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 Manchu wrote:

 treslibras wrote:
Which incentive does the German government (or the French, and surely the British) see to avoid a total desaster?

What exactly is the total disaster? Greek re-alignment toward Moscow?

I think he meant total disaster for the Greeks.

It's a bit late for that.

Greece is nowhere near total disaster at this point, trust me.

If they leave the EU then their whole financial system will collapse, they will suffer hyper-inflation when they are forced to devalue whatever currency they adopt to lower their international debt, their internal production, including of basic foodstuffs and necessities won't be able to meet the internal demand and with their democratic parties completely devoid of any legitimacy it will probably mean a return to a military dictatorship like they had in the past... They will basically become the Venezuela of Europe but without the oil.

THAT will be total disaster.

PhantomViper wrote:
Greece is nowhere near total disaster at this point, trust me.

If they leave the EU then their whole financial system will collapse, they will suffer hyper-inflation when they are forced to devalue whatever currency they adopt to lower their international debt, their internal production, including of basic foodstuffs and necessities won't be able to meet the internal demand and with their democratic parties completely devoid of any legitimacy it will probably mean a return to a military dictatorship like they had in the past... They will basically become the Venezuela of Europe but without the oil.

THAT will be total disaster.

It may not be a disaster, but the patient is on life support, hemorrhaging badly, with little ability to clot, and showing little signs of recovery.

PhantomViper wrote:
If they leave the EU [...]

Keep in mind that this branch of the conversation began here:

 Manchu wrote:

 treslibras wrote:
Which incentive does the German government (or the French, and surely the British) see to avoid a total desaster?

What exactly is the total disaster? Greek re-alignment toward Moscow?

That is to say, the question is about what Germany can, should, or might want to do. Germany cannot make Greece leave. If the Greeks say Germany has made it too tough for them to stay, no one should take that seriously ... if you are correct that leaving would only make things worse. Therefore, the question of Greece leaving the EU is effectively moot inasmuch as it boils down to an attempt to extort Germany by threatening the Greek people. If some Greek government puts the gun against their people's heads, they cannot claim it is Germany's finger on the trigger.

 Manchu wrote:

PhantomViper wrote:
If they leave the EU [...]

Keep in mind that this branch of the conversation began here:

 Manchu wrote:

 treslibras wrote:
Which incentive does the German government (or the French, and surely the British) see to avoid a total desaster?

What exactly is the total disaster? Greek re-alignment toward Moscow?

That is to say, the question is about what Germany can, should, or might want to do. Germany cannot make Greece leave. If the Greeks say Germany has made it too tough for them to stay, no one should take that seriously ... if you are correct that leaving would only make things worse. Therefore, the question of Greece leaving the EU is effectively moot inasmuch as it boils down to an attempt to extort Germany by threatening the Greek people. If some Greek government puts the gun against their people's heads, they cannot claim it is Germany's finger on the trigger.

I'm a bit confused about that whole "can Greece be forced to leave the EU/Euro" thing atm...

On one hand, the only thing that I find about it on legal documents is the Article 50 of the EUT that I mentioned earlier, on the other hand I keep seeing several Ministers from different countries, newspaper articles and even EU representatives saying that it can be a real option so I'm not really sure if the EU can force Greece to leave or not.

Also, there is one thing that you might not be aware of: Syriza WANT'S Greece to leave the Euro / EU. They were founded as an anti-EU party and only changed their tune so that they could win the elections (more than 80% of Greeks state that they should stay in the EU at all costs). And so is their coalition partner.

There are several political views that state that all of this: going against all other countries on the EU-Russian relations, threatening Germany with War Reparation claims, threatening to open European borders to Jihadists and illegal immigrants, constantly refusing to deliver the technical documents that the European Commission is asking and bragging about it in the media, etc, are all just political ploys so that when they are finally "forced" to leave the EU they can still point the blame for it to the EU itself to their own countrymen.

Like I said, Greece has a gun to its head and keeps saying "don't make me do it!" This is not impressive.

PhantomViper wrote:

 Manchu wrote:

 treslibras wrote:
Which incentive does the German government (or the French, and surely the British) see to avoid a total desaster?

What exactly is the total disaster? Greek re-alignment toward Moscow?

I think he meant total disaster for the Greeks.

This.

PhantomViper wrote:Greece is nowhere near total disaster at this point, trust me.

If they leave the EU then their whole financial system will collapse, they will suffer hyper-inflation when they are forced to devalue whatever currency they adopt to lower their international debt, their internal production, including of basic foodstuffs and necessities won't be able to meet the internal demand and with their democratic parties completely devoid of any legitimacy it will probably mean a return to a military dictatorship like they had in the past... They will basically become the Venezuela of Europe but without the oil.

THAT will be total disaster.

And this.

And I think it is important to make a distinction between the Greek people and the Greek state and government. I do not care much about the latter but I do for the former.
But how can you divide them? If you say "No more money for Greece" you condemn the Greek to huge suffering. You might think that is OK. I do not.

I agree that Syriza was totally blue-eyed on what they could do or demand. But I am also sure that by now Tsipras has very much understood that he is trapped between the devil and Belzebub.

Ah, the German poster wants to help the Greeks but that pesky Greek government is ruining everything.

Perhaps if Germany assumed more direct control ...

 Manchu wrote:
Like I said, Greece has a gun to its head and keeps saying "don't make me do it!" This is not impressive.

Yes and I agree with you and I really can't fathom what they are hopping to accomplish with these attitudes.

Polls in the rest of the European countries, especially those in northern Europe, show that the people of those countries are against "lending" (giving away, actually) any more money to Greece.

Is the Greek government really expecting the leaders of those countries to go against the wishes of the majority of their constituents? When all of them are also being forced to implement very unpopular austerity measures in their own countries?

And even if they do and Greece gets another pardon on their foreign debt, and yet another bundle of cash. What then? They still suffer from a massive corruption, tax evasion and general public finance deficit problems that no Greek government so far has shown the will or the competence to tackle so we would all be in this exact same position in another 2-3 years...

Furthermore the current Greek government is anti austerity and wants to spend, because the people elected them to do so.

Let it fail, allow hard reality to sink in, and then permit Greece to default.

The Greek people elected a series of governments that promised continued good times on borrowed money. All the consequences become tomorrows problems. Tomorrow came and now the piper must be paid.

international economics is bullgak anyway, paper monety that deosnt exist, the bubble needs to not only be burst but prevented from reinflating. Greece is a good start.

Once that is done nations with margianlly better economies but following the same economic principle as Greece, and for that I mean Spain, France, the UK and ultimately the US might change tracks a little.

The trouble with democracy is that the people offering cake today paid for tomorrow get elected, those who propose monetary caution cant offer the electorate cake today and thus don't get elected. Most nations cant afford cake everyday. In fact I dont think any can. But everyday cake is served and the debts mount up.

 Manchu wrote:
Ah, the German poster wants to help the Greeks but that pesky Greek government is ruining everything.

Perhaps if Germany assumed more direct control ...

 Iron_Captain wrote:

 Manchu wrote:
Ah, the German poster wants to help the Greeks but that pesky Greek government is ruining everything.

Perhaps if Germany assumed more direct control ...

Think they can do it this time and HOLD IT

Sorry everyone -- I definitely did not mean to play into Russian propaganda here with that comment.

Haha, yah, well, since mine is a minority opinion in Germany, I think we can all keep our pickelhauben in the closet, for the time being.

Sorry for not reading all 4 pages here (lazy me), but I'm confused. This is a simple matter to resolve isn't it?

It's not like a cheque for billions can go missing in the post, there would be lots of paperwork for simple government transactions???

If the Greeks messed up their calculations at the time by a few hundred billions and it was a legally binding agreement then tough.

It's not like this would be a sympathy payment, it all would have been ratified by a legal body at some point.

 Grimstonefire wrote:
Sorry for not reading all 4 pages here (lazy me), but I'm confused. This is a simple matter to resolve isn't it?

It's not like a cheque for billions can go missing in the post, there would be lots of paperwork for simple government transactions???

If the Greeks messed up their calculations at the time by a few hundred billions and it was a legally binding agreement then tough.

It's not like this would be a sympathy payment, it all would have been ratified by a legal body at some point.

You'r assuming the Greek government has it's side of the paperwork. That's a big assumption, and Germany could just forage it's side of the paperwork, y'know?

As long as Greece doesn't go Bosnia and Kosovo route its all good.

Greece will default and be declared bankrupt by the IMF. Any refunding is just noise before the inevitable.

Why sent good money after bad? The current Greek government has no intention of changing Greek spending or trying to balance, and were elected for abandoning austerity.

Greece made its choice at the ballot box and the rest of the EU should not have to pay for it.

Sining wrote:
I mean ignoring the fact that Greece and Germany are in this case, neither kid nor adult, and if anything are both mature countries that really should know better than to let anything of this sort happen to them,

You missed the point of the analogy entirely. The parent/child element is irrelevant. The point is that the payments being made are no way near the face value of the debt, and everyone involved knows this.

the thing isn't about punishing Greece. I'm sorry if you feel it is, but basically Greece could have chosen not to borrow the money.

Nonsense positioning. What you are sorry for, and what I feel is irrelevant. And. But what should have done is even more irrelevant (what Greece should have done is borrow the money and put it all in Apple stocks).

All that matters is what was done, and what is to be done to resolve it. And the basic facts of that reality is that Greece has a debt that they won’t ever repay in full, and the rest of Europe is lumped with a bad that’s actually quite immaterial relative to the scale of the Eurozone.

So the basic workable solution, which is more or less being reached slowly over a muddled process of negotiations and renegotiations, is to steadily write off the Greek debt, while insisting they may considerable sacrifices as a show of repaying the debt. That is done both as a punishment to avoid the moral hazard, and as an offering to people who really hate the idea that organisations often walk away from debt.

[And I think you're the one with no idea about debt restructuring. If a company lent another company 2 billion and expected to get back 2 billion + interest, and the other company said 'well, too bad, you can only get 1 billion back', that's really less debt restructuring than it is debt forgiveness.

Please, just go and read about this. Learn. There’s a million websites out there offering simple, plain English explanations of concepts like debt restructuring. Don't just sit in a forum denying basic financial concepts to protect your ego. That's wasting everyone's time.

As it is, nobody is going to start forgiving Greece's debt anytime soon because it would set a horrible precedent for all the other EU countries that are in a bind.

Holy gak. I've already said this "Basically how much do we have to punish Greece in order to avoid a moral hazard?"

Incredible.

How much of this punishment do you chalk up to moral hazard and how much do you chalk up to satisfying frustrated German voters?

 sebster wrote:

Sining wrote:
I mean ignoring the fact that Greece and Germany are in this case, neither kid nor adult, and if anything are both mature countries that really should know better than to let anything of this sort happen to them,

You missed the point of the analogy entirely. The parent/child element is irrelevant. The point is that the payments being made are no way near the face value of the debt, and everyone involved knows this.

It kind of is the point. The whole parent/child is important because as you said, the child will NEVER be able to repay the parent back for the cost of the car. Another adult however should be able to pay back another adult for wrecking a car.

the thing isn't about punishing Greece. I'm sorry if you feel it is, but basically Greece could have chosen not to borrow the money.

Nonsense positioning. What you are sorry for, and what I feel is irrelevant. And. But what should have done is even more irrelevant (what Greece should have done is borrow the money and put it all in Apple stocks).

All that matters is what was done, and what is to be done to resolve it. And the basic facts of that reality is that Greece has a debt that they won’t ever repay in full, and the rest of Europe is lumped with a bad that’s actually quite immaterial relative to the scale of the Eurozone.

So the basic workable solution, which is more or less being reached slowly over a muddled process of negotiations and renegotiations, is to steadily write off the Greek debt, while insisting they may considerable sacrifices as a show of repaying the debt. That is done both as a punishment to avoid the moral hazard, and as an offering to people who really hate the idea that organisations often walk away from debt.

The Greeks claim Germany also has a debt to pay -- not just in terms of reparations but the gunpoint-loan extracted from Greece during the war, which the Third Reich did begin to repay.

 Manchu wrote:
I agree with Sining that the parent/child metaphor is misplaced.

The point of the analogy wasn’t to place them as parent and child, but just to set up a situation where a payment was significant to the debtor, but meaningless compared to the scale of the debt. Seeing that situation it should be obvious to everyone that the payment had little to do with ever repaying the full debt, but about making the debtor face at least some consequences for the situation he put himself in.

If the question is, why hasn't Germany engineered some kind of Marshall Plan for Greece then perhaps we ought to consider what incentive Germany has to do so, considering the expense.

Thinking back to what the USA stood to gain at the beginning of the Cold War, it is difficult to imagine Germany finding the same potential benefits in Greece today.

One interesting thing to note about the Marshall Plan is that it was the end result, and for a long before the idea was much closer to the old fashioned notion of punishing and crippling the loser. We very nearly got instead the Morgenthau plan, which dominant well in to 1945, and in this plan Germany was to be essentially disarmed – a new Germany was envisioned to be like Belgium or the Netherlands, with high standards of living but essentially no heavy industry and therefore no capacity for war. What’s interesting to note is that the Morgenthau plan was finally rejected because it was too kind to Germany. How things changed in a few short years, so that not just the old axis powers, but also the new rivals in the Soviet Union, were offered vast sums of money to build their economies is kind of incredible.

I guess this links to Greece’s in that eventually the debt will be largely written off. Give it another five years and the wisdom of insisting Greece hand over ~4% of GDP every year for the mess of another time will seem less and less wise. But like the Marshall plan, it takes a lot of negotiations and the clarity of time to reach that understanding.


Automatically Appended Next Post:

 Da Stormlord wrote:
And I thought our country was in serious debt....

It depends what you mean by serious. If you mean it is a large sum of money that will require extensive effort to repay over a long period of time, then yeah, it is serious debt. If you mean 'oh my God that's so much money any minute now it's going to come crashing down' then no, you're nowhere near a serious level of debt, and this can be observed through the fact that you've owed vastly more in the past without ever coming close to collapse.

In fact, there's a pretty solid argument that if a country borrows in a currency it controls entirely, it can't ever collapse through debt.

 sebster wrote:
The point of the analogy wasn’t to place them as parent and child

But perhaps you can see how it was unfortunate nonethless, especially with regard to characterizing Germany as punishing Greece. It certainly has the ring of accusing Germany of unfounded paternalism (again, keep in mind the current state of Russian propaganda).

 Iron_Captain wrote:
It is. But states work very different from companies or individuals. They can usually get away with having huge debts unless things really go wrong like with Greece.

The big difference with Greece is that the debt is in a currency it doesn't control entirely.

That's actually a serious flaw with the Euro that I don't believe was fully realised before the experiment began, that we're only now beginning to understand properly.

 sebster wrote:
But like the Marshall plan, it takes a lot of negotiations and the clarity of time to reach that understanding.

I expect Germany would have handed Greece a Marshall Plan sometime in the last three years if it had any confidence that (a) Greece was as essential to its foreign policy aims as West Germany was to the USA's post-WW2 and/or (b) Greece could be a responsible and reliable partner in Germany's foreign policy aims as West Germany was for the USA post-WW2. As things stand, Greek politics took a flaky turn toward Russia in the context of Russian aggression in the Ukraine as part of a transparent extortion bid ...

 Manchu wrote:

 sebster wrote:
But like the Marshall plan, it takes a lot of negotiations and the clarity of time to reach that understanding.

I expect Germany would have handed Greece a Marshall Plan sometime in the last three years if it had any confidence that (a) Greece was as essential to its foreign policy aims as West Germany was to the USA's post-WW2 and/or (b) Greece could be a responsible and reliable partner in Germany's foreign policy aims as West Germany was for the USA post-WW2. As things stand, Greek politics took a flaky turn toward Russia in the context of Russian aggression in the Ukraine as part of a transparent extortion bid ...

The Marshall Plan has been re-interpreted in history as a means of building strong states to resist communism, but it actually wasn't the plan. The plan actually offered the USSR and the other Eastern bloc countries funds in order to modernise and adopt US style industry. The idea being that if US money could help everyone else become prosperous like the US then everyone would be rich and happy and there'd be lots of trade and no need for any more fighting. The Soviets rejected the funds, and told the rest of the Eastern Bloc countries to do the same.

Point being, I guess, that Marshall plan type support to Greece wouldn't just be about drawing Greece towards Germany, it'd be more about a belief that making Greece in to a stable, prosperous nation is good not just for the Greeks but for everyone in Europe.

To clarify, I'm not in any way suggesting money gets handed over to Greece. The corruption is still there, and the money would be pissed away sure as anything. But a program that steadily writes off debt, in conjunction with anti-corruption reforms in Greece with experts paid for out of Euro coffers, that might be a workable medium term plan.

PhantomViper wrote:


They will suffer hyper-inflation when they are forced to devalue whatever currency they adopt to lower their international debt, their internal production, including of basic foodstuffs and necessities won't be able to meet the internal demand and with their democratic parties completely devoid of any legitimacy it will probably mean a return to a military dictatorship like they had in the past... They will basically become the Venezuela of Europe but without the oil.

THAT will be total disaster.

You mean like Russia but without oil?

Interesting article on sueddeutsche.de , albeit a bit off-topic.

(I am pretty impressed by google translation, I basically just did some formatting for ease of reading):

"Why Portugal, Spain and Ireland managed the turn and Greece did not"

The real problem in Greece is the weakness of state institutions, says an insider who is familiar with the work of the Troika. This meant that the government has saved that the reforms that the re-emergence of the country should take, but was omitted. The renovators in Brussels, Frankfurt and New York had set out that SYRIZA would take back some austerity measures after a change of power, but that this would be evened out by the fact that the new government would act forcefully against corruption and nepotism. "That was a bitter disappointment" says the insider.

1. This is demonstrated by the controversy over an anti-corruption officer of the government. The troika had urged former conservative Prime Minister Antonis Samaras to provide for an independent authority to build a firewall against potential offenders, in order to fight corruption in the public service. The new head of government Tsipras installed that authority within the Treasury. The firewall is gone.

2. Take another example - the property tax, the government Samaras introduced the tax at the insistence of the Troika to make wealthy Greeks finance the state budget. The tax was was unpopular, partly because many property values ​​were only fictitious after five years of crisis. During the election campaign SYRIZA promised an easing, without, however, providing for a replacement. As a result, the revenue from the tax collapsed already before the election - the Greek took the victory of SYRIZA for granted. Because of this the primary surplus turned into a deficit again. Exact figures are not currently not obtainable.

3. 7000 Greeks with a tax liability of more than one million euros. Another example is the dispute over tax payment extensions. Even the Samaras government had refused to collect tax arrears consistently. A law allowed, much to the displeasure of the creditors of Greece, to pay off tax debts in 100 monthly installments. SYRIZA further eased the conditions for the debtor. In the opinion of the Troika that further undermined tax morale. Currently, there are up to 7,000 Greeks with tax debts of more than one million euros. This can hardly be poor.

4. Finally, the law against foreclosures: Ostensibly to protect poor people from being thrown out of their houses, it is now forbidden to banks to secure the property assets of outstanding defaults. The Government of Alexis Tsipras has not limited protection to those most in need, but on the contrary, included higher real estate assets of up to EUR 500 000 involved. From the banks' perspective, this means that collateral for loans are worth nothing now, and they are not even protected against fraud. So they did the obvious and stopped lending money - which prevents the construction of new houses and the recovery of the Greek construction industry.

One banker says: "I know few governments which have done so much harm to their own country in such a short time, such as SYRIZA has done here."


-- Well, I would not take bankers as the most objective commentators in these questions , but it was interesting to read which measurements were discussed - and blocked or pervertred by Syriza.