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This is not correct. At least you can't say that without depicting the full picture. Greece is a country that can't afford it operations. It has no economic gr

by nakkiel 15y ago

This is not correct. At least you can't say that without depicting the full picture. Greece is a country that can't afford it operations. It has no economic growth and large unemployment. It survives by borrowing money. In a "normal" situation, it would go bankrupt and its money would be devaluated. Then in several troubled years it could experience growth again because with a devaluated money you are in a better economic position to make things and sell them. In reallity, Greece is part of the Euro zone so its money is the Euro and it has no control over it. Greece's situation is comparable to that of California (although not to the same extent). While many economist agree that austerity doesn't bring growth, at least it stops the bleeding. Also, we "don't know better" is the general concensus. Not to mention it worked for Iceland.

scotch_drinker 15y ago
In a normal situation, they wouldn't necessarily have to go bankrupt. If they had a national lender of last resort, they could essentially monetize the debt, causing inflation, and pay their way out with their devalued currency. The Greek economy is not fundamentally different than it was when it was accepted into the EU. France and Germany knew that then and know it now. They just want to have their cake and eat it too. They loaned money to a country that had little hope of paying it back. It's fun to say "it's all the debtor's fault" but there are two sides to every debt relationship and in this case, as much fault lies with France and Germany as it does with Greece. Also, Iceland didn't go through the forced austerity that is being pushed upon the Greeks. The Icelandic government essentially defaulted when it nationalized the banks. There was no "We'll give you a bailout if you crush your economy through austerity programs" from the EU because Iceland is not an EU country. Austerity only stops the bleeding to foreign creditors at the expense of the country's citizens. It does not stop the bleeding internally in the local economy. The Greek population knows this and that's why they are strongly resisting.
barrkel 15y ago
I fully agree that if Greece had its own currency, devaluation would be a viable solution, but it doesn't, so there's no point talking about it. Government spending isn't "bleeding"; economies are feedback systems, and changes to spending in one location directly reduces income in other areas, which results in lost productivity until the system readjusts. Adjusting the system when productivity is already low is one of the worst times to do it, because there's very little to take up the slack. On the other hand, Greece probably needed a crisis like this in order for it to face up to its governance problems. I don't know why you quoted "don't know better"; I didn't say that, nor anything like it, as far as I understand. Iceland is not very relevant, again, since it had its own currency; in sudden devaluation, it reduced the value of monetary wealth of its citizens massively. You could view it has a massive government appropriation of citizen assets.
- meric 15y ago
  >> massive government appropriation of citizen assets. Hardly; The government got itself into so much debt in the first place because of tax evasion lowering tax revenue and high government expenditure. i.e The government spent too much servicing its own people, now it needs to grab the citizens' assets back to repay it all.

by nakkiel 15y ago

scotch_drinker 15y ago

In a normal situation, they wouldn't necessarily have to go bankrupt. If they had a national lender of last resort, they could essentially monetize the debt, causing inflation, and pay their way out with their devalued currency. The Greek economy is not fundamentally different than it was when it was accepted into the EU. France and Germany knew that then and know it now. They just want to have their cake and eat it too. They loaned money to a country that had little hope of paying it back. It's fun to say "it's all the debtor's fault" but there are two sides to every debt relationship and in this case, as much fault lies with France and Germany as it does with Greece. Also, Iceland didn't go through the forced austerity that is being pushed upon the Greeks. The Icelandic government essentially defaulted when it nationalized the banks. There was no "We'll give you a bailout if you crush your economy through austerity programs" from the EU because Iceland is not an EU country. Austerity only stops the bleeding to foreign creditors at the expense of the country's citizens. It does not stop the bleeding internally in the local economy. The Greek population knows this and that's why they are strongly resisting.

barrkel 15y ago

I fully agree that if Greece had its own currency, devaluation would be a viable solution, but it doesn't, so there's no point talking about it. Government spending isn't "bleeding"; economies are feedback systems, and changes to spending in one location directly reduces income in other areas, which results in lost productivity until the system readjusts. Adjusting the system when productivity is already low is one of the worst times to do it, because there's very little to take up the slack. On the other hand, Greece probably needed a crisis like this in order for it to face up to its governance problems. I don't know why you quoted "don't know better"; I didn't say that, nor anything like it, as far as I understand. Iceland is not very relevant, again, since it had its own currency; in sudden devaluation, it reduced the value of monetary wealth of its citizens massively. You could view it has a massive government appropriation of citizen assets.

meric 15y ago
>> massive government appropriation of citizen assets. Hardly; The government got itself into so much debt in the first place because of tax evasion lowering tax revenue and high government expenditure. i.e The government spent too much servicing its own people, now it needs to grab the citizens' assets back to repay it all.