EPTEuropean Politico-economics QA Mega-thread - Page 158
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warding
Portugal2395 Posts
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FusionSC2
Ireland29 Posts
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Bizaraciel
1075 Posts
On July 06 2015 09:06 FusionSC2 wrote: From an Irish pov, why the hell should the greeks get to retire early, hardly get taxed at all, and complain about austerity, when Ireland went throught the exact same thing, and we were recently the fastest growing economy in Europe. Cause they are fighting for democracy against the evil capitalism. /sarcasm | ||
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c0ldfusion
United States8293 Posts
On July 06 2015 09:06 FusionSC2 wrote: From an Irish pov, why the hell should the greeks get to retire early, hardly get taxed at all, and complain about austerity, when Ireland went throught the exact same thing, and we were recently the fastest growing economy in Europe. Right, if I were Portuguese or Irish, I can't imagine I'd be too happy right now. | ||
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warding
Portugal2395 Posts
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FusionSC2
Ireland29 Posts
On July 06 2015 09:09 Bizaraciel wrote: Cause they are fighting for democracy against the evil capitalism. /sarcasm It's hardly democracy when they rely on other people to pay for them. It's hardly democracy when they don't pay democracy. I don't really know what democracy you live in. | ||
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Bizaraciel
1075 Posts
On July 06 2015 09:23 FusionSC2 wrote: It's hardly democracy when they rely on other people to pay for them. It's hardly democracy when they don't pay democracy. I don't really know what democracy you live in. Did you not see the sarcasm tag at the end. | ||
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c0ldfusion
United States8293 Posts
On July 05 2015 19:22 CuddlyCuteKitten wrote: There was an interview with a retired boss of the Swedish tax collection agency (40 years of experience) who had been in Greece as an expert adviser together with an Irish expert. His opinion is that it basically doesn't matter what kind of tax changes are done because the Greek government lacks any ability to collect them. Him and his colleague were sent to assist the new boss of Greek tax collection. They expected corruption which they found but they also found out that the entire organization was inefficient to the point of uselessness. Tax collection was done by outdated and incompetent methods for example manually checking trucks cargo manifests in the field instead of seriously reviewing companies books, almost all methods were completely outdated for a modern society. Things like all the archives being in paper form and spread all over the country also made serious tax collection almost impossible. The new boss also faced pressure from the employees and from the politicians to keep the current conditions. After a year he was fired for achieving nothing. He describes the general attitude of politicians and employees to be "wait for this to blow over and continue business as usual". His opinion is that 1 person is not enough for reform, there needs to be a group of 5-6 preferably young, well trained ambitious, driven and above all extremely motivated to the cause of reforming Greek tax collection and they need to have the political backing do whatever it takes both in their own department and others (centralizing all records necessary for a start, rooting out corruption at all levels) in order for any tax reforms to be meaningful at all. Edit: He was there earlier in the crisis, before Syriza. Just to clarify. I thought tax enforcement was revamped in Greece in recent years. Or is it still a huge problem? | ||
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Oktyabr
Singapore2234 Posts
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jello_biafra
United Kingdom6641 Posts
In 2000, the year before Greece joined the eurozone, "one of the things we had to do was get rid of all our printing presses" as part of the bloc's assertion that "this monetary union is irreversible," he said. "We smashed the printing presses -- we have no printing presses," Varoufakis said. Greece is so screwed. | ||
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Cam Connor
Canada786 Posts
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Livelovedie
United States492 Posts
On July 06 2015 09:12 c0ldfusion wrote: Right, if I were Portuguese or Irish, I can't imagine I'd be too happy right now. Did they not have the option to vote against their own scenario also? | ||
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c0ldfusion
United States8293 Posts
From everything I've read in this thread (very interesting and multifaceted by the way) informed European citizens do not think the Greeks are lazy. There seems to be some concern of governance though. The question also isn't purely economic, i.e. whether or not austerity is effective / the best solution is not the whole picture. At this point Ireland and Portugal are doing, relatively speaking, pretty good. | ||
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rezoacken
Canada2719 Posts
On July 06 2015 10:25 Oktyabr wrote: I probably know too little on this matter, but wouldn't a Greece exit do both sides a favor? Greece can work its way back on on its own currency assuming it's producing anything at all, while the EU would avoid handing out loans they can't possibly hope to recoup given the attitude of the Greek leaders and their people. To be honest an exit from the EZ is a "Who's the biggest loser competition". Creditors (with Germany and France as the biggest lenders) lose money (what they lent). This can cause a wide range of problems but I'd expect banks and countries to have worked to prepare for this eventuality and not be too exposed on Greece credit risk. A domino effect is of course still a possibility. The Euro and the euro zone would lose credibility both in the financial and political worlds. Financial market will feel a "flight to quality" effect and you'd expect both the Euro and European stocks to drop for a while. The amplitude of the effect will remain to be seen. In politics, since the crisis of 2007 there has been a growing anti-Europe feeling in many countries and this would be a victory for them. However you could argue that if things get really bad for Greece it could also diminish that feeling. For Greece, it's where the most unknown variables resides. There are a few forecasts that you can read. Greece would become the pariah of the financial world. Not being able to borrow decently. It would have to print a "new" currency without currently having the means to do so. It's not easy to improvise a change of currency ! Meanwhile greeks that have money will still try to get it out either by moving it or by withdrawals, feeling safer with the Euro or the Dollar than whatever the new money will be. The Greek banking system will simply crash or be paralyzed unable to withstand the pressure. The current queues to get a few dozen Euros everyday is just a taste of what is next. A new currency could face massive devaluation and inflation making imports very costly (and greek imports more than it exports... currently). I'd personally bet the Greeks to plunge even further into recession and that has been the position of all people in my entourage working in finance in Canada. Things will get real really fast for the Greeks if all bridge with the financial system are cut, especially for a country with such tax issues. There aren't many example of a developed country defaulting like this and an exit scenario from the eurozone is something 100% new. So in the end it's mostly wild guesses. Maybe problems won't last long but it is a very risky bet that I'm personaly not willing to take. You could even bet on a political crisis to make things worse. With a portion of the greeks that do not want to leave and if things get worse after the exit, the government will be blamed for it. | ||
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Cam Connor
Canada786 Posts
But they need a mature, disciplined government, which is not currently what they have | ||
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Cam Connor
Canada786 Posts
Largely useless statistic, but still food for thought | ||
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Taf the Ghost
United States11751 Posts
On July 06 2015 11:30 c0ldfusion wrote: It wasn't mean to be a statement from a populist view. From everything I've read in this thread (very interesting and multifaceted by the way) informed European citizens do not think the Greeks are lazy. There seems to be some concern of governance though. The question also isn't purely economic, i.e. whether or not austerity is effective / the best solution is not the whole picture. At this point Ireland and Portugal are doing, relatively speaking, pretty good. Problematic tax systems are a staple of Mediterranean countries, it seems. Italy's is supposed to be worse (at least from a few Italians I've known). Also, the Greeks work about as much as the rest of Europe (at least when they have jobs), it's much more of an issue of bad governance (for decades), bad policy and bad regulation. This simply made their social welfare systems badly unworkable. Add in too high of taxes (for a long time) and it becomes common to do as much of your work "off the books". For as much as we're talking about Spain, Portugal and Ireland, those really aren't the ones to watch out for. Portugal didn't get hit as bad as the rest. Spain actually took the biggest hit to the core parts of its economy, but they've done well to hold water for now. (That they had so little debt before the crash really helped) No, the real problem is Italy. And with China heading for a "functional" recession, the second half of the year is shaping up to be really bad. (Going from "dirt poor" to "poor" is the biggest jump in economic well-being in life, so China could be "growing" at 4-5% for the next decade, but the core parts of the economy that we think about in Modern Economic thinking could be crashing at the same time. And that's ignoring China's invention of their numbers.) | ||
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RenSC2
United States1089 Posts
Everything I've read says that the vote of "no" does not mean that the Greek people want to leave the EU or the euro. Tsipras has said that a "no" vote does not mean leaving the EU. from http://www.latimes.com/world/europe/la-fg-greece-referendum-20150705-story.html Tsipras cheered the referendum’s outcome, but he portrayed the “no” vote as a desire for Greece to stay in the Eurozone on its own terms. The vote “did not answer the question ‘in or out of the euro,’” he said. “The Greek people today answered the question: Which Europe do we want? And it answered bravely: We want the Europe of solidarity and democracy.” More negotiations will happen. The problem is that there is no compromise that will even partially satisfy either side under the current conditions. The Greek government is not willing to go through reforms that would make it fiscally responsible. Therefore, more loans will only be more money down the drain for the EU. Extending another 50 billion euros to Greece just so that they can continue to pay back small amounts of the original loan + 50 billion more won't ever result in repayment of the 50 billion, let alone the 240 billion already owed. It would be extremely fiscally irresponsible of the EU to extend more loans to Greece under the current conditions. Oh, and if they fold to Tsiparas's bluff, then every other borrower will bluff in the future and the losses will be much more than the 240 + 50 + future loans to Greece. This negotiation feels like two people playing poker. Tsiparas keeps bluffing harder and harder with a crap hand. The Euro guy can see Tsiparas's hand and knows that if he just keeps calling, he'll beat the Greek. The problem for the Euro guy is that if he keeps calling the bluffs and "wins", the pot will disappear and he won't get the money. If he willingly falls for the bluff and loses, then he has to throw even more money into the bottomless pot. Calling down and letting Tsiparas keep bluffing is a slow ride to a devastating conclusion. If neither player is willing to take a decisive action, it actually turns into the worst catastrophe with the Greek situation getting worse and worse until it ends up as a third world country. The bank limits are just the beginning. Those limits are meant to prevent the banks from running out of money, but nobody is putting money back into Greek banks right now. They will eventually run out. Even people with thousands in the banks will suddenly have nothing. How are they going to pay for anything without money? So even people who theoretically have money in the banks will be poor. Importing things like gasoline and food will become virtually impossible. from http://www.theguardian.com/world/2015/jul/03/greece-economy-collapse-close-food-medicine-shortage More than half of Greece’s food supplies – and the vast majority of pharmaceuticals – are imported, but with bank transfers now banned, companies are unable to pay suppliers. What do you do when you literally don't have the food to feed your people? That's the path Greece is currently on. If I'm the guy sitting across from Greece at the poker table, I don't let him slowly bluff himself into death, but I don't let him bluff his way to a win either. Instead, I'd push back over the top. In this case, they need to immediately and publicly start procedures to remove Greece from the EU and the Euro. Put together an even harsher deal and say that it is the only way the procedures would stop. With the Greeks starving in the streets, they may vote differently. When Tsiparas is done bluffing and wants to get back to negotiating, then consider lightening up from the harsher deal. That gives him a little bit of a "win" that he can take back to his people so that he doesn't get lynched. Also, I'd look into giving the Irish (and anyone else that has established austerity measures due to loan repayment) a more favorable rate on their deal. This move would show an appreciation to countries that are willing to accept terms to make deals happen. | ||
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Taf the Ghost
United States11751 Posts
On July 06 2015 12:08 rezoacken wrote: To be honest an exit from the EZ is a "Who's the biggest loser competition". Creditors (with Germany and France as the biggest lenders) lose money (what they lent). This can cause a wide range of problems but I'd expect banks and countries to have worked to prepare for this eventuality and not be too exposed on Greece credit risk. A domino effect is of course still a possibility. The Euro and the euro zone would lose credibility both in the financial and political worlds. Financial market will feel a "flight to quality" effect and you'd expect both the Euro and European stocks to drop for a while. The amplitude of the effect will remain to be seen. In politics, since the crisis of 2007 there has been a growing anti-Europe feeling in many countries and this would be a victory for them. However you could argue that if things get really bad for Greece it could also diminish that feeling. For Greece, it's where the most unknown variables resides. There are a few forecasts that you can read. Greece would become the pariah of the financial world. Not being able to borrow decently. It would have to print a "new" currency without currently having the means to do so. It's not easy to improvise a change of currency ! Meanwhile greeks that have money will still try to get it out either by moving it or by withdrawals, feeling safer with the Euro or the Dollar than whatever the new money will be. The Greek banking system will simply crash or be paralyzed unable to withstand the pressure. The current queues to get a few dozen Euros everyday is just a taste of what is next. A new currency could face massive devaluation and inflation making imports very costly (and greek imports more than it exports... currently). I'd personally bet the Greeks to plunge even further into recession and that has been the position of all people in my entourage working in finance in Canada. Things will get real really fast for the Greeks if all bridge with the financial system are cut, especially for a country with such tax issues. There aren't many example of a developed country defaulting like this and an exit scenario from the eurozone is something 100% new. So in the end it's mostly wild guesses. Maybe problems won't last long but it is a very risky bet that I'm personaly not willing to take. You could even bet on a political crisis to make things worse. With a portion of the greeks that do not want to leave and if things get worse after the exit, the government will be blamed for it. In a world where a near majority of sovereign debt is going for negative yields, Greece isn't going to be a pariah for very long. If they had 0 other debt and, 1 year after default, offered the Bonds at 9% in a different currency, the entire order book would be oversubscribed by a LOT. So that's not the issue. The issue is actually shifting to a new currency and all of the interwoven systems that go with modern capital movement. That's really going to cause the biggest issues. Though ignoring the completely illiquid shadow banking sector isn't something to do, either. | ||
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WhiteDog
France8650 Posts
On July 06 2015 12:41 Cam Connor wrote: Interesting stat: if greece wasn't in the eurozone, eurozone economic output would only decrease by 1.8% and gdp per capita would increase 1.5% Largely useless statistic, but still food for thought Where did you got that bullshit stat I wonder. More than 20% unemployment in Portugal, Spain, more than 10% in Italy and France, and there are people that actually believe Europe would be better without Greece... Hahahha. Greece is 2% of GDP, 3% of our debt, it's impact is close to zero. On July 06 2015 12:55 Taf the Ghost wrote: In a world where a near majority of sovereign debt is going for negative yields, Greece isn't going to be a pariah for very long. If they had 0 other debt and, 1 year after default, offered the Bonds at 9% in a different currency, the entire order book would be oversubscribed by a LOT. So that's not the issue. The issue is actually shifting to a new currency and all of the interwoven systems that go with modern capital movement. That's really going to cause the biggest issues. Though ignoring the completely illiquid shadow banking sector isn't something to do, either. The debt won't be a problem to Greek but it's not actually a country that has what it takes now to actually profit from having control over its currency exchange rate. Sure, for "islands" like Italy or France - countries that could actually live despite a great increase of import price due to the appreciation of their currencies - going out of the euro is not a big problem because they have the production to compensate the increase costs of imports. But Greece has a completly crushed economy, with rather low production capacities at the moment (in important goods, I'm not talking about TV but food for exemple), and so it's very dependant on trading : going lone wolf would be really difficult for a time. Not to mention (and people seems completly oblivious to it) that Greece, much like the eurozone in this regard, is very weak and completly open to another crisis - in a world that has not changed at all since 2007, be it from the bank perspective or from the european institutions perspective, and where the debt level are unsustainable. | ||
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