A spectre is haunting Europe ...

[SimpleDon]

Would you personally lend someone money who had a history of stiffing its creditors?

If he says no, that means he thinks he personally should let people die because money is more important to him.

If someone shops for all their groceries using credit cards, and they reach the limit, is the credit card company obliged to raise the limit lest the shopper starve?

My earlier point remains unanswered by anyone. Where will the money come from once the lenders all disappear?

This is assuming that austerity is the way to restore the confidence in the Greeks to pay back future loans. Austerity reduces the Greeks' ability to pay back the loans because it ruins the economy. I am not going to lend them any money unless they pay a very high interest rate, which will ironically make it even harder to pay back the loans.

If the ECB feels that it is vital to bailout the banks and the wealthy then they should do at least a part of it. Like we did in the US. Like we have implicitly promised to do in the future when the excesses of the financial sector again cause these types of problems. Why I don't know. We seem to only be taking a firm stand on one half of the moral hazards involved.

 

[Axulus]

If he says no, that means he thinks he personally should let people die because money is more important to him.

If someone shops for all their groceries using credit cards, and they reach the limit, is the credit card company obliged to raise the limit lest the shopper starve?

My earlier point remains unanswered by anyone. Where will the money come from once the lenders all disappear?

This is assuming that austerity is the way to restore the confidence in the Greeks to pay back future loans. Austerity reduces the Greeks' ability to pay back the loans because it ruins the economy. I am not going to lend them any money unless they pay a very high interest rate, which will ironically make it even harder to pay back the loans.

If the ECB feels that it is vital to bailout the banks and the wealthy then they should do at least a part of it. Like we did in the US. Like we have implicitly promised to do in the future when the excesses of the financial sector again cause these types of problems. Why I don't know. We seem to only be taking a firm stand on one half of the moral hazards involved.

The economy was ruined before the austerity was implemented. 2013 and 2014 saw the beginnings of recovery, with GDP increasing in both years and unemployment down and the budget finally close to being in balance. Of course the new reality is going to be tough. The hangover from cutting off the alcohol of unsustainable deficit spending is going to be painful, but the hangover will eventually clear. When reality and the data conflict with your hypothesis or theory, the rational thing to do is abandon the theory.

 

[T.G.G. Moogly]

Unfortunately the people who suffer the most under austerity are not the ones who profited the most under the huge budget deficits. No matter how long you spread out the pain this is going to be true.

You aren't making any sense. Greece was spending X (money raised from tax revenue) + Y (borrowings). The EU and Greece implement austerity by keeping spending to X (tax revenue collected) or close to it. Now you are saying they are suffering because they can no longer spend Y, and yet you say that it was bad that the lenders allowed Greece to spend Y in the first place. Well, without the lenders, the spending would've been kept at X, which you say causes people to suffer.

You need to get your story straight.

You're making an academic argument, full of ideological purity. But you're not going to recover your "investment" unless there's an economic turnaround. As it stands you're just shaking people down for your pound of flesh. You're demonstrating that the money lent was only lent to make money. The deal went sour. You fucked up. The chickens are coming home to roost. When you're willing to lend you're willing to lose.

 

[T.G.G. Moogly]

This is assuming that austerity is the way to restore the confidence in the Greeks to pay back future loans. Austerity reduces the Greeks' ability to pay back the loans because it ruins the economy. I am not going to lend them any money unless they pay a very high interest rate, which will ironically make it even harder to pay back the loans.

If the ECB feels that it is vital to bailout the banks and the wealthy then they should do at least a part of it. Like we did in the US. Like we have implicitly promised to do in the future when the excesses of the financial sector again cause these types of problems. Why I don't know. We seem to only be taking a firm stand on one half of the moral hazards involved.

The economy was ruined before the austerity was implemented. 2013 and 2014 saw the beginnings of recovery, with GDP increasing in both years and unemployment down and the budget finally close to being in balance. Of course the new reality is going to be tough. The hangover from all the alcohol of unsustainable deficit spending is going to be painful, but the hangover will eventually clear. When reality and the data conflict with your hypothesis or theory, the rational thing to do is abandon the theory.

If this is true we ought to be hearing it screamed across the airwaves. It ought to be the one thing the creditors say over and over, that the arrangement is working for everyone. Why aren't we hearing that?

 

[Axulus]

You aren't making any sense. Greece was spending X (money raised from tax revenue) + Y (borrowings). The EU and Greece implement austerity by keeping spending to X (tax revenue collected) or close to it. Now you are saying they are suffering because they can no longer spend Y, and yet you say that it was bad that the lenders allowed Greece to spend Y in the first place. Well, without the lenders, the spending would've been kept at X, which you say causes people to suffer.

You need to get your story straight.

You're making an academic argument, full of ideological purity. But you're not going to recover your "investment" unless there's an economic turnaround. As it stands you're just shaking people down for your pound of flesh. You're demonstrating that the money lent was only lent to make money. The deal went sour. You fucked up. The chickens are coming home to roost. When you're willing to lend you're willing to lose.

What the hell are you talking about? Are you having a discussion with a mouse in your pocket?

 

[SimpleDon]

And this is probably a good argument as to why countries shouldn't use fiat currency in the first place.

Fiat currency isn't the problem. All currencies are essentially fiat.

Well, this in’t entirely true. Countries that have their own currencies don't have to require people to use it, the fiat part, they only have to require that taxes have to be paid in the currency for there to be a demand for the currency. A semantic point I grant you, which I am trying to swear off, but an important one.

The problem that hard money people have is that this is a "hard money” problem. The Greeks and the other PIIGS can't devalue the currency to spread the pain across the full population. Austerity and "internal devaluation,” a fancy way of saying deflation, concentrates the pain on the poor, the disabled and the young. The so-called success stories of austerity all have one characteristic in common, they have had massive numbers of people who have left the country to find work in other EMU countries and who send money back that is largely supporting their home country now. These people who immigrate are the young. How can anyone suggest that this is a desirable solution?

 

[T.G.G. Moogly]

You're making an academic argument, full of ideological purity. But you're not going to recover your "investment" unless there's an economic turnaround. As it stands you're just shaking people down for your pound of flesh. You're demonstrating that the money lent was only lent to make money. The deal went sour. You fucked up. The chickens are coming home to roost. When you're willing to lend you're willing to lose.

What the hell are you talking about? Are you having a discussion with a mouse in your pocket?

Stop being coy. It's beneath you.

 

[SimpleDon]

Trade Surplusses / Deficits aren't the same thing as Government Budget Surplusses / Deficits. Germany being good at selling to the Greeks doesn't make Germany responsible for the irresponsible acts of Greek politicians.,

No, but it makes them responsible for the trade deficit, a large part of the Greeks' initial problem. (The Greeks have a small trade surplus now because of the deflation in their economy.) It is a little disingenuous of the Germans to put forward the idea that the answer to this problem is for everyone to run a trade surplus when the vast majority of trade is internal EU trade (> 80%) and they aren't willing to run a trade deficit.

 

[dismal]

What the hell are you talking about? Are you having a discussion with a mouse in your pocket?

Stop being coy. It's beneath you.

There's a point I'm not sure you completely grasp here. The last round of debtors was European Union countries who provided a large amount of funds to bail Greece out. They did it with the requirement Greece make progress to debt targets that Greece had already committed to when it joined the EU and are still generally required of EU members.

Is it actually your position that these countries who came to help Greece by lending it money when it had no other options deserve to be screwed now?

Is it actually your position that Greece should be able to stay in the EU while flaunting the EU's rules on debt?

 

[fromderinside]

Stop being coy. It's beneath you.

There's a point I'm not sure you completely grasp here. The last round of debtors was European Union countries who provided a large amount of funds to Greece out. They did it with the requirement Greece make progress to debt targets that Greece had already committed to when it joined the EU and are still generally required of EU members.

Is it actually your position that these countries who came to help Greece by lending it money when it had no other options deserve to be screwed now?

Is it actually your position that Greece should be able to stay in the EU while flaunting the EU's rules on debt?

Abso-damn-lutely. They screwed Greece on interest rates and requirements rather than forgiving much of their overpriced debt. Greedy gets as greedy sows. Euro-rich bend over. Your turn is next with all that wonderful strong currency thinking leading you down a road even Japan didn't take.

 

[T.G.G. Moogly]

Stop being coy. It's beneath you.

There's a point I'm not sure you completely grasp here. The last round of debtors was European Union countries who provided a large amount of funds to bail Greece out. They did it with the requirement Greece make progress to debt targets that Greece had already committed to when it joined the EU and are still generally required of EU members.

Is it actually your position that these countries who came to help Greece by lending it money when it had no other options deserve to be screwed now?

Is it actually your position that Greece should be able to stay in the EU while flaunting the EU's rules on debt?

No. That's not my position because you're putting yourself at one extreme and me at the other. People operate somewhere in between.

It ain't working, dis. Are you going to sail over the edge with the colors flying?

 

[dismal]

There's a point I'm not sure you completely grasp here. The last round of debtors was European Union countries who provided a large amount of funds to bail Greece out. They did it with the requirement Greece make progress to debt targets that Greece had already committed to when it joined the EU and are still generally required of EU members.

Is it actually your position that these countries who came to help Greece by lending it money when it had no other options deserve to be screwed now?

Is it actually your position that Greece should be able to stay in the EU while flaunting the EU's rules on debt?

No. That's not my position because you're putting yourself at one extreme and me at the other. People operate somewhere in between.

It ain't working, dis. Are you going to sail over the edge with the colors flying?

I don't detect an answer in there. I detect a shift in your tactics to attacking me personally.

Do you understand the last 2 rounds of loans to Greece were bailouts provided by other EU countries?

Do you understand that these loans were provided based on a commitment Greece made to get its fiscal house in order?

Do you understand that Greece's debt-to-GDP is way above allowable EU levels?

Do you understand that if Greece blows off the countries that bailed it out last time and returns its budget to massive deficits there will be no additional bail outs in the offing?

Do you understand that if Greece in unable to borrow from the people that bailed it out last time it likely won't be able to borrow the money required to fund its massive deficits?

Because these are relatively important things to understand before saying what Greece should do.

 

[Loren Pechtel]

The problem is that they want to go on a spending spree they don't have the money for.

There's a lot of posturing going on right now. Time will tell. Obviously if they do not have the money they cannot spend it.

I think debt repayment linked to economic recovery is damn smart in this arrangement. The lenders get their money and the pain to Greece is considerably lessened. Looks like a win win to me. I'm curious to see how it all ends, especially considering the plight of other heavily indebted and economically depressed Eurozone members.

I think it's a horrible idea because until they see reason there isn't going to be recovery.

- - - Updated - - -

Its more that if Greece wants loans, that they have to make their creditors feel comfortable. If the Greeks refuse to honor old debts, not very likely that their new investors will trust them for new debt.

No, the confidence fairy will be a long time coming back to Greece.The only way that any bonds will be sold is if the ECB guarantees them. The ECB doesn't have to continue destroying the Greek economy to do that. It actually makes no sense, the Greeks are less able to pay back the bonds with austerity imposed on them destroying their economy.

The ECB guaranteeing them would be a case of throwing good money after bad.

 

[Loren Pechtel]

Whether they have produced a surplus is somewhat dependent on the definition that you apply. I am not a semantic warrior so yes, they have paid off a small part of their debt. But not even a tenth of it that the troika had projected that they would have been able to by now and at a much greater cost to the privation of the people. The troika said that the unemployment rate would peak at 15%, it actually hit 28%.

It is really simple, the question is how much pain should each party to the mess have to bear. The troika and the conservatives here seem to believe that the people should be forced to bear whatever pain is necessary for the bonds to be repaid in full. Including interest.

My point is that it is in the best interests of everyone involved to get the economy back on its feet and the people producing rather than to have it limp along at 75% for years. Even if it means that the bondholders have to have more than a haircut. Or the ECB has to bail them out. There is no room in economics for this kind of moralizing. There is also a moral hazard in the EC bailing out the bondholders, but if that is what is required then do it and let's start start to get the economies working well again. This is what we did in the US. It was distasteful and it creates a moral hazard, the banks will expect to always be bailed out. This means that they will feel free to even wilder speculation in the future.

Things are going so badly in Greece because they're still digging themselves in deeper. The problem isn't the troika, the problem is their own unwillingness (and inability) to collect taxes.

- - - Updated - - -

People forgot that the whole thing started with cooking books, why no one is in prison?
Is it because if they go to prison then so must Goldman Sucks people?

Steal $100 - you are a criminal going to prison, steal $100bil - you are just a successful banker.

Which books were cooked, specifically, and how were they cooked?

Greece cooked their books when they were seeing admission to the Euro.

The reason nobody went to jail for it is who has the authority to send anyone to jail over it? Nobody. Countries can commit crimes without being held accountable.

 

[Axulus]

What the hell are you talking about? Are you having a discussion with a mouse in your pocket?

Stop being coy. It's beneath you.

Your bizarre and irrelevant musings of an attempt to psychically divine the contents of my thoughts (inaccurate, I might add, don't quit your day job), are apparently not beneath you.

 

[Axulus]

The economy was ruined before the austerity was implemented. 2013 and 2014 saw the beginnings of recovery, with GDP increasing in both years and unemployment down and the budget finally close to being in balance. Of course the new reality is going to be tough. The hangover from all the alcohol of unsustainable deficit spending is going to be painful, but the hangover will eventually clear. When reality and the data conflict with your hypothesis or theory, the rational thing to do is abandon the theory.

If this is true we ought to be hearing it screamed across the airwaves. It ought to be the one thing the creditors say over and over, that the arrangement is working for everyone. Why aren't we hearing that?

Nice goal post shift.

Is it working to significantly reduce the deficits? As demonstrated in 2013 and 2014, yes
Is it still compatible with economic growth and reduction in unemployment? As demonstrated by 2013 and 2014, yes.
Was it bringing confidence and capital back to the economy (or at least compatible with that)? Yes - see chart below. Austerity began in 2010.

http://www.investingreece.gov.gr/default.asp?pid=21

Will it bring about the fastest economic growth and fastest reduction in unemployment Greece is capable of? No, and no one claimed otherwise. But then again, they don't have any good options to bring that about.

Furthermore, if Greece and the people didn't like the terms. Why didn't they reject them in 2010 and just exit the EU at that time?

 

[untermensche]

Do you understand the last 2 rounds of loans to Greece were bailouts provided by other EU countries?

And the measures attached to these loans were arbitrary and harmful to millions of Greeks.

US bankers crash the world economy.

And the weakest economies become the scapegoats and their middle class is made to bail out the rich.

 

[Axulus]

Do you understand the last 2 rounds of loans to Greece were bailouts provided by other EU countries?

And the measures attached to these loans were arbitrary and harmful to millions of Greeks.

US bankers crash the world economy.

And the weakest economies become the scapegoats and their middle class is made to bail out the rich.

I think you misunderstand. The original bondholders already took a 50% hit on their loans to Greece. A good amount of these probably included retirees in Greece who unwisely held Greek bonds in their retirement and pension funds.

European leaders announced a deal early Thursday in which private investors in Greek government debt will take a 50% writedown on the value of their holdings as part of a wide-ranging package of measures designed to stem the euro-zone debt crisis.

http://www.marketwatch.com/story/greek-bondholders-to-take-50-haircut-2011-10-26

The current loans are bailout loans backed by EU taxpayers, which presumably include the non-rich to the extent that people other than the rich pay taxes in the EU, and also include countries with large debt burdens that are committed to meeting their EU debt obligations, including Spain and Italy. Why should those struggling in Spain and Italy pay for Greek screw-ups? How is it fair for EU and IMF to agree to Greek debt relief but not agree to the same for Spain and Italy?

 

[untermensche]

I think you misunderstand.

I think it is you.

The Greek crisis originates on Wall Street.

It materializes when trillions in wealth by magic disappear.

To say the Greeks were unwise to not predict US bankers would destroy the economy with their greed may have some wisdom.

 

[Axulus]

I think you misunderstand.

I think it is you.

The Greek crisis originates on Wall Street.

It materializes when trillions in wealth by magic disappear.

To say the Greeks were unwise to not predict US bankers would destroy the economy with their greed may have some wisdom.

The Greek crisis originates from their 175% debt to GDP ratio which arose from their own spend and borrow decisions and their fraudulent financial statements to defraud the creditors into keeping the loans coming. Keep living in that fantasy world, however. Must be nice and cozy there.