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You're parroting the EU Commission/IMF/ECB line, and not looking at it any deeper. The Greek economy wasn't good enough to join the Euro, but the EU wanted the
by netsharc 2y ago
You're parroting the EU Commission/IMF/ECB line, and not looking at it any deeper.
The Greek economy wasn't good enough to join the Euro, but the EU wanted them in anyway, and pretended to not notice. Why? Probably because German banks lobbied the German government, because joining the common currency meant a lot of security, and the German banks could loan to them knowing if the debts go bad, the ECB/other Euro economies would have to bail them out, i.e. it's "privatize the wins, socialize the losses" for the banks.
So Greece joined the Euro, all the banks offered loans, the Greeks all thought "Wahey, booming economy, let's spend, spend, spend!" (and don't say "Those greedy lazy Greeks!", this is a natural reaction, just look at the subprime mortgage times of the US before it blew up and almost brought down the world economy), and when it all went bad, the German government fought hard to bail them out (with EU taxpayer money) because it was bailing out German banks, despite them offering irresponsible loans.
The Greek Syriza government and Yanis Varoufakis fought hard against the measures, e.g. austerity (proven to be bullshit, just look at Tory Britain), wanting a loan haircut to punish the irresponsible banks and the bureaucrats in Brussels preferred a government that would just take their "punishment" quietly...
- brnt 2y agoThe best part was that most (all?) of the bailout money never went to Greece; it went straight to German and French banks.
- netsharc 2y agoIt was funnier when Cyprus also had a crisis. Their banks had a lot of Russian money, so it was Brussels bailing out rich Russians with EU taxpayer money. https://en.wikipedia.org/wiki/2012–2013_Cypriot_financial_crisis https://en.wikipedia.org/wiki/2012–2013_Cypriot_financial_cr...
- toomuchtodo 2y agoGreat comment, excellent retelling of the historical event. If you want to see what the alternative looks like, look what Iceland did to its banks during their banking crises. Icelandic depositors had priority claims, haircuts for everyone else (in opposition to intense pressure for Iceland to make foreign investors and depositors whole). Importantly, notice near the end of the Wikipedia article an about how it talks about using currency devaluations for economic recovery versus labor policies and negotiations (ie austerity). This isn’t possible in the EU due to their shared currency. A monetary union binds. https://en.m.wikipedia.org/wiki/2008%E2%80%932011_Icelandic_financial_crisis https://en.m.wikipedia.org/wiki/2008%E2%80%932011_Icelandic_...
- netsharc 2y agoYeah, I read a lot/too much about the crisis when it was going on... a monetary union without a fiscal union was just/is trouble, because every bailout had to be voted in by 28 national parliaments. The US states have a fiscal union so "bailouts" of states in deficit happen quietly and automatically, and federal benefits for citizens are guaranteed. And indeed, having one's own currency means there's a natural way to recover the economy without pissing off many of the locals, if your currency devalues (e.g. compared to USD), your labor is now cheaper (in USD), and your countries products can be sold for cheaper. The Euro was very beneficial to Germany because it could continue growing without making its currency go up in value relative to other European ones and making its products less affordable. But it messed up a lot of other European countries...