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Although this thread does not function under the same strict guidelines as the USPMT, it is still a general practice on TL to provide a source with an explanation on why it is relevant and what purpose it adds to the discussion. Failure to do so will result in a mod action. |
Yes those banks suffered. They lost billions. So have the French and German taxpayers. If the greek government simply defaulted as you have suggested so the banks took all of the damage, what will happen? The money owed is gone, but the decifit is still there, and no one will lend them money. Greece would simply collapse. They would have to remove almost all the social infrastructure. Hospitals, social security, police, military, general public services.
Ultimately the winners were the public sector workers who were paid by those loans and the rest of the segment of the Greek population that didn't have to face any reforms that should had occured due to their own political power and unsular unions, and the rich who didn't pay any taxes.
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On December 17 2014 23:31 farvacola wrote:
You're right, you aren't on the same page, control=/=permitted
Why do German sovereign reform of monetary control and labour laws to which they have commited to many years before the euro crisis need the permission of France?
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those banks got bailed out... by the tax payers. if you fuck up on that scale you don't deserve to lose "only a few billions".
you deserve to go out of business.
the economic outcome of that happening would be a disaster for everyone, and should have been a wake up call to revise and start another bretton woods discussion.
but the political will was not there (maybe it was not a discussion some would like to have?).
instead we printed a 12k billion dollar note to bandage a flesh wound. which on its own caused a shitton of problems of its own. debt crisis anyone? people hurting anyone? people voting extreme parties anyone?
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On December 18 2014 01:22 Dangermousecatdog wrote:Yes those banks suffered. They lost billions. So have the French and German taxpayers. If the greek government simply defaulted as you have suggested so the banks took all of the damage, what will happen? The money owed is gone, but the decifit is still there, and no one will lend them money. Greece would simply collapse. They would have to remove almost all the social infrastructure. Hospitals, social security, police, military, general public services. Ultimately the winners were the public sector workers who were paid by those loans and the rest of the segment of the Greek population that didn't have to face any reforms that should had occured due to their own political power and unsular unions, and the rich who didn't pay any taxes. _____ Show nested quote +On December 17 2014 23:31 farvacola wrote:
You're right, you aren't on the same page, control=/=permitted Why do German sovereign reform of monetary control and labour laws to which they have commited to many years before the euro crisis need the permission of France?
Because Germany's policy would have been a complete failure if it were not for the cooperation of french who, at the time, dragged the entire euro zone behind them with an high increase in wage and inflation. To say it clearly : when you talk about competitivity in a common currency area, what makes the increase in competitivity is the differential of inflation (and not the drop of pricesin an empty world). When german decided to press on wage and reform their labor market, it resulted in a low inflation for almost a decade that would have been a complete failure if the biggest partner of Germany had done the same policies at the same time. But France opted for cooperation and did the exact opposite, increase wage, and creating inflation, so the differential in inflation between France and Germany was high : France's demand supported German's reform (just like we partially supported the cost of the reunification, say thanks it created around more than 100 000 loss of jobs for us) despite the negative effect that policy had on its commercial balance. To say it in a simpler manner, a decrease of German's costs and prices have no direct impact if at the same time all other prices of other partner countries drop and all other wage drop (which is what happen in a purely competitive scenario in a common currency area).
Monetary control is not up to Germany btw, it's the European Central Bank, and it's supposed to be completly independant... If you are talking about budgetary control, it's the opposite since Germany had a higher deficit than the treaty for almost the entire decade before the crisis.
So your post, from a practical standpoint, is just hypocrisie.
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Why, when a debtor takes on loans they can't pay back, do we have the imagination to discuss apportioning blame the lender yet when we talk about corrupt officials stealing money we fail to even mention the places where that money might go?
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On December 18 2014 02:30 WhiteDog wrote:Show nested quote +On December 18 2014 01:22 Dangermousecatdog wrote:Yes those banks suffered. They lost billions. So have the French and German taxpayers. If the greek government simply defaulted as you have suggested so the banks took all of the damage, what will happen? The money owed is gone, but the decifit is still there, and no one will lend them money. Greece would simply collapse. They would have to remove almost all the social infrastructure. Hospitals, social security, police, military, general public services. Ultimately the winners were the public sector workers who were paid by those loans and the rest of the segment of the Greek population that didn't have to face any reforms that should had occured due to their own political power and unsular unions, and the rich who didn't pay any taxes. _____ On December 17 2014 23:31 farvacola wrote:
You're right, you aren't on the same page, control=/=permitted Why do German sovereign reform of monetary control and labour laws to which they have commited to many years before the euro crisis need the permission of France? Because Germany's policy would have been a complete failure if it were not for the cooperation of french who, at the time, dragged the entire euro zone behind them with an high increase in wage and inflation. To say it clearly : ...
We thank you for the great sacrifice of having higher wages than us and having your state print more money for its public services and welfare. You must have suffered greatly in those hard times - thank you!
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On December 18 2014 02:38 ACrow wrote:Show nested quote +On December 18 2014 02:30 WhiteDog wrote:On December 18 2014 01:22 Dangermousecatdog wrote:Yes those banks suffered. They lost billions. So have the French and German taxpayers. If the greek government simply defaulted as you have suggested so the banks took all of the damage, what will happen? The money owed is gone, but the decifit is still there, and no one will lend them money. Greece would simply collapse. They would have to remove almost all the social infrastructure. Hospitals, social security, police, military, general public services. Ultimately the winners were the public sector workers who were paid by those loans and the rest of the segment of the Greek population that didn't have to face any reforms that should had occured due to their own political power and unsular unions, and the rich who didn't pay any taxes. _____ On December 17 2014 23:31 farvacola wrote:
You're right, you aren't on the same page, control=/=permitted Why do German sovereign reform of monetary control and labour laws to which they have commited to many years before the euro crisis need the permission of France? Because Germany's policy would have been a complete failure if it were not for the cooperation of french who, at the time, dragged the entire euro zone behind them with an high increase in wage and inflation. To say it clearly : ... We thank you for the great sacrifice of having higher wages than us and having your state print more money for its public services and welfare. You must have suffered greatly in those hard times - thank you!
You're funny, you think there is no link with unemployment ? You think it's positive for a country to accept losing its competitivity to support another country ? You think supporting demand necessarily mean increase in purchasing power ? Narrowminded.
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Well it's arguably better than working and not having anything of it. The general population has certainly not profited from the Hartz-Reforms and the wage stagnation.
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On December 18 2014 02:58 Nyxisto wrote:
Well it's arguably better than working and not having anything of it. The general population has certainly not profited from the Hartz-Reforms and the wage stagnation.
If your point is that the Hartz Reforms were a bad idea even for Germany's people, we agree. But you cannot say that the French government did not cooperate, while they accepted an abnormally high unemployment rate and a loss of competitivity for that, just like you cannot forget that Germany's reform were only possible thanks to the European Community facilitating the process by accepting Germans from not following the deficit target despite the fact that it was not a period of crisis.
Note that without french cooperation, the "sacrifice" should have been bigger for the same result (since it's the differential in inflation that matter), so it basically mean that we french shared the "sacrifice" with you (which is perfectly normal from an economical and a political standpoint).
Now with any logic, the question that would arise is how does Greece's reform could have worked ? The european community forced them to go back to the target, while all other european countries and germany in pole position refused any kind of cooperation.
By the way :
A top court of the European Union has annulled the bloc's decision to keep the Palestinian Islamist movement Hamas on a list of terrorist groups.
The decision had been based not on an examination of Hamas' actions, but on "factual imputations derived from the press and the internet", judges found.
http://www.bbc.com/news/world-middle-east-30511569
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On December 18 2014 01:22 Dangermousecatdog wrote:
Yes those banks suffered. They lost billions. So have the French and German taxpayers. If the greek government simply defaulted as you have suggested so the banks took all of the damage, what will happen? The money owed is gone, but the decifit is still there, and no one will lend them money. Greece would simply collapse. They would have to remove almost all the social infrastructure. Hospitals, social security, police, military, general public services.
uhm Greece now has a surplus exactly because of the colapse of education,health care, wages, employment.
What exactly you think IMF reforms are?
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The German and French taxpayers are propping up your government at the moment. Imagine if all that money wasn't. These reforms are far less severe than if the Greek government simply had taken a default like you had suggested. Where do you suggest that the money gap from the bail out would come from? Good luck getting a new loan right after defaulting from the previous one.
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On December 17 2014 22:07 Dangermousecatdog wrote:Show nested quote +On December 17 2014 09:12 JonnyBNoHo wrote:On December 17 2014 07:20 Dangermousecatdog wrote:On December 17 2014 06:12 JonnyBNoHo wrote:On December 16 2014 23:44 Skilledblob wrote:
the greek government lied when it applied for the Eurozone, the greek government failed to build a proper tax infrastructure
you reap what you sow.
everyone was hit by the global recession a couple years back, but the magnitude by which it affected Greece was by a large part their own making. Greece wasn't the first or last country to break deficit rules or fudge the accounting to make things look nicer, nor was it the last. As for 'you reap what you sow', well yes, I wouldn't disagree with that. Greeks borrowed heavily and didn't spend it wisely... of course good things don't come from that. However, it takes two parties to be involved here, and so those who lent Greeks money for those frivolous things should be reaping what they sowed as well. A nd that doesn't seem to be the case, or at least it is lopsided. Actually I beleive the banks which lent the money to the Greek Government had to write off billions of dollars. True, but the pain has been very lopsided. Greece went from a rising economy into a depression while Germany went from 'the sick man of Europe' to an economic superstar. There's more to that story than just the debt crisis, but the reversal in fortunes is amazing. Eh? Greece wasn't a rising economy, it just hid how badly it was doing by taking debts and hid it's decifits with dodgy accounting until it couldn't be hidden any longer. Germany had their roots on being an economic superstar simply because they themselves underwent years of reform with a political and popular will, far greater than just about any other democratic country. Who lent the Greeks money? It wasn't the German government. It were banks. And those banks that lent the Greek government money lost money. Who gained money? The Greek government in the short term. Who gained out of all this? The wealthy tax avoiders in Greece. The nepostic, well paid, public sector with comfortable jobs with comfortable pensions. The politicians. Those were the ones who gained. Who suffered? The banks who lent the money in the first place, and everybody else in Greece. Oh and everybody else whose taxpayers money had to who bailed out the Greeks. That'll be the German taxpayers then. So as you can see, your strange story that the Germans somehow engineered the Greek disaster for their own benefit is nothing of the sort.
But that's not my story.
Germany relies on foreign demand to keep its economy going. For a while that foreign demand was provided by Europe's peripheral countries like Greece and Spain. It was a mutually beneficial arrangement, with Germans having a market for their goods, higher rates of return on their investments and peripheral countries better able to finance their purchases.
As it goes, a portion of that foreign demand turned out to be unsustainable. So a correction was needed but keep in mind that a correction should hurt both parties. Countries like Greece should be buying less but countries like Germany should be producing less, since their customers are now buying less.
But that is not how the aftermath has really played out. Germany continues to produce, and indeed its exports have only risen. Meanwhile Greek unemployment shot up, meaning they're producing less. Part of that is due to being locked in a currency union with Greece, but it is also due to Greek debt restructuring not going far enough. Those who lent, have gotten off too easy in the name of financial stability.
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On December 18 2014 05:55 Dangermousecatdog wrote:
The German and French taxpayers are propping up your government at the moment. Imagine if all that money wasn't. These reforms are far less severe than if the Greek government simply had taken a default like you had suggested. Where do you suggest that the money gap from the bail out would come from? Good luck getting a new loan right after defaulting from the previous one.
How exactly it would be worse? 27% unemployment? 25% GDP collapse?
FYI Greece already defaulted, twice through voluntary haircuts (CDS payed) and exactly because they were voluntary the debt remained unsustainable and after 5 years Greece has a higher national debt than what it was back to 2009.
That's the main point about defaulting really, it's nothing else but a statement/realization of how much debt the country (any country) is able to pay back while sustaining basic services to its people (aka no deficit) without new loans, but obviously this never happened in this case.
Anyway i can very well imagine what would happen without the "bailouts". Obviously Greece would have to default e.g a one sided debt restructuring plus a fast deficit adjustment and really for that there were (and still are) some paths that could very well save many social services from collapsing , for example a cut to military spending, one of the highest per GDP among the EU countries and ofcourse deal with the corruption and oligarchs. Now i understand that you can hardly believe this but both of those paths at some point would hit upon european governments and companies.
But anyway the (far-)right wing greek muppet government simply agreed to the IMF policies and we are at a point of humanitarian crisis and always a step away from a big burst.
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On December 17 2014 05:52 WhiteDog wrote:Show nested quote +On December 17 2014 05:27 RvB wrote:On December 16 2014 21:24 WhiteDog wrote:On December 16 2014 16:18 RvB wrote:On December 14 2014 22:47 WhiteDog wrote:Was reading To our Friends (from the invisible comity, check it !) and found out that Elstat (responsible for production various statistics in Greece) falsified 2009's data on Greece deficit to make it worse than it was (higher than Ireland) in order to justify the (wrong and stupid) austerity policies. This has been done under pressure from the european union and eurostats... so Junker's warning is almost an insult to Greeks. ATHENS (Reuters) - Greece's statistics chief will testify next month in a criminal investigation into allegations that his office falsified the budget deficit to make the country's financial crisis look worse, court officials said Monday.
The head of the newly independent statistics service ELSTAT, Andreas Georgiou, denied any wrongdoing and has not been charged with any offence in the investigation, stemming from allegations made by a former ELSTAT board member.[...]
"The 2009 deficit was artificially inflated to show that the country had the biggest fiscal shortfall in all of Europe, even higher than Ireland's which was 14 percent," former ELSTAT board member Zoe Georganta was quoted as saying by the Eleftherotypia newspaper.
Georganta told Greek media the inclusion of a number of utilities under general government data inflated the deficit and that this was done under German pressure to justify harsh austerity measures. http://www.huffingtonpost.com/2011/11/28/andreas-georgiou-greek-statistics-chief_n_1116732.htmlAnd by the way, islamophobia going strong in Germany. Pretty institutionalized movement... In Germany alone 81 attacks targeting mosques were carried out since 2012, but of course the 3 attacks on Synagogues in France, in 2013, are more concerning... There have been plenty of movements such as Stürzenberger's in Germany in recent years. They generally begin in response to the construction of a mosque: Reluctance turns into resistance, then hate and violence. Over the last two years, there have been arson attacks against Muslim prayer houses in Berlin, Hanau and Hannover. Politically Incorrect, the most prominent German-speaking anti-Islam website, has up to 120,000 visitors per day.
In addition to Die Freiheit, radical anti-Islamists have founded the political party Pro Deutschland ("Pro Germany") and the citizens' movement Pax Europa. They are currently attempting to gain influence over the euro-skeptic Alternative for Germany Party (AfD) -- the former federal chairman of Die Freiheit has called for his followers to support the AfD in this May's European elections.
According to a study by the Friedrich Ebert Foundation, 56 percent of Germans consider Islam to be an "archaic religion, incapable of fitting into modern life" and many believe religious freedom for Muslims should be "substantially restricted." http://www.spiegel.de/international/germany/islamophobic-hate-groups-become-more-prominent-in-germany-a-956801.html I dont think Greece had any choice really it was either the austerity or bankruptcy. Even if inflated, which isn't proven, their structural deficit was really high. You are wrong and at this point you should know how wrong you are. Ireland had a higher deficit and refused austerity. Result : they are growing right now. Austerity was the worst decision possible, especially at this time, and anybody who say the opposite have no clue about economy. ![[image loading]](http://www.irishtimes.com/polopoly_fs/1.2034135!/image/image.png_gen/derivatives/landscape_620/image.png) ![[image loading]](http://cdn.static-economist.com/sites/default/files/imagecache/original-size/images/print-edition/20141122_FNC309.png) Austerity, coming from Germans through the european union, has been nothing less than a crime against Greece. Ierland had it's own austerity programme. Youre niet even reading what I wrote anyway. For Greece is was either default or austerity. http://www.economist.com/news/europe/21588110-government-end-economic-emergency-sight-eighth-austerity-budget Again that's wrong : there could have been debt restructuring, solidarity from the european union (the totality of the greek debt was around 2% of the union's GDP) or monetization from the central bank. As for austerity in Ireland, it was way less (freeze in wages but no decrease for exemple), and they voted against in 2014. But I should have talked about Island and not Ireland, was a little distracted. Ireland is not a good exemple.
There was a debt restructuring from the private sector with a write off of 75% iirc. The European governments agreed tot an extension of the maturity of the bonds, a lowering of the interest rate, they will only have to start paying back in 5 years and the ecb will reinvest the money they make from the bonds they bought. So while we demanded a lot of Greece they received a lot as well.
Iceland had it's own austerity programme and a real gdp drop of like 10% so maybe you cab explain why thats a good example?
I agree with you that Germany and the northern countries should have helped and increased investment while persueing a more inflationary policy. That way we would have benefited from higher wages while southern Europese countriee wouls become more competitive and wouldnt be facing these disgusting unemployment figures.
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On December 18 2014 07:23 RvB wrote:Show nested quote +On December 17 2014 05:52 WhiteDog wrote:On December 17 2014 05:27 RvB wrote:On December 16 2014 21:24 WhiteDog wrote:On December 16 2014 16:18 RvB wrote:On December 14 2014 22:47 WhiteDog wrote:Was reading To our Friends (from the invisible comity, check it !) and found out that Elstat (responsible for production various statistics in Greece) falsified 2009's data on Greece deficit to make it worse than it was (higher than Ireland) in order to justify the (wrong and stupid) austerity policies. This has been done under pressure from the european union and eurostats... so Junker's warning is almost an insult to Greeks. ATHENS (Reuters) - Greece's statistics chief will testify next month in a criminal investigation into allegations that his office falsified the budget deficit to make the country's financial crisis look worse, court officials said Monday.
The head of the newly independent statistics service ELSTAT, Andreas Georgiou, denied any wrongdoing and has not been charged with any offence in the investigation, stemming from allegations made by a former ELSTAT board member.[...]
"The 2009 deficit was artificially inflated to show that the country had the biggest fiscal shortfall in all of Europe, even higher than Ireland's which was 14 percent," former ELSTAT board member Zoe Georganta was quoted as saying by the Eleftherotypia newspaper.
Georganta told Greek media the inclusion of a number of utilities under general government data inflated the deficit and that this was done under German pressure to justify harsh austerity measures. http://www.huffingtonpost.com/2011/11/28/andreas-georgiou-greek-statistics-chief_n_1116732.htmlAnd by the way, islamophobia going strong in Germany. Pretty institutionalized movement... In Germany alone 81 attacks targeting mosques were carried out since 2012, but of course the 3 attacks on Synagogues in France, in 2013, are more concerning... There have been plenty of movements such as Stürzenberger's in Germany in recent years. They generally begin in response to the construction of a mosque: Reluctance turns into resistance, then hate and violence. Over the last two years, there have been arson attacks against Muslim prayer houses in Berlin, Hanau and Hannover. Politically Incorrect, the most prominent German-speaking anti-Islam website, has up to 120,000 visitors per day.
In addition to Die Freiheit, radical anti-Islamists have founded the political party Pro Deutschland ("Pro Germany") and the citizens' movement Pax Europa. They are currently attempting to gain influence over the euro-skeptic Alternative for Germany Party (AfD) -- the former federal chairman of Die Freiheit has called for his followers to support the AfD in this May's European elections.
According to a study by the Friedrich Ebert Foundation, 56 percent of Germans consider Islam to be an "archaic religion, incapable of fitting into modern life" and many believe religious freedom for Muslims should be "substantially restricted." http://www.spiegel.de/international/germany/islamophobic-hate-groups-become-more-prominent-in-germany-a-956801.html I dont think Greece had any choice really it was either the austerity or bankruptcy. Even if inflated, which isn't proven, their structural deficit was really high. You are wrong and at this point you should know how wrong you are. Ireland had a higher deficit and refused austerity. Result : they are growing right now. Austerity was the worst decision possible, especially at this time, and anybody who say the opposite have no clue about economy. Austerity, coming from Germans through the european union, has been nothing less than a crime against Greece. Ierland had it's own austerity programme. Youre niet even reading what I wrote anyway. For Greece is was either default or austerity. http://www.economist.com/news/europe/21588110-government-end-economic-emergency-sight-eighth-austerity-budget Again that's wrong : there could have been debt restructuring, solidarity from the european union (the totality of the greek debt was around 2% of the union's GDP) or monetization from the central bank. As for austerity in Ireland, it was way less (freeze in wages but no decrease for exemple), and they voted against in 2014. But I should have talked about Island and not Ireland, was a little distracted. Ireland is not a good exemple. There was a debt restructuring from the private sector with a write off of 75% iirc. The European governments agreed tot an extension of the maturity of the bonds, a lowering of the interest rate, they will only have to start paying back in 5 years and the ecb will reinvest the money they make from the bonds they bought. So while we demanded a lot of Greece they received a lot as well. Iceland had it's own austerity programme and a real gdp drop of like 10% so maybe you cab explain why thats a good example?I agree with you that Germany and the northern countries should have helped and increased investment while persueing a more inflationary policy. That way we would have benefited from higher wages while southern Europese countriee wouls become more competitive and wouldnt be facing these disgusting unemployment figures.
This week at Davos, most of the time the world’s richest people spent time patting each other on their backs.
But there were some good parts too. Al-Jazeera briefly interviewed Iceland’s President Ólafur Ragnar Grímsson on how the country managed to turn around its economy so quickly.
He says:
I think the primary reason is that we were wise enough to realise this was also a fundamental social and political crisis, but overall we didn’t follow the traditional prevailing orthodoxies of the western world of the last 30 years.
We introduced currency controls, we let the banks fail, we provided support for the poor, we didn’t introduce austerity measures of the scale you are seeing here in Europe… and the end result four years later is that Iceland is enjoying progress and recovery very differently from the other European countries that suffered from the financial crisis.
http://liberalconspiracy.org/2013/02/01/watch-icelands-president-we-saved-our-economy-by-avoiding-austerity/
However, the new government adopted the Icesave law - whose name comes from the online bank that went bankrupt and whose depositors were mostly Dutch and British - to reimburse foreign customers. This legislation forced Icelanders to repay a debt of 3.5 billion euros (40% of its GDP) - nine thousand euros per inhabitant - over fifteen years and with an interest rate of 5%. Before the new popular protests, the president refused to enact the law passed by parliament and submitted it to a referendum. In March 2010, 93% of Icelanders rejected the law of reimbursement of Icesave losses. Once again, it was submitted to a referendum in April 2011, and 63% of citizens reject it again.
A new constitution, drafted by a Constituent Assembly of 25 citizens elected by universal suffrage among 522 candidates, comprising nine chapters and 114 articles, was adopted in 2011. It provides for the right to information, public access to official documents (Article 15), the creation of a Commission for the Control of government accountability (Article 63), the right to direct consultation (Article 65) - 10% of voters can ask a referendum on laws passed by Parliament - as well as the appointment of the Prime Minister by Parliament.
Thus, unlike the other nations of the European Union in the same situation, who applied to the letter the instructions of the IMF demanding severe austerity measures as Greece, Ireland, Italy or Spain, Iceland chose an alternative route. When, in 2008, the country's three main banks - Glitnir, Kaupthing and Landsbankinn - collapsed, the Icelandic State refused to inject public funds into them, as did the rest of Europe. Instead, they were subject to nationalization.
Similarly, private banks had to cancel all mortgage loans with variable rates that would exceed 110% of the value of real estate, which averted a crisis of subprime and the United States. Moreover, the Supreme Court outlawed all loans indexed in foreign currencies that had been granted to households, thus forcing banks to withdraw their claims for the benefit of the population.
As those responsible for the disaster - the bankers and speculators that caused the collapse of the Icelandic financial system - were not benefited with the meekness in the rest of Europe, where they were systematically acquitted. Indeed, Olafur Thor Hauksson, Special Prosecutor appointed by Parliament, sued them and arrested them, including the former Prime Minister, Geir Haarde.
An alternative to austerity
The results of the Icelandic economic and social policy have been spectacular. While the European Union is in a recession, Iceland presented a growth rate of 2.1% in 2011 and provides for a rate of 2.7% for 2012, and an unemployment rate of 6%. The country even bothered to make early repayment of its debt to the IMF.
http://english.pravda.ru/world/americas/28-11-2012/122952-iceland_reject_austerity-0/
The scale and the time of the debt restructuring were bad tho. It was always accepted by foreign european power as a "gift" to greece in exchange for substantial reform and austerity measure. "I give you this piece of bread but you cut your leg, okay ?".
On December 18 2014 05:55 Dangermousecatdog wrote:
The German and French taxpayers are propping up your government at the moment. Imagine if all that money wasn't. These reforms are far less severe than if the Greek government simply had taken a default like you had suggested. Where do you suggest that the money gap from the bail out would come from? Good luck getting a new loan right after defaulting from the previous one.
Not enough tho. I would gladly support a heavy investment from the european union (or even just France) towards Greece, without any form of constraint or necessity to pay any debt (with a substantial debt restructuring).
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Becaues Iceland let its Banks basically default.. Which was a shock and a hard hit BUT it also recovered fast and nicely.
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On December 18 2014 07:08 JonnyBNoHo wrote:Show nested quote +On December 17 2014 22:07 Dangermousecatdog wrote:On December 17 2014 09:12 JonnyBNoHo wrote:On December 17 2014 07:20 Dangermousecatdog wrote:On December 17 2014 06:12 JonnyBNoHo wrote:On December 16 2014 23:44 Skilledblob wrote:
the greek government lied when it applied for the Eurozone, the greek government failed to build a proper tax infrastructure
you reap what you sow.
everyone was hit by the global recession a couple years back, but the magnitude by which it affected Greece was by a large part their own making. Greece wasn't the first or last country to break deficit rules or fudge the accounting to make things look nicer, nor was it the last. As for 'you reap what you sow', well yes, I wouldn't disagree with that. Greeks borrowed heavily and didn't spend it wisely... of course good things don't come from that. However, it takes two parties to be involved here, and so those who lent Greeks money for those frivolous things should be reaping what they sowed as well. A nd that doesn't seem to be the case, or at least it is lopsided. Actually I beleive the banks which lent the money to the Greek Government had to write off billions of dollars. True, but the pain has been very lopsided. Greece went from a rising economy into a depression while Germany went from 'the sick man of Europe' to an economic superstar. There's more to that story than just the debt crisis, but the reversal in fortunes is amazing. Eh? Greece wasn't a rising economy, it just hid how badly it was doing by taking debts and hid it's decifits with dodgy accounting until it couldn't be hidden any longer. Germany had their roots on being an economic superstar simply because they themselves underwent years of reform with a political and popular will, far greater than just about any other democratic country. Who lent the Greeks money? It wasn't the German government. It were banks. And those banks that lent the Greek government money lost money. Who gained money? The Greek government in the short term. Who gained out of all this? The wealthy tax avoiders in Greece. The nepostic, well paid, public sector with comfortable jobs with comfortable pensions. The politicians. Those were the ones who gained. Who suffered? The banks who lent the money in the first place, and everybody else in Greece. Oh and everybody else whose taxpayers money had to who bailed out the Greeks. That'll be the German taxpayers then. So as you can see, your strange story that the Germans somehow engineered the Greek disaster for their own benefit is nothing of the sort. But that's not my story. Germany relies on foreign demand to keep its economy going. For a while that foreign demand was provided by Europe's peripheral countries like Greece and Spain. It was a mutually beneficial arrangement, with Germans having a market for their goods, higher rates of return on their investments and peripheral countries better able to finance their purchases. As it goes, a portion of that foreign demand turned out to be unsustainable. So a correction was needed but keep in mind that a correction should hurt both parties. Countries like Greece should be buying less but countries like Germany should be producing less, since their customers are now buying less. But that is not how the aftermath has really played out. Germany continues to produce, and indeed its exports have only risen. Meanwhile Greek unemployment shot up, meaning they're producing less. Part of that is due to being locked in a currency union with Greece, but it is also due to Greek debt restructuring not going far enough. Those who lent, have gotten off too easy in the name of financial stability.
So, according to you Greece exists to buy German goods, and Germany exists to give their money to Greece to buy their own goods, and after the euro crisis Germany continues to make goods and Greeks has no money to buy them any longer with unemployment as the result. Your words not mine. What a load of bullcrap. I wonder who fed you such a story.
It's simple really. Germany is doing well becuase the rest of the world buys German exports. Whatever loss in exports the Germans has lost in Europe, they have more than gained in outside markets. Greek unemployment shot up simply because the Greek government can no longer afford to pay their ridiculously inflated and inefficient public sector.
On December 18 2014 07:15 accela wrote:Show nested quote +On December 18 2014 05:55 Dangermousecatdog wrote:
The German and French taxpayers are propping up your government at the moment. Imagine if all that money wasn't. These reforms are far less severe than if the Greek government simply had taken a default like you had suggested. Where do you suggest that the money gap from the bail out would come from? Good luck getting a new loan right after defaulting from the previous one. How exactly it would be worse? 27% unemployment? 25% GDP collapse? FYI Greece already defaulted, twice through voluntary haircuts (CDS payed) and exactly because they were voluntary the debt remained unsustainable and after 5 years Greece has a higher national debt than what it was back to 2009. That's the main point about defaulting really, it's nothing else but a statement/realization of how much debt the country (any country) is able to pay back while sustaining basic services to its people (aka no deficit) without new loans, but obviously this never happened in this case. Anyway i can very well imagine what would happen without the "bailouts". Obviously Greece would have to default e.g a one sided debt restructuring plus a fast deficit adjustment and really for that there were (and still are) some paths that could very well save many social services from collapsing , for example a cut to military spending, one of the highest per GDP among the EU countries and ofcourse deal with the corruption and oligarchs. Now i understand that you can hardly believe this but both of those paths at some point would hit upon european governments and companies. But anyway the (far-)right wing greek muppet government simply agreed to the IMF policies and we are at a point of humanitarian crisis and always a step away from a big burst. Of course it would be worse if the Greek government defaulted. 27% unemployment? 25% GDP collapse? Now imagine what the figures would be if the Greek government simply didn't have the finance to pay the workings of the government. A step away from one big burst is better than the big burst that would had occured otherwise. Whether or not 10 years down the road the ruins of the country would get together for another go to deal with the inefficiencies of their own country is a different matter.
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Of course it would be worse if the Greek government defaulted. 27% unemployment? 25% GDP collapse? Now imagine what the figures would be if the Greek government simply didn't have the finance to pay the workings of the government. A step away from one big burst is better than the big burst that would had occured otherwise. Whether or not 10 years down the road the ruins of the country would get together for another go to deal with the inefficiencies of their own country is a different matter.
that's a lot of imagining and assuming for my taste.
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On December 18 2014 07:50 Dangermousecatdog wrote:Show nested quote +On December 18 2014 07:08 JonnyBNoHo wrote:On December 17 2014 22:07 Dangermousecatdog wrote:On December 17 2014 09:12 JonnyBNoHo wrote:On December 17 2014 07:20 Dangermousecatdog wrote:On December 17 2014 06:12 JonnyBNoHo wrote:On December 16 2014 23:44 Skilledblob wrote:
the greek government lied when it applied for the Eurozone, the greek government failed to build a proper tax infrastructure
you reap what you sow.
everyone was hit by the global recession a couple years back, but the magnitude by which it affected Greece was by a large part their own making. Greece wasn't the first or last country to break deficit rules or fudge the accounting to make things look nicer, nor was it the last. As for 'you reap what you sow', well yes, I wouldn't disagree with that. Greeks borrowed heavily and didn't spend it wisely... of course good things don't come from that. However, it takes two parties to be involved here, and so those who lent Greeks money for those frivolous things should be reaping what they sowed as well. A nd that doesn't seem to be the case, or at least it is lopsided. Actually I beleive the banks which lent the money to the Greek Government had to write off billions of dollars. True, but the pain has been very lopsided. Greece went from a rising economy into a depression while Germany went from 'the sick man of Europe' to an economic superstar. There's more to that story than just the debt crisis, but the reversal in fortunes is amazing. Eh? Greece wasn't a rising economy, it just hid how badly it was doing by taking debts and hid it's decifits with dodgy accounting until it couldn't be hidden any longer. Germany had their roots on being an economic superstar simply because they themselves underwent years of reform with a political and popular will, far greater than just about any other democratic country. Who lent the Greeks money? It wasn't the German government. It were banks. And those banks that lent the Greek government money lost money. Who gained money? The Greek government in the short term. Who gained out of all this? The wealthy tax avoiders in Greece. The nepostic, well paid, public sector with comfortable jobs with comfortable pensions. The politicians. Those were the ones who gained. Who suffered? The banks who lent the money in the first place, and everybody else in Greece. Oh and everybody else whose taxpayers money had to who bailed out the Greeks. That'll be the German taxpayers then. So as you can see, your strange story that the Germans somehow engineered the Greek disaster for their own benefit is nothing of the sort. But that's not my story. Germany relies on foreign demand to keep its economy going. For a while that foreign demand was provided by Europe's peripheral countries like Greece and Spain. It was a mutually beneficial arrangement, with Germans having a market for their goods, higher rates of return on their investments and peripheral countries better able to finance their purchases. As it goes, a portion of that foreign demand turned out to be unsustainable. So a correction was needed but keep in mind that a correction should hurt both parties. Countries like Greece should be buying less but countries like Germany should be producing less, since their customers are now buying less. But that is not how the aftermath has really played out. Germany continues to produce, and indeed its exports have only risen. Meanwhile Greek unemployment shot up, meaning they're producing less. Part of that is due to being locked in a currency union with Greece, but it is also due to Greek debt restructuring not going far enough. Those who lent, have gotten off too easy in the name of financial stability. So, according to you Greece exists to buy German goods, and Germany exists to give their money to Greece to buy their own goods, and after the euro crisis Germany continues to make goods and Greeks has no money to buy them any longer with unemployment as the result. Your words not mine. What a load of bullcrap. I wonder who fed you such a story. It's simple really. Germany is doing well becuase the rest of the world buys German exports. Whatever loss in exports the Germans has lost in Europe, they have more than gained in outside markets. Greek unemployment shot up simply because the Greek government can no longer afford to pay their ridiculously inflated and inefficient public sector. Show nested quote +On December 18 2014 07:15 accela wrote:On December 18 2014 05:55 Dangermousecatdog wrote:
The German and French taxpayers are propping up your government at the moment. Imagine if all that money wasn't. These reforms are far less severe than if the Greek government simply had taken a default like you had suggested. Where do you suggest that the money gap from the bail out would come from? Good luck getting a new loan right after defaulting from the previous one. How exactly it would be worse? 27% unemployment? 25% GDP collapse? FYI Greece already defaulted, twice through voluntary haircuts (CDS payed) and exactly because they were voluntary the debt remained unsustainable and after 5 years Greece has a higher national debt than what it was back to 2009. That's the main point about defaulting really, it's nothing else but a statement/realization of how much debt the country (any country) is able to pay back while sustaining basic services to its people (aka no deficit) without new loans, but obviously this never happened in this case. Anyway i can very well imagine what would happen without the "bailouts". Obviously Greece would have to default e.g a one sided debt restructuring plus a fast deficit adjustment and really for that there were (and still are) some paths that could very well save many social services from collapsing , for example a cut to military spending, one of the highest per GDP among the EU countries and ofcourse deal with the corruption and oligarchs. Now i understand that you can hardly believe this but both of those paths at some point would hit upon european governments and companies. But anyway the (far-)right wing greek muppet government simply agreed to the IMF policies and we are at a point of humanitarian crisis and always a step away from a big burst. Of course it would be worse if the Greek government defaulted. 27% unemployment? 25% GDP collapse? Now imagine what the figures would be if the Greek government simply didn't have the finance to pay the workings of the government. A step away from one big burst is better than the big burst that would had occured otherwise. Whether or not 10 years down the road the ruins of the country would get together for another go to deal with the inefficiencies of their own country is a different matter.
Germany cannot fully substitute european demand with foreign demand and the current economic difficulties of Germany is a good exemple of that !
That you want it or not, Europe is one of the most solid region of the world, and the existance of the european union / common currency, heavily facilitate the exchange and thus the exportation of Germany (making it less costly). In this regard, europe as a common market is very beneficial to Germany. A weak europe will always, one day or another, end up in weakened Germany because its entire strategy is based around exportation and those exports are way easier in a regional space such as a the euro.
If you look at the trade at world level, while Germany is a giant, most of the trading in the world is made at regional level : america is a pretty closed region, south america and asia too, etc. Even if the trading at the world wide level are growing, regional trading will always be more important (for obvious cultural and territories reasons).
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But how do you want to make sure that this continues if you're in favour of breaking up the currency? In real-life politics you're not going to be able to just end the currency zone. Allmost all parties in Europe that are in favour of getting rid of the currency are also protectionist, anti-immigration, and sometimes outright racist. Looking at the currency in a vacuum seems not so good to me. A breakup of the Euro would probably have terrible indirect consequences.
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EPT![[image loading]](http://www.ritholtz.com/blog/wp-content/uploads/2012/08/iceland.jpg)
