Greece II or: How I learned to stop worrying and love the euro.

[A Horse Named Stranger]

I feel really uncomfortable with the way this discussion is going, because telling the Greece what they should have done 30 years ago, is really crying over spilt milk and not particularly helpful.

Anyway, how did this debt start out in the first place.

For decades the Greece state had been used/abused by the elites of both parties as their "personal kingdom". Giving good positions to their loyal supporters and family members (whether they were qualified or not), as a result the state ended up with that overblown public sector. Nepotism did not stop there, also the administration was/is rather weak. So the Greek state had and still has problems actually collecting taxes. A small sign that this problem is not solved can be seen in the fact, that people waited to pay some new unpopular taxes, in the hopes that Syriza would cancel those. So the tax revenue broke in straight after Syriza's elections. And no, that was just the further collapsing economy. Another very polemic example was the "Lagarde list", with tax cheats straight through society. Including high ranking officials, one who tried to scratch a few relatives from that list.

Also the prosecutors being rather hesitant to use the list, because they could verify its authenticity. You really can't make that up. So a bit more technocrats might actually serve the Greek state rather well, I would guess. But it's not for me to tell the Greek how to run their country.

So how to finance all that? A lot of that was financed by loans. Right the banks should not have given Greece all that money, BUT there was no Bankster pointing a gun at the Greeks and said, take that loan. That was entirely the decission of the Greek goverment(s). And they were elected by the Greek people. Then came the Euro. Greece was in no way ready to join the Eurozone. That goes to Greek goverments hiring Goldman to cook the books to make them look better, and to the other Goverments who casted all their doubts aside. Once Greece joined the Euro, they got loans on the free market for even better terms.And no Greek Goverment was interested in fixing any of those messes, because reforms would mean upsetting the electorate and losing power. And the problem was not restricted to the elites, "fakelaki" and what other oddities were present in everyday life. And the Greek people were happy the way things went. To keep the whole thing going Greece needed more and more loans, the state was hooked up onto those loans. Like a junkie, if you forgive me that imagery.

Along came the financial crisis and the whole bubble did burst, but that doesn't mean the economy or system was by any means sustainable. That was a crash in the making. And now the Greek state has gone cold turkey in regards to the loans.

So that's a criticism the Greek people have to live with and which is not totaly unfounded.

Now keep that perception in mind, and you can see where the unwillingness to transfer money to Greece is coming from.

[Arakan]

Monetary policy, not fiscal policy.

And yes, this is the obvious problem with the eurozone itself. The Great Recession just exposed the fact that it's not anything close to an optimum currency area.

Everyone wants the benefits of a shared currency but no one wants the downsides and the countries in control of the central bank get to set the monetary policy they want and whatever to the rest of the countries.

Well...yes. Okay, I don't know about 50billion specifically, but some transfer of payments, yes. Surely that's one of the consequences of monetary union? Just as London subsidises Cornwall, or New York subsidises Mississippi, the wealthy Euro-adopting nations will be subsidising the poorer ones. If that's unpalatable then the poorer countries need to be able to set their own fiscal policy.

Transferunion is fine with me, as long as we have a common fiscal and economic policy.

Which we dont have. Because smaller countries (like Ireland) feared to lose their influence.

Which is correct: the one who pays (like Germany) should then of course lead the line and say how thing will work.

The systemic failure of the Euro is not the Euro itself, but the half-arsed implementation what currency union really means.

Anyway, what Liftguard is talking about has happenend for 50 years, it's called EU subsidies. Which helped countries like Greece, Portugal, Spain, Ireland and others a lot.

But people have short memories, blame the bad EUSSR and ignore that without EU help many of the aformentionend countries would be glorified developing countries.

[Arakan]

I feel really uncomfortable with the way this discussion is going, because telling the Greece what they should have done 30 years ago, is really crying over spilt milk and not particularly helpful.

Anyway, how did this debt start out in the first place.

For decades the Greece state had been used/abused by the elites of both parties as their "personal kingdom". Giving good positions to their loyal supporters and family members (whether they were qualified or not), as a result the state ended up with that overblown public sector. Nepotism did not stop there, also the administration was/is rather weak. So the Greek state had and still has problems actually collecting taxes. A small sign that this problem is not solved can be seen in the fact, that people waited to pay some new unpopular taxes, in the hopes that Syriza would cancel those. So the tax revenue broke in straight after Syriza's elections. And no, that was just the further collapsing economy. Another very polemic example was the "Lagarde list", with tax cheats straight through society. Including high ranking officials, one who tried to scratch a few relatives from that list.

Also the prosecutors being rather hesitant to use the list, because they could verify its authenticity. You really can't make that up. So a bit more technocrats might actually serve the Greek state rather well, I would guess. But it's not for me to tell the Greek how to run their country.

So how to finance all that? A lot of that was financed by loans. Right the banks should not have given Greece all that money, BUT there was no Bankster pointing a gun at the Greeks and said, take that loan. That was entirely the decission of the Greek goverment(s). And they were elected by the Greek people. Then came the Euro. Greece was in no way ready to join the Eurozone. That goes to Greek goverments hiring Goldman to cook the books to make them look better, and to the other Goverments who casted all their doubts aside. Once Greece joined the Euro, they got loans on the free market for even better terms.And no Greek Goverment was interested in fixing any of those messes, because reforms would mean upsetting the electorate and losing power. And the problem was not restricted to the elites, "fakelaki" and what other oddities were present in everyday life. And the Greek people were happy the way things went. To keep the whole thing going Greece needed more and more loans, the state was hooked up onto those loans. Like a junkie, if you forgive me that imagery.

Along came the financial crisis and the whole bubble did burst, but that doesn't mean the economy or system was by any means sustainable. That was a crash in the making. And now the Greek state has gone cold turkey in regards to the loans.

So that's a criticism the Greek people have to live with and which is not totaly unfounded.

Now keep that perception in mind, and you can see where the unwillingness to transfer money to Greece is coming from.

Yep, basically the whole Greek economic system was a huge, decades-long scam.

Our politicans can and should be blamed because they closed both eyes when they let Greece join the Eurozone.

But people like Waigel and Eichel (German finance ministers 1989-98 and 1999-05 respectively) don't have to feel any consequences besides some criticism in history books.

[Lyanna Stark]

Lyanna I am on your side but you made a popular mistake: ALL EU states are members of the EMU as well (by default). What you are reffering to is the Stage 3 of the EMU: Eurozone.

Which for all intents and purposes is exactly what is commonly referred to when "EMU" is talked about, i.e. the single currency. The Wiki page lists it as well,that people generally don't talk about "The third EMU stage". You discuss the eurozone and it is separate from the EU.

The Economic and Monetary Union (EMU)[1][2] is an umbrella term for the group of policies aimed at converging the economies of all member states of the European Union at three stages. Both the 19 eurozone states and the 9 non-euro states are EMU members. A Member State however needs to comply and be a part of the "third EMU stage", before being able to adopt the euro currency; and as such the "third EMU stage" has also become largely synonymous with the eurozone

At least here nobody talks about "The third EMU stage". The EMU = the eurozone. I've not once seen a Swedish newspaper discuss "EMU" with any other meaning than full eurozone membership and including all its 3 stages.

Perhaps this is a much bigger deal in countries who are members of the EU and not members of the "Third EMU stage" since you'd probably get total outrage if you'd claim the UK, Sweden and Denmark were "EMU members" to the local populace. We're talking bulls and red flags. :commie:

Not to mention that Denmark and the UK will never be full EMU members since they have exempts from stage 3, and Sweden is just avoiding it. Hence you have at least three countries who will, for the foreseeable future, not go to stage 3 of EMU, which is to all intents and purposes the most far-reaching and important step. Without step 3 the economies won't be "converged" and there is no "monetary union".

Sure, if you want to really go into EU legislation, the it matters, but for most people it's enough to know that EU isn't the same as EMU and not all countries will "converge" and follow through with EMU, without getting into the headache of looking at the stages. EU-legislation is only slightly less boring than reading the phone book, after all. :p

EDIT: Not to mention that the already negative view of the "Third step of the EMU" in at least the UK and Sweden are probably reaching new heights now.

[Fragile Bird]

Sorry, I can't help but insert an anecdote about a long-standing argument I had with a Greek neighbour 30 years ago.

She used to bitch about Canada and how inadequate our social benefits were, our retirement policies, our unemployment benefits, our health system, our minimum wage, our laws on almost every subject.

"Look," she'd say, "Greece does this better and that better, and Greece is a poor country. Canada is such a rich country. How come Greece can do these things and Canada can't?"

And this was at a time when Canada was deeply in debt, and the Wall Street Journal was mocking us as the Argentina of the western world.

[a free shadow]

The conditions imposed by the bailout crushed their economy, as austerity is wont to do. Even the IMF has stated this.

Could you (or anyone reading) point at a source?

[Fez]

Jumping back a bit,

I believe the point is more that given the monumental nature of taking either decision, he is passing the buck via the referendum. So if anyone comes at him about what actions he takes, he can just say "Well, the people decided and I'm just exercising the will of the people".

Yes, exactly. Things are going to get worse no matter what happens, but if he follows whatever the referendum outcome is, he can just say to Greeks "Hey, don't blame me. I'm doing what you said you wanted." and to the EU/IMF "My hands are tied. The will of the people is that we do X."

I don't know a ton about domestic Greek politics, so I don't know if it'll work, but its pretty classic ass-covering.

[Noroldis]

So how to finance all that? A lot of that was financed by loans. Right the banks should not have given Greece all that money, BUT there was no Bankster pointing a gun at the Greeks and said, take that loan. That was entirely the decission of the Greek goverment(s).

There might have been no banker pointing a gun at the Greeks' collective head, but certainly there were bankers willing to loan all that money. Those bankers either failed to perform due diligence and realize that fiscal evasion had been the Greeks' true national sport for decades and any loan was therefore a huge risk, or they did realize it but decided to offer the loans anyway, figuring that if Greece defaulted or threatened to do so, they'd get bailed out one way or the other. So the bankers were utterly incompetent morons, or utterly cynical a-holes. Either way, IMO they bear every bit as much responsibility for the crisis as Greece itself... but curiously, the rest of the EU is not nearly as eager to punish the banks and the bankers as they are about punishing Greece and the Greeks.

[Ser Scot A Ellison]

FB,

Sorry, I can't help but insert an anecdote about a long-standing argument I had with a Greek neighbour 30 years ago.

She used to bitch about Canada and how inadequate our social benefits were, our retirement policies, our unemployment benefits, our health system, our minimum wage, our laws on almost every subject.

"Look," she'd say, "Greece does this better and that better, and Greece is a poor country. Canada is such a rich country. How come Greece can do these things and Canada can't?"

And this was at a time when Canada was deeply in debt, and the Wall Street Journal was mocking us as the Argentina of the western world.

Interesting. Are we seeing the long range consequences of borrowing from Peter to pay Paul?

[Arakan]

Sorry, I can't help but insert an anecdote about a long-standing argument I had with a Greek neighbour 30 years ago.

She used to bitch about Canada and how inadequate our social benefits were, our retirement policies, our unemployment benefits, our health system, our minimum wage, our laws on almost every subject.

"Look," she'd say, "Greece does this better and that better, and Greece is a poor country. Canada is such a rich country. How come Greece can do these things and Canada can't?"

And this was at a time when Canada was deeply in debt, and the Wall Street Journal was mocking us as the Argentina of the western world.

Sir,

with that anecdote you hit the nail on the fookin' head.

[Hayyoth]

1. They ARE separate institutions (if you want to call the EMU and "institution" and I am not certain it is even the correct word for the EU either, since the EU is a political (at least for the "pillar" areas) and economic union). There are lots of countries who are not members of the Eurozone, i.e. the EMU who are at the same time members of the EU (the European Union) and I ought to know as I've lived in two different EU countries who are not members of the EMU. The money was a dead give away.

From the EU's own sodding page:

Not sharing fiscal policies, monetary policies or currency are pretty important differences between a Eurozone country and an EU country not in the Eurozone.

2. The main question is whether or not Greece will stay in the EMU, not whether it will exit the EU, which is a completely different thing. Nine EU countries are currently not members of the EMU and are doing just fine as EU countries without the Euro. You won't (and can't) get booted out because you don't accept the Euro, either by not agreeing to it in the first place (Denmark, the UK) or by avoiding it (Sweden).

I really don't know what you're trying to argue. That the EMU and EU are two entirely separate things? Well they're not. The EMU is the project launched by EU member states to achieve closer economic union (and as a carry on political union). The currency union was the final stage following on from the Maastricht agreement. The EMU is a treaty agreement between EU members, it's an intrinsic part of the EU.

And yes spending other people's money until you run out is the best defintion of socialism.

[Arakan]

And yes spending other people's money until you run out is the best defintion of socialism.

Are you one of those "EU = EUSSR" guys?

How would you call a system in which profit is privatized but losses are socialized? Is this also socialism?

Because THAT is what has happened since 2007, and especially since 2008, be it in the US or EU.

What about massive subsidies for oil&Gas companies in the US? Because THAT is what fueled the Shale Gas and Shale Oil boom in the US, initiated under the Bush administration.

Honestly, let's be pragmatic and let ideology be ideology.

[dalThor]

I saw some articles discussion a re-election. Do you think that might happen if Tsipras sulks and moans a bit longer. He does come off a bit childish actually, even if it's always difficult to tell through translations since stuff can get lost.

Tsipras, and now Varoufakis, have said that they'd resign if the referendum ends up with a 'yes'. Whether that's actually true or not remains to be seen. In any event, I personally see a new government with a yes irrespective of their actually resigning.

The problem with that is there isn't a viable alternative. The only thing I'm sure of is that the neo-Nazi Golden Dawn party will grow. As for the rest, Tsipras and SYRIZA may very well garner the most votes again - but not a majority allowing them to form their own government.

Anyone arguing that Greece's situation has anything to do with socialism can be safely dismissed as knowing nothing about anything.

Indeed.

Well...yes. Okay, I don't know about 50billion specifically, but some transfer of payments, yes. Surely that's one of the consequences of monetary union? Just as London subsidises Cornwall, or New York subsidises Mississippi, the wealthy Euro-adopting nations will be subsidising the poorer ones. If that's unpalatable then the poorer countries need to be able to set their own fiscal policy.

Shryke addressed this already but there is a vast difference between a monetary union and a fiscal union.

Could you (or anyone reading) point at a source?

In an interview that will be broadcast tonight, on French channel "France 2", Strauss Kahn ended with an admission of mistakes, admitting that Greece was forced to apply an unbearable policy. As he days: “We made some mistakes. But, we had to tighten the screws. That alone was not enough. We forced on Greeks an unbearable policy that even today has tremendous effects on Greece.”

http://www.thetoc.gr/eng/politics/article/strauss-kahn-mea-culpa-for-handling-of-greece

[Fragile Bird]

And yes spending other people's money until you run out is the best defintion of socialism.

Er, how much is the US budget deficit? How many times in the last 30 or 40 or 50 years has the U.S. had a balanced budget? How much is the accumulated debt? And you have a socialist government, eh? :lol:

[Arakan]

Er, how much is the US budget deficit? How many times in the last 30 or 40 or 50 years has the U.S. had a balanced budget? How much is the accumulated debt? And you have a socialist government, eh? :lol:

To be specific:

as of 2015, the US has a public gross debt of 105% of its GDP, the Eurozone is at 95%.

Socialism everywhere ;).

ETA: Germany is at 69%. Does this mean we are much less socialistic than the US 😳?

[The Marquis de Leech]

And yes spending other people's money until you run out is the best defintion of socialism.

OK. Reagan was a socialist then. And so was Lord Liverpool, who presided over a debt over 250% of UK GDP. You really don't have a clue what you're talking about, do you?

[The guy from the Vale]

To be specific:

as of 2015, the US has a public gross debt of 105% of its GDP, the Eurozone is at 95%.

Socialism everywhere ;).

ETA: Germany is at 69%. Does this mean we are much less socialistic than the US ?

It still matters where you spend that money. At least, we're spending it on useful stuff and not primarily on bombing Afghanistan (except for that Kundus incident), Iraq, Lybia, Syria, Yemen,...

In other words, I prefer frugal socialism to spendthrift pseudocapitalism every time.

[Arakan]

It still matters where you spend that money. At least, we're spending it on useful stuff and not primarily on bombing Afghanistan (except for that Kundus incident), Iraq, Lybia, Syria, Yemen,...

I agree.

[Biglose]

It still matters where you spend that money. At least, we're spending it on useful stuff and not primarily on bombing Afghanistan (except for that Kundus incident), Iraq, Lybia, Syria, Yemen,...

I doubt that. If germany would have only spent her money for the last 20 years on "useful stuff" only, we now probably would have the money to bail out greece without any help from the EU.

I guess if you add everything up and adjust for lost growth etc. you probably end up with a several hundred billions wasted all in all.

[The guy from the Vale]

The USA have wasteful policies, too. And useless wars on top of that. We're not all that deep in debt, compared to others. Could we do better? Sure, one always can. But the point is that "socialism" on its own makes no statement about the amount of waste or debt. There are efficient "socialist" countries and wasteful "capitalist" ones. If these labels even make sense, which they often don't.