up. They weren't so keen on sharing the profits when they were there, but sharing the losses seems A-OK. That is what erodes legitimacy from the entire discussion.
Question; Do you like having an economy? If yes, them sometimes you have to suck up the idea that the government might spend mountains of tax dollar saving the economy from a bunch of idiots with get rich schemes whose actions screw everyone else.
It's not the bail out that should be the focus of controversy. It's the implementation, or lack there of, of new policy to prevent another one if the future.
It's not just the lack of regulations to prevent this sort of catastrophe again, it's every step of the damn thing from start to finish. From the decision to protect senior bondholders from their bad decisions to the decision to target austerity at the most vulnerable rather than the most wealthy, all of these decisions stacking on top of each other for the last few years have got us to where we are now.
I also reject your "TINA" narrative that says we _must_ accept these debts or the economy is screwed.
The narrative of "Debtor Nations Irresponsible, Creditor Nations Responsible" is a half truth that needs to be defeated.
I do truly fear that European integration will fail, with serious consequences for us all.
The latest BBC news says Greek government has agreed to a new bailout package which is tougher than the one rejected last week, and their parliament has to pass it by Wednesday or the banks will close from running out of money.
Like this quote here:
"Experience has shown that there is deep-seated political resistance to privatization in Greece. Against this background, it is critical for a realistic and robust DSA to assume reduced privatization revenues, which will derive from small annual concession payments, occasional extraordinary dividends, and gradual real estate sales – totaling about €500 million per year. Privatization should still be pursued, principally to improve governance and the investment climate rather than for fiscal reasons. To the extent that privatization receipts exceed the levels assumed in the DSA, any excess should be used to pay down debt, which would bolster debt sustainability and investor confidence."
Recommendation:
"It is unlikely that Greece will be able to close its financing gaps from the markets on
terms consistent with debt sustainability. The central issue is that public debt cannot migrate back
onto the balance sheet of the private sector at rates consistent with debt sustainability, until debt-to-
GDP is much lower with correspondingly lower risk premia (see Figure 4i). Therefore, it is imperative
for debt sustainability that the euro area member states provide additional resources of at least
€36 billion on highly concessional terms (AAA interest rates, long maturities, and grace period) to
fully cover the financing needs through end–2018, in the context of a third EU program (see also
paragraph 10)."
Basically looking at the end of the document they "forecast" how things will go if the measures are implemented and some lessons learned applied of how "successful" the privatization was going (not well, only targeted less politically volatile institutions).
It was rather "funny" how often they stated (my summary) "If they only followed the plan in 2012 they would have avoided this crisis completely an be well on the road to sustainability."
Now mentioning debt "haircuts" are looking more the tool as "AAA" low loan interest rates stretched out over 20 years are getting less effective.
There was a bright spot in all this: interest rates supposedly went down for them so had helped to some degree (so crisis now rather than the prior Christmas)
Hard to find reports from the other groups, the IMF ones have "meat" and it looks like they are covering all the scenarios.
Well, maybe with some structure things can go a little better.
What is outlined is worth doing but a crisis will hit again because Germany likes being a loan-shark.
Privatisation is a fething mantra of neo-liberal economic policy but in the UK's case it has been bad to disastrous for our power, water and rail industries. It can't be seen as a panacea for all ills.
Kilkrazy wrote: Privatisation is a fething mantra of neo-liberal economic policy but in the UK's case it has been bad to disastrous for our power, water and rail industries. It can't be seen as a panacea for all ills.
Government monopolies can be somewhat tolerable due to politicians being answerable "to the people" I am concerned if they hand monopoly businesses to private sector: they will still need to be regulated to prevent rampant greed.
Maybe the efficiencies realized will offset the reduced control?
It is so hard to see which way a new business could go in Greece: contribute to the bottom line or hide/funnel the money away?
I think in small countries the economies of scale aren't there for privatisation of stuff like rail and power. It's just not the same as in a larger country.
Seems it will be messy passing the deal through Greek parliament. The government party (Syriza) has 149 deputies, along with another 13 from Independent Greeks party.
This totals 162 out of 300 in total, with 151 needed to hold the majority. From what the media is saying, already around 30 deputies from Syriza have said they will not vote the bill.
I'm pretty sure the opposition will however and the agreement shall eventually pass, but this leaves a handicapped government to carry out the bill/agreement.
Either Tsipras will take VERY strict measures against the untouchables (which I hope but doubt) or else he shall fall.
Edti: Good luck to us all. I think we'll need it... :-(
Da Boss wrote: I do truly fear that European integration will fail, with serious consequences for us all.
It has failed, I think. Integration requires some notion of a common good. I really cannot see any notion of the common good in the demands put on Greece, if anything I see a desire that the Greek people should be made to suffer as much as possible. If there was a real notion of a united European people who actually give a gak about each other, this whole thing would have played out very differently.
Now, I'm not saying Europe should have such a notion, just pointing out the reality that it doesn't. And when you realise it doesn't, and then realise how important such a notion is in operating under a single government structure, well then much of the European Union seems like a very, very bad idea.
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Kilkrazy wrote: Privatisation is a fething mantra of neo-liberal economic policy but in the UK's case it has been bad to disastrous for our power, water and rail industries. It can't be seen as a panacea for all ills.
Yeah, privatisation is very situational. Where there is scope for a large number of private operators to complete in a well-structured market, privatisation is a win for everyone. Unfortunately a lot of ideologues just call for privatisation no matter the circumstances, even when the industry is clearly a natural monopoly like water or rail.
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Jihadin wrote: Time to relook into buying some property in Greece.....maybe a small island....dang Proprety in Chang-mai or Pattaya or Greece......
You can probably get the whole of Greece for a euro.
It will come with attached debt of about 300 billion, though.
Bit of a nasty update here: IMF had been saying many times that sustainability is not achievable without debt "forgiveness" and their recent preliminary report leaked.
This may help put more pressure on the EU that their expectations are not logical or reasonable.
Why should we care? If the path shown is "unsustainable" by the IMF's own rules they will not be "allowed" to offer the 25% of the bailout they are expected to give.
This may inadvertently force Germany to be reasonable or the whole agreement will fall apart before it got going.
Good reading here: http://www.theguardian.com/business/2015/jul/14/imf-report-greece-needs-more-debt-relief Can't wait to see their actual report, others I have seen are well laid out, use plain language (read later in their rules it is a requirement!).
I honestly think if the Greek gov. and IMF could partner a bit, I think they have found an ally that is genuinely trying to help them out of this.
Hmmm... last "Article IV consultation" (read country based audit) was May 31 2013.
Cannot find any actual transcripts of "Staff reports" other than the nasty wake-up call 2009 one:
http://www.imf.org/external/pubs/ft/scr/2009/cr09244.pdf
This may inadvertently force Germany to be reasonable or the whole agreement will fall apart before it got going.
Except that Germany has no interest in being reasonable. Merkel is facing growing internal pressures about pouring even more money into this situation so if the IMF bails out on the deal I'm willing to bet that Germany, Finland and the Baltic states that comprise the "hardcore" line of these negotiations would welcome the excuse to drop the whole thing.
This 3rd bailout isn't Germany's plan, this whole mess is the brainchild of Msieu Francois Hollande.
If Germany and the rest of those countries had had its way in the negotiations of the previous weekend, we would be discussing the terms of the Grexit, not the terms of a third bailout (that IMO, won't solve anything in 1 or 2 years time we will be in this exact same spot).
This may inadvertently force Germany to be reasonable or the whole agreement will fall apart before it got going.
One can hope, but I doubt it. As much as I like Germany itself, the German government's actions have been akin to that of a bitter old man, very much a Scrooge. Yes, Greece earned this mess for herself, but Germany abetted it, like a dealer to a junkie in need of a fix. They (along with other partners like France) looked the other way or chose not to see the problems when admitting Greece into the Euro, and made loans they knew were unsustainable.
Their actions are also remarkably short sighted. Here they are, now strongly emerging into the role they were starting to fill at the beginning of the 20th century, the emerging superpower of Europe, an economic powerhouse able to direct the course of Europe with nothing getting accomplished without her permission, and yet Germany is willing to risk a collapse of her new domain simply to stick it to the Greeks out of what basically amounts to spite?
Especially when Germany, of all nations, should know the problems that arise when banks collapse and currency issues arise and unemployment soars.
PhantomViper wrote: If Germany and the rest of those countries had had its way in the negotiations of the previous weekend, we would be discussing the terms of the Grexit, not the terms of a third bailout (that IMO, won't solve anything in 1 or 2 years time we will be in this exact same spot).
Yes, the Grexit forced by Germany would be a mixed feeling for them.
How are they going to negotiate if Greece walks away from it's loans and Germany's is left holding the bag?
Oddly, it is Germany that keeps demanding no "haircut" or write-down on the debt, they want it paid in full with interest so exiting the Euro has been their best threat.
As the IMF has been pointing out, further loans and austerity only ensures "full payment" until Greece is bled dry, it is a certainty according to their calculations.
I can only surmise Germany figures Greece is going to "stiff them" one way or another so they are ensuring it is the most painful way possible.
Too bad these tactics is like the phrase "To cut off your nose to spite your face": it hurts them and their partners in the end.
It seems rather hypocritical when they were staring into the same abyss after the war and debt was forgiven for them, so they have the economic prosperity they enjoy today.
Interesting times, Germany being the bully on the block and Greece the party-goer suffering from a serious hangover still looking for their economy (parked it around here somewhere...) so they can get to work.
Last night's London Evening Standard had a good editorial in the business news section.
Main points were that this deal is only good because it's better than no deal and without a deal now, Greece is about a week away from collapse of their economic system.
However this is a bad deal and cannot have a good outcome in the long run. It only kicks the problem down the road for a few years.
Greece cannot trade its way out of problems while remaining in the Euro, so there will have to be more debt remission of some kind unless the Eueo bloc is prepared to see Greece drop out.
The thing is being decided on political rather than economic grounds. Europe cannot afford Greece to become a failed state like Libya or Syria, and physically attached to our southern edge, so in the end something will have to be done, probably some addition debt relief.
[youtube]
LIVE: Greeks react to the Parliament’s vote on eurozone agreement
An anti-austerity rally attended by thousands of protesters gathering outside of the Parliament in the Greek capital has spiraled into clashes with police, who are deploying pepper spray and tear gas against Molotov cocktails and rocks
Automatically Appended Next Post: The Greek crisis is shaking the IMF to its core http://www.bbc.co.uk/news/business-33537445 The Greek crisis, having shaken the eurozone to its core, is likely to have a similar seismic effect on another massive institution, the IMF.
The International Monetary Fund's exposure is small compared with the Eurozone.
In the 2010 bailout it paid out over €20.7bn and in the following 2012 rescue it contributed €11.6bn
The real threat is to its credibility as the world's biggest multinational lender.
It is a story of conflict with Europe - and with itself.
On July 7 IMF managing director Christine Lagarde said that the situation in Greece demanded a restructuring of debt.
Chief economist Olivier Blanchard told the BBC a few days later that the IMF had been privately urging the European creditors for several months that sizeable debt relief was the only credible option.
By going public the IMF hoped it could swing the argument against the European creditors, in particular Germany who believed debt forgiveness was unacceptable.
In what was obviously a co-ordinated move US Treasury secretary Jack Lew came out with a near identical statement.
In short, they argued Greece's debt position was unsustainable. There had to be restructuring.
Fraction
As the world knows, the agreement was proposed with Greece - without any debt restructuring at all, as the IMF stood by.
Now the IMF has made a dramatic attack on the deal, saying it will have nothing to do with it.
Who's calling on people to 'Boycott Germany'? http://www.bbc.co.uk/news/blogs-trending-33538098 German brands and products are the latest target of political activists upset about the Greece bailout.
#BoycottGermany was first mentioned on Twitter in connection with the Greek crisis over the weekend, but started picking up on Monday. The hashtag has since been used more than 30,000 times, driven up the trending charts across Europe by left-leaning and anarchist voices.
Some are urging people to avoid products with barcodes starting with a sequence of numbers which indicates German origin:
loki old fart wrote: The International Monetary Fund's exposure is small compared with the Eurozone.
In the 2010 bailout it paid out over €20.7bn and in the following 2012 rescue it contributed €11.6bn
The real threat is to its credibility as the world's biggest multinational lender.
It is a story of conflict with Europe - and with itself.
On July 7 IMF managing director Christine Lagarde said that the situation in Greece demanded a restructuring of debt.
Chief economist Olivier Blanchard told the BBC a few days later that the IMF had been privately urging the European creditors for several months that sizeable debt relief was the only credible option.
This is no surprise.
It may have been possible according to them in 2009 to have not needed forgiveness then.
This has been in every analysis they had conducted after 2012 (when they realized Greece was not following "the plan").
I have documented and linked this rather thoroughly earlier.
By going public the IMF hoped it could swing the argument against the European creditors, in particular Germany who believed debt forgiveness was unacceptable.
In what was obviously a co-ordinated move US Treasury secretary Jack Lew came out with a near identical statement.
In short, they argued Greece's debt position was unsustainable. There had to be restructuring.
They did the math.
They figured it was obvious.
France even argued that forgiveness was a needed way forward.
As the world knows, the agreement was proposed with Greece - without any debt restructuring at all, as the IMF stood by.
No.
They did not stand by.
They I would think INTENTIONALLY leaked the recent report to their board that the agreement Germany was trying to force is contrary to IMF policy: they cannot loan unless a sustainable path is outlined.
Now the IMF has made a dramatic attack on the deal, saying it will have nothing to do with it.
It could be an attack of sorts or just pointing out the logic of the situation as outlined by their own rules:
Greece is being run into the ground with the current "agreement" IMF policy will not allow them to "cook the golden goose".
The IMF "PRELIMINARY DRAFT DEBT SUSTAINABILITY ANALYSIS" June 26 2015:
http://www.imf.org/external/pubs/ft/scr/2015/cr15165.pdf This is important to note this was available to show how bleak things were and IMF was armed with this well prior to the talks over the weekend.
#BoycottGermany was first mentioned on Twitter in connection with the Greek crisis over the weekend, but started picking up on Monday. The hashtag has since been used more than 30,000 times, driven up the trending charts across Europe by left-leaning and anarchist voices.
Some are urging people to avoid products with barcodes starting with a sequence of numbers which indicates German origin:
Germany going to buy some vacation homes in Greece before I do
The anti-austerity rhetoric is getting amped up to downright silly and counterproductive levels.
Austerity can be misused as a political weapon but it's really just a mathematical necessity. Greece is on the Euro, Greece cannot print Euros. The only way for the Greek government to get Euros is through taxes or loans.
As national debt grows the debt service payments grow. Since the government's revenue is limited to taxes it has a limited budget. Some form of repayment plan, even a restructuring plan that forgives a lot of the principle, must be put in place if Greece ever wants to qualify for loans again. Since debt service payment need to be made it becomes a top priority for government spending. There's only so much money to go around so other programs and services get less money so that the debt service payments can be made.
If the Greek government didn't want to have to make difficult decisions and deep cuts in order to budget in their debt payments they shouldn't have borrowed crippling amounts of Euros. Austerity should be done in a fiscally responsible way but it's a mathematical necessity because Greece doesn't have a lot of money and fixing their debt crisis is a top priority.
This is also a scenaior where some level of privatization of government services makes sense. When the government doesn't have enough money to go around it needs to find ways to cut the budget. Governments tend to overly large and make themselves providers of lots of nonessential services that don't have to be government monopolies. Smart, fiscally responsible, limited privatizations of former government provided services reduces government spending, freeing up money for more important priorities and installs a private sector provider to ensure that the services are still available to the public. Privatization is not a once size fits all cure all and needs to be done in an intelligent manner but it's an important tool that can be used to help alleviate the crisis.
It's a math problem. Unfortunately it's a math problem that affects millions of peoples' lives and livlihoods so it needs to be solved in a way that minimizes that suffering. Hopefully the people in charge can stick to those priorities but I fear that like most problems those in charge won't listen to their better natures and will instead look for "solutions" that are primarily concerned with maintaining political power, gaining political power and winning elections.
loki old fart wrote: Who's calling on people to 'Boycott Germany'? http://www.bbc.co.uk/news/blogs-trending-33538098 German brands and products are the latest target of political activists upset about the Greece bailout.
#BoycottGermany was first mentioned on Twitter in connection with the Greek crisis over the weekend, but started picking up on Monday. The hashtag has since been used more than 30,000 times, driven up the trending charts across Europe by left-leaning and anarchist voices.
Some are urging people to avoid products with barcodes starting with a sequence of numbers which indicates German origin:
No worries.
Greece buys most of their military equipment from them at about 2% GDP so the recommended reduction in spending in that field is part of the package.
The Germans are getting nailed both in banking and military industry.
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Prestor Jon wrote: The anti-austerity rhetoric is getting amped up to downright silly and counterproductive levels.
Austerity is a correct mechanism it just has not been applied effectively and has relied on overly focused areas: they are hitting too narrow a population base and expecting them to carry the country.
Austerity can be misused as a political weapon but it's really just a mathematical necessity. Greece is on the Euro, Greece cannot print Euros. The only way for the Greek government to get Euros is through taxes or loans.
I must add also part of the euro agreement is they are not allowed to control where their people funnel their euros so the majority go to "foreign" banks assisting in tax evasion AND having the nasty side effect of Greek banks not physically having any euros since their citizens will not deposit in their own national banks.
As national debt grows the debt service payments grow. Since the government's revenue is limited to taxes it has a limited budget.
Also note an estimated ~85% of taxes are not paid / evaded by their citizens.
Some form of repayment plan, even a restructuring plan that forgives a lot of the principle, must be put in place if Greece ever wants to qualify for loans again. Since debt service payment need to be made it becomes a top priority for government spending. There's only so much money to go around so other programs and services get less money so that the debt service payments can be made.
So increasing taxation collection "efficiencies" (enforcement) never mind VAT increases coupled with decreasing government owned institution expenditures even as far as privatization and revenue generated by those sales is the outlined requirements.
If the Greek government didn't want to have to make difficult decisions and deep cuts in order to budget in their debt payments they shouldn't have borrowed crippling amounts of Euros. Austerity should be done in a fiscally responsible way but it's a mathematical necessity because Greece doesn't have a lot of money and fixing their debt crisis is a top priority.
Unfortunately they borrowed, lied about their debt levels I think 3 times and counting, had a plan that was nowhere near as nasty as now in 2012 and ignored the "politically uncomfortable" elements in the plan and are now firmly into the deep waters.
This is also a scenario where some level of privatization of government services makes sense. When the government doesn't have enough money to go around it needs to find ways to cut the budget. Governments tend to overly large and make themselves providers of lots of nonessential services that don't have to be government monopolies. Smart, fiscally responsible, limited privatizations of former government provided services reduces government spending, freeing up money for more important priorities and installs a private sector provider to ensure that the services are still available to the public. Privatization is not a once size fits all cure all and needs to be done in an intelligent manner but it's an important tool that can be used to help alleviate the crisis.
No argument here, they may still have to add some regulations to reign-in what a company can charge in a monopoly condition.
It's a math problem. Unfortunately it's a math problem that affects millions of peoples' lives and livlihoods so it needs to be solved in a way that minimizes that suffering. Hopefully the people in charge can stick to those priorities but I fear that like most problems those in charge won't listen to their better natures and will instead look for "solutions" that are primarily concerned with maintaining political power, gaining political power and winning elections.
It has been a political hot potato in Greek government, what got them here is easy short term solutions with no endgame in mind.
In the end, it IS their hole they dug.
There does need to be consequences of living beyond their means.
They need to know other countries shall suffer due to their selfish decisions.
But in order for a lesson to be learned and hopefully become a responsible global citizen: they need to survive this.
Germany has had their 50% debt forgiveness pointed out a few times and say "we learn to make do with less" and they learned this lesson how?
They were allowed to survive. Other countries in their position made the decision to take the high road and allow them to grow.
Germany needs to remember this and make decisions accordingly.
Greece needs to be sent to their room without supper not kicked from the house into the street. You monsters.
Prestor Jon wrote: The anti-austerity rhetoric is getting amped up to downright silly and counterproductive levels.
Austerity can be misused as a political weapon but it's really just a mathematical necessity. Greece is on the Euro, Greece cannot print Euros. The only way for the Greek government to get Euros is through taxes or loans.
Except, as has been repeated time and fething time again, when you cut government spending you need some way to offset that. In a healthy economy you will see that slack picked up by increased investment (reverse crowding out, so to speak), and in most countries there's the option for monetary policy adjustments.
But given Greece's situation, with a struggling economy and no independent currency, the inevitable result of the required austerity was a collapse in GDP. Here's the chart I linked to earlier, it makes the issue absolutely clear;
The explosion in Greece's debt to GDP is the mostly the product of the collapse in GDP, not from new debt. And the primary reason GDP collapsed was because of the reforms required to pay down debt.
It's a math problem.
It is a math problem. Unforunately too many people didn't realise the math problem was actually GDP=C+I+G+I-S-T-E
This doesn't mean the problem was insolvable. But the solution needed a basic grip of Keynesian economics, and once that's understood then continued spending in the short term to support GDP, combined with medium and long term reforms to tax and welfare becomes obvious. But, once again, we find ourselves relearning the old lessons of economics whenever they tell us something our simple money morality doesn't like to hear.
Oh, and the big lesson for all of Europe should be that Greece is not some once off abberation caused by its own fiscal irresponsibility. It's debt in 2007 was not that far from the levels in much of the rest of Europe. The lesson here is that as long as Europe maintains seperate fiscal policy, and culturally does not see any reason for Euro nations to support each other, this will happen again and again.
The simple conclusion has to be that talking just about Grexit is thinking too small. Every nation with the Euro should be thinking about how to get out, before it happens to them.
Sebster,
I understand the intricacies of the economic situation in Greece, I just didn't want to restate all the details because the main point I was trying to make was that austerity was inevitable and didn't have to be punitive, Greeks are understandably upset but that's not a good reason to throw Molotovs and try to set other people on fire.
It's unfortunate but all too commonplace that when situations get serious and we need cooler heads to prevail we get instead ramped up rhetoric that incites violence and political posturing. The powers involved need to be adults, recognize their mistakes and work to find a compromise that will effectively mitigate the crisis instead of entrenching themselves in hard line positions. It's just depressing that we never seem to be able to rise above the fray and choose the wiser more pragmatic course of action.
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Dreadclaw69 wrote: So how long before we're back with Greece needing another bail out?
You mean after th current one being negotiated? I'd say no more than 2 years.
Austerity can be misused as a political weapon but it's really just a mathematical necessity. Greece is on the Euro, Greece cannot print Euros. The only way for the Greek government to get Euros is through taxes or loans.
Austerity is been used as a political weapon. And who says they can't print Euros. One of the worries is that they may print Euros, and there's nothing to stop them.
Austerity should be done in a fiscally responsible way but it's a mathematical necessity because Greece doesn't have a lot of money and fixing their debt crisis is a top priority.
Get your math head around this
How bad are things for the people of Greece? http://www.bbc.co.uk/news/world-europe-33507802 The people of Greece are facing further years of economic hardship following a Eurozone agreement over the terms of a third bailout.
The deal included more tax rises and spending cuts, despite the Syriza government coming to power promising to end what it described as the "humiliation and pain" of austerity.
With the country having already endured years of economic contraction since the global downturn, just how does Greece's ordeal compare with other recessions and how have the lives of the country's people been affected?
The long recession
It is now generally agreed that Greece has experienced an economic crisis on the scale of the US Great Depression of the 1930s.
According to the Greek government's own figures, the economy first contracted in the final quarter of 2008 and - apart from some weak growth in 2014 - has been shrinking ever since. The recession has cut the size of the Greek economy by around a quarter, the largest contraction of an advanced economy since the 1950s.
Although the Greek recession has not been quite as deep as the Great Depression from peak to trough, it has gone on longer and many observers now believe Greek GDP will drop further in 2015.
Jobs are increasingly difficult to come by in Greece - especially for the young. While a quarter of the population are out of work, youth unemployment is running much higher.
Half of those under 25 are out of work. In some regions of western Greece, the youth unemployment rate is well above 60%.
To make matters worse, long-term unemployment is at particularly high levels in Greece.
Being out of work for significant periods of time has severe consequences, according to a report by the European Parliament. The longer a person is unemployed, the less employable they become. Re-entering the workforce also becomes more difficult and more expensive.
Young people have been particularly affected by long-term unemployment: one out of three has been jobless for more than a year.
After two years out of work, the unemployed also lose their health insurance.
This persistent unemployment also means pension funds receive fewer contributions from the working population. As more Greeks are without jobs, more pensioners are having to sustain families on a reduced income.
According to the latest figures from the Greek government, 45% of pensioners receive monthly payments below the poverty line of €665.
Prestor Jon wrote: Sebster,
I understand the intricacies of the economic situation in Greece, I just didn't want to restate all the details because the main point I was trying to make was that austerity was inevitable and didn't have to be punitive, Greeks are understandably upset but that's not a good reason to throw Molotovs and try to set other people on fire.
It's unfortunate but all too commonplace that when situations get serious and we need cooler heads to prevail we get instead ramped up rhetoric that incites violence and political posturing. The powers involved need to be adults, recognize their mistakes and work to find a compromise that will effectively mitigate the crisis instead of entrenching themselves in hard line positions. It's just depressing that we never seem to be able to rise above the fray and choose the wiser more pragmatic course of action.
I don't know man. For much of Europe this is about responsibility and economic balance and other fairly abstract stuff. For people in Greece this is about having a job and avoiding poverty and hoping your kids have an okay future. Violent protest is not okay but I understand why it's happening.
And there's the unfortunate reality that austerity had to have a massive impact on the Greek economy. The only way that wasn't going to happen was if the European core agreed to inflation of their own to improve competitiveness in the PIGS, but instead they were holding to some really economic ideas that didn't work at all.
I think a lot of the moral positioning and the like is really missing that what we've really seen is a really terrible bit of economic policy.
This doesn't mean the problem was insolvable. But the solution needed a basic grip of Keynesian economics, and once that's understood then continued spending in the short term to support GDP, combined with medium and long term reforms to tax and welfare becomes obvious. But, once again, we find ourselves relearning the old lessons of economics whenever they tell us something our simple money morality doesn't like to hear.
And you continue to fail to grasp the simple fact that in open market economies with a large trade deficit Keynesian economics simply don't work because the liquidity that is supposed to prop the GDP is instead used to buy foreign goods.
Keynesian economics are in a very large part responsible for the final collapse of both Greece and Portugal. In both countries, the government answer to the 2008 crisis was to increase public spending even further in the following years (both countries reached deficits of close to 10% and the Portuguese debt grew from 60% to close to 100% of the GDP in less than 3 years), without having any significant GDP impact (both countries were in pretty big recessions during those years).
That you continue to advocate that the answer to this problem are the very same measures that caused it in the first place is getting pretty surreal at this point.
Well, Sebster has been pointing to how the main thing Greece was fighting was the plunge in GDP.
I figured I better look into that more so I got a nice summary where the downward trend started in the tail end of 2009.
Spoiler:
http://www.theguardian.com/business/2010/may/05/greece-debt-crisis-timeline 4 October 2009: George Papandreou becomes Greece's prime minister
Papandreou's Panhellenic Socialist Movement (PASOK) party wins power after New Democracy calls a snap general election, asking the Greek people for a new mandate to tackle the looming financial crisis. The Greek economy has contracted by 0.3%, and the national debt has risen to €262bn, from €168bn in 2004. At this stage, the government expects the 2009 deficit to reach 6% of GDP.
30 November 2009: Debt fears mount
Papandreou admits that the Greek economy is in "intensive care", as European finance ministers express concern about the size of the country's debt.
8 December 2009: Fitch downgrades Greece's credit rating
The crisis escalates and shares fall around the world after ratings agency Fitch cuts Greece's long-term debt to BBB+, from A-. This is the first time in a decade that Greece does not have an A-rating, and pushes up the cost of borrowing.
14 December 2009: Papandreou unveils radical reforms
The Greek government announces an ambitious plan to cut the deficit by four percentage points, as a proportion of GDP, in 2010-2011.
17 December 2009: Strikes hit Greece as debt crisis grows
Thousands of workers take to the streets in protest at Papandreou's cutbacks, hours after Standard & Poor's follows Fitch by cutting Greece's credit rating.
28 January 2010: Greece promises to 'put house in order'
The spread between the interest charged on Greek and German debt widens to 4% as investors fret that Greece may default.
2 February 2010: Papandreou makes TV appeal for unity over financial crisis
Greece announces a wider austerity package, including a freeze on public sector pay and higher taxes for low and middle-income households.
10 February 2010: Greek public sector workers strike as spectre of bailout looms
Riot police fire tear gas on demonstrators in Athens, protesting at the austerity measures. Meanwhile European leaders consider a rescue package for Greece at an economic summit.
11 February 2010: Angela Merkel dashes Greek hopes of rescue bid
Germany opposes a quick bailout of Greece, saying the country must tackle its debt problems itself.
26 February 2010: Goldman Sachs faces Fed inquiry over Greek crisis
Investment bank is accused of helping to cause the crisis by using derivatives contracts to disguise how much Greece was borrowing.
3 March 2010: Greece unveils radical austerity package
Greek population told to accept lower bonuses and higher taxes or risk bankruptcy.
4 March 2010: Greece breathes a sigh of relief as 10-year bonds sale proves popular
... and the financial markets welcome the move by bidding for €16bn of government debt.
9 March 2010: Papandreou asks Obama for help
Greek prime minister calls for a crackdown on financial speculators during a whirlwind world tour.
29 March 2010: Greece struggles on after weak response to bond sale
Financial markets start to lose faith in Greece's ability to service its debts.
11 April 2010: EU ministers agree Greek bailout terms
Finally, after weeks of haggling the eurozone agrees a €30bn rescue package for its weakest member.
16 April 2010: Fury in Greece over IMF intervention
Greek government admits that it may need help from the International Monetary Fund, pushing its bailout up to €45bn.
19 April 2010: Greek borrowing reaches record high
The spread between the yield on Greek and German bonds shoots up to 469 basis points, as Greek workers fear the IMF's arrival.
23 April 2010: Greece activates €45bn EU/IMF loans
With €16bn of debt maturing in May, Papandreou bows to the inevitable and officially requests a bailout.
27 April 2010: Standard & Poor's downgrade Greek credit rating to junk status
S&P loses patience with Greece and slashes its credit rating to BB+, sending stock markets plunging worldwide. Analysts and politicians warn that €45bn simply won't be enough to sort out the Greek crisis, with Goldman Sachs predicting that the country may need a €150bn rescue package.
28 April 2010: All eyes are Berlin
EU and IMF officials hold crunch talks with German leaders. Rumours of a €120bn package calm the markets, as Angela Merkel admits that admitting Greece into the euro may have been a mistake.
2 May 2010: EU debt crisis: Greece granted €110bn aid to avert meltdown
After days of frantic negotiations, the IMF, the EC and the European central bank hammer out a three-year package to rescue Greece.
4 May 2010: Greek protesters storm the Acropolis as markets lose faith
As anger erupts across Athens at the scale of the cutbacks that Greece must now implement, stock markets fall sharply and gold hits a record high as investors start to doubt whether the €110bn bailout will actually solve Greece problems.
Best I can tell is between the harsher austerity and the rebellion that ensued and the first time credit rating falling below A is what started to kick the GDP down, then hiding their debt really killed it:
26 February 2010: Goldman Sachs faces Fed inquiry over Greek crisis
Investment bank is accused of helping to cause the crisis by using derivatives contracts to disguise how much Greece was borrowing.
In the span of little more than a year there was so much consistent economic turmoil.
It saw a "normal" country reduced to third world and as soon as the financial institutions got a better look and got the "real" financial figures all confidence was lost.
Just like in the stock market: low confidence = stock tailspin.
No different in an economy, investors bail out and spending stops.
Germany is still "staying the course" and truly had decided to force Greece to fail while draining them of everything they have.
They really could have taken a higher road on this for the "greater good".
<edit> Noted more references that the Greek government was really afraid of IMF involvement.
Best I can tell they are "evidence based" in their findings so I am less inclined to think it is because they are "nasty" but that they tend to uncover things best left hidden...
Talizvar wrote: Also note an estimated ~85% of taxes are not paid / evaded by their citizens.
Yup. That right there is the problem with Greece and why it's economy can't recover. The Greeks have enjoyed the benefits of a modern welfare state for years, but haven't actually been paying the taxes to support it. The government can't budget anything, because the money that should exist on paper won't materialize on tax day, but the government continued to provide services it couldn't afford, rather than crack down on the massive tax evasion. Now Greeks are forced into the uncomfortable position of living with the welfare state that they can actually afford, which is no welfare state at all. And the worst part is, even if every single Greek began paying 100% of their taxes today, they still couldn't dig themselves out of the hole they've spent the last couple decades digging for themselves.
Debt forgiveness is going to have to happen at some point, simply because no government on Earth can pay a debt bill that amounts to "All of the money ever printed". It will come much more quickly if Greece would restructure its banking, restructure its government, and crack down very hard on tax evasion (which is what the rest of Europe wants to see). However, I think the Greeks would enjoy that even less than they do the austerity measures they are being forced to deal with.
Talizvar wrote: Also note an estimated ~85% of taxes are not paid / evaded by their citizens.
Yup. That right there is the problem with Greece and why it's economy can't recover. The Greeks have enjoyed the benefits of a modern welfare state for years, but haven't actually been paying the taxes to support it.
They owe what, 320 billion? While 10 billion is not a small number, it isn't the only factor in this whole mess.
Sure, they need to pay their taxes if they are going to have a ton of people on the dole. I think we can all agree that tax evasion needs to be cracked down upon. But it's more complicated than "Pay your taxes".
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