- Spanish banks lent to overpriced real estate: The spanish people got austerity with the Spanish bank bailouts

- The German/french banks lent to a state they knew to be weak: The greek people got austerity with the German/French bank bailouts

Greek here. This is an understatement. While I’ve mentioned in other posts that our economy is faulty, arguing that we didn’t do anything to fix it is awfully wrong. We did a lot. We managed to move from a 14% deficit to a 1% surplus in just four years. Four. Fucking. Years. No other country in the developed world has done such a feat in such a short time. The effect of that was tremendous for the population, 50% of young people are unemployed.

So while we admit our wrongdoings (well at least some of us do) we’d also appreciate if EU could cut us some slack. The reason radicals like Tsipras came into power is the lack of flexibility from EU leaders.

The tip of the iceberg is the report that was published last week from IMF that pretty much described the Greek dept as unsustainable. The report was known to various EU leaders for months but they chose to suppress it. I don’t need to tell you how this looks from our side. It’s preposterous to say the least. They say they don’t trust our government, and I don’t blame them for it, but how could anyone trust them. They’re all cunts.

yep, man, those sacrifices would mean that some bondholders in Germany will get their half-percent... I'm really feeling for your people - i myself lived through pretty devastating (or as it happened - transforming) years 25 years ago in USSR/Russia and such things are brutal to regular people.

Anyway, just compare - having your own currency, you could have covered the 14% deficit just by printing those money - it would have caused a few percent of inflation, like 5-6%. Few years ago US had like 3 times bigger deficit than that Greece's deficit (and FY2014 US deficit is about the same as Greece's) and just kept printing the money with official inflation less than 2% or something like this. And unemployment situation is among all times best today.

Perhaps most glaring is the ECB's current Quantitative Easing effort to the tune of 1 trillion euros, buying assets and bonds in every country but greece [1]. This devaluing of currency is paid for by all users of the Euro, including greek. And yet it is used to prop up the same banks and countries greek lends from on conditions of austerity?

1. http://www.ecb.europa.eu/mopo/implement/omt/html/index.en.ht...

Please tell me you were making a joke.

Trying to collect WW2 "debt" from Germany? Using "insulted dignity" as an argument in financial negotiations? Deliberately setting up the referendum after the deadline and then "pleading" for extension? Really? He is pulling all the stops, granted, but they are nothing short of sleazy and obnoxious. If EU are to cave in, it would basically mean that EU is susceptible to blatant manipulation. So they won't.

The only way out of this mess is for the referendum to resolve with Yes, for Tsipras to step down and his replacement to agree to whatever the last EU proposal was. Tsipras tried the unorthodox approach and it didn't work, not much left he can do now but to leave.

The second debt relates to an official loan that Hitler took in gold from our central bank. It is documented and is considered a state loan. We have every fucking right to claim it. It is somewhere between 8 and 12 billion Euros by today standards.

By the way, back in 1954 the Greek government agreed to write off a big part of the German debt owed to us [1]. Those are state loans completely independent to war reparations. So while we did it for them they deny it to us. And we did it while our economy was in a far worse state than German economy is today.

The problem we have with Germans is that they’re ungrateful pricks.

[1] https://en.wikipedia.org/wiki/London_Agreement_on_German_Ext...

Incorrect. West Germany paid 115 million Deutschmarks to Greek victims of Nazi crimes in 1960 (a lot more than the $45 million reparations that were demanded by the 1947 Paris Peace Treaty), while victims of the forced labour camps were also compensated individually.

Shame on you for spreading bald faced lies.

http://www.truth-out.org/speakout/item/24456-the-math-of-mas...

Concerning Greece remaining in the EU and the Euro, you do have a choice. It would be short-sighted to expel Greece. You see, everybody just has to learn their lesson. In the future, don't let your commercial banks buy too much Greek debt paper, because you will end up paying instead. It takes two to tango. There's no point in blaming just one side of the equation. The other side is responsible too.

Greece doesn't sure. But the Greeks do. That is at the very heart of this situation.

There is a Greek proverb saying that when too many roosters sign the dawn comes late.

But there are deeper issues too. What the creditors really want is to micromanage Greece while they do not understand our economy and culture. They want to change everything in a couple of years. Change takes time, you can't turn a Greek into a German or an American in 3 or 5 years.

In order to do this and protect their interests, they support the previous, crooked goverments. These people acted like lapdogs, signing everything the creditors threw at them, whilst implementing only what didn't touch their rich friends.

The creditors did not only got binding agreements through them but also protection. Siemens for example, the German conglomerate that accounts for a large percentage of Germany's GDP has spent over 2 billion euros (!) in bribery to Greek politicians and public servants. If this case ever reached the court, both our politicians would face jail and Siemens wouldn't be able to work with the European public sector again (think from traffic lights, to trains, hospitals, energy, etc). Thus the creditors prefer a goverment that looks like an obedient and honest goverment, whilst it only applies austerity measures for the weak and protect themselves.

Our new goverment seems genuinely interested to make things better, but it asks for the freedom to implement their own ideas in order to reach the targets set by our creditors and also a debt restructure so that our debt becomes sustainable.

You mentioned the Siemens scandal for example, by the way your numbers are off by an order of magnitude. This is a typical example of a cover-up from our part. We let the key witness escape to Germany where he is protected from extradition. It’s not their fault, we shouldn’t have let him leave in the first place. Taking responsibility for our mistakes would be a first step in overcoming our inefficiencies. And the previous government was anything but obedient, as a matter of fact all three governments that were called to implement reforms resisted as much as they could.

So please, let’s just stop the speculation about EU wanting to rule Greece through puppet governments. I’m sure they have better things to do.

      Siemens for example [...] has spent over 2 billion euros (!) in bribery to Greek politicians and public servants. 

[1] https://en.wikipedia.org/wiki/Siemens_Greek_bribery_scandal

As an american tax payer it hurt to watch bank bailouts here. In europe I keep hearing countries names, but this is a bank bailout fundamentally.

Sticking the debt on national governments while also forcing austerity ( defacto shrinking of GDP ) leads to a lose:lose.

While I am quite willing to lambast the banks in the states for the mess they got into I am not so willing to do so with regards to their lending to Greece. Someone would have stepped forward regardless because state actors are supposed to function properly with fiscal restraint when its apparent their economy cannot sustain their spending.

The real fault here is the past and current Greek administrations which decided to pass the buck to the point we have a new government which is effectively trying to blackmail the EU.

The IMF is pulling back because they were overly generous giving the Greek government far more support that rules generally permitted. Under normal conditions the rule is 200% of a countries quota which is based on each countries contribution to the IMF with a 600% cumulative total. In 2010 Greece got a 3208% (three thousand two hundred an eight) percent infusion.

Greece has the highest military spending vs GDP of any NATO nation second to the US. What the IMF and EU lenders and such have done is force Greece to raise taxes to the point its near impossible to do business. Forcing many out of the legal economy if not out of Greece itself. This is the fault that can be assigned to IMF and others.

Basically the businesses and people of Greece are paying a tax load so high that profit and therefor growth is nearly impossible.

Then there should never have been a single currency. This is a case of wanting to eat their cake and have it too.

>While I am quite willing to lambast the banks in the states for the mess they got into

Doesn't sound so much like you are, actually. Where is all the hate for Commerzbank for lending money to Greece and then shifting all the losses on to the German government?

>I am not so willing to do so with regards to their lending to Greece. Someone would have stepped forward regardless because state actors are supposed to function properly with fiscal restraint when its apparent their economy cannot sustain their spending.

Everybody is supposed to act with restraint when it becomes apparent that they cannot finance spending.

Nonetheless the Greek government that got Greece into this mess is long gone (and I don't hear you calling for their members to be imprisoned on charges of fraud and negligence).

>Basically the businesses and people of Greece are paying a tax load so high that profit and therefor growth is nearly impossible.

Businesses didn't get that bad a deal out of austerity. They got to cut their wage bill in half and their tax bill still hasn't really budged. So they're the first people you feel sorry for?

Not compensating economically weaker countries in a currency union is completely unjust and immoral. Weaker countries give up the ability to control exchange rates. And they have to deal with trading in stronger currency than they would if they were going it alone. This makes their exports relatively unattractive.

> The IMF is pulling back because they were overly generous giving the Greek government far more support that rules generally permitted.

I think the IMF is pulling back because they can't stomach this crap anymore.

> Greece has the highest military spending vs GDP of any NATO nation second to the US.

Right so French and German defense contractors bribed previous Greek politicians to buy weapons systems on credit. And the ECB etc are dead set that that part of the Greek budget continue as usual.

Right.

There are no "previous Greek politicians": Greece is a sovereign state that elects its own leadership. That sovereignity comes with responsibility, too. So, in the end, people should think more when voting, not blame others...

> According to investigative reports that appeared in Der Spiegel, the New York Times, BBC, and Bloomberg News from 2010 through 2012, Blankfein, now Goldman Sachs CEO, Cohn, now President and COO, and Loudiadis, a Managing Director, all played a role in structuring complex derivative deals with Greece which accomplished two things: they allowed Greece to hide the true extent of its debt and they ended up almost doubling the amount of debt Greece owed under the dubious derivative deals.

source: http://wallstreetonparade.com/2015/06/goldman-sachs-doesnt-h...

So, EU and IMF didn't catch that, they lent money in a stupidly criminal way and now they want it back at any cost to Greece. They lent Greece money when Greece didn't need it, and now request it back when they are down.

Of course Greece bears the brunt of blame here, but collective punishment at the level of a country is cruel. There are lots of innocents paying now for the financial dealings of the older generation.

It's sad to see EU reduced to this kind of relationships between us. Maybe EU isn't ready to exist as it is. They allowed countries into the union and Eurozone that didn't need to be there. Instead of having a corruption-reducing effect, corruption was allowed to go on without scandals for years. EU should have had a civilizing effect on its poorer and more corrupt countries. As it is now, it's a money-shark.

The EU was never meant to be a currency union either, it was a trading bloc when the UK signed up to the EEC.

But it was not a productive business, anyway.

The Greek government runs a primary budget surplus.

http://www.wsj.com/articles/greece-misses-target-on-budget-s...

Just not one large enough to satisfy creditors. That means, without the debt payments, Greece would be free and clear and wouldn't have any budget issues. The only reason Greece needs 'constant infusions of cash' is to pay off these debts, which becomes more difficult as more austerity is demanded.

Most of the recent infusions of cash were part of the ELA -- so /not/ to pay off debts but to compensate for illiquid (or insolvent...) banks and the stave off bank runs.

The debt payments are /not/ in any way big or difficult -- the EU took over most of the debt and in the process forced through a large haircut on the debt + Greece got artificially low (very low!) interest rates + enormous maturity extensions. Greece also got (much) deferred payments for that debt, especially for the interest.

What you call "necessary changes" actually turned out to be "bad changes", and everybody with a grain of salt would say there was no way they could get Greece up again on its feet.

Greece, like many other countries, messed up or not, began sinking after joining the Eurozone. One may wonder a bit before blaming them.

I wish more pro-Eurozone people would consider this one. The creditors were very plainly less concerned with getting paid back than they were with waging a brutal class war.

This is a classic principal/agent problem. The Troika negotiators are not playing with their money, they are playing with taxpayer money. Hence the debt is more of an excuse to push for the reforms that their friends want, irrespective of the very real negative effect it has on Greek solvency.

This, if for no other reason, is why the debt should never be paid back.

As the wise man says: doing the same thing over and over, and expecting a different result, is insanity.

But since they didn't default, and instead the banks holding the bad debt were bailed out indirectly though loans to Greece (a tiny fraction of which remained in Greece, mind you), national income did shrink by 1/3 because of many of the changes that the institutions insisted take place _did_ take place. Now the likelihood of those loans getting paid back is as close to nil as non-failed state can get. So, to look to the future rather than the past, everybody should be trying to figure out how to repay the institutions as much money as possible. Shrinking national income further isn't going to do that.

With respect to the "completely bogus referendum", not gonna bite.

Greece's debt was restructured to be drawn out into longer payment terms at a lower interest rate and at a reduced principal to be fair to them and to prevent a financial collapse.

It's containment. It's been 5 years of containment now, and it's working to some extent as nations within the eurozone are much less exposed to the greek situation than they were 5 years ago.

Check this prescient article from 18 years ago by one of the best macro minds of recent years (Rudi Dornbusch):

https://www.foreignaffairs.com/articles/europe/1996-09-01/eu...

He talks about excluding Italy, Portugal, Greece, Spain, etc. So what happened? Standards got relaxed and they accepted e.g. Spain. And then other countries completely falsified their numbers and also got in due to that (Greece).

I don't even know why are they still thinking about keeping Greece in the Euro. They don't even have the internal political capital to make the deep reforms they need (labor mkt reforms, an IRS with bite, retirement at a much older age, etc). It would have been better for everyone on the first place to assume Greece will devalue, and to start planning for that.

They default, have maybe half a year of real pain, and then they get back on their feet albeit with financial autarky.

As for your question. If Greece leaves the Euro then it is the end of the euro zone. When Florida was going to default the federal reserve paid for them. That way people has confidence in the dollar. If when a European country is going to default every body screams and runs people knows that they shouldn't have any confidence.

Like they did with the EMS. https://en.wikipedia.org/wiki/European_Monetary_System

It didn't work at the time, they now wanted to make it forcibly work (again). Something is not right.

No. Greece is too small for its default to be that important, especially given that the vast majority of debt is actually now in the hands of governments and government institutions.

The mismanagement leading up to the financial crises was of course the fault of the Greek government. However, the reforms that the EU has proposed/enforced since then seem to have been more about punishing the Greeks than about actually building a properly functioning economy. That might feel justified (and because of that it has the support of many voters) but long-term it is not a viable solution to the problem.

Greece is hosed because, as the article points out, it is an incredibly screwed up and corrupt country. The EU is desperately trying to make it a few percent less screwed up, and mostly getting nowhere. Greece absolutely isn't hosed because of those awful European creditors who deserve to be punished for their naive belief that maybe Greece would improve.

I mean, just go take a look at the garbage that has been pouring out of Greece and ordinary Greek people about German in recent times. Allusions to Hitler seem to fall from their mouths every single day. The idea that maybe Germans should not be paying for Greeks is not fascism, yet they routinely act as if it is.

Greece has no real alternative but to adopt severe reforms and that means severe "austerity", whereby "austerity" of course what people mean is shrinking the Greek state to a size more appropriate to the size of its economy.

Germany isn't paying for Greece, it (well the troika but Germany is significantly calling the shots) is effectively governing Greece by a series of manufactured crises every 6 months in which they can impose conditions (detailed policy requirements on internal issues including pensions and taxes) for the next payment (which is 90% transferred to creditors rather than going to Greece itself).

Whether fascism is the right word or not there is something profoundly undemocratic about the situation and there are several valid comparisons with fascism. Singling out a groups as scapegoats for all blame and the aspect of collective punishment. Sensible people trying to maximise the return on their loans would restructure them to take some loss but to enable Greece to recover to be able to pay the bulk of them. Instead the focus seems to be punishment for irresponsible lending.

    Singling out a groups as scapegoats for all blame and the aspect of collective punishment

   Germany isn't paying for Greece

    Sensible people trying to maximise the return on their loans would restructure them to take some loss but to enable Greece to recover to be able to pay the bulk of them.

   there is something profoundly undemocratic 

That is demonstrably NOT what the IMF says. Quite the contrary, in fact.

http://www.forbes.com/sites/timworstall/2015/07/03/tsipras-i...

http://www.newstatesman.com/blogs/world-affairs/2012/05/expl...

61.7 for Greece, 60.9 is the EU average.

But it has to happen in a way that doesn't completely destroy the economy in the process.

Greece has a perfectly workable alternative in a Grexit. It would help them enormously and not require austerity but there are political reasons that won't allow it.

If Greece was using the drachma, this would not be a problem.

The other problem with austerity measures is that they have a tendency to inhibit growth or even shrink the economy; shrinking the government further certainly doesn't help that situation.

EDIT: I forgot to add that Greece has a primary budget surplus - meaning that if it wasn't for the debt they owe, they'd be doing fantastically budgetarily.

On top of that, would Greece leave the EU? There's a lot of greek living and working abroad under the EU residence/work rules. Would such a vote not be perceived as a "No" to europe, effectively pushing greece out of the EU at least on a temporary basis?

I'm not convinced that the Grexit is a workable alternative in a larger context.

As I added in my edit, Greece has a primary budget surplus. There would be no ongoing deficit.

Existing debt would be paid off with the expedient of default and currency devaluation, just as other countries have historically done. A little rough patch and then things look up. Seems a much healthier alternative than decades of economic suffering due to more and more austerity and the consequences thereof.

> there's no infrastructure to print new bills

I can't imagine that is a very hard problem to solve.

> On top of that, would Greece leave the EU? There's a lot of greek living and working abroad under the EU residence/work rules. Would such a vote not be perceived as a "No" to europe, effectively pushing greece out of the EU at least on a temporary basis?

Does leaving the Euro mean leaving the Eurozone? That's an honest question. I don't think it does, but I've heard this said before.

On your final point, I don't disagree: at least right now leaving the Eurozone is politically untenable. But I suspect that economically it might be the most sensible thing to do, and not just for Greece. Unless Europe forms a real fiscal union, this kind of madness will happen over and over.

All current debts are held in EUR or other foreign currencies. Currency devaluation won't help with the existing debt. I doubt a single creditor would accept exchanging EUR denominated debts to New Drachme.

> I can't imagine that is a very hard problem to solve.

Even the greek finance minister considers that a major roadblock.

> As I added in my edit, Greece has a primary budget surplus. There would be no ongoing deficit.

Greece had a primary surplus, it's tethering on the edge of not having a surplus any more. Greece desperately needs money to invest and kick-start its economy. And then there's still the IMF debt and the IMF always wants and gets its money. Even Argentina treated the IMF debts preferential. Who would step up and cover that?

However, I think it would be possible for the EU to agree to amend the contracts to allow Greece to leave the Euro while staying inside the EU, if Greece so wishes.

Greece, and Greeks, do have money. I am not sure what you mean. It's not as if Greece is the only poor country which imports most of its food.

Food prices have already been skyrocketing. As the article points out, austerity has tanked the Greek economy despite repeated predictions by European 'experts' that any minute now, austerity would cause Greece to turn a corner. Why do you think food prices would get substantially worse?

Its not "perfectly workable" in a country that imports >>50% food, has practically zero foreign currency reserves, and is already considered a bad lender.

What's the retirement age of the other people in Europe, excuse me?

62 like in Germany? 67+ like in Italy?

> Greece is hosed because, as the article points out, it is an incredibly screwed up and corrupt country.

Japan is often ranked as the most corrupted country in the world, but still is going fine. It resisted many crises, and it's one of the most powerful economies in the world. You may guess that corruption is not part of the equation then. Isn't USA corrupted? Isn't China? The whole idea that economies fall down because of corruption is non-sense. As long as money stealed by corrupted people stays in the country the economy does not suffer that much. Corruption issue is about social justice more than everything else.

[Citation needed]

I searched for "most corrupt countries" and pulled up the first dozen-odd resulting pages. Not one of them mentioned Japan.

Certainly by no means one of the most corrupt, though.

What part of the reform is actually punitive?

The history of the Greek land registry is kinda hilarious btw...http://openeurope.org.uk/blog/reforming-greece-easier-said-d...

Those misrepresentations were discovered when the Troika started to investigate Greece's financial state.

The notion that no-one knew the Greek government was lying about the state of their economy until it was too late is ludicrous on its face.

It doesn't excuse the largely international banks a la Deutsche, but it does explain the Germanic outrage.

Russia, France, Britain, and the US should have paid reparations to Germany, not the other way around.

Why? Because Germany /didn't/ start the war. It just ended up as one of the losers.

Germany had huge territorial losses after both wars, parts of Germany were under forceful occupation for a long time afterwards, and they paid heavily in terms of manufacturing equipment and money afterwards. I'd say they paid.

> Why? Because Germany /didn't/ start the war. It just ended up as one of the losers.

It also didn't blame Germany for starting the war but for the damage caused by German troops.

https://en.wikipedia.org/wiki/Article_231_of_the_Treaty_of_V...

It's neither Anglo-Saxon nor German. It's a creditor perspective.

The same perspective that brought us debtor's prisons, and even (in Roman times), the notion of bankruptcy meaning "selling yourself into slavery".

Also, from 2004, long before any Troka: "Greece admits fudging euro entry"

"Katinka Barysch, chief economist at the Centre for European Reform, said the announcement would not be a surprise for Brussels insiders.

"Quite a few member states did something similar because of the political imperative to join the euro as soon as possible. Greece has just gone a bit further," she said."

http://news.bbc.co.uk/2/hi/business/4012869.stm

The idea that Greece simply fooled everyone is nothing more than propaganda.

Not until the Goldman Sachs executives who helped misrepresent their finances are doing the perp walk, no.

The responsible states in Europe all benefited from the excesses of countries like Greece, so they let the good times roll.

The implication is that Greek's issues were used as a scapegoat for a systemic problem.