A spectre is haunting Europe ...

[Axulus]

In any other situation but a leftist "paradise", a stable strong currency is a good thing and a positive for the economy and the people.

Stable yes. A strong currency can inhibit exports and induce more imports which may or may not be a positive for the economy and the people.

Does it inhibit exports to other countries that share the same currency? The claim being made is that Germany is ruining things because it is a large exporter. People seem to be falling for the typical mercantilist fallacy. Furthermore, is the Euro really all that strong? It has lost a lot of value vs. the USD lately. Finally, even if a currency is "strong", then couldn't things adjust via production prices to get back to a competitive level?

 

[dismal]

The whole point of exporting is to get money to buy imports. The whole point of producing is to consume.

The whole "huzzah we have devalued our currency so our people can no longer afford as many things but on the plus side we get to work hard to make nice things for other people" argument is puzzling.

 

[Axulus]

The whole point of exporting is to get money to buy imports. The whole point of producing is to consume.

The whole "huzzah we have devalued our currency so our people can no longer afford as many things but on the plus side we get to work hard to make nice things for other people" argument is puzzling.

Yes, it's very strange. When we are talking about an individual, we export things (provide labor) to earn money so that we can buy things later (imports). Weakening the currency I am paid in would be the equivalent of taking a pay cut since the currency will buy less. Yes, being willing to take a pay cut makes it more likely I will be hired by someone and therefore allow me to export more, compared to a situation where no one will hire me, or the hours I am hired for are limited. But, why demand that the currency I am paid in be weaker (and therefore have less buying power)? Why not just take a pay cut in a stronger currency and get the same effect, if the desire is to have more hours to work?

 

[T.G.G. Moogly]

It wasn't venture capital. If a venture capitalist invests in a country he owns a chunk of it. As an owner he is not protected nearly as well as a creditor. Are you suggesting Germany now owns a chunk of Greece?

I understand that. I was taking liberty to make the point that the lenders made big mistakes but now they're acting like it's the borrowers' fault entirely. It clearly isn't. They fucked up. Maybe they got caught up in their own greed and opportunism. But they clearly fucked up and there should be a cost. I think now the chickens are coming home to roost and even though they realize they fucked up they're pushing for every penny they can get.

 

[Axulus]

It wasn't venture capital. If a venture capitalist invests in a country he owns a chunk of it. As an owner he is not protected nearly as well as a creditor. Are you suggesting Germany now owns a chunk of Greece?

I understand that. I was taking liberty to make the point that the lenders made big mistakes but now they're acting like it's the borrowers' fault entirely. It clearly isn't. They fucked up. Maybe they got caught up in their own greed and opportunism. But they clearly fucked up and there should be a cost. I think now the chickens are coming home to roost and even though they realize they fucked up they're pushing for every penny they can get.

I'm not sure what you are talking about. Greece has the funds to pay the lenders back, it just wants to implement a new surge in spending instead and screw the lenders. Also, the vast majority of lending to Greece was done during a time of historically low interest rates to Greece. Not exactly very greedy to accept such low interest rates and also typical in business to not suspect that the other party is trying to defraud you (with the fiscal reports being fake and the other side intending to break the agreement at the first opportunity).

 

[T.G.G. Moogly]

I'm not sure what you are talking about.

Clearly.

Greece has the funds to pay the lenders back, it just wants to implement a new surge in spending instead and screw the lenders.

While half the youth are unemployed and living standards go down a black hole. It's become a sharecropper state, if that good.

Also, the vast majority of lending to Greece was done during a time of historically low interest rates to Greece. Not exactly very greedy to accept such low interest rates and also typical in business to not suspect that the other party is trying to defraud you (with the fiscal reports being fake and the other side intending to break the agreement at the first opportunity).

If this were happening to you, you would get it. But it isn't, so you don't. I understand your position.

 

[Axulus]

Clearly.

Greece has the funds to pay the lenders back, it just wants to implement a new surge in spending instead and screw the lenders.

While half the youth are unemployed and living standards go down a black hole. It's become a sharecropper state, if that good.

Also, the vast majority of lending to Greece was done during a time of historically low interest rates to Greece. Not exactly very greedy to accept such low interest rates and also typical in business to not suspect that the other party is trying to defraud you (with the fiscal reports being fake and the other side intending to break the agreement at the first opportunity).

If this were happening to you, you would get it. But it isn't, so you don't. I understand your position.

The same could be said about Spain. Should they default on their debt, which is actually more burdensome than Greece's (and plunge Europe back into another prolonged recession)? Or is it only OK because Greece is small enough for Europe to handle the hit? Not only that, but you need to explain how those youth will be helped with a debt default (which means no more borrowing and bye bye to plans for increased spending). You think the economy will be magically unaffected? Poof, the debt will be gone, and all will be well, living standards will emerge from the black hole?

You seem to be living in a fantasy world like the Greeks.

 

[Jayjay]

Clearly.

Greece has the funds to pay the lenders back, it just wants to implement a new surge in spending instead and screw the lenders.

While half the youth are unemployed and living standards go down a black hole. It's become a sharecropper state, if that good.

The youth unemployment rate in Greece is going down compared to two previous years.

Greece has no one but themselves to blame, and while climbing out of the hole is hard, I have no doubt that they'll be able to do it. But turning the clock back and going back to the overspending that got them here in the first place, hoping that they can default on their debt, is not the way to do it. It's not that its creditors deserve the money, it's that if Greece defaults on the debt they'll have a hard time getting new loans, and that will push them even deeper in to the hole.

 

[T.G.G. Moogly]

Greece has no one but themselves to blame...

It's not that its creditors deserve the money....

This much is certainly true.

 

[Axulus]

Clearly.

While half the youth are unemployed and living standards go down a black hole. It's become a sharecropper state, if that good.

The youth unemployment rate in Greece is going down compared to two previous years.

Greece has no one but themselves to blame, and while climbing out of the hole is hard, I have no doubt that they'll be able to do it. But turning the clock back and going back to the overspending that got them here in the first place, hoping that they can default on their debt, is not the way to do it. It's not that its creditors deserve the money, it's that if Greece defaults on the debt they'll have a hard time getting new loans, and that will push them even deeper in to the hole.

Even though you discount the impact to other people in Europe of a Greek default, the costs incurred to them should still be taken into consideration, whether they are a creditor or someone else affected by the harm done to the economies in the rest of Europe. Yes, much smaller harm than a default by Spain, for example, but still some harm nonetheless.

Also, how much of that debt is owned by Greek retirees, for example? I know a good portion of the US government debt is held in pension/retirement funds. Is there any reason you think they don't deserve the money they saved up for their retirement?

 

[Jayjay]

Greece has no one but themselves to blame...

It's not that its creditors deserve the money....

This much is certainly true.

The creditors took a risk of non-payment. Of course part of it was that Greece cooked its books, but the banks and others are still basically private entities who took their chances and may have lost their money for funneling it to a deadbeat like Greece. The fact that Greece will likely spiral into a deeper recession if it defaults and leaves the Eurozone is largely independent of whether rest of the Europe needs that money or not... and it's rather likely that if Greece pulls through the debts are going to be written off one way or the other anyway.

There are other countries in Europe who are in deep recession as well, is it fair to them to make them pay for Greece's blunders?

 

[T.G.G. Moogly]

There are other countries in Europe who are in deep recession as well, is it fair to them to make them pay for Greece's blunders?

Of course it's fair. It may not be desirable but it's certainly fair. Those creditors wanted to grow their money, so they loaned it, and unfortunately for them they lost. There's nothing unusual about such a scenario.

My point is simply that both sides blundered. To any reasonable person that much is obvious. The creditors were the enabling element and in my view more the burden of fault. They fucked up but they still want their money back. Nothing unusual there.

 

[Harry Bosch]

Of course it's fair. It may not be desirable but it's certainly fair. Those creditors wanted to grow their money, so they loaned it, and unfortunately for them they lost. There's nothing unusual about such a scenario. My point is simply that both sides blundered. To any reasonable person that much is obvious. The creditors were the enabling element and in my view more the burden of fault. They fucked up but they still want their money back. Nothing unusual there.

if the lenders blundered in the past by lending to Greece in good times, are they not 'blundering' by lending to them now in bad times?

 

[Loren Pechtel]

Clearly.

Greece has the funds to pay the lenders back, it just wants to implement a new surge in spending instead and screw the lenders.

While half the youth are unemployed and living standards go down a black hole. It's become a sharecropper state, if that good.

Spending won't solve the problem because they don't have anything to spend. The only way they can spend like they want to is with the printing press--and that means leaving the Eurozone.

The fundamental cause of the Greek problem is lavish social payments without the taxes to support them. They've maxed out their credit cards and yet think the answer is to spend more without dealing with the income side of the problem.

The sources are rather dodgy but it looks like Greece has already turned to the printing press.

 

[T.G.G. Moogly]

Clearly.

While half the youth are unemployed and living standards go down a black hole. It's become a sharecropper state, if that good.

Spending won't solve the problem because they don't have anything to spend. The only way they can spend like they want to is with the printing press--and that means leaving the Eurozone.

The fundamental cause of the Greek problem is lavish social payments without the taxes to support them. They've maxed out their credit cards and yet think the answer is to spend more without dealing with the income side of the problem.

The sources are rather dodgy but it looks like Greece has already turned to the printing press.

You can't spend money you don't have unless someone enables the borrowing. This is the fundamental problem underlying your fundamental problem.

 

[T.G.G. Moogly]

Of course it's fair. It may not be desirable but it's certainly fair. Those creditors wanted to grow their money, so they loaned it, and unfortunately for them they lost. There's nothing unusual about such a scenario. My point is simply that both sides blundered. To any reasonable person that much is obvious. The creditors were the enabling element and in my view more the burden of fault. They fucked up but they still want their money back. Nothing unusual there.

if the lenders blundered in the past by lending to Greece in good times, are they not 'blundering' by lending to them now in bad times?

I would wager they took a chance knowing someone was going to be left holding the hot potato, and hoping it would not be them. This is not exactly an unusual tactic. Or maybe they knew there couldn't be a hot potato so they just lent freely, like their loans were not losable. Can't blame them for this, but it's still rotten.

 

[Harry Bosch]

I would wager they took a chance knowing someone was going to be left holding the hot potato, and hoping it would not be them. This is not exactly an unusual tactic. Or maybe they knew there couldn't be a hot potato so they just lent freely, like their loans were not losable. Can't blame them for this, but it's still rotten.

Therefore, it would be rotten for anyone to lend additional funds to Greece today?

 

[T.G.G. Moogly]

I would wager they took a chance knowing someone was going to be left holding the hot potato, and hoping it would not be them. This is not exactly an unusual tactic. Or maybe they knew there couldn't be a hot potato so they just lent freely, like their loans were not losable. Can't blame them for this, but it's still rotten.

Therefore, it would be rotten for anyone to lend additional funds to Greece today?

No. Simply do so knowing there are no guarantees, just as you would scrutinize any other business undertaking.

 

[Harry Bosch]

No. Simply do so knowing there are no guarantees, just as you would scrutinize any other business undertaking.

Why were lenders 'rotten' to lend to Greece in the past, but not rotten to lend to them today? Secondly I'd be surprised if there were any lenders who didn't understand that all loans carry risk.

 

[T.G.G. Moogly]

No. Simply do so knowing there are no guarantees, just as you would scrutinize any other business undertaking.

Why were lenders 'rotten' to lend to Greece in the past, but not rotten to lend to them today? Secondly I'd be surprised if there were any lenders who didn't understand that all loans carry risk.

What I mean by rotten is making a loan or venturing capital without risk. I think this is how the lenders want it to turn out. And unless I'm anachronizing I think this was the expectation going in, perhaps too big or too important to be allowed to fail. No one expected to lose their "investment," but when it became apparent that might actually happen the goal posts started moving.