European debt deal

[CloudFlare]

Firstly, it's PIIGS.

Secondly, you are full of shit since most of the PIIGS were doing fine and their problems extend solely from the financial crisis.

I intentionally left Ireland out, hence pIgs.

Italy and Greece have been corrupt basket cases for years, Portugal somewhat less, Spain a tad less. Getting admitted to the EU bought them a bit of breathing room, helped fuel the credit bubble that they leeched off of(Spain in particular), and let some of the more entrepreneurial find a job in other countries.

[Shryke]

I intentionally left Ireland out, hence pIgs.

Spain was fine too. Italy mostly fine in a different way.

Greece was fucked, as was Portugal as I remember though in different ways.

[CloudFlare]

But that post overall did read like something you'd expect on one of ThinkerX's "more paranoid sites."

Edit: Can't find the original article on the Forbes website, might be a hoax. But Greece has reshuffled its military leadership.

Speaking of paranoia:

“Instead of pouring euros down the drain, it would be much wiser for Germany to sponsor a military coup and solve the problem that way.” No, this extract is not from a fascist blog. It is from Forbes magazine and it’s just another one of the provocative articles that follow this insane ongoing anti-Greece campaign of international media.

The article circulates a joke going around the financial markets at the moment that Greece’s only chance to be saved is a junta. “What’s so sad, or bitter if you prefer, about the joke is that, if we ignore the little problem of it being a military dictatorship, this would in fact be a good solution to Greek woes.” This “little problem” Mr. Worstall so cynically refers to, doesn’t sound very funny to Greek people who have already been through one dictatorship, from 1969 to 1974 during which Greek people suffered enormously.

http://greece.greekr...-military-coup/

[guag]

High, there. Average Greek Citizen here, reporting from the battlefield. I would like, at some point, to write a short paragraph, a tl,dr; version. But I am exceedingly verbose, especially when I'm angry. So for now, all I have for you are big, menacing Walls Of Text. You have been warned. :)

A) THE GREEK MESS: AN INTRODUCTION

Q: If you don't have money to pay back a loan, when does it make sense to get another loan on top of it?

A: Only in two cases. One, when you are able to use the second loan to produce wealth, and specifically enough wealth to pay back both loans in the long run. Otherwise, you simply postpone default, and in the mean time your total debt rises.

And two, when delaying can make a difference. For example, if you expect extra income from another source some time in the future, you just need to hang on until then. Therefore it makes sense to suck up the second loan, provided this extra income will be enough to pay back both of them.

Q: Did the original "bail-out" plan of Greece (110 billion euros, in 2010) meet any of the above conditions?

A: No, sir, it did not. It's written right there on the bail-out terms. The 110 billion loan cannot produce wealth, because it is forbidden. It may only be used to pay back the previous loans. And if Greece gets extra income from another source? Say that a miracle happens and now Greece produces oil, or another country offers help for its own nefarious reasons, or a huge surplus is miraculously achieved. Well, tough. It is forbidden to use ANY other source than the bail-out loan to pay back the previous loans. That's on the terms, too.

In short, in 2010, the IMF, the ECB, the EU and Greece agreed to a plan that, as far the debt is concerned, was literally guaranteed to not work. Greece agreed to it because our esteemed elected representatives didn't have a clue what was going on. Basically, they were told "look here, if you don't accept this bail-out, you'll default, and if you default, it's the apocalypse". And they said "yes, sir, as you say, sir, right away, sir", without negotiating a single term. The measures that came along the "bail-out plan" (I use both words in the loosest possible sense) was the classic IMF recipe for all troubled countries, with a few extra goodies.

(Absurd terms were included, where Greece basically forfeits its rights as a sovereign state. Presumably, they expected the Greeks to negotiate, refuse to accept at least the most ridiculous terms, so that both parties would agree to tone the whole thing down a bit, and end up with the usual deal. That's how haggle and negotiating works. The Greek representatives did no such thing, however. Their only question was where to sign.)

B ) THE IMF RECIPE

"We'll lend you money, but you'll have to do as told. To cut expenses, you're not allowed to choose which ones you need less. WE know that (we are experts, you see). You'll cut wages and pensions. No, not just the public sector, the private sector, too. Yes, we know that these aren't payed by the government, but shut up. You'll also cut welfare, benefits, and all that jazz.

As for revenue, you'll get it from taxes, but only tax working people and pensioners - don't touch business and capital. Business and capital get exemptions instead. Oh, and sell your assets. Anything that's needed for a country to function must go out of state control. And anything that makes money must go out of state control. You'll also cut labor rights. So, it will be PROFITABLE to set up a business in the country, and you will be COMPETITIVE, therefore MONEY WILL FLOW. Do you understand now why we cut private sector wages, too? It's for your own good, dammit!"

The above neoliberal recipe is repeated so often, that for many people it has become a gospel. They do not doubt it, they just accept it.

But even the numbers are rigged. Here's a fun fact. When a corporation invests money, it has every right to estimate how much this investment is worth (although it's merely a projection which may or may not happen as planned), and add an amount of money on its balance sheet under "assets". However, if a government spends money, say, to build a harbor for commercial ships, it has no right to count it as an investment in the budget, even though it will probably generate profits from taxes, jobs and fees in the long run. It's obligated to include it under "expenses" only. So on paper, corporations may invest, but a government only spends, as if it were physically impossible to get money back from a state project.

Still, the neoliberal recipe is widely accepted as a "one size fits all" solution, without any other concerns. But does it work? When does it work? And more importantly, FOR WHOM does it work?

C) A RECIPE NOT FOR EVERY TASTE

Competing for the lowest:

When you deliberately reduce labor rights, wages and welfare, the best case scenario is that you'll get A LOT OF A BAD THING. Yes, on paper it is fine to battle, say, unemployment by closing down every shop in the country and replacing them with maquiladoras. But is it really a good idea? In the end, we worry about the economy because we want to make life better for people, not because figures look good on paper. If our solution for the economy is to make life worse for people in perpetuity, something has gone horribly awry.

In a globalized world, no matter how "competitive" you become, there'll always be someone more "competitive". A place where labor rights don't exist at all, business tax is 0%, a human life is worth nothing, child labor happens and is damn cheap, environmental concerns don't concern anyone, and if an unruly native speaks up, you can hire your own personal army to gun him down. How low must we fall? Must we have children scraping metal from shipyards or collecting zinc and carbon from empty batteries for a living, like in Bangladesh? Because until then, sayeth the Gospel according to neoliberals, we are not competitive enough, and Bangladesh has us by the balls. (More realistically, we are required to compete with Bulgaria, Romania, and Latvia. Either way, we stand no chance in hell.)

So what are we competing for, again? For whose workforce will be more screwed and helpless than any other workforce on the planet, or at least in the currency zone? That's not exactly a noble pursuit. That's not smart tactics. Not if you care about the people at large. As someone who cares about the huge majority of people who actually work for a living, I don't want to compete for WORSE CONDITIONS, that would defeat any purpose that matters to me. Try something else. Anything else. For fuck's sake.

The Kingdom for a horse (step right up, it's a bargain)

When a state is in financial trouble, selling off PROFITABLE state assets is a very stupid thing to do. You'd think this is evident, but no. In our case, we are basically forced to sell, among other things, what little is left of state-owned (small percentages of) telecommunications, energy, and the national lotteries. Now, for a minute, I'd like you to ignore any misgivings you may have about state-owned anything, and focus on the financial aspect here. Assume that the goal is simply to reduce Greece's deficit and sovereign debt, to spend less and to earn more. (In theory, that's indeed the goal. But only in theory.) Are you with me?

The above sectors are consistently generating a profit and are guaranteed to continue to do so. Even by selling them at a normal price (and since there's a gun to our head, the price is not normal at all, it is in fact a joke), the state loses money and gains shit. It doesn't lose money "now", it loses those precious few things that can be legitimately called profit-generating assets. Assets that would add to the revenue every year, forever. Assets that would reduce the deficit (or hey! improve the surplus!) every year, forever. Assets that could be used to, say, pay back our creditors. Every year, forever.

Last year, during another wave of strikes and while the streets of Athens were once again like a war zone, a merry convention was happening just a square beyond the bombarded Syntagma Square. It was organized by Forbes magazine. And the genial Mr Forbes himself was happily explaining to investors how Greece is now a golden opportunity, since assets of guaranteed profit can be bought so damn cheap.

I can perfectly understand why a capitalist would love to convince or blackmail Greece to sell these assets. But why on earth would Greece agree just like that, no questions asked, no negotiations, nothing? "Madness. Madness and stupidity."

(tbc)

[guag]

D) GROUNDHOG DAYS

Ever since that thrice-cursed "bail-out" of 2010, I've been saying (shouting, mostly) that this isn't only blackmail. It isn't only a typical, post colonial-style, acquisition of national assets. It isn't only taking labor rights and indeed HUMAN rights back to the Middle Ages. It's also DOOMED TO FAIL.

The process was ridiculous: get a huge loan in order to pay back a loan that you couldn't pay back in the first place, only you can't use it to invest on anything that could generate a profit. At the same time, the imposed measures of austerity all but guarantee a huge drop in employment, wages, business, revenue, sales, consumption. And all that in the middle of a global recession. If you expected anything else than the GDP dropping like a stone, the deficit becoming spectacularly worse, and naturally the debt rising by more than 50%, you are a fucking idiot.

And the numbers never added up. Even if the most naive projections could come to pass, even if there was growth (HOW?), even if the GDP soared (HOW?), even if all the suggested measures were followed to the letter and in time (yeah, right...), still there would come a time when we'd find ourselves unable to pay the second loan. Remember that? It's the "bail-out" loan. We weren't just given money, you know (since we are not a bank, regrettably).

Even a fucking monkey could understand, right from the very start, that unless we defaulted, very soon we would need a THIRD loan to pay back the second, and that this was the BEST case scenario. Then we'd need a fourth loan to pay the third. And again. Ad nauseam. It's a debt bubble, and there's nothing worse than a debt bubble, especially when you can't control your damn currency.

It's Groundhog Day (take one): We need a loan to pay back our loans! Otherwise we'll default and then we're doomed! Doomed!!!

Also note that the "bail-out" loan wasn't a one-off agreement. It has come in 6 installments so far, and every single time our esteemed elected representatives (who can go fuck themselves) threatened us with fire and brimstone if we didn't agree to YET ANOTHER wave of austerity measures - and every time they would swear that this is the last one. Every time until the next one.

It's Groundhog Day (take two): Another installment is due, but we need more sacrifices from the Greek people to get it! Otherwise we will default or (gasp!) a haircut will be needed! And then we're all doomed! Doomed!!!

So, NOW (and unlike the monkey, not from the start) the Experts (who can go fuck themselves, too) discover (oh my!) that Greece can't pay back after all (who could have guessed?) and that a haircut is inevitable and indeed a lifesaver. Otherwise, it's the Apocalypse. The careful reader will remember that we're being threatened with the Apocalypse for a year now, only until now it was a haircut that would BRING it. But no, it will save us, apparently. So say the experts. That a 50% haircut (which is in fact 35% after expenses for collateral, and less if you factor in other costs, and in any case NOT BLOODY ENOUGH BECAUSE WE STILL DON'T HAVE MONEY TO PAY BACK THE BLOODY LOANS) is what will save us from fire and brimstone. Yes, sir.

It's Groundhog Day (take three): We, the Experts, found the solution, which proves that our previous and exactly opposite solution was bollocks. We hope you weren't paying attention, and if you were, it's your fault for not following the measures to the letter. Not that our expertise is a joke, no sir. Do as we say or you're doomed! Doomed!!!

...After all that, it should come as no surprise that people here, who have to put up with this circus on top of losing half their income, are really, really angry. Over the edge angry. We're way beyond "quiet desperation" and silent frustration. Greek MPs are afraid to walk on the streets or appear anywhere there's a crowd, lest people start yelling at them, throwing vegetables at them, or physically attacking them. In the fray, innocent people will get hurt. HAVE been hurt. And have been killed. Four dead and counting.

And it should come as no surprise if a referendum (designed, with the most devious wording, to achieve consent at all costs) gets instead a resounding result of "FUCK YOU".

[guag]

E) BALANCING A BUDGET

And if Greece was approached by an expert whose job was indeed to reduce deficit and debt in a viable way, without decimating the population in the process? If someone were to take a look at the budget and give a reasonable, honest opinion? What would he say? He would say what Greeks themselves have been asking for.

1) Tax the bloody church: biggest land-owner, major entrepreneur, big big business, largely exempt from taxes. Oh, and while we're at it, let's make the church/state separation happen at last, and stop paying the priests' salaries from the state coffers for fuck's sake.

2) Tax the bloody shipowners: the Greek-owned merchant fleet is the largest IN THE WORLD. And what does Greece gain from that huge international business? Improbably, nothing worthwhile. (It's unbelievable how many tax exemptions you get when you're in the ship business in this country). If shipowners were taxed, not properly, but slightly more reasonably (as in, for actual revenue instead with a random minimal fee), we wouldn't know what a budget deficit looks like.

3) Cut military spending: despite the mess, we keep buying guns on a steady pace from the Americans, as well as German submarines and French freighters (the Germans, hilariously, protested about that last bit only). It's not a recent trend. Our military expenses are wildly disproportional to our size and needs. Slash them.

4) Be fucking SERIOUS about battling tax evasion. And that means invest, not lay people off: unlike developed countries, electronic data procession is still in its infancy here. FIX THAT. (Last year, I walked to my local tax collecting agency and said "High, I need a certificate that I don't owe you people money". And the clerk said "Oh, we can't check that information. You'll have to sign a statement that you don't owe us money, and then we'll give you a certificate that we received the statement". Facepalm.)

F) BALANCING A DEBT

All of the above could and SHOULD be done, regardless of any debt obligations. (That's why we've been asking for them for so long. I remind you that the people of Greece had no idea that we are going bankrupt until 2010. No one thought to inform us, for some reason.)

But there's also a debt obligation. A debt obligation that Greece cannot realistically fulfill, no matter how drastic the haircut. I'd like for once, just once, someone to get up, clear his esteemed expert or elected representative throat, and say: "Greece CANNOT repay its debt. Therefore, it will not. It's not a matter of morality any more. It is physically impossible. There. Now let's see how to make this less painful for everyone involved." And sit down again.

So what could we do, really? Could we, maybe, renegotiate?

Hey there, creditors. I will pay back my debt, eventually. But I won't starve myself to do it, neither will I sell off my natural resources and assets, which actually produce wealth. Because wealth is what I need to pay YOU back, among other things. I'll pay as much as I can afford per year. So here, I pledge to give - say - 10% of my GDP every year to you. It will take many years to pay it off in its entirety, but in the end, you'll have back your capital, you'll have gained your interest, and my citizens will be still alive. Oh, and incidentally, since your income will be dependent on my GDP, you won't be tempted to start any punitive measures against me, to cripple my economy not because it would do any good to you financially, but because it would make me an example to the rest of the world - as in "beware kids! this is what happens when you don't surrender to your creditors! you bleed to death!"

A payback based on GDP percentage is exactly what Iceland was negotiating for, a few months back. The basic legal argument is staggeringly simple: necessity. I don't pay as promised because I cannot. Yes, I have an obligation to you, but I also have an obligation to my citizens, to provide defense, infrastructure, education, whatever I tax them for. And since I'm a sovereign state, this obligation takes precedence.

This system wouldn't only help Greece get out of this mess. It would help ensure that the creditors will indeed be paid off, slowly perhaps, but come rain or come shine. Something which seems like a big gamble right now.

Of course, the big question is this: if you take Greece's budget and entirely remove any debt obligations from expenses, do you have a surplus or a deficit? And if it's a surplus, how much can you pledge for debt repayment without, say, finding yourself in a corner if a natural disaster happens next year? Can we actually survive on our own, without borrowing? Is the classic creditor threat "pay back, or I won't let you borrow again!" actually threatening in our case, or just a boogeyman?

As it is now, I frankly don't know. I have read articles, complete with figures from the budget, that support entirely different results. My economist friends vigorously disagree with each other on the subject. But one thing is certain: if we do tax the church and the ships, and if we do cut military spending, we have a nice healthy surplus, any amount of which can be safely pledged to debt obligations. We don't need any other loans. And then we can start investing on battling tax evasion, and having a healthy real economy, with actual production and growth and everything.

I find this fair. I find this viable. I find this sensible. And I find this unlikely to be accepted by the creditors, unless the Greek government spontaneously decides to stand up for Greece, and even then it's a gamble. It's not like we have a lot to gamble with. We're a small, powerless, insignificant country, whose position on the map would be largely unknown to the world if it weren't for this mess. And if this mess didn't threaten to destroy the freaking Eurozone...

G) I, WHO HAVE NOTHING

So, if anything viable, anything sensible and anything fair is out of the question, inconceivable for my own representatives and unacceptable for the people with the guns, no, wait, money... where does that leave me?

If the powers that be don't give a shit about the Greek people, or the French people, or the German people, or the Finnish people (all of the above now pay their governments to pay mine to pay the banks...), what do I have left? It's not hope, surely.

I have nothing but anger and blind rage. Even though, when it all began, I had arguments and eloquence and the will to debate. And solutions, big and small, modest and radical, to suggest.

I have nothing but a big FUCK YOU to give as an answer to any referendum or elections you care to grace me with, desperately trying to prove that we're still a democracy.

I have nothing but a scarf for the tear gas. It's black and red. My hands are empty, as always.

For all intents and purposes, I have nothing, period.

But FUCK ME if I'm gonna stand aside and watch the wreckage from afar.

There's no such thing as a safe distance, anyway.

So I'm joining the fray, with exactly: nothing.

[Daemrion]

Can't Greece just do a land tax to raise money? That's probably the hardest to avoid since you can't physically move your land out of the country or hide it. So all that would need to be done is to get a tax clerk to collect the money. Taxing ships may work, but I reckon a whole load of ships will change flags if they try to raise a tax against shipping.

Or Greece could sell off some of its land to raise money. It's got enough outlying isles and stuff that are probably a drag on the economy anyway. And they do need to cut away their generous pension entitlements, or *gasp* raise the retirement age from 50 or so to 60 or so.

[guag]

Can't Greece just do a land tax to raise money? That's probably the hardest to avoid since you can't physically move your land out of the country or hide it. So all that would need to be done is to get a tax clerk to collect the money.

Ah, another poor soul who thinks that we are a modern, civilized country.

Greece doesn't know who owns what. We've been hearing about a comprehensive file of land ownership supposedly being made, for at least ten years. It never seems to take off. The biggest problem is - again - the church, which claims land by producing dubious, conflicting documents dating to the Ottoman Empire (from which Greece gained independence in 1828, with a lot of blood, and thus has no reason to recognize its authority on such matters). But frankly, it's all a mess.

Yes, it should be done as soon as possible. No, it cannot be done in a timely fashion, no matter how you choose to define "timely".

Taxing ships may work, but I reckon a whole load of ships will change flags if they try to raise a tax against shipping.

That's a long story. Have in mind that most Greek ships fly convenience flags anyway, and that most shipping companies have their business sector based on the Great Offshore (aka the City of London). Yes, it's entirely possible that some will flee taxation altogether, and it's not a measure that should be taken lightly (shipping is the biggest contributor to the GDP after tourism, so caution is needed).

Even so, two things make me certain that it can be done. First, every Greek shipowner worth his salt will want to keep SOME business in the country. The lot of them come from families with a long naval tradition, and pride is actually a factor to these families. Not a large one, but it's there. Also note that staying in the country means that Greece will continue to pursue YOUR interests in international committees. (Disagree on imposed safety measures, for example, refuse to sign international agreements that you disapprove of, or even veto them. Nothing noble, naturally.)

Second, we're talking about HUGE revenue here. We're talking about a hefty percentage of all naval commerce. We're talking 20% of global tonnage. Even if most of them flee, a small tax on FEW of the ships (a trifle amount for the shipowners) equals a RIDICULOUS amount of money for the impoverished Greek state.

Or Greece could sell off some of its land to raise money. It's got enough outlying isles and stuff that are probably a drag on the economy anyway.

Um, no. You don't do that. You just don't. You're not an individual or a corporation, to do as you please with your property, land or otherwise. You're a sovereign state. The land is not yours to sell, it belongs to your people. People fought and died for this land, with the state's blessings. Asking me "how much for one of your islands" is like asking me "how much for one of your children". I can do it, and it may help, but I won't. There are other ways.

And they do need to cut away their generous pension entitlements, or *gasp* raise the retirement age from 50 or so to 60 or so.

Yes, you have that right. Everyone in Greece retires at 52 and gets 4500 euros per month. Silly us. We were bound to go bankrupt. Serves us right.

...Sorry for the sarcasm, but when you read about Greek wages and such, kindly remember that even when the figures are real, the most ridiculous examples have been handpicked on purpose. (Oh, there's a lot of ridiculousness here, no one argues that, and we don't WANT that). But said figures are not, in any way, suggestive of what actually happens in the country.

For every asshole who gets paid more than he should, there are 100 even bigger assholes who work like dogs for next to nothing. Before 2010, a young man with a brand new degree would normally expect a full time job for 700 euros per month. 620 for those without higher education. Healthcare is supposedly provided, but it's a joke. (Greeks who have been to English or French hospitals return crying.) All this assuming your employer did everything by the book - when the book actually existed, and even then it was a toss up. Now, of course, it is spectacularly worse.

[ThinkerX]

Guag-

What of putting this latest effort to fix things to a general vote among the greeks? I realize it is causing minor mayhem and panic in the markets, but do you see it as being a step in the right direction towards actually fixing this mess or not?

[Lummel]

3) Cut military spending: despite the mess, we keep buying guns on a steady pace from the Americans, as well as German submarines and French freighters (the Germans, hilariously, protested about that last bit only). It's not a recent trend. Our military expenses are wildly disproportional to our size and needs. Slash them.

It was a frigate. Or if Greece is buying a freighter off the french then it is also buying a frigate. But hey, you know, our export driven recovery plans in the rest of Europe depend on us selling stuff like that to countries like Greece even at the same time as we are sitting round the table and having a very serious converssation about how Greece needs to manage its budget responsibly.

Or Greece could sell off some of its land to raise money. It's got enough outlying isles and stuff that are probably a drag on the economy anyway.

There aren't enough islands or they don't have sufficient value. This was apparently fairly seriously discussed earlier on in the crisis. Islands without water or inhabitants aren't a drag on the economy. They just sit there in the water looking rocky.

[guag]

Guag-

What of putting this latest effort to fix things to a general vote among the greeks? I realize it is causing minor mayhem and panic in the markets, but do you see it as being a step in the right direction towards actually fixing this mess or not?

If you're talking about the referendum bomb, I can only answer after I know what the question will be exactly. Referendums are answered by a YES or No answer, and for now there's only hearsay about the question. "Do you accept the haircut?", "Do you want to remain in the Eurozone?", "Do you want to default" and even "Do you want to keep receiving salaries" have been - more or less seriously - suggested.

In general, a referendum is a good thing, as it's direct democracy, cutting the middle men - who may often be... misguided, to be polite. It was a great move in Iceland, for example. However, since the government produces the Question, it's possible to "rig" one to basically force the answer you want. This is quite probable with our current government.

In short, I don't know yet, but I don't get my hopes up.

If you mean elections, why, I never get my hopes up about these. In our case, it would be a déjà vu, as it happened in Portugal and in Ireland. A government accepts a bail-out of dubious results with horrendous terms and with which nobody agrees, not even the MPs who were basically forced to vote for it. Our Prime Minister in particular had the gall to ask for the people's vote in the previous elections by promising an increase in wages, even though he was perfectly aware of what was going on, and had already begun talks with the IMF. We, on the other hand, weren't aware of anything. If that's not fraud, I don't know what is.

The government signs the deal, then elections are held, and it falls with a bang. The next government will have neither the guts nor the ability to take the measures back, refuse to accept the deal, renegotiate terms or do anything at all. And so, nothing happens. Except that death rattle you hear, which is a battered, helpless, and thoroughly disgusted democracy.

It was a frigate. Or if Greece is buying a freighter off the french then it is also buying a frigate. But hey, you know, our export driven recovery plans in the rest of Europe depend on us selling stuff like that to countries like Greece even at the same time as we are sitting round the table and having a very serious converssation about how Greece needs to manage its budget responsibly.

Yes, it was a frigate, apologies for the wrong term. Also, heh.

[Padraig]

Very interesting few posts.

So, NOW (and unlike the monkey, not from the start) the Experts (who can go fuck themselves, too) discover (oh my!) that Greece can't pay back after all (who could have guessed?) and that a haircut is inevitable and indeed a lifesaver. Otherwise, it's the Apocalypse.

I think (at least) that all this talk of apocalypse isn't just for a Greek audience. Its also for a worldwide audience and (specifically) Greece's creditors. A year ago, those creditors were never going to accept any sort of hair cut, without leading to terrible credit default claims, contagion etc. Now its reluctantly accepted because they know there is no alternative.

You can definitely argue that there was a better way to do all this. Creditors should have known there was no alternative a year ago but people fight tooth and nail for their money. That works for both sides.

I think people would be a lot more cynical about Greece if the steps outlined in "Balancing a budget" above were actually taken by Greece's government. At the moment, we seem to be going nowhere.

[KAH]

The Kingdom for a horse (step right up, it's a bargain)

When a state is in financial trouble, selling off PROFITABLE state assets is a very stupid thing to do. You'd think this is evident, but no. In our case, we are basically forced to sell, among other things, what little is left of state-owned (small percentages of) telecommunications, energy, and the national lotteries. Now, for a minute, I'd like you to ignore any misgivings you may have about state-owned anything, and focus on the financial aspect here. Assume that the goal is simply to reduce Greece's deficit and sovereign debt, to spend less and to earn more. (In theory, that's indeed the goal. But only in theory.) Are you with me?

The above sectors are consistently generating a profit and are guaranteed to continue to do so. Even by selling them at a normal price (and since there's a gun to our head, the price is not normal at all, it is in fact a joke), the state loses money and gains shit. It doesn't lose money "now", it loses those precious few things that can be legitimately called profit-generating assets. Assets that would add to the revenue every year, forever. Assets that would reduce the deficit (or hey! improve the surplus!) every year, forever. Assets that could be used to, say, pay back our creditors. Every year, forever.

Well, a rushed fire sale is not going to get you what the assets are worth, that is certainly true.

Now, lotteries aside, I don't know how much profit telecom and utility assets generate above the money needed to replenish capital over the long haul, but say it's still a fair amount of money generated.

That kind of money works as a tax on the average Greek, and not the most progressive of taxes, either (at least not if it is actually the profit-maker you say). And that is discounting any waste generated in state outfits, necessitating even higher prices.

Preferrably, Greece should be able to tax her citizens properly, and sell those assets for a proper price. None of which can be done in a hurry, but theoretically, if you had a ten-year window, would that plan work for you?

[Lummel]

The more important news in Greece is that they changed up their military leadership, presumably to prevent a coup.

Well either that or to ensure they have 'reliable' people in the right places if they want to deploy the military on the streets.

[Exa Inova]

Since this crisis is about people, none of which I personally know but still, thanks to this board are real to me, I will not post on the subject.

But still this made me laugh......

No, it cannot be done in a timely fashion, no matter how you choose to define "timely".

[Former Lord of Winterfell]

Our Prime Minister in particular had the gall to ask for the people's vote in the previous elections by promising an increase in wages, even though he was perfectly aware of what was going on, and had already begun talks with the IMF. We, on the other hand, weren't aware of anything. If that's not fraud, I don't know what is.

I'm kind of curious as to this promised wage increase. Was it just to workers in the public sector, or to all Greeks? And if the latter, exactly how does the PM go about such a thing? It's an honest question, because that's not something that a politician can deliver here in the U.S.

Also, do you think he would have been elected if he'd told the truth and promised a decrease in wages, benefits, etc?

[mormont]

After some rumors yesterday of Greece not actually holding a referendum, they definitely will be holding one.

Definitely?

First, the Greek government has to survive a confidence vote on Friday, and thanks to the referendum announcement they now have a majority of one - with several of their own MPs calling for the PM to resign. Papandreou is far from certain to even get as far as introducing the bill for a referendum. I wouldn't talk about the Greeks 'definitely' holding a referendum unless he survives into next week and his position is strengthened significantly.

That's why this move is politically so foolish: at the moment all Papandreou has achieved is to cause unrest in the markets and give his opponents a stick to beat him with, all without any guarantee that the vote will ever happen. The referendum suggestion is beginning to look like his first shot in an election campaign.

[Former Lord of Winterfell]

That's why this move is politically so foolish: at the moment all Papandreou has achieved is to cause unrest in the markets and give his opponents a stick to beat him with, all without any guarantee that the vote will ever happen. The referendum suggestion is beginning to look like his first shot in an election campaign.

It may be foolish politically, but I can't see Greece actually following through on the deal without the support of a majority of voters. If you get their buy-in via a referendum, you can then claim a legitimate mandate to make tough choices, which may make them more likely to actually stick.

[mormont]

It may be foolish politically, but I can't see Greece actually following through on the deal without the support of a majority of voters. If you get their buy-in via a referendum, you can then claim a legitimate mandate to make tough choices, which may make them more likely to actually stick.

I'm not seeing how this really addresses the point that Papandreou had to realise that he was promising a referendum that he would struggle to actually deliver. I can see the argument that it would be helpful to get buy-in from voters, if only in order to make them acknowledge that the deal might be terrible but still beats any available alternative, and to avoid the perception that this was a political stitch-up: but if that was Papandreou's motive, there was no reason for him not to have made it clear during the negotiations that he would seek to hold a referendum on any deal. The fact that he sprung this on everyone out of the blue - including his own finance minister - makes it seem to me clear that this is a political ploy.

[Former Lord of Winterfell]

but if that was Papandreou's motive, there was no reason for him not to have made it clear during the negotiations that he would seek to hold a referendum on any deal. The fact that he sprung this on everyone out of the blue - including his own finance minister - makes it seem to me clear that this is a political ploy.

That's a fair point. Or maybe it's possible that he just reconsidered after seeing the reaction within Greece to the plan.

I'm just thinking that if the Greeks are that pissed about this, and there is no mandate, then any deal is going to unravel eventually anyway even if the government did approve it without a referendum.

Or, it could be just politics. Although I don't quite see how a referendum would help him politically. The people who oppose the deal and would vote against it aren't likely to be much happier just because they had the referendum first. It's the substance of the deal they oppose, and Papandreou is still in front of the deal politically. And I don't see why people who support the plan would be more likely to vote for him just because he submitted it to referendum. Although I suppose I could see them being more forgiving of him if it doesn't work out if they had the chance to vote on it first.