Greece Is Running Out of Money, Cannot Make June IMF Repayment 743
jones_supa writes: Greece, the country which has been in extreme financial trouble and high debt for years, cannot make debt repayments to the International Monetary Fund (IMF) next month, unless it achieves a deal with creditors. 'The four installments for the IMF in June are €1.6 billion ($1.8 billion). This money will not be given and is not there to be given,' Interior Minister Nikos Voutsis told Greek Mega TV's weekend show. Shut out of bond markets and with bailout aid locked, cash-strapped Athens has been scraping state coffers to meet debt obligations and to pay wages and pensions. With its future as a member of the 19-nation eurozone potentially at stake, a second government minister accused its international lenders of subjecting it to slow and calculated torture.
it's not "slow and calculated torture" (Score:5, Insightful)
It's that eventually, Germany is going to get tired of you riding on their back. If you borrow money, eventually the people you borrow it from want to be repaid. You can negotiate for more time, but only so many times before they get tired of it.
It might be better to let Greece default. It'll be painful, yes, but better deal with that pain sooner than later. The longer this goes on, the bigger the problem is going to get.
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Yep. Eventually your lenders want to be repaid. This is why most sovereign debt is rolled over. The EU has put Greece in a situation where it can't roll over its debts and must pay them as they come due. Almost no nation can do this for all of its debt. Think of it like this, you can payoff your home mortgage over thirty years, if the bank suddenly accelerates it and demands all of the money tomorrow that isn't going to be doable unless you can find another lender. Unfortunately, the sovereign debt ma
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Yep. Eventually your lenders want to be repaid. This is why most sovereign debt is rolled over. The EU has put Greece in a situation where it can't roll over its debts and must pay them as they come due. Almost no nation can do this for all of its debt. Think of it like this, you can payoff your home mortgage over thirty years, if the bank suddenly accelerates it and demands all of the money tomorrow that isn't going to be doable unless you can find another lender. Unfortunately, the sovereign debt markets tend to dislike long maturity bonds. This means the only loans many nations can get need to be repaid in five or ten years. In normal circumstances a nation can roll their debt over.
^ all true...
How many nations could? Germany *might*, given their huge hard currency reserves, plus their gold and other physical assets. (Many people don't know this, but after the United States, Germany holds the world's largest gold reserves)
China probably could, given the massive foreign currency they hold.
The US of course could, given that the US Dollar is the world's reserve currency, we could print enough to pay it all off tomorrow, abit at the cost of inflation, but we could.
Who else? Honestly, I
Re:it's not "slow and calculated torture" (Score:4, Interesting)
Norway would have no problems paying of it's debts immediately.
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Not so difficult when you live atop one of the largest petroleum reserves in the world. Oil and its derivatives make up 59% of Norway's exports [wikipedia.org]. I agree that Norway has been investing its petroleum manna pretty wisely though.
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^ all true...
How many nations could? Germany *might*, given their huge hard currency reserves, plus their gold and other physical assets. (Many people don't know this, but after the United States, Germany holds the world's largest gold reserves)
China probably could, given the massive foreign currency they hold.
The US of course could, given that the US Dollar is the world's reserve currency, we could print enough to pay it all off tomorrow, abit at the cost of inflation, but we could.
Who else? Honestly, I think that might be it.
Most of Germany's gold is on US-soil. It's assumed to exist, but nobody knows for sure... ;-)
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Uh no. Germany has been riding on everyone else's back. They have argued against economic stimulus for years even as the Eurozone economy crashed around them. They demanded interest rates be kept high even as deflation loomed. They fought against QE even as the stock markets crashed. Their exports have been artificially boosted by the Euro. If they were running their own independent currency their exports would be much more expensive.
Re:it's not "slow and calculated torture" (Score:5, Interesting)
Yes and no. Germany isn't being nefarious. The crux of the issue is the same as it's always been - Greece should never have joined the EU. Germany and Greece have very different economies and different fiscal and monetary policies. Given Germany has more power in voting, Greece knew what they were getting into. In fact, they lied about their economy just to get in - because they wanted the benefits of the euro that all EU countries would enjoy plus the stability of the euro and the lower interest rate they could (and did) restructure their debt under when converting to the euro. This backfired during the Great Recession when they were disproportionately affected and subsequently every country in the EU was given a different interest rating for their government bonds based upon their individual risk where before, they were all given the same risk level - so they got currency stability, but lost interest rate stability.
http://www.marketoracle.co.uk/... [marketoracle.co.uk]
Germany pushed for rules to entry that require a deficit lower than 3% of GDP - Greece cooked their books and lied when they showed numbers to the EU lower than that. There was also a rule that total debt had to be lower than 60% of GDP. Greece hadn't seen numbers like that in decades, but the rule was bent and they were allowed in. HUGE mistake for all parties. Greece wasn't a good fit even with lots of safeguards in place as their needs didn't match Germany and other players.
40% of Germany's GDP comes from exports... and they got rid of exchange rates between EU countries plus lower exchange rates worldwide because the euro wouldn't increase in value as quickly as the deutschmark - the trade-off for them was that they pay higher interest rates to support the overall euro. Greece got bonuses, too -- lower interest rates, lower inflation, and cheaper imports which briefly led to a higher standard of living. Greece was on track to lowering its debt and increasing GDP...
What happened? - the market crash, the housing crash, worldwide economic collapse basically. Everyone suffered, but not equally. Greece couldn't effectively use monetary policy to help recover from the injury because it was tied to the EU - and Germany, who weathered the slump like a champ and saw no need for such measures, had more power to control that monetary policy in the EU than Greece or other suffering countries.
So, the dominoes start falling. Greece takes one measure after another to compensate for the lack of monetary policy flexibility as it crushes under debt without the ability to change the money supply and/or interest rates, or ease trade with fluctuating exchange rates. Their credit rating is downgraded making it impossible to get decent interest rates on loans needed to get themselves through the recession. There was no money for a stimulus package and the crippling debt just made the situation worse. The bailouts and debt-restructurings are nice peace-offerings, but wow... when you see how Greece was dealing with up to nearly 30% interest rates for a while there, it still feels like they're being fleeced. The whole thing smells of usury.
http://upload.wikimedia.org/wi... [wikimedia.org]
Coupled with austerity measures during a recession, I'm surprised Greece didn't just get up and leave the EU long ago. I don't blame Germany for acting in their own best interests, but I do blame each EU country that allowed members to join that did not match the necessary economic requirements.
Spain and Greece are suffering high unemployment largely because their wages are in euros and they can't do much with fiscal and monetary policies to ease their current competitive disadvantage:
http://en.wikipedia.org/wiki/E... [wikipedia.org]
If they hadn't joined the EU to begin with, they might have bee
Re:it's not "slow and calculated torture" (Score:4, Insightful)
+1
But it should be pointed out that EU membership did not require Greece to join the monetary union (EMU).
E.g. Sweden stayed out on purpose, and some eastern EU countries had to rocky economies to join in the first place, they are all getting the best of both worlds right now.
-greger
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The ROOT cause, as you imply, was Europtimism.
The PanEurope folks were willing to accept any tissue-paper rationalization or flimsy camouflage to encourage more countries to join in their giant Kum-Bay-Yah fest of the EU.
You CANNOT simply 'bolt' the Drachma and the Lira (sometimes exchanging at 000s to the dollar) to the D-Mark (@2 to the dollar) and assume they're all going to behave like the Dmark. That's ridiculous, if you understand WHY the drachma and the lira were valued so low: a history of unstable
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Lol. How the hell do you equate anti-austerity with communism? Unless all leftist(?) ideologies are communism for you.
Plus, we don't consider the elected government communistic nor did we turn to communistic ideas.
Also where did you see that austerity started to work? Only one thing was clear with current austerity measures: It leads to even more austerirty measures and economic decline. We don't see anything beneficial from it for the last ~4 years.
Come live with 400 euros per month and then tell me if you
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You touch on a lot of good points - perhaps too many for me to address in one post without making a wall of text.
There is no doubt that Greece would have hit hard times during the great recession, but no one has a crystal ball to say how it would have fared. The issue isn't so much whether it would have been bad or not (oh, I think it would definitely have been bad!), but how quickly Greece could have recovered if it had control over its own monetary and fiscal policies.
Let's look a bit deeper:
Greece's ec
Re:it's not "slow and calculated torture" (Score:5, Insightful)
Default is a credit death sentence. Please understand, sovereign countries can NOT declare bankruptcy and refuse to pay. The debt has to be paid unless you can get the creditors to be magnanimous and forgive a portion of it. Otherwise, until you pay it back you will be bared from all credit. Greece has already gotten their "haircut". They will have to pay back every dime or they will never borrow money again unless they can get the ECB or IMF to agree to another haircut which isn't going to happen.
You should see what default did to Argentina. It destroyed the country and it continues to wreck havoc on the economy a decade later. Small countries like Greece have to borrow money because they generally import most of their products and obtain most of their foreign currency through tourism. If you shut of debt they will be unable to purchase anything on the foreign market without first obtaining equivalent amounts of foreign currency first. Even with a very strong tourism industry and positive cash flows from the tourism this will be very painful for every single Greek.
Sovereign countries cannot just decide not to pay debts. There is not bankruptcy. Greece has one choice, here, pay the money or default on payment and pay the money later after suffering for several decades. There aren't other options in this world.
Re:There is something to it, people are missing (Score:5, Insightful)
And that was new loans AT INSANE RATES.
Last time I've checked check dept per citizen numbers, Greek was roughly on the level of Germany.
But interest rates they are paying (and that mostly to German banks), oh my goodness:
Interest rates reflect the lenders perceived risk of not being able to retrieve the loan on time or at all.German citizens are vastly more productive than Greek citizens.
If I were to lend 10.000 euros to someone, I'd have a better chance of having that loan paid in full from a German citizen living and working in Germany than from a Greek citizen living and working in Greece. That does not mean that I would not lend to Greece, but it means that I would take a higher interest rate to compensate for the risk.
It is not a diabolic German plan to put Greece down. It's just economics.
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Because US debt is denominated in US dollars, we could pay it off tomorrow with a spreadsheet entry at the Federal Reserve which created $16.39 trillion by fiat. There may even be some non-inflationary gimmick that could be employed to pay off existing debt via normal government revenue and only sell treasuries to the Fed who would never sell them.
And because the dollar is the dominant world reserve currency (around 65%), Congress could just vote to nullify a huge portion of that debt tomorrow. There's no
All the time (Score:4, Insightful)
The US always pays its debts when they are due. I think perhaps the problem is you don't understand how US debt works, and why it is a bit special:
So the most important thing to understand is the US doesn't go and beg people to give it money, rather it auctions debt. People come and purchase the debt. You can do it yourself on their Treasury Direct site. The US sells debt instruments to interested buyers. They are bid on, and whoever bids the lowest interest rate wins. The upshot is the US sets the terms of the debt instruments sold. They have a variety, some are as short as 4 weeks, some as long as 30 years. When you buy something, the terms of repayment are stated up front: What it'll pay, and when. There is no provision to cash out early, and you don't get to dictate any terms, you just choose what note you want to buy (if they are available).
This is how public debt works in a lot of countries, but it isn't how things go when you are getting loans from the IMF.
The other important thing is that all US debt is denominated in US dollars. A US debt instrument specifies how many dollars it'll pay out and that number is NOT inflation adjusted, except in a few very special cases. Well the US government also controls the US mint, which makes US dollars. So the US government can literally print money, and inflate its way in to payments. There are negatives to that, of course, but it is perfectly doable. The US controls its fiscal and monetary policy regarding its debt. Since all its debts are in US dollars, and since US dollars are the world's reserve currency, the US cannot face a crisis where it can't pay, unless such a crisis is internally generated (via the debt limit).
Not the case with Greek debt, it is in Euros and Greece doesn't control the Euro.
Finally, there's the fact that the US has great credit. Doesn't matter if you disagree that it should, fact is it does. Investors are willing to loan the US money for extremely low interest rates because they see it as a very safe investment. 4 week T-Bills have been going for between 0%-0.015%. 30-year bonds have been going for 2.5%-3.75%. Investors bid the interest rates very low because they desire it as a safe investment.
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That's not really true. Rotating debt isn't the same as a giant monolithic debt. Paying a debt and then adding a new debt is still paying off a debt, even if you're borrowing from the same person.
But I understand what you're getting at and I definitely agree that we have (and should have) different expectations for debt when it comes to countries than when it comes to corporations, say. Debt isn't the same sort of liability for a country--I really hate it when politicians say that we should run countries '
Great Recession part II? (Score:5, Insightful)
I am nervous as this feels like early 2008 all over again.
People though ack a few banks will be late paying each other for it's silly home instruments. Big deal let's buy banking shares now while they are cheap etc ...
We all know what happened next? Last year we finally came close to full recovery. The house of cards collapsed and is still being pumped up by the federal Reserve as we never had a full collapse!
Japan, America, and the EU may be next should Greece not to pay with skyrocketing rates and a great depression awaiting as the Federal Reserve won't be able to pump borrowed money to the banks, again.
Am I the only one who sees this?
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The house of cards is different now. The bulk of the investment market is moving towards private equity, where things are less regulated and more difficult to game.
The only danger with this private equity trend is if all those billions invested in Silicon Valley startups don't turn up profitable. But how could that happen? There's an infinite customer base for freemium and ad-supported step counting widgets. That system could never fail like the subprime mortgage thing, too many people Like it on Facebook.
I
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The house of cards is different now. The bulk of the investment market is moving towards private equity, where things are less regulated and more difficult to game.
It's almost universally acknowledged that the GFC was caused by a LACK of regulation in the US mortgage market making it impossible for financial institutions to trust each others financial instruments ( ie: easier to game).
This reminds me of that joke about two guys driving downhill in a car with no brakes; one of them is not nervous at all so the other one asks him why he is so calm in such a dangerous situation. The first guy replies: it's ok, there's a stop sign at the bottom of the hill.
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By the start of the crisis in 2007 Countrywide held over a 15% share of the subprime mortgage market. The thing is, they were constantly selling their loans to other people. In reality, they were probably the issuers of close to half the subprime market loans from 1994 to 2008. Countrywide was in bed with the Clinton administration http://www.nytimes.com/2008/10... [nytimes.com] http://www.wsj.com/articles/SB... [wsj.com] They were the ones who directly pushed for the expansion of the subprime loan market. Not to mention the rea
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So the solution was the fed pumped vast amounts of money into the system and looked the other way when finance companies were essentially insolvent. A lot of debt got restructured. One group did get punished, under water home buyers were locked in and either had to scrap up enough money to pay or go bankrupt and lose every cent invested.
Yep. Fed actually took over several large financial companies and government provided emergency fiscal stimulus to kick-start the stalled economy. As a result, the recession in the US was not as deep as it could have been.
Europe instead drank the Ayn Rand Koolaid wholesale and went with hard austerity, never mind stimuli. Results are obvious: http://www.tradingeconomics.co... [tradingeconomics.com] At this point Greece should just exit the Eurozone and leave Germany to pick up the pieces.
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Swapping debt assets seem stupid like the children's hot potato game where as long as you are not holding the potato when the bill is due you gain.
I don't know. Have you seen those savings circles in poor areas like Central America or Africa? Basically people pool a small amount of money each month and one member gets the whole pool each month. It may look like a zero sum game, but the people who get the big sum of money can invest in farming or cooking equipment, and the productivity of the whole group increases each month a lot more than if they just kept their small savings.
A dollar is not always just a dollar. It depends on the context.
Re:Great Recession part II? (Score:5, Insightful)
I am nervous as this feels like early 2008 all over again.
It's not. That was the end of 2011, when Greece nearly defaulted and got a bailout. Too many banks in Europe had Greek bonds, and they were worried about that contagion.
Since that time, all the other banks have divested themselves of Greek bonds (and have been recapitalized by the ECB). There is no worry of contagion this time, because no one expected Greece to repay anything, and they prepared appropriately. The European governments are laughing as Greece falls over the edge.
So what will Greece do? The first thing Greece will do is refuse to make interest payments (not on everything at first.....EFSF loans don't need to start being paid back until 2023, for example). That will give them a bit more money, but the major problem is not having enough money to pay their bills. Mandatory furloughs of government workers, riots, etc. Will they leave the Euro? Who knows, but that won't help the fundamental problem that the government spends more than it takes in (and now it can't borrow anymore).
If you want to watch for a time to worry, the time will be when Germany, or France, or the United States can no longer borrow. Then there will be another 2008.
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Don't underestimate the mental impact it will have. When Greece crashes then investors will look into other investments and see how viable they are and get scared and pull the plug to save what they have - and we may experience a '29 avalanche.
Meanwhile populist parties are growing in strength and fanatics like IS are brewing - starts to look like there's a lot of fuel that only needs a spark.
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Don't underestimate the mental impact it will have. When Greece crashes then investors will look into other investments and see how viable they are and get scared
No. If you'd been paying attention (which I assume you would if you were an investor in European sovereign bonds), you can see that the EU drew a clear line between countries it would save, and countries it wouldn't. Ireland and Portugal got on the good side, Greece got on the bad side.
Investors know where the line is, and that if (for example) Portugal gets in a similar situation, they will have a chance to pull their money out. Just like they did with Greece.
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I am nervous as this feels like early 2008 all over again.
Don't be. In 2008 there was a real risk that banks would fall like dominoes. When talk started about a possible Greek default in the first round, the same concern was there: That a lot of European banks had so deep loans to Greece that a Greek default would cause the banks to start toppling and cause a widespread crisis in Europe.
This time, the other European states (notably Germany), ECB and IMF have largely taken over the "bad debt" from the banks. Which means that Central banks, ECB and IMF will have to
Re:Great Recession part II? (Score:4, Funny)
That's why people believe aliens build the pyramids.
I'm surprised that this hasn't made the list of common misconceptions on Wikipedia yet.
Of course it's people that built the pyramids. But the pyramid scheme itself was designed by aliens posing as gods. They came to Egypt for cheap labor and sure, they exploited people for a while, but then there was the Arab spring when people used Facebook and the Stargate to get rid of the corrupt alien leaders. People, get your facts straight!
Banksters (Score:5, Insightful)
I just learned that the fines for illegal activity paid by banks since the economic collapse have totaled more than a quarter trillion dollars which is more than the entire economy of Greece. And that number is from 2014, before the $13 billion from Citi and the recent $5 billion for the banks involved in the price-fixing scandal.
Coincidence?
One of the traders for those banks, who was part of a collusion group that called itself (I'm not making this up), "The Cabal", said, in an email to the group, "If you're not cheating, you're not trying." That's $5 billion in fines for activity that made them hundreds of billions of dollars and bonuses.
And so far, not one of the members of "The Cabal" have been charged with a crime, and they'll be keeping their record bonuses. In fact, no one from those banks will be facing criminal charges of any kind.
So if you want me to be mad at Greece for letting the IMF dangle, I'm sorry. There are much bigger fish to fry.
There's so much more to this Greece story than just, "Oh those lazy Greeks with their big pensions." The IMF and the biggest banks were basically doing what those sketchy "payday loan" places in the strip mall do. They were basically doing what the home-lending institutions were doing in the 2000s. They were giving big bonuses to loan brokers for making loans - any loans - to people because they knew they could flip them on the secondary and CDO market. Investors were chasing yield so the word went out to mortgage lenders to "just get it done" and they basically defrauded as many people as possible. That's what the IMF does in countries like Greece and many South American companies. I think we're going to start seeing more of these countries deciding to just tell the IMF to go eff itself and take their monetary policy medicine and just be done with it. Then you'll start seeing the CIA-backed and German-backed and UK-backed coups start to happen.
Re:Banksters (Score:5, Informative)
Here's the link to the "Cabal" story:
http://www.nytimes.com/2015/05... [nytimes.com]
Remember, it's the shareholders that pay these fines. And no one in the bank corporation is held accountable.
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One more thing: The colluding traders making these outsized profits for the banks actually named their online chat rooms, "The Cartel", "The Cabal" and "Mafia".
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Even worse, they got bonuses for their behaviour.
"Slow and calculated torture?" (Score:5, Insightful)
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Not Surprising (Score:4, Insightful)
The Greek government lied to its population, and the EU, about how much debt the country had. When the other party got into office they revealed the prior party's cover-up. So far so good.
The EU demands that Greece make deep budget cuts in return for aid. These cuts were made. Unfortunately, debt to GDP ratio is debt/GDP. Debt went down but GDP went down more. Austerity is like any other kind of easy answer, it sounds good but doesn't work.
Austerity is the reapers of nations. A country that tries to cut its way out of a debt crisis can end up in vicious cycle where each cuts drops revenue by more than it saves. Historically, either something happens to break the cycle of Austerity or things get to a point when the situation becomes unsustainable. Unsustainable situations often end in a situation where the people of a country must pull down the government out of a need for sheer self preservation. You want to pull a country apart, convince it's government to engage in Austerity until their is an uprising.
The Greeks, not wanting to have to pull their leaders out into the square and shoot them, elected an anti-Austerity party. Syriza has been pretty clear. They'll compromise if a demand could arguably help the nation. Selling off a port to Dubai Ports World? Well the government isn't going to like it, but if the purchaser will contract to improve the port, perhaps its a good idea. Ditto tax reform. If tax reform means going after rich tax dodgers, then the government thinks its a good idea.
Unfortunately, this isn't enough for many European nations. The EU is insisting that the Greek people collectively feel the pain as a result of their governments actions. It does not matter that making the people feel pain won't actually help. Remember, the issue here is debt/GPD. Making the people feel pain translates into things that cause GDP to drop. The EU has to pretend that pain is an economic reform. Article 33 of the Fourth Geneva convention states that. "No persons may be punished for an offense he or she has not personally committed. Collective penalties and likewise all measures of intimidation or of terrorism are prohibited." If the EU came out and said that it intends to hurt the Greek people to punish them for the crimes of the Greek government, then the EU would be committing a crime against humanity. As a result, retaliation has to be clothed in the idea of some kind of reform plan.
Making things worse, the Greeks are in a week enough position that they don't feel that they can leak the state of negotiations to the press. This means that all the press coverage so far has been one sided. On the non-Greek side, this is bringing about a self-reinforcing cycle of bad thinking. For example, a number of German politicians have called on the ECB to cut off support to otherwise solvent Greek banks to force the Greek government to capitulate. Let's break this down. Banks are private institutions. The Greek government is a public body. Attacking private institutions to force the Greek government to do something would be, in essence, weaponizing the banking system. Once banks become a weapon that can be wielded against a country's national interest they become a national security issue. Does anyone really think that turning banking into a national security threat is a good, long term, idea for the Eurozone? Self reinforcing cycles of bad thinking like this are how elites bumble their way to the Guillotine.
So now the game is up. A normally functioning country can roll its debt over. A rich country can, over time, pay down its debt (though this might not be a good idea as it can create a bubble in government debt by shrinking the supply of bonds). Almost no nation can pay off all of their debts right now. The Greeks are basically being told to either capitulate or find some way, without further borrowing, to pay off all of their debts in short order. To put this in prospective, what if somebody told you that you had to pay off all of your student loans
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Almost no nation can pay off all of their debts right now. The Greeks are basically being told to either capitulate or find some way, without further borrowing, to pay off all of their debts in short order. To put this in prospective, what if somebody told you that you had to pay off all of your student loans this month and your home mortgage next month. Even people with good jobs couldn't do this. The same with nations.
Bullshit. The largest creditor to Greece is the EFSF and they're not paying a dime on the principal until 2023. They're choking just trying to pay interest and no, taking up more credit card debt to pay off this month's credit card bill is not a sustainable way to go. They do have a problem in that their GDP is going down, meaning they earn less to pay interest with. That will eventually make paying back the principal harder too, but that's not their short or even medium-term problem. They can't even manage
United States of Europe (Score:5, Interesting)
Greece's weak economy was never capable of withstanding the monetary troubles of an entire continent. The single market/currency gives it no flexibility to do simple things like adjust interest rates and devalue currency to alleviate the debt.
Who gave it all that money anyway? What were they thinking? How much blame do they have for giving Greece infinite credit?
Re:United States of Europe (Score:5, Insightful)
Who gave it all that money anyway?
Giving money away is easy when it's not yours.
Kick em out (Score:3)
Greece's Welfare State is Unsustainable (Score:4, Insightful)
I've been following the Greek debt crisis for at least five years, Greece's problem is that they absolutely refuse to stop spending money they don't have [battleswarmblog.com]. Remember: Greece has never practiced real austerity (cutting deficits to match receipts) since they joined the Eurozone [battleswarmblog.com]. Not once. (By contrast, Estonia did eliminate their deficit [battleswarmblog.com], and as a result started recovering from The Great Recession quicker than other EU economies.) Greece merely slowed the rate at which they were going more broke (or at least pretended to). Despite being right at the edge of complete national bankruptcy, Greece continues to insist [battleswarmblog.com] that there will be “no wage or pension cuts” for government workers.
Greece lied about their economic situation to get into the Eurozone, lied about it before the crisis broke, lied after it broke, and continue to lie now.
Keep in mind that the past four years of bank loans from the ECB have not been to save Greece. What they were really designed to do was to keep the card game running long enough to let EU insiders and favored national banks unload Greek bonds, and to reduce their exposure to Greek default risks long enough to put European taxpayers onto the hook in the inevitable event of a Greek default. They pretended to save Greece, and Greece pretended to reform. And now here we are.
The adoption of the Euro hastened and deepened Greece's crisis, but was not the central cause, which was their refusal to stop spending money they didn't have to prop up their extravagant (even by European standards) welfare state. This modern welfare state has now become more sacred to voters than the capitalist economics that make it possible. As Mark Steyn put it [battleswarmblog.com], "People’s sense of entitlement endures long after the entitlement has ceased to make sense."
The problem is that with declining demographics [forbes.com], the cradle-to-grave European welfare state is unsustainable. Greece and the rest of the PIIGS are discovering that first, but birth rates are declining all across Europe, and modern welfare states are unsustainable without a new generation to stick with the bill. Most economists believe that Greece will never be able to pay back what they've already borrowed.
Syriza was elected on a platform of ignoring basic economic reality, but they've finally run out of people willing to loan them money to spend. The risk of a Grexit is already priced into all the European markets, But leaving the Eurozone doesn't provide relief for any of the Euro-denominated debt Greece already owes, and there's no guarantee European markets would even be willing to exchange refloated drachmas for real(er) money. And since it's hard to see any sane institution buying Greek debt after a default, Greece's government would undoubtedly start printing drachmas like mad and trigger hyperinflation.
If Greece was willing to pare back its welfare state to much saner levels, they might have a chance to slowly dig their way out of the crisis. Since they refuse to, they're in for a whole lot more economic pain...
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Keep in mind that the past four years of bank loans from the ECB have not been to save Greece. What they were really designed to do was to keep the card game running long enough to let EU insiders and favored national banks unload Greek bonds, and to reduce their exposure to Greek default risks long enough to put European taxpayers onto the hook in the inevitable event of a Greek default. They pretended to save Greece, and Greece pretended to reform. And now here we are.
Yes, today >75% of Greek's debt is either the EFSF, ECB, bilateral loans from EU members or the IMF. Some was bought significantly below the nominal value though, so the net loss will be somewhat less. Of course at the time they very reasonably feared another wave of dominoes falling, either in the banking market or due to a jump in national debt interest rates. They bought time to show the other countries are past the peak and on a slow recovery and they built a giant insulating buffer. Some got bailed
Re:Greece's Welfare State is Unsustainable (Score:4, Insightful)
Well, well. The conservative argument is heard. Albeit, through five links to a website that is, guess what, the authors personal platform for his unique political rants. The links say one thing but the title on the web page is "Lawrence Person's BattleSwarm Blog" Come on take credit where credit is due.
And, since this brand of conservatism is more interested in perceptions than facts., let's review some of those perceptions as they pertain to Greece's much maligned pension system . This article in the WSJ does a better job than I could; http://blogs.wsj.com/brussels/... [wsj.com].
To proclaim that it's all Greece's fault for their economic woes and deny the effects of the worldwide recession and its impacts on Greece is the view of a simple one track mind.
It's more obvious than ever who were the winners and losers during and after the recession. Which side did the banks fall on? Which side of the fence you fell on was and continues to be as easy to read as your yearly income.
As the article in the WSJ says, 15% of Greece's seniors were at risk of poverty in 2013. The figure is rising. Yet your comments impart a message that this doesn't matter The only thing that matters is cutting government spending, which I believe you think results primarily from pensions . Poverty isn't enough, the pensions are still too high. Age doesn't matter either. I think maybe we should hear your ideas about cutting a pension to someone already dwelling in poverty? Retire at 78 at 50% of the poverty level? Is that enough to satisfy the bondholders?. Have you ever given a thought to the reality of living in poverty and knowing your too old to work? Yeah, don't frazzle a hair over it. No big deal.
My question is this. When does the day of reckoning ever arrive for the bankers? The ones who continued through thick and thin to draw their bonuses. And probably deserved to shoulder much of the blame for the recession. The ones who begged for and received more money for their privileged companies and execs than Greece could ever dream of. At freaking zero interest. Now that's a deal I'm pretty sure Greece would be interested in. A zero interest loan. What's the odds. So Mr Capitalism, when and where has any country received a bundle of cash like the bankers got?
Yeah I guess you can see which side I lean to. I'm pretty fuc*ing sick of the unregulated pro-corporation welfare, while we do some sort of means testing on every dollar spent on a poor person or a broke country like Greece.
You have quotes about "Peopleâ(TM)s sense of entitlement endures long after the entitlement has ceased to make sense." How about this for a quote. "How luck before the trickle down hogwash is dead and buried" A quick look at before and after tax Gini coefficient will tell you everything you need to know about current tax law. Yeah, I guess your system of disinformation is better than most. I mean, gee, here I thought we'd be anyplace but number one. It won't do you any good, but here's a link to a site that isn't your own; http://www.economist.com/blogs... [economist.com]. Yeah, I can punch in numbers too. Especially after I get one of the personal responsibility pitches from the right wing that insists on responsibility for everyone buy corporations and the wealth that own most of them.
For me I hope to God that Greece survives and thrives.
Greece was bamboozled by international banks (Score:5, Interesting)
Goldman-Sachs was a major player in the destruction of the Greek economy. They set up unsustainable loan arrangements and then bet that Greece would not be able to pay them off. [businessinsider.com]
They pulled the same scam on US home buyers that they pulled on an entire country. They originated loans that they knew were going to default. They made money doing that. Then they sold the loans to another sucker. They made money doing that. Then the bet that the loans would fail. They made money doing that as well. In the end, both the US home buyers and an entire country were left with unpayable debts.
Goldman-Sachs was monumentally predatory. As the article says:
If you read the full article it's full of excuses why Goldman was not really a bad actor, but you must remember the source is the Business Insider, and they would happily support selling children into sex slavery if it was legal because Profit!
It's a pure swindle. Goldman had the deck stacked and the cards marked. Even a sovereign government was not up to understanding how a huge banking institution was able to manipulate the financial system to squeeze them dry and avoid any responsibility.
Re:Germany should pay war reparations for WWII (Score:4, Interesting)
Re:Germany should pay war reparations for WWII (Score:5, Insightful)
Maybe they should shake down Italy and Turkey too.
Funny how Poland isn't flat broke; anyone that thinks Greece came out of WW2 worse off than Poland is delusional or a member of the Greek Parliament. Oh, wait, I'm being redundant. :)
Re: (Score:3)
Re: (Score:3, Interesting)
German war spoils were forcibly taken back. Their country was divided in two and all the property gained by them taken away. This resulted in genocide in the newly created nation states whose political borders did not follow ethnic borders. Take Yugoslavia as an example. Or for that matter the Israeli Inquisition on Germany and their allies is still going on 60 years afterwards.
This was a repeat of WWI and was even worse, especially for their Axis allies. The Ottoman empire was effectively dismantled, the A
Forget shit and move on (Score:5, Informative)
Fast-forward... since I never met the "folks from the old country" and only knew my mom and a step father who raised me as American, with no particular culture, other than American, I don't have any animosity towards past aggressors, I am happy with my lot in life.
My take-away, as trite as it may seem, is "what you don't know can't hurt you", and if you forget your (possibly shitty) past and just go forward you will be fine.
If you think you are owed something from those who went before you, you are in for a big disappointment, since those people are dead, and those who are here today only want to know "what have you done for me lately".
Do something and stop whining.
Re:Germany should pay war reparations for WWII (Score:5, Funny)
If Germany paid war reparations for the brutal occupation and raping of the country of Greece, it would amount to something like $150-200 Billion owed.
Scotland should also pay reparations to Italy for crossing Hadrian's Wall and looting Britannia. If you include 16 centuries of interest, it would be way more than a measly $200B.
Re: (Score:3)
The true bits being that Scotland and England exist?
Re:Germany should pay war reparations for WWII (Score:5, Insightful)
This kind of ridiculous stunt is why the Germans are sick and tired of giving Greece money. They've been model world citizens and have been subsidizing Greece for decades, and trying to use this now is the ultimate in spoiled screaming teenager tactics. Nobody bankrupted Greece except Greece - as the Nordics, who actually got their shit together, very painfully, like to point out.
Germany are somewhat dour and grumpy parents, and a Grexit now is much less harmful to Eurozone than it would have been two years ago, so being kicked out of the house isn't out of the question at all. I wouldn't push it too hard.
I'm not German or Greek, but have been following this for years in the Economist and Bloomberg, and I know lazy scammers trying to wheedle more money rather than earn it.
Re:Germany should pay war reparations for WWII (Score:5, Informative)
You don't know anything. Germany has benefited tremendously from the Euro. Having the same currency as Greece has allowed German exports to remain disproportionately cheap, and Greece's exports disproportionately expensive. Greece has actually had a major account surplus for the last few years, but it's all bring drained into paying off impossible debts. They cut into their programs to pay off debt, which leads to more unemployment, which lowers government revenue, which forces more cuts, and on and on.
Re:Germany should pay war reparations for WWII (Score:4, Informative)
Re:Germany should pay war reparations for WWII (Score:5, Insightful)
Re:Germany should pay war reparations for WWII (Score:5, Insightful)
Nobody bankrupted Greece except Greece -
As I keep pointing out, weak economies have nothing to gain and everything to lose if they cannot control the production of their currency. The weakest EU member (currently Greece) will always be at a trade disadvantage if forced to use money not under their control. Weak economies use a mixture of both currency and interest rates to reign in a spiral. Greece can't do this if they're using the euro.
Grexit now is much less harmful to Eurozone than it would have been two years ago, so being kicked out of the house isn't out of the question at all.
Hah! The EU would be much more harmed by a country leaving than the country that leaves. The country that leaves instantly get's the ability to control their economy. All the EU gets, OTOH, is the danger set by a precedent. Only the rich countries benefit from a common currency. Should all the poor countries leave those rich countries would be in more than a little trouble.
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The country that leaves instantly get's the ability to control their economy
How ? By printing money nobody wants ?
Currency control is widely acknowledged as one of the levers used in directing the economy. Surely you are not proposing that currency control has no effect no the economy? After all, Greece probably won't care if no one wants their drachmas; creditors (like Germany) will have to either take it or forfeit the debt.
Managing the exchange rate is something a country can do if they print their own money. They can't do it if they have no control over the currency. Poor economies need weak currencies to enable p
Re: (Score:3)
but a weak currency for Greece means that, for things Greece does not need to import, it becomes cheaper to live.
For things that don't require any import, it stays the same when measured in the local currency. But even local stuff in the supermarket needs oil for transportation, and oil needs to be imported. So, even in local currency, many goods and services will go up in price.
I don't understand what you mean by this
I mean that if you get a paycheck in Drachmas, and the Drachma drops in value, your paycheck is effectively gone down when measured in euros. You can get the same effect by keeping euros, and just lowering the amount. The difference is psycho
Re:Germany should pay war reparations for WWII (Score:5, Insightful)
This kind of ridiculous stunt is why the Germans are sick and tired of giving Greece money. They've been model world citizens and have been subsidizing Greece for decades, and trying to use this now is the ultimate in spoiled screaming teenager tactics. Nobody bankrupted Greece except Greece - as the Nordics, who actually got their shit together, very painfully, like to point out.
If I remember correctly, it was the 3rd party auditors that made the economical recommendations that led Greece to bankruptcy. In a perfect world, the financial institutions and auditors that pushed Greece onto such a road would pay for the economical disaster that they directly contributed to. But I guess that they're busy giving bonuses to C*Os. If your financial consultant (or tax consultant) makes wrong calculations/projections/recommendations for you and puts you into default, wouldn't you seek compensation from him? You did pay him to give you realistic results. How can one country's rating go down from AAA to Junk in one day?
Germany are somewhat dour and grumpy parents, and a Grexit now is much less harmful to Eurozone than it would have been two years ago, so being kicked out of the house isn't out of the question at all. I wouldn't push it too hard.
You're claiming that it's not fair, but the IMF and ECB gave Greece loans at rates that are not sustainable. I can get an EURO credit at a lower rate than Greece has. Furthermore, for Germany it's win/win. They bought out a lot of Greek companies for pennies. Think of OTE that was bought by Deutsche Telekom. I personally feel like this is looting and not helping out. Private corporations from the US, UK and Germany (financial and audit) bankrupted Greece with bad advice, while earning serious money for it (think Deloitte, S&P, etc.). When the bubble burst, the Greek government received help at ridiculously high rates from a few countries and multi-national institutions. Then came the major companies from those countries and bought everything for pennies. Afterwards, they are still complaining that the Greek can't make the payments.
I'm not German or Greek, but have been following this for years in the Economist and Bloomberg, and I know lazy scammers trying to wheedle more money rather than earn it.
I see your problem right there: you're reading it from Economist or Bloomberg. How about checking out the bare survival conditions of a lot of Greek citizens? Should Greece abandon them because Germany said austerity is the way? The Greek government's responsibility is to it's citizens. P.S.: I'm not Greek or German either. I don't live in Greece or Germany, but I try to get my news from newspapers that aren't necessarily in New York, London, Frankfurt, Tokyo or Hong Kong.
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This kind of ridiculous stunt is why the Germans are sick and tired of giving Greece money.
By "giving" you must mean getting Greece on the same currency and then instituting a monetary policy that benefits German industry.
I'm not German or Greece either, but its hard to ignore Germany's responsibility here. It was incredibly irresponsible for Germany to allow Greece to be on the Euro. Greece wasn't solvent before they joined the Eurozone, but letting them in benefited Germany a great deal in the short term. This obviously wasn't going to end well, and the German government at best showed uncha
Re:Germany should pay war reparations for WWII (Score:5, Insightful)
If Germany paid war reparations for the brutal occupation and raping of the country of Greece, it would amount to something like $150-200 Billion owed.
Do you actually believe that, or are you a paid member of the Greek government?
Actually, I'm not such which would be worse...
Germany did pay, nearly 50 years ago, and settled its legal obligations at the time, money which Greece accepted.
The issue is closed, it doesn't get reopened every few decades for convenience. Frankly, most of the people alive in 1945 are no longer here, it has passed into history, let it go...
Re:Germany should pay war reparations for WWII (Score:4, Insightful)
Yeah, force the Germans to pay reparations. What could possibly go wrong?
Re: (Score:3)
http://www.sjtrek.com/trek/rul... [sjtrek.com]
48. The bigger the smile, the sharper the knife.
Re:Ingredients for this thread ... (Score:5, Insightful)
Maybe it's just to piss of people who keep asking why various articles are on Slashdot.
If you aren't interested in the subject, don't bother clicking on the link.
Greece is tiny (Score:4, Insightful)
It's a tiny economy, 2.5% of Eurozone GDP, its less than when France sneezed recently.
So PR aside, it has no real value keeping it a-float.
On the plus side, Spain just elected a bunch of anti-austerity MPs, and if you bail out the bail out of the bail out of Greece (this is the third bail out, they didn't make the requested improvements from the previous two bailouts), then Spain can rightfully demand free money too without restructuring.
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apart from the fact that apart from UKIP's partisan share, Germany has most seats in the European Parliament (96 to Greece's 21 and the UK's 73) hence has the loudest voice when it comes to regional policy (incidentally, the UK might have 73 seats but every bit of primary legislation it has billed before the EP so far has been vetoed)?
Re:Germany should pay war reparations for WWII (Score:5, Interesting)
Germany stll pays Israel.
Germany "kinda" paid USSR that took most factories it came by.
Germany actually also paid Greece a while ago, although the scale of the payment was nowhere near what current government wants (and even (nominally) much less than they took from Greek bank)
In 1942, the Greek Central Bank was forced by the occupying Nazi regime to loan 476 million Reichsmarks at 0% interest to Nazi Germany. In 1960, Greece accepted 115 million Marks as compensation for Nazi crimes. Nevertheless, past Greek governments have insisted that this was only a down-payment, not complete reparations.[citation needed] In 1990, immediately prior to German reunification, West Germany and East Germany signed the Two Plus Four Agreement with the former Allied countries of the United States, Great Britain, France, and Russia. Since that time, Germany has insisted that all matters concerning World War II, including further reparations to Greece, are closed because Germany officially surrendered to the Allies and to no other parties, including Greece. On Sunday, February 8, 2015, the Greek Prime Minister, Alexis Tsipras appeared in front of the Greek parliament and officially demanded that Germany pay further reparations to Greece.[1] On April 6, 2015, Greece demanded Germany pay it the equivalent of $303 billion in reparations for the war. Germany replied that the reparations issue was resolved in 1990.[2]
German reparations for World War II/ [wikipedia.org]
Re:Germany should pay war reparations for WWII (Score:5, Interesting)
The US gave Greece $376 Million dollars to rebuild between 1949 and 1951. This was not a loan. The US just gave Greece the money. Given that the exchange rate back then was around 4 DEM per dollar, that is over 1bn DEM that Greece got.
The point that Germany surrendered to the US to the allies is a salient one. At least one of these allies paid back Greece two fold for its trouble. And Germany doesn't have that money it stole. That was either conscripted by the allies or sent offshore by Nazi's in hiding. It is why most claims to money and treasures stolen by Germany it WWII gets made to places like Switzerland and Austria.
This argument going back to Nazi German doesn't serve Greece. The rest of the world got over WWII years ago, and nobody is holding the current German state accountable for the Nazis. It is generally accepted that one of the last place one looks for the people responsible for WWII is Germany. Those Nazi folks either got killed, when into hiding, or got good jobs with the Americans or Russians.
What Greece should be arguing is that it was irresponsible for Germany to allow Greece in the Eurozone to begin with. Greece's addition had to do with Germany's greed. At the time, it just make it easier for Germany to export, while giving a very poor Greece a credit card it obviously couldn't handle. It is kind of the same story of all those mortgage banks lending to people with bad credit in the US. And all while, Germany was telling its citizens that they would never have to bail out Greece. What a crock.
Re:Germany should pay war reparations for WWII (Score:5, Insightful)
I agree with everything you said but will add this....
I have yet to see any country taking IMF funds come out any better in the end. The demands of the IMF are too extreme for any country it goes into to "rescue". Not to long ago the IMF went into South American countries and now they are in serious financial trouble I argue because of the IMF.
In my opinion, it would be better for Greece to declare insolvency, pull out of the Eurozone and begin again. It will be less torture than dealing with the IMF.
Re:Germany should pay war reparations for WWII (Score:4, Interesting)
The intention of the IMF is not to help those it gives money to. The intention is basically to control them.
When Franz Josef Strauss, a German politician who was renowned for being hardcore anti-communist and would generally fit well into the right edge of the current US Republicans, was asked why he offered a billion Marks loan to the GDR, he pretty much said "We have to make them dependent on our money like the addict to the drug".
And that's basically the IWFs function now. Though FJS could not even dictate how they may spend the money, unlike the IWF now.
Re: (Score:3)
Britain, 1970s.
Re:Soverign debt (Score:5, Insightful)
Sovereign debt denominated in a country's own fiat currency (the US situation) is VERY different from sovereign debt denominated in some other currency (the Greek situation).
Re: (Score:3)
The matter is settled, then. Thanks for your valuable input!
Re:They're bums, why keep them around (Score:5, Insightful)
making an example?
how?
they're not yet made an example. if they get busted and thrown out of eurozone, THEN they're an example. the sad funny thing is that a lot of greeks want that to happen and their goverment to go all venezuela with monetary policy.
and if greeks weren't in the monetary union, they would have done that already three times in past 15 years.
the funny thing is that the "austerity measurements" are just measurements to make the country not use more money than they have. like, it doesn't matter if someone loans them more money if they don't fix that, 1 year down the road they'll be out of money and in even more debt. but the greeks do not want to live withing budget - they promised to live within budget when they joined the monetary union, they promised it 10 times in 10 years already but never lived up to it.
Re:They're bums, why keep them around (Score:5, Interesting)
the funny thing is that the "austerity measurements" are just measurements to make the country not use more money than they have
It's not that simple.
The problems are mostly because of trade deficits within the eurozone. Greece doesn't really make stuff, which means they buy stuff. They buy stuff with euros. Those euros don't come back to Greece which makes Greece not have any euros. Then it doens't matter anymore what their means are because they have none.
If Greece had their own currency, then them buying more from outside means they could just print ("borrow") more. That money would then devalue making local stuff cheaper and foreign stuff more expensive, in theory. But since Greece doesn't control its money, it just means their money is drained out of Greece.
Only way of fixing this imbalance would be to have transfer payments from Germany (and others that get inflows) to Greece so Greece has currency to spend locally. This eventually ends up in Germany and other producing nations anyway.
This doesn't mean lavish spending in Greece would result, just basic standard of living could be had. As is, this is not possible.
Greece is not the only nation in this problem. Entire Eurozone has this problem whether they believe it or not. To prevent inevitable splits, transfer payments really must happen.
As an example, see the inter-provincial transfer payments in Canada. Without these, a few provinces would be bankrupt and the entire Canadian economy would be worse off.
http://en.wikipedia.org/wiki/C... [wikipedia.org]
Re:They're bums, why keep them around (Score:4, Interesting)
You may want to ad in that if Greece was on the Drachma again and it was devalued compared to the Euro, they would get a huge influx of tourist currency as Greece would become the cheap place for the rest of the euros to vacation.
Re:They're bums, why keep them around (Score:5, Interesting)
Even the USA would split apart without these kinds of transfer payments. Most of the states in the south receive more in federal money than they pay in taxes. Actually for most of the USA you can separate red vs blue states based on if they are net positive or net negative on tax paid vs federal dollars coming back. There are states upset about this but it does stabilize the country.
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Admittedly, it's a concept that few of the paying countries' residents will find appealing.
But in a monetary union, this is what has to happen to level economic imbalances.
The problem is that the politicians failed to prepare their voters for it (for 20 years). Now would be the time to do, but it's a "bad time".
I'm not sure if we've hit the end of the road here, yet, because cha
Re:They're bums, why keep them around (Score:5, Insightful)
That doesn't really help. If they print more than they produce, the currency will drop in value.
That's the whole point. Devaluing the currency means everyone in the country takes a pay cut, at least with respect to imports. but internal prices don't change (at least not immediately). This has the effect of discouraging imports and encouraging exports. Taken to extremes it will mean hyperinflation and financial collapse but used judiciously it's a good economic tool.
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Also, government bonds are usually denominated in the country's currency. That means you can always run the printing presses to pay off your foreign debt (something people often forget when discussing US government debt).
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Greece could be the vacation and retirement location for Europe. Of course, that would mean changing things: become more friendly and open to foreigners and foreign investments, reduce regulation, change their society, and generally say goodbye to a lot of cherished traditions. Why aren't they doing that? Because their internal politics doesn't allow it, and they aren't badly enough off yet that they are willing to change. Eventually, it's going to happen, but it's going to take a while.
Re:They're bums, why keep them around (Score:5, Insightful)
>the "austerity measurements" are just measurements to make the country not use more money than they have
Sadly naive economics like this have brought us in this situation. Greece already has a primary surplus so they can cover their own needs.
The problem is that the external debt is simply not viable. Up to 2030 greek debt obligations are up to 140billion euros. So while Greece managed with great sucrifices to have an unhealthy surplus based on neoliberal policies that finely IMF imposes for decades now, they still need 140/15 = 9 billions in average extra surplus for the next 15 years. That's simply imposible to happen, not in this world. In other words the greek debt is not sustainable and it's not a matter of if they make a haircut (voluntary or otherwise) but when.
Btw, all this mess started back to 2009 with greek external debt of 140% to GDP and after all those years of neoliberal policies it is closing to 180%.
Re:They're bums, why keep them around (Score:4, Insightful)
You're a freaking idiot. Greece is nothing like Venezuela. They've been severely hampered by the Euro, unable to enact proper monetary or fiscal stimuli to deal with their recession and 25% unemployment. Even running an account surplus the last few years they've been drained by these nonstop debt repayments, all while their export prices are artificially inflated by a strong Euro.
Then they shouldn't have joined in the first place.
You talk as if their debt repayments are struck upon them by some natural disaster, but the fact was that every debt they had, their government borrowed knowing full well in advance the payment schedule. Everyone, including themselves, knew that if they keep their spending level unchanged, eventually they won't be able to repay their debts. Everyone knew, but they still did nothing.
If staying in the Euro zone is hampering their ability to deal with their recession, the responsible thing to do is to leave. I think a Eurozone without these countries would fare even better, and these same countries would clamoring to join in 5-10 years' time, or less.
Looking at this from Asia, I have say this is not surprising at all. Many Asian countries have had a taste of IMF's "help" back in 2003, that left many of them devastated. As a result, most of them saved up a sizable reserve in foreign currencies, and that's why Asian stood strong during the 2008 crisis. We will see the Greeks learned anything this time.
Re:They're bums, why keep them around (Score:4, Insightful)
Then they shouldn't have joined in the first place.
Greece shouldn't have been allowed into the Eurozone in the first place. The government at the time falsified and hacked [wikipedia.org] balance sheets, economic and financial data to be allowed into the Eurozone.
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Greece shouldn't have been allowed into the Eurozone in the first place. The government at the time falsified and hacked [wikipedia.org] balance sheets, economic and financial data to be allowed into the Eurozone.
And now the people, who had very little to do with that, will have to pay the price.
Re:They're bums, why keep them around (Score:4, Insightful)
You're a freaking idiot. Greece is nothing like Venezuela.
Just FYI, no matter the veracity of your points, starting a conversation that way is a sure way to get them (and yourself) discounted as a dishonest opponent in a debate.
They've been severely hampered by the Euro, unable to enact proper monetary or fiscal stimuli to deal with their recession and 25% unemployment. Even running an account surplus the last few years they've been drained by these nonstop debt repayments, all while their export prices are artificially inflated by a strong Euro.
A few points:
1. I remember and still hear the "we're all keysians now" and "the economy is bad, now is the time to spend!" arguments. There are two issues with this: (a) The countries doing the best in the EU are generally the ones that enacted "austerity" and (b) borrowing money to pay for large infrastructure projects that will pay off is one thing, but borrowing more and more money to pay pensions that aren't affordable or other things generally means those pensions really, really need to be realigned as they simply aren't affordable.
2. Greece got themselves in a position where they getting into the EU allowed them to borrow tons of money (which germany and others benefited from, because they sold them the new fancier goods bought with that money) that they can't repay. At some point, you have to live within your means. Greece should be angry at their government and older citizens who saddled their children with debt to live outside their means -- not the EU.
3. Everyone in the EU has export prices to other parts of the world hampered by the strong euro, it's one of the reasons why the UK is looking at it leaving -- but it probably won't, because while its exports to China and Brazil might suffer slightly, they'd have to do most of what was necessary anyways. You're basically saying if Greece could print it's own currency it could be super cheap and help exports... which is kind of true in the short term! However, it wouldn't be part of the EU, and it would still fiscally implode because it couldn't pay the debt it keeps taking on -- and paying that debt would be even harder due to the super-weak currency.
4. Greece keeps taking money as part of bailouts and saying it'll do things, and then doesn't do them. They are the definition of a bad credit risk, and can't be surprised when people stop giving them money. It's kept happening because Greece was/is sitting on a box of dynamite saying if you kick us out or let us fail it could cause a spiral for the whole EU.
Re:They're bums, why keep them around (Score:5, Insightful)
The funny thing is that Greece already has its budget balanced better than most other countries.
Any idiot can generate an operating surplus by borrowing money to buy income-producing assets. But if the surplus is not enough to at least cover the interest, it is a failure.
Re:They're bums, why keep them around (Score:4, Interesting)
I'm not rooting for the whip master. I'm rooting for being responsible and reaping the consequences of failing to be responsible.
I'm also rooting for this example of extreme, heavy handed socialism to fail in a spectacular fashion so that it can be used as a warning to my country, which is also surviving on massive deficit spending. It's bad. It shouldn't be done. Do you want to collapse like Greece? No? Okay, then stop, set up a real budget (not the "we balanced the budget because we borrowed money" bullshit), and be responsible.
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Yeah, let's speak about this from the "humanity perspective": Greek debt is largely other people's retirement funds. That is, people in places like France and Germany agreed to consume less right now so that the Greeks co
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Their citizens spent that cash.
You think?
How strange. It takes seconds with Google and you find a hundred newspaper articles all explaining you that all that bailout money never reached any regular greek folks. Most of it went to Greece on paper only, for one legal second, before going back to the banks to cover interest and debt payments.
Yes, Germany will bail them out. But not Greece. Germany is bailing out german banks, just in a more hidden way than before, because our government understands the people would probably not stand a seco
Re:Eurofututre (Score:5, Interesting)
I'm a bit surprised that the Euro hasn't cracked yet.
Europe is too diverse to be able to sustain a single currency without tensions that can lead to disaster.
It's more a question of when than if Greece is forced to leave the Euro. But when that happens there are going to be other countries that follows.
Re: (Score:3, Insightful)
Let's have private companies in charge of everything! That will work great - they will not try to make more profit than they have to and if they still do, we can vote them out in the next election.
So, I am sure that I won't have to pay $100000 in case of a fire, $20000 to have the police find the guy who beat me up (and another $20000 to have the court send him to jail) and $1M to repair a road.
Re:Great Idea (Score:4, Insightful)
Companies shouldshould try to pay as little as possible. That's the system: it depends on human greed at every exchange. Any system that doesn't is purest foolishness.
BTW, if you expect the police to "find the guy you beat you up" today, lets me say from experience the police give 0 fucks about you as a victim. The problem many large cities face today is the propensity of the police themselves to beat people up for fun and profit. I doubt private policing could actually work, but lets not pretend the current system is some fucking utopia, OK?
Re: (Score:3)
In my opinion the current system, while not perfect, is still better than privately owned police (who would only do stuff for money, therefor, only for people who have (lots of) money).
Companies shouldshould try to pay as little as possible. That's the system: it depends on human greed at every exchange. Any system that doesn't is purest foolishness.
Sure, however, while Free Market looks good in theory, so does Communism. The problem with both is that they are not achievable in reality, we can only have weird mangled versions of them.
Re: (Score:3)
So, I am sure that I won't have to pay $100000 in case of a fire, $20000 to have the police find the guy who beat me up (and another $20000 to have the court send him to jail) and $1M to repair a road.
Of course you wouldn't, you're being absurd -- I know a guy who'll do it for $15000, tops.
Re: (Score:3)
STOP LETTING PEOPLE RETIRE AT 55 WITH FULL BENEFITS! It's not a sustainable economic model you arrogant, self-absorbed ass!!!!
I don't see why this is such a problem. You just need to modify the definitions of 'full', 'benefits' (and while you're at it, 'retire') and you should be fine.
Re:I have an idea (Score:5, Informative)
You seem to know a lot about Greece. Have you been there or is it all just internet lore?
I have to live there and I can tell you we are neither lazy nor entitled. Those of us that can actually find a job end up working for scraps. Wages for people with degrees and postgrad studies are often less than what you find for unskilled labour in other "developed" parts of Europe.
Employment is always precarious so people do not dare even claim overtime hours often in fear of losing their jobs.
Even the public sector, which has always been considered the domain of the "privileged" among greek salaried employees has for years been shrunk to sensible size.
And retirement? I don't expect to be able to retire before 70 the way things are going, and even then, it will be for pocket money, a fraction of what I will have paid in welfare taxes. Not to mention taxes for (a practically inexistent by now) health service.
Yes, for years things have been different. That was in the 80's and 90's mostly. You could say we "deserve" our fate but you wouldn't be so quick to say it if it were you picking up the bill for stuff that was certainly not your fault.
Personally I wish they would let us out of the euro. I have no illusions and understand it will be a long and hard period (perhaps even 10 years) of adaptation, during which living standards will drop even further, but what is going on right now is just pointless. In the long run, we just cannot go on like this
Re: I have an idea (Score:4, Interesting)
Greek here as well.
We are indeed lazy, and we simply are unaware of that.
We think that spending a day in the office is what productivity is about.
Number one rule amongst us greeks is this: if nobody is watching, then don't do the work.
It is no coincidence that the word we use for work also means slavery. We equate work with slavery in our minds.
And that is why there is no real progress in Greece the last few decades.
You are underestimating it (Score:3)
You are *severly* udnerestimating it. It is not only that greece wll have tod efault, but also that greece will still be noted as junk as far as bond goes so will not be able to borrow again at good rate EVEN after default, but also that now that greece is outside of the eurozone, it will have to either junk their own currency so far down the rabbit hole to make export / import not kill them that the inflation in the subsequent decades (
Re: Greece cannot make debt payments... (Score:4, Insightful)
They *are* productive. Do you understand that the Euro is zero sum? If Germany runs a surplus, someone else in the Euro has to run a deficit. It's literally impossible for Greece to run an annual surplus unless they become more productive than Germany, which would then put Germany in a deficit.