Greek Banks, Stock Exchange to Remain Closed From Monday(bloomberg.com)
bloomberg.com
Greek Banks, Stock Exchange to Remain Closed From Monday
http://www.bloomberg.com/news/articles/2015-06-28/running-out-of-cash-greece-counts-on-ecb-to-avert-black-monday
165 comments
Greek here. It seems that Tsipras is trying to pull his last card by going nuclear but the general consensus amongst non government supporters is that he did more harm than good. There was a belief that even a bad deal with EU was far better than a non-deal and it seemed that finally they’ve found some common ground and an agreement was a matter of days. The referendum announcement caught pretty much everyone by surprise.
There is a strong trend towards the Yes vote in the referendum and most people I’ve talked to view it as a consensus towards Euro regardless of how the government will try to put it. And there is still hope that even in the last minute a deal will be made for the sake of everyone involved.
You have to understand that to most people in the tech industry or any other person with some kind of liberal thinking, Tsipras is like an alien. An idealist of a communist era that was never popular in Greece and whose decisions and actions seem insane. We don’t understand what his strategy is and whether he’s bluffing or really want to take us out of the euro.
There is a strong trend towards the Yes vote in the referendum and most people I’ve talked to view it as a consensus towards Euro regardless of how the government will try to put it. And there is still hope that even in the last minute a deal will be made for the sake of everyone involved.
You have to understand that to most people in the tech industry or any other person with some kind of liberal thinking, Tsipras is like an alien. An idealist of a communist era that was never popular in Greece and whose decisions and actions seem insane. We don’t understand what his strategy is and whether he’s bluffing or really want to take us out of the euro.
I'm a (classical) liberal, but a lot of the current Greek position makes sense.
1. To get future investment, it's more important that Greece starts growing again than that it pays off existing debt. While socialist policies can stifle growth, it seems in the current situation growth is stifled more by a strong Euro than by tax evasion, corruption or overspending.
2. Greece was the fastest growing state in Europe before the Euro. With all its natural advantages, there's no reason why it couldn't return to fast growth w/a devalued currency.
3. Syriza doesn't seem as "far left" as described. I certainly don't think they will go down the totalitarian communist route, vs becoming a democratic welfare state like the Nordic states.
4. As constituted, the Euro favors exporting economies over tourist/shipping economies like Greece. Switzerland is in many ways similar to Greece structurally .. a tourist mecca of about 10 million people and a service oriented economy. It does export a lot, but mainly specialty items (watches, cheese, chocolate etc). Greece would seem to be better off as a Switzerland on the sea, with strong EU relations but independent monetary policies.
1. To get future investment, it's more important that Greece starts growing again than that it pays off existing debt. While socialist policies can stifle growth, it seems in the current situation growth is stifled more by a strong Euro than by tax evasion, corruption or overspending.
2. Greece was the fastest growing state in Europe before the Euro. With all its natural advantages, there's no reason why it couldn't return to fast growth w/a devalued currency.
3. Syriza doesn't seem as "far left" as described. I certainly don't think they will go down the totalitarian communist route, vs becoming a democratic welfare state like the Nordic states.
4. As constituted, the Euro favors exporting economies over tourist/shipping economies like Greece. Switzerland is in many ways similar to Greece structurally .. a tourist mecca of about 10 million people and a service oriented economy. It does export a lot, but mainly specialty items (watches, cheese, chocolate etc). Greece would seem to be better off as a Switzerland on the sea, with strong EU relations but independent monetary policies.
Dude living in Switzerland here.
Could you elaborate more on the structural similarity to Greece?
Yes, Switzerland has tourism but - unlike Greece - I doubt that they depend on it. Also, watches and cheese are only the tip of the iceberg. Switzerland's wealth probably derives from mega-banks like UBS and the not well-known, but enormous industrial sector (e.g., Nestlé, Novartis, Roche, ABB).
Before I moved here, I thought Switzerland is only about cheese and chocolate, but it really is an oasis of wealth unparalleled in Europe due to various reasons; here is my medium blog post about how it is living and working here: https://medium.com/@iwaninzurich/eight-reasons-why-i-moved-t....
Could you elaborate more on the structural similarity to Greece?
Yes, Switzerland has tourism but - unlike Greece - I doubt that they depend on it. Also, watches and cheese are only the tip of the iceberg. Switzerland's wealth probably derives from mega-banks like UBS and the not well-known, but enormous industrial sector (e.g., Nestlé, Novartis, Roche, ABB).
Before I moved here, I thought Switzerland is only about cheese and chocolate, but it really is an oasis of wealth unparalleled in Europe due to various reasons; here is my medium blog post about how it is living and working here: https://medium.com/@iwaninzurich/eight-reasons-why-i-moved-t....
For sure, Switzerland is an amazing wealth-generator. In addition to all you mentioned, it also exports great tennis players, my personal favorite Swiss product :)
I meant that it is a strategically situated, naturally beautiful, culturally strong state of about 10 million people.
Greece shares all of these traits, and can build up industries like Switzerland has if it has a more independent state and implements Swiss-like policies.
They won't be the exact same industries .. they both attractiveness for tourists, but people come to Switzerland to ski and trek, and go to Greece to sail and relax on the beach. Similarly Switzerland might make drugs, chocolate and watches, while Greece excels in shipping & shipbuilding.
Certainly Switzerland is far ahead of where Greece is now. But it's proof that a similar state can become a economic powerhouse without the Euro. With a devalued currency, in addition to boosting existing industries, Greece will become an attractive place for foreign multinationals to setup factories, so it can grow new industries from scratch as well.
I meant that it is a strategically situated, naturally beautiful, culturally strong state of about 10 million people.
Greece shares all of these traits, and can build up industries like Switzerland has if it has a more independent state and implements Swiss-like policies.
They won't be the exact same industries .. they both attractiveness for tourists, but people come to Switzerland to ski and trek, and go to Greece to sail and relax on the beach. Similarly Switzerland might make drugs, chocolate and watches, while Greece excels in shipping & shipbuilding.
Certainly Switzerland is far ahead of where Greece is now. But it's proof that a similar state can become a economic powerhouse without the Euro. With a devalued currency, in addition to boosting existing industries, Greece will become an attractive place for foreign multinationals to setup factories, so it can grow new industries from scratch as well.
I've been in both (lived in Switzerland for 5+ years) and I couldn't imagine two more unlike countries than Greece and Switzerland, structurally or any other way.
To put it mildly you're completely wrong. Switzerland is an exporting powerhouse (watches, cheese and chocolate? - the bulk is phara, precision electronics, chemicals, technology, banking services, etc.). Greece is em.. not.
To put it mildly you're completely wrong. Switzerland is an exporting powerhouse (watches, cheese and chocolate? - the bulk is phara, precision electronics, chemicals, technology, banking services, etc.). Greece is em.. not.
The number one reason for the wealth of the Swiss is that they prudently stayed out of wars as much as they possibly could.
While the rest of Europe had to clean up the rubble and rebuild everything periodically, the Swiss could incrementally build up their wealth.
While the rest of Europe had to clean up the rubble and rebuild everything periodically, the Swiss could incrementally build up their wealth.
My impression is that is does not _want_ to take Greece out of the euro. He hoped that the 'institutions' would change their mind, but they didn't. So now it is a choice between trying to keep going despite impossible conditions and a huge debt burden that can never be repaid or leaving the eurozone with a small chance that the EU gets scared and actually changes course. In any case, leaving the euro is bad for Greece and possibly fatal for the eurosystem, but for Greece it looks increasingly like the lesser evil.
Do you think it is better to stay in the Eurozone and continue to pay down interest on a $300bn debt over the next decade, or to default on the debt, leave the Eurozone, and try to begin anew?
Would the Greek economy even be strong enough to support the latter?
Would the Greek economy even be strong enough to support the latter?
It’s a common secret that once there will be a true unification of the member states all national debt will become EU owned (by issuing Eurobonds for example). Regardless of that, as it stands now the debt isn’t our real problem because we pay a very low interest (less than 3%) and the maturity has been extended and there is willingness to be extended even further. Our problems are structural ones like the fact that we pay almost 80% of the state budget in pensions and salaries, which is the highest in of all EU members.
As for leaving the Eurozone, I seriously doubt whether we could default on all our debt. We can’t default on IMF’s debt for example. Or ECB’s. Because once we leave we’ll still need the support of the ECB otherwise our banks will collapse in a matter of weeks. Our economy is still very fragile, exports are less than 20% of GDP. Tourism might flourish because of the devaluation of the local currency but it still won’t be enough.
As for leaving the Eurozone, I seriously doubt whether we could default on all our debt. We can’t default on IMF’s debt for example. Or ECB’s. Because once we leave we’ll still need the support of the ECB otherwise our banks will collapse in a matter of weeks. Our economy is still very fragile, exports are less than 20% of GDP. Tourism might flourish because of the devaluation of the local currency but it still won’t be enough.
> It’s a common secret that once there will be a true unification of the member states all national debt will become EU owned
This is wishful thinking. It won't happen anytime soon, if ever. For example, German politicians are scared of their voters who are completely unwilling to go along with this, which is exactly the reason why they have rejected such proposals for five years now.
> the debt isn’t our real problem because we pay a very low interest (less than 3%) [...] our problems are structural ones
Indeed the problem is not the debt, but for now it is also not structural reforms. Structural reforms are required in the long term, but they won't fix anything now and in any case, you can't change a country in a few years. This will take a long time.
The main issue is simply that the economy has tanked, unemployment is high, etc. and this won't change by imposing more austerity. The last five years have proven this beyond a shred of doubt.
> I seriously doubt whether we could default on all our debt. We can’t default on IMF’s debt for example. Or ECB’s.
Yes you can. There is no reason why your banks would collapse, if you have a new currency.
This is wishful thinking. It won't happen anytime soon, if ever. For example, German politicians are scared of their voters who are completely unwilling to go along with this, which is exactly the reason why they have rejected such proposals for five years now.
> the debt isn’t our real problem because we pay a very low interest (less than 3%) [...] our problems are structural ones
Indeed the problem is not the debt, but for now it is also not structural reforms. Structural reforms are required in the long term, but they won't fix anything now and in any case, you can't change a country in a few years. This will take a long time.
The main issue is simply that the economy has tanked, unemployment is high, etc. and this won't change by imposing more austerity. The last five years have proven this beyond a shred of doubt.
> I seriously doubt whether we could default on all our debt. We can’t default on IMF’s debt for example. Or ECB’s.
Yes you can. There is no reason why your banks would collapse, if you have a new currency.
This is wishful thinking. It won't happen anytime soon, if ever. For example, German politicians are scared of their voters who are completely unwilling to go along with this, which is exactly the reason why they have rejected such proposals for five years now.
It’s already happening. ECB issued a QE program in January for buying out national bonds for one trillion Euros.
Indeed the problem is not the debt, but for now it is also not structural reforms. Structural reforms are required in the long term, but they won't fix anything now and in any case, you can't change a country in a few years. This will take a long time.
The main issue is simply that the economy has tanked, unemployment is high, etc. and this won't change by imposing more austerity. The last five years have proven this beyond a shred of doubt.
Sure, the economy has tanked but the main reason that happened is that pretty much all the economy was state funded. Once the state run out of money businesses started collapsing. That’s why we had a 30% drop in GDP while other EU countries that issued similar austerity programs faced far less GDP drop.
If you take a look at the top 10 biggest companies in Greece for example, most are either state owned or subsidiaries of multinational corporations. There isn’t a single privately owned company in Greece that makes more than a billion in sales annually.
I’m not a great fan of the austerity measures but I won’t argue that it’s the root of all our problems. The root of our problems is the model of our economy and there’s better chances we solve it inside EU than on our own.
It’s already happening. ECB issued a QE program in January for buying out national bonds for one trillion Euros.
Indeed the problem is not the debt, but for now it is also not structural reforms. Structural reforms are required in the long term, but they won't fix anything now and in any case, you can't change a country in a few years. This will take a long time.
The main issue is simply that the economy has tanked, unemployment is high, etc. and this won't change by imposing more austerity. The last five years have proven this beyond a shred of doubt.
Sure, the economy has tanked but the main reason that happened is that pretty much all the economy was state funded. Once the state run out of money businesses started collapsing. That’s why we had a 30% drop in GDP while other EU countries that issued similar austerity programs faced far less GDP drop.
If you take a look at the top 10 biggest companies in Greece for example, most are either state owned or subsidiaries of multinational corporations. There isn’t a single privately owned company in Greece that makes more than a billion in sales annually.
I’m not a great fan of the austerity measures but I won’t argue that it’s the root of all our problems. The root of our problems is the model of our economy and there’s better chances we solve it inside EU than on our own.
> It’s already happening. ECB issued a QE program in January for buying out national bonds for one trillion Euros.
That's a measure to adjust the inflation rate, nothing else. Greek bonds are excluded. The ECB has made it very clear that it will buy no weak bonds that give the impression it finances government spending. Furthermore, since they are still normal government bonds and just ownership changes from banks to the ECB, they will eventually have to be payed back by the countries that issued them, as far as I understand.
> I’m not a great fun of the austerity measures but I won’t argue that it’s the root of all our problems.
I agree that it's not the root of your problems. But it is what has prolonged the current crisis and will prevent a solution.
> The root of our problems is the model of our economy and there’s better chances we solve it inside EU than on our own.
If Greece gets a real chance to do that within the EU, yes. That would imply getting out of the crisis first and it would also imply a serious haircut. And on a reasonable timescale, say within the next five years. But it seems clear to me that the Eurogroup does not have the necessary courage to make that happen. I hope the change their mind, but if they do not, getting out looks better to me than just kicking the can down the road.
That's a measure to adjust the inflation rate, nothing else. Greek bonds are excluded. The ECB has made it very clear that it will buy no weak bonds that give the impression it finances government spending. Furthermore, since they are still normal government bonds and just ownership changes from banks to the ECB, they will eventually have to be payed back by the countries that issued them, as far as I understand.
> I’m not a great fun of the austerity measures but I won’t argue that it’s the root of all our problems.
I agree that it's not the root of your problems. But it is what has prolonged the current crisis and will prevent a solution.
> The root of our problems is the model of our economy and there’s better chances we solve it inside EU than on our own.
If Greece gets a real chance to do that within the EU, yes. That would imply getting out of the crisis first and it would also imply a serious haircut. And on a reasonable timescale, say within the next five years. But it seems clear to me that the Eurogroup does not have the necessary courage to make that happen. I hope the change their mind, but if they do not, getting out looks better to me than just kicking the can down the road.
Who would want to invest in a risky country with huge structural deficits that just set a precedent of defaulting on debts? The ECB/IMF did it because Greece was part of the Eurozone so they were obligated to in order to preserve the strength of the coalition. I believe most investors would be extremely wary of placing any money into Greece post-default. And huge investments are exactly what the country needs to enact structural reform.
Also, The problem with creating a new currency is that no one will have any reason to trust that the government will be able to back it with real economic value. If Greece were to come out with a new brand of money, say the "Greco", I would be extremely suspicious of holding any for fear of hyperinflation/a new currency coming out in 3 years to replace the debts taken on in Greco.
Also, The problem with creating a new currency is that no one will have any reason to trust that the government will be able to back it with real economic value. If Greece were to come out with a new brand of money, say the "Greco", I would be extremely suspicious of holding any for fear of hyperinflation/a new currency coming out in 3 years to replace the debts taken on in Greco.
> I believe most investors would be extremely wary of placing any money into Greece post-default.
Well, investors are already wary. In any case, I'm not convinced that foreign investment is the most important factor here. Exports would surely go up and similarly tourism could flourish if the currency devalues.
edit: from ft.com: "Credit rating agencies already have said they will not consider non-payment to the IMF a proper default, since they only care about debts owed to private creditors."
> Also, The problem with creating a new currency is that no one will have any reason to trust that the government will be able to back it with real economic value.
It will take on a value, just much less than the euro currently has. If they control the supply, why would it not have value?
Once again, the situation is bad, but once things have recovered a bit (say after two or three years) the future should look better than it currently looks within the euro.
Well, investors are already wary. In any case, I'm not convinced that foreign investment is the most important factor here. Exports would surely go up and similarly tourism could flourish if the currency devalues.
edit: from ft.com: "Credit rating agencies already have said they will not consider non-payment to the IMF a proper default, since they only care about debts owed to private creditors."
> Also, The problem with creating a new currency is that no one will have any reason to trust that the government will be able to back it with real economic value.
It will take on a value, just much less than the euro currently has. If they control the supply, why would it not have value?
Once again, the situation is bad, but once things have recovered a bit (say after two or three years) the future should look better than it currently looks within the euro.
>I'm not convinced that foreign investment is the most important factor here. Exports would surely go up and similarly tourism could flourish if the currency devalues.
Which currency are you talking about? If Greece defaults and institutes a new currency, there would be no devaluation within the economy, rather a complete shift from the Euro to some new currency.
Also, exports (especially in the long run) are not driven so much by currency fluctuation as they are by the cost of inputs. So unless Greece suddenly finds a huge deposit of natural resources or drastically reduces the minimum wage and pushes down manufacturing wages, then exports really won't change much.
Check out this graph: https://research.stlouisfed.org/fred2/graph/fredgraph.png?g=...
If the value of the euro and total exports are inversely related, we would expect to see the lines moving in opposite directions. Thus exports would be rising as the exchange rate declines and vice versa. We actually see the opposite happening over the past 10 years, and we see that the relationship has especially broken down in recent months.
Now check out this graph: https://research.stlouisfed.org/fred2/graph/fredgraph.png?g=...
We see that there truly is an (lagging) inverse relationship of exports and the value of the euro for Germany. Why? I have no idea. It probably has to do with the different type of exports coming out Germany vs. Greece.
It would be naively optimistic to hope that devaluations of the currency would lead to more than a few percentage points of increase to the overall Greek GDP, and that the (supposed) growth in NE and tourism would be enough to fund vast structural reforms within Greece.
>It will take on a value, just much less than the euro currently has. If they control the supply, why would it not have value?
I control the supply of "Roynotes", aka squares of toilet paper that I have signed and guaranteed to be redeemable for $100USD in 3 year's time. I'll purchase $50 worth of goods from you today with one note, and you'll make a profit of $50USD over 3 years for a nominal 100% return - not bad! What do you say, partner?
Joking aside, supply is only 1/2 of the value equation, and wary investors + annihilated credibility = no demand for new currency = no value of new currency.
Which currency are you talking about? If Greece defaults and institutes a new currency, there would be no devaluation within the economy, rather a complete shift from the Euro to some new currency.
Also, exports (especially in the long run) are not driven so much by currency fluctuation as they are by the cost of inputs. So unless Greece suddenly finds a huge deposit of natural resources or drastically reduces the minimum wage and pushes down manufacturing wages, then exports really won't change much.
Check out this graph: https://research.stlouisfed.org/fred2/graph/fredgraph.png?g=...
If the value of the euro and total exports are inversely related, we would expect to see the lines moving in opposite directions. Thus exports would be rising as the exchange rate declines and vice versa. We actually see the opposite happening over the past 10 years, and we see that the relationship has especially broken down in recent months.
Now check out this graph: https://research.stlouisfed.org/fred2/graph/fredgraph.png?g=...
We see that there truly is an (lagging) inverse relationship of exports and the value of the euro for Germany. Why? I have no idea. It probably has to do with the different type of exports coming out Germany vs. Greece.
It would be naively optimistic to hope that devaluations of the currency would lead to more than a few percentage points of increase to the overall Greek GDP, and that the (supposed) growth in NE and tourism would be enough to fund vast structural reforms within Greece.
>It will take on a value, just much less than the euro currently has. If they control the supply, why would it not have value?
I control the supply of "Roynotes", aka squares of toilet paper that I have signed and guaranteed to be redeemable for $100USD in 3 year's time. I'll purchase $50 worth of goods from you today with one note, and you'll make a profit of $50USD over 3 years for a nominal 100% return - not bad! What do you say, partner?
Joking aside, supply is only 1/2 of the value equation, and wary investors + annihilated credibility = no demand for new currency = no value of new currency.
I'd say that "true unification" of the EU through Eurobonds is nigh impossible given the enmity and financial division between creditor and debtor countries in the EU.
I'm a big fan of Friedrich Hayek, who argued against the absurdity of creating the EU from the beginning:
"Though I strongly sympathise with the desire to complete the economic unification of Western Europe by completely free-ing the flow of money between them, I have grave doubts about the desirability of doing so by creating a new European currency managed by any sort of supra-national authority. Quite apart from the extreme unlikelihood that the member countries would agree on the policy to be pursued in practice by a common monetary authority (and the practical inevitability of some countries getting a worse currency than they have now), it seems highly unlikely, even in the most favourable circumstances, that it would be administered better than the present national currencies. Moreover, in many respects a single international currency is not better but worse than a national currency if it is not better run. It would leave a country with a financially more sophisticated public not even the chance of escaping from the consequences of the crude prejudices governing the decisions of the others. The advantage of an international authority should be mainly to protect a member state from the harmful measures of others, not to force it to join in their follies."
I'm a big fan of Friedrich Hayek, who argued against the absurdity of creating the EU from the beginning:
"Though I strongly sympathise with the desire to complete the economic unification of Western Europe by completely free-ing the flow of money between them, I have grave doubts about the desirability of doing so by creating a new European currency managed by any sort of supra-national authority. Quite apart from the extreme unlikelihood that the member countries would agree on the policy to be pursued in practice by a common monetary authority (and the practical inevitability of some countries getting a worse currency than they have now), it seems highly unlikely, even in the most favourable circumstances, that it would be administered better than the present national currencies. Moreover, in many respects a single international currency is not better but worse than a national currency if it is not better run. It would leave a country with a financially more sophisticated public not even the chance of escaping from the consequences of the crude prejudices governing the decisions of the others. The advantage of an international authority should be mainly to protect a member state from the harmful measures of others, not to force it to join in their follies."
Greek startup owner here. Our government is trying to recover from a mistake by commiting a bigger one. Our Varoufakis-illusioned prime minister thought that he could force a better deal from Eurozone members by blackmailing with a worldwide economic Lehman Brothers moment. This obviously didn't work, and the referendum theatre was setup to cover up the failure. That in turn, is a huge gamble, putting the country's prospects for generations to come at risk.
>Our Varoufakis-illusioned prime minister thought that he could force a better deal from Eurozone members by blackmailing with a worldwide economic Lehman Brothers moment.
"Better deal" meaning "a deal which doesn't involve breaking promises they made to the electorate".
Clearly such a deal wasn't possible, hence here we are.
The idea that this is somehow blackmail is ludicrous.
"Better deal" meaning "a deal which doesn't involve breaking promises they made to the electorate".
Clearly such a deal wasn't possible, hence here we are.
The idea that this is somehow blackmail is ludicrous.
Don't pin everyone on "that's what the people want though!!!"... there's a reason we don't simply setup government so that whatever passing whim the populace manages to latch onto gets adopted and then cast aside once the populace gets bored with it.
Greece has already voted in one government that promised an end to austerity and then reneged upon its promise when threatened by the Eurozone.
I think that if the successive government also reneged upon its promise, that would signal the true end of democracy is Greece.
I think that if the successive government also reneged upon its promise, that would signal the true end of democracy is Greece.
Or it would signal that ending austerity is actually impossible for Greek politicians. If several parties in a row had promised to double the number of moons, they would also have had to renege on that promise.
The main difference is, of course, that it wasn't clear that it would be impossible to end austerity, with some thinking that the Troika would give in. But that doesn't mean the end of democracy.
The main difference is, of course, that it wasn't clear that it would be impossible to end austerity, with some thinking that the Troika would give in. But that doesn't mean the end of democracy.
>Or it would signal that ending austerity is actually impossible
It basically signaled that the Troika will cajole, threaten, blackmail and generally do everything in their power to keep the austerity train going.
Ultimately, though, that's the way to destroy the currency union. An economic policy based upon wage suppression and privatization of monopoly industries is nice for some people, but it isn't sustainable.
It basically signaled that the Troika will cajole, threaten, blackmail and generally do everything in their power to keep the austerity train going.
Ultimately, though, that's the way to destroy the currency union. An economic policy based upon wage suppression and privatization of monopoly industries is nice for some people, but it isn't sustainable.
So they promised something they couldn't deliver and now haven't delivered it. This appears to have done nothing to help the situation. "Blackmail" might not be precisely the right word, but you could perhaps argue it's some kind of fraud? It's certainly a failure of their entire platform.
If they have a referendum, that gives renewed democratic legitimacy to whichever side wins. Considering how much is at stake, that seems entirely reasonable to me. Democracy is something Europe in general could use a whole lot more of these days.
Right now, Greece is stuck between a rock and a hard place: agreeing to the Troika’s demands for continued austerity and see another 5 years of economic depression with no end in sight in a way that sells out their campaign promises, vs. leave the Eurozone and see possibly immediate even more dramatic economic collapse but with a potential way out of the mess through a currency under Greek control more appropriate exchange rates.
Right now, Greece is stuck between a rock and a hard place: agreeing to the Troika’s demands for continued austerity and see another 5 years of economic depression with no end in sight in a way that sells out their campaign promises, vs. leave the Eurozone and see possibly immediate even more dramatic economic collapse but with a potential way out of the mess through a currency under Greek control more appropriate exchange rates.
AFAIK they made no promises to stay in the Eurozone. They just said that they would try.
Given the way that the negotiations are going, they were essentially faced with a choice of slashing pensions and wages to the bone (wouldn't have helped with paying the debt back, incidentally) or... plan B.
Given the way that the negotiations are going, they were essentially faced with a choice of slashing pensions and wages to the bone (wouldn't have helped with paying the debt back, incidentally) or... plan B.
What your perception of Varoufakis is? He seems reasonable in his assumption that more austerity will not work, and Greece needs a new approach to solve its economical woes?
It's really not easy to answer if it is the right thing or the wrong thing. I will try to enumerate a few key points while being as objective as possible.
a) Most Greeks feel that they have been wronged or cheated. Their anger is usually against 1) other Greeks (i.e. public sector employees against freelancers for not paying taxes, or private sector employees against public for being lazy) 2) against Germany, for austerity, the WWII and the loans they haven't repaid 3) against large multinational interests, etc.
b) All (recent) governments, including this one (so far), have fallen victim to voting in policies that benefit special interests, large or small, instead of making a few basic reforms that are necessary. What is necessary and what is just is debatable, of course. It's a constant battle between different social groups, where everyone is right.
c) There are a lot more and deeper problems in Greece that I can't go into, that fuel an endless feeling of injustice. Things that are taken for granted in other European countries do not work like that over here. This is why some of the analogies made when criticizing Greeks are false.
Now, about the referendum. One side, the government, is saying that a "No" will give them more power to continue the negotiations and bring in a better agreement. They are trying to reduce the issue to democracy in the EU, national pride and independence. Other sides say that the government's proposal and troika's proposal are very similar and this is a false dilemma that only serves the ruling party's interests, and some vague Drachma lobby. The previous prime minister even went out and said that the deal offered by Troika is "unacceptable" (while the one they had made was better but they were forced out) but we have to accept it.
One important point I would like to make is that no one seems to know what either deal really says, but no one bothers to explain it to the people. The news only report the "bad" and everyone is spreading FUD.
I don't know what's best. I have an opinion but I'm afraid there are things in play that I do not understand. One thing I do know is that many of our youth want more Europe and less Greece, and a very large number have already left.
a) Most Greeks feel that they have been wronged or cheated. Their anger is usually against 1) other Greeks (i.e. public sector employees against freelancers for not paying taxes, or private sector employees against public for being lazy) 2) against Germany, for austerity, the WWII and the loans they haven't repaid 3) against large multinational interests, etc.
b) All (recent) governments, including this one (so far), have fallen victim to voting in policies that benefit special interests, large or small, instead of making a few basic reforms that are necessary. What is necessary and what is just is debatable, of course. It's a constant battle between different social groups, where everyone is right.
c) There are a lot more and deeper problems in Greece that I can't go into, that fuel an endless feeling of injustice. Things that are taken for granted in other European countries do not work like that over here. This is why some of the analogies made when criticizing Greeks are false.
Now, about the referendum. One side, the government, is saying that a "No" will give them more power to continue the negotiations and bring in a better agreement. They are trying to reduce the issue to democracy in the EU, national pride and independence. Other sides say that the government's proposal and troika's proposal are very similar and this is a false dilemma that only serves the ruling party's interests, and some vague Drachma lobby. The previous prime minister even went out and said that the deal offered by Troika is "unacceptable" (while the one they had made was better but they were forced out) but we have to accept it.
One important point I would like to make is that no one seems to know what either deal really says, but no one bothers to explain it to the people. The news only report the "bad" and everyone is spreading FUD.
I don't know what's best. I have an opinion but I'm afraid there are things in play that I do not understand. One thing I do know is that many of our youth want more Europe and less Greece, and a very large number have already left.
I don't know why Greek geeks, in particular, would have any insight, but here is what some economists think:
http://marginalrevolution.com/marginalrevolution/2015/06/the...
http://marginalrevolution.com/marginalrevolution/2015/06/the...
Not sure if it's of much relevance, but my ex-collegue blogs on Greek start-ups:
* http://eulenausathen.com/
* https://twitter.com/eulenausathen
I suggest that you follow this Twitter account: http://twitter.com/GreekAnalyst
Summarizing in a post the Greek problem is almost impossible, but I would say that the referendum is a terrible idea, especially at this moment.
(greek student/developer)
Summarizing in a post the Greek problem is almost impossible, but I would say that the referendum is a terrible idea, especially at this moment.
(greek student/developer)
That guy really looks biased.
"Tsipras turning this into a "fundamental democratic issue" (his words) is the most shameful populist trick in the book."
This ("shameful populism!") is kind of just another way of saying "I don't like this democracy thing. Stop it!"
This ("shameful populism!") is kind of just another way of saying "I don't like this democracy thing. Stop it!"
Yeah, most of the people that are against the referendum seem to follow some kind of reasoning like: "Syriza should take the decision by themselves so that when everything goes to hell only they are to blame and not the Greek electorate".
Which is strange because those who will have to endure the consequences of the decision will be the Greek people, so I don't understand what is so negative about involving them in the choice.
The bad thing is, both ways will probably mean hell to the Greeks so it's not like there is a good answer. Trying to pay an unpayable debt by destroying the economy will never work, and changing back to the drachma and devaluating the coin won't probably do much good in an economy like Greece where there are very limited exports.
I am not sure what was the underlying expectations of the austerity route, the official narrative of eventually paying the debt is obviously not going to happen, so I suppose that the underlying message was to play along for X more years until the EU decides to solve the mess at some point. But playing along any longer was not something that politicians could sell to the Greek electorate anymore. And the EU intervening and solving the mess is probably impossible to sell to the electorate of the strong economies of Europe like Germany, specially after so many years of "lazy greeks" headlines. So some sort of scenario like the current one was bound to happen sooner or later.
Which is strange because those who will have to endure the consequences of the decision will be the Greek people, so I don't understand what is so negative about involving them in the choice.
The bad thing is, both ways will probably mean hell to the Greeks so it's not like there is a good answer. Trying to pay an unpayable debt by destroying the economy will never work, and changing back to the drachma and devaluating the coin won't probably do much good in an economy like Greece where there are very limited exports.
I am not sure what was the underlying expectations of the austerity route, the official narrative of eventually paying the debt is obviously not going to happen, so I suppose that the underlying message was to play along for X more years until the EU decides to solve the mess at some point. But playing along any longer was not something that politicians could sell to the Greek electorate anymore. And the EU intervening and solving the mess is probably impossible to sell to the electorate of the strong economies of Europe like Germany, specially after so many years of "lazy greeks" headlines. So some sort of scenario like the current one was bound to happen sooner or later.
Banks are to remain closed until at least July 6th:
http://en.protothema.gr/breaking-capital-controls-taken-bank...
The stock exchange will also remain closed according to Reuters: http://www.cnbc.com/id/102793367
The stock exchange will also remain closed according to Reuters: http://www.cnbc.com/id/102793367
Did you mean July 6th?
Yes, thanks. I have updated the comment.
As a sidenote, this doesn't have to be a huge deal necessarily. Recall the US closed every bank for 8 days in March 1933. Life goes on.
As a sidenote, this doesn't have to be a huge deal necessarily. Recall the US closed every bank for 8 days in March 1933. Life goes on.
Well that was a pretty huge deal in the U.S. in 1933.
Life goes on, but as many can attest having gone through the crisis worldwide at varying levels from 2008 -> 2013/2014/present, it's not always pleasant.
Life goes on, but as many can attest having gone through the crisis worldwide at varying levels from 2008 -> 2013/2014/present, it's not always pleasant.
exactly. Life will always go on, but I can attest that it is a big deal, especially for businesses that already have a hard time surviving in the hostile Greek environment...!
I doubt anyone here is able to recall that :-). And from what we know, those were some of the worst times in recent US history...
As an argentinean, who lived the same experience in 2001, I can say this is very bad.
I live in Europe now, and most people in this part of the world does not understand the idea and consecuencies of an economic issue like this.
My hope is that the greek government, in some way, find a new agreement soon.
I live in Europe now, and most people in this part of the world does not understand the idea and consecuencies of an economic issue like this.
My hope is that the greek government, in some way, find a new agreement soon.
Can you provide some color on this? What was it like when a gov't closed banks to avoid a financial apocalypse?
edit: would be interested in your experience if you feel comfortable giving it. Interested if new mediums of exchange took place and just generally how it played out as I am not familiar with the Argentinean crisis at all.
edit: would be interested in your experience if you feel comfortable giving it. Interested if new mediums of exchange took place and just generally how it played out as I am not familiar with the Argentinean crisis at all.
Argentina is still experiencing some monetary controls. When I visited Buenos Aires two weeks ago, the official exchange rate was ~9 pesos to the dollar, however there are prevalent 'blue' (black) market exchanges that will readily give you over 12 pesos (I got 12.3) to the dollar.
Argentina has a notorious counterfeit currency problem. Did you have any problems on the black market exchanges ensuring that all the currency you were getting was real?
I took a local with me on my first visit (as I had been advised). There are people on the street hawking exchanges 'cambio cambio cambio' and they will lead you off the street into a store where the shop does the actual exchange (in my case it was a jewelry store). After completing the exchange, the man in the store took a moment to show me the security features of the bills and what I should be looking for to spot counterfeits. I had no problem spending any of the money I exchanged there.
Not OP, not Argentian but watched a proper Dutch documentary about it : http://tegenlicht.vpro.nl/afleveringen/2011-2012/Argentinie....
Teachers don't get paid : need to fabricate and sell souvenirs to tourists on the beach. Every day. Large black markets are created, adhoc currencies get created, lots of crime ( burglaries, robberies ), people living of collecting waste paper etc.
Teachers don't get paid : need to fabricate and sell souvenirs to tourists on the beach. Every day. Large black markets are created, adhoc currencies get created, lots of crime ( burglaries, robberies ), people living of collecting waste paper etc.
"adhoc currencies get created"
Remember that day Google shut down Reader, and ready or not it was demo day for every competing rss feed reader?
This is demo day for bitcoin or dogecoin or whatever other digital currency you can think of. Now I'm not claiming any will succeed, but I am claiming its going to be demo day, ready or not.
My gut level guess is the next Greek currency is far more likely to be the Ruble than BTC, but whatever, its still gonna be demo day for BTC even if it fails.
The next quarter or so will be an exciting time to work at a place like Coinbase.
Remember that day Google shut down Reader, and ready or not it was demo day for every competing rss feed reader?
This is demo day for bitcoin or dogecoin or whatever other digital currency you can think of. Now I'm not claiming any will succeed, but I am claiming its going to be demo day, ready or not.
My gut level guess is the next Greek currency is far more likely to be the Ruble than BTC, but whatever, its still gonna be demo day for BTC even if it fails.
The next quarter or so will be an exciting time to work at a place like Coinbase.
They're no more likely to go to Bitcoin than they are to go back to the gold standard--and there are good reasons everyone left gold behind long ago.
greece and Argentina are entirely different since Argentina had it's own currency (which it could devaule) and it also had a strong export (soy beans). greece has neither.
Rioting, looting, blood in the streets.
https://en.wikipedia.org/?title=December_2001_riots_in_Argen...
https://en.wikipedia.org/?title=December_2001_riots_in_Argen...
I can. Basically, the country collapsed at first. Political instability. Companies closed. Unemployment went up... Crime raised. Big money left the country.
Capital controls were imposed, but as it's predictable in this kind of situations, people with the right connections, banks and big investors, got the news before the controls were imposed. Banks closed for a few days, then, people could only extract a certain amount per week from ATMs (just enough to live). Sending money outside the country had to be authorized (and generally rejected)... Of course, they said that this would only be for a few weeks or months... (a lie)
Then, they devaluated the Peso (ARS). from 1 ARS = 1 USD, to 1.4 ARS = 1 USD.
Every bank account in USD was converted to ARS, with the new valuation.
For a few months, they let the ARS to float freely, and it devaluated heavily. So, people who had a few months before USD deposited in their bank accounts, now had ARS that were quickly loosing its value. And they couldn't get it out of their accounts, so it was terrible for them to see their life savings evaporating, without being able to do anything. Some reports indicate that suicides, hearth attacks and strokes peaked at the time.
A lot of companies, who had acquired credits (in USD) from foreign institutions during the previous years, were no longer able to pay them back, and had to close, letting lots of people unemployed. One interesting thing that appeared (from a social-experiment perspective) was the following: In some cases, the workers joined and formed cooperatives, took control of the facilities, and continued working without the approval of the former owners, distributing equally the gains of their production (it didn't matter what was the position, either manager or janitor, everybody earned the same), as a means to keep their jobs, increase morale and reduce costs. They kept paying their providers, so, from outside, those factories kept working as always. Some may argue that even better, because they were more motivated...
The exchange rate reached 4 ARS = USD, and of course, inflation went up. Having the same salaries, but with prices going up quickly, a lot of people (especially the most vulnerable sectors of society) were no longer able to survive.
So, reverting to the most basic form of exchange, some people started what was called "Club del Trueque" (barter clubs). People made food, pasties, handicrafts, and exchanged them with other people. Eventually, those clubs grew up, and they started using pseudo-currencies, only valid inside their own clubs, to make trading easier. Of course, the government deemed that activity illegal, because they could not collect taxes... That worked for a time (several months, the most critical), but eventually, fake pseudo-currencies started to appear. It was always suspected that the government was behind the printing of those fake papers as a means of ending that... but anyway, it ended up eroding the trust in the members of those clubs.
But every Crisis can also be an opportunity:
As people was not able to extract their money from their bank accounts, (and believe it or not, most real state operations here are done in cash... big piles of cash), the real state market went down. And If you happened to have money (in foreign currencies) saved in a strong box, suddenly, your money had more value. I have friends who bought their first apartment back then. Others took credit in pesos at the beginning of the crisis (before indexation), and after a few years, the can say that they bought their house for 1/5 of their current value. (because the indexation they had was much much lower than inflation).
At a country level, it was a reboot. Which can be bad, and it can also be good. Having most of the indebted companies closed, new stronger companies had space to flourish. Given that now Argentina was a "NO-NO" place to invest for foreign companies, local companies had more chance to grow and expand. During the previouse years, most factories were not able to compete with Asian competitors, because of their cheaper prices. But having devaluated, and imposing imports restrictions (to avoid loosing foreign currency), factories had a new chance to increase regain the local market, with cheaper labor costs.
And being defaulted and bankrupted, the country was able to renegotiate most of the debts, reducing heavily the external debt.
All of this, worked for a few years. GDP Growth was high (>8). Unemployment descended. Social stability started to come back. Capital controls were relaxed. Central Bank's currency reserves went up year after year.
But eventually, that fast growth ended up being poison in the long term. As new industries started to work, it turns out that we didn't have the infrastructure to support them (and what's worse, we didn't make plans and started to invest with time). Power shortages came back (something that became uncommon since the privatizations). Roads were collapsed. And our cargo train lines were almost destroyed. But the real deadly bullet came with oil. As petrol prices started to go up, transport became expensive (this is a big country, mainly connected by roads). And with our new energy requirements, (to fuel our power plants) we passed from being a net oil exporter to beign a net oil importer... And with oil imports, currency reserves started to go down again.
So, here starts the story again: heavier import controls, it's harder to send money out of the country, very hard again to buy foreign currencies... but at least, this time around, it's not a financial crisis. Banks are not at risk, and people and local companies are not indebted in foreign currencies. So, it's bothersome, but not nearly as bad this time around as it was in 2001. There's simply no comparison.
But of course, Argentina is not comparable with Greece. Argentina is MUCH larger (8th, vs 97th), bigger population, and lots of natural resources (gas, oil, mining, agriculture, fishing, uranium). So, if forced, Argentina can survive totally on its own. But sadly, I don't think Greece can do the same.
Phew!. that was a large post...
Capital controls were imposed, but as it's predictable in this kind of situations, people with the right connections, banks and big investors, got the news before the controls were imposed. Banks closed for a few days, then, people could only extract a certain amount per week from ATMs (just enough to live). Sending money outside the country had to be authorized (and generally rejected)... Of course, they said that this would only be for a few weeks or months... (a lie)
Then, they devaluated the Peso (ARS). from 1 ARS = 1 USD, to 1.4 ARS = 1 USD.
Every bank account in USD was converted to ARS, with the new valuation.
For a few months, they let the ARS to float freely, and it devaluated heavily. So, people who had a few months before USD deposited in their bank accounts, now had ARS that were quickly loosing its value. And they couldn't get it out of their accounts, so it was terrible for them to see their life savings evaporating, without being able to do anything. Some reports indicate that suicides, hearth attacks and strokes peaked at the time.
A lot of companies, who had acquired credits (in USD) from foreign institutions during the previous years, were no longer able to pay them back, and had to close, letting lots of people unemployed. One interesting thing that appeared (from a social-experiment perspective) was the following: In some cases, the workers joined and formed cooperatives, took control of the facilities, and continued working without the approval of the former owners, distributing equally the gains of their production (it didn't matter what was the position, either manager or janitor, everybody earned the same), as a means to keep their jobs, increase morale and reduce costs. They kept paying their providers, so, from outside, those factories kept working as always. Some may argue that even better, because they were more motivated...
The exchange rate reached 4 ARS = USD, and of course, inflation went up. Having the same salaries, but with prices going up quickly, a lot of people (especially the most vulnerable sectors of society) were no longer able to survive.
So, reverting to the most basic form of exchange, some people started what was called "Club del Trueque" (barter clubs). People made food, pasties, handicrafts, and exchanged them with other people. Eventually, those clubs grew up, and they started using pseudo-currencies, only valid inside their own clubs, to make trading easier. Of course, the government deemed that activity illegal, because they could not collect taxes... That worked for a time (several months, the most critical), but eventually, fake pseudo-currencies started to appear. It was always suspected that the government was behind the printing of those fake papers as a means of ending that... but anyway, it ended up eroding the trust in the members of those clubs.
But every Crisis can also be an opportunity:
As people was not able to extract their money from their bank accounts, (and believe it or not, most real state operations here are done in cash... big piles of cash), the real state market went down. And If you happened to have money (in foreign currencies) saved in a strong box, suddenly, your money had more value. I have friends who bought their first apartment back then. Others took credit in pesos at the beginning of the crisis (before indexation), and after a few years, the can say that they bought their house for 1/5 of their current value. (because the indexation they had was much much lower than inflation).
At a country level, it was a reboot. Which can be bad, and it can also be good. Having most of the indebted companies closed, new stronger companies had space to flourish. Given that now Argentina was a "NO-NO" place to invest for foreign companies, local companies had more chance to grow and expand. During the previouse years, most factories were not able to compete with Asian competitors, because of their cheaper prices. But having devaluated, and imposing imports restrictions (to avoid loosing foreign currency), factories had a new chance to increase regain the local market, with cheaper labor costs.
And being defaulted and bankrupted, the country was able to renegotiate most of the debts, reducing heavily the external debt.
All of this, worked for a few years. GDP Growth was high (>8). Unemployment descended. Social stability started to come back. Capital controls were relaxed. Central Bank's currency reserves went up year after year.
But eventually, that fast growth ended up being poison in the long term. As new industries started to work, it turns out that we didn't have the infrastructure to support them (and what's worse, we didn't make plans and started to invest with time). Power shortages came back (something that became uncommon since the privatizations). Roads were collapsed. And our cargo train lines were almost destroyed. But the real deadly bullet came with oil. As petrol prices started to go up, transport became expensive (this is a big country, mainly connected by roads). And with our new energy requirements, (to fuel our power plants) we passed from being a net oil exporter to beign a net oil importer... And with oil imports, currency reserves started to go down again.
So, here starts the story again: heavier import controls, it's harder to send money out of the country, very hard again to buy foreign currencies... but at least, this time around, it's not a financial crisis. Banks are not at risk, and people and local companies are not indebted in foreign currencies. So, it's bothersome, but not nearly as bad this time around as it was in 2001. There's simply no comparison.
But of course, Argentina is not comparable with Greece. Argentina is MUCH larger (8th, vs 97th), bigger population, and lots of natural resources (gas, oil, mining, agriculture, fishing, uranium). So, if forced, Argentina can survive totally on its own. But sadly, I don't think Greece can do the same.
Phew!. that was a large post...
This was so interesting, and probably a great foreshadowing of what is to come.
> It was always suspected that the government was behind the printing of those fake papers as a means of ending that
This was one of the more ruthless and unexpected things about your post. I would have suspected the rise of a barter economy, obv currency devaluation and a run on the banks, but I didn't think the government would undermine a small barter economy.
To contrast with Greece, they just do not have the resources Arg. does. This was insightful, thanks again.
> It was always suspected that the government was behind the printing of those fake papers as a means of ending that
This was one of the more ruthless and unexpected things about your post. I would have suspected the rise of a barter economy, obv currency devaluation and a run on the banks, but I didn't think the government would undermine a small barter economy.
To contrast with Greece, they just do not have the resources Arg. does. This was insightful, thanks again.
At first, they didnt care about those clubs, but a lot of pressure came from foreign entities, calling that activity «a menace to the western economy», and even a US senator called it «economic terrorism». I guess that the world bank, and IMF were afraid that if those clubs were successful, they could pose a really bad example for other countries, as the government was not able to control them.
Consider that at its peak, 1 out of 7 citizens was involved in a barter club.
There is not doubt about the govenment involment in the falsification of pseudo-currencies, because some were even printed in the same paper used to print bank checks, money paper, same ink, same printers.... it was a coordinated attack to undermine the confidence on the system. And it worked much more efficiently that whatever they could do with the use of force...
Consider that at its peak, 1 out of 7 citizens was involved in a barter club.
There is not doubt about the govenment involment in the falsification of pseudo-currencies, because some were even printed in the same paper used to print bank checks, money paper, same ink, same printers.... it was a coordinated attack to undermine the confidence on the system. And it worked much more efficiently that whatever they could do with the use of force...
[deleted]
Well this is terrible for the Greek people in the short term but its probably for the best in the long term. They have to default and the ECB just won't allow that.
History is full of examples of disallowed things happening.
This a really good system design example, if a situation is possible and you don't design that situation into the system, then you will run the system in uncharted territory, eventually. Probably running it off the rails.
Of course but that doesn't change the fact the ECB would cut off the tap in that scenario.
This is really bad for the people of Greece. I have seen small bank runs with my own eyes where folks queued for hours to get their savings rescued. ($bigCorp going down with internal bank). Bad sad bad.
It worked out quite well in Cyprus in 2012. So just by itself, capital controls aren't the end of the work.
Greece is much larger than Cyprus, their debt is much bigger in absolute values and the outcome of the current status so unknown that it's very difficult to compare the current capital controls against those implemented in Cyprus.
I recommend reading this short article published on The Economist to get a grasp of the consequences of Greece defaulting.
For Greece the gains from defaulting would be slight, and the costs potentially vast. True, the country could walk away from debts of €317 billion, or almost 180% of GDP. But that is worth less to Greeks than it sounds. Although the debt is huge, it is at bargain-basement interest rates and repayable over decades. Interest payments until the early 2020s are just 3% of GDP a year. Even for Greece, that is manageable. Nor would leaving the euro do much good. In theory, with a new drachma and its own central bank, Greece could devalue and gain competitiveness. But Greece’s trade is modest. And it has already lowered nominal wages by 16% without a boom in exports.
The costs of Grexit still outweigh the benefits By contrast, the cost of Grexit would be exorbitant: bust banks, slashed savings, broken contracts and shattered confidence (see article). Politics could be devastated. Syriza, Mr Tsipras’s hard-left party, is anti-market and anti-enterprise. Neo-fascist Golden Dawn and the Communists, with a combined 12% of the vote, would thrive. Most of the parties in the middle, already discredited, would struggle. This week Mr Tsipras was due to play footsie with Vladimir Putin in Russia. Ejected from the euro, and possibly the EU, a country with a history of coups would risk becoming violent and even more corrupt.
http://www.economist.com/news/leaders/21654598-greece-and-eu...
For Greece the gains from defaulting would be slight, and the costs potentially vast. True, the country could walk away from debts of €317 billion, or almost 180% of GDP. But that is worth less to Greeks than it sounds. Although the debt is huge, it is at bargain-basement interest rates and repayable over decades. Interest payments until the early 2020s are just 3% of GDP a year. Even for Greece, that is manageable. Nor would leaving the euro do much good. In theory, with a new drachma and its own central bank, Greece could devalue and gain competitiveness. But Greece’s trade is modest. And it has already lowered nominal wages by 16% without a boom in exports.
The costs of Grexit still outweigh the benefits By contrast, the cost of Grexit would be exorbitant: bust banks, slashed savings, broken contracts and shattered confidence (see article). Politics could be devastated. Syriza, Mr Tsipras’s hard-left party, is anti-market and anti-enterprise. Neo-fascist Golden Dawn and the Communists, with a combined 12% of the vote, would thrive. Most of the parties in the middle, already discredited, would struggle. This week Mr Tsipras was due to play footsie with Vladimir Putin in Russia. Ejected from the euro, and possibly the EU, a country with a history of coups would risk becoming violent and even more corrupt.
http://www.economist.com/news/leaders/21654598-greece-and-eu...
>For Greece the gains from defaulting would be slight, and the costs potentially vast.
Translation: FUD.
>True, the country could walk away from debts of €317 billion, or almost 180% of GDP. But that is worth less to Greeks than it sounds.
Translation: pretty please don't.
>Although the debt is huge, it is at bargain-basement interest rates and repayable over decades. Interest payments until the early 2020s are just 3% of GDP a year. Even for Greece, that is manageable.
Translation: You may have had to do with massive unemployment and without life saving drugs by kowtowing to creditor demands ( http://www.digitaljournal.com/article/325955 ), but you'll "manage" if you continue doing it.
>Nor would leaving the euro do much good. In theory, with a new drachma and its own central bank, Greece could devalue and gain competitiveness. But Greece’s trade is modest. And it has already lowered nominal wages by 16% without a boom in exports.
Translation: we believe so fervently in the power of suppressing wages to improve economic performance, that the idea of trying anything else is literally unthinkable.
>The costs of Grexit still outweigh the benefits By contrast, the cost of Grexit would be exorbitant: bust banks, slashed savings, broken contracts and shattered confidence (see article). Politics could be devastated. Syriza, Mr Tsipras’s hard-left party, is anti-market and anti-enterprise.
Translation : Attention target readers of the Economist - elites, captains of industry, rapacious financiers - Mr Tsipras is your masked villain.
>Neo-fascist Golden Dawn and the Communists, with a combined 12% of the vote, would thrive.
Translation : please ignore the fact that they already are thriving thanks to the Economist-stamp-of-approval austerity measures.
Translation: FUD.
>True, the country could walk away from debts of €317 billion, or almost 180% of GDP. But that is worth less to Greeks than it sounds.
Translation: pretty please don't.
>Although the debt is huge, it is at bargain-basement interest rates and repayable over decades. Interest payments until the early 2020s are just 3% of GDP a year. Even for Greece, that is manageable.
Translation: You may have had to do with massive unemployment and without life saving drugs by kowtowing to creditor demands ( http://www.digitaljournal.com/article/325955 ), but you'll "manage" if you continue doing it.
>Nor would leaving the euro do much good. In theory, with a new drachma and its own central bank, Greece could devalue and gain competitiveness. But Greece’s trade is modest. And it has already lowered nominal wages by 16% without a boom in exports.
Translation: we believe so fervently in the power of suppressing wages to improve economic performance, that the idea of trying anything else is literally unthinkable.
>The costs of Grexit still outweigh the benefits By contrast, the cost of Grexit would be exorbitant: bust banks, slashed savings, broken contracts and shattered confidence (see article). Politics could be devastated. Syriza, Mr Tsipras’s hard-left party, is anti-market and anti-enterprise.
Translation : Attention target readers of the Economist - elites, captains of industry, rapacious financiers - Mr Tsipras is your masked villain.
>Neo-fascist Golden Dawn and the Communists, with a combined 12% of the vote, would thrive.
Translation : please ignore the fact that they already are thriving thanks to the Economist-stamp-of-approval austerity measures.
> Translation: FUD
The Greeks have always been perfectly free to stop paying their existing debts, at the cost of not being able to borrow any more money. The only reason they've been negotiating with the Troika and agreeing to the austerity measures you disagree with is that they believed that defaulting would be _even worse_. Even if default is currently the best option, there is plenty of actual uncertainty, and some amount of fear seems justified.
The Greeks have always been perfectly free to stop paying their existing debts, at the cost of not being able to borrow any more money. The only reason they've been negotiating with the Troika and agreeing to the austerity measures you disagree with is that they believed that defaulting would be _even worse_. Even if default is currently the best option, there is plenty of actual uncertainty, and some amount of fear seems justified.
What's left for them to fear?
After years of enormous unemployment and the country's slow decline into near-3rd world status, even having your savings seized and forcibly devalued loses its sting.
After years of enormous unemployment and the country's slow decline into near-3rd world status, even having your savings seized and forcibly devalued loses its sting.
1. I'm not sure what you mean by "near-3rd world". Their economy has fallen to about the pre-Euro trend-line (http://www.vox.com/2015/6/28/8858727/greece-gdp-chart). There's still plenty of room for them to fall (https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)...).
2. If The Economist is too capitalist for you, the current Greek finance minister also thinks (thought?) default would be very bad: http://yanisvaroufakis.eu/2012/05/16/weisbrot-and-krugman-ar....
2. If The Economist is too capitalist for you, the current Greek finance minister also thinks (thought?) default would be very bad: http://yanisvaroufakis.eu/2012/05/16/weisbrot-and-krugman-ar....
The Greek finance minister recommends defaulting in (2). Also note one of his points is defaulting would poison the Eurozone. That's one more reason this isn't as simple as "default would be bad" for Greece. It's a lesser evil for Greece and it's bad for the Eurozone. It gives Greece leverage.
"Does this mean that Greece ought to grin and bear the massive and misanthropic idiocy of the bailout-austerity package imposed upon it by the troika (EU-ECB-IMF)? Of course not. We should certainly default."
Defaulting could lead to further negotiations if Greece stays in the Eurozone, like slashing a big part of a loan handed out when projections showed Greece would not be able to pay it.
Why do you loan to a country when projections show the country can't pay? Is it to keep the country economically enslaved for years?
That's probably why the second-to-top-level comment translated the following as FUD. The gains for Greece from defaulting would be better than accepting the austerity measures.
"Does this mean that Greece ought to grin and bear the massive and misanthropic idiocy of the bailout-austerity package imposed upon it by the troika (EU-ECB-IMF)? Of course not. We should certainly default."
Defaulting could lead to further negotiations if Greece stays in the Eurozone, like slashing a big part of a loan handed out when projections showed Greece would not be able to pay it.
Why do you loan to a country when projections show the country can't pay? Is it to keep the country economically enslaved for years?
That's probably why the second-to-top-level comment translated the following as FUD. The gains for Greece from defaulting would be better than accepting the austerity measures.
>For Greece the gains from defaulting would be slight, and
the costs potentially vast.
Translation: FUD.1. He's talking about default within the Euro, which doesn't seem to be in the cards any more. As he notes (in a linked article), their ability to stay would depend on the ECB continuing to support the Greek banks. In reality, the ECB froze their Emergency Liquidity Assistance program yesterday, and Greece has imposed capital controls to avoid further bank runs.
2. This article was written three years ago, when the rest of Europe was in worse shape. It's not clear how a Greek default would affect the rest of the continent right now.
3. I have nothing against a reasoned argument that default is Greece's best remaining option (like yours, thanks!). What I object to is the semantic stopsign "FUD" in response to a situation that is legitimately uncertain and scary.
2. This article was written three years ago, when the rest of Europe was in worse shape. It's not clear how a Greek default would affect the rest of the continent right now.
3. I have nothing against a reasoned argument that default is Greece's best remaining option (like yours, thanks!). What I object to is the semantic stopsign "FUD" in response to a situation that is legitimately uncertain and scary.
They weren't that perfectly free. According to Noble prize winning economist Paul Krugman:
"if Grexit happens it will be because the creditors, or at least the IMF, wanted it to happen."
http://krugman.blogs.nytimes.com/2015/06/25/breaking-greece/...
http://www.businessinsider.com/krugman-europe-greece-2015-6
"if Grexit happens it will be because the creditors, or at least the IMF, wanted it to happen."
http://krugman.blogs.nytimes.com/2015/06/25/breaking-greece/...
http://www.businessinsider.com/krugman-europe-greece-2015-6
My disagreement with the second-to-top-level comment is that they consider "default would be bad" to be unjustified FUD. Krugman is on my side: "force Greece into a presumably disastrous default". He's just faulting the other side (the Troika) for being so aggressive in negotiating that default seems like the least-bad option.
Between this austerity and this default, default is better. See above.
With an estimated 24% of the economy being shadow economy vs 13% in Germany, which adds up to 37 billion euros in tax evasions a year, they could pay their debts solely by lowering the shadow economy by 5.5%. This would put Greece shadow economy half-ways between where it is now and the German rate.
I think Greece is more like the friend that keeps raking up debt rather than the person that gets pummeled by medical bills.
I think Greece is more like the friend that keeps raking up debt rather than the person that gets pummeled by medical bills.
This was addressed by Yanis Varoufakis' recent post. He explained that if you want to see more people move to the shadow economy, raise taxes on the honest portion to compensate for the loss. But to get the money back, needs amnesty, negotiation, education and time
You are right. Once Greece leaves the Euro its recovery will begin in about six months, the average time it took countries to rebound after leaving the gold standard in the 1930s. Then as now the same vague arguments about the benefits of austerity (confidence!) were presented by debt-holders and shown by history to be disastrously wrong.
I agree The Economist isn't exactly unbiased here, thanks for pointing that out.
">Neo-fascist Golden Dawn and the Communists, with a combined 12% of the vote, would thrive.
Translation : please ignore the fact that they already are thriving thanks to the Economist-stamp-of-approval austerity measures."
No, it just means Greeks gonna Greek. If you think most of this has anything to do with logic, I invite you to spend a week with my in-laws. 90% wild emotion and knee-jerk responses with 10% self pity.
Translation : please ignore the fact that they already are thriving thanks to the Economist-stamp-of-approval austerity measures."
No, it just means Greeks gonna Greek. If you think most of this has anything to do with logic, I invite you to spend a week with my in-laws. 90% wild emotion and knee-jerk responses with 10% self pity.
The economist has been pretty skeptical about austerity recently.
Europe can financially afford Greece defaulting. Can't afford Spain and other markets. So an example has to be made of the Greek people, before other countries get any bright ideas. Its going to really suck for them.
This is a long, old crisis, many years. There is a famous graph I can't find (the world needs a graph search startup?) of the future promises of post-austerity growth vs actual results and the separation is staggering, like 30+ percent difference between promises and reality. Given the trends during the crisis the article seems to miss the point that trying year number eight, or whatever it'll be exactly, of even more austerity absolutely guarantees Golden Dawn taking over, despite that being a claimed result solely of grexit. Obviously continuing with the failed BAU strategies is a total non-starter. It is also possible that trying "anything else", which is finally a political necessity, will somehow make things even worse.
The fundamental problem is you can't have a partial union. Everything else, the root cause of the crisis, the attempts to fix it, the politics, all follow from that fundamental problem.
This is a long, old crisis, many years. There is a famous graph I can't find (the world needs a graph search startup?) of the future promises of post-austerity growth vs actual results and the separation is staggering, like 30+ percent difference between promises and reality. Given the trends during the crisis the article seems to miss the point that trying year number eight, or whatever it'll be exactly, of even more austerity absolutely guarantees Golden Dawn taking over, despite that being a claimed result solely of grexit. Obviously continuing with the failed BAU strategies is a total non-starter. It is also possible that trying "anything else", which is finally a political necessity, will somehow make things even worse.
The fundamental problem is you can't have a partial union. Everything else, the root cause of the crisis, the attempts to fix it, the politics, all follow from that fundamental problem.
This may be the chart you're thinking of:
http://krugman.blogs.nytimes.com/2015/06/25/breaking-greece/
http://krugman.blogs.nytimes.com/2015/06/25/breaking-greece/
>The fundamental problem is you can't have a partial union.
I imagine you're talking about the monetary union, because it is of course possible to have partial unions in the EU (many EU countries are not in the Eurozone, and many non-EU countries are in the EEA or in the Schenghen zone, enabling free trade and free movement of their citizens in and out of the other Schenghen countries).
But even in a monetary union, you can absolutely have a common currency without a common fiscal policy. A currency is just a measure of account, a medium of exchange and a store of wealth. We've had centuries of common currency in the form of gold equivalence (i.e. a hard gold standard). The moments we got into trouble with gold currencies are not inherent in the gold standard itself, but in the attempts by sovereigns to jiggle around with it (seigneurage, mixing gold with other metals, creating pretend gold-standards that allow them to create more paper currency than there is gold backing it up, etc.)
I imagine you're talking about the monetary union, because it is of course possible to have partial unions in the EU (many EU countries are not in the Eurozone, and many non-EU countries are in the EEA or in the Schenghen zone, enabling free trade and free movement of their citizens in and out of the other Schenghen countries).
But even in a monetary union, you can absolutely have a common currency without a common fiscal policy. A currency is just a measure of account, a medium of exchange and a store of wealth. We've had centuries of common currency in the form of gold equivalence (i.e. a hard gold standard). The moments we got into trouble with gold currencies are not inherent in the gold standard itself, but in the attempts by sovereigns to jiggle around with it (seigneurage, mixing gold with other metals, creating pretend gold-standards that allow them to create more paper currency than there is gold backing it up, etc.)
"The fundamental problem is you can't have a partial union."
You can have a partial union. That's what EU members who aren't part of the Eurozone have. Greece defaulting will be damaging for its trade prospects, but they don't need to leave the EU to recover.
You can have a partial union. That's what EU members who aren't part of the Eurozone have. Greece defaulting will be damaging for its trade prospects, but they don't need to leave the EU to recover.
Err kind of. I phrased my claim poorly. Something more like if you have a partial union it'll be less stable than the alternative, more human suffering, etc.
Look at the origin of the crisis, the union is simultaneously strong enough for international debt to be accumulated, but too weak to control the situation to keep the accumulation to survivable levels and too weak to keep humanitarian services operating regardless of financial market issues. A weaker (no?) union would have never accumulated the debt due to lack of procedure or trust, a stronger union would have regulated the loans and cut off the flow before Greece committed debt suicide years and years ago.
Or look at midgame. The weak union had to decide if it should make German banks suffer or the Greek people suffer, the union was strong enough for them to enforce their decision, at least for several years... A weaker union would still have decided for the banks but the Greeks would have told them to pound sand and this would have been water under the bridge years and years ago. A stronger union would have sent in the tanks and troops and taken it out of their hide, pretty rough stuff but it would have all been over years ago and we'd be talking about the recovery that started years ago etc. The weak union doesn't really have any idea what to do.
Looking at the endgame, a weak union has the possibility of creating a generational depression instead of getting it over with quickly like either alternative, basically the midgame argument but emphasizing the length of the crisis, like a weak union is optimally designed to maximize human suffering.
Look at the origin of the crisis, the union is simultaneously strong enough for international debt to be accumulated, but too weak to control the situation to keep the accumulation to survivable levels and too weak to keep humanitarian services operating regardless of financial market issues. A weaker (no?) union would have never accumulated the debt due to lack of procedure or trust, a stronger union would have regulated the loans and cut off the flow before Greece committed debt suicide years and years ago.
Or look at midgame. The weak union had to decide if it should make German banks suffer or the Greek people suffer, the union was strong enough for them to enforce their decision, at least for several years... A weaker union would still have decided for the banks but the Greeks would have told them to pound sand and this would have been water under the bridge years and years ago. A stronger union would have sent in the tanks and troops and taken it out of their hide, pretty rough stuff but it would have all been over years ago and we'd be talking about the recovery that started years ago etc. The weak union doesn't really have any idea what to do.
Looking at the endgame, a weak union has the possibility of creating a generational depression instead of getting it over with quickly like either alternative, basically the midgame argument but emphasizing the length of the crisis, like a weak union is optimally designed to maximize human suffering.
I think your parent is referring to a monetary union. As in: you can't have a monetary union without a fiscal union.
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Funny that the economist mentions the "history of coups" when in fact these military coups and dictatorships were instigated and supported by the US and UK to prevent a communist government. (like they did in Iran back then)
What would happen if Greece defaulted on western debt and aligned with Russia and China is certainly not a repeat of the fascist military dictatorship they had back then.
They most likely would have social-democratic governments in the next decades, exorbitant financial investment from both Russia and China and lots of Russian military bases on their territory.
This would most likely be the end of the EU (and NATO) as we know it, because from there Russia and Turkey would work on pushing the EU out of the Balkans, which would most likely work considering that all of the populations there have a strong preference and historic ties to either Russia or Turkey, depending on what country you look at.
Even in Bulgaria, which is currently in the EU and has a pro-EU government, about 80% of the population have pro-Russian sentiments regarding the conflict in the Ukraine.
This is why the EU and US will do whatever it takes to keep Greece in the EU, even if it means that they have to orchestrate a military coup in Greece or that they will have to print trillions to cover for the debt.
What would happen if Greece defaulted on western debt and aligned with Russia and China is certainly not a repeat of the fascist military dictatorship they had back then.
They most likely would have social-democratic governments in the next decades, exorbitant financial investment from both Russia and China and lots of Russian military bases on their territory.
This would most likely be the end of the EU (and NATO) as we know it, because from there Russia and Turkey would work on pushing the EU out of the Balkans, which would most likely work considering that all of the populations there have a strong preference and historic ties to either Russia or Turkey, depending on what country you look at.
Even in Bulgaria, which is currently in the EU and has a pro-EU government, about 80% of the population have pro-Russian sentiments regarding the conflict in the Ukraine.
This is why the EU and US will do whatever it takes to keep Greece in the EU, even if it means that they have to orchestrate a military coup in Greece or that they will have to print trillions to cover for the debt.
Greece could try to align themselves with Russia and China, but I doubt they could get an appointment. Russia has no money to lend. Russia is already on the verge of financial collapse; they couldn't bail out Cyprus let alone Greece.
China has shown no real interest in countries that don't have significant mineral or natural resources.
Your stats on Bulgaria are also completely backwards. Bulgaria has a very pro-west citizenship.
China has shown no real interest in countries that don't have significant mineral or natural resources.
Your stats on Bulgaria are also completely backwards. Bulgaria has a very pro-west citizenship.
Actually you got the Bulgaria part a bit wrong. Currently the population is ~70% pro-EU.
I did not write that Bulgaria is anti-EU, I said it's majority is pro-Russian.
EU polls: http://www.ecfr.eu/article/public_opinion_poll311520
Bulgarians are pro EU as long as the majority still believes that they will have a better economic future. I dispute that will continue for very long considering the socio-economic collapse Bulgaria has experienced since they joined the EU.
There is no shared culture or historic ties to the West that will keep Bulgarians tied to the West once the EU starts to disintegrate.
EU polls: http://www.ecfr.eu/article/public_opinion_poll311520
Bulgarians are pro EU as long as the majority still believes that they will have a better economic future. I dispute that will continue for very long considering the socio-economic collapse Bulgaria has experienced since they joined the EU.
There is no shared culture or historic ties to the West that will keep Bulgarians tied to the West once the EU starts to disintegrate.
Polls are one thing and then there comes the reality.
I am Bulgarian. And I don't know a lot of people who work in Russia or dream of emigrating to Russia.
On the other hand I know a HUGE amount of people who reap the benefits of the EU. A huge part of Bulgarian GDP is formed because of EU. We wouldn't have dreamed of the huge infrastructure projects that are now a reality without the EU.
Also, fearing Russia and loving Russia is not exactly the same thing.
Also, fearing Russia and loving Russia is not exactly the same thing.
Well, it is your right to dispute this poll but I doubt that the EU gives incentives in creating polls that paint EU member states as pro-Russian.
its majority
Bulgaria, Greece and Russia share an Orthodox Christian and Slavic heritage.
Well, Greeks are not Slavic but the Orthodox Slavic populations certainly view Greek culture (or to be more precise - Byzantine, East-Roman or Roman culture or whatever you'd like to call it) as one of the foundations of their own culture.
We view each other as brotherly nations and there's not much that can change this, just as the Muslim populations on the Balkans view Turkey as their brotherly nation.
The only reason they all signed up for the EU is because of the promise of a better economic future, not because they want to be part of western culture.
During the last years it has become apparent that these promises will not materialize and that's why I expect that the EU will massively contract in the next years.
We view each other as brotherly nations and there's not much that can change this, just as the Muslim populations on the Balkans view Turkey as their brotherly nation.
The only reason they all signed up for the EU is because of the promise of a better economic future, not because they want to be part of western culture.
During the last years it has become apparent that these promises will not materialize and that's why I expect that the EU will massively contract in the next years.
You got the Bulgaria bit wrong again. Actually Byzantium was Bulgaria's arch-enemy during most of our existence. These sentiments are nor forgotten.
As it was once the enemy of Serbia and Russia.
Bulgaria is today Orthodox Christian and has kept the culture of their "arch-enemy". If the majority of Bulgarians really viewed this as their arch enemy then they probably would have rejected this culture the same way that they have rejected the culture of the Turks (by the way in a extremely cruel way) after they regained their freedom.
Bulgaria is today Orthodox Christian and has kept the culture of their "arch-enemy". If the majority of Bulgarians really viewed this as their arch enemy then they probably would have rejected this culture the same way that they have rejected the culture of the Turks (by the way in a extremely cruel way) after they regained their freedom.
Well, it's complicated on why it happened that way. USSR is one undeniable factor.
What does the Atheist USSR have to do with Orthodox Christian Byzantium? The USSR tried to eradicate all traces of this culture by harsh means. They killed priest on a large scale, destroyed churches and outlawed religious practices.
When they saw it didn't work they basically started to control the church from within with their KGB.
When they saw it didn't work they basically started to control the church from within with their KGB.
It doesn't matter whose debt their defaulting on. They will be suspect borrowers for decades to come. They'll have a harder time getting loans from any country in the west or east. Their business and government infrastructure will suffer the consequences from the decisions of this current government. This will end badly for them and the ramifications will last decades.
If you don't believe me ask an Argentinian.
If you don't believe me ask an Argentinian.
I know Argentina had a bad time, and the Greeks will probably too for some time. (albeit much shorter)
But not every country is equally valuable to the great powers.
China needs a strong commercial foothold in the mediterranean sea (ports) to control economic trade with the EU. (which is enormous compared to the trade with Argentina)
Russia could want to fracture the EU and NATO if the standoff with the EU & US continues and wants military cooperation and bases in the mediterranean sea.
Turkey wants to reestablish its influence over the muslim countries in the Balkans and since they are now EU candidate for almost 30 years (meaning: they will never be allowed to join) they will try to find an alternative. Even worse for them, the EU and US appears to be actively working on fracturing the turkish nation via the Kurds. For them it might be a question of life and death to push the West out of the balkans and the middle east.
But not every country is equally valuable to the great powers.
China needs a strong commercial foothold in the mediterranean sea (ports) to control economic trade with the EU. (which is enormous compared to the trade with Argentina)
Russia could want to fracture the EU and NATO if the standoff with the EU & US continues and wants military cooperation and bases in the mediterranean sea.
Turkey wants to reestablish its influence over the muslim countries in the Balkans and since they are now EU candidate for almost 30 years (meaning: they will never be allowed to join) they will try to find an alternative. Even worse for them, the EU and US appears to be actively working on fracturing the turkish nation via the Kurds. For them it might be a question of life and death to push the West out of the balkans and the middle east.
Well, if they default on their debts, their books will look very good so they will make for an interesting creditor. There will be lots of angry people around, but it will still make finantial sense to lend, for a tasty interest rate, of course.
What about Hungary? I doubt they would consider _strongly aligned_ to either Russia or Turkey...
I wouldn't count Hungary as part of the Balkans or if so, only small parts of it.
But last time I heard of Hungary their government was seeking stronger ties to Russia and McCain called the PM a Nazi and compared his policies to those of Hitler.
I can't imagine that anyone would currently see Hungary as tightly integrated and focused on a future in the EU.
Edit: I believe the future of Hungary will be sovereign and block-free.
But last time I heard of Hungary their government was seeking stronger ties to Russia and McCain called the PM a Nazi and compared his policies to those of Hitler.
I can't imagine that anyone would currently see Hungary as tightly integrated and focused on a future in the EU.
Edit: I believe the future of Hungary will be sovereign and block-free.
German scource in which the president of the ifo institute says that the Grexit is the best alternative for all involved parties. I heard him speak at talkshows and while his argumentation is a bit harsh, it made sense when I heard it.
Fact is, no one can prove that his stategy is the best alternative.
http://www.faz.net/aktuell/wirtschaft/eurokrise/griechenland...
Fact is, no one can prove that his stategy is the best alternative.
http://www.faz.net/aktuell/wirtschaft/eurokrise/griechenland...
The billion dollar question is, if the Grexit will be followed by Portexit, Spexit and Italexit at some point in the future.
My crystal ball says, if that's going to happen, the EU or at least the Euro will be toast.
My crystal ball says, if that's going to happen, the EU or at least the Euro will be toast.
As an Irish man, it makes me kind of proud that we have pulled ourself out of the mess enough to be rarely mentioned in such lists any more! We have a lot of problems, including a stupid housing market once again, high debts and exposure because of our export dependance - but i would sure rather be in our position than Greece's.
Ireland's is doing undeniably better than Greece. The numbers are still pretty grim though:
http://krugman.blogs.nytimes.com/2013/03/22/ireland-recovers...
http://krugman.blogs.nytimes.com/2013/03/22/ireland-recovers...
It's really not that clear that Ireland really has pulled itself out of its mess yet...
It pretty much is clear.
And it proves Krugman wrong so I guess since that 2 year old article with its disingenuous graph (sneakily shifting the y-axis to make the up tick look insignificant), he'll never mention Ireland again.
Irish GDP grew 4.8% last year - one of the highest in the EU. Unemployment is 30/40% less than peak (although still high at 9.5% but it's falling). The government deficit is falling faster than expected. So despite the fact that apparently "austerity doesn't work", it did for Ireland (and it looks like it's starting to work for Spain and maybe even Portugal and Italy).
Here are some more up-to-date economic numbers: http://www.rte.ie/news/business/2015/0312/686549-cso-gdp-gro...
And it proves Krugman wrong so I guess since that 2 year old article with its disingenuous graph (sneakily shifting the y-axis to make the up tick look insignificant), he'll never mention Ireland again.
Irish GDP grew 4.8% last year - one of the highest in the EU. Unemployment is 30/40% less than peak (although still high at 9.5% but it's falling). The government deficit is falling faster than expected. So despite the fact that apparently "austerity doesn't work", it did for Ireland (and it looks like it's starting to work for Spain and maybe even Portugal and Italy).
Here are some more up-to-date economic numbers: http://www.rte.ie/news/business/2015/0312/686549-cso-gdp-gro...
I remember the economics editor of the Guardian saying at the time of the euro launch "a bad idea who's time has come"
If Italy defaults then all hell breaks loose.
In theory, with a new drachma and its own central bank, Greece could devalue and gain competitiveness. But Greece’s trade is modest
Greece is the most enticing tourist destination in the world. It has everything .. history, culture, beaches, food etc. A devalued Drachma would draw an increasing portion of an industry that is poised for dramatic growth as more Indians & Chinese become rich enough to catch the tourist bug.
It's world-class shipping industry would also become more competitive against Korea, Scandinavia and Japan.
Syriza is not as "far left" as portrayed, and they are not as corrupt as previous Greek governments. Their finance minister, though he has described himself as a "libertarian marxist", has received strong praise from free-market institutions for various proposals.
https://en.wikipedia.org/wiki/Yanis_Varoufakis
The big problem for establishment magazines like the Economist has become, is that he dares to think for himself.
Greece is the most enticing tourist destination in the world. It has everything .. history, culture, beaches, food etc. A devalued Drachma would draw an increasing portion of an industry that is poised for dramatic growth as more Indians & Chinese become rich enough to catch the tourist bug.
It's world-class shipping industry would also become more competitive against Korea, Scandinavia and Japan.
Syriza is not as "far left" as portrayed, and they are not as corrupt as previous Greek governments. Their finance minister, though he has described himself as a "libertarian marxist", has received strong praise from free-market institutions for various proposals.
https://en.wikipedia.org/wiki/Yanis_Varoufakis
The big problem for establishment magazines like the Economist has become, is that he dares to think for himself.
Unfortunately tourist infrastructure determines how much tourism can grow and Greece already has 70-80% hotel bed occupancy so I don't see the scope here to prove a huge economic boost.
On the other hand, Greece imports energy, food, medicine and technology and those things will all have to be paid for with hard cash. The result of a 50% devaluation of the new Drachma will be a doubling in prices for basic life necessities.
It's clear to me that Syriza's policies have been and will be absolutely disastrous for the ordinary Greek person. Things may have been bad last year but at least there was a small uptick in GDP and employment and seemingly a small improvement in government finances. With a busted bank system, capital controls and no cash to pay for essential imports, I can see Syriza turning Greece into a fully failed state.
On the other hand, Greece imports energy, food, medicine and technology and those things will all have to be paid for with hard cash. The result of a 50% devaluation of the new Drachma will be a doubling in prices for basic life necessities.
It's clear to me that Syriza's policies have been and will be absolutely disastrous for the ordinary Greek person. Things may have been bad last year but at least there was a small uptick in GDP and employment and seemingly a small improvement in government finances. With a busted bank system, capital controls and no cash to pay for essential imports, I can see Syriza turning Greece into a fully failed state.
Why couldn't you build more hotel capacity? Anyway, airbnb should accommodate more and more visitors as well.
Some of those things, particularly medicine & food, are artificially high priced because you are in the EU:
http://www.firstwordpharma.com/node/1065529#axzz3ePfuiLQG
I grant it will be difficult for a year or two, but I predict you will be better off in the long run.
Some of those things, particularly medicine & food, are artificially high priced because you are in the EU:
http://www.firstwordpharma.com/node/1065529#axzz3ePfuiLQG
I grant it will be difficult for a year or two, but I predict you will be better off in the long run.
libertarian marxist
https://en.wikipedia.org/wiki/Libertarian_Marxism
The Economist is quite neo-liberal.
> Syriza, Mr Tsipras’s hard-left party, is anti-market and anti-enterprise.
Only if by "market" you mean no social security and zero-hour contracts, and by "enterprise" you mean a fire-sale privatisation of state assets.
> Syriza, Mr Tsipras’s hard-left party, is anti-market and anti-enterprise.
Only if by "market" you mean no social security and zero-hour contracts, and by "enterprise" you mean a fire-sale privatisation of state assets.
Politics are already devastated, for the simple reason that all governments pre-Syriza put the country in this mess to begin with, and then simply couldn't find a way out that didn't involve huge social strife. The EU should help the new government correct the situation, if anything because they were elected with a relatively large mandate to do just that, and they clearly have the brains to do it (they took a smalltime ultraleft party and brought it in government, they can't be stupid). Instead, EU governments are scared of... What exactly?
> Instead, EU governments are scared of... What exactly?
Their own electorate.
Their own electorate.
Expectations of popular opposition to debt relief for Greece are greatly exaggerated. There is exactly one electorate slightly contrary (the German one) and even then, it's mostly due to tabloids stoking the fires of casual racism, that evergreen topic. Anybody who knows anything about how the Euro integration process happened and how Greek finances ended up in this state, will admit that 0.01% of Europe GDP is a pittance to pay for the benefit to humankind that a stable Euro would deliver.
And I recommend reading this rather long, 4-part series from Der Spiegel for anyone who wants to know how we got to this point. http://www.spiegel.de/international/europe/the-ticking-euro-...
For longer, drier background reading, recommend "This Time It's Different." One key insight the researchers shared was that outright defaults (complete failure to repay) on sovereign debt are rare. The Soviets did it on the Tsar's debt, but usually what happens is that repayment is delayed. My guess is that Greece will do that rather than switching currencies. The exact terms depend on what their creditors will allow, but their creditors have a lot to lose from failure to reach agreement, too.
Official now, latest headline:
GREEK PM TSIPRAS SAYS ECB'S ACTIONS HAVE FORCED THE CENTRAL BANK TO RECOMMEND A BANK HOLIDAY AND CAPITAL CONTROLS
GREEK PM TSIPRAS SAYS ECB'S ACTIONS HAVE FORCED THE CENTRAL BANK TO RECOMMEND A BANK HOLIDAY AND CAPITAL CONTROLS
I'm not very well educated in this area, for anyone else like me, this infographic video really helped explaining the European Debt Crisis.
[0] https://www.youtube.com/watch?v=C8xAXJx9WJ8
[0] https://www.youtube.com/watch?v=C8xAXJx9WJ8
The first half was reasonable, the second half just bad.
It literally portrays Greek people as drinking grappa on the beach while hardworking Germans pay for their lifestyle. Greek people as immoral, Germans as respectable and responsible. That kind of cultural stereotyping is toxic.
It's also analytically bad. It argues the problem is fiscal irresponsibility, even though Spain had a budget surplus before the crisis hit. Spain was a model of fiscal responsibility (and was lauded as such), and yet they too went into a deep depression with 50% youth unemployment.
The video doesn't even mention the most important cause of the crisis: balance of payments between the north and south.
It literally portrays Greek people as drinking grappa on the beach while hardworking Germans pay for their lifestyle. Greek people as immoral, Germans as respectable and responsible. That kind of cultural stereotyping is toxic.
It's also analytically bad. It argues the problem is fiscal irresponsibility, even though Spain had a budget surplus before the crisis hit. Spain was a model of fiscal responsibility (and was lauded as such), and yet they too went into a deep depression with 50% youth unemployment.
The video doesn't even mention the most important cause of the crisis: balance of payments between the north and south.
Spain was wildly fiscally irresponsible in numerous ways.
Their total government spending went from $280 billion Euros in 2002, to $450 billion Euros just six years later in 2008. That's a 60% increase in government spending in six years.
The government premised their spending on the real estate bubble, which was floating their growth for years prior to the crash. The fall-out from that behavior of course was a tripling of their debt to GDP ratio in just seven years when the crash hit.
Their household debt to income ratio went from about 70% in 2000, to 125% by 2007.
Spain was living far beyond its means for years, with the bubble temporarily holding off the consequences of that behavior. They weren't being fiscally prudent, they were being fiscally irresponsible by spending as though the bubble would go on forever.
Their total government spending went from $280 billion Euros in 2002, to $450 billion Euros just six years later in 2008. That's a 60% increase in government spending in six years.
The government premised their spending on the real estate bubble, which was floating their growth for years prior to the crash. The fall-out from that behavior of course was a tripling of their debt to GDP ratio in just seven years when the crash hit.
Their household debt to income ratio went from about 70% in 2000, to 125% by 2007.
Spain was living far beyond its means for years, with the bubble temporarily holding off the consequences of that behavior. They weren't being fiscally prudent, they were being fiscally irresponsible by spending as though the bubble would go on forever.
Not so.
Spain's gov't spending to GDP ratio developed in the same way as the Netherlands:
http://imgur.com/I5AZaN9
Spain had a housing bubble, of course. And the housing bubble was the primary cause of the crisis. But there was a bubble in the responsible northern countries too. And in the USA. So it's not the case that Spain was an outlier in terms of fiscal responsibility.
Don't forget that Spain had a lower debt to GDP ratio than Germany at the start of the crisis:
http://krugman.blogs.nytimes.com/2012/03/07/finally-spain/
If Spain was irresponsible, then Germany and the Netherlands moreso. Private and commercial borrowing in Spain was a big part of the problem, but because the Eurozone has no trade barriers the government in Spain can't stop it. I'm not saying Spain isn't partially to blame for the mess, but it's not a case of fiscal irresponsibility.
Spain's gov't spending to GDP ratio developed in the same way as the Netherlands:
http://imgur.com/I5AZaN9
Spain had a housing bubble, of course. And the housing bubble was the primary cause of the crisis. But there was a bubble in the responsible northern countries too. And in the USA. So it's not the case that Spain was an outlier in terms of fiscal responsibility.
Don't forget that Spain had a lower debt to GDP ratio than Germany at the start of the crisis:
http://krugman.blogs.nytimes.com/2012/03/07/finally-spain/
If Spain was irresponsible, then Germany and the Netherlands moreso. Private and commercial borrowing in Spain was a big part of the problem, but because the Eurozone has no trade barriers the government in Spain can't stop it. I'm not saying Spain isn't partially to blame for the mess, but it's not a case of fiscal irresponsibility.
Yes, it is so.
Spain's total government spending increased by 60% from 2002, to 2008. That is a fact [1].
Spain's household debt to income ratio, increased from 70% to 125% from 2000 to 2007, another fact. [2]
Both are clear indications of fiscal irresponsibility. How could increasing total government spending by 60% in six years, be anything but? How could households taking on so much leverage so quickly, be anything but?
You reference the Netherlands, which has the most indebted households in the Euro zone, and is in the midst of a debt disaster. That's a really bad example [3]. Their GDP hasn't increased in nearly eight years.
[1] http://i.imgur.com/tSu2htA.jpg
[2] http://i.imgur.com/z8VUtFs.png
[3] http://www.cnbc.com/id/100905782
Spain's total government spending increased by 60% from 2002, to 2008. That is a fact [1].
Spain's household debt to income ratio, increased from 70% to 125% from 2000 to 2007, another fact. [2]
Both are clear indications of fiscal irresponsibility. How could increasing total government spending by 60% in six years, be anything but? How could households taking on so much leverage so quickly, be anything but?
You reference the Netherlands, which has the most indebted households in the Euro zone, and is in the midst of a debt disaster. That's a really bad example [3]. Their GDP hasn't increased in nearly eight years.
[1] http://i.imgur.com/tSu2htA.jpg
[2] http://i.imgur.com/z8VUtFs.png
[3] http://www.cnbc.com/id/100905782
I don't dispute the accuracy of your numbers.
Spain's household borrowing was unwise/irresponsible, no question about it. No good comes from a housing bubble like that. Of course, this housing bubble was funded by foreign banks. When people see an opportunity to live in a big house for cheap they just sign on the dotted line. That's human nature for ya.
Household debt in the Netherlands also way too high, although it's unclear whether it will become a disaster in any meaningful sense. Stagnant GDP caused by austerity. No surprise there. I specifically mentioned the Netherlands because they're portrayed as a responsible country, in contrast to GIPS countries.
Spain's labor costs also increased by 50% during the boom (http://i.imgur.com/pdHgmf4.png), so gov't spending had to go way up just to provide the same services. Besides, spending a lot of money for a couple of years is no big deal when the country doesn't have a big national debt, and Spain didn't. Doesn't mean Spain's fiscal policy was beyond reproach, of course. Ideally speaking a government should have anti-cyclical fiscal policy.
Bubbles followed by recessions happen all the time in Western Europe and the US, but the consequences are usually pretty manageable. When it comes to Spain the government was no more irresponsible, but because of the Euro they got pulled into a crushing depression.
If you want to argue that every modern government is irresponsible, fine. But if you want to demonstrate that Spain was fiscally irresponsible compared to the rest of Europe or the US you're going to need better stats.
Spain's household borrowing was unwise/irresponsible, no question about it. No good comes from a housing bubble like that. Of course, this housing bubble was funded by foreign banks. When people see an opportunity to live in a big house for cheap they just sign on the dotted line. That's human nature for ya.
Household debt in the Netherlands also way too high, although it's unclear whether it will become a disaster in any meaningful sense. Stagnant GDP caused by austerity. No surprise there. I specifically mentioned the Netherlands because they're portrayed as a responsible country, in contrast to GIPS countries.
Spain's labor costs also increased by 50% during the boom (http://i.imgur.com/pdHgmf4.png), so gov't spending had to go way up just to provide the same services. Besides, spending a lot of money for a couple of years is no big deal when the country doesn't have a big national debt, and Spain didn't. Doesn't mean Spain's fiscal policy was beyond reproach, of course. Ideally speaking a government should have anti-cyclical fiscal policy.
Bubbles followed by recessions happen all the time in Western Europe and the US, but the consequences are usually pretty manageable. When it comes to Spain the government was no more irresponsible, but because of the Euro they got pulled into a crushing depression.
If you want to argue that every modern government is irresponsible, fine. But if you want to demonstrate that Spain was fiscally irresponsible compared to the rest of Europe or the US you're going to need better stats.
In addition to gizmo's comment the story also seems unreasonable in another way. The very last chapter, starting at 10m18s, presents a false choice between establishing a fiscal union and pending doom. That union is modeled as the Frankfurt ECB office and is characterized as "The United States of Europe".
From the story:
"This brings us back to that fundamental division of monetary policy and fiscal policy. Ultimately, the euro area requires a fiscal union to match its monetary union, or neither. That is, there must be a political organization with authority to set fiscal policy within every euro area country. It must have the power to cut spending, raise taxes and set laws."
The authors of the story clearly believe that a fiscal union will solve all problems of deficit across the European union, but plainly fail to articulate why beyond presenting an animated hand which is cutting state spending.
From the story:
"This brings us back to that fundamental division of monetary policy and fiscal policy. Ultimately, the euro area requires a fiscal union to match its monetary union, or neither. That is, there must be a political organization with authority to set fiscal policy within every euro area country. It must have the power to cut spending, raise taxes and set laws."
The authors of the story clearly believe that a fiscal union will solve all problems of deficit across the European union, but plainly fail to articulate why beyond presenting an animated hand which is cutting state spending.
The worst thing is the duration of this. If you're a young Greek, like some of my friends, you're screwed. You either leave your family and go to a foreign country, or you stay and try against hope to get a job so you can start a family. Now it's been several years of this crap and it's going to leave a lasting scar on just about everyone who's old enough to remember it.
Whatever they decide, they should have decided it long ago. Go bankrupt, or get a (sensibly sized) haircut from the creditors. But decide before everyone's life is ruined living in a zombie economy.
Whatever they decide, they should have decided it long ago. Go bankrupt, or get a (sensibly sized) haircut from the creditors. But decide before everyone's life is ruined living in a zombie economy.
At this point, we can safely say that whatever the scenario, it's going to be very ugly for Greece and not only in the short term.
In Europe, there is little compassion for this country though, due to their reputation for laziness and huge tax evasion schemes. I actually remember my holidays there some years ago (beautiful country btw) - most things were paid in cash and in many grocieries I didn't even see a cash register.
In Europe, there is little compassion for this country though, due to their reputation for laziness and huge tax evasion schemes. I actually remember my holidays there some years ago (beautiful country btw) - most things were paid in cash and in many grocieries I didn't even see a cash register.
This sounds terrible but how should I invest to capitalize on this? Is there something on Vanguard I can throw some money at and be glad I did in 5+ years?
If you feel the need to ask on an Internet discussion board where you should invest to profit from $X, that's probably a good sign that you should just keep your money where it is. Flippancy aside, the most likely result is going to be downward pressure on stocks generally and European stocks in particular.
It's really hard to capitalize on this, because noone really know what's going to happen. The only thing you can bet will happen is an increase in volatility in financial markets, but I'm sure that the counterparty would take that into account and appropriately increase the price of volatility bets. The only thing you can really do is take a one-sided bet (e.g. short/buy Greek bonds), you win if you're right, lose if you're wrong.
Some think the modest rise in bitcoin prices is a consequence of the Greek difficulties. For example:
http://www.reuters.com/article/2015/06/16/us-eurozone-greece...
http://www.reuters.com/article/2015/06/16/us-eurozone-greece...
Bitcoin is not the solution for the Greek government, but could probably be the solution for the Greek people.
Why Greece Should Not Switch To Bitcoin http://techcrunch.com/2015/02/28/why-greece-should-not-switc...
Why Greece Should Not Switch To Bitcoin http://techcrunch.com/2015/02/28/why-greece-should-not-switc...
I really hope Greece does not cave in to ECB:s demands. Because if they do, it will spread first to Portugal and then to the rest of the EU. And I don't want to have to work until I'm 75, have my vacation weeks cut and my future pension decimated.
And I don't think the EU should interfere in how Greece wants to raise their state's income. If they think it is better to raise corporate taxes rather than decrease pensions, the ECB can't just say that's wrong and if you don't do as we say you won't get any money.
And I don't think the EU should interfere in how Greece wants to raise their state's income. If they think it is better to raise corporate taxes rather than decrease pensions, the ECB can't just say that's wrong and if you don't do as we say you won't get any money.
As far as I'm aware it wasn't so much the ECB that were worried about the debt sustainability of the latest greek proposals as the IMF, who felt that more of the gap should be filled with cuts to benefits as opposed to increases in taxes.
The problem with not "caving in" to the demands of their creditors is that if Greece defaults, it's likely to have serious consequences for the affordability of their pension arangements. Whether those are more, or less, serious than the consequences of acceding to the requirements of their creditors is unknown.
The problem with not "caving in" to the demands of their creditors is that if Greece defaults, it's likely to have serious consequences for the affordability of their pension arangements. Whether those are more, or less, serious than the consequences of acceding to the requirements of their creditors is unknown.
No, it was the ECB that decided not to extend Greece's credit because the government didn't implement the cuts they demanded. Maybe their government will lead them into ruin or maybe it will not. But it was democratically elected and has strong popular support. It's not the job of the ECB to bully other countries into doing what they think is best.
It is not my understanding (and I'd be interested to see where you get that from) that the ECB is the one demanding cuts. The EU and the IMF are the one's proposing the package, not the ECB.
...more of the gap should be filled with cuts to benefits as opposed to increases in taxes.
What's their reasoning behind this?
What's their reasoning behind this?
Because tax evasion is so rampant in Greece, the IMF reasons (correctly) that tax increases wouldn't raise anywhere remotely as much revenue as Syriza claims they would.
My understanding (which is purely derived from reading news sites FWIW) is that IMF view heavy tax increases as likely to reduce economic activity in Greece (i.e. companies will go elsewhere to do business) and that this would have a bad effect on tax receipts, so would be in essence, self-defeating...
Work until 75? Where do you see that? What we do see in Greece is hairdressers and policemen retiring at in their 50s and Germans have to work until 67 or 69 to pay for the Greek retirement age differences. What's needed is cross-eurozone retirement ages.
Portugal has 22 statutory leave days; Germany has 20; France (whose productivity is actually very high) 25. Being efficient does not mean being always at work - actually quite the opposite
It's not in fact the opposite, there's no strong data correlation either way.
The US has a high productivity rate. So does Japan, Australia, Canada, South Korea and the UK - all work long hours, all have high per hour output
The US has a high productivity rate. So does Japan, Australia, Canada, South Korea and the UK - all work long hours, all have high per hour output
It is interesting to speculate how the climate in Greece might be different if bitcoin had been more widely adopted there prior to this meltdown. No central control. No banks to close.
It is something that Greek officials joke about: http://www.reuters.com/article/2015/06/05/us-digital-currenc...
It is something that Greek officials joke about: http://www.reuters.com/article/2015/06/05/us-digital-currenc...
In some ways it might improve things in the short term as financial transactions could continue absent banking requirements, however in the long term I would suggest it would be a bad thing for the greek economy.
One of the major recurring themes of the greek economic problem, has been tax avoidance/evasion which has reduced the amount of money that the government have to support themselves.
With bitcoin's less traceable nature, it seems likely that it's introduction would make the job of efficient tax collection even harder, which would in turn cause even more problems for the greek economy.
One of the major recurring themes of the greek economic problem, has been tax avoidance/evasion which has reduced the amount of money that the government have to support themselves.
With bitcoin's less traceable nature, it seems likely that it's introduction would make the job of efficient tax collection even harder, which would in turn cause even more problems for the greek economy.
Recent events in the Silk Road criminal trials suggest that governments have the ability to trace BTC transactions to a useful degree--witness the guilty pleas of two former federal law enforcement personnel for enriching themselves via extorting bitcoin. Yes, it does take a different mind set from conventional banking records, but ultimately everything is recorded in the blockchain.
Those were 2 very specific cases, I don't think you can usefully extrapolate to a government level ability to track blockchain transactions to real identities, especially when one of the main selling points of bitcoin transaction is that (if done correctly) they cannot be tied to a real identity!
A blockchain is a tracing device by construction. Bitcoin is as traceable as governments want it to be.
The greek people have made it very clear that they want the euro. They don't even want their own currency and they certainly don't want bitcoin.
No banks to close.
MtGox was a bank that closed and never reopened.
MtGox was a bank that closed and never reopened.
What's crazy is that EU won't give Greece an extension for the referendum. The negotiations stalled over small issues like if they're going to raise the retirement age to 67 in 2022 or 2025. This all seems like political moves, the EU wants to force a failure of the leftist party and make an example of the country.
The problem with the extension for the referendum is that it would cost the ECB Billions of Euros in increased ELA support that would need to be provided (without capital controls this week, it's a fair bet that anyone who can get their money out of a greek bank, will get their money out of a greek bank).
when you have the ruling party actively campaigning for a No vote, that could be seen as throwing good money after bad, and at the end of the day the other member states will ahve to pick up the tab for any money that is lost if Greece defaults on their debts.
when you have the ruling party actively campaigning for a No vote, that could be seen as throwing good money after bad, and at the end of the day the other member states will ahve to pick up the tab for any money that is lost if Greece defaults on their debts.
I don't see it the same way. A referendum can be acceptable (but why so late and why behind the backs of the Eurogroup?). But what is not acceptable is that Tsipras is telling the public to vote No. Why would anyone want to extend loans to someone who does not want a deal to come through?
The EU is also free to tell the people how to vote, and they've already started doing this. But they don't like populism, they'd rather governments impose austerity via diktat.
Tsipras is telling the public that he does not support the agreement. The public will have to decide if they want to avoid the potential negative consequences of no agreement (exit of Euro, EU, ...) more than they dislike the agreement.
If they just wanted to have a referendum they could have planned this ages ago. Instead they suddenly announced it in the middle of negotiations, without even telling their own delegates. And then they set the date after the deadline and say they will campaign against it themselves.
To me this looks like either an attempt to stall for time or an attempt to shift the blame for to the EU, no matter what happens.
Why should the EU play along and extend the bailout any longer, throwing more good money after bad?
To me this looks like either an attempt to stall for time or an attempt to shift the blame for to the EU, no matter what happens.
Why should the EU play along and extend the bailout any longer, throwing more good money after bad?
This is a perfect reminder for everyone about how the fractional reserve banking systems works and where the limitations and risks are.
We as a society (all of us including the rich and the poor, the bright and the dumb) need to rethink how we allow the banks to (be it accidentally or not) destabilize a financial system only by the volume of its debt.
Some say capital controls are only of temporary measures but still, I feel that this is something which must be avoided by future rules and regulations.
https://en.wikipedia.org/wiki/Fractional-reserve_banking
We as a society (all of us including the rich and the poor, the bright and the dumb) need to rethink how we allow the banks to (be it accidentally or not) destabilize a financial system only by the volume of its debt.
Some say capital controls are only of temporary measures but still, I feel that this is something which must be avoided by future rules and regulations.
https://en.wikipedia.org/wiki/Fractional-reserve_banking
I don't understand the munchhausen syndrome-like attachment to the Eurozone that Greece seems to have. Are we not noticing some hugely important positive benefit from eurozone membership that Greece has enjoyed? Enough to virtually completely give up sovereignty and self-determination? Enough to subject the nation to foreign oppression by technocrats and bankers? How is it even a close question?
No exchange rates for trade are considered "hugely important positive" for all countries within the EU who are part of the Euro.
But yes, your other points sure are valid remarks and I bet those questions are being posed nonstop within .gr.
But yes, your other points sure are valid remarks and I bet those questions are being posed nonstop within .gr.
I'm really short on quality, direct feedback about what Tsipras is doing. All I can read about the topic is politics influenced.