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On July 08 2015 08:23 cLutZ wrote:Show nested quote +On July 08 2015 07:42 Gorsameth wrote: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 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.
Completely agree
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Anyone else find it funny to hear britains and americans complain about 'austerity' all the time? I'd say if they're so eager to give away billions to Greece's corrupt government then go ahead lol.
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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.
They had to take a very heavy loss on the deal but having debt in sovereign hands is a lot easier to deal with then in private hands. The tarp program was there to give banks the liquidity that none had so they could continue functioning.
In any case tarp made money for American taxpayers and made it so that almost no banks failed. It's pretty easy to make money when you pay almost no interest on the loans you take but can charge slightly more on the money you loan.
The Netherlands are relatively safe. America is so big that it's too big to fail. Oh and oil is tied to the dolla son.
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Greece is lucky it's part of Eurozone. Or else, this situation will be a major flop for Greece long ago.
Eurozone does not want Greece out of it because of obvious reasons of investor confidence, etc. With this bargaining chip, Greece is able to push back loans, acquire even more loans and default on international loans. Complacency is just destroying the greek economy now.
Eurozone needs new rules and regulations to deal with potential members doing these silly stuff without getting punished. Even though its partially Euro that caused greece to be where it is today, it's still stupid for banks/other countries to lend greece just to save Euro.
Let greece get what it deserved, which will probably change the government now. People who vote yes to the referendum just to preserve greece's pride need to understand the ramifications of their action.
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Also, the real thing that is causing the panic in Greece is the capital controls. I doubt (and kind of hope) that Greek banks hold much Greek sovereign debt, so a default shouldn't cause massive insolvency among the banks so long as the national politicians pledged to not leave the Euro (which is what was/is causing bank runs). Its not like Detroit (in fact some US states defaulted during the depression) going bankrupt made all banks there to become insolvent. That should be a major benefit of being on a super-national currency. However, Greeks are probably (rightfully) worried that the government will confiscate deposits as part of the deal, which is insane and counterproductive, by the way.
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Also add to the market chaos, the bubble seems to have burst in China. As of typing the Market went down over 8% just in the first few minutes and 43% of the Market is frozen.
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On July 08 2015 12:32 {CC}StealthBlue wrote:
Also add to the market chaos, the bubble seems to have burst in China. As of typing the Market went down over 8% just in the first few minutes and 43% of the Market is frozen.
Effects of that are rather weak on the eurozone as the stock market in China is largely cut off from the rest of the world. Ofc China is slumping which will affect trade, but the KP has previously shown to go very far to prevent economic slowdown.
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Netherlands6273 Posts
Euro zone members have given Greece until the end of the week to come up with a proposal for sweeping reforms in return for loans that will keep the country from crashing out of Europe's currency bloc and into economic ruin.
"The stark reality is that we have only five days left ... Until now I have avoided talking about deadlines, but tonight I have to say loud and clear that the final deadline ends this week," European Council President Donald Tusk told a news conference.
Prime Minister Alexis Tsipras has until Friday to present the proposal, but German Chancellor Angela Merkel said she hoped to have convincing reform commitments from Tsipras on Thursday so she could ask the German parliament to authorize negotiations on a new aid program.
Merkel said she was "not exaggeratedly optimistic" for a solution.
At an emergency summit in Brussels on Tuesday, representatives of the 19-country euro zone said all 28 European Union leaders would meet on Sunday to decide Greece's fate. The talks were organized after Greeks voted in a referendum on Sunday against a bailout that carried stringent austerity measures.
French President Francois Hollande said the European Central Bank would ensure that Greek banks had the minimum necessary liquidity to stay afloat until Sunday.
The situation in Greece worsened with banks closed for a second week, limited cash withdrawals and businesses feeling the crunch of demands from vendors for cash payments.
Tsipras sounded upbeat as he left the summit, even though many of the reforms demanded by his partners would inflict more pain on Greeks who voted at his behest to reject the austerity measures in return for financial aid.
"The discussion took place in a positive climate," he said. "The process will be extremely fast. It starts in the coming hours, with the aim to conclude by the end of the week at the latest."
He promised to work for a socially just deal that would bring a "final exit" from the crisis, return Greece to growth and restructure Greek debt to make it viable.
Failure, Tusk warned, would undermine the EU's standing in the world and said the six-decade-old bloc may face "the most critical moment in our history".
source
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On July 08 2015 18:45 RvB wrote:Show nested quote +Euro zone members have given Greece until the end of the week to come up with a proposal for sweeping reforms in return for loans that will keep the country from crashing out of Europe's currency bloc and into economic ruin.
"The stark reality is that we have only five days left ... Until now I have avoided talking about deadlines, but tonight I have to say loud and clear that the final deadline ends this week," European Council President Donald Tusk told a news conference.
Prime Minister Alexis Tsipras has until Friday to present the proposal, but German Chancellor Angela Merkel said she hoped to have convincing reform commitments from Tsipras on Thursday so she could ask the German parliament to authorize negotiations on a new aid program.
Merkel said she was "not exaggeratedly optimistic" for a solution.
At an emergency summit in Brussels on Tuesday, representatives of the 19-country euro zone said all 28 European Union leaders would meet on Sunday to decide Greece's fate. The talks were organized after Greeks voted in a referendum on Sunday against a bailout that carried stringent austerity measures.
French President Francois Hollande said the European Central Bank would ensure that Greek banks had the minimum necessary liquidity to stay afloat until Sunday.
The situation in Greece worsened with banks closed for a second week, limited cash withdrawals and businesses feeling the crunch of demands from vendors for cash payments.
Tsipras sounded upbeat as he left the summit, even though many of the reforms demanded by his partners would inflict more pain on Greeks who voted at his behest to reject the austerity measures in return for financial aid.
"The discussion took place in a positive climate," he said. "The process will be extremely fast. It starts in the coming hours, with the aim to conclude by the end of the week at the latest."
He promised to work for a socially just deal that would bring a "final exit" from the crisis, return Greece to growth and restructure Greek debt to make it viable.
Failure, Tusk warned, would undermine the EU's standing in the world and said the six-decade-old bloc may face "the most critical moment in our history". source
"They voted at his behest to reject the austerity measures in return for financial aid."
Can someone please inform the Greeks that there will be no more money unless there are plans for significant and deep reforms, that they will be suffering from austerity for probably at least another decade regardless?
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I'm confused, most news I've seen in the US blames socialism, yet I see this:
The real problem is that Greeks have long considered it beneath their dignity to pay taxes. Even during this debt crisis, Greeks have balked at a property tax introduced by the former government. One of the winning planks of the Syriza government now in power was to welcome an anti-tax movement summed up as “I won’t pay.” What did they think was going to happen?
To put the issue in perspective, Athens’ immediate crisis sprang from non-payment of a $1.7 billion debt; Greeks, at last tally, owed their government $86 billion in unpaid taxes. And, it isn’t just the wealthy that play this game. The Wall Street Journal reported that the “vast majority of tax evasion occurs at the lower end of the income scale….”
Moreover, about one quarter of all Greek commerce takes place underground – completely outside the taxman’s purview.
Greece’s tax structure is in line with other EU nations, but its tax evasion is extraordinary -- amounting to about 6 percent of GDP. If people paid their taxes, the budget hole would disappear overnight.
Some trace this behavior to the country’s long occupation by the Ottoman Empire when tax cheating was hailed as patriotic. Others suggest it reflects a long-standing and profound distrust in the government. The latter argument seems convincing, particularly given several administrations’ habit of lying about the country’s budget.
Source
Doesn't sound very socialist to me lol.
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On July 08 2015 20:04 screamingpalm wrote:I'm confused, most news I've seen in the US blames socialism, yet I see this: Show nested quote +
The real problem is that Greeks have long considered it beneath their dignity to pay taxes. Even during this debt crisis, Greeks have balked at a property tax introduced by the former government. One of the winning planks of the Syriza government now in power was to welcome an anti-tax movement summed up as “I won’t pay.” What did they think was going to happen?
To put the issue in perspective, Athens’ immediate crisis sprang from non-payment of a $1.7 billion debt; Greeks, at last tally, owed their government $86 billion in unpaid taxes. And, it isn’t just the wealthy that play this game. The Wall Street Journal reported that the “vast majority of tax evasion occurs at the lower end of the income scale….”
Moreover, about one quarter of all Greek commerce takes place underground – completely outside the taxman’s purview.
Greece’s tax structure is in line with other EU nations, but its tax evasion is extraordinary -- amounting to about 6 percent of GDP. If people paid their taxes, the budget hole would disappear overnight.
Some trace this behavior to the country’s long occupation by the Ottoman Empire when tax cheating was hailed as patriotic. Others suggest it reflects a long-standing and profound distrust in the government. The latter argument seems convincing, particularly given several administrations’ habit of lying about the country’s budget.
SourceDoesn't sound very socialist to me lol.
It is a combination.
Greece spends to much money on socialism points (overly generous pensions for public servants) and it has an income problem because of rampant tax evasion.
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On July 08 2015 20:16 Gorsameth wrote:Show nested quote +On July 08 2015 20:04 screamingpalm wrote:I'm confused, most news I've seen in the US blames socialism, yet I see this:
The real problem is that Greeks have long considered it beneath their dignity to pay taxes. Even during this debt crisis, Greeks have balked at a property tax introduced by the former government. One of the winning planks of the Syriza government now in power was to welcome an anti-tax movement summed up as “I won’t pay.” What did they think was going to happen?
To put the issue in perspective, Athens’ immediate crisis sprang from non-payment of a $1.7 billion debt; Greeks, at last tally, owed their government $86 billion in unpaid taxes. And, it isn’t just the wealthy that play this game. The Wall Street Journal reported that the “vast majority of tax evasion occurs at the lower end of the income scale….”
Moreover, about one quarter of all Greek commerce takes place underground – completely outside the taxman’s purview.
Greece’s tax structure is in line with other EU nations, but its tax evasion is extraordinary -- amounting to about 6 percent of GDP. If people paid their taxes, the budget hole would disappear overnight.
Some trace this behavior to the country’s long occupation by the Ottoman Empire when tax cheating was hailed as patriotic. Others suggest it reflects a long-standing and profound distrust in the government. The latter argument seems convincing, particularly given several administrations’ habit of lying about the country’s budget.
SourceDoesn't sound very socialist to me lol. It is a combination. Greece spends to much money on socialism points (overly generous pensions for public servants) and it has an income problem because of rampant tax evasion.
It has very little to do with socialism and everything to do with corruption and rampant nepotism. Some 40 years of political dynasties handing out comfy government positions and favourable pension schemes to their supporters will bloat government spending uncontrollably. It has also led to incompetent and corrupt administration; I read statistics saying 18% of Greeks used bribes in 2014 and that court cases regarding taxation can take up to 3 times longer than the OECD average. A complete overhaul of the Greek public sector is needed, which I doubt will happen if they continue being run by populists and/or cronies.
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On July 08 2015 09:43 Sermokala 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. They had to take a very heavy loss on the deal but having debt in sovereign hands is a lot easier to deal with then in private hands. The tarp program was there to give banks the liquidity that none had so they could continue functioning. In any case tarp made money for American taxpayers and made it so that almost no banks failed. It's pretty easy to make money when you pay almost no interest on the loans you take but can charge slightly more on the money you loan. The Netherlands are relatively safe. America is so big that it's too big to fail. Oh and oil is tied to the dolla son.
It's not a conspiracy. The crisis was started by bad debts, but its not like all the loans were shit. Like it was said above, people were getting killed by liquidity, and anyone who had cash during the crisis could make a shit ton of money by giving liquidity. ie warren buffet, us govn't, some smarter banks. Even if you looked at lehman's books, they balance, just not in a no liquidity environment.
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On July 08 2015 20:04 screamingpalm wrote:I'm confused, most news I've seen in the US blames socialism, yet I see this: Show nested quote +
The real problem is that Greeks have long considered it beneath their dignity to pay taxes. Even during this debt crisis, Greeks have balked at a property tax introduced by the former government. One of the winning planks of the Syriza government now in power was to welcome an anti-tax movement summed up as “I won’t pay.” What did they think was going to happen?
To put the issue in perspective, Athens’ immediate crisis sprang from non-payment of a $1.7 billion debt; Greeks, at last tally, owed their government $86 billion in unpaid taxes. And, it isn’t just the wealthy that play this game. The Wall Street Journal reported that the “vast majority of tax evasion occurs at the lower end of the income scale….”
Moreover, about one quarter of all Greek commerce takes place underground – completely outside the taxman’s purview.
Greece’s tax structure is in line with other EU nations, but its tax evasion is extraordinary -- amounting to about 6 percent of GDP. If people paid their taxes, the budget hole would disappear overnight.
Some trace this behavior to the country’s long occupation by the Ottoman Empire when tax cheating was hailed as patriotic. Others suggest it reflects a long-standing and profound distrust in the government. The latter argument seems convincing, particularly given several administrations’ habit of lying about the country’s budget.
SourceDoesn't sound very socialist to me lol.
It's clientelism rather than socialism: advantages, jobs, tax exemptions, etc in return for votes.
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There is no way something substantial gets done this week.
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On July 08 2015 20:04 screamingpalm wrote:I'm confused, most news I've seen in the US blames socialism, yet I see this: SourceDoesn't sound very socialist to me lol.
People spin it the way they want. If this is true it says a lot about that media source. In the US socialism already is a problem. So when they see something going wrong, it must be socialism. Not paying taxes, that's a very American line of thought, and thus good.
Greece had corrupt politicians coming out from the civil war and dictatorships. You know, the ones foreign powers created there as they wanted to fight out the cold war on the battlefield called Greece. The Greece people wanted communism, yet the US couldn't allow that. So they killed Greeks and introduced a dictatorship to keep the soviets out.
Not a healthy start. This is all fallout from that era.
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On July 08 2015 20:04 screamingpalm wrote:I'm confused, most news I've seen in the US blames socialism, yet I see this: Show nested quote +
The real problem is that Greeks have long considered it beneath their dignity to pay taxes. Even during this debt crisis, Greeks have balked at a property tax introduced by the former government. One of the winning planks of the Syriza government now in power was to welcome an anti-tax movement summed up as “I won’t pay.” What did they think was going to happen?
To put the issue in perspective, Athens’ immediate crisis sprang from non-payment of a $1.7 billion debt; Greeks, at last tally, owed their government $86 billion in unpaid taxes. And, it isn’t just the wealthy that play this game. The Wall Street Journal reported that the “vast majority of tax evasion occurs at the lower end of the income scale….”
Moreover, about one quarter of all Greek commerce takes place underground – completely outside the taxman’s purview.
Greece’s tax structure is in line with other EU nations, but its tax evasion is extraordinary -- amounting to about 6 percent of GDP. If people paid their taxes, the budget hole would disappear overnight.
Some trace this behavior to the country’s long occupation by the Ottoman Empire when tax cheating was hailed as patriotic. Others suggest it reflects a long-standing and profound distrust in the government. The latter argument seems convincing, particularly given several administrations’ habit of lying about the country’s budget.
SourceDoesn't sound very socialist to me lol.
Again, so far Tsipras is using every tool at his disposal to buy time and jockey for position at the negotiation table.
And I know I've said this before, Eurogroup cannot give in to his demands (moral hazard, policy contagion, etc.). Their hands are tied. Everything they've done so far is consistent with this stance. So either Tsipras accepts the terms and basically ignores the results of the referendum or he finds another way to keep delaying.
We are beyond purely economic rationale for these discussions.
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On July 08 2015 21:45 c0ldfusion wrote:
Again, so far Tsipras is using every tool at his disposal to buy time and jockey for position at the negotiation table.
And I know I've said this before, Eurogroup cannot give in to his demands (moral hazard, policy contagion, etc.). Their hands are tied. Everything they've done so far is consistent with this stance. So either Tsipras accepts the terms and basically ignores the results of the referendum or he finds another way to keep delaying.
We are beyond purely economic rationale for these discussions.
That's bullshit as what Tsipras is asking for now is what is inevitable anyway. There is a taboo to even say that debts will be restructured. They will be. But EU politicians don't dare to even talk about it? Why? Because they put themselves into a corner.
The monetary union is fundamentally flawed. There is no political union and economies are too diverse. They knew this before the financial sector almost destroyed the world. They did nothing before or after. It is 5 years later and all EU politicians did was push the ball ahead of them and lie to their voters to stay in power.
It is bullshit now to say their hands are tied. All they need to do is go back and say they were wrong these last 5 years, solve their own problems, then resign. But they won't because they put their personal interests before the future of the EU.
As for moral hazard, the biggest problem is the refutation of austerity of Greece's economy recovering after they leave the Euro. Hence, Greece has to stay in the eurozone and suffer austerity. A radical left party can't refuse austerity and can't show some countries are better off without the euro. That is the true 'moral hazard'.
No one is seeing what is happening in Greece and hoping they were in Greece's shoes. They got to be crazy? You really think Slovakia or Bulgaria see what is happening in Greece and plan to do the same thing? Hell no!
It was moral hazard when they saved the banks. And they'd do the same today, moral hazard or not.
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Pooring money down a system like the Greek one seems like a complete waste when considering the large problems with tax evasion and government spending.
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EPT
