European Politico-economics QA Mega-thread - Page 140

On July 01 2015 07:27 Acrofales wrote:

Stop drinking the socialist cool-aid, and read this:
http://www.vox.com/2015/6/8/8747195/greece-crisis-explained/in/8625476

One estimate is that Greece actually subscribed to €156bn worth of new debt in order to get €206bn worth of old debt to be written off, meaning the write-down of €110bn by the banks and others is more than double the true figure of €50bn that was truly written off. Taxpayers are now liable for more than 80% of Greece's debt.[268] One journalist for Der Spiegel noted that the second bailout was not "geared to the requirements of the people of Greece but to the needs of the international financial markets, meaning the banks. How else can one explain the fact that around a quarter of the package won't even arrive in Athens but will flow directly to the country's international creditors?" He accused the banks of "cleverly manipulating the fear that a Greek bankruptcy would trigger a fatal chain reaction" in order to get paid.[269] According to Robert Reich, in the background of the Greek bailouts and debt restructuring lurks Wall Street. While US banks are owed only about €5bn by Greece, they have more significant exposure to the situation via German and French banks, who were significantly exposed to Greek debt. Massively reducing the liabilities of German and French banks with regards to Greece thus also serves to protect US banks.[270]

According to Der Spiegel "more than 80 percent of the rescue package is going to creditors—that is to say, to banks outside of Greece and to the ECB. The billions of taxpayer euros are not saving Greece. They're saving the banks."[271] One study found that the public debt of Greece to foreign governments, including debt to the EU/IMF loan facility and debt through the eurosystem, increased by €130 bn, from €47.8 bn to €180.5 billion, between January 2010 and September 2011.[272] The combined exposure of foreign banks to Greek entities—public and private—was around 80bn euros by mid-February 2012. In 2009 they were in for well over 200bn.[273] The Economist noted that, during 2012 alone, "private-sector bondholders reduced their nominal claims by more than 50%. But the deal did not include the hefty holdings of Greek bonds at the European Central Bank (ECB), and it was sweetened with funds borrowed from official rescuers. For two years those rescuers had pretended Greece was solvent, and provided official loans to pay off bondholders in full. So more than 70% of the debts are now owed to 'official' creditors", i.e. European taxpayers and the IMF.[274] With regard to Germany in particular, a Bloomberg editorial noted that, before its banks reduced its exposure to Greece, "they stood to lose a ton of money if Greece left the euro. Now any losses will be shared with the taxpayers of the entire euro area."

On July 01 2015 08:12 Jibba wrote:

I said it earlier but I'll repeat it because people keep being baited into the easy and incorrect solution of blaming Greece: any structural changes that Greece makes will be irrelevant in the current EU. They're not climbing out of this hole given the current circumstances, even if Brussels acquiesces to their proposal. The country that needs to make structural economic changes is Germany and it's unlikely to happen, which dooms the EU. Greece is just the weakest player that let go first, but every other eurozone country is harmed by Germany's austerity and paranoia of becoming the Weimar Republic again.

Ya'll are stuck debating the best way to hide a pimple and ignoring what's causing the acne.

On July 01 2015 06:31 Taguchi wrote:
Curious that none of you guys comment on the Guardian article which reports that the IMF has sent documents to all German MPs outlining that the debt is unsustainable under even the best case scenario. A lot more in the article of course, most things have been repeated in this thread too.

Didn't Merkel say a couple days ago that the debt is sustainable? Was that an outright lie or what? Juncker lying is no big deal, but Merkel?

(Reuters) - Greek debt will miss debt targets set out by creditors in 2012 but an analysis prepared for euro zone finance ministers shows its debt burden is still sustainable without writing off principal -- if Greece gets another three-year bailout.

The analysis, commissioned by the EU creditor governments to help their financing-for-reforms negotiations with Athens, concludes that even in the worst scenario for the Greek economy, the lenders would not have to write off any loans.

Debt relief has been a repeated request from the leftist government in Athens which wants to ease back on austerity.

Under a 2012 bailout agreement, Greece was to reach a debt-to-GDP ratio of 124 percent in 2020 and in 2022 a debt-to-GDP ratio substantially lower than 110 percent, down from 175 percent now.

"It is clear that the policy slippages and uncertainties of the last months have made the achievement of the 2012 targets impossible under any scenario," the analysis, seen by Reuters, said.

"The main factors behind the deterioration of the Debt Sustainability Analysis are the worsening of economic growth, the revised primary balance path, the lower privatisation revenues and possible additional financial needs for the banking sector."

Under the revised forecast and the most optimistic scenario that Athens implements all reforms, Greek is debt to fall to 124 percent only in 2022 from 172.8 pct in 2015.

If it implements the reforms only partially, Greek debt will fall only to 135 percent in 2022 from 174.3 pct in 2015.

In the worst case, which the International Monetary Fund sees as its "baseline", which means most likely, Greek debt would fall only to 142.2 percent in 2022 from 176.7 percent in 2015.

"All scenarios assume a new 3-year programme with concessional financing," the analysis said.

The analysis stresses however, that focusing on the debt-to-GDP ratio does not give an accurate picture of debt sustainability and that this is better reflected by gross financing needs of a country.

Measured like this, Greece has no sustainability problem in any scenario, but would require help to improve the sustainability, via for example an extension of maturities, under the third, least favourable option.

"This gross financing need metric points to no sustainability issues under the first two scenarios," the document said.

"The gross financing needs remain well below 15 percent threshold, a threshold mentioned in IMF guidance for this criterion. Under this scenario, significant reprofiling of the stock of debt and concessional lending terms would improve sustainability," it said.

On July 01 2015 18:12 mahrgell wrote:

Then maybe faking their numbers to get into the Euro was not the smartest thing to do. Those barriers were there for a reason, Greece cheated their way in, and now it is the Euros fault?

A majority of Greeks would vote 'No' to the terms of a proposed bailout deal by foreign lenders but the lead narrowed significantly after banks were closed this week, according to an opinion poll published on Wednesday.

The poll, conducted between June 28-30 and published in the Efimerida ton Syntakton newspaper, showed 54 percent of those planning to vote in Sunday's referendum would oppose the bailout against 33 percent in favor.

However, a breakdown of results between those polled before and after Sunday's decision to close the banks and impose capital controls showed the gap narrowing.

Of those polled before the announcement of the bank closures, 57 percent said they would vote No against 30 percent for who would vote Yes. Of those polled after, the No's were at 46 percent against 37 percent for Yes.

The poll showed support for 'No' strongest among voters of the ruling leftist Syriza party (77 percent), the far-right Golden Dawn party (80 percent) and the Communist KKE (57 percent).

Support for 'Yes' was strongest among voters of the center-right New Democracy (65 percent), the pro-European centrist To Potami (68 percent) and the center-left Pasok (65 percent).

The poll, by the ProRata institute, showed 86 percent of those surveyed planned to vote, with 50 percent backing Prime Minister Alexis Tsipras' decision to hold a referendum with 38 percent against.

No votes were strongest among the unemployed (62 percent), and more No votes than Yes were polled in all categories classified, comprising entrepreneurs, the self-employed, public and private sector pensioners and employees and housewives.

On July 01 2015 19:05 mahrgell wrote:


Nah, Germany is "less political" because we do not have such a great history of political competence as Greece. Nor did we manage to vote someone like Berlusconi into office 4 times. :[

Also our politics only cater the 60% old and retired, that is why we have an retirement age of 67 instead of 57. Certainly...