>The difference is Chicago and Illinois can raise taxes and make appropriate cuts over the long term
Chicago, Illinois, New Jersey, federal, and most of the other governments will also be defaulting, just not by name because of course you have to prop up the bond markets. What has been happening, and will continue happening, is under investment in infrastructure, education, cuts to promised benefits (which is a default in and of itself), and inflating away a portion of it. Basically a continuous erosion of quality of life to keep the game going.
For example, California sends 180 billion in tax revenues to the fed while accepting approximately 30 billion in federal spending. In the EU this kind of thing occurs only in the single digit billions.
Are you trolling? What kind of mechanism does the EU have? How does Germany have such a high surplus if such a mechanism is in place?!
Germany should be running a trade deficit with the rest of Europe right now but it refuses to.
1. They knew what Greece was up to. 2. They facilitated it - or turned a blind eye. 3. They benefited from it.
I don't see how it's unreasonable for everyone to share the blame for this. Sadly the cost can't be shared as equally as the blame.
Because I'm pretty sure that greek governments decided all for themselves to pile up even more debt and falsify their records to hide it from the public.
Well. Yes. And even in your reformulation, it sounds like a fairly reasonable argument.
Do you really believe that? After all we have seen, do you think that Germany cares about the greeks? And they say Varoufakis is naive.
Greece has lost more GDP for more time that the states in the Great Depression, and you know what? there is not end in view to that. They can't do anything because they don't control their currency.
Everybody know that the debt never will be pay, but instead of facing that, they just "extend and pretend".
All the predictions of future growth from the Euro institutions and the IMF are wrong year after year, but they just keep doing the same. What was the definition of insanity again?
If you have an interest in Greece "being successful" you should check the facts again.
After one week of working on a stockbroking floor I was disabused of almost all the economics I learnt in school.
Ultimately, a shared currency with nations with such disparate levels of income and corruption just doesn't work out in real life like it does on paper. Arguably, Greece could have restructured its debt and engaged in inflation with its own currency and handled this much better, but that's not an option when you're wed to the Euro. Personally, I like the idea of the EU, but a shared currency is extremely questionable.
Credit ratings are just that, ratings, not investment advice and like all ratings should be understood to be of limited value. A nation state can hide quite a bit from organizations like Moody's and every election changes leadership, so there's no static "Greece." Instead its a handful of parties fighting for power with different agendas and goals and with differing levels of corruption and incompetence with a baseline being pretty bad to begin with. Heck even senior Moody's staff were warning investors about Greece and its dealings with Goldman[1]. You'd have to be a little thick to think that AAA rating meant no-risk. All investment involves risk.
I suspect the larger economies always saw Greece as their 'little brother' and countries like Germany had a sort of "Well, if we give them money, they'll build industry and catch up to us eventually," instead Greece blew it on pensions for people retiring at 50, questionable social programs, and other unsustainable and unwise spending.
I sense a high level of paternalism in general from other Europeans especially when I'm perceived as a native Greek when in Europe. Sadly, I think everyone would be better off if we were rougher with Greece and instead of seeing it as our tourist-friendly 'little brother,' but instead as our dishonest and thieving neighbor. I hope this current crisis has changed perception and paternalist attitudes in Europe and made everyone think about the limitations a shared currency creates.
[1] http://www.nytimes.com/2010/02/14/business/global/14debt.htm...
In 2008, Goldman helped the bank put the swap into a legal entity called Titlos. But the bank retained the bonds that Titlos issued, according to Dealogic, a financial research firm, for use as collateral to borrow even more from the European Central Bank.
Edward Manchester, a senior vice president at the Moody’s credit rating agency, said the deal would ultimately be a money-loser for Greece because of its long-term payment obligations.
Referring to the Titlos swap with the government of Greece, he said: “This swap is always going to be unprofitable for the Greek government.”