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> While in many occasions he had admitted the faults of the Greek economy he never took specific actions in correcting them. By doing what, exactly? The count

by krona 10y ago

> While in many occasions he had admitted the faults of the Greek economy he never took specific actions in correcting them. By doing what, exactly? The country was bankrupt. In such a situation, the only sensible thing to do is default. Instead, Greece will be a 3rd world country with almost no public assets, and mass unemployment for decades. Regaining competitiveness through decades of internal devaluation is, to me, far less preferable than default. What Greece was given was like Versailles on steroids. And to make it worse, it's going to happen again, and again. I'd say we're due another club-med crisis any moment now. http://www.zerohedge.com/news/2017-02-26/european-debt-bomb-fuse-lit-target2-imbalances-hit-crisis-levels http://www.zerohedge.com/news/2017-02-26/european-debt-bomb-...

sgift 10y ago
Yesterday, there was a news that Greece has reached an agreement for a new round of money in exchange for further cuts to pensions and removal of some tax exemptions. So yeah, it is going to happen again. And again. And again. And all to save a few German and French banks, because politicians feared the results of telling them "you wanted to play in the casino and you lost, now the money is gone" after Lehmann.
- ricw 10y ago
  Or rather it'll happen again and again until the casino is turned into a viable and competitive economy. I wouldn't blame the Germans and French for trying to contain a crisis at its origin..
  - sgift 10y ago
    > I wouldn't blame the Germans and French for trying to contain a crisis at its origin.. The origin is that banks can lend money without any risk. End of story. Banks get interest for various reasons - one reason is risk of not seeing the money again and that has to be a real risk or banks will just lend money without thinking twice.
  - marcosdumay 10y ago
    Each round it gets exponentially bigger... There will come a time when postponing it won't work, then what? By the way, how injecting money in the hands of a chosen handful and taking it from a country to try to pay back can make a viable and competitive economy?
  - RobertoG 10y ago
    I'm not sure that this approach to economics of 'beatings will continue until morale improves', it's a so good idea. If fact, I think that, as the data show, it's in the same league of 'Trickle-down economics'.
  - Bartweiss 10y ago
    > Or rather it'll happen again and again until the casino is turned into a viable and competitive economy. By what mechanism? Each round of cuts drives up unemployment and poverty, and cutting expenses hasn't solved the deficit because trashing the economy has destroyed tax revenues. The first few rounds were rationalization, but they were too little too late. At this point the deep restructuring that's still needed is unapproachable - it's too slow and too unpopular, and the economy is already too weak. The recent cuts haven't been sensible and structural, they've been deadline-beating short-term moves to unlock a new tranche. Germany gains from this, certainly, but by making an example of Greece. It deters other high-debt Euro nations from getting into the same state, but it's not moving Greece closer to functionality.
    - occamrazor 10y ago
      Cutting expenses has not solved the _debt_ problem, but has surely solved the _deficit_. Greece has a strong primary surplus.
      - shkkmo 10y ago
        > but has surely solved the _deficit_. Greece has a strong primary surplus. No, it hasn't. The "primary surplus' doesn't include any debt repayments.
        Bartweiss 10y ago
        Yes, exactly. I said "too little too late" because a primary surplus doesn't resolve crippling debt - at this point it looks like the debt is far too large to handle with any kind of sensible short-term spending cuts.
elorant 10y ago
Greece's problem isn't the debt. It's the competitiveness of the economy, or more precisely the lack of. Even if we had all our debt erased, the way the economy is structured we'd be back in the same place give it a couple of decades, at most. We spend so much money paying pensions that it's a given we'd default one way or the other. Furthermore, you can't just default on the debt just by saying so. There's a naivety among mostly Greeks that just by going back to drachma and defaulting on our debt will magically solve all of our problems. In a country that imports pretty much everything that would be catastrophic. Varoufakis never came up with a plan. He admitted that there was no substantial alternative about converting into drachma. All that he did was playing bluff for six month, dragging a whole nation under his ideology. Then he moved on to greener pastures, not giving a fuck about the havoc he wrecked with his actions. He can act as a smart-ass all he wants in his books, but we were here and we experienced first hand the results of his reign. Once we get rid of this charade of imbeciles that act as the government, he and many of his former colleagues will end up in jail for their actions. There he will have plenty of time to write memoirs.
- lakis2 10y ago
  > We spend so much money paying pensions that it's a given we'd default one way or the other. That contradicts the "give it a couple of decades, at most" sentence right before it. In a couple of decades you can expect a lot of the pensions you are referring to to not be payed anymore due to natural causes (deaths). While you clearly have a point to make here, you lose in the details > He can act as a smart-ass all he wants in his books, but we were here and we experienced first hand the results of his reign. Once we get rid of this charade of imbeciles that act as the government, he and many of his former colleagues will end up in jail for their actions. There he will have plenty of time to write memoirs. And that's clearly belief/propaganda talking. Feel free to believe in it, but don't be surprised if it doesn't work out that way
- cinquemb 10y ago
  >Furthermore, you can't just default on the debt just by saying so. There's a naivety among mostly Greeks that just by going back to drachma and defaulting on our debt will magically solve all of our problems. In a country that imports pretty much everything that would be catastrophic. Well thinking from a trader perspective, by defaulting and going back to the drachma (and leaving the EU), Greece would have more flexibility wrt what goods they can import and from where compared to now with all the restrictions on trading that being within the EU imposes. Combine that with land access to the rest of Europe, I can imagine a prosperous almost black market for such goods that would provide much needed inflows of capital to the Greek economy (outside of selling junk sovereign bonds and hoping pensioners die faster).
pjc50 10y ago
> only sensible thing to do is default The problem here was cashflow; defaulting might save you from more loan payments, although actually doing it is quite painful under international law (see Argentina). But Greece needed to take out further loans in order to meet immediate public funding needs - and defaulting would have prevented that, or made it much more expensive. I've turned this over in my head a number of times. None of the options are particularly pleasant, but it's not a good idea to pretend that defaulting would have been trouble-free.
- marcosdumay 10y ago
  "The only way out" != "trouble free" Obviously Greece needs a balanced budget for defaulting. Too bad it seems to be moving the other way.
  - Bartweiss 10y ago
    The cynical play for Greece might have been trying to schedule their bailouts in a default-friendly way. Accept bailouts, conduct several rounds of aggressive cuts to balance the budget (while financing with tranche funds), blame the Eurozone for them at home, and then default with a balanced budget immediately after a funding unlock. I'm not sure it was possible - the deficit was too big to close without damaging the economy - but I suspect that leaning on international support while preparing an easy default might have been the best chance.
  - pjc50 10y ago
    If they'd been able to balance the budget, they wouldn't have been in that state in the first place!
deleted 10y ago
[deleted]

by krona 10y ago

sgift 10y ago

Yesterday, there was a news that Greece has reached an agreement for a new round of money in exchange for further cuts to pensions and removal of some tax exemptions. So yeah, it is going to happen again. And again. And again. And all to save a few German and French banks, because politicians feared the results of telling them "you wanted to play in the casino and you lost, now the money is gone" after Lehmann.

ricw 10y ago
Or rather it'll happen again and again until the casino is turned into a viable and competitive economy. I wouldn't blame the Germans and French for trying to contain a crisis at its origin..
- sgift 10y ago
  > I wouldn't blame the Germans and French for trying to contain a crisis at its origin.. The origin is that banks can lend money without any risk. End of story. Banks get interest for various reasons - one reason is risk of not seeing the money again and that has to be a real risk or banks will just lend money without thinking twice.
- marcosdumay 10y ago
  Each round it gets exponentially bigger... There will come a time when postponing it won't work, then what? By the way, how injecting money in the hands of a chosen handful and taking it from a country to try to pay back can make a viable and competitive economy?
- RobertoG 10y ago
  I'm not sure that this approach to economics of 'beatings will continue until morale improves', it's a so good idea. If fact, I think that, as the data show, it's in the same league of 'Trickle-down economics'.
- Bartweiss 10y ago
  > Or rather it'll happen again and again until the casino is turned into a viable and competitive economy. By what mechanism? Each round of cuts drives up unemployment and poverty, and cutting expenses hasn't solved the deficit because trashing the economy has destroyed tax revenues. The first few rounds were rationalization, but they were too little too late. At this point the deep restructuring that's still needed is unapproachable - it's too slow and too unpopular, and the economy is already too weak. The recent cuts haven't been sensible and structural, they've been deadline-beating short-term moves to unlock a new tranche. Germany gains from this, certainly, but by making an example of Greece. It deters other high-debt Euro nations from getting into the same state, but it's not moving Greece closer to functionality.
  - occamrazor 10y ago
    Cutting expenses has not solved the _debt_ problem, but has surely solved the _deficit_. Greece has a strong primary surplus.
    - shkkmo 10y ago
      > but has surely solved the _deficit_. Greece has a strong primary surplus. No, it hasn't. The "primary surplus' doesn't include any debt repayments.
      - Bartweiss 10y ago
        Yes, exactly. I said "too little too late" because a primary surplus doesn't resolve crippling debt - at this point it looks like the debt is far too large to handle with any kind of sensible short-term spending cuts.

elorant 10y ago

Greece's problem isn't the debt. It's the competitiveness of the economy, or more precisely the lack of. Even if we had all our debt erased, the way the economy is structured we'd be back in the same place give it a couple of decades, at most. We spend so much money paying pensions that it's a given we'd default one way or the other. Furthermore, you can't just default on the debt just by saying so. There's a naivety among mostly Greeks that just by going back to drachma and defaulting on our debt will magically solve all of our problems. In a country that imports pretty much everything that would be catastrophic. Varoufakis never came up with a plan. He admitted that there was no substantial alternative about converting into drachma. All that he did was playing bluff for six month, dragging a whole nation under his ideology. Then he moved on to greener pastures, not giving a fuck about the havoc he wrecked with his actions. He can act as a smart-ass all he wants in his books, but we were here and we experienced first hand the results of his reign. Once we get rid of this charade of imbeciles that act as the government, he and many of his former colleagues will end up in jail for their actions. There he will have plenty of time to write memoirs.

lakis2 10y ago
> We spend so much money paying pensions that it's a given we'd default one way or the other. That contradicts the "give it a couple of decades, at most" sentence right before it. In a couple of decades you can expect a lot of the pensions you are referring to to not be payed anymore due to natural causes (deaths). While you clearly have a point to make here, you lose in the details > He can act as a smart-ass all he wants in his books, but we were here and we experienced first hand the results of his reign. Once we get rid of this charade of imbeciles that act as the government, he and many of his former colleagues will end up in jail for their actions. There he will have plenty of time to write memoirs. And that's clearly belief/propaganda talking. Feel free to believe in it, but don't be surprised if it doesn't work out that way
cinquemb 10y ago
>Furthermore, you can't just default on the debt just by saying so. There's a naivety among mostly Greeks that just by going back to drachma and defaulting on our debt will magically solve all of our problems. In a country that imports pretty much everything that would be catastrophic. Well thinking from a trader perspective, by defaulting and going back to the drachma (and leaving the EU), Greece would have more flexibility wrt what goods they can import and from where compared to now with all the restrictions on trading that being within the EU imposes. Combine that with land access to the rest of Europe, I can imagine a prosperous almost black market for such goods that would provide much needed inflows of capital to the Greek economy (outside of selling junk sovereign bonds and hoping pensioners die faster).

pjc50 10y ago

> only sensible thing to do is default The problem here was cashflow; defaulting might save you from more loan payments, although actually doing it is quite painful under international law (see Argentina). But Greece needed to take out further loans in order to meet immediate public funding needs - and defaulting would have prevented that, or made it much more expensive. I've turned this over in my head a number of times. None of the options are particularly pleasant, but it's not a good idea to pretend that defaulting would have been trouble-free.

marcosdumay 10y ago
"The only way out" != "trouble free" Obviously Greece needs a balanced budget for defaulting. Too bad it seems to be moving the other way.
- Bartweiss 10y ago
  The cynical play for Greece might have been trying to schedule their bailouts in a default-friendly way. Accept bailouts, conduct several rounds of aggressive cuts to balance the budget (while financing with tranche funds), blame the Eurozone for them at home, and then default with a balanced budget immediately after a funding unlock. I'm not sure it was possible - the deficit was too big to close without damaging the economy - but I suspect that leaning on international support while preparing an easy default might have been the best chance.
- pjc50 10y ago
  If they'd been able to balance the budget, they wouldn't have been in that state in the first place!

deleted 10y ago

[deleted]