Economists! Comments and Opinion on Greek Debt Article

[Admiral Valdemar]

1000 or even 500 points in a single day isn't the end of the world... but several weeks of declines and the bottom WILL fall out. And then we're all fucked, and it's time to stock up on guns and ammo

True, but we lost a good couple hundred the other day, and these jitters have only just started translating to the markets. Oil, for instance, has dropped near ten bucks, while gold seems to be holding steady. I doubt the eye being on an unsure German backed bailout will help matters.

[Admiral Valdemar]

NYSE says "no technical problem".

[aerius]

Gotta love that high-frequency trading. I wouldn't be shocked if they deliberately crashed the markets today to force the Germans to pass the Greek bailout package tomorrow. That's pretty much what they did to pass TARP in the US, and since that worked out so well they've decided to do it to entire nations.

[D.Turtle]

The bailout package is already sure to pass. The only question is with what kind of margin it will pass.

[Crown]

Oh, and Crown: It was more than just a few people. Several parties (communists and ultra-conservatives - no idea how big they are, or how significant) in the parliament demanded in February that the government should call in reparations from Germany. In addition, at that time some other organizations called for a boycott of German goods.

I accept the clarification, but I will point out that in the English media I have heard nothing of the kind and still stand by my original point; sensational reporting is making more of this for you guys (because you do have a vested interest) than is given credence anywhere else.

For reference; the PASOK government holds 160 seats and the bill (austerity) just passed of a simple majority of 151 (actually 173 voted yea).

[Crown]

From the Beeb

Angry Greeks 'carrying the can' for politicians
By Kate Forbes
BBC News, Athens

Like the sting of police tear gas, popular anger hangs heavy in the air as protesters take to the streets of Athens, for the third time in less than a week.

Some Europeans have been surprised by the extent of Greeks' anger over government cuts in wages, pensions and increases in VAT - all measures needed to get the Greek economy back from the brink of default.

The measures are a condition for the huge bailout agreed by the IMF and EU, amounting to loans to Greece worth 110bn euros (£95bn; $146bn).

Why are Greek people so angry? From the outside, it looks like a spendthrift country getting what it deserves in painful cuts to public spending.

At street level, however, the anger stems from a sense of injustice. Many feel that the average citizen is now paying the price for corruption and government spending that they did not benefit from.

A civil servant in the finance ministry spoke on condition of anonymity. "Greek people are willing to contribute and make sacrifices. The vast majority of people do want to contribute to ease the economic problems of our country," he said.

"But first of all they want to stop political corruption. So if we see the people responsible for this being brought to justice, we are really willing to pay and make sacrifices."

"In the past I've seen government offices or committees being set up which don't actually do anything. They are designed only to give important political supporters a wage. In the ministry we've highlighted these and said 'Really, don't do this! We can't afford it!' But no one listens."

"Also we knew for years in the ministry about the wrong figures being shown to the world about our GDP and our debt. We protested to our seniors but again no one would listen. We are very unhappy about it - taking to the streets is really our only option."

'Strangling business'

The mood on the street is bitter because of this sense that pensioners and public sector workers on some of the lowest wages in the European Union are paying for these so called "ghost workers" in government.

However, lots of those marching in Athens this past week have accepted the need for cuts.

Evyenea owns a ceramics shop in the tourist district of Placa.

"This mess started 30 years ago but the politicians are shoving the responsibility for their bad management [of finances] onto others who can't afford it," she says angrily.

"If they need to cut big salaries of civil servants of course do so, but to punish those on pensions by cutting them is really not fair."

"I'm worried about VAT increases because that's going to have a knock on effect on business as people will spend less. The Greeks have no money to spend so the smaller shops like mine are closing, and soon the only thing we'll have left is the multinationals."

Odysseas Roussos owns a jewellery shop just down the street. He feels that the cuts imposed are unfair.

"Those that have to pay don't have the means to pay," he says.

"And they are strangling small businesses. A lot of people with shops and businesses are finding that the trade has gone down by around 50%. I'm worried that with people earning even less they will spend less and there'll be a recession. My wife has already lost 3,000 euros a year from her salary, which is about a 20% cut."

"There's not much I can do about it - we could burn Athens down but that wouldn't be the solution."

'Tough on the kids'

Thrasyvo Paxinos, a teacher with three children, has seen his salary cut by 12% and he faces another cut in the next few months.

"We have cut back on luxuries of course," he said. "Cigarettes, wine, cheese, using the car. Although maybe cutting back on cigarettes is a good thing!" he concedes.

"But it's also tough on the kids - we used to take them out at the weekend, to the zoo or whatever, but VAT increases with our pay cuts will mean we really won't be doing that so much anymore."

"I am willing to take a cut, because we all have to. But I'm feeling more and more angry every day, because those who got us into this mess are not held responsible. Their children aren't going to suffer because of this."

Most Greeks we spoke to acknowledged that sacrifices would have to be made, and some were in support of cuts.

But nearly all referred to lower paid workers "carrying the can" for decades of mismanagement and political corruption, and it is this sense of injustice which is propelling people out onto the streets.

The BBC has (not surprisingly) a whole serious on the issue, you can click through the whole lot if you like, no point posting it all here, but hopefully this will put paid to the over simplistic 'they're crying because they're being asked to give up their toys' argument.

[Broomstick]

About that stock market drop - the nightly news here reported that someone entered a large sell order for Proctor and Gamble at about half the stock's price. That supposedly triggered today's plunge in the Dow. Trading was halted for 90 seconds, after which things rebounded. Supposedly it was a typo.

All I can say is that if the stock market can be tanked because of a TYPO there is something seriously wrong....

Anyhow - jitters about other stuff undoubtedly contributed, making folks more likely to wig out/panic/whatever.

[Admiral Valdemar]

About that stock market drop - the nightly news here reported that someone entered a large sell order for Proctor and Gamble at about half the stock's price. That supposedly triggered today's plunge in the Dow. Trading was halted for 90 seconds, after which things rebounded. Supposedly it was a typo.

All I can say is that if the stock market can be tanked because of a TYPO there is something seriously wrong....

Anyhow - jitters about other stuff undoubtedly contributed, making folks more likely to wig out/panic/whatever.

"Markets do not work that way!"
[/Morbo]

Basically, they're wrong. And they're peddling either the "Whoops, our computers are kerrrazy!" or "Someone made a typo. Despite words not being used in trading. And the billions of previous transactions in the history of ETF trading not having this error crop up once".

Maybe, possibly, it's down to the Euro tanking and EU banks basically halting lending overnight, Greek austerity going down like a lead balloon, Merkel being generally clueless and a likely hung Parliament in the UK.

[Broomstick]

Ah. So I should use my food stamps to stock up on canned meat products, get the vegetable garden growing, and spend the money I made this week mowing lawns and stuff on guns and ammo. Is that what you're saying?

(Corn products should be no problem for the foreseeable future - with the Gulf of Mexico all oiled up the Midwestern corn harvest won't be able to go anywhere this year, so I will be surrounded by abundance. Too bad my body doesn't really get along that well with corn...)

[Admiral Valdemar]

Put it this way. Which is more comforting? Knowing that the market is acting somewhat rationally in seeing the Ponzi scheme we're running is out of suckers, or a single fat fingered man at a computer terminal can make a typo and wipe out billions instantly from the world's biggest stock exchange?

The likes of Bloomberg and MSNBC must think we're mugs. Friday is going to be ugly.

[Uraniun235]

Which is more comforting? Knowing that the market is acting somewhat rationally in seeing the Ponzi scheme we're running is out of suckers, or a single fat fingered man at a computer terminal can make a typo and wipe out billions instantly from the world's biggest stock exchange?

I dunno, man. I always thought the more cynical and depressing thought was that, no, shit isn't due to a conspiracy of evil bastards; we just actually can't run society successfully because we're literally too goddamn stupid to manage our affairs. The conspiracy at least presents us with a percentage of competent people and the hope that someday we can get competent people in power who aren't out to dick everyone over; the latter leaves us with no hope for anything but perpetual failure.

[Admiral Valdemar]

If it was just down to one eejit, then I'm amazed we even managed to make an economy to collapse. I can go with the likes of those eeeeevil Jews at Goldman Sachs raping the wealth of the world and spreading lies about the Moon landing or something, but human stupidity on this level is painful. I know, collectively, we're being stupid and greedy and bringing down the house because of it, and this fact doesn't make it any easier to accept that in this day and age, we can have such clusterfucks brought about by incompetence of a handful of people. That's probably why conspiracy theories get so much credence with people: the alternative is simply unthinkable and disturbing.

Like they say, the markets now basically are casinos where our cash is thrown around like so much confetti. I actually wish there was a grand scheme for this other than simple greed and lack of altruism. Alas, no: we are surrounded by comic book villain evil stupid.

[Iosef Cross]

Admiral Valdemar should change his name to Captain Bullshit. My god, he produced enough bullshit in this topic to fertilize hundreds of hectares of land.

[Big Phil]

Homey... I'm no fan of Valdemar and his gloom and doom predictions, but there isn't much bullshit in his arguments. You can disagree with his conclusions (I don't think things are nearly as dire as he does), but you're going to have to do better than call him Captain Bullshit.

Besides, he's far from the worst as far as end of the world predictions... compared to some posters Valdemar is practically optimistic.

[Admiral Valdemar]

Admiral Valdemar should change his name to Captain Bullshit. My god, he produced enough bullshit in this topic to fertilize hundreds of hectares of land.

Let me know when you make an actual point.

[D.Turtle]

Well, we (Germans) did our part in helping Greece. It passes parliament with the votes of the ruling coalition, joined by the Greens, while the Social Democrats abstained and the Left voted against it. It will pass the Bundesrat (the second chamber with representatives from the states), and go for signature to the President this afternoon.

Lets hope that the Greeks do something useful with the help they are getting ...

Now I wonder how long it will take until we have to bail out Italy, Spain, Portugal and Ireland.

Oh, and of course the UK, as they are currently headed for a deficit of 12% of GDP (worst in the EU) ...

Its really hilarious how we are apparently pretty much the most robust and strongest member of the EU, after being called the "sick man of Europe" for so long. Apparently basing your entire economy on financial speculation (Ireland, UK), real estate speculation (Spain), and lying (Greece) only works for a short time ....

[Broomstick]

And of course, what was especially pleasant in Germany to hear - according to the Greeks, Germany has to pay because of ....wait for it..... THE NAZIS.

OH, fucking hell, my family really was almost wiped out by the Nazis but I wouldn't lay that at the feet of the current Germany. It's just a fucking excuse by a bunch of spoiled brats Which WE all know.

And, do you think that there aren't a lot of Greeks in Greece that weren't personally affected by Nazi occupation? You know, in a country that was occupied by the Nazis? You know, during the second world war? You know, back in the 40's?

Wah, wah, wah - you're pleading exceptionalism for Greece. Stop acting like an American about it.

Do you think Greece was the ONLY country invaded in WWII? Do you think ONLY the Greeks suffered? Do you not realize that there people ALL AROUND THE WORLD who were "personally affected" by WWII, you know, back in the 40's?

Or maybe you hadn't noticed that there are entire fucking graveyards in Europe full of people who came from other continents to fight the Evil Nazis.

Yes, your country being invaded 60 years ago can have a big effect on today - just ask, oh, I don't know - France. Belgium. The Netherlands. Poland. The Czech Republic - do I really have to go on with this? WWII has fuck all to do with the situation Greece finds itself in today. Yes, it's primarily the fault of a few at the top, but really, the vast majority were happy to ride the gravy train while it lasted. They were complacent. They trusted their government too much. In that, they aren't much different than other folks, except to the degree with which the practiced self-deception.

So ANYONE, even just one person, who says that Germany should pay to bail Greece out of this mess because of the goddamned Nazis is full of bullshit. They're reprehensible, to be picking at old wounds like that and perpetuating group guilt and making this generation pay for the faults of a prior generation. If the Germans help to bail out Greece that's damn nice of them, but it has fuck all to do with WWII. That just allows the idiots to lie to themselves again and refuse to face the fact that this mess is the fault of Greece and not some other nation.

Does Greece want to be bailed out? Then sit down, take your medicine, and shut the fuck up. The fact is your mess is spilling over onto other people who had jack shit to do with it, and, frankly, some of us are annoyed and pissed off about it.

[Admiral Valdemar]

Fun times in the S&P 500 pits.

[montypython]

If the Scandinavian Monetary Union had expanded to a full Nordic Monetary Union instead of going defunct, in a way that could have served as a buffer between the Nordic states and the wider present EU economic crisis.

[Crown]

Wah, wah, wah - you're pleading exceptionalism for Greece.
<snip moronic diatribe>

Be quiet Don Quixote, the conversation has well and truly moved beyond you. Try and not assign pathetic motives for what I am doing but instead read exactly what I type.

Novel idea, I know!

[Broomstick]

Wah, wah, wah - you're pleading exceptionalism for Greece.
<snip moronic diatribe>

Be quiet Don Quixote, the conversation has well and truly moved beyond you. Try and not assign pathetic motives for what I am doing but instead read exactly what I type.

I did - and drew my conclusion that you want Greece to be a special case of some sort when in reality plenty of other countries have faced similar problems without whining or rioting. Just because you don't like my conclusion doesn't make it wrong. In fact, I seem to have touched a raw nerve there.

Fact is, the fiscal meltdown in Greece is causing the rest of us problems. And Greece still wants the EU to bail them out. Sorry, Greece, you'll have to retire later than 48 - just like the rest of us - and stop scamming your own society.

I though corruption in places like Chicago was bad... but this seems to be a whole other level of rotten.

[Iosef Cross]

And no, the ending of the US military industrial complex wouldn't decrease living standards, it would increase them. Since resources that the military consumes will be available to the civilian population, including the labor force used by the military. That is derived from the basic understanding of the concept of scarcity.

I guess you are totally and completely unaware that right now the US has a labor SURPLUS. There are no civilian jobs waiting for that ex-military labor force you are proposing.

Things are more complicated than that. Way more complicated.... For starters, labor would only cease to become scarce, if there is a labor surplus with ZERO wages. Americans currently earn 5 times more than Brazilians, they are unemployed because they don't want to work for the minimum wage or, assuming that there are unemployed people that want to work for wages even lower than the minimum wage, well in that case unemployment is generated by labor laws.

And even assuming that they cannot find jobs for wages above zero (with means that they are so incompetent that their work is not valued by the market), they will be more useful unemployed than they are right now, where they are a net cost to society.

[Iosef Cross]

Actually, in the long run increased government spending reduces growth, by taking aways resources from their possibility of being invested

Increased government consumption. If the government invests, it increases growth normally.

The government can increase growth if they tax consumption and use the money to pay off it's debts. This would increase the supply of credit to the market while reducing consumption, hence resources would be allocated to increase the capital structure. It would be a type of forced savings.

There is no such thing as an reservoir of resources that is turned on automatically by increased aggregate demand.

The idea is that you spend money and pay it off during good times so it smoothes out the cycle. Since part of the depression is idled resources it does work... as long as you take care of the spending later or have been saving up money previously.

This is a very naive theory. During the 50's there where even some PHD's with believed in such things. Today many economists know that the economic system doesn't work that way. But Washington's fiscal police makers aren't the brightest of the bunch.

You can even increase unemployment by increasing aggregate demand during crisis, instead of decreasing it. That's can occur if the increase in demand is disproportional to the relative allocation of resources, in this case the structure of relative prices change and the patterns of employment and income are disturbed, increasing the number of people 'between jobs' (i.e. unemployed).

[Iosef Cross]

Admiral Valdemar should change his name to Captain Bullshit. My god, he produced enough bullshit in this topic to fertilize hundreds of hectares of land.

Let me know when you make an actual point.

Don't be offended, but you just talk too much and doesn't appear to know what are you talking about.

[K. A. Pital]

And even assuming that they cannot find jobs for wages above zero (with means that they are so incompetent that their work is not valued by the market), they will be more useful unemployed than they are right now, where they are a net cost to society.

You mean they'd be more useful starving, because a zero wage means a person can't feed himself? Else, if the (wage provided minus cost of product produced) << possible unemployment benefit, the person is less of a cost than he'd otherwise be.

If a person can't find jobs it doesn't mean he's incompetent - there's a limited, not limitless supply of jobs for a given market situation, not to mention transaction costs.