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2015/07/13 19:32:59
Subject: Looks like Greece may be out of the Eurozone
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.
Time to relook into buying some property in Greece.....maybe a small island....dang
Proprety in Chang-mai or Pattaya or Greece......
Proud Member of the Infidels of OIF/OEF
No longer defending the US Military or US Gov't. Just going to ""**feed into your fears**"" with Duffel Blog Did not fight my way up on top the food chain to become a Vegan...
Warning: Stupid Allergy
Once you pull the pin, Mr. Grenade is no longer your friend
DE 6700
Harlequin 2500
RIP Muhammad Ali.
Jihadin, Scorched Earth 791. Leader of the Pork Eating Crusader. Alpha
2015/07/13 19:39:17
Subject: Re:Looks like Greece may be out of the Eurozone
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?
A revolution is an idea which has found its bayonets.
Napoleon Bonaparte
2015/07/13 21:22:56
Subject: Looks like Greece may be out of the Eurozone
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... :-(
This message was edited 1 time. Last update was at 2015/07/14 00:01:11
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.
Automatically Appended Next Post:
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.
Automatically Appended Next Post:
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.
This message was edited 3 times. Last update was at 2015/07/14 00:55:41
“We may observe that the government in a civilized country is much more expensive than in a barbarous one; and when we say that one government is more expensive than another, it is the same as if we said that that one country is farther advanced in improvement than another. To say that the government is expensive and the people not oppressed is to say that the people are rich.”
Adam Smith, who must have been some kind of leftie or something.
2015/07/14 08:24:19
Subject: Looks like Greece may be out of the Eurozone
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).
2015/07/14 20:39:40
Subject: Looks like Greece may be out of the Eurozone
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.
New Heavy Gear Log! Also...Grey Knights! The correct pronunciation is Imperial Guard and Stormtroopers, "Astra Militarum" and "Tempestus Scions" are something you'll find at Hogwarts.
2015/07/14 21:04:02
Subject: Re:Looks like Greece may be out of the Eurozone
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.
This message was edited 1 time. Last update was at 2015/07/14 21:06:39
A revolution is an idea which has found its bayonets.
Napoleon Bonaparte
2015/07/15 09:03:15
Subject: Re:Looks like Greece may be out of the Eurozone
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.
This message was edited 2 times. Last update was at 2015/07/15 19:01:28
Its hard to be awesome, when your playing with little plastic men. Welcome to Fantasy 40k
If you think your important, in the great scheme of things. Do the water test.
Put your hands in a bucket of warm water,
then pull them out fast. The size of the hole shows how important you are.
I think we should roll some dice, to see if we should roll some dice, To decide if all this dice rolling is good for the game.
2015/07/15 19:32:53
Subject: Looks like Greece may be out of the Eurozone
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:
Its hard to be awesome, when your playing with little plastic men. Welcome to Fantasy 40k
If you think your important, in the great scheme of things. Do the water test.
Put your hands in a bucket of warm water,
then pull them out fast. The size of the hole shows how important you are.
I think we should roll some dice, to see if we should roll some dice, To decide if all this dice rolling is good for the game.
2015/07/15 20:27:49
Subject: Re:Looks like Greece may be out of the Eurozone
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.
This message was edited 3 times. Last update was at 2015/07/15 20:43:10
A revolution is an idea which has found its bayonets.
Napoleon Bonaparte
2015/07/15 20:37:02
Subject: Re:Looks like Greece may be out of the Eurozone
#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
Proud Member of the Infidels of OIF/OEF
No longer defending the US Military or US Gov't. Just going to ""**feed into your fears**"" with Duffel Blog Did not fight my way up on top the food chain to become a Vegan...
Warning: Stupid Allergy
Once you pull the pin, Mr. Grenade is no longer your friend
DE 6700
Harlequin 2500
RIP Muhammad Ali.
Jihadin, Scorched Earth 791. Leader of the Pork Eating Crusader. Alpha
2015/07/15 20:45:31
Subject: Looks like Greece may be out of the Eurozone
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.
Mundus vult decipi, ergo decipiatur
2015/07/15 20:48:02
Subject: Re:Looks like Greece may be out of the Eurozone
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.
Automatically Appended Next Post:
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.
This message was edited 2 times. Last update was at 2015/07/15 21:12:53
A revolution is an idea which has found its bayonets.
Napoleon Bonaparte
2015/07/16 01:59:40
Subject: Looks like Greece may be out of the Eurozone
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.
“We may observe that the government in a civilized country is much more expensive than in a barbarous one; and when we say that one government is more expensive than another, it is the same as if we said that that one country is farther advanced in improvement than another. To say that the government is expensive and the people not oppressed is to say that the people are rich.”
Adam Smith, who must have been some kind of leftie or something.
2015/07/16 03:09:22
Subject: Looks like Greece may be out of the Eurozone
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.
Automatically Appended Next Post:
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.
This message was edited 1 time. Last update was at 2015/07/16 04:01:55
Mundus vult decipi, ergo decipiatur
2015/07/16 05:58:26
Subject: Looks like Greece may be out of the Eurozone
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.
Its hard to be awesome, when your playing with little plastic men. Welcome to Fantasy 40k
If you think your important, in the great scheme of things. Do the water test.
Put your hands in a bucket of warm water,
then pull them out fast. The size of the hole shows how important you are.
I think we should roll some dice, to see if we should roll some dice, To decide if all this dice rolling is good for the game.
2015/07/16 06:49:35
Subject: Looks like Greece may be out of the Eurozone
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.
“We may observe that the government in a civilized country is much more expensive than in a barbarous one; and when we say that one government is more expensive than another, it is the same as if we said that that one country is farther advanced in improvement than another. To say that the government is expensive and the people not oppressed is to say that the people are rich.”
Adam Smith, who must have been some kind of leftie or something.
2015/07/16 09:15:07
Subject: Looks like Greece may be out of the Eurozone
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.
2015/07/16 18:21:10
Subject: Re:Looks like Greece may be out of the Eurozone
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...
This message was edited 2 times. Last update was at 2015/07/16 18:24:57
A revolution is an idea which has found its bayonets.
Napoleon Bonaparte
2015/07/16 18:41:06
Subject: Re:Looks like Greece may be out of the Eurozone
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.
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2015/07/16 20:07:35
Subject: Re:Looks like Greece may be out of the Eurozone
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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