The Greek "tragedy"

[Mardo]

I will remove the refhide links and replace with http://anon.projectarchive.net/

 

[luvmuslmen]

Shelter - your understanding of the economics is naive at best. You are offering a simplistic interpretation of the very complex economics at play that makes Germany out to be a saint, which it most certainly is not, and the Greeks out to be devils, which they most certainly are not either.

It would take me 100 pages to bring you from where you are to a full understanding, and I really don't have the time to be an economics professor!

What I will say is that the root of this problem is the Euro - it is a currency union without a fiscal union. This means that when the crisis struck, it was in Germany's interest to have HIGHER interest rates, but Ireland's, Spain's, Greece's, Portugal's and others' interest to have LOW interest rates. You can't have high and low rates at once, so someone has to win. The someone is always the same - Germany.

During the boom capital flowed from the periphery to Germany, helping it keep deficits down thanks to a healthy trade balance, then, when things go south and it's time for Germany to do it's part and help the rest of Europe - nothing - Germany gets what it wants, and we can all fuck off and suffer for a decade. Germany is a bully - it gets all the benefit of a single currency, and refuses to pay any price. Utterly un-fair. It should be give-and-take in a true union.

The ECB, under the influence of Great Britain & Germany adopted a controversial an un-orthodox theory of expansionary austerity. The theory was that through the magic of market confidence, massive spending cuts would not cause recessions, but would cause growth. That was nothing short of fantasy, and that fantasy was the underpinning of the first Greek Bailout. The Greeks were promises that if they cut back DRASTICALLY, their economy would recover. They did. They cut spending SPECTACULARLY, and what did all that austerity do? It caused a massive recession of course.

The Germans are still living in the fantasy world where you get out of recessions with austerity. Facts be damned. We've tried this for 8 years and it hasn't work, so let's do MORE of the same!!!

In the past, before the Euro and the fiction of expansionary austerity, there were two approaches to getting out of recessions:

1) devalue your currency - only possible if you have your own, or if everyone agrees. The Greeks do not, and the Germans will not.
2) deficit spending - when an economy is stalling, interest rates are always LOW. That makes it cheap to borrow. Governments borrow, they spend the money on infrastructure, putting people to work, making the country better, and getting the economy flowing again. Once the economy is back on its feet you run surpluses to make up the deficits you ran during the bust. The Greeks have been forced to do the inverse of that - to cut cut cut as their economy ground to a halt. They stamped on the economic brake with a gun to their heads while the economy was already grinding to a halt, and all on the promise that stamping on the brake would make the economy go faster.

The facts are in, but the German people, the German government, and the ECB, have their collective fingers in their ears, and are singing 'la la la la la'.

Meanwhile, Ireland has suffered horribly for a decade, so has Spain, and the poor Greeks have been roggered by a prize leek!

But, by all means pretend Ireland was a success, and that the Greeks should just do what we did, and that Germany is perfect. Fuck facts. Fuck reality, if we just will it hard enough it'll happen!

If you think I'm talking bollox - I have not said anything Nobel Prize Winning Economist Paul Krugman has not been saying since this whole mess started almost a decade ago. I may not be a professional economist, but he most certainly is.

You do realise you are playing with fire here of course? 98% of Germans know nothing about economics and are flying on pure emotion here. I bet this thread will be very low on facts, very high on offensive racial stereotypes, and CRAMMED with righteous anger from rich nations who are busy fucking over poor nations.

As an educated victim of this fucking over, I'm going to have plenty to say to anyone who pretends Germany is a saint.

B.

Someone tell that to the Republican Party in the U.S. We should be spending on badly need infrastructure and all they ever want to do is give more tax cuts to the super rich. Everyone else be damned.:angry:

 

[gb2000ie]

And it was a mistake to get the economically weak countries into the currency union. But at the same time, they decided for themselves. There were critical voices, which then got silenced by playing the World War II card, which makes Germany shut up. Which makes it even more laughable that Greece now tries to play the same card again to blame Germany for accepting their blackmailing attempts. :rofl:

So when someone sweet-talks you into a deal that then goes bad, it's OK to turn around with "caveat emptor!"? It might be to you, but that's just a shit-head move in my book!

That way it is still the fault of the people following that "science" without having a plan B.

EXACTLY! The EU institutions who pushed for this union did not do their homework!

Which is simply not possible for such a collection of different economies, unless one would want to make it entirely unattractive for Germany and France (and the UK, who considered it unattractive the way it is already).

Really? Why no?

Why can't we do simply things like a real banking union, one where the ECB actually performs the role of 'Central Bank'?

Why can't we issue Euro Bonds? That way everyone benefits form the strength of the union, not just the big countries. Surely if you offer someone a union you need to offer them the advantage of union. Is the whole point not that we are stronger together? So, literally, put your money where your mouth is!

Everyone who has the euro right now wanted the euro. There might be a democracy deficit in the union, but in this case it does not let anyone from the hook. The rules of the game were clear, as nonsensical as some might be.

Sorry, I don't support that negative attitude. The appropriate response to "this is not working out well for all partners in the union" is not "well, tough shit - you knew the rules!". The correct response is to stop, gather information, get advice, AND TRY IMPROVE IT! When a UNION has winners and losers, it is broken, and needs fixing.

No, the Euro *is* stable. The point was to have a currency which does not go the way of the Lira. Which should have been a hint to nations who relied on having a constantly dropping currency to stay away. So the reaction of not devaluing the common currency is not sudden change of the game in order to make some nations suffer out of sheer racism. It was the clearly stated goal right from the beginning.

The promises of the currency union were much more than just a stable exchange rate! The promise was also for a more stable and prosperous Europe, and that part is an abject failure!

Sure - if you define success REALLY narrowly, you can classify failure as success, but you know what, the people aren't going to keep buying that shit sandwich for ever!

The more massive the overspending, the more impressive such a graphic looks. It does not take in account that Ireland did not overspend as massively as Greece in 2007. In fact it was just thrown off balance by the economic crisis which lead to the current situation. This makes the numbers appear less impressive, especially when considering that Greece is also not able to establish a working taxation system to collect its taxes and that the former governments tried to dodge the bullet by cutting the spending for the people who would create the least problems and blaming the EU and Germany.

Sure, that explains some of the difference in that graph, but the graph makes it undeniable that Greece HAVE put in the work. They HAVE done their bit. And that fact seems to have gone un-noticed by so many in this discussion, and on this continent as a whole.

That graph does NOT match with a country that is just pointing fingers and asking for help but not getting stuck in, and that is how many want to keep portraying Greece, the facts be damned!

True, I guess you want to see Germany as a bunch of Nazis, so facts should not come into your way.

Of course that's what I want. NOT! I want Europe to work better not worse. I've also said many times in this threat that I have a lot of respect for Germany in general, I just think they are wrong in this regard. It is normal to like some things a government does, not not others. Government are not religions you know!

I neither do, nor want to, see Germany as some kind of Satan. Nice try at setting up a stupid straw man. *FAIL*

B.

B.

 

[reasek1]

Well now this thread has turned into a very heated debate.

Or as gb2000ie would put it 'a fucking heated debate... shithead...' :rofl:

We always try to give members as much freedom as possible but having received several complaints we must now step in to remind posters to respect one another. This is a second reminder here as I see another mod already posted a caution.

We don't want to either close the thread or penalize :butslap: anyone but as patient as we try to be even we have limits.

Everyone is entitled to their say, but it has to be done respectfully. Thank you

 

[Frenchgerman]

jazzeven ... one word ... and one word only : Pegida !

 

[Shelter]

jazzeven ... one word ... and one word only : Pegida !

Oh stop it Frenchgerman - stop it please. Don't put your finger only in one direction!
The next word only: Marie Le Pen's Front National!

 

[Frenchgerman]

yes I agree it's the same battle ! Marine le Pen and the Front National are every bit as alterophobe as Pegida and ... if you please ... the CSU !

 

[Shelter]

yes I agree it's the same battle ! Marine le Pen and the Front National are every bit as alterophobe as Pegida and ... if you please ... the CSU !

I don't wan't to go so far to compare the CSU with Pegida or the Front National - but in a special way I will accept your statement.

 

[gb2000ie]

Who "sweet talked" Greece into the union? Nobody. They wanted to be part of it and even provided false reports in order to get in. So when talking about shit-head moves, in my book that ranks rather high.

That description of events is at odds with my recollections of the times, and of many other people's views of how the Euro got started. The reality of Greece's situation was an open secret, and everyone worked together or brush it under the carpet. It was not that Greece deceived anyone in authority.

Because then the savings of all Germans would be down the drain, something which was promised not to happen when entering the union. And as we see, Euro bonds would just keep the party going on for some members, or do you seriously think Greece would commit to any reform program without getting forced - after the last twenty years already proved that they did not have the slightest interest in getting their budget in balance.

Eurobonds are not just about Greece!!!!

You seem to think that ONLY Greece is a problem. Sorry, no! Spain is in big problems too, and they did NOT run big deficits. Ireland too suffered, and it too had a healthy economy until the crash.

Euro bonds are about using the strength of the whole union to help everyone. There is zero evidence that it would do anything to German savings.

Germany has benefited MASSIVELY from the Euro - not allowing their strength to bolster everyone is selfish and utterly against a spirit of community and cooperation. It is, frankly, a shitty-attitude for a supposed "partner" in a supposed "union" to have.

Also - those "German savings", where did they come from? In a substantial part, from the economies of the countries now suffering. There were massive capital flows into Germany, so it's doubly shitty to take everyone's money and then refuse to help in their time of need.

Euro bonds are a valid idea for the future, but at this stage they would just offer more money to support a lack of reforms.

Again, Greece is not the only country suffering, and the other countries do not in any way support your attitude of not fixing the problems with the Euro now. Spain did not start suffering because of a lack of reform. Why on earth should we wait even longer to fix a clear an obvious weakness in our currency union?

Especially in the case of Greece which after its initial decision to stay in the Euro zone does not miss a single opportunity to show its lack of reliability.

Err - THERE IS NO EXIT PATH!!

No one invented an off-ramp for the Euro, so Greece didn't have a choice to just leave. They have a choice to become the first experiment in absolute chaos, but not to just leave. No sane person was suggesting Greece invent a path out of the Euro.

Also - we have again forgotten the almost 25% cut in government spending - i.e. the STAGGERING austerity Greece has enforced on its people at the Troika's insistence. It never ceases to amaze me that people can see the numbers, and STILL say obviously false things like "does not miss a single opportunity to show its lack of reliability".

It is difficult to encourage investments when every new government tries to blackmail the EU with the money already spent on the bail out. The current government lost a lot of trust by talking to the russians immediately after coming into office.

Ah yes - when you remove all reasonable options, you then get mad at the people you forced into doing desperate things, for doing desperate things. That makes PERFECT sense. It is definitely Greece's fault that Greece were forced to talk to Russia. (Apply all the sarcasm in the world to that last paragraph)

Imagine Germany had been forced to undermine their own economy in the middle of a global recession and impose 25% government cuts, which then resulted in over 25% employment. How would the German people respond if their government didn't follow every possible lead for a solution? I think the Germans would be properly pissed off at their government for not trying everything.

Actually - I'm not sure you can imagine what it's like to live in a country where over a quarter of the population cannot find work. If you could empathise with the ordinary Greeks, I can't imagine your attitude to their decade of sacrifice and suffering could be this inhumane.

And in this situation you wonder why the others don't throw money after Greece until the problem gets magically solved on its own?

I expect a union to help its members in their times of need. I expect every EU citizen to be given a decent standard of living. I think the rich countries, who made a lot of their riches off the backs of the poor countries (again, look at the capital flows within the Euro-zone) must do their bit, or the union will inevitable disintegrate.

Since you are against all the proposed solutions to the Euro's short-comings are not acceptable to you, what do you think the union should do address the union's now provable vulnerability to asymmetric shocks? I'm assuming you have ideas of how to fix the problems? Or have you just decided that nothing can be done, so we should ignore the undeniable problems, and just let people suffer?

B.

 

[Frenchgerman]

I don't wan't to go so far to compare the CSU with Pegida or the Front National - but in a special way I will accept your statement.

What are the signs of a functioning democracie ?

free and universel election,
responsability of government before the parliament
alternance

(liste non-exhaustive)

and this third point is not respected in Bavaria where the CSU reigns since 1949 without sharing !

furthermore : try to find a family planing in Bavaria for abortion consultation, try also to find a clinic for abortion !
what about gays in the Bavarian Forest ?
what about the power of the Catholic Church there ?
all the most reactionnary ideas of the CDU / CSU government came from the Bavarian side !
what about the blackmailing of the CDU by the Bavarians ?

want me to continue ?


and a point of humor ...
What was the founding moment of the Bavarian tribe ?
It was when Hannibal tried to cross the Alps and said : all those with footsoreness and veneral deseases, turn left and forward !

 

[gb2000ie]

So basically you are saying Germany is responsible for the crisis because of treating Greece like people who have an idea about what they are doing, while now, that it is clear that Greece fucked up, Germany is responsible for the crisis because of demanding something to be done from Greece?

NO! I am saying Germany is not blameless. There is a LOT of blame to go around when it comes to Greece, no one is 'responsible' for it on their own, but lots of governments and institutions made mistakes and miscalculations to get things to where they are now.

Right, it would just magically make money appear and allow more and more spending while preventing the evil Germans from having a say in it. Worked well in Greece.

Euro bonds could have prevent or lessened the crises in Spain and Ireland. This is much bigger than just Greece, but you seem to be blinded to that by your desire to white-wash everyone but the Greeks.

The concept that the whole is often greater than the sum of the parts is not magical thinking, it's the very reason unions of all sorts exist - in fact, it is the very reason the Euro was created! If a union did not make the group stronger than the sum of the individual parts, the EU and the Euro would not exist!

From spending less money than earning money. Not a complicated concept.

Actually - much of those German 'savings' actually came from trade surpluses, not from cutbacks or saving. They came at the expense of other economies, those very economies that are now suffering! That is what it means to have capital flows from the periphery to the centre. German and French GDP goes up, and Spanish, Irish, and Greek GDP goes down.

Also - are you aware that Greece is currently running a primary budget SURPLUS? And that what they are asking for is to be allowed to run a lower SURPLUS so they can stimulate their economy and hence increase government income and then have the ability to pay back debts more easily? http://refhide.com/?http://krugman.blogs.nytimes.com/2015/02/14/greeces-excess-burden/

And those people were told that their savings are... well... save. Else there would not have been a political way to become part of the Euro zone.

Right, my Grandma took a plane to Greece, robbed all their money and then flew back. Now let's make that old bitch pay for it...

I refuse to believe you are ill-informed enough to believe that is anything but bullshit. I'm not wasting my time replying to this kind of trolling.

No sane person and of course Greece's current Mister of Finances. Greece had the choice to declare bankruptcy.

Countries can't 'declare bankruptcy' - they can only default - that is not pay back ANYONE! The main point of the deal was to prevent Greece from defaulting, because that would have caused a financial crisis that would make Lyman brothers look like a wet fire cracker!

Given that Greece is running a primary SURPLUS, defaulting would actually be in Greece's interest - the people who would be hurt by a Greek default are the LENDERS - i.e. the EU, Germany, France, and others!

If Greece is pushed too hard, and forced to default, the Germans will have scored a SPECTACULAR own goal.

Instead they accepted better conditions for their debts and stayed. If you want to find something to blame Germany (and France and UK) for, then this nonsensical bail-out, which did not happen to save Greece but to keep several banks from losing their money.

See above - the bialout was to save GERMANY and the other debtors - better to get most of the money they lent back rather than NONE!

Considering that this was about the number Greece overspent its budget, I would not call it staggering. And what is the alternative? Let the spending continue?

Yes, and, no.

Increase revenue by fighting tax fraud, and spend MORE on things that provide direct employment like infrastructure building. You need to work WITH the business-cycle, not against it. When there is a recession you absolutely cannot cut back spending without making everything WORSE - it is a feedback loop - ever Euro you cut in spending results in MORE than a Euro of lost income. During a recession you spend MORE, because if you do it right (and infrastructure spending is doing it right), you get back MORE than a Euro in extra revenue for every Euro you spend.

Then, when the crisis is over, and the economy is in the top half of the business cycle, you cut like mad. This has two advantages - in the shot-term it prevents a bubble and keeps the economy from over-heating, and in the long-term it deals with your fiscal problems, letting you balance your budget again.

An economically sounds deal would look like this:
1) apply all the pressure you possibly can on Greece to end tax fraud
2) allow Greece to slow down on repayments for a few years so they can use that money to stimulate the economy
3) get your money back at the end of those few years.

It's not really about what has to happen, but about the order things have to in for the plan to have the possibility of succeeding.

If you force Greece to kill their own economy, how, exactly, do you expect them to replay you?

The only reason the Troika has any say in this is because Greece needs more money. This is connected to conditions. If they don't like the conditions, they are free not to take the money. Just like nobody forced them to get all the money they took before.

Actually - WE forced them to, because if the defaulted WE would suffer, not them!

I finally get what it is that you have utterly not grasped - it is the LENDERS who need Greece not accept a deal, not Greece! If they just stopped paying back their loans, they would be fine - we have already forced them to take in more than they spend each year, so they only need help in their debt payments. Remove the debt by defaulting, and they will GAIN money in their annual budgets!

We did not do Greece a favour by giving them just enough money not to default, we did the debtors a favour by allowing Greece to stay just alive enough to keep making repayments!

However the signal the new government sent by *first* talking to Putin was an obvious attempt to signal the "partners" that there was still an ace up their sleeves. And that is what I am talking about when it comes to reliability or rather the lack thereof.

What do you mean by first? Can you give me a link to a news story to back that up? I remember the early days of this new government differently. There were lots of negotiations between the new government and Europe from day-1.

Imagine Germany overspending their budget by about the same amount for several years. Now imagine having an election in Germany. Who do you think gets elected? The party which does not work on the tax system and still promises to spend lots of money? That is where that comparison fails. The people of Greece did a shitty job when it came to controlling their government.
Any concept which denies that truth and refuses to deal with it, won't solve the crisis.

See my suggested solution above.

On long sight I absolutely agree that the goals of the currency have to get newly defined.

I mean this without any sarcasm at all - thank goodness - we have found a small patch of common ground at last

With that there should be an option of leaving the common currency.

That'd be a tough nut to crack, but if a mechanism can be worked out for a nation to leave without causing chaos, then I'm in favour of it.

It is reasonable to assume that some day, we may want to throw someone out, or, that someone may want to leave to protect their own national interest - either way, a sane exit route would be useful.

The idea that Europe would grow together quicker when having a common currency obviously has failed and there is no point in sacrificing the Union just to make different systems appear like one. Maybe when the EU parliament gets into a condition, in which its blocks are defined by ideology rather than the borders of its nations one can start to talk about something like an economic union again. But right now it is clear that everybody will just try to take as much as possible, and it seems only fair to play that game with the established rules outside of the backrooms.

I'm not sure I agree with your pessimism here. I think a banking union is very achievable. That would have been sufficient to keep Ireland from needing a bailout. What killed Ireland was the forced conversion of debts run up by privately owned banks into public national debt. At a stroke, we went from nationally solvent to broke. If the ECB had actually been a CB (central bank), those companies would have been under direct ECB regulation, and those private bank debts would have been absorbed by the entire EU, not by Ireland alone. The banking system and the currency should span the same geographic area. That means an end to banks avoiding regulation by moving to the smaller countries where their bribes have more effect and the regulations are weakest (helloooo cypress!), it would mean that all banks in the entire Euro-zone have to play by the same rules, and that no one bank could bring down a nation, like happened in Ireland.

Probably a little harder, but still eminently doable would be Euro bonds. It might not have been enough to save Greece, but it would have made a big difference to Spain and Ireland, allowing both countries to move out of deficit and into surplus much quicker, and without having to inflict needless extra damage on already weak economies.

There is plenty of room for common-sense improvements.

There are also common-sense ways to give Greece a deal that will make it more likely the debtors get paid, and help the Greek economy to start working again at the same time. It's just a matter of timing the repayments, not of giving handouts.

This is all so much more nuanced than "Greece is satan" and "Germany is a saint". Once you move beyond that simplistic view, there is lots that can be done.

B.

 

[Frenchgerman]

But at the same time it has to be clear that nobody becomes a saint simply by being the loser. Which the vibe one can easily sense in such debate. A system which ends up rewarding the most irresponsible player will not solve the problem.

Noone said something like this !

But the situation is bad enough with the lack of transparence, the lack of democracy, the lack of sound management of the ressources, the lack of ...
Greece has to pay back, but Germany (and the others of the troika) cannot impose an austerity making to suffer a whole country, especially if known and respected economists (Nobel Price Stiglitz) say the way choosen FOR (in opposition to BY) Greece is irresponsible !

The whole situation makes me think of the new North Atlantic Trade treaty with the independent tribunals where in some cases there is the problem of acting judges being former attorneys and vice versa.
One of these tribunals told Germany that it has no right to quit nuclear energy because it would make 'suffer' some companies (among them the accuser). But a change in national policy is not subordinated to an economic entity gaining or loosing markets !

So in my opinion germany has the right to demand restitution of the borrowed money, but they cannot impose austerity if Greece choose so. Germany has the choice of helping the Greek economy to strive again and by this way to make sure the loan is reimboursed . Or Germany can take a stand by saying 'no further money' and will take the risk of driving Greek economy into the ground ...

 

[Frenchgerman]

Greece in talks with Russia to buy missiles for S-300 systems: RIA
Link

That, my dear Henri, is just an imitation of the first German federal Chancelor, Konrad Adenauer ... who is credited for the 'bon mot' : Wat kümmert mich ming Jeschwätz von jestern?

(free translation : i'm not interested in what I said yesterday)

another 'bon mot', certified to be by him is : Es kann mich doch niemand daran hindern, jeden Tag klüger zu werden

(free translation : who wants to prevent me becoming more clever every day)

Perhaps Varoufakis should have said it to Germany ...


:no: just kidding ... :rofl:

 

[gb2000ie]

A decision was made by Greece to go a path. Nonetheless they are consistently threatening to stop walking it.

Of course they are! The original Troika bailout promised them that if they did X Y would happen, and Z happened instead, and Z is a LOT worse than Y.

Why would you not question the road you are on when it turns out to be full of pot holes and poisonous snakes despite assurances that it would be smooth and safe!?

If something is obviously not working, why would you keep doing it? Is that not the text-book definition of insanity?

There is a pessimism that none of the money comes back and the only thing done to prevent the crisis is to have stretched the fallout over the duration of several decades.

Stretching the fallout is kinda the point - it's the financial equivalent of opening a bottle of coke that has been shook vigorously very slowly rather than just yanking the top off. If you do it slowly enough, no one gets wet, if you just yank it off there is carnage!

So it is not too surprising not to offer more money which most likely will never come back.

Greece is not asking for more money though - they are asking to be allowed pay back the money they already owe more slowly. That would give them the breathing room they need to get out of this mess.

Greece does nothing to prevent that pessimism.

Other than turning things around to the point that they now run a primary budget surplus of 4%!

So basically Germany saved itself by lending money? Does not sound logical.

Reality does not always sound logical, but yes, that is it exactly.

It wasn't altruism that led the troika to offer Greece help, it was a frantic effort to prevent "contagion". Had Greece defaulted, it would have ruined big banks all across Europe and beyond to the point that Germany, and France, and Italy, and many more countries would have found themselves in Ireland's position - having to use public money to rescue private banks at tax-payers expense.

Having watched the death of just one bank in the US send the whole world into chaos, no one wanted to see what would happen if a whole bunch of European banks went bust!

No, what happened is that Germany, France and the UK saved their banks by paying back their money.

Well no actually - the troika LENT Greece money so that Greece could pay back the banks. Greece still owes that money back to the troika. Greece were not given a handout, they were given a loan!

See the slight difference? Once more Germany is one dark empire which works like on single-minded clockwork in your book.

No - once again you are missing key facts. These 'bailouts' are not free money. Ask the Irish tax payer about it!

But banks are entirely different enitities from people. What happened is that money banks idiotically gave away causing the vicious cycle of increasing deficits and to stop this cycle without simply defaulting a big part of the debt got socialized.

Because we have allowed banks to grow so they are bigger than our economies, we are now in a situation that tax payers do indeed end up socialising bank debt. That is precisely why we need a strong banking union with a strict ECB to keep banks from effectively gambling with public money. In America, and in Ireland, when the banks won, the profit was private, when they lost, the nation picked up the tab. America was big enough to take it, Ireland was not.

Economics 101, I know. Which is why it is wise not to spent up to one's limit before a recession but instead to consolidate.

Until someone invents a time machine, "well you see you should have done X a decade ago" is not a solution to a current crisis!

I don't think anyone has argued that it would not have been better for everyone if Greece, and Germany, and France, and Ireland, and America, and MANY other countries had run budget surpluses during the boom years. Here in Ireland we had an idiot prime minister who actually said, in parliament "the boom is going to get boomier". He kept our budgets fairly balanced during the boom, but he should have been running big surpluses while times were good.

Else there simply is not money to spend left, no matter how great it would be to have that money. So you are comparing an ideal situation to a sad reality.

No! I am saying that if you are trying to fix a problem, step 1 is "do no harm", the troika UTTERLY failed at that. Contractionary policy is always a bad idea in the middle of a recession, especially a global one that people are starting to call a depression.

If you are trying to solve problems, you need to come up with solutions that will work in the real world, not in fantasy land.

I laid out three very simple steps to do that in my last post.

I have yet to see your proposed plan for actually getting from where we are, to where we need to be. All you do is whine about how we got here. We are here, now what?

Also letting that sword dangling over Europe does not really encourage other strategy, as every Euro given to Greece could be a Euro lost, once they decide they had enough of this kind of bailout.

That is why it is important to offer Greece a FAIR and REALISTIC deal. They can only be expected to walk the path all the way to the end if they have confidence that this time, the path really will lead to a better future.

The russian ambassador was the first he spoke to as prime minister. He did not enter negotiations, but Tsipras that way made a clear statement where he thinks Greece belongs to.

Oh, hello mole-hill, someone confused you for a mountain!

The first people he negotiated with was Europe, not Russia. Which ambassador he has a meaningless conversation about nothing with first is just not important.

As long as this would have been the case for the benefits reaped by Ireland before, I'd agree. But, well, that did not happen. It might be a smart move for the future though.

Good - some more common ground.

But at the same time it has to be clear that nobody becomes a saint simply by being the loser. Which the vibe one can easily sense in such debate. A system which ends up rewarding the most irresponsible player will not solve the problem.

1) no one here is calling Greece a saint.
2) there is no danger of anyone seeing the hell Greece has been in for almost a decade now as a "reward" - the danger of 'moral hazard' has LONG passed for small peripheral nations.

On a related note - compare and contrast the Greek experience with that of the banks that did so much damage to the world economy. The banks hardly suffered at all. If you are looking for some 'moral hazard' to go fight against, that's where you should be looking, and if you do, I'll be right there next to you!

B.

 

[Frenchgerman]

Unfortunatly there we have to look into the direction of the UK, which tries to prevent any kind of control over the banks.

we can only hope that the UK leave the EU, because if there ever was a profiteer, it was the UK ...

 

[Frenchgerman]

but that's the reality !

Give them the time to repay the loans or risk the exit of Greece ... and in this last case, what would become of Europe ? What would become of Germany who does the principal trading with the European partners ?
i was the first here among my friends to tell that loaning money without garanties is a gamble ... a very dangerous gamble ! Help Greece not by starving the population, but an organizing help.
It's the same with the banks ... the called out for help from the states but refused an ethic commitement for futur banking. And the states that gave the money have no leverage anymore to impose their views.

And please stop talking as if Germany were the only country concernend. Germany is the head of the file for Europe.
But there is one certainety, as long as Germany thinks they can give lessons (with reason or not is not the point), it will never gain sympathy, understanding and respect. That's the reason I opened the discussion about Schäuble talking about France. The approach to bless your partner is unfortunate at best, perhaps rude. For me it is impertinent.

There is only one solution today. Reorganize the euro, reorganize the system on which the euro is based !
And respect your partners !

 

[Shelter]

And respect your partners !

Tell that too the Greek government!!!! And sympathy - I don't want sympathy from them - the only thing I want is that they will stop to trick and start to clear out their Augean stables!

 

[gb2000ie]

Because it would mean walking back the very same road.

No it would not. There are lots of alternatives to just doing the same thing over and over again.

A bit of stimulus now could do Greece the world of good. Since they're running a primary budget surplus, it would not involve them borrowing any more money, just slowing down repayments for an agreed time.

Also they gave their word to people who relied on it. If they turn now, their word won't be worth anything anymore.

And the troika have also been proved wrong - so surely there is room for some compromise no? Greece were promised that taking the deal would have a given effect on their economy, it did not. So the Greeks have every right to ask for a re-negotiation when the troika's promises proved to be wishful thinking.

So the money is lost anyway then. What would be the point of giving more?

I'm not sure how often I can saw this, but lets try one more time - THEY ARE NOT ASKING FOR MORE MONEY! They are asking for a change in the speed of repayment.

You might have missed it, but Germany is still a democracy. So you have a lot of people to convince to give their own money - the money which will miss in their health system, social security systems and infrastructure spendings, which all got cut down in the last 15 years - to bail out someone else. Those are not banks anymore, who follow single-minded certain interests. But I guess that is what you are missing entirely - that there are people in Germany who are not banks and who are not making their living by giving away other people's money. If you demand empathy, you should be able to give it as well. Greece is not simlply threating some soulless corportation anymore, right now their threads are directed towards the German people and they don't make new friends that way.

Sorry, but when you can borrow money FOR FREE (I already posted the link proving that assertion earlier in the discussion), why on earth would you think there will be any poor Germans thrown on the streets. You make it sound like Angela Merkel is going to collect cheques from every German citizen when in actual fact, all that is going to happen is a key is going to be hit on a computer, and the German debt goes up a faction of a percent, and at no cost because German bonds are effectively free, allowing Germany to borrow at no real cost.

To pretend there is any symmetry between the effects on the Greek ordinary people, and the effects on the German ordinary people is pathetic. You do yourself a disservice by passing off such obvious nonsense as a real argument.

With the help packages they got. So much about the way not working.

I don't think you understand what a primary budget surplus is! It means the difference between tax income and government expenditure. It means their tax intake is bigger than their spend. No outside money features in that calculation, so no, not with the help package. The primary surplus is all their own doing.

It was money Greece could not pay and most likely won't be able to pay the next 50 years. The money itself was not a handout, the risk and low interest rates were, as now a big part of money is owed to other states and not the banks anymore. It is not like Greek had much options in the middle other than passing on that money. So for saving the banks it really does not matter whether the money is lent, stolen, printed or gifted. Fact is it went from the pockets of the people into the pockets of the bank so they could cover their asses.

Are you now arguing against preventing a run on the banks and a collapse of the banking system? You seem to think that preventing the loss of the life savings of millions of people was somehow not a good thing? That it was somehow not worth doing?

I get the impression you wish Greece has been let default. I guess the entire European economy exploding and every country being as badly off as Greece would have had one positive outcome - you would understand how bad the ordinary Greeks have it now, because we'd all be in the same boat!

Indeed, it just creates a foundation to decide who on a moral level should carry the damages and whether he is a victim. It is so easy to see those who lost less as the winners of a crisis. Not more and not less. It is tempting to demand money for someone out of pity.

I thought so - you have no actual interest in fixing the real problems real people are having - you just want to dish our vengeance. Is a decade of suffering and 1 in four people being out of work not punishment enough? How much more should we impose until you think millions have suffered enough?

I find your vengeful attitude deeply distasteful.

There is certainly a limit to it, but at someone has to pay the bills in the end, it makes sense to cut the spending to a realistic level.

TIMING MATTERS! Are you trying to actually fix the long-term problem? Or are you only intersted in dishing out vengence?

You claim to understand economics 101, so one again I ask, how, exactly, is turning a recession into a depression going to help anyone balance their books? If you understand economics 101 you are aware of the multiplier effect, and you know that if you cut in a depression, you made deficits WORSE, because every euro you cut in spending results in MORE than a Euro of lost income. This death-spiral is well understood in main-stream economics, but the troika believe that "confidence" could magically fix the problem. They were wrong! They ordered the Greeks to do things economics 101 tells you will make them MORE indebted, not less, and reality proved the economics text books right.

You still think this was a good idea. Why? How was it helpful? You claim fixing the deficit was vital, but you insist on a policy economic theory tells you will make it worse. That is what I call nuts!

One can only use the options which are there, just keeping on spending until the crisis is over and there is a better time to make cuts simply does not work. Or as you yourself say it: Germany paying everything for the next 20 years is not a realistic solution.

I've already given you my simple 3-step proposal:
1) immediate enforcement of existing tax law
2) a break from interest repayments for a few years, freeing money for well-focused stimulous - all that money to be ring-fenced for infrastructure work which generates lots of employment, and brings in more tax revenue than it costs, leading to a net PROFIT from that INVESTMENT, and ending the recession.
3) As soon as the business cycle swings, don't just restore intrest payments to where they were, increase them to make up for lost time. That has the bonus of avoiding moral hazard, and of preventing the economy from over-heating and heading into a bubble.

In short - take a longer-term view so you can work WITH the business cycle, not against it. What you propose is trying to hold back the tide, instead of working with it.

Nothing I am saying is new, but you keep pretending there are no alternatives - HERE IS ONE!

Unfortunatly there we have to look into the direction of the UK, which tries to prevent any kind of control over the banks. They even refuse the way too tame ideas our government proposed, a government which gives birthday parties to bank CEOs in their offices. There is just a limit how for one can get without everyone moving along. But maybe the next crisis will shake down the UK and London will be at the receiving end of some package...
But on that I absolutely agree -had the banks acted rational, the crisis in Greece would never have gone beyond the gravity of the Spanish one. But still they get rewarded with tax payer's money.

The UK is definitely a strong force against banking reform, but, they are not in the Euro, so they are not in the ECB, and not holding up ECB reform. Sadly, I know of one little country who's government will fight tooth and nail against banking reform, even though the banks ruined the country, and even though the people are very much in favour of reform. Sadly, I am talking about my government here in Ireland (I didn't vote for them, but I am still stuck with 'em)

B.

 

[gb2000ie]

If you want to see the extent to which the troika's belief in 'confidence' over basic economic theory undermined the first rescue plan, have a look at the graph at the top of this article:
http://refhide.com/?http://krugman.blogs.nytimes.com/2015/02/14/greeces-excess-burden/

It shows what was predicted by the troika, and what actually happened. The sharp difference between the promises made and the reality are very important in understanding Greece's determination not to just keep doing more of the same.

It also shows the extent to which the troika powers need to re-think their strategy - this is dramatic demonstration of how wrong the European elite were, and that includes the German government.

B.

 

[Frenchgerman]

Tell that too the Greek government!!!! And sympathy - I don't want sympathy from them - the only thing I want is that they will stop to trick and start to clear out their Augean stables!

until prooven otherwise, the Greek government respects the wishes of those who elected them : stop the austerity !

and that is the ultimate respect a government can give .... has to give !


Sorry for Germany if it is in the way !