Your money went mainly to your Banks, via Greece.
Concluding, I'd rather go back to the Drachma and blow the Euro project than die starving becuase it suits your country's political class.
ps. Even if Greece doesn't put the last nail on the coffin of the EU-project, I'm 100% sure that the UK will.
These bailouts in the past were signed from the greece government in the best interest of its people. A lot of people make it seem that we (non-greece european) somewhat forced theses agreements onto greece. In fact these bailouts where were unpopular in Germany, because it cost us a lot of our money, we could have spent on infrastructure, education, etc.
Therefore I would love Greece to give up the Euro currency and leave the European Union, so that these other 18 countries don't feel any obligation anymore to transfer more money to greece.
I believe that Europe will be stronger that way. Because a vision of a truly united European Union can only be reached if all countries play by the same rules and abide to their agreements.
Also "Greece" is not a single entity. Making Greece pay does not mean making the people that created the debt pay - it means taking the available money and you should know that "available money" is generally not rich people money.
So yes, you are right that you do not want to reward such behaviour. Letting the actual responsible get away with it and punish somebody else is not the way to do it though.
Besides - why should other countries be equally or more responsible for Greece's problems than the people of Greece themselves? It just doesn't make any sense.
There is no abdication of responsibility in a democracy and the Greeks should know that better than anyone.
AFAIK there are countries (NL?) that traditionally could not elect self-contained governments so parties were forced to cooperate with other, which in turn created politics of accommodation. I think this is healthier than blocking minorities out of parliament.
Syriza got elected with 36.3% back in January, while ~64% of Greeks voted.
Also, what happens if a voter agrees with none of the choices (parties)? Is he responsible for what their government does? (Legally yes, that's democracy, but ethically he should be given the right to object)
Oh, let's not forget that Greeks leaving outside Greece (some say we're another 10mil out here) were not given the chance to vote neither in the elections or referendum. We had to travel back to do so...
> The point of democracy is that the people appoint representatives to act on their behalf
in a perfect world, yes this should happen. But look around, the system isn't perfect. Look at america, money buys power. The money isn't evenly distributed. The system is broken.
You get history sadly backward. The no abdication of responsibility is what dragged the world in 2 world wars and what Europe is supposed to fix.
Typically a system works okish if only the people at the top skim, because they are rather few. If the rest starts showing the same behaviour, that's when the system crashes.
That's not how that works though. People one level under the top will try to get their cut too, then the level under until you get to the bottom. The system is ok-ish if the overall level of corruption is somewhat reasonable. In the case of Greece, the amount of corruption at the bottom level is not the cause, but the symptom of the fucked up state all the way up.
Now, there is a difference between the top and bottom. The whole bottom level is creating a black economy. Not as good as a regular market, but something that self sustain itself. See Greece pre-euro.
The few people a top though are the one that forged the accounts of Greece and pushed the country in its death spiral.
Perhaps everyone in Germany would be better off still re-paying that 50% that was just removed.
I wonder what the EU expected.
The Euro was primarily a (french) political project to weaken Germany following reunification. This is strongly reflected on the ECB's board, where Germany has the same number of votes as Malta! In order to sell the Euro to conservative Germans who feared a "Transfer Union" (where they would perpetually have to bail out certain states that shall remain anonymous with a reputation for fiscal improbity) some vague promises were added about debt levels. But the promises were not accompanied by any enforcement mechanisms and soon fell by the way-side.
I used to ridicule Eurosceptics, seeing them as dinosaurs who are on the wrong side of history. But to my consternation, I have to accept now that most of their worst fears have come to pass.
As a historical aside, it is noteworthy that about a century ago a similar scenario played out: Greece (and others) crashed the Latin Monetary Union [1], a 19th-century attempt to unify several European currencies into a single currency that could be used in all the member states, at a time when most national currencies were still made out of gold and silver. It was established in 1865 and disbanded in 1927.
European taxpayers aren't going to be willing to permanently transfer money to a country if they feel some of the government's problems are caused by widespread tax evasion.
[1] https://en.wikipedia.org/wiki/Greek_Financial_Audit,_2004
The risk/reward curve is the fundamental idea of investment. If we privatize reward but nationalize risk, the cost of bonds/mortgages/etc. will never reflect reality. I shudder to think of a system where governments are implicitly assumed to insure everything that's "too big to fail."
Do you feel an obligation to pay for the debts of Greece? No? Then why would a German, or me as a Dutchman feel such an obligation?
As a result, we don't have to "bail out" Mississippi so much as continually pay for its mismanagement.
And so, again, isn't "paying for mismanagement" part of what you sign up for when you try to unify Europe?
No, you tried to do that 203 years ago, but we burnt down your White House.
I'll give you that you unified somewhat less than half of the continent though. ;-)
In other words, if you ask whether the EU aims for a single financial and regulatory regime the answer is "yes and no"
Very few current EU countries signed up for a "unification of Europe", it started as a trading bloc and escalated from there.
For the Euro to work, the rich member countries must be willing to accept massive transfers from countries like France and Germany, to the Mediterranean countries. In addition, the ECB must be a lender of last resort.
Seeing as none of these criteria are currently (formally) met, the Euro can't function. The only way it could work was if the economies of the member states quickly converged. They didn't.
As for Germany... as Piketty told Die Zeit, Germany never repaid its debts and has "no standing to lecture other nations." They're hilariously wagging their fingers at far more responsible people. (https://medium.com/@gavinschalliol/thomas-piketty-germany-ha...)
What that implies to external financing negotiations is that even if Greece's debt is forgiven (economists from across the spectrum seem to agree this should happen), unless Greece adjusts its fiscal policy --- inconveniently, to something more akin to what Germany is demanding --- the bailout just delays the inevitable.
What do you think about points like: "I am much more afraid that the conservatives, especially in Germany, are about to destroy Europe and the European idea, all because of their shocking ignorance of history. [...] Look at the history of national debt: Great Britain, Germany, and France were all once in the situation of today’s Greece, and in fact had been far more indebted. The first lesson that we can take from the history of government debt is that we are not facing a brand new problem. There have been many ways to repay debts, and not just one, which is what Berlin and Paris would have the Greeks believe."
Or how about the fast way for a state to leave delinquency: "Germany proved it in the 20th century. Essentially, it consists of three components: inflation, a special tax on private wealth, and debt relief."
Have you read David Graeber's book which he recommends elsewhere ("Debt: The First 5000 Years") which covers how debt is just a promise, and it's fetishized (more than say promises from politicians to their constituents) when it's a promise from the weak to the powerful?
I'm not moralizing debt. I am, however, according sovereign states and their constituent organizations the agency to decide whether or not to finance other sovereign states.
However much honor you accord to debt service, the prospect that (expensive) debt forgiveness will simply generate the need for more debt forgiveness in the future is actually material to the question of how to finance Greece.
(I am, in this instance, parroting something Tyler Cowen wrote yesterday; not that I agree with Cowen on everything [I'm not a libertarian].)
As for Greece's finances, that's exactly what the negotiations are about. A political issue. (After all, money is a purely social construct, not some law of physics. Underlying it is power relations and violence.)
Greece isn't simply arguing that, morality being relative and all, they've decided not to pay back their debts.
They are demanding more money from their creditors. It seems like they have to: they're running a primary deficit; they're losing money even before you take debt service into account.
Whatever the moral dimension of paying back their debt is has nothing to do with the question of whether Germany (ie, the EC) or the IMF (to whom Greece just defaulted) or the ECB (which doesn't want to be in this particular lending game to begin with) is going to give them more money.
If Greece can't persuade the EC, IMF, or ECB to lend them more money, it's doesn't look like they can just walk away from this whole scenario. "Oh well! Debt is just politics and morality!" That might be true, but if they want to allow people to retire in their early 60s, or pay half the nominal tax rate, or not regressively tax the poor through punishing VAT increases, they're going to need to convince someone in the world of some kind of compatible morality, right? They require additional financing, don't they?
The current hovernment wants to add at least 30% debt reatructuring (which Germany says it s off the table) and pay back only when reasonable primary surpluss has been achieved.
I think the history is full of misinterpreted debts, especially Germany's (Versailles > WWII...)
But I think one basic understanding of debt should not be discredited:
There's a difference between ...
- A debt that was agreed upon by both parties in a free market (Greece defaulted on that in 2012)
- A debt that was agreed upon by both parties's representatives as an act of embezzlement - i.e. favoring Europe's banks/Greek oligarchy (Greece is about to default on that right now)
- A debt that was agreed upon by the winners of a war over a defeated country
You can say what you want about a "level playing field" not being in place when battered Greece gets to negotiate with its Creditors, but even trying to compare that with a war-looser situation is disingenuous.
Enjoy the reading. Oh feel free to share the take-away.
Does the term European Union mean anything to you? Does the term common currency mean anything to you? If Greece fails, Do you really think Germans won't suffer any consequences?
Piketty: "When I hear the Germans say that they maintain a very moral stance about debt and strongly believe that debts must be repaid, then I think: what a huge joke! Germany is the country that has never repaid its debts. It has no standing to lecture other nations.(https://medium.com/@gavinschalliol/thomas-piketty-germany-ha...)
Greeks make nearly nothing that anybody wants, but they want the goods everyone else makes. They are not adjusting themselves to the realities of the modern world. You want cell phones, computers, cars, shoes, t-shirts, refrigerators ... all these things ... but you want to not actually make anything ... just sit at desks in secure government jobs doing nothing productive. This has to stop.
But politically there is no will to stop it, because people there don't seem to understand that secure, easy jobs for life, where you don't make things, don't actually create wealth for the country. They think jobs are some thing where you just show up in the morning for work, do some paper shuffling and go home at night. And get your secure paycheck from government.
How do we change this attitude? The same attitude is in India's public sector too. The way is you have to cut off the money faucet for the government.
If the issue is poverty in Greece ... then let Europe provide basic needs for the Greek citizens as they reorganize the country. But feeding the Greek bureaucracy really shouldn't be done. Also continuing to perpetuate this attitude towards what employment is and what jobs are should also not be done.
You should have. It would have been better for Greece if the former Greek government had not been strongarmed into being the fall-guy for a rescue programme for French and German banks.
Is it better for Greece to give up the euro and return to the drachma? Quite possibly. Iceland successfully rebooted its economy after the financial crisis (with a lot of pain involved) because it was not tied to the euro. Of course, that required a huge amount of willpower and effort (which Greece has not shown yet).
Is it better for the EU and the rest of the world for Greece to give up the euro and return to the drachma? Probably not. Why? Because it sets a precedent for giving up the euro and/or leaving the EU.
Greece is a relatively small country, and the upheaval resulting from its financial recalibration could be fairly manageable.
If Spain or Italy tries to go down the same road, it is a different story. Take a look:
http://www.bbc.com/news/business-15748696
Italy owes France a LOT of money. France owes the UK a lot of money. The UK owes the US and Germany a lot of money.
Greece, as you can see, is a drop in the bucket. It's the precedent that's important.
I feel like I'm taking crazy pills when I see that no one from the financial sector went to jail for recklessly causing the biggest worldwide financial crisis since 1929, yet everybody is happily demonizing the Greeks, who in spite of having a made several errors were in no way responsible for the global crisis.
This shows how much journalism has been captured by financial interests, working hard to deflect attention from the true perpetrators.
I bet we would have voted the same if given the opportunity.
https://medium.com/@gavinschalliol/thomas-piketty-germany-ha...
Private debts were made public. You should ask Mrs. Merkel and Mr. Schauble, why you should pay for debts that were private.
What if a country destroys, literally, the entire continent killing around 80 million ppl, 70 years ago.
What should we do with this country? Should show some solidarity and pardon it's debt or "abide to the rules" and ask them to pay their dues to all the countries they created damages?
What I'm saying is that solidarity towards Germany was key in 1945. Now it's time to make a Marshall plan for Greece that will bring 'justice' to the country, fix our tax-system, etc. Every Greek would welcome that sort of change even it came from abroad.
The troika didn't do that at any point. It just sucked money from Greek tax-payers.
I don't believe that it sets any sort of precedence where everyone in the union can just not pay their debts. In society, we allow people to negotiate debt repayments in a way that isn't harmful to them and their families. People who can pay their debts and don't need this facility do so. That is the only precedent we should look at: if debt is unsustainable for individuals they are given the opportunity to restructure repayments in a way that is affordable to them without detriment to their life.
In Greece, this isn't what's happening. We see relentless spending cuts, stupidly high unemployment and a group of people who know what to do but are being told they can't do it.
That and I don't downvote based on something I don't agree with, I just wanted you to know I didn't downvote even though I don't agree with that approach, as much as I really want to. I use downvoting on comments without substance, especially ones that are overtly negative without substance.
Unfortunately, right now, everyone in Greece is paralyzed, because they don't know if, a few months from now, a new tax or law will be instituted that will kill their business, or mean they will no longer be able to feed their family (for the ones that still can). I think this prolonged uncertainty is the biggest problem right now.
The original Marshall plan was worth 5.2% of German GDP (of 1952). Greece has already received 185% of its GDP, in other words, other countries have given Greece already 36 Marshall plans!
The IMF already noted that the "plan" was wrong. Every single forecast was out by a huge margin, what exactly more do we need to die? Stop breathing?
WHat Varoufakis says is that we don't want money under terms the country can't honor, and the troika asks repeadetly for him to be removed. Maybe someone like Stournaras who signs any paper without asking questions would be more fit.
Suppose you have a €500 credit card bill. That bill represents euros you have spent (plus interest). If I pay that bill for you it frees €500, which would have previously serviced debt, for other things. It would be disingenuous to say "I gave the money to the bank, so it only helped them and not you."
French and German banks did get bailed out of their bad credit decisions. But Greece gained substantially from its borrowings in the short-run.
> blow the Euro
The financial markets are not convinced that a Grexit would harm Europe significantly [1]. In the long-run, the union may actually be strengthened.
[1] http://www.businessinsider.com/deutsche-bank-greece-contagio...
Your money went mainly to your Banks, via Greece.
your Banks
So French and German politicians did not want this to happen. Greece was not alone to have financial problems, Ireland, Spain and Portugal had some as well but after a long austerity cure they are now stable. But austerity just didn't work as expected in Greece.
This kind of schadenfreude against EU/EZ/Germany is very common in greece this week. In a few months, nobody will want to admit they voted for "no".
You were quite lucky you were only non-communist country in that region 30 years ago and you joined EU. EU for last 30 years was sending you approximately 6 billions EUR every year.
At least you are popular tourist destination. Good luck, I wouldn't want to be a Greek.
PS: I am not a German.
From all the arguments I’ve read this is the most hilarious. Dude, have you opened a map lately? Half of Middle East is in flames including parts of northern Africa. And we have no strategic position? Greece is what stands between Europe and legions of refugees from Syria, Afghanistan and Iraq. Not to mention the fuckers from ISIS who want to infiltrate Europe. Thank God we’re in NATO otherwise we could allow Russia to build a naval base in Greece and watch EU and US go ballistic.
It also funny you mention you are what stand between immigrants and Europe but I guess you forgot to mention you don't protect your borders anymore because you cannot afford it anymore so thousands of immigrants through your country is flooding Europe.
Serious question: Why do you think switching currency to Drachma will solve anything? From what I've heard and read, Greece can't spend its way out of this problem because it lacks trust among creditors.
But... there's nothing wrong with swimming! Sure, the drachma will plummet against the euro, dollar, etc. So no one will be able to afford an iPhone. But their factories, farmers, and fisherman will be ideally placed to produce for and export to the rest of Europe, because they'll be selling cheap. They'll issue bonds denominated in drachma, and sure those will have to yield more than euro-denominated bonds in the short term, but that won't last forever.
When entitlements are denominated in drachma as well, they don't have to borrow anything to pay for them. (If they issue bonds for the purpose rather than just printing money, that's more honest but it doesn't change anything.) Entitlement ppp value just naturally drops and rises with that of their national currency. So, it will hurt at first, but after exporters start ramping up it will get better.
Greece doesn't need the euro, the euro doesn't need Greece, and the Grexit won't turn Greece into the Congo.
The rhetoric against austerity seems to be that we don't want to hurt the people (especially the economically disadvantaged) but I don't see a bright future in the near-term whichever way the Greeks vote. (I know, this is such a terrible thing to say. Good thing I am not in politics.)
Yes high food prices are a problem but without tyrannical corruption like we see in Egypt this problem fixes itself over time.
"Austerity" seems like a red herring to me. The Germans were only too happy about Greek entitlements when they were driving Greek borrowing. Now that they're shutting off the tap (and why now rather than five years ago?), the Greeks themselves will figure out how to distribute the food. I'm sure they'll come up with something, and that plan will have come from Athens rather than Brussels or Frankfurt.
Also much of anger on the street has been due to lower living standards (euphemistically referred to "internal devaluation") So a true devaluation via an independent drachma won't go over well either.
Of course, the rich keep their money far away from Greece. It's the masses who will suffer.
Worse, any political instability will cause more problems for their critical tourism industry.
Enter inflation. It sucks, obviously, but it's a great way to spread the pain around evenly between workers, pensioners, and creditors. And it doesn't cause unemployment. It causes a bit of additional pain through things like menu costs but that's small potatoes compared to everything else happening.
Of course this is all presupposing a carefully calibrated monetary policy. It worked great for Iceland but I'm not sure I'd trust the current crop of Greek politicians not to give into the temptation to print themselves out of debt. That way lies hyperinflation.
EDIT: I tend to think it would be good if the Euro zone could be dissolved somehow and it would probably be good for Greece in the long term to leave. However, I'm not at all convinced that in practice the "no" vote will work out well for Greece or anybody else over the next decade or so.
[1]http://econlog.econlib.org/archives/2013/09/why_dont_wages.h...
All of those tools are used in countries with their own currency all the time. Monetary policies change to match the health of the economy. But in the Eurozone, monetary policy did not match what Greece needed, neither in their boom, or in their bust. Greece should have never, ever, joined the Euro, given how different their economy is from Germany. Unified monetary policy without a fiscal union doesn't make any sense.
The debate among economists is not whether Greece should have joined the Euro, but now that it's in, and in dire straits, if the very high cost of leaving the Euro is worth the advantages, or it's better to suffer yet a second consecutive bad decade trying to become competitive with Germany.
Still, Greece allowed it to happen by not facing reality.
Greece not failing to pay creditors is good for both Greece and Greek's creditors. I'm not sure why you feel that the two are mutually exclusive.
You may however start to feel very hungry soon holding a pile of worthless Drachma...
The reason we rejected the last bailout was because it didn’t include any terms of debt relief which is the only way for the economy to recover. That and Tsipra’s incompetence paired by an equal amount of incompetence and lies from EU officials. As the saying goes, it takes two to tango.
I’m not surprised that you are from Germany (I guess you read Bild a lot). Well I’m Greek and I have news for you. In 1954 we wrote off 50% of your debt to us. And we did it despite the fact that ten years ago you’ve invaded our country and wrecked havoc doing monstrosities like murdering whole villages including kids. We did out of solidarity to help your economy grow. It’s time now you do the same. It’s either that or we default and you can kiss your 70 bn loans goodbye. And then you can return to your miserable Mark because Euro will collapse sooner or later.
It ballooned because when you entered the euro your country was now able to acquire and spend much more debt then before.
If you feel your country is owed money from Germany then by all means go and try to collect it so that you can apply it to your +350 Billion Euro debt. Although, I have a feeling that the money Germany owes you is just a drop in the bucket for what you owe.
Congratulations on your "No" vote and good luck on your exit from the Euro.
The reason we rejected thelast bailout was because it didn’t include any
terms of debt relief which is the only way for the economy to recover.
Even though the european leaders vowed to their voters that all their money was going to be paid back to them, Greece had to pay back less than the european voters gave due to low interest and generous installments. Some earlier debts were written off already.
Also, if Greece would have started to give the creditors slight hints that they were actually making the economy more healthy, than it would be easier for the euro leaders to break their pledges and forgive debts.
The current economy doesn't suffer from the debts, it is suffering because it is structurally broken. Before Tsipras started to take over, the economy was getting better. He increased government spending.
Even if all Greece's debts were forgiven, it would still have the problem of a third world economy. RIGHT NOW Tsipras is asking for more money, because the economy is structurally not sustainable.
For example, there's no mention at all in your remarks about the well-known shenanigans that led to Greece joining the Eurozone (and camouflaging its debts) in the first place (with the connivance of certain large foreign banks). Or of the naked arrogance and condescending, hoof-in-mouth verbiage we've been treated to by certain foreign leaders (like Angela Merkel) in recent months.
Just simply: "look at those Greeks -- they're irresponsible, they're overspending, and now they're looking for another handout", basically.
At no point in the El Mundo article did he call the Germans "terrorists", and -- worse than hyperbolic -- it's irresponsible for you to suggest that he did.
Here's what Varoufakis said:
What they’re doing with Greece has a name — terrorism
[...]
Why did they force us to close the banks? To instill fear in people. And spreading fear is called terrorism.
My point, of course, is that these were both hyperbolic arguments.
"αυτό που κάνουν (οι πιστωτές) στην Ελλάδα έχει ένα όνομα: τρομοκρατία"
In greek, τρομοκρατία is a much less loaded term than "terrorism", even though it translates the same way. It's more "terror campaign".
The word "terrorism" in its more original form is ruling by fear and it can mean many things, such as being given power because the population is afraid of what you might do if you don't get what you want. "Terorrism", by contrast, is a massively politically loaded word for a completely black & white "good vs evil" world.
I know bloody well what the original meaning of "terror" was (you translate lots of sentences about terror and tyrants when you start studying Latin). The shift in meaning in English from the Latin meaning to the current meaning happened a long time ago.
I can also inform you that I just tried googling "tromokratia" (which google and/or chromium helpfully offered to transliterate into proper Greek). I got all the expected hits for the current English/German/etc meaning. The Wikipedia page lists all the usual greatest hits: Lockerbie, Timothy McVeigh, 9/11, London, Madrid. There is no hint what so ever that the usual or even just non-obscure meaning would be "fear-monger", as MaysonL suggested.
I think Varoufakis /meant/ terrorism and some people are backpedaling for him...
Greece needs the equivallent of Marshall plan. The troika wants to keep the Greek oligarchy in power and does everything in their power to keep the current status quo.
So generally speaking, what the troika did was destroy a heavely indebted country instead of actually helping.
The Siemens scandal (google it please I'm too bored to write another summary) and Christoforako's case (Varoufakis talked about this with Scheuble) shows the real problem: Greece has it's issues of course, but the troika was never about helping, it was more about exploiting all along.
Lots of projections in all these opinions. But for somebody that actually had to go through austerity measures, I am not happy to see others asking for a handout, with the only justification being "just because, Greek history".
EDIT: and if you downvote, at least be New Yorker enough, and justify your action. Otherwise, I would say that you just want a handout.
(http://nypost.com/2015/07/05/decades-of-fraud-have-swindled-...)
In Greece, A Hairdresser Can Retire At 50 With Full Benefits (http://www.businessinsider.com/in-greece-you-can-retire-at-5...)
That's not a "deficit." If that was a deficit, than every person in the US who pays less than $11,000 in tax would be running a "deficit." That's just the way governments work: the amount you pay in tax and the amount of services you get back from the government aren't always the same. But we do all have representation in the authority that chooses how to spend the pot of money.
Greece is different because they have sovereignty over their budget. Greece's taxes aren't collected by the ECB (with enforcement power) and there is no European body deciding how the taxes will be spent.
The Greek case of lying and spending way beyond any reasonable means does not compare to it.
The U.S. also, historically speaking fought a very bloody civil war to keep states in the Union... (first rule of U.S. club, is you can never leave/quit U.S. club). Where as EU's history of unity/separation even in the last two centuries is very different. It's mostly a cultural difference.
That said, I wouldn't mind seeing a bit more assertiveness to state level governments in the U.S. ... even though I don't agree with typical politics in, for example, Texas, I appreciate their assertiveness in recent years.
The better analogy is the handling of "deadbeat dads" who don't pay child support. The government's response is to confiscate their drivers license. It doesn't require a genius that then they really won't be able to pay child support. At least in the case when non-payment was the result of unemployment or lower salary, which was undoubtedly a significant number of cases.
I didn't mean to imply that. The only similarity I was relying upon was non-payment of their legal obligations.
The Greek position is relatively similar. There is blame on both sides of such a loan, and more for the banks if the number or size of these loans threatens their very business when people default.
I am sorry. You should never have had to go through austerity either. We know better and we have no excuse for putting countries through austerity. The impact of austerity policies is obvious when you look at the countries in Europe so afflicted.
But that doesn't mean because you suffered, others must continue to suffer. We should do better.
There are reports from the IMF and many other leading figures that now say austerity has had more of a negative impact than once thought. Greece has been cutting its spending or else it wouldn't have been given more money, as per the terms of the bail out. The effects of those cuts have been mediocre and, in fairness, harmful.
http://www.theguardian.com/business/2014/feb/26/imf-inequali... http://www.theguardian.com/business/2015/jun/15/focus-on-low... http://www.washingtonpost.com/blogs/wonkblog/wp/2012/10/12/i... http://www.washingtonpost.com/blogs/wonkblog/wp/2013/04/18/a... http://www.bbc.co.uk/news/magazine-22223190 http://www.bloomberg.com/bw/articles/2013-04-18/faq-reinhart...
1) Due to being in the monetary union, Greece is not able to print more money, devalue its currency or other monetary policies to help its economy. Greece is paying the price of being in a monetary union, and it should either get help from the other members of that union, or it is not really a union.
2) Also, take into account that Germany and other countries are benefitting from this monetary union by being able to use a currency that is devalued due to the poorer countries, and therefore is able to increase its export.
3) Much of the bailout went into the banks of other eurozone members therefore helping them as well.
4) Do not forget that Greece if not in the eurozone would be able to default on its debts, live on the primary surplus it is now generating and when it is considered a good debtor to get loans again. Instead of having to exit the eurozone (which would be a bad sign for the whole union) and default on its debts (which would mean other countries losing money) and THEN grow, it may be beneficial to everyone to do a debt restructuring.
5) Greece is paying an interest on the loan given to them to be able to pay the older debts to the ECB and others. They are not able to pay that interest on the subsequent loans and are asking to be able to use that for economic growth to pay the older loans! In a sense, you can see that as debt restructuring, which can also happen in other ways. This way creditors will also get their money back, altough restructured or payed later.
help them with what? One of the achievement of modern civilization is the recognition that bankruptcy is the preferable way than debtor prison to deal with non-ability to pay debts.
>Now greece voted against this bailout. There are a lot of people in europe (myself included, I am from Germany by the way) who are not willing to transfer further billions of euroes to greece, just so that a socialist party can fullfil its "promises" and increase their deficit.
if you noticed, Greeks have just agreed with you.
The "No" vote, to my understanding, strengthens their demand to have whole debt restructuring included in this deal - not put off till later.
Edit: this is a "strengthened hand", but subtly different to using that hand just to get more cash / debt. The ECB is like my bank manager wanting to give me an overdraft so I can make my mortgage payments so he does not have to foreclose. I want to have all debts up for discussion, he just goes on about overdrafts.
It is forcing the EU to face up to the realities of a single currency and fiscal union. But at least it is a democractic approach...
Wrong. The reason for a referendum is so, whatever comes next, the people and the governing party go in knowing they are together, with a level of bonding that is extremely rare in our cynically modern western democracies. Compare with Spain's recently gag law, which was passed by the government against the will of almost half of their own voters (and presumably against 100% of everyone else).
http://www.reuters.com/article/2015/07/05/us-eurozone-greece...
https://www.vox.com/2015/6/30/8870257/greek-crisis-myth-aust...
The Eurozone needs a vision for its future especially on the dept problem. Piketty said it correctly what we need now is a dept conference to renegotiate the dept of all EU states.
With this its possible to change the contracts of Maastricht and create new ways of financing the eurozone and implement ways of enforcing them as well.
In a few months Spain and Portugal will elect left wing parties into their government because these countries suffer under the austerity programs as well. Do we want them to exit as well?
Especially in about five years when it will be clear what a boon the Grexit will have been for the Greeks.
At the same time they sold us a “bad europe” story and sold you a “bad greeks” story. Most of the facts circling around (e.g Greeks average retirement age) are myths. Germany's minimum wage is double the average greek pension. Our prices in common goods don't differ much. One of the terms of our previous bailout was that people under 25 should work for 511 euros per month —that is gross salary. Can you survive on 400 euros per month (salary after deductions) in Germany? Neither can you in Greece. Now they want us to work for 300 euros a month. Do you think this is fair?
We have a common currency. The currency's main purpose is to be used for the citizens' well being. But we can't manipulate our currency anymore because the rest of the EZ members (particularly Germany) have different plans. What can we do?
Edit: spelling
There isn't a single EU country where 'correcting government deficits' with taxes and spending cuts helped the economy.
You'd have been better off without austerity. The reason the Greek situation is now so terrible is exactly because of the austerity measures. They caused the 'economic armageddon.' Count your blessings that the austerity in most EU countries was not so bad, though in most of them GDP never has recovered and unemployment is in the low double digits.
Not exactly a miracle story. Compare with the US, which managed a tepid stimulus.
Greece has in a way helped the ECB by distracting economic pundits from their various other failures in the recession and recovery process. The truth is that we're all so used to being mad at the ECB that liberals are now confounded by the least bad thing they've done in a while.
It's long since known and agreed that austerity policies were detrimental to the recovery. The thing is that Europe's failure to pursue expansionary monetary policyead to both diminished inflation (which means debts have larger real value) and diminished growth in the eurozone, both of which hindered Greece et al's ability to repay debts regardless of the terms they were given. That's added to the fact that inflation couldn't happen and internal devaluation wouldn't happen as chosen by the Greek people. And internal devaluation, what happened in Ireland, is a pretty ugly process, though Ireland would be okay right now if the ECB hadn't also blown the recovery in general, methinks.
Now the issue is whether Greece gets what everyone else got. It's fair, but it isn't exactly right. And the ECB has distracted everyone from their big failures.
This is also being tossed around as proof that currency unions don't work! That's kind of a strong conclusion. I think it could work if it were well managed and smaller and less diverse. A couple of economies in similar situations with proper economic management can probably keep things together with only a small chance of an Ireland-style devaluation (and no Greece events), and in the future the charter could predict these sort of things.
That it turned into a call for political fusion of Europe is scary. I get that nationalism is bad and all, but you want to redraw the map and the culture...
...so you can keep the money.
Overall, I agree - greece needs to get its house in order and that involves making tough decisions, cutting jobs, lowering benefits, etc. They don't have the revenue to support the quality of life that they want to provide.
The transfers to greece of the last few years were to a large extent a way of transferring private debt of german and french banks to the general EU populace.
Moreover, taking on Greek debt is a massive gift to Greece, for this money no longer needs to be paid back, hence is a gift.
https://www.cesifo-group.de/de/ifoHome/publications/docbase/...
OK, but the eurozone control the finances of the eurozone in a way which actively harms Greece's finances and economy.
What will happen if Germany or France have an economic downturn? We already know the answer to this: the economies of small peripheral countries are thrown under the bus to protect the major ones.
It should not be this way. If a country in the Eurozone is in trouble, they should be protected by the other countries sufficiently that they might be able to protect other countries, in turn, when the situation is reversed.
There's just this something that I can't help but add. There isn't a single country that has received more debt relief in modern history than Germany, but for a reason people seem to forget that. It's possibly because of that that you are now present. If one were to continue this would turn into some sort of debate/argument of you-did-that so I do-this. No, this isn't (again) about who's at fault, it's about realizing what is actually doable and what isn't and acting based on that. It's about not repeating a paraphrased form of history as we know it, which we so happily seem to indeed be doing.
Edit: Learning how to separate paragraphs.
You're not into the economy thing, are you?
Because even the most amateur scholar of economics is able to understand that having Greece within the eurozone has helped Germany's exports by about 80-90 billion (can't get the source now). Right now, even the UK would rather have Greece on its own currency, so that the euro will be strenghened and UK will be in a position to ease its exports.
And btw, you cant't really believe that you have given money to Greek citizens, money that otherwise would be in the pockets of german citizens. There's a thing called "banks".
Since you are German, act like it, and do some research.
1. The ones bailed out have been private bankers, by public funds.
2. Austerity, demanded as the cure for deficit spending, has dragged Greece into a recession and achieved exactly none of its aims - spending is still high as a proportion of GDP, because GDP has crashed.
3. The creditors have stopped demanding austerity as a policy aimed at creating a viable economy, and switched to demanding it to punish the greeks for populist leftism, and to contain the anti-austerity parties in Europe, and because they have unprofessional snits against Tsipras.
4. The only sane answer is to write off a huge swathe of the debt, as patently irrecoverable, inject capital, give a decade long holiday from repayments, and let the Greek economy recover.
5. Only a NO vote could lead to this being on the table.
Moreover, can their economy recover without outside help? What does that actually look like? That's the bigger issue, any way you slice it, they got really used to making promises and living larger than they are. The wish or risk or whatever is that the ECB will want to recover some of that debt and in exchange for that wish, write off a large chunk of it and then continue to give them handouts. What does a viable Greek economy actually look like?
Your comments are entirely reasonable when it comes to the rent-seeking corrupt upper classes in Greece who have run the country aground over 3 decades, costing both the European taxpayer and the honest working class Greek (who have voted NO).
Your comments are unreasonable when taking into account the fact that the bailouts so far have overwhelmingly supported the existing wealthy (Greek and German) at the expense of the middle and lower classes (again, Greek and German (taxpayers)), who cannot be blamed for Greece's existing travails.
The underlying issue here is that all European (and most American) banks are bankrupt, and that in order to support them we cannot let any of their assets go bad. Thus we must bailout their debtors (transfer of bad assets at inflated prices from the rich to the taxpayer). Watch this space. There is much more of this to come, and not only in Greece. It's what QE is all about.
We're witnessing the weakest domino fall but there are many in the chain, and in all cases, pretending that people should "just pay their debts" is simplistic and ignorant of the unfair transfer of wealth happening before our eyes.
Back to Mesopotamia: http://www.axel-troost.de/serveDocument.php?id=1967&file=5/5...
A reasonable deal should be a stimulating one. Not one with just spending cuts. A major haircut of existing debt, and enough new money flowing in to actually stimulate growth.
There are no good options here. It's not like Greece will return to the Drachma and become a picturesque olive exporting tourist attraction. What will happen is that the following decade of poor economy will see extremists and Putin run the country. From a democratic and security perspective it's likely the lesser evil to just support the Greek economy. Those of us in the rest of Europe (not least in Germany) have made good money from having an artificially low interest rate for years, at the expense of the PIIGS countries.
The IMF themselves have said that Greek debt is unsustainable and a significant haircut is needed (although their head Lagarde ignores their analysts). Keeping with the dysfunctional austerity plans would only make the debt ball, and the eventual inevitable default, larger and larger. So even from a purely egoistic point of view, you should support the OXI.
Easy there. The austerity measures and the troika only came into play in 2010. After Greek government called EC-ECB-IMF because it could not solve its own crisis.
By 2010 (prior to Troika-imposed austerity), as a result of the Global Recession, Greece had already lost about 15% of its GDP and its debt had risen to about ~150% of its GDP.
It is extremely disingenuous to say that austerity caused a 25% drop in GDP or that it caused the debt/GDP ratio to go from 105% to 175%.
This is actually not true. Based on the 2nd bailout terms from 2012 Greece doesn't have to pay interest on the loans until 2023 and does not have to start paying them back for the next 27 years.
Oh, those wars and massacres weren't your decisions? Then, you think the average Greek took those Eurozone loans and bailouts themselves?
It seems to me, as an outsider, that the political problems and ESPECIALLY the tax collection problems need to be addressed for any permanent change. Perhaps rather than austerity measures, the EU should have targeted the Greek public directly and tied the bailout funds to the citizens willingness to fund their own government.
The tax and corruption situation is an interesting one, it's not particularly new there. Who'd have ever guessed that a country with nearly 50% tax evasion might reneg on some debts? It's really bad when the local banks just factor that in when handing out loans. It's become part of the culture. I don't know how you fix that. I wish the Greek people the best though, it's a beautiful place
The potential long term political and financial cost of abandoning Greece far outstrip the 70B it owes Germany. It will leave the European project in tatters, despite what Merkel assures us.
That's a legend. The money went to the banks and to various arms companies.
[1] http://blog.mpettis.com/2015/02/syriza-and-the-french-indemn...
And now our TV's are showing images of Greeks celebrating that they've told us to f-off with our euros. That's going to kill any kind of sympathy they still had when what's left of the Greek economy is going to crash hard over the next few weeks and months.
This is game over. Any compromise that was still possible is now dead, even if EU leaders would be willing to compromise, they can no longer sell this to their own people.
Facts are: Greece had a spending deficit for several decades now. This spending deficit accumulated to such a big dept, that no investors were willing to lend greece any more money. 18 european countries transferred billions of euros in the last couple of years to greece, to help the country and the people. In return they had an agreement that greece would cut their spending. Greece never lived up to the agreements it made. In the last weeks 18 european countries offered greece another bailout, where greece would receive several bilions again. In return they asked greece to finally cut spendings.
Now greece voted against this bailout. There are a lot of people in europe (myself included, I am from Germany by the way) who are not willing to transfer further billions of euroes to greece, just so that a socialist party can fullfil its "promises" and increase their deficit.