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Well BBC ran a show last night. And it did show the some reasons why Greece is such trouble today. It turns out people spent like crazy, far beyond their means.

by batista 14y ago

Well BBC ran a show last night. And it did show the some reasons why Greece is such trouble today. It turns out people spent like crazy, far beyond their means. Things like electricians driving Porsche's and High End Mercedes cars. All of it imported from Germany. When a nation full of people with government included involves in such spending it is but other wise natural that they price for it later on. If BBC did run such a show, then, as a Greek, I can tell you it was bollocks. In fact, in you check the private (homes + enterprises) debt for Greece as compared to the GNP you will see that it is quite small, actually one of the smallest in the western Europe. Plus, even for this private debt, the majority is in the form of housing loans (= to buy a house). So, no "electricians driving Porsches". Well, you could find one or two maybe. But I doubt you could find five of them. Now, state spending is another story altogether. I will get in more detail when I can.

muyuu 14y ago
Heh it cracked me up too. "Well BBC ran a show last night" therefore it must be true and I can now give you all my expert opinion in the matter. Private debt is much higher in the UK than in Greece, both in relative and in absolute terms. Public debt is probably second in line to Greece, it's a close race with Italy and maybe some smaller Eastern countries. I wonder if the BBC covered that last night.
- kamaal 14y ago
  Fine, I never said borrowing was wrong. I said borrowing without having means to pay back is wrong. You almost make it look as though Greece did nothing wrong in borrowing, but now Germany and alike are committing a huge sin in not bailing them out. UK, Italy and all those countries you mentioned might definitely have the same debt. But the situation there is different because those people have a way of paying their loans back. I am not expert in economics but I know, spending more than earning(Or what you can earn) is not healthy for any economy.
  - muyuu 14y ago
    Germany has massive part on it by enforcing such shockingly low borrowing rates across the Eurozone. It completely destroyed countries with immature Real Estate landscapes, countries used to high inflation rates that collectively shot themselves in the foot. Germany and France took no hostages when they were stagnating and failed to meet EU requirements. They gave absolutely no regard to these countries and now they are paying for it. They will either way, because that's their main market, Europe. Because it's not just Greece that's over-borrowed, it's most of the eurozone including Italy, France, Spain, Belgium, Netherlands, ... basically most of the Eurozone by GDP.
    - lispm 14y ago
      Germany 'enforced' the borowing rates? Let's look a few years back. The rating agencies rated all kinds of junk very high. The banks all over the place where very creative with products hiding the risks. When Germany was asking for tighter regulations we were ignored or laughed at. Now the Germans simply demand that the lessons are learned and we see structural reforms - reforms which can not be done by just throwing more money at countries high in debt.
      - muyuu 14y ago
        Yep, they pretty much control the rates. This is not "a few years back" - this clusterfuck has been brewing since year 2000 with the euribor. At that point several countries needed high rates to stop their overheating borrowing and they were given a shower of petrol to stop their fires.
    - Uchikoma 14y ago
      As this pops up everywhere, could you please cite a source from e.g. a ECB protocol or otherwise how Germany "controls the rates" or "enforces shockingly low borrowing rates" in violation of the ECB charta? The ECB back then set rates in accordance with inflation, e.g. to keep it low. That's the charta of the ECB. When a high inflation country joins a construct that has a goal of keeping inflation low, then yes you have a problem if you do not change. But I'm not sure Greece e.g. was forced to join a low inflation construct. From the ECB homepage: "The ECB is the central bank for Europe's single currency, the euro. The ECB’s main task is to maintain the euro's purchasing power and thus price stability in the euro area." (Beside the obvious fact that "shockingly low borrowing rates" would lead to high inflation, which could then not lead to "countries used to high inflation rates that collectively shot themselves in the foot.") (PS: I'm biased as I'm German)

by batista 14y ago

muyuu 14y ago

Heh it cracked me up too. "Well BBC ran a show last night" therefore it must be true and I can now give you all my expert opinion in the matter. Private debt is much higher in the UK than in Greece, both in relative and in absolute terms. Public debt is probably second in line to Greece, it's a close race with Italy and maybe some smaller Eastern countries. I wonder if the BBC covered that last night.

kamaal 14y ago
Fine, I never said borrowing was wrong. I said borrowing without having means to pay back is wrong. You almost make it look as though Greece did nothing wrong in borrowing, but now Germany and alike are committing a huge sin in not bailing them out. UK, Italy and all those countries you mentioned might definitely have the same debt. But the situation there is different because those people have a way of paying their loans back. I am not expert in economics but I know, spending more than earning(Or what you can earn) is not healthy for any economy.
- muyuu 14y ago
  Germany has massive part on it by enforcing such shockingly low borrowing rates across the Eurozone. It completely destroyed countries with immature Real Estate landscapes, countries used to high inflation rates that collectively shot themselves in the foot. Germany and France took no hostages when they were stagnating and failed to meet EU requirements. They gave absolutely no regard to these countries and now they are paying for it. They will either way, because that's their main market, Europe. Because it's not just Greece that's over-borrowed, it's most of the eurozone including Italy, France, Spain, Belgium, Netherlands, ... basically most of the Eurozone by GDP.
  - lispm 14y ago
    Germany 'enforced' the borowing rates? Let's look a few years back. The rating agencies rated all kinds of junk very high. The banks all over the place where very creative with products hiding the risks. When Germany was asking for tighter regulations we were ignored or laughed at. Now the Germans simply demand that the lessons are learned and we see structural reforms - reforms which can not be done by just throwing more money at countries high in debt.
    - muyuu 14y ago
      Yep, they pretty much control the rates. This is not "a few years back" - this clusterfuck has been brewing since year 2000 with the euribor. At that point several countries needed high rates to stop their overheating borrowing and they were given a shower of petrol to stop their fires.
  - Uchikoma 14y ago
    As this pops up everywhere, could you please cite a source from e.g. a ECB protocol or otherwise how Germany "controls the rates" or "enforces shockingly low borrowing rates" in violation of the ECB charta? The ECB back then set rates in accordance with inflation, e.g. to keep it low. That's the charta of the ECB. When a high inflation country joins a construct that has a goal of keeping inflation low, then yes you have a problem if you do not change. But I'm not sure Greece e.g. was forced to join a low inflation construct. From the ECB homepage: "The ECB is the central bank for Europe's single currency, the euro. The ECB’s main task is to maintain the euro's purchasing power and thus price stability in the euro area." (Beside the obvious fact that "shockingly low borrowing rates" would lead to high inflation, which could then not lead to "countries used to high inflation rates that collectively shot themselves in the foot.") (PS: I'm biased as I'm German)