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Offline kylie

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Re: Greek Bailout
« Reply #25 on: July 10, 2015, 07:45:24 PM »
      The question for me is where IS the system sustainable anymore?  How many people are solvent outside the top less than 1% hanging onto most of the wealth...  Much of it accumulated from housing bubbles, bad investment deals [see housing bubbles again], overpriced necessities like often pharmaceuticals and medical care, and credit given at outrageous repayment rates...? 

      Sure, the Greeks are weird for going back and asking to play another round of 3 years, at which point it'll probably be much the same thing over again (though maybe they shave off a bit of the debt and prolong the roulette wheel spinning for everyone).  I think they should have ideally all become self-sustaining sheep herders or smaller-time tour operators or fishermen or whatever they could do really and said to hell with the common currency/fixed interest rates, if there was any way they could.  But how many people around the world do you see willing to up and change their lifestyle today?  It's hardly just them.
« Last Edit: July 11, 2015, 07:10:25 AM by kylie »

Offline Zillah

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Re: Greek Bailout
« Reply #26 on: July 10, 2015, 08:10:34 PM »
Couldn't have said it better myself.

"I can't pay you back."

"Well cut your spending and go earn more money."

"No, you're an evil lender and I won't be told what to do.  ...  Now, loan me more money."

To quote a banking adage ...

If you owe a bank a hundred dollars, it's your problem.

If you owe a bank a hundred million dollars, it's the bank's problem.

If Greece completely defaults, everyone gets screwed. Which is why they ironically hold a lot of power in this hot shitshow mess.

Online Dashenka

Re: Greek Bailout
« Reply #27 on: July 11, 2015, 03:05:40 AM »

If Greece completely defaults, everyone gets screwed. Which is why they ironically hold a lot of power in this hot shitshow mess.

They knew that, Europe knew that, everybody knew that which is why what happend was the only solution possible from the start.

Everybody just wanted to show off how much of a spine they had and how much they wanted to do for their own people. In the end though, everybody got screwed nonetheless, it only took 'them' two weeks to figure it out.

It's a great example of how the EU doesn't work and more and more people are beginning to see this and when Greece exits and the UK exits in a few years, there is no more EU and the leaders know this so they are desperate to safe their faces and 'fight' till the end.

Offline Cycle

Re: Greek Bailout
« Reply #28 on: July 11, 2015, 03:49:57 PM »
But how many people around the world do you see willing to up and change their lifestyle today?  It's hardly just them.

If a lot of people do a dumb thing, that doesn't make it any less of a dumb thing.  I've seen dozen of people do what you've describe.  All of them ended up bankrupt and/or foreclosed out and/or in jail.  "Doubling down" on a stupid move just means you've made twice as many stupid moves.  And here's the beauty of it.  Those people who are willing to change?  They are the ones that succeed.  Do dumb things, fail.  Doubling down on a dumb thing, fail twice as fast.  Do a smart thing, succeed.

Greece's problem stems from the fact it spends more than it makes.  And after it spent all of its money, it started to borrow other people's money to spend.  Then--and this is the first bit I find hilarious--they argue that it is their lender's fault for getting them into the mess.

Yeah, no.

You got yourself into this mess.

And now here's the second bit that I find hilarious:  after running about on international TV cheering about how they've struck a blow against the "oppressive" lenders that supposedly got them into this mess, they go right back to those same lenders begging to borrow more money.

This really has to be a comedy.

Because if you can't laugh at it, it is utterly sad.



Offline kylie

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Re: Greek Bailout
« Reply #29 on: July 11, 2015, 08:25:18 PM »
Quote from: Cycle
Greece's problem stems from the fact it spends more than it makes.  And after it spent all of its money, it started to borrow other people's money to spend.  Then--and this is the first bit I find hilarious--they argue that it is their lender's fault for getting them into the mess.
      Eh, I admit I don't know enough about the whole background in Greece.  What I do understand is that benefits in Greece are at least by now, not all that different from those in most of Western Europe.  So from that perspective the Germans are asking Greece to make it legal/normal for more people to have it harder, than they themselves are prepared to accept -- just because there's debt. 
 
       Whether or not the debt was "necessary" or "avoidable" in the first place, may or may not be a more subjective question in the Greek case -- but I don't have enough info now to really decide on that count. There are some situations where it might be easier to argue it's quite necessary to go into debt, no matter how awful the terms seem to be.  Much of the world is doing it, and I think plenty are doing it because they have to get stuff done now to survive in the system they've been given in the first place.  People didn't choose to be born in a country that imports everything to begin with, so who are you saying "got them into that" exactly?? 

      Look at the US where until very recently, there was no serious national health care system to speak of and credit card rates are 20%+ with compounding for any single month where you can't pay for whatever reason.  Unemployment was pushing into double digits and what jobs were available for young people were generally short-term and low wages.  Would you suggest it's people's "fault" if they need medical care immediately and go into debt? 

      I do understand there are corruption issues in Greece and some stashing a whole lot of money away overseas (seems the US has a fair bit of this problem with large corporations in particular, too -- and I'd be surprised if the measures the US is taking are hitting the corps a great deal harder over it).  But expecting people not to spend no matter what, is really a bit much.  We could go farther back of course, and say well, they might have been better off not entering the regional financial bloc to begin with.  Though there too, I think there would have to be some discussion of all the promises people were given of how it should work to protect "everyone", and now everyone's starting to realize it doesn't do those things for the poorer South in particular.

Should the average people, the moment this original situation beyond their control forces them into debt, always (and therefore probably, repeatedly,  cyclically as business tends to work it) quit everything they might be doing at the moment -- job training for more specialized careers that might take years, taking care of families, living in stable situations so they can move wherever the jobs might be, etc. etc. -- so that they just might have a slightly, piddly better chance of working overtime for months in low-paying jobs in the hopes of paying off debts fast?  What if the debt is something like cancer treatment and no amount of short-term overtime is gonna cover it? 

     And I don't think youth unemployment is better than the 2010-2013 US situation in much of Europe now; in fact if I recall, it's still worse.  In Greece particularly, but again they are not alone.  And people didn't do this to themselves.  Bankers and austerity and a collusion of governments working for the rich did it to them.

Quote
And now here's the second bit that I find hilarious:  after running about on international TV cheering about how they've struck a blow against the "oppressive" lenders that supposedly got them into this mess, they go right back to those same lenders begging to borrow more money.

     I don't really disagree with you there. 

     But I understand it could be very, very difficult -- and perhaps even politically dangerous -- to attempt to overhaul the whole economy.  Most of the world is soooo accustomed to the idea of economics as a matter of faith or roulette, where simply working onward is somehow "supposed" to (hopefully, maybe, if you win the lottery or there's a very temporary industry boom on your doorstep tonight  or you pick that one in a thousand invention that pans out) lead to wealth, which is the only "real" and "honest" path to sustainability at least for one's own household.  And never mind helping whole countries or peoples, they don't "deserve" anything because hey, they all were lazy and irresponsible right?  Surely no one ever "forced" any of them to spend money to survive.  Oh no, never. (/sarcasm with rolling eyes at how people believe original choices are all free
« Last Edit: July 11, 2015, 08:35:10 PM by kylie »

Offline Cycle

Re: Greek Bailout
« Reply #30 on: July 11, 2015, 08:55:21 PM »
      Eh, I admit I don't know enough about the whole background in Greece.  What I do understand is that benefits in Greece are at least by now, not all that different from those in most of Western Europe.  So from that perspective the Germans are asking Greece to make it legal/normal for more people to have it harder, than they themselves are prepared to accept -- just because there's debt. 

No, they are not asking Greece to accept cuts to their pension system (and raise taxes on corporations and others) simply because Greece owes $270 billion.

They are saying they won't give Greece another $60 billion unless it cuts its spending.

Why do you think Greece is entitled to $60 billion of someone else's money anyway? 



I urge you to research the Greek pension system.  Look up how long they have to work, when they can start collecting, and how much they get.  Then compare it to, say, German--the country from whom Greece wants a huge amount of money.


Offline kylie

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Re: Greek Bailout
« Reply #31 on: July 11, 2015, 09:30:20 PM »
Quote from: Cycle

Why do you think Greece is entitled to $60 billion of someone else's money anyway? 
     I do think the Greeks have some point, at least in principle, that Germany was gifted a whole lot of money (far more than Greece is asking for, I believe) when it faced historical crises.  It depends whether you think Europe is basically an economic conglomerate based on "Everyone for themselves," or a political union where everyone is supposed to give a care when it comes to a rock and a hard place for others in the group.  Granted on paper, what the euro does is brings fixed interest rates for everyone with predictably turbulent results...  But it was sold as, 'This is supposed to allow the whole to adjust and prop up weaker areas when shit like this happens.'  Or some such, now dubious balance. 

     Is Germany in the economic union (my acronyms fail me, EEC? EU also inasmuch as they're partly linked...) only for Germany to make money and to drain some southern country every few years when there's a fiscal crisis because we've always known those were net importers that give their people a few more hours off each week (as if that would change the whole balance of payments, I'm a little skeptical), or is Germany in the group to do anything sustainable for the whole?

     Though it could be a problem where the money comes from -- some countries have banks that are more flush than others.  Fair enough at the point where it's the people rather than a few rich banks actually ending up with the bill.  I'm not ignoring the possibility that rich banks would be happy to farm out the cost to people who aren't.

Quote
I urge you to research the Greek pension system.  Look up how long they have to work, when they can start collecting, and how much they get.  Then compare it to, say, German--the country from whom Greece wants a huge amount of money.
       Fair enough.   Although if you are so convinced, I wonder if you wouldn't have some links or numbers yourself.  My argument was based mainly on a Guardian column recently (don't have time to link search just now) which stated that as a % of GDP, the Greek benefits were somewhere within a percent higher than other states in the area. 

       And I would also note that the recent proposals have envisioned Greek retirement age being forced up to 67 -- do you think that is something that should be a fair answer? 

-------

     Meanwhile, the northern states (so-called "hawks") seem to be either, perhaps 1) eager for Greece to leave already, anyway or 2) milking this for every euro they can squeeze back.  I recall just the other day some commentators said the probability of Grexit was around 70-80% regardless of continuing negotiations.  So who knows, we might yet see whatever Greece can eventually accomplish without staying in the system.

Quote
the German finance minister, Wolfgang Schäuble, dismissed that view, supported by a number of northern and eastern European states. “These proposals cannot build the basis for a completely new, three-year [bailout] programme, as requested by Greece,” said a German finance ministry paper. It called for Greece to be expelled from the eurozone for a minimum of five years and demanded that the Greek government transfer €50bn of state assets to an outside agency for sell-off.

Timo Soini, the nationalist True Finns leader, meanwhile, threatened to bring down the government in Helsinki if Alex Stubb, the finance minister, agreed to a new bailout for Greece. Stubb apparently came to the crunch meeting on a new bailout without a mandate to agree one.
« Last Edit: July 11, 2015, 09:38:18 PM by kylie »

Offline Zakharra

Re: Greek Bailout
« Reply #32 on: July 12, 2015, 12:41:45 AM »
     I do think the Greeks have some point, at least in principle, that Germany was gifted a whole lot of money (far more than Greece is asking for, I believe) when it faced historical crises.  It depends whether you think Europe is basically an economic conglomerate based on "Everyone for themselves," or a political union where everyone is supposed to give a care when it comes to a rock and a hard place for others in the group.  Granted on paper, what the euro does is brings fixed interest rates for everyone with predictably turbulent results...  But it was sold as, 'This is supposed to allow the whole to adjust and prop up weaker areas when shit like this happens.'  Or some such, now dubious balance. 

     Is Germany in the economic union (my acronyms fail me, EEC? EU also inasmuch as they're partly linked...) only for Germany to make money and to drain some southern country every few years when there's a fiscal crisis because we've always known those were net importers that give their people a few more hours off each week (as if that would change the whole balance of payments, I'm a little skeptical), or is Germany in the group to do anything sustainable for the whole?

     Though it could be a problem where the money comes from -- some countries have banks that are more flush than others.  Fair enough at the point where it's the people rather than a few rich banks actually ending up with the bill.  I'm not ignoring the possibility that rich banks would be happy to farm out the cost to people who aren't.
       Fair enough.   Although if you are so convinced, I wonder if you wouldn't have some links or numbers yourself.  My argument was based mainly on a Guardian column recently (don't have time to link search just now) which stated that as a % of GDP, the Greek benefits were somewhere within a percent higher than other states in the area. 

       And I would also note that the recent proposals have envisioned Greek retirement age being forced up to 67 -- do you think that is something that should be a fair answer? 

 the EU, as I understand it, isn't a economic, financial and political union like say, the US or Canada. While the nations in the EU have more or less dropped their currency for the euro, they aren't as politically bonded like the US or Canada. The nations of the EU are still that, nations, and not provinces of the EU nation. So htere is considerable political and economic differences that are straining the system. The central EU government has little power to directly enforce directives on the associate nations. It clearly cannot shape/force their financial policies, which leads to situations like southern Europe is facing and Greece is experiencing the hard way. Greece's government policies simply are not sustainable. It clearly needs help, but I understand the reluctance to throw good money after bad (and it is clear that Greece is a very bad bet financially). Only a fool would lend Greece any money without ironclad guarantees that it WILL change its ways and stop spending like a drunk sailor on leave.. Greece has to change, which means its citizens will feel the brunt of it since as I understand it, Greece's government employs or pensions a hell of a lot of its citizens at rates that are, frankly, unsustainable.

 Unless the EU becomes a closer union economically and politically, eliminating the nations of Europe for provinces where those nations were, Greece is out of luck in demanding or expecting to get anymore money without insurances it will be spend wisely. And the other nations of the EU are under no obligation to give Greece that money because they are failing financially. The people and government of Greece seem to want their cake and to eat it too.

Offline kylie

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Re: Greek Bailout
« Reply #33 on: July 12, 2015, 01:23:52 AM »
      Well, according to CNBC (June 2015), Greek pensions are more than a touch above neighbors as percent of GDP.  (I wonder if it was some other sort of adjusted comparison number I was looking at earlier.)  However, slashing pensions is not obviously going to make the Greek economy any more sustainable.  They are facing a terrible demographic crunch:

Quote
Greece has been criticized by its creditors for the huge amount of money it spends on pensions. Until the euro zone debt crisis hit, Greece offered one of the most generous benefit packages to retirees in Europe.

After 2010, measures were put in place by the Greek government that encouraged workers not to take early retirement, making retirement before the age of 60 very difficult. At the same time, the number of annual pension payments was reduced from 14 to 12, after the government eliminated "bonus payments".

The IMF praised the reforms at the time and while the "primary" or core pay-as-you-go system was overhauled, the "auxiliary" or secondary system made no changes.

As it stands currently, Greece still spends more than any other country in the European Union on pensions as a proportion to GDP – with the country shelling out a whopping 17.5 percent according to Eurostat.

However this does not give us the full picture, as Greece has an aging population, with one of the highest "age dependency ratios" or the level of support given to younger and older citizens by the working age population.

The country's old-age dependency ratio is around 30 percent in Greece, one of the highest in Europe, according to Eurostat.

Unemployment in Greece is the worst in Europe, with over 25 percent of the population without a job, according to Eurostat. Youth unemployment is even worse, with over 50 percent of young people unemployed.

Eurostat figures show 73.5 percent of people who were unemployed in Greece in 2014 had been out of work for more than a year, compared with 67 percent in 2013.

This often means that the monthly state pension payment is the sole source of income for a family, rather than just a pensioner.

"Two-thirds of pensioners have pensions below or close to the European poverty line," said sources close to the debt talks who asked to remain anonymous because of the sensitivity of the talks.

"It could also be noted that in Greece one pension often needs to serve a whole family, given our 27 percent unemployment rate and over 60 percent youth unemployment rate," they added.

     The Wall Street Journal (February 2015) also blames the demographic situation, and says:

Quote
Adjusting for the fact that Greece has a lot of older people, its pension spending is below the eurozone average. In fairness to Germany and other scolds of Greece, this only happened after major cuts imposed on the pension system by the European Commission, the International Monetary Fund and the European Central Bank — the troika representing its international creditors. But it’s also worth remembering that 15% of older Greeks were at risk of poverty in 2013, above the eurozone average of 13% and a figure that has almost certainly risen over the last year.

      The WSJ imagined a continued reduction in the number of separate pension funds, but not a reduction in absolute pension payments.
« Last Edit: July 12, 2015, 01:25:42 AM by kylie »

Offline TaintedAndDelish

Re: Greek Bailout
« Reply #34 on: July 12, 2015, 01:29:27 AM »
the EU, as I understand it, isn't a economic, financial and political union like say, the US or Canada. While the nations in the EU have more or less dropped their currency for the euro, they aren't as politically bonded like the US or Canada. The nations of the EU are still that, nations, and not provinces of the EU nation. So htere is considerable political and economic differences that are straining the system. The central EU government has little power to directly enforce directives on the associate nations. It clearly cannot shape/force their financial policies, which leads to situations like southern Europe is facing and Greece is experiencing the hard way. Greece's government policies simply are not sustainable. It clearly needs help, but I understand the reluctance to throw good money after bad (and it is clear that Greece is a very bad bet financially). Only a fool would lend Greece any money without ironclad guarantees that it WILL change its ways and stop spending like a drunk sailor on leave.. Greece has to change, which means its citizens will feel the brunt of it since as I understand it, Greece's government employs or pensions a hell of a lot of its citizens at rates that are, frankly, unsustainable.

 Unless the EU becomes a closer union economically and politically, eliminating the nations of Europe for provinces where those nations were, Greece is out of luck in demanding or expecting to get anymore money without insurances it will be spend wisely. And the other nations of the EU are under no obligation to give Greece that money because they are failing financially. The people and government of Greece seem to want their cake and to eat it too.

You nailed it right there. The Germans are arguing that throwing money at the problem yet again will not help and are insisting that Greece fix the hole in their bucket before any more hard earned money is dumped in. Greece is refusing to do this. On one had, I can't blame Merkel and the IMF for drawing the line and playing hard ball, on the other, when a creditor lends money, they are taking a risk and need to be willing to suck up some of the loss should it not work out. If they don't provide some debt relief and Greece goes tits up, I think the rest of the union is going to suffer and other members of the union will see bankrupcy and exit as a viable option.

Greece can only tighten their belts so much and can only hold their breath for so long. They do need some breathing room in the form of debt settlement or postponement in addition to fixing their economy so that it is capable of recovering. It looks like the EU needs to have some sort of shared fiscal policy so that member of the EU can't just piss away money or do things that threaten everyone else.



Offline Cycle

Re: Greek Bailout
« Reply #35 on: July 12, 2015, 01:49:29 AM »
Fair enough.   Although if you are so convinced, I wonder if you wouldn't have some links or numbers yourself.

Try these.  Greece's pension system is broken.

http://www.economist.com/blogs/freeexchange/2015/06/greek-pensions
http://www.macropolis.gr/?i=portal.en.the-agora.2622
http://www.thejournal.ie/readme/greece-pension-system-bailout-negotiations-2194668-Jul2015/?com_ord=thumbs
http://time.com/3954657/european-leaders-greece-promise-change/
http://www.theguardian.com/business/2015/jun/15/unsustainable-futures-greece-pensions-dilemma-explained-financial-crisis-default-eurozone
http://www.businessinsider.com/greece-germany-pensions-2010-4?op=1
http://www.economist.com/blogs/charlemagne/2010/02/greeces_generous_pensions
http://abcnews.go.com/Business/reasons-greece-economic-crisis/story?id=32130617


on the other, when a creditor lends money, they are taking a risk and need to be willing to suck up some of the loss should it not work out.

This is actually a good argument in favor of the EU not loaning any more money to Greece.  This argument is basically saying, "hey EU, Greece is massive credit risk and if you loan them another $60 billion on top of the $270 billion, expect not to get that $60 back either!"

This persuades the EU to loan Greece more money how?


The problem is simple.  Greece makes $2 a day and spends $4 a day.  It doesn't matter how much Greece had in its account at the start, simple math will draw that number down to $0.  You can keep adding money in via loans or gifts or bailouts or magic fairies.  It won't do a thing to solve the problem because the number will still go down to $0.

You can't solve this problem without either (a) increasing how much Greece makes or (b) decreasing how much it spends. 

It doesn't matter if the solution is painful or seems unfair or whatever because that is the only solution. 

To quote John Aaron, from Apollo 13:  "Ken, you're telling me what you need. I'm telling you what we have to work with!"


Offline kylie

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Re: Greek Bailout
« Reply #36 on: July 12, 2015, 02:17:34 AM »
      Cycle, I've only peeked at a few of your links so far (a couple I'd seen already), but basically I'm wondering if focusing on the pension system is going to help the overall problem all that much.  It seems more to me like another drop in the bucket that Germany demands for continued financing, but in the long run I don't see things changing all that much.  The whole national economy is shot, and people still seem focused on how much red ink they can find to recover. 

      It's like a bad marriage case where people are chasing after the spouses and grandchildren (as well as the adults, here) because they think the parents spoiled them...  Although in this case, the neighbors who are sermoning about the sins of the Greek government -- or better, the neighbors' banks and leadership -- agreed to fund the whole thing for years on end themselves and passed the costs of that choice on to the people.

      For example, take part of one of the links you supplied, Macropolis:

Quote
In 2014, the state pension bill reached 6.09 billion euros and state grants to SSFs stood at 11.1 billion. The combined total corresponded to 9.6 percent of GDP.

Despite a sharp drop of 21 percent (4.5 billion) in the total figure since 2011, the respective figure relative to GDP has fallen by just 1 percentage point. This reflects the fact that GDP contracted by around 14 percent over this period.

       Greece was arguably never up to the EU's own official standards for entering the economic union, but since it was brought in anyway, German and French banks pushed on for years making Greek debt relief cost taxpayers -- rather than costing their banks' shareholders.  The treaties of the economic union include some clauses that said there will be no bailouts, and others that said there will be bailouts for emergencies -- but here we are, several years and numerous revisions of terms later.  There is a rather interesting history in a student paper here; yes it's a student paper, but it has citations and it's fairly readable, one can pick at it as anything else. 

       When half the youth are out of work and the pensions are paying for whole families, what is going to make it worth it to remove the money from those families?  Is reducing pensions by 1 or 2% of GDP as the north demands going to somehow provide Greece with competitive export industries?  Or are they a land that has tourism and a whole lot of sheep, and gee those just aren't competitive no matter what you do?  I really don't know, but I'd like to know the rationale for slashing social services and raiding state assets...  How is it really going to change the situation Greece has been in?  What kind of productivity is it supposed to create?  Or is it just going to pay off a tiny fraction of the upset banks, and one can expect to do it all over again in a few years?

      The IMF has finally gotten around to admitting (they had the documents some time earlier, and were pressured by the EU to keep them quiet, no malice there of course???) ...  Even if Greece accepted all the creditor demands, the debt load will not be sustainable.  The problem is far beyond a question of small tweaks and payback punitive measures. 

      Personally I still think Greece should get out of the euro, but it's hard to say what that would mean for such an aged population and so many unemployed people.  I wonder if it might lead toward a humanitarian crisis (internal) and refugee crisis (somewhere external, wherever Greeks can still go for work).  In the long run though, it might be the smart thing to do for future generations.  Scrap the euro, get back to the drachma or whatever works, and restructure the economy, give up on the debt that isn't going to really shrink anyhow.  Even if many of them end up having to work elsewhere.  The question becomes whether that's a politically swallowable thing to do for Greece and/or the EU either.  Not everyone is willing to consider such huge risks, and I can understand that too.

« Last Edit: July 12, 2015, 02:20:13 AM by kylie »

Offline consortium11

Re: Greek Bailout
« Reply #37 on: July 12, 2015, 07:01:35 AM »
Continued from the "What's in the news?" thread.




Offline consortium11

Re: Greek Bailout
« Reply #38 on: July 12, 2015, 07:03:07 AM »
Rather than clog this thread up with more Greek bailout discussions, I thought I'd start a new thread. Remarkably empty right now, but I'll hopefully get some stuff up shortly.

Offline Blythe

Re: Greek Bailout
« Reply #39 on: July 12, 2015, 10:57:28 AM »
Continued from the "What's in the news?" thread.


Sorry about that--moved old posts from the News to your thread so we could have this all in one spot, and the forum displays posts in chronological order, so ack, Louise has the 1st post now. >_>

If you folks see any posts left in the 'Whats in the News?' thread that need to be here, PM me the urls for those specific posts, please.
« Last Edit: July 12, 2015, 11:01:22 AM by Sherlock »

Offline Cycle

Re: Greek Bailout
« Reply #40 on: July 12, 2015, 11:10:19 AM »
Kylie, why do you keep trying to make out the EU as the bad guys in this situation?
  • Do you know what the EU did for Greece in the first bailout?  And the second?

  • Do you know what Greece promised to do in return for the money? 

  • Do you know that the EU has already forgiven a huge portion of the debt Greece incurred to the EU via those two bailouts?
Read this, if you are short on time:  http://www.bbc.com/news/business-13798000


Your analogy to parents is off.  A more accurate analogy would be:  the Smiths get into trouble, the Jones loan them some money to help them out.  The Jones promise that they will cut down their kids' $10 allowances.  But the Jones continue to do so.  The Smith kids, in the meantime, are getting $8 allowances.  Now the Smiths go to the Jones and say, "hey, how about you cut down on your kids' allowances?" 

The Jones then scream that their kids are being punished and they won't be told what to do and run around the streets waiving a flag while screaming that lenders are evil.

Three days later, the Jones go back to the Smiths telling them they won't get paid back on the money previously borrowed, asking to borrow more money and promising they will cut down their kids' $10 allowances.


Why shouldn't the people of Greece have the same pensions as those in the other countries in the EU?  Why should the EU pay for Greece to have a better pension system then the ones in their home countries?

Is reducing pension and welfare alone going to do it?  Of course not.  Never said it would.  But given that those account for 1/3 of the government spending, yes, they need to be part of the solution.  Times are tough.  Everyone needs to tighten their belts, not just the lenders.




Edited to remove the designer clothes analogy.  Oniya is right.  That is incorrect.  Allowances are more accurate.

« Last Edit: July 12, 2015, 12:09:52 PM by Cycle »

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Re: Greek Bailout
« Reply #41 on: July 12, 2015, 11:54:07 AM »
When 50% of your young people are unemployed, and families are barely surviving (not buying designer clothes) on the retired person's pension, how do you suggest the situation should get remedied?

Offline Cycle

Re: Greek Bailout
« Reply #42 on: July 12, 2015, 11:56:19 AM »
When 50% of your young people are unemployed, and families are barely surviving (not buying designer clothes) on the retired person's pension, how do you suggest the situation should get remedied?

When you have no money to pay those pensions, how do you suggest the situation should get remedied?


Offline Lilias

Re: Greek Bailout
« Reply #43 on: July 12, 2015, 12:12:35 PM »
The mess started back in 1990. The entire south of Europe (because it's not just Greece - Italy, Spain, Portugal and Cyprus are still shaky) is paying for the greatest mismanagement of funds in history that was German unification. Add banking shenanigans, and there you are.

http://www.democracynow.org/2015/7/7/economist_richard_wolff_on_roots_of
https://www.foreignaffairs.com/articles/greece/2015-07-07/pain-athens

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Re: Greek Bailout
« Reply #44 on: July 12, 2015, 12:26:21 PM »
Well, for one thing, I'd make sure that the money sent to Greece had gone towards helping to create jobs for that 50%.  We've seen it in the U.S. - if the middle class has nothing to spend (no wages), then they don't spend (austerity), and then companies don't have a place to sell their goods, meaning that they cut back on production.  If they decrease production, then they fire/lay off workers because there's nothing for them to do.  If workers are laid off/fired, then they have nothing to spend.  Repeat until thoroughly Depressed.

This might be an interesting read:  https://www.foreignaffairs.com/articles/greece/2015-07-07/pain-athens

Offline Cycle

Re: Greek Bailout
« Reply #45 on: July 12, 2015, 12:51:34 PM »
Well, for one thing, I'd make sure that the money sent to Greece had gone towards helping to create jobs for that 50%.  We've seen it in the U.S. - if the middle class has nothing to spend (no wages), then they don't spend (austerity), and then companies don't have a place to sell their goods, meaning that they cut back on production.  If they decrease production, then they fire/lay off workers because there's nothing for them to do.  If workers are laid off/fired, then they have nothing to spend.  Repeat until thoroughly Depressed.

This might be an interesting read:  https://www.foreignaffairs.com/articles/greece/2015-07-07/pain-athens

It is interesting indeed.  There are other articles that say it Greece's current problem is not caused by a simple rounding error: 

http://www.slideshare.net/AlexanderKorvin/the-causes-of-the-debt-crisis-in-greece
http://fpc.state.gov/documents/organization/142363.pdf
http://www.wsj.com/articles/SB10001424052748703961104575226651125226596

And I absolutely agree.  The next $60 billion to Greece should have conditions requiring Greece to boost its economy.  Cut the red-tape holding back small business?  Crack down on the tax evaders?  Revitalize those shipping and exporting industries?  Raise the minimum wage?  Possibly.  But not just paying it out to pensioners month after month at the current levels with no conditions.

Look, I get that it is an unpleasant idea to force people living on pensions to take less money.  But pleasant or not, spending has to be cut because there is not enough to spend.  Really, this is like that Apollo 13 scenario.  We can't focus on what we want.  We must focus on what we have.

Quote
Ken Mattingly:  "Here's the order of what I want to do. I want to power up Guidance, E.C.S., Communications, warm up the pyros for the parachutes and the command module thrusters."

John Aaron:  "The thrusters are gonna put you over budget on amps, Ken."

Ken:  "Well, they've been sitting at two hundred below for four days, John.  They've got to be heated."

John:  "Fine.  Then trade off the parachutes, something."

Ken:  "Well, if the chutes don't open, what's the point?"

John:  "You're telling me what you need. l'm telling you what we have to work with at this point.  l'm not making this stuff up."

Ken:  "They're going to need all these systems, John."

John:  "We do not have the power, Ken. We just don't have it."



Offline TaintedAndDelish

Re: Greek Bailout
« Reply #46 on: July 12, 2015, 04:24:35 PM »


I found this video to be rather enlightening on the topic of debt and credit.


Quote from: cycle
Quote from: TaintedAndDelish on Today at 02:29:27 AM
on the other, when a creditor lends money, they are taking a risk and need to be willing to suck up some of the loss should it not work out.
This is actually a good argument in favor of the EU not loaning any more money to Greece.  This argument is basically saying, "hey EU, Greece is massive credit risk and if you loan them another $60 billion on top of the $270 billion, expect not to get that $60 back either!"

This persuades the EU to loan Greece more money how?

I'm not taking one side or the other, I just don't seeing this problem being fixed by one side or the other exclusively. Things need to change on both sides. I could be wrong, but I don't think the Germans necessarily win if Greece goes bankrupt. When your debt is so large that you simply can't pay it, you need to cut it. Likewise, if your fiscal policy is not working, you need to fix it. If Greece is not able to thrive and pay a reasonable amount of debt down, then perhaps part of the solution needs to be focused on how to build Greece up so that it can thrive.



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Re: Greek Bailout
« Reply #47 on: July 12, 2015, 04:36:53 PM »

If Greece is not able to thrive and pay a reasonable amount of debt down, then perhaps part of the solution needs to be focused on how to build Greece up so that it can thrive.

This.  Greece needs to be able to get its non-pensioners employed.  That's what the EU and the Greek government need to concentrate on.  Shoveling money that only ends up going to the bankers (and I recognize some of the names on the 'bankers' side as those that were 'too big to fail' when the US did the big bank bailout) isn't going to do that.  The money needs to go to the right places.

Online Dashenka

Re: Greek Bailout
« Reply #48 on: July 12, 2015, 05:03:35 PM »
The easiest way for Greece to quickly get back on the horse is to ease their debts so they have more to spent on their problems.

Offline kylie

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Re: Greek Bailout
« Reply #49 on: July 12, 2015, 05:53:18 PM »
Kylie, why do you keep trying to make out the EU as the bad guys in this situation?
      Actually, I'm more making the ECB and the lending scheme generally out to be the bad guys.  I can understand that people in Finland and Germany feel upset when they are apparently led to believe that they are obviously "good" simply because they work more hours or years like good drones.  (I'd say it's not as if people working more years at penny jobs under an admittedly questionable administrative regime, is going to matter for Greece though.)  I can understand that they feel upset if their tax money gets put into Greece and they don't see a lot of progress.  Again, because banks are "too big to fail" and governments allow the banks to raid tax money as if they were public "persons"/entities, when in fact they are corporations that serve shareholders -- who should be the ones "taking the risks to make the big money" or so we are told. 

      What I don't like is that the Union (the leadership, not everyone) violated its own rules to rush Greece in, and then as has been pointed out many times in the news, they have gone on lending for many years at rates that make most of the money go straight back into the banks.  At some point, that obviously isn't going to work -- and we're well past it.  The IMF has said as much.  Several of the American commentators have noticed too.

       I'm sure there are some things that Greece could improve, but simply setting themselves up as the underdog to German industrial strength (which is what many would argue the EU is really about anyway), isn't obviously going to help much in the long run.  I understand pensions are a large part of the Greek economy now, but then the elderly are a large part of the Greek population.  A percent here and there doesn't make any difference to the big picture if it's mostly going to fund/compensate for things like another $50 billiion sell-off of assets the Germans are requiring.  Maybe if it were obviously going to something that will help Greece be sustainable by itself in the future.  I'm not convinced that the northern finance ministries are actually very interested in that, however.
 
        Really, in terms of competitiveness, what does Greece have to work with?  Yogurt and some iPhone products?  Tourism, shipping, agriculture, services.  We've seen so many southern countries that are ripe for agriculture, unable to crawl out from debt for generations all over the world.  Even the US has a history of pushing poor, indebted countries to take projects and treaties they largely didn't need, for the sake of outside banks and corporations, as a condition for favorable treatment and foreign aid (plenty of that in "diplomacy" toward Latin America and some of the Middle East historically).  Sometimes, we even used to do it basically at gunpoint (assassinations). 

       Sure there's an issue with corruption, but there's also the fact that agricultural products are not priced like industrial products.  And once you are behind in industry, which is where so many start out, you are behind for ages and the leading economies tend to do what they can to keep their advantages.  Not least by demanding you give up control of your currency and (you mentioned small businesses?) make life harder on small businesses -- but hey, don't you dare tax those big international corporations "too much."  The Greeks wanted to earn back another percent at least there, and no no, the ECB wasn't having that.

Quote
The Greek economy is the twenty-seventh largest in the world by nominal gross domestic product. The per capita GDP is $27,716. Tourism is the most important industry of the country; about twenty million tourists visit Greece annually. It also has an important maritime industry, which is the largest in the world; it accounts for 4.5% of the GDP and employs about 160,000 people.

Greece is an agricultural country; almost twenty percent of the people are employed in this sector. Wheat, corn, barley, sugar beets, olives, tomatoes, tobacco, potatoes, beef, dairy products and wine are the major agricultural products. Food and tobacco processing, textiles, chemicals, metal products, mining and petroleum are the major industries employing twenty-one percent of the Greek population. Fifty-nine percent of the workforce is employed in the services sector. The country is rich in natural resources like petroleum, marble, hydropower, magnetite, lignite, bauxite and gold. Germany, Italy, United Kingdom, France, Netherlands, and the United States are the major trading partners.

      They say there are "rich" mineral resources -- no absolute or relative numbers in this summary on how many...  And nothing right here on who already owns shares in them or how easy they are to develop in that part of the world.  I'd be a little leery about how many of the austerity conditions involve selling off mineral wealth in ways that make the profits accrue mainly to outside players.  It surely wouldn't be the first time. 

      Shipbuilding is something and there is talk of increasing taxes there, (at which point the firms go overseas much like US firms historically, and stretch out the tax paperwork as far as possible) but at least from the workers' perspective and relative vessel selling count, it's a declining industry within Greece:

Quote
Most shipbuilding, the main specialty of Perama’s workers, is now being outsourced to shipyards in China, Korea and Turkey, where labor costs are much lower and minimally regulated. To find jobs, local workers must therefore become migrant workers themselves.


       For the moment, tourism, food and tobacco are a greater share of the economy anyway.  And those do not pay.  You don't get very competitive on a seasonal (tourist) economy. 

      I'm just not sure how much is left after these years of austerity programs for the north to yank away -- it seems part of their yanking just ensures that the next bust will hit Greece that much harder, require more loans, and they can shout all over about 1% here and 2% there.  But that's also reinforcing a fundamental trade imbalance that's never/hardly going to go away, and moreover it may be all intentionally making it deeper.
 
« Last Edit: July 12, 2015, 06:08:42 PM by kylie »