Basically this (Summary only possible to you, edit and improve if you like): I also posted this in the ekathimerini comments section
Greece votes OXI/No on more Austerity measures
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Basically this (Summary only possible to you, edit and improve if you like): I also posted this in the ekathimerini comments section
The Greeks lied through their teeth in order to join the Euro. And their European partners didn't call them out on their bullshit.
A
A More Normal Bird
Unconfirmed Member
The Japanese people have a lot of private savings because their Government consistently runs deficits. They don't "treat their creditors like toys" because they don't negotiate with them over anything, they just issue debt and allow the market to purchase what's left after Government institutions and the Bank of Japan (the largest single holder of Japanese Government debt) have bought their share. But sure, the fact that Eurozone countries like Portugal, Italy, Ireland, Greece and Spain had sovereign debt crises in the wake of the GFC despite varying levels of debt and differing budget balances and that other nations with persistent deficits like Japan, the US and the UK did not is just a coincidence and it really is as simple as "don't live beyond your means".
CharlieDigital
Banned
Why does no one blame the buy side in these transactions?
Why does no one fault the holders of these bonds and see that they made a mistake in buying junk bonds? If we like to use the household budget analogy, then we can apply the same analogy here: don't lend money to that friend that's always broke but wearing the hottest Jordan's. If you do, don't be surprised if he comes back to you two weeks later without your money and looking for more.
If the Greeks were living "beyond their means", then the entities that purchased Greek debt are idiots and should get taken to the cleaners for giving money to them; they should be allowed to fail and deserve as much of the blame for their losses as the Greeks for spending their money.
But of course, that's exactly the issue; the Germans and the French don't want their institutions to eat those loses though they are the ones that made the bad decision to buy Greek debt.
Machspeed007
Member
Problem is, "that friend that's always broke but wearing the hottest Jordan's" is actually part of your family not some stranger on the street. The German and the French want a Unified Europe and as an European, I happen to agree with that. So they bailed out Greece, the problem child, because of the higher agenda and because they are looking into the future hopping the Greeks will look up to that too (unfortunately not just yet, as they do not take responsibility for their own mistakes, and I'm not only talking about the last government of course).
My take on this is that (and this may sound scandalous to some of you) when you have access to easy money, the socialist-marxist ideas take root and this amplifies the problems of living "beyond your means".
benjipwns
Banned
Yeah, but if we can just loot the proles to prop up the elites for a bit longer...we can get to the next bubble and make money off those junk assets.
benjipwns
Banned
In fairness, didn't nearly everyone? IIRC, France didn't even meet all the original standards.
Coriolanus
Banned
If you think they bailed out the greeks due to some greater european ideal... Well, you haven't been paying attention. To be more precise, you've been explicitly ignoring what happened.
As for the socialist-marxist ideas... dear god.
Mostly, yeah.
Japan is holding out because it is actually producing and exporting. It also has a lower debt to other countries than Greece.
There are other Eurozone countries with significantal debts that aren't suffering. France and Belgium for instance are nested around the United Kingdom when it comes to debts. Unless you're trying to show tourism based economies just have more problems getting back on their feet compared to product based economies.
That's because the major issue is with those soverign debt crises wasn't debt, it was interest rates.
I mean, the investors around the world suddenly realize that no, EU nations all arent as credit worthy as Germany. Interests rates increase, Nations have trouble paying off their now unexpected costs and shit starts to get serious. Not surprising that Greece got its shit pushed in the most considered the nation's interest rate before. Not saying that this was the only factor, but I think it was a major one.
benjipwns
Banned
At the same time that's the problem with debt. When you can't service the interest.
Most countries pay just enough of the interest to keep rolling over their debt but could theoretically pay more if needed by adjusting their spending budgets.
As you note, Greece ran into the situation where that doesn't really work anymore. Your interest alone is outpacing your ability to pay so people are like "fuck it" and that makes your interest and debt spiral even more.
On a smaller individual scale, this is what happened to people in the housing market. (In part because of lies about adjustable rate mortgages.)
It has money printers.
[QU**E=benjipwns;171361442]** *he s*me *ime *h**'s *he pr*blem wi*h deb*. When y*u c*n'* service *he in*eres*.
M*s* c*un*ries p*y jus* en*ugh *f *he in*eres* ** keep r*lling *ver *heir deb* bu* c*uld *he*re*ic*lly p*y m*re if needed by *djus*ing *heir spending budge*s.
*s y*u n**e, Greece r*n in** *he si*u**i*n where *h** d*esn'* re*lly w*rk *nym*re. Y*ur in*eres* *l*ne is *u*p*cing y*ur *bili*y ** p*y s* pe*ple *re like "fuck i*" *nd *h** m*kes y*ur in*eres* *nd deb* spir*l even m*re.
*n * sm*ller individu*l sc*le, *his is wh** h*ppened ** pe*ple in *he h*using m*rke*. (In p*r* bec*use *f lies *b*u* *djus**ble r**e m*r*g*ges.)[/QU**E]
*greed. *h*nks f*r expl*ining *h** m*re fully
M*s* c*un*ries p*y jus* en*ugh *f *he in*eres* ** keep r*lling *ver *heir deb* bu* c*uld *he*re*ic*lly p*y m*re if needed by *djus*ing *heir spending budge*s.
*s y*u n**e, Greece r*n in** *he si*u**i*n where *h** d*esn'* re*lly w*rk *nym*re. Y*ur in*eres* *l*ne is *u*p*cing y*ur *bili*y ** p*y s* pe*ple *re like "fuck i*" *nd *h** m*kes y*ur in*eres* *nd deb* spir*l even m*re.
*n * sm*ller individu*l sc*le, *his is wh** h*ppened ** pe*ple in *he h*using m*rke*. (In p*r* bec*use *f lies *b*u* *djus**ble r**e m*r*g*ges.)[/QU**E]
*greed. *h*nks f*r expl*ining *h** m*re fully
Machspeed007
Member
That's precisely what I think. I also don't believe in the saying that 'saving the foreign owned Greek banks doesn't count'.
To tell you the truth I believe that having the Greeks leave the Euro would help both Europe and the Greek people (salaries becoming competitive again, leading to industry investments, etc). However, if we are listening to the democratic voice of the greek people, the majority of them don't want to leave the Euro either. So you see, Europe doesn't always do what's financially rational because higher reasons.
I don't know. In Germany some politicians are just hyper corrupt to the point where they don't even make a secret out of it. Just look at Schröder who left his chancellor chair asap to Gazprom who he benefited during his reign. Lobbyism is pretty bad in Germany and at least a few years ago our government refused to bid to the anti-corruption guideline of the EU. Lets also not forget that the guy who orchestrated a huge arms company bribe for the CDU became minister of finance and several other posts.
I'd hardly call a bailout, the majority of which was earmarked to pay back Greece's creditors - German and French financial institutions specifically, idealistic. Not to mention the austerity provisions that the bailout forced on Greece by the Troika.
Machspeed007
Member
What institutions are you talking about exactly?
banks
Machspeed007
Member
Ah, I wouldn't call banks 'institutions', at least in my native language 'institutions' have to do with the public sector mostly.
Nevertheless, as much as they are despised, 'banks' are needed for the economy to run. I wouldn't say that helping the banks didn't help the greeks. The salaries, the deposits, the pensions, all run through banks.
Theonik
Member
Foreign banks in this case for the most part so no. And if they wanted to bail out the banks they should have been more open about it and screw the incompetent bankers.
Machspeed007
Member
Foreign banks operating in Greece, so yes. Foreign as in European, not that it matters who owns the bank as long is active in Greece and operating under Greek National Bank supervision and regulations.
A
A More Normal Bird
Unconfirmed Member
No that's not what I'm trying to show; the fact that some Eurozone nations did not have sovereign debt crises does not disprove my post. They're two points: there is something about the Eurozone that makes its members more susceptible to government finance constraints and there are things about certain members of the Eurozone that made them more susceptible to those constraints than others. Deficits and higher debt may play a part in that second point, but Ireland had modest public debt and budget surpluses prior to the crisis (for that matter, so did Spain), so there's clearly more to it.
Basically, if someone says "it's simple don't live beyond your means or you'll become Greece" then they're focussing entirely on the latter point and are likely entirely ignorant of the former.
Japan is "holding out" despite huge levels of public debt because its government for some reason has very low and stable interest rates on the bonds it sells mostly to its own central bank and other governmental institutions.
benjipwns
Banned
Banks are practically half public sector institutions or more these days.
I am sure someone can correct me if I am wrong since i am not well-versed in econ-lingo, but it looks like 5% of the 226 billion went to the Greek state (helpful), 19% went to prop up Greek Banks (fairly helpful), and the other 74% of the money went to pay back its creditors. Mostly German and French banks.
How exactly does propping up German and French banks help the Greek economy all that much? I dont know about you, but I would imagine that Greece would have loved to have some of that 200 billion dollars to invest in their country so that they didnt have massive unemployment and people starving in the streets.
The bailout was a cleverly disguised bank bailout of French and German banks. I am sure European politicians loved the idea because instead of being blamed by their constituents for bailing out the banks like what happened in America, their constituents would blame those lazy Greeks.
That certainly isnt idealistic. It is very self-serving.
http://www.macropolis.gr/?i=portal.en.the-agora.2080
http://www.nytimes.com/2012/05/30/b...longer-sees-most-of-its-bailout-aid.html?_r=0
Machspeed007
Member
Funny how helping relieve the debt is now a bad thing.
"People starving in the streets"? Let's not go the populist route. There are plenty of other european countries living alright with just a third of what an average greek earns.
Meaningful investment would help lower unemployment only if the salaries are competitive. If any salary has to compete from the start with the 800E+ pension (that's helping the youth stay at home) than it's difficult to find jobs, yes.
Theonik
Member
Not operating in Greece for the most part.
Relieve the debt by taking on more debt in exchange for sovereign control of fiscal policy leading to further recession in the economy that worked great.
The only way banks worldwide are going to stop propping up risky countries/companies, is when they stop getting bailed out by the taxpayer.
In a way, Greece defaulting and just saying you're not getting the money - ever, would harm the Greeks, but it would help the global economy as the next Greece wouldn't get those cheap loans or be stuck with decades of austerity from being strung along payday-lender style.
That said, this would probably lead to some global austerity as most countries would have to live within their means more, or you'd see more countries just inflating their debts.
In a way, Greece defaulting and just saying you're not getting the money - ever, would harm the Greeks, but it would help the global economy as the next Greece wouldn't get those cheap loans or be stuck with decades of austerity from being strung along payday-lender style.
That said, this would probably lead to some global austerity as most countries would have to live within their means more, or you'd see more countries just inflating their debts.
But it didnt relieve the debt. It certainly saved French and German banks, but it definitely did not relieve Greek debt. Greece has more debt now than it did in the beginning of the crisis thanks to austerity measures tanking their economy.
http://www.theguardian.com/world/2013/aug/06/greece-food-crisis-summer-austerity
http://www.nytimes.com/2013/04/18/world/europe/more-children-in-greece-start-to-go-hungry.html
Yea, just populist rhetoric...
Theonik
Member
Deficit spending isn't an inherently bad thing. Truly if you can grow your income faster than you can accumulate your debt and as long as you have monetary control very rarely will you end up in a worse situation.
Machspeed007
Member
You said 'people are dying in the streets' yet your source ('public health professionals') are only talking about 'food insecurity' (whatever that means) for 10% of the youth.
Theonik
Member
30% of the Greek population is living bellow the poverty line.
benjipwns
Banned
You don't know where you're next meal is coming from when asked.
It could be at home, from a restaurant, from a soup kitchen, from digging through dumpsters, it could be eating your family members, etc.
Machspeed007
Member
It worked in 9 out 10 cases, Greece being the exception. Although 6 months ago, things had begun to look good at least, with Greece beginning to show positive economic gains.
Theonik
Member
I'm sure the Spanish and Italians would agree. Except they don't. And any signs of improvement only came recently and are very tiny. They also didn't go through the massive Austerity Greece had to go through.
Machspeed007
Member
Like I said, Greece isn't the only country in Europe that can provide such studies. I bet that USA has places where we could find 'food insecurity' as well. It's important to put things in perspective when talking about 'people dying on the streets'.
I mean, it works in terms of maintaining hegemony. Spain, Italy? Their economies are still destroyed.
Is there one actual example of a euro country that implemented austerity and recovered at all? People sure seem to believe there are! But I'm not sure they would think that if they lived in those countries.
It means that your assertion that Greeks are better off than a number of European countries is ridiculous because a significant portion of the population have food insecurity, and that means hunger.
etc etc etc, but yes, continue to dismiss the humanitarian hardships in Greece. As for starving in the streets, perhaps this is a language thing, but I did not mean that to be taken in a strictly literal sense.
Machspeed007
Member
I know that graph comparing the 1939 USA recession deep with the Greek one. I agree that the graphs look similar but I don't believe that the standard of living in the 1939 recession compares to what the Greeks have, even in recession. Putting the graphs together and saying that the Greeks are feeling the recession like the Americans did in 1939, I don't think that's entirely comparable.
paradise_circus
Member
And an exporting economy.
No, it didnt. Austerity is a terrible and debunked idea. There has been no economic study that has shown that austerity actually works. In fact, the research on austerity has shown to be incredibly damaging. The IMF's own research is even finding this.
Last I heard, some people in Greece were burning their furniture to heat their homes, and there was town that was left with only a single ambulance after budget cuts. They are suffering bad.
Machspeed007
Member
We still buy Fiat and Seat cars from Italy and Spain, I wouldn't go that far saying that their economies are destroyed. I can't name one product we are buying from Greece, I'll give you that. I can't name one from the last 20 years even.
Machspeed007
Member
Well, from now on we'll just talk about Reforms, not Austerity. How about that?
Austerity is about cutting spending from inefficient money sinks. If you think about it that way, 'austerity' will never go away because it's economically sound to improve money spending efficiency.
Sure, it must be doubled by investments, meaningful investments and improved productivity.
Ted Striker
Neo Member
What a load of crap.
D
Deleted member 231381
Unconfirmed Member
What silly graphs, benji. You're having a laugh, right? If you define things in terms of government spending as a percentage of GDP, then austerity can increase government spending as a percentage of GDP if spending drops but GDP drops faster proportionally as a result - which it does. That's the entire reason it doesn't work.
Which is very important because a country needs to pay back its creditors to be able to function on the debt market, to not default.
You showed some none-Eurozone members didn't have them as part of your point, so I showed some Eurozone members didn't either.
Or maybe there is a sign that countries that have had multiple financial problems in the past, will probably still be having them in the future.
Personally, I think we should define austerity as how the EU and Troika defined it because that is what actually was put into practice. That is what EU nations who received bailouts, and especially Greece experienced. And that was, at least in Greece's case, massive Spending cuts and tax increases on already depressed economies in the hopes of reducing deficits. That sentence right there basically scream to most people that the damn thing was doomed to begin with.
http://www.theguardian.com/business/ng-interactive/2015/apr/29/the-austerity-delusion
That is a very good article on why austerity doesnt work and the research and evidence to support that argument.
Plenty of nations have defaulted and have returned to decent to good standing in the debt market. It is not a good idea to continue with bailouts when the debt is unsustainable, which Merkel herself admitted in 2011.
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