Greek debt crisis [update: 3rd Bailout deal reached]

[Crown]

I have to quote this again, because I wasn't allowed to edit;

And Germany paid for that: with twelve million of its people dead, a QUARTER of its former territory lost, its heavy industry, that wasn't destroyed dismanteled for reparations (the Brits were responsible for (not) distributing the greek share), a separation of the remaining country (overcoming that cost 1,000 billion € so far and still isn't complete) in two parts and occupation for four decades, so don't say the country got off easily in 1953.

Yes Germany suffered because of its actions in WW2 genius; but so did every fucking country on the continent you dumb cunt. I can't believe you typed that.

Greece engaged in completely legal derivative swaps with banks; who the FUCK suffered until such time as the German government decided to go neoliberal and socialise the banks losses. LIKE SERIOUSLY; what the fuck is the matter with you? The banks should have taken a hit on their investment, it happens all the fucking time, but not with the neoliberal agenda any more; 'privatise profits and socialise losses', that's the ticket.

[Crown]

Cenk weighing in with his size nines;



Not quite as good as the "USA you suck!" clip, but he's in good form again.

[BabelHuber]

Northern European voters have been sold a bill of goods. The Troika feared 'contagine' and the failure of all the big bank's (read: oligarch's) loans. The bailouts were doomed to fail from the start: Paul Krugman outlines why here. The bailouts accomplished three things relevant to this: 1. transfer that bad debt to the public (i.e., N. Euro. voters), 2. extract as much money out of the indebted nations as possible, and 3. postpone 'contagion' until the bad debt could be transferred to the public.

If you ignore what everyone says and instead just look at what everyone did and the results thereof it is pretty clear what's going on.

I agree with you that the bailouts in 2010 was a huge mistake - it would have been better to let Greece bancrupt back then.

Of course then some "system-relevant" banks would have had to be saved, too. But at least this way the stock holders would have lost their shares, this would have teached all investors about the risks involved.

But this is easy to say in hindsight. Back in 2010 it was feared that a GREXIT would cause a domino-effect for all the PIIGS and even could lead to a world-wide recession.

Krugman is an idiot BTW, I cannot take that guy serious.

[K. A. Pital]

Actually, all the politicians were corrupt bank bootlickers with ties to Goldman Sachs. That is the real story of 2010.

And I should say a student calling Krugman an idiot looks like an idiot himself...

[Thanas]

Currently travelling so I don't have much time:

Greece engaged in completely legal derivative swaps with banks; who the FUCK suffered until such time as the German government decided to go neoliberal and socialise the banks losses. LIKE SERIOUSLY; what the fuck is the matter with you? The banks should have taken a hit on their investment, it happens all the fucking time, but not with the neoliberal agenda any more; 'privatise profits and socialise losses', that's the ticket.

They took a 50% hit on their investment as well, or did you just completely forgot the haircut? And quit blaming Germany, it was a joint decision with every other European country in agreement, including Greece, and with the US supporting it.

And "completely legal". Right. If that is the standard we are judging Governments now then you might just as well stop arguing now, after all your entire argument for why the EU should bail out Germany is not based on a legal argument, but a moral one. Under no moral argument whatsoever was it right for Greece to engage in credit behaviour which was clear to everybody, after promising to be fiscally responsible in order to join the EU.

I don't suppose any of those pretty numbers has anything to do with Iceland wiping off 85% of its (bank) debts does it? What am I saying, of course it does!

Jesus-titty-fucking Christ Thanas do you work at being this embarrassingly bad at macroeconomics?

The point, which you missed, is that they raised taxes a lot, hit everybody with it (including the rich, which Tsipras does not want to do) and kept at it even when it shrank their economy. If Greece would be as willing as Iceland they too could expect to be treated a lot better.



From the Guardian:

http://www.theguardian.com/commentisfre ... is-tsipras

Alexis Tsipras came to power in January vowing that he would restore Greece’s dignity and deliver Greeks from the misery of five years of austerity imposed in return for the financial aid the country needed to avoid outright bankruptcy.

After six maddening months, filled with missed deadlines, accusations and rancour, he has failed to do so. His finance minister, Yanis Varoufakis, who took Greece from a primary surplus and anaemic growth into what most economists expect to be at least a 10-15 point recession, has resigned. Tsipras has persuaded voters that a reinvigorated mandate was what he needed to deliver the elusive deal. It is doubtful that even he believes this.

Syriza’s wrestling match with Greece’s creditors has dominated attention to the extent that there has been little examination of what else it has done in office. Much of its manifesto including promises to bring Greece’s oligarchs to heel, end tax evasion among the elite, and lift the minimum wage are nowhere in sight. There was the high-profile arrest of Leonidas Bobolas in April, a construction and media tycoon who was released after paying $1.9m in back taxes. This smacked of the same tokenism that Syriza lambasted previous governments for when former defence minister Akis Tsochatzopoulos was jailed. There has been no discernible effort to bring Greece’s shipowners to book for their meagre contribution to the state.

What Syriza has done is to bring back some of the worst excesses of its predecessors. The state broadcaster ERT – scrapped abruptly by the previous government under the impulsive and irascible conservative, Antonis Samaras – has been reformed. But instead of fresh blood, the government put ERT’s tainted former leadership back in charge. The return as chief executive of Lambis Tagmatarchis, a television executive associated with the governments who ran up Greece’s debt pile, outraged even the ERT employees who were getting their old jobs back. From prefectures to court appointments, party hacks have been favoured over more qualified counterparts. This is indiscernible from the cronyism of old.

[K. A. Pital]

The banks should have lost their investment. Allowing them to exit and then the debt to be transferred to national budgets and European common funds was a preposterous bailout of private entities by governments. Greece at the time was ruled by complete Europuppets, so no surpise this happened.

[Irbis]

Joseph Stiglitz: Europe totally wrong, Greek voters right, stop this mess right now:

http://www.usatoday.com/story/opinion/2 ... /29763347/

I especially recommend this gem:

Eventually, some of Greece's debt was restructured. But it was too little and not done well. When the crisis began, Greece's debt was about 117% of its GDP. Today, after restructuring, after a program allegedly designed to increase the sustainability of debt, it stands at 177%.

Though the conditions Europe imposed on Greece caused its depression, Greece saw little of this money — about 90% went to the creditors, including German and French banks.

This is typical: Most bailouts (for instance, the Mexican bailout) are not bailouts of the country but of the Western banks who didn't do adequate due diligence. It could be nice that the German and other European governments bailed out their banks (though whether that is good policy is another matter); but the Greeks rightly asked, why it should be done so much on their backs.

Now, even the IMF is calling for deep debt restructuring. There are many ways this can be done: lengthening the time over which loans have to be paid back, lowering interest rates, or even writing off some of the debt or converting some of the debt into GDP-linked bonds, which would pay more if Greece recovered. This would align the interests of Greece and its creditors in getting a quick return to growth. Supposedly, the IMF report detailing the need for this was suppressed by Europe: Europe's leaders didn't want an open and full discussion of what would work. Some wanted regime change — to get rid of the government that had been elected to end the devastating austerity.

Greeks non democratic, lazy, cheating, skirt too short, salmon, thieves, etc, etc

[BabelHuber]

And I should say a student calling Krugman an idiot looks like an idiot himself...

First of all I am no student.

Secondly, Krugman's suggestions mostly are a recipe for disaster - like when he said the German economy has to become less competitive

[K. A. Pital]

I am not sure if Krugman's recipes are bad or good, but I am certainly not going to condemn him on the basis of a nobody like you trashing him. Sorry. I cannot even be sure you are actually honestly relaying what Krugman said about Germany.

[BabelHuber]

Take this as example of the typical Krugman-bullshit: http://www.nytimes.com/2013/11/04/opini ... .html?_r=0

[K. A. Pital]

What exactly you don't like in this article? The fact that Germany uses the cheap Euro as a vehicle for ramping up exports, crushing competitors even inside the Eurozone, thereby depressing periphery countries' growth? I think it is a case of your pants burning. Get the refence?

[Irbis]

Take this as example of the typical Krugman-bullshit

You mean, very sound argument that since Germany profits massively on less competitive economies dragging Euro down, when it should be sky-rocketing to balance German exports, and since without the very same economies you'd now see big crisis in Germany, then, logically following, Germans should share these profits with their benefactors (or allow economy to balance in some other way) instead of babbling about lazy Greeks?

In a sense, I guess Finland, Slovakia and Baltics have a bit of truth in their argument - while that still doesn't absolve their egoism, why they should be first to help Greece instead of country that caused that whole mess and still continues to profit from it? Perhaps Merkel should explain to her voters exactly to who they should give thanks for low unemployment and shiny new factories, but sadly, Adenauer she ain't.

[BabelHuber]

You mean, very sound argument that since Germany profits massively on less competitive economies dragging Euro down, when it should be sky-rocketing to balance German exports, and since without the very same economies you'd now see big crisis in Germany, then, logically following, Germans should share these profits with their benefactors (or allow economy to balance in some other way) instead of babbling about lazy Greeks?

In a sense, I guess Finland, Slovakia and Baltics have a bit of truth in their argument - while that still doesn't absolve their egoism, why they should be first to help Greece instead of country that caused that whole mess and still continues to profit from it? Perhaps Merkel should explain to her voters exactly to who they should give thanks for low unemployment and shiny new factories, but sadly, Adenauer she ain't.

No, this is not sound. Instead, it's a typical ivory-tower bullshit

Some points:

1.) If Germany gets weaker, it does not automatically mean that the other Euro-countries are profiting:

- If Germany sells less machine tools (an industrial sector where Germany is very strong), does that mean that Spain sells more machine tools now? Or could that also mean that Europe sells less machine tools as a whole now, thereby weakening Europe as a whole?

- If Germany sells less cars, does that mean that Renault/ Citroen sell more cars? Or could it be that Toyota/ Lexus is profiting instead? Especially in non-European export markets?

- Who says that the companies actually stay in Germany when the government weakens the economy? Perhaps they find some other countries to invest instead...

2.) What would German voters say when the government weakens the economy? Do you think the workers at Audi or BMW which got~ €8000 bonus last year (IIRC) would welcome this? Especially after strong exports have been regarded as strength for decades (at least as longs as I can remember)?

This would be a gift for the parties in the opposition: "Have you heard our government? They want you to lose your job!"

3.) How would you restructure the economy to produce more for in-country consumption at all?

You know, the factories which produce premium cars or machine tools at the moment are designed to produce mostly for export.

- Do you want to produce less there? Have fun talking to the union about firing people "because we have to get weaker"
- Or do you want to produce worse products? Manager: "Don't work so well in the future, we have to be as shitty as the competition now!"
- Or do you want to produce something else? Do you think you can convert these factories easily to produce some widgets?

And so on and so on...

[K. A. Pital]

Note that there is no talk about weakening Germany's economy, only ramping up spending to help other economies, by expanding demand. You just attacked a complete strawman and missed the point entirely.

[BabelHuber]

Note that there is no talk about weakening Germany's economy, only ramping up spending to help other economies, by expanding demand. You just attacked a complete strawman and missed the point entirely.

No

If Germany only "expands demand", the industrial sectors which mostly produce for exporting will still do so. Hence the European competition will not get stronger. So you need to actually weaken the German industry to make the 'others' more competitive.

Also, if you increase demand in Germany, who says that this will generate imports from other EU countries at all? Perhaps people in Germany would mostly buy Chinese smartphones, TVs and such stuff.

[K. A. Pital]

Wow, you really are a dumbass. So, no demand expansion means no chance. Expansion of demand means there is a chance, though not a guarantee. But in idiot world, if something is not guaranteed to happen, it is not worth a try.

[BabelHuber]

Wow, you really are a dumbass. So, no demand expansion means no chance. Expansion of demand means there is a chance, though not a guarantee. But in idiot world, if something is not guaranteed to happen, it is not worth a try.

No, in idiot-world people do something just to have something done, no matter if it does make sense or not!

Get it in your head: We live in an international world, Europe is not an island without contact to other countries! If one country imports more, it does not automatically mean that another country in the same region will export more!

Especially if this other country is known to be weak and lacks export not because the mean Germans don't buy its products, but because it does not have many competitive products to offer. Of course in such a scenario countries which are strongest from the start will benefit the most!

So if you raise German imports, surely China will profit, but not necessarily Greece or Portugal!

[K. A. Pital]

Inside EU there are no tariffs, idiot. China must pay at the customs, Portugal or Spain - no.

[Purple]

Inside EU there are no tariffs, idiot. China must pay at the customs, Portugal or Spain - no.

To be fair, just because there are not tariffs does not mean that the industry will be competitive. If a car costs 10$ to make in China and 50 $ to make in Greece and the tariff for goods is 50% that still means the Chinese car only costs 15$ which is less than 50$.

[K. A. Pital]

First and foremost the export profiles of China and Southern Europe are not identical, so it is obvious a rise in spending will help them too. But even if it helps other countries that import into Europe (US, China) it does not mean we should not do it.

[Purple]

First and foremost the export profiles of China and Southern Europe are not identical, so it is obvious a rise in spending will help them too. But even if it helps other countries that import into Europe (US, China) it does not mean we should not do it.

Yes and no. If you ask me, and as an euroskeptic I hate to say this, the only proper way to make sure the EU works as an economy is to start planing it as a unified economy. It's not just about simplistic things such as making one country less competitive. You have to set up joined distribution chains that make use of the things particular countries are good at. In other words, basically set up a planned economy where every country is zoned for a certain set of products which they have to produce and for which they have guaranteed purchasers within the union. It's basically the equivalent of having government officials come to a village and say: "You do not have to grow bananas. But if you do we will buy each and every banana that you harvest. And our banana split factories are obliged to only use those bananas we give them." That's the only way to prevent outside nations from pushing their way into your market by being more competitive than the country you want to support. In other words, a form of EU wide mercantilism.

Is it a good thing? I can't say. But it's the only economically viable way.

[K. A. Pital]

Heh, but I am also a Euroskeptic and I think that it has two ways: superstate or a lose confederacy with no currency union, as it did more harm in the long run. EU-wide protectionism is necessary, as EU labour and environment standards are higher than in many other parts of the world.

[Purple]

Heh, but I am also a Euroskeptic and I think that it has two ways: superstate or a lose confederacy with no currency union, as it did more harm in the long run. EU-wide protectionism is necessary, as EU labour and environment standards are higher than in many other parts of the world.

Pretty much agree with you there. As far as I am concerned the best solution is a loose customs and trade union. I'd keep the Euro but only as a trade/reserve currency. Basically something you use when traveling as a tourist and something that big companies and governments use to trade with one another. But I'd revert to the local currencies for local payments within a country.

[Irbis]

'Why Germany Wants Rid of Greece'

When I recently visited Berlin, it quickly became clear the extent to which Germany had created a fantasy story about Greece. It was an image of Greeks as a privileged and lazy people, who kept on taking ‘bailouts’ while refusing to do anything to correct their situation. I heard this fantasy from talking to people who were otherwise well informed and knowledgeable about economics.

So powerful has this fantasy become, it is now driving German policy (and policy in a few other countries as well) in totally irrational ways. In particular, Germany refuses to discuss debt relief with Greece, yet seems quite happy to see Greece leave the Eurozone, the inevitable consequence of which would be that Greece would obtain much greater debt relief through default. Talk about cutting off your nose to spite your face. What is driving Germany’s desperate need to rid itself of the Greek problem?

One possible answer is that Germany finds the truth about Greece too upsetting, too challenging. This is because since 2010 Greece has done most of what the Troika asked of it. In particular, changes in its government’s underlying primary budget balance (i.e. the degree of austerity enacted) have been greater, by a long distance, than any other European economy. For many outside Germany what has happened to Greece as a result is hardly surprising: austerity is contractionary, and austerity on steroids is ruinous. Yet Germany is a country where the ideas of Keynes, and therefore mainstream macroeconomics in the rest of the world, are considered profoundly wrong and are described as ‘Anglo-Saxon economics’. Greece then becomes a kind of experiment to see which is right: the German view, or ‘Anglo-Saxon economics’.

The results of the experiment are not to Germany’s liking. Just as ‘Anglo-Saxon economics’ would have predicted, the results for Greece under the Troika have been a disaster. After dutifully taking the medicine for years, and seeing the collapse of their economy, finally the Greek people could take no more. Confronting this reality has been too much for Germany. So instead it has created its fantasy, a fantasy that allows it to cast its failed experiment to one side, blaming the character of the patient.

The only thing particularly German about this process is the minority status of Keynesian economics within German economic policy advice. In the past I have drawn parallels between what is going on here and the much more universal tendency for poverty to be explained in terms of the personal failings of the poor. These attempts to deflect criticism of economic systems are encouraged by political interests and a media that supports them, as we are currently seeing in the UK. So much easier to pretend that the problems of Greece lie with its people, or culture, or politicians, or its resistance to particular ‘structural reforms’, than to admit that Greece’s real problem is of your making.

[Crown]

Greece engaged in completely legal derivative swaps with banks; who the FUCK suffered until such time as the German government decided to go neoliberal and socialise the banks losses. LIKE SERIOUSLY; what the fuck is the matter with you? The banks should have taken a hit on their investment, it happens all the fucking time, but not with the neoliberal agenda any more; 'privatise profits and socialise losses', that's the ticket.

They took a 50% hit on their investment as well, or did you just completely forgot the haircut? And quit blaming Germany, it was a joint decision with every other European country in agreement, including Greece, and with the US supporting it.

And the US is now saying that Greece needs debt relief. Everyone bought into this experiment Thanas, but rational people can no longer ignore the truth; austerity is a dead fucking policy, it is damaging and it was the exact wrong prescription for the Greek problem.

And "completely legal".

Yes; completely legal. Doesn't that give you some fucking pause? Doesn't it make you wonder how something so obviously wondrously corrupt could be so legal?

Right. If that is the standard we are judging Governments now then you might just as well stop arguing now, after all your entire argument for why the EU should bail out Germany Greece (edit by Crown) is not based on a legal argument, but a moral one. Under no moral argument whatsoever was it right for Greece to engage in credit behaviour which was clear to everybody, after promising to be fiscally responsible in order to join the EU.

Bzzt. My argument for why debt restructuring/relief/forgiveness should be given to Greece isn't a 'moral' one (other than it would immediately alleviate the suffering of 10m people), it isn't a 'legal' one (other than Greece didn't break any laws - as astounding as that is), it's a simple truth; it's the only way that Greece will get out of this and the only way the creditors will see ANY of their money back at all.

Because the current status quo will yield nothing. However, both legally and morally there are more than enough precedents in modern European history which doesn't make this a special or radical solution at all. Unless of course you're a German in denial who actually believes his country has a stellar record of paying back debts.

The point, which you missed, is that they raised taxes a lot, hit everybody with it (including the rich, which Tsipras does not want to do) and kept at it even when it shrank their economy. If Greece would be as willing as Iceland they too could expect to be treated a lot better.

Yes, Iceland raised taxes, but it also secured pensions, didn't cut the welfare state and has continued to raise minimum wage in the country to the point where it is currently now HIGHER than it has ever been in its history. Greece is being to mandated to raise taxes, CUT wages, CUT pensions, CUT the welfare state. So you want Greece to do what Iceland did?

From the Guardian:

http://www.theguardian.com/commentisfre ... is-tsipras

<snip>

Same accusation was made in today's European Parliament by Guy Verhofstadt, here's Tsipras' response part 1 and part 2.

I'll summarise his response;

• SYRIZA has been in office for 5 months and spent more time negotiating than governing
• After the Lagrade list sat in previous government's filing draws for 3 years, it was the SYRIZA government who went after people on it
• It was the SYRIZA government that has reached an agreement with the Swiss government to allow greater transparency which will allow the Greek government to tax Greek citizens effectively who seek to shelter their wealth outside of Greece
• It was the SYRIZA government who went to the large media owners in Greece and told them they need to start paying tax (remember this picture Thanas? Do you have an understanding now of why all the private channels were trying to bury the OXI vote in the referendum?)
• It was SYRIZA who had implemented greater custom checks to help fight smuggling and piracy

But he concedes that there is a lot more to do.

Currently travelling so I don't have much time:

Don't stay away for too long, this thread will get boring without your thoughtful posts comedy act.