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On July 08 2015 05:17 nkr wrote:Show nested quote +On July 08 2015 05:15 Plansix wrote:On July 08 2015 05:09 nkr wrote:
Thanks for your response. But how come Greece ended up with this huge debt to begin with? Was it all down to the financial crisis of 200X? I get the feeling that Greece are very "entitled" and that they feel "cheated" somehow, but how can that be unless they themselves didn't bring forth the situation they find themselves in? I think this part is what confuses me the most. They were allowed to borrow to much money and continued to do so. This weird thing happens when you offer free money to nations, people and companies. They take it even if they might not be able to take it pay it back. Its why responsible lending is important, because the people handing out the funds are normally better equipped to determine if the borrower can pay it back. Of course, if your a huge bank and you can just off load the risk onto a government or sell it to another lender, the system falls apart. See Country Wide Lending, Bank of America and FNMA for the ultimate example of stupid lending assuming that the government would pick up the tab. But why the outrage in Greece if this is the case? The country put itself in the mess, why is it that they feel others should pull them out of it? Is it literally because "well you shouldn't lend us money because we might not be able to pay it back'?
Who knows why, there isn't a lot of sympathy in the rest of the EU because of that attitude but I guess its easy to get used to good living conditions, even if they are unsustainable and its hard to give them back up again.
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On July 08 2015 05:17 nkr wrote:Show nested quote +On July 08 2015 05:15 Plansix wrote:On July 08 2015 05:09 nkr wrote:
Thanks for your response. But how come Greece ended up with this huge debt to begin with? Was it all down to the financial crisis of 200X? I get the feeling that Greece are very "entitled" and that they feel "cheated" somehow, but how can that be unless they themselves didn't bring forth the situation they find themselves in? I think this part is what confuses me the most. They were allowed to borrow to much money and continued to do so. This weird thing happens when you offer free money to nations, people and companies. They take it even if they might not be able to take it pay it back. Its why responsible lending is important, because the people handing out the funds are normally better equipped to determine if the borrower can pay it back. Of course, if your a huge bank and you can just off load the risk onto a government or sell it to another lender, the system falls apart. See Country Wide Lending, Bank of America and FNMA for the ultimate example of stupid lending assuming that the government would pick up the tab. But why the outrage in Greece if this is the case? The country put itself in the mess, why is it that they feel others should pull them out of it? Is it literally because "well you shouldn't lend us money because we might not be able to pay it back'?
Its easy to blame the debtor than the bank that handed out the shit loan. Also banks are allowed to sell debt easily, so by the time the default takes place the holder of the debt has little to do with who issued it. So its challenging to directly attribute the bad debt to the lender. By default, people take the route of least resistance. Same in my field, where people always blame the person who defaults, even if its for totally legit reasons(yes, there are good reasons to walk away from a debt, businesses do it all the time).
Greece isn't totally without blame, they borrower more than they should have. Other members of the EU picked up the tab to stop a straight up crash of the whole EU and now everyone is angry a bitter. Except maybe the lenders, they are likely still cashing checks and making bank.
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9071 Posts
On July 08 2015 05:15 Plansix wrote:Show nested quote +On July 08 2015 05:09 nkr wrote:
Thanks for your response. But how come Greece ended up with this huge debt to begin with? Was it all down to the financial crisis of 200X? I get the feeling that Greece are very "entitled" and that they feel "cheated" somehow, but how can that be unless they themselves didn't bring forth the situation they find themselves in? I think this part is what confuses me the most. They were allowed to borrow to much money and continued to do so. This weird thing happens when you offer free money to nations, people and companies. They take it even if they might not be able to take it pay it back. Its why responsible lending is important, because the people handing out the funds are normally better equipped to determine if the borrower can pay it back. Of course, if your a huge bank and you can just off load the risk onto a government or sell it to another lender, the system falls apart. See Country Wide Lending, Bank of America and FNMA for the ultimate example of stupid lending assuming that the government would pick up the tab. Show nested quote +On July 08 2015 05:12 disciple wrote:
How is it a gamble if the current situation is precisly why such loans by privite banks are risk-free? Its a gamble for smaller banks, because they are small and are not able to make themselves invaluable to the economy. The key is to become so big that no one can tell you what to do, including the government and they can't let you fail because you will destroy the economy. Then focus on getting people elected that won't force you to break up. High finance in action.
The banks in questions are not small by any means, thats my point. In western Europe there are hardly any 'small' banks.
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On July 08 2015 05:25 Plansix wrote:Show nested quote +On July 08 2015 05:17 nkr wrote:On July 08 2015 05:15 Plansix wrote:On July 08 2015 05:09 nkr wrote:
Thanks for your response. But how come Greece ended up with this huge debt to begin with? Was it all down to the financial crisis of 200X? I get the feeling that Greece are very "entitled" and that they feel "cheated" somehow, but how can that be unless they themselves didn't bring forth the situation they find themselves in? I think this part is what confuses me the most. They were allowed to borrow to much money and continued to do so. This weird thing happens when you offer free money to nations, people and companies. They take it even if they might not be able to take it pay it back. Its why responsible lending is important, because the people handing out the funds are normally better equipped to determine if the borrower can pay it back. Of course, if your a huge bank and you can just off load the risk onto a government or sell it to another lender, the system falls apart. See Country Wide Lending, Bank of America and FNMA for the ultimate example of stupid lending assuming that the government would pick up the tab. But why the outrage in Greece if this is the case? The country put itself in the mess, why is it that they feel others should pull them out of it? Is it literally because "well you shouldn't lend us money because we might not be able to pay it back'? Its easy to blame the debtor than the bank that handed out the shit loan. Also banks are allowed to sell debt easily, so by the time the default takes place the holder of the debt has little to do with who issued it. So its challenging to directly attribute the bad debt to the lender. By default, people take the route of least resistance. Same in my field, where people always blame the person who defaults, even if its for totally legit reasons(yes, there are good reasons to walk away from a debt, businesses do it all the time). Greece isn't totally without blame, they borrower more than they should have. Other members of the EU picked up the tab to stop a straight up crash of the whole EU and now everyone is angry a bitter. Except maybe the lenders, they are likely still cashing checks and making bank.
It's also easy to blame the banks on this. Greece burrowed so much money, because with the EURO they got the same interest rate as Germany, a way more stable and stronger economy.
Look at this graph:http://sdw.ecb.europa.eu/quickview.do?SERIES_KEY=229.IRS.M.GR.L.L40.CI.0000.EUR.N.Z&periodSortOrder=ASC
They went from 25% in like 1993 to 5% in 2001. Ofc everybody is gonna buy stuff if money is so cheap. And the governments in Greece unlike other countries didn't use the cheap money to invest in longterm productivity. They spend it to have a unhealthy high living standard.
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On July 08 2015 05:17 nkr wrote:Show nested quote +On July 08 2015 05:15 Plansix wrote:On July 08 2015 05:09 nkr wrote:
Thanks for your response. But how come Greece ended up with this huge debt to begin with? Was it all down to the financial crisis of 200X? I get the feeling that Greece are very "entitled" and that they feel "cheated" somehow, but how can that be unless they themselves didn't bring forth the situation they find themselves in? I think this part is what confuses me the most. They were allowed to borrow to much money and continued to do so. This weird thing happens when you offer free money to nations, people and companies. They take it even if they might not be able to take it pay it back. Its why responsible lending is important, because the people handing out the funds are normally better equipped to determine if the borrower can pay it back. Of course, if your a huge bank and you can just off load the risk onto a government or sell it to another lender, the system falls apart. See Country Wide Lending, Bank of America and FNMA for the ultimate example of stupid lending assuming that the government would pick up the tab. But why the outrage in Greece if this is the case? The country put itself in the mess, why is it that they feel others should pull them out of it? Is it literally because "well you shouldn't lend us money because we might not be able to pay it back'?
Blaming scapegoats is easier than blaming oneself.
Basic psychology - it helps that mistakes were made on every side (see: responsible lending discussion, hard line neoliberal measures at least at the beginning of the programmes and bank bailout), a few populists are in the mix and that the biggest lender has a bit of a history as the universal bad guy that everybody has at least vaguely in the back of their mind and voila, you have the current situation.
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On July 08 2015 05:34 Kenpark wrote:Show nested quote +On July 08 2015 05:25 Plansix wrote:On July 08 2015 05:17 nkr wrote:On July 08 2015 05:15 Plansix wrote:On July 08 2015 05:09 nkr wrote:
Thanks for your response. But how come Greece ended up with this huge debt to begin with? Was it all down to the financial crisis of 200X? I get the feeling that Greece are very "entitled" and that they feel "cheated" somehow, but how can that be unless they themselves didn't bring forth the situation they find themselves in? I think this part is what confuses me the most. They were allowed to borrow to much money and continued to do so. This weird thing happens when you offer free money to nations, people and companies. They take it even if they might not be able to take it pay it back. Its why responsible lending is important, because the people handing out the funds are normally better equipped to determine if the borrower can pay it back. Of course, if your a huge bank and you can just off load the risk onto a government or sell it to another lender, the system falls apart. See Country Wide Lending, Bank of America and FNMA for the ultimate example of stupid lending assuming that the government would pick up the tab. But why the outrage in Greece if this is the case? The country put itself in the mess, why is it that they feel others should pull them out of it? Is it literally because "well you shouldn't lend us money because we might not be able to pay it back'? Its easy to blame the debtor than the bank that handed out the shit loan. Also banks are allowed to sell debt easily, so by the time the default takes place the holder of the debt has little to do with who issued it. So its challenging to directly attribute the bad debt to the lender. By default, people take the route of least resistance. Same in my field, where people always blame the person who defaults, even if its for totally legit reasons(yes, there are good reasons to walk away from a debt, businesses do it all the time). Greece isn't totally without blame, they borrower more than they should have. Other members of the EU picked up the tab to stop a straight up crash of the whole EU and now everyone is angry a bitter. Except maybe the lenders, they are likely still cashing checks and making bank. It's also easy to blame the banks on this. Greece burrowed so much money, because with the EURO they got the same interest rate as Germany, a way more stable and stronger economy. Look at this graph:http://sdw.ecb.europa.eu/quickview.do?SERIES_KEY=229.IRS.M.GR.L.L40.CI.0000.EUR.N.Z&periodSortOrder=ASC They went from 25% in like 1993 to 5% in 2001. Ofc everybody is gonna buy stuff if money is so cheap. And the governments in Greece unlike other countries didn't use the cheap money to invest in longterm productivity. They spend it to have a unhealthy high living standard.
Of course they are not totally blameless. But who helped get Greece into the EU zone and who is baring very little of the burden?
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The bailouts in the USA have already been repaid and the government made money off of it. A lot of sub prime loans where given out to low income and minority communities.
The idea that corporations are people is stupid if it's a bank or if it's walmart. People just don't want to take responsibility for their mistakes and pay for it. They knew things were bad back in 2003 even before the Olympics but refused to do anything about it. Let Greece default and be an example of what went wrong when you treat second rate economies like they're a first rate one.
Greece isn't blameless even before with refusing to allow yugo countries in.
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9071 Posts
On July 08 2015 05:35 ACrow wrote:Show nested quote +On July 08 2015 05:17 nkr wrote:On July 08 2015 05:15 Plansix wrote:On July 08 2015 05:09 nkr wrote:
Thanks for your response. But how come Greece ended up with this huge debt to begin with? Was it all down to the financial crisis of 200X? I get the feeling that Greece are very "entitled" and that they feel "cheated" somehow, but how can that be unless they themselves didn't bring forth the situation they find themselves in? I think this part is what confuses me the most. They were allowed to borrow to much money and continued to do so. This weird thing happens when you offer free money to nations, people and companies. They take it even if they might not be able to take it pay it back. Its why responsible lending is important, because the people handing out the funds are normally better equipped to determine if the borrower can pay it back. Of course, if your a huge bank and you can just off load the risk onto a government or sell it to another lender, the system falls apart. See Country Wide Lending, Bank of America and FNMA for the ultimate example of stupid lending assuming that the government would pick up the tab. But why the outrage in Greece if this is the case? The country put itself in the mess, why is it that they feel others should pull them out of it? Is it literally because "well you shouldn't lend us money because we might not be able to pay it back'? Blaming scapegoats is easier than blaming oneself. Basic psychology - it helps that mistakes were made on every side (see: responsible lending discussion, hard line neoliberal measures at least at the beginning of the programmes and bank bailout), a few populists are in the mix and that the biggest lender has a bit of a history as the universal bad guy that everybody has at least vaguely in the back of their mind and voila, you have the current situation.
Thats out of the question. But you also need to consider the period around 2006-2008 the econ crisis and everything, the resurgence of keynesianism - governments should spend money they don't have to come of out recession. Lets not see the spendings as malefic. Maybe incompetent but not malefic.
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On July 08 2015 05:38 Plansix wrote:Show nested quote +On July 08 2015 05:34 Kenpark wrote:On July 08 2015 05:25 Plansix wrote:On July 08 2015 05:17 nkr wrote:On July 08 2015 05:15 Plansix wrote:On July 08 2015 05:09 nkr wrote:
Thanks for your response. But how come Greece ended up with this huge debt to begin with? Was it all down to the financial crisis of 200X? I get the feeling that Greece are very "entitled" and that they feel "cheated" somehow, but how can that be unless they themselves didn't bring forth the situation they find themselves in? I think this part is what confuses me the most. They were allowed to borrow to much money and continued to do so. This weird thing happens when you offer free money to nations, people and companies. They take it even if they might not be able to take it pay it back. Its why responsible lending is important, because the people handing out the funds are normally better equipped to determine if the borrower can pay it back. Of course, if your a huge bank and you can just off load the risk onto a government or sell it to another lender, the system falls apart. See Country Wide Lending, Bank of America and FNMA for the ultimate example of stupid lending assuming that the government would pick up the tab. But why the outrage in Greece if this is the case? The country put itself in the mess, why is it that they feel others should pull them out of it? Is it literally because "well you shouldn't lend us money because we might not be able to pay it back'? Its easy to blame the debtor than the bank that handed out the shit loan. Also banks are allowed to sell debt easily, so by the time the default takes place the holder of the debt has little to do with who issued it. So its challenging to directly attribute the bad debt to the lender. By default, people take the route of least resistance. Same in my field, where people always blame the person who defaults, even if its for totally legit reasons(yes, there are good reasons to walk away from a debt, businesses do it all the time). Greece isn't totally without blame, they borrower more than they should have. Other members of the EU picked up the tab to stop a straight up crash of the whole EU and now everyone is angry a bitter. Except maybe the lenders, they are likely still cashing checks and making bank. It's also easy to blame the banks on this. Greece burrowed so much money, because with the EURO they got the same interest rate as Germany, a way more stable and stronger economy. Look at this graph:http://sdw.ecb.europa.eu/quickview.do?SERIES_KEY=229.IRS.M.GR.L.L40.CI.0000.EUR.N.Z&periodSortOrder=ASC They went from 25% in like 1993 to 5% in 2001. Ofc everybody is gonna buy stuff if money is so cheap. And the governments in Greece unlike other countries didn't use the cheap money to invest in longterm productivity. They spend it to have a unhealthy high living standard. Of course they are not totally blameless. But who helped get Greece into the EU zone and who is baring very little of the burden?
Politicians that have a vision about a united EU, stability and peace in the region. I mean this is a longterm project starting over 50 years ago.
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On July 08 2015 05:42 disciple wrote:Show nested quote +On July 08 2015 05:35 ACrow wrote:On July 08 2015 05:17 nkr wrote:On July 08 2015 05:15 Plansix wrote:On July 08 2015 05:09 nkr wrote:
Thanks for your response. But how come Greece ended up with this huge debt to begin with? Was it all down to the financial crisis of 200X? I get the feeling that Greece are very "entitled" and that they feel "cheated" somehow, but how can that be unless they themselves didn't bring forth the situation they find themselves in? I think this part is what confuses me the most. They were allowed to borrow to much money and continued to do so. This weird thing happens when you offer free money to nations, people and companies. They take it even if they might not be able to take it pay it back. Its why responsible lending is important, because the people handing out the funds are normally better equipped to determine if the borrower can pay it back. Of course, if your a huge bank and you can just off load the risk onto a government or sell it to another lender, the system falls apart. See Country Wide Lending, Bank of America and FNMA for the ultimate example of stupid lending assuming that the government would pick up the tab. But why the outrage in Greece if this is the case? The country put itself in the mess, why is it that they feel others should pull them out of it? Is it literally because "well you shouldn't lend us money because we might not be able to pay it back'? Blaming scapegoats is easier than blaming oneself. Basic psychology - it helps that mistakes were made on every side (see: responsible lending discussion, hard line neoliberal measures at least at the beginning of the programmes and bank bailout), a few populists are in the mix and that the biggest lender has a bit of a history as the universal bad guy that everybody has at least vaguely in the back of their mind and voila, you have the current situation. Thats out of the question. But you also need to consider the period around 2006-2008 the econ crisis and everything, the resurgence of keynesianism - governments should spend money they don't have to come of out recession. Lets not see the spendings as malefic. Maybe incompetent but not malefic.
Spending your way out of a recession can work but the problem with Greece is that their economy is non-existent. Their public sector is massively bloated even now. It makes your options for clawing out of a depression much harder.
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9071 Posts
On July 08 2015 05:46 Kenpark wrote:Show nested quote +On July 08 2015 05:38 Plansix wrote:On July 08 2015 05:34 Kenpark wrote:On July 08 2015 05:25 Plansix wrote:On July 08 2015 05:17 nkr wrote:On July 08 2015 05:15 Plansix wrote:On July 08 2015 05:09 nkr wrote:
Thanks for your response. But how come Greece ended up with this huge debt to begin with? Was it all down to the financial crisis of 200X? I get the feeling that Greece are very "entitled" and that they feel "cheated" somehow, but how can that be unless they themselves didn't bring forth the situation they find themselves in? I think this part is what confuses me the most. They were allowed to borrow to much money and continued to do so. This weird thing happens when you offer free money to nations, people and companies. They take it even if they might not be able to take it pay it back. Its why responsible lending is important, because the people handing out the funds are normally better equipped to determine if the borrower can pay it back. Of course, if your a huge bank and you can just off load the risk onto a government or sell it to another lender, the system falls apart. See Country Wide Lending, Bank of America and FNMA for the ultimate example of stupid lending assuming that the government would pick up the tab. But why the outrage in Greece if this is the case? The country put itself in the mess, why is it that they feel others should pull them out of it? Is it literally because "well you shouldn't lend us money because we might not be able to pay it back'? Its easy to blame the debtor than the bank that handed out the shit loan. Also banks are allowed to sell debt easily, so by the time the default takes place the holder of the debt has little to do with who issued it. So its challenging to directly attribute the bad debt to the lender. By default, people take the route of least resistance. Same in my field, where people always blame the person who defaults, even if its for totally legit reasons(yes, there are good reasons to walk away from a debt, businesses do it all the time). Greece isn't totally without blame, they borrower more than they should have. Other members of the EU picked up the tab to stop a straight up crash of the whole EU and now everyone is angry a bitter. Except maybe the lenders, they are likely still cashing checks and making bank. It's also easy to blame the banks on this. Greece burrowed so much money, because with the EURO they got the same interest rate as Germany, a way more stable and stronger economy. Look at this graph:http://sdw.ecb.europa.eu/quickview.do?SERIES_KEY=229.IRS.M.GR.L.L40.CI.0000.EUR.N.Z&periodSortOrder=ASC They went from 25% in like 1993 to 5% in 2001. Ofc everybody is gonna buy stuff if money is so cheap. And the governments in Greece unlike other countries didn't use the cheap money to invest in longterm productivity. They spend it to have a unhealthy high living standard. Of course they are not totally blameless. But who helped get Greece into the EU zone and who is baring very little of the burden? Politicians that have a vision about a united EU, stability and peace in the region. I mean this is a longterm project starting over 50 years ago.
That's correct. The EU's inception was a steel trade agreement between France and Germany after WWII making military conflicts extremely costly. The EU is one economical union, that's why sanctions and restrictions might make participants less likely to cooperate and not the other way around.
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The problem is that the Eurogroup does not know how to handle an un-cooperative member. It all works well enough when everyone is on 1 line but when someone (Greece) says "No i don't" they just become impotent.
The Eurozone needs a way to deal with rogue nations and that should include the ability to remove them.
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Greece will need to make real and painful cuts to their spending and (from what I've heard) really buff up their tax collection enforcement. Problem is, that means whoever does it will be almost guaranteed to lose the next election. No politician is willing to make that sort of sacrifice, especially considering the sort of policies Greek politicians have pushed for the last couple of decades.
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On July 08 2015 03:29 farvacola wrote:
That's a terrible analogy.
It's not terrible at all unless you still ask your mom for money.
If you earn your money, you'll know that spending more than you earn will get you into trouble.
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On July 08 2015 06:27 darkness wrote:It's not terrible at all unless you still ask your mom for money. If you earn your money, you'll know that spending more than you earn will get you into trouble.
No. It is so bad it doesn't even deserve a refutation.
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The bailouts in the USA have already been repaid and the government made money off of it. A lot of sub prime loans where given out to low income and minority communities.
This I find impossible to believe. Not only did the banks get direct and indirect financial aid ,they also got to unload all of their bad debts without having to bank a loss with the tarp program that was over 1 billion dollars.
Do the banks nol have these bad debts back and did they pay the same for it as they got when they sold it under tarp?
In the Netherlands the politicians also say that we actually made money on the euro crisis and all the lending we did but almost no one does believe that anymore.
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On July 08 2015 07:04 Rassy wrote:
The bailouts in the USA have already been repaid and the government made money off of it. A lot of sub prime loans where given out to low income and minority communities.
This I find impossible to believe. Not only did the banks get direct and indirect financial aid ,they also got to unload all of their bad debts without having to bank a loss with the tarp program that was over 1 billion dollars.
Do the banks nol have these bad debts back and did they pay the same for it as they got when they sold it under tarp?
In the Netherlands the politicians also say that we actually made money on the euro crisis and all the lending we did but almost no one does believe that anymore.
you will have made money if you actually get the majority of the money back and assuming you don't end up losing more money with the next couple loans. The german Linke asked how much profit Germany made off of the loans so far and the number was publicized. I don't know by heart how much it was but it should be somewhere, I'll see if I can find it.
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On July 08 2015 07:04 Rassy wrote:
The bailouts in the USA have already been repaid and the government made money off of it. A lot of sub prime loans where given out to low income and minority communities.
This I find impossible to believe. Not only did the banks get direct and indirect financial aid ,they also got to unload all of their bad debts without having to bank a loss with the tarp program that was over 1 billion dollars.
Do the banks nol have these bad debts back and did they pay the same for it as they got when they sold it under tarp?
In the Netherlands the politicians also say that we actually made money on the euro crisis and all the lending we did but almost no one does believe that anymore.
Note, I'm not advocating the bank bailouts were smart long-term, or morally correct, but this is simply what happened (mostly).
The bank bailouts mostly made money because most banks actually had solid revenue streams, just were facing a temporary liquidity crisis. Once they got enough cash on hand to get through a short-term crisis they went back to making money as usual. GM was also bailed out, and that did not make the government money (unless you ignore, like some people do, $10-20 billion in forgiven loans), and it didn't because that company was not facing a liquidity crisis, it was facing a structural crisis. Mostly being paying too high of wages, too much in pensions, and selling too few cars at too low of margins.
The reason the Greek bailout by the Troika was flawed from the beginning is because Greece is/was more like GM than like the US banks. Greece had too much debt in 2007-08 for an economy their size, and most of that debt was not accumulated by making investments that would increase their tax revenues in the future. Plus they had bloated obligations that basically amounted to "social security" and government workers salary/pension. Cash infusions do not solve structural problems, particularly when they are just used (as in Greece) to maintain the same economic structure. The smarter choice, at that time, would have been Greek default with the bailouts going to banks that needed the temporary liquidity infusion (while letting fundamentally unsound banks fail). Now, however, most of the debt is held my supra-national entities anyways, so Greece defaulting is a similar result, and new negotiated terms with Greece by the Troika are pretty silly, considering nothing negotiated will alter Greece's fundamentals.
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On July 08 2015 07:37 cLutZ wrote:Show nested quote +On July 08 2015 07:04 Rassy wrote:
The bailouts in the USA have already been repaid and the government made money off of it. A lot of sub prime loans where given out to low income and minority communities.
This I find impossible to believe. Not only did the banks get direct and indirect financial aid ,they also got to unload all of their bad debts without having to bank a loss with the tarp program that was over 1 billion dollars.
Do the banks nol have these bad debts back and did they pay the same for it as they got when they sold it under tarp?
In the Netherlands the politicians also say that we actually made money on the euro crisis and all the lending we did but almost no one does believe that anymore. Note, I'm not advocating the bank bailouts were smart long-term, or morally correct, but this is simply what happened (mostly). The bank bailouts mostly made money because most banks actually had solid revenue streams, just were facing a temporary liquidity crisis. Once they got enough cash on hand to get through a short-term crisis they went back to making money as usual. GM was also bailed out, and that did not make the government money (unless you ignore, like some people do, $10-20 billion in forgiven loans), and it didn't because that company was not facing a liquidity crisis, it was facing a structural crisis. Mostly being paying too high of wages, too much in pensions, and selling too few cars at too low of margins. The reason the Greek bailout by the Troika was flawed from the beginning is because Greece is/was more like GM than like the US banks. Greece had too much debt in 2007-08 for an economy their size, and most of that debt was not accumulated by making investments that would increase their tax revenues in the future. Plus they had bloated obligations that basically amounted to "social security" and government workers salary/pension. Cash infusions do not solve structural problems, particularly when they are just used (as in Greece) to maintain the same economic structure. The smarter choice, at that time, would have been Greek default with the bailouts going to banks that needed the temporary liquidity infusion (while letting fundamentally unsound banks fail). Now, however, most of the debt is held my supra-national entities anyways, so Greece defaulting is a similar result, and new negotiated terms with Greece by the Troika are pretty silly, considering nothing negotiated will alter Greece's fundamentals.
Just one small nitpick
and new negotiated terms with Greece by the Troika are pretty silly, considering nothing negotiated will alter Greece's fundamentals. The Troika isn't really re-negotiating, Its Greece that broke the existing deals (which included reforms, ill not go into if they were good or bad) by reverting previous reforms and stopping future ones. They are now trying to score a new deal with less cuts to the obligations you mentioned.
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On July 08 2015 07:42 Gorsameth wrote:Show nested quote +On July 08 2015 07:37 cLutZ wrote:On July 08 2015 07:04 Rassy wrote:
The bailouts in the USA have already been repaid and the government made money off of it. A lot of sub prime loans where given out to low income and minority communities.
This I find impossible to believe. Not only did the banks get direct and indirect financial aid ,they also got to unload all of their bad debts without having to bank a loss with the tarp program that was over 1 billion dollars.
Do the banks nol have these bad debts back and did they pay the same for it as they got when they sold it under tarp?
In the Netherlands the politicians also say that we actually made money on the euro crisis and all the lending we did but almost no one does believe that anymore. Note, I'm not advocating the bank bailouts were smart long-term, or morally correct, but this is simply what happened (mostly). The bank bailouts mostly made money because most banks actually had solid revenue streams, just were facing a temporary liquidity crisis. Once they got enough cash on hand to get through a short-term crisis they went back to making money as usual. GM was also bailed out, and that did not make the government money (unless you ignore, like some people do, $10-20 billion in forgiven loans), and it didn't because that company was not facing a liquidity crisis, it was facing a structural crisis. Mostly being paying too high of wages, too much in pensions, and selling too few cars at too low of margins. The reason the Greek bailout by the Troika was flawed from the beginning is because Greece is/was more like GM than like the US banks. Greece had too much debt in 2007-08 for an economy their size, and most of that debt was not accumulated by making investments that would increase their tax revenues in the future. Plus they had bloated obligations that basically amounted to "social security" and government workers salary/pension. Cash infusions do not solve structural problems, particularly when they are just used (as in Greece) to maintain the same economic structure. The smarter choice, at that time, would have been Greek default with the bailouts going to banks that needed the temporary liquidity infusion (while letting fundamentally unsound banks fail). Now, however, most of the debt is held my supra-national entities anyways, so Greece defaulting is a similar result, and new negotiated terms with Greece by the Troika are pretty silly, considering nothing negotiated will alter Greece's fundamentals. Just one small nitpick Show nested quote +and new negotiated terms with Greece by the Troika are pretty silly, considering nothing negotiated will alter Greece's fundamentals. The Troika isn't really re-negotiating, Its Greece that broke the existing deals (which included reforms, ill not go into if they were good or bad) by reverting previous reforms and stopping future ones. They are now trying to score a new deal with less cuts to the obligations you mentioned.
Not at all a nitpick. The point is that there is really no point in giving Greece additional money so long as the fundamentals of Greece remain unchanged. And we have 7 years of evidence that they wont so long as they keep getting loans.
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EPT
