5 ms·

Can someone explain to me if and why I'm wrong to think of Greece as a deadbeat? I understand the point that they were forced to make cuts in exchange for loan

by latch 12y ago

Can someone explain to me if and why I'm wrong to think of Greece as a deadbeat? I understand the point that they were forced to make cuts in exchange for loans, and this only further depressed their economy, but where did that money go and shouldn't the government and people be accountable for it? Also, even if they were wrong to do so, something must have caused creditors to demand austerity, have those issues been solved? If Greece was given a clean slate, would it be a healthy, productive and growing economy? There are a lot of places in the world where people have horrible social support. I don't wish it for anyone, but that's the reality for a lot of places. Maybe that ought to be the reality for Greece? Work until you die, third rate health care and infrastructure. I'm not happy to see it, but if you can afford more, energy is something that must be produced.

crdoconnor 12y ago
>Also, even if they were wrong to do so, something must have caused creditors to demand austerity Austerity in Greece (much as in America) is pure class warfare: an attempt to break the back of the working classes so that their wages and negotiating leverage will be pressured down. There is a reason that French and German creditors demanded that pensions and public sector salaries be slashed but "allowed" Greece to continuing purchasing expensive imported military hardware. It's the same reason why Schaeuble and Dijsselbloem keep pushing for austerity despite the fact that it will never help get the debt paid back: they aren't actually interested in being paid back.
- latch 12y ago
  Is there a reason "allowed" is in quotes? I feel like I'm missing something obvious, but I don't know what. Without that [possible] missing piece, couldn't Greece just have opted not to buy any military hardware?
  - speeder 12y ago
    I don't have the full explanation now, some people explained and gave sources to me in 2011, but some legal moves were made abusing some contracts that made greece buy a bunch of military hardware for the same value as some unwanted bailout (that they also had to take, to get the bailout they actually wanted). If I rembember correctly about 100 billion in total went in thsoe sort of deals. The greek population then became very upset, because the hardware bought don't even work right (some subs that DO work, but float always tilted and are unstable, and some military planes that need an absurd amount of ground maintenance to fly just a little, something that to greece is useless, they need planes that can fly for longer time compared to the amount of time on ground).
  - crdoconnor 12y ago
    >Is there a reason "allowed" is in quotes? I feel like I'm missing something obvious, but I don't know what. Without that [possible] missing piece, couldn't Greece just have opted not to buy any military hardware? One of the conditions of the bailout to Greece was essentially that the Troika should have some control over the Greek budget to ensure that it wasn't "spending irresponsibly". The fact public sector pensions were at the top of the list of 'must-do' cuts and military hardware purchases weren't even on the list demonstrates where the Troika's priorities really lay.
- AnimalMuppet 12y ago
  > Austerity in Greece (much as in America) is pure class warfare: an attempt to break the back of the working classes so that their wages and negotiating leverage will be pressured down. Can you supply actual evidence for that claim? Because for those who don't agree with you (and there are many), the bare claim is not very persuasive.
  - crdoconnor 12y ago
    Here's what the IMF (a member of the Troika) has to say: https://systemicdisorder.wordpress.com/2012/10/10/quietly-the-imf-confesses-that-austerity-does-not-work https://systemicdisorder.wordpress.com/2012/10/10/quietly-th... >The IMF said a common figure used by governments was to assume that for each dollar lost in government spending, 50 cents is erased from gross domestic product, an assumption used when creating austerity budgets. But, the fund said, its study of the issue has found that, since the economic collapse that began in 2008, for each dollar cut from government spending, GDP is reduced from 90 cents to $1.70. i.e. yes it cuts your deficit, but your public debt/GDP gets worse.
    - AnimalMuppet 12y ago
      Interesting: In "normal" times, adding a dollar of government spending adds 50 cents to GDP, that is, it's inefficient. I don't find it surprising that things changed in 2008 - we entered a very different economic environment then. So austerity was a bad (even disastrous) policy choice starting in 2008. But it seems reasonable to ascribe the bad choice to the troika being unfamiliar with that new environment, rather than to "pure class warfare". (Except once they learned that the conditions changed, doubling down on a non-working policy is less easy to justify.)
- protomyth 12y ago
  In the US, "austerity" was done by the Congress and forced on President Truman from 1946 - 1948. It worked quite well after the war as President Truman wanted to continue spending to reinvigorate the economy (FDR style projects). This lead to some very good years. The modern US has not bothered to reduce its borrowing or spending in a meaningful way.
  - crdoconnor 12y ago
    >In the US, "austerity" was done by the Congress and forced on President Truman from 1946 - 1948. It worked quite well after the war The only reason it "worked" was because it was implemented after the New Deal, which had provisions (like social security) that acted as a counter-cyclical automatic stabilizer. >The modern US has not bothered to reduce its borrowing or spending in a meaningful way. Naturally. The US economy would crater if it did. There has been a lot of political pressure to chip away at US social security, however, with austerity used as the pretext for why it is "necessary". Fortunately the AARP is a powerful enough political force in Washington to make this politically impossible. For now. As in Greece - all arguments about austerity go out of the window when talking about the military's budget, so this is most often used by Congress as a means of giving their constituents' economies a keynesian kick while not offending their corporate backers.
    - protomyth 12y ago
      So, keep borrowing and hope it all works out? "The only reason it "worked" was because it was implemented after the New Deal, which had provisions (like social security) that acted as a counter-cyclical automatic stabilizer." references?
      - crdoconnor 12y ago
        >So, keep borrowing and hope it all works out? Personally I think that they should default now and start issuing tax anticipation notes like California did. Losing access to the credit markets is irrelevant to them now, so they might as well hit the reset button. >references? Explanation here: http://socialdemocracy21stcentury.blogspot.sg/2011/01/keynesianism-in-america-in-1940s-and.html http://socialdemocracy21stcentury.blogspot.sg/2011/01/keynes...
- dingaling 12y ago
  > Austerity in Greece (much as in America) is pure class warfare: an attempt to break the back of the working classes so that their wages and negotiating leverage will be pressured down. Austerity == reduction in Government spending. When has that ever been bad? Isn't small-government something to which all countries should aspire. A couple of comparisons, bear in mind Greece has a population of 12 million and the UK 60 million Does Greece really need 700,000 civil servants ( down from 900,000 ) when the UK makes do with 420,000? Does Greece really need a standing military of 140,000, the same size as the UK's military?
  - sebkomianos 12y ago
    What's happening is not reduction in Government spending. It's reductions everywhere. They haven't just been firing civil servants that were doing a bad job (or no job at all), they have been cutting budgets of hospitals, they have been shutting down schools, they have been reducing health insurance coverage, etc etc. And that's where the current party came in and said "Okay, we HAVE TO make reforms because we have been spending wrongly, among other things, BUT we can't do whatever just so numbers look right - it has to make sense, both for the country to continue existing and for the creditors to see that they have a longterm trustworthy partner on the other side of the table." As for your last question, two things: a) Why does an EU-member country have to spend on military AT ALL? Shouldn't such costs be executed at a EU-wide level? b) Greece is neighbourhooding with Albania, FYROM, Bulgaria, Turkey. UK is surrounded by...the sea, Ireland and...France.
keebEz 12y ago
1) In general, for the european union to work, European national governments need to start dropping the 'us vs. them' mentality - all of the EU is a deadbeat if Greece is a deadbeat. 2) Corruption - Greece just isn't as 'well-run' as Germany - a lot of that money gets skimmed off the tops at the expense of the people. Yes, the 'people' elected the governments that took the money and skimmed the money, but if you think the U.S. government is slanted towards corporations than Greece's is backwards in comparison. 3) This matters for a lot more than just Greece - all of the EU is at stake, and yet blame seems to get layered onto Greece.
evoloution 12y ago
This is a good criticism, allow me to answer your questions to my best of knowledge. 1) Greece was not always a deadbeat. a) misuse of money over many years (kleptocracy) b) lack of competitive advantage after merging economy with stronger countries (eg. Germany) and c) a large influx of cash from stronger countries that eased productivity and entrepreneurship is also to blame. Imagine if US slashed "bullshit jobs" tomorrow what effect this would have to consumerism and GDP in comparison. Austerity measures in Greece basically stagnated cash flow to the economy which like US is mostly service sector - based. 2) Structural reforms are far behind due to the Kleptocrats' influence till today. Clean slate, dealing with kleptocracy and a growth plan would do a lot to reverse this 3) Sensible management and right investments could mean no such fate for Greece. Gourmet-quality agricultural products and food processing, tourism by exploitation of natural beauty and rich history, and a strong shipping industry and tradition could help this country move forward. Mining also has some potential but I am not sure if it can account for a big chunk of the new economy.
- latch 12y ago
  None of this makes me sympathetic to Greece. It's an a) explanation for what transpired and b) a list of things that might help solve it, but is it actually being done? For me, it boils down to: should reasonable people think that Greece can and will execute?
ErneX 12y ago
The "problem" is that they have a recently elected government that doesn't want to be held accountable for what the previous governments did and/or spent.
glesica 12y ago
I'm sorry, I realize that you're asking for clarification, but it is really frustrating to keep hearing this kind of crap. Greece the country didn't borrow all (or even most) of that money, private borrowers borrowed it from German banks (or Greek banks that borrowed it from German banks). The money ended up as public debt because the banks got bailed out. The reasons for this were complex, but had a lot of do with German fiscal and labor policy. Once the loans turned out to be bad (because why on Earth did the banks expect that all of these funds could possibly to put to good, productive use, especially once credit standards were lowered), Greece was expected to deal with the situation. They did, and they bankrupted the country doing so (same with Portugal, Spain, and Ireland). There is, of course, plenty of blame to go around, but this is not a situation where the Greek government borrowed a ton of money and wasted it. They borrowed a ton of money to bail out their banking system including a bunch of German banks (which is where a lot of the money originated). This is exactly what the global economic elites were telling everyone to do in 2008. Then, once things got ugly, those same elites decided that the Greek people should collectively pay the price for two bad economic policies that were only partially the fault of their government. Suggested reading: http://www.amazon.com/Austerity-The-History-Dangerous-Idea/dp/019982830X http://www.amazon.com/Austerity-The-History-Dangerous-Idea/d... - this book goes into great depth about what exactly happened in Europe. http://blog.mpettis.com/2015/02/syriza-and-the-french-indemnity-of-1871-73/ http://blog.mpettis.com/2015/02/syriza-and-the-french-indemn... - blog post that describes how what has happened in Greece, Spain, and Portugal was effectively inevitable and not the fault of the respective governments so much as it was a result of a series of pan-European financial blunders.
- protomyth 12y ago
  "Greece the country didn't borrow all (or even most) of that money, private borrowers borrowed it from German banks (or Greek banks that borrowed it from German banks). The money ended up as public debt because the banks got bailed out." In the US there was quite a series of legal moves requiring banks to lend mortgages to people who didn't previously meet the banks criteria. Were German banks similarly compelled or was it just bad judgement of the banks?
  - 12y ago
Lazare 12y ago
Complicated topic; a couple ways of approaching it. One way is to say this: All countries (and regions) have periodic downturns. When this happens you either have fiscal flows from richer to poorer regions (the US does this), or you have currency devaluation (the EU prior to the Euro did this). After the Euro, the EU was still reluctant to have straight up fiscal flows (if the EU worked the way the US works, Germany would straight up fund Greek unemployment benefits). But with a shared currency, currency devaluation was also not possible. This left only one answer: So called internal devaluation. The standard neoliberal textbook answer is "don't ever do this, it's slow, terrible, and doesn't really work", but Greece had no other options. (Krugman is quoted at the link; in this he speaks for the neoliberal consensus.) You ask why you shouldn't think of Greece is a deadbeat; the answer is the same reason why you shouldn't think of Alaska as a deadbeat, or the north of England as a deadbeat (both relatively poorer regions of larger nations which are net recipients of government transfers); because they're people suffering from an economic downturn largely beyond their control, and they need help. Greece didn't need (or deserve) loans, they needed aid...or a devaluation. Since aid was politically impossible, and devaluation legally impossible, they got loans. Which they couldn't pay back, which forced them to make cuts which deepened the problem. To the surprise of no one, really, but what else could be done? Even Krugman never identified a politically and legalally feasible alternative. Another approach is to focus on your question "If Greece was given a clean slate, would it be a healthy, productive and growing economy?" The answer is "yes of course". Until Syriza came to power Greece was running a "primary surplus" (that means their budget balanced if you don't count interest); that means that if they simply defaulted they would be, economically, fine. Greece doesn't (or didn't, but we'll come to that in a moment) need to borrow to fund ongoing government operations; they only need to borrow to fund repayments of the money they already borrowed. And again, they were forced to borrow, because the options that would normally be open (aid or devaluation) were closed to them. (Note: Greece hasn't run a primary surplus the last two months because tax receipts crashed on the election of Syriza. Syriza ran against some of the more onerous taxes, and people stopped paying them on the assumption that they would soon be repealed, or at least unenforced. Ironically, this means that the election of Syriza has made the bargaining position of Greece's Syriza-led government much worse; the last government could credibly tell the markets to jump off a cliff, but the current one needs to continue borrowing to avoid a crisis. Not the first political party to be hamstrung by their own election promises, but it's rarely so severe.) Anyhow, when you say "Maybe that ought to be the reality for Greece?", what you're really discussing is a devaluation, where a nation collectively realises they aren't quite as rich as they thought, and scales all their expectations down. A salary that might have stretched to a new Lexus now only stretches to a new Toyota, or whatever. Devaluations are normal and healthy; southern European countries devaluated their currencies over and over and over again in the post WWII years. Greece should have done that at the start of the global financial crisis; they should probably do that now. There's just one problem: They can't do it, because they're part of the euro. Or rather, they can, but rather than it just being a matter of the drachma/deutchmark exchange rate shifting a bit, and everyone's drachma salaries being worth less, while all the tourist's pounds and marks are worth a bit more, with everyone's mortgages, employment contracts, pensions, etc. being left alone, Greece now faces the reality of an internal devaluation, where everything has to change in a brutal, grinding process. (Edit: Devaluing the currency would also decrease the loan burden; they could just print drachma to pay back the German loans. Which they can't do now, because they don't have the drachma. My point is its all linked; Greece has much less control over their finances than we would expect a "real" country to have, and all the obvious answers that countries all over the world have used and continue to use are closed to them. Personally, I struggle not to be sympathetic. The US and the UK don't—in fact, can't—face a problem like Greece faces, because they still have printing presses.) (Again, US states face the same issue, but the US has a strong federal government that transfers enormous quantities of money between regions. The EU, in comparison, is tiny. And incompetent. And (arguably) dominated by Germany.) TL;DR: Joining the euro removed every existing easy or painless way to fix the problem, but didn't add any new methods. You can blame Greece for joining the euro all those years ago, but once they did, the problems were set in stone. Calling them deadbeats now isn't really accurate, but worse, it's pointless. Ninja edit: Or, of course, Greece could exit the Euro. But that cure might be worse than the disease. Then again, there may no longer be any other options. We live in interesting times.
theophrastus 12y ago
Who is Greece? The politicians which promised its voters too much, borrowed from eager usury of the (mostly) German bankers, and thereby pauperized the nation -or- the people who were thereby fooled and taken advantage of? One should keep in mind that while in some legal sense they're one and the same; but not so in a sense of social justice.
nicolasehrhardt 12y ago
You are not wrong, Greece is a deadbeet right now. They already are living on life support from the EU-IMF, and have been for more than a year. What's wrong is that, we gave them money and forced them to do reforms (reforms that France and Germany [mostly] designed). A year and a half later, Greece is still on life support (on our money) but the reforms we forced them to do made the situation worse. Greece has a giant problem with corruption, I don't think they have a really modern state, neither can they be really productive (I mean, look at all of these small islands). But the issue is now political. I think we (France and Germany) should be ashamed of what we forced them to do, not even because we mothered them (if it had them then maybe...), but because we made their situation worse. We should find a way to losen our requirements and let them breath a little because clearly, we failed to help them so far. It's the same old problem, either the EU becomes a real political union and we can start thinking about helping each other as neighbor states, not as economic partners, to maintain the stability of the union, either we keep thinking about the money we don't have, and nothing really improves. PS: the day that the US collapses because of its giant debts, I hope you will think again about this: "shouldn't the government and people be accountable for it?".
- cperciva 12y ago
  we (France and Germany) should be ashamed of what we forced them to do When did France and Germany force Greece to do anything? I was under the impression that the Greek government negotiated the terms of the bailout which they're now talking about repudiating.
  - 6t6t6 12y ago
    You can see it that way: the main goal of the agreements that have been signed until now between Greece and the Troika was to protect the interest of the big fortunes even if that mean misery for the citizens. Lets be clear, big mistakes have been made and someone will have to pay. The opinion if Syriza is that is not the poor who have to assume the consequences.
  - speeder 12y ago
    Forced on the population. Greek protests were the population pointing out that the deals would fuck them over. The rulers of Greece ignored the population, and took the deal anyway, and France and Germany KNEW they would take the deal, because it would be profitable for them (Greek rulers then had lots of some bizarre derivatives in Switzerland that would appreciate if they had taken the bailout, thus a "legal" way to steal public money)
msabalau 12y ago
Greece is running a primary surplus, so if they were given a clean slate they'd have a chance at a productive and growing economy, despite the damage that has been recklessly been caused. If you choose to consider the Greeks deadbeats, I hope you hold the same contempt for Germans, who had a huge debt write off in 1953. Nor, indeed, have the Germans repaid the the forced loans that the Nazi extracted at gunpoint from Greece and other occupied countries.
msabalau 12y ago
Greece is running a primary surplus, so if they were given a clean slate they'd have a chance at a productive and growing economy, despite the damage that has been recklessly been caused. If you choose to consider the Greeks deadbeats, I hope you hold the same contempt for Germans, who had a huge debt write off in 1953. Nor, indeed, have the Germans repaid the the forced loans that the Nazi extracted at gunpoint from Greece and other occupied countries.

by latch 12y ago

crdoconnor 12y ago

>Also, even if they were wrong to do so, something must have caused creditors to demand austerity Austerity in Greece (much as in America) is pure class warfare: an attempt to break the back of the working classes so that their wages and negotiating leverage will be pressured down. There is a reason that French and German creditors demanded that pensions and public sector salaries be slashed but "allowed" Greece to continuing purchasing expensive imported military hardware. It's the same reason why Schaeuble and Dijsselbloem keep pushing for austerity despite the fact that it will never help get the debt paid back: they aren't actually interested in being paid back.

latch 12y ago
Is there a reason "allowed" is in quotes? I feel like I'm missing something obvious, but I don't know what. Without that [possible] missing piece, couldn't Greece just have opted not to buy any military hardware?
- speeder 12y ago
  I don't have the full explanation now, some people explained and gave sources to me in 2011, but some legal moves were made abusing some contracts that made greece buy a bunch of military hardware for the same value as some unwanted bailout (that they also had to take, to get the bailout they actually wanted). If I rembember correctly about 100 billion in total went in thsoe sort of deals. The greek population then became very upset, because the hardware bought don't even work right (some subs that DO work, but float always tilted and are unstable, and some military planes that need an absurd amount of ground maintenance to fly just a little, something that to greece is useless, they need planes that can fly for longer time compared to the amount of time on ground).
- crdoconnor 12y ago
  >Is there a reason "allowed" is in quotes? I feel like I'm missing something obvious, but I don't know what. Without that [possible] missing piece, couldn't Greece just have opted not to buy any military hardware? One of the conditions of the bailout to Greece was essentially that the Troika should have some control over the Greek budget to ensure that it wasn't "spending irresponsibly". The fact public sector pensions were at the top of the list of 'must-do' cuts and military hardware purchases weren't even on the list demonstrates where the Troika's priorities really lay.
AnimalMuppet 12y ago
> Austerity in Greece (much as in America) is pure class warfare: an attempt to break the back of the working classes so that their wages and negotiating leverage will be pressured down. Can you supply actual evidence for that claim? Because for those who don't agree with you (and there are many), the bare claim is not very persuasive.
- crdoconnor 12y ago
  Here's what the IMF (a member of the Troika) has to say: https://systemicdisorder.wordpress.com/2012/10/10/quietly-the-imf-confesses-that-austerity-does-not-work https://systemicdisorder.wordpress.com/2012/10/10/quietly-th... >The IMF said a common figure used by governments was to assume that for each dollar lost in government spending, 50 cents is erased from gross domestic product, an assumption used when creating austerity budgets. But, the fund said, its study of the issue has found that, since the economic collapse that began in 2008, for each dollar cut from government spending, GDP is reduced from 90 cents to $1.70. i.e. yes it cuts your deficit, but your public debt/GDP gets worse.
  - AnimalMuppet 12y ago
    Interesting: In "normal" times, adding a dollar of government spending adds 50 cents to GDP, that is, it's inefficient. I don't find it surprising that things changed in 2008 - we entered a very different economic environment then. So austerity was a bad (even disastrous) policy choice starting in 2008. But it seems reasonable to ascribe the bad choice to the troika being unfamiliar with that new environment, rather than to "pure class warfare". (Except once they learned that the conditions changed, doubling down on a non-working policy is less easy to justify.)
protomyth 12y ago
In the US, "austerity" was done by the Congress and forced on President Truman from 1946 - 1948. It worked quite well after the war as President Truman wanted to continue spending to reinvigorate the economy (FDR style projects). This lead to some very good years. The modern US has not bothered to reduce its borrowing or spending in a meaningful way.
- crdoconnor 12y ago
  >In the US, "austerity" was done by the Congress and forced on President Truman from 1946 - 1948. It worked quite well after the war The only reason it "worked" was because it was implemented after the New Deal, which had provisions (like social security) that acted as a counter-cyclical automatic stabilizer. >The modern US has not bothered to reduce its borrowing or spending in a meaningful way. Naturally. The US economy would crater if it did. There has been a lot of political pressure to chip away at US social security, however, with austerity used as the pretext for why it is "necessary". Fortunately the AARP is a powerful enough political force in Washington to make this politically impossible. For now. As in Greece - all arguments about austerity go out of the window when talking about the military's budget, so this is most often used by Congress as a means of giving their constituents' economies a keynesian kick while not offending their corporate backers.
  - protomyth 12y ago
    So, keep borrowing and hope it all works out? "The only reason it "worked" was because it was implemented after the New Deal, which had provisions (like social security) that acted as a counter-cyclical automatic stabilizer." references?
    - crdoconnor 12y ago
      >So, keep borrowing and hope it all works out? Personally I think that they should default now and start issuing tax anticipation notes like California did. Losing access to the credit markets is irrelevant to them now, so they might as well hit the reset button. >references? Explanation here: http://socialdemocracy21stcentury.blogspot.sg/2011/01/keynesianism-in-america-in-1940s-and.html http://socialdemocracy21stcentury.blogspot.sg/2011/01/keynes...
dingaling 12y ago
> Austerity in Greece (much as in America) is pure class warfare: an attempt to break the back of the working classes so that their wages and negotiating leverage will be pressured down. Austerity == reduction in Government spending. When has that ever been bad? Isn't small-government something to which all countries should aspire. A couple of comparisons, bear in mind Greece has a population of 12 million and the UK 60 million Does Greece really need 700,000 civil servants ( down from 900,000 ) when the UK makes do with 420,000? Does Greece really need a standing military of 140,000, the same size as the UK's military?
- sebkomianos 12y ago
  What's happening is not reduction in Government spending. It's reductions everywhere. They haven't just been firing civil servants that were doing a bad job (or no job at all), they have been cutting budgets of hospitals, they have been shutting down schools, they have been reducing health insurance coverage, etc etc. And that's where the current party came in and said "Okay, we HAVE TO make reforms because we have been spending wrongly, among other things, BUT we can't do whatever just so numbers look right - it has to make sense, both for the country to continue existing and for the creditors to see that they have a longterm trustworthy partner on the other side of the table." As for your last question, two things: a) Why does an EU-member country have to spend on military AT ALL? Shouldn't such costs be executed at a EU-wide level? b) Greece is neighbourhooding with Albania, FYROM, Bulgaria, Turkey. UK is surrounded by...the sea, Ireland and...France.

keebEz 12y ago

1) In general, for the european union to work, European national governments need to start dropping the 'us vs. them' mentality - all of the EU is a deadbeat if Greece is a deadbeat. 2) Corruption - Greece just isn't as 'well-run' as Germany - a lot of that money gets skimmed off the tops at the expense of the people. Yes, the 'people' elected the governments that took the money and skimmed the money, but if you think the U.S. government is slanted towards corporations than Greece's is backwards in comparison. 3) This matters for a lot more than just Greece - all of the EU is at stake, and yet blame seems to get layered onto Greece.

evoloution 12y ago

This is a good criticism, allow me to answer your questions to my best of knowledge. 1) Greece was not always a deadbeat. a) misuse of money over many years (kleptocracy) b) lack of competitive advantage after merging economy with stronger countries (eg. Germany) and c) a large influx of cash from stronger countries that eased productivity and entrepreneurship is also to blame. Imagine if US slashed "bullshit jobs" tomorrow what effect this would have to consumerism and GDP in comparison. Austerity measures in Greece basically stagnated cash flow to the economy which like US is mostly service sector - based. 2) Structural reforms are far behind due to the Kleptocrats' influence till today. Clean slate, dealing with kleptocracy and a growth plan would do a lot to reverse this 3) Sensible management and right investments could mean no such fate for Greece. Gourmet-quality agricultural products and food processing, tourism by exploitation of natural beauty and rich history, and a strong shipping industry and tradition could help this country move forward. Mining also has some potential but I am not sure if it can account for a big chunk of the new economy.

latch 12y ago
None of this makes me sympathetic to Greece. It's an a) explanation for what transpired and b) a list of things that might help solve it, but is it actually being done? For me, it boils down to: should reasonable people think that Greece can and will execute?

ErneX 12y ago

The "problem" is that they have a recently elected government that doesn't want to be held accountable for what the previous governments did and/or spent.

glesica 12y ago

I'm sorry, I realize that you're asking for clarification, but it is really frustrating to keep hearing this kind of crap. Greece the country didn't borrow all (or even most) of that money, private borrowers borrowed it from German banks (or Greek banks that borrowed it from German banks). The money ended up as public debt because the banks got bailed out. The reasons for this were complex, but had a lot of do with German fiscal and labor policy. Once the loans turned out to be bad (because why on Earth did the banks expect that all of these funds could possibly to put to good, productive use, especially once credit standards were lowered), Greece was expected to deal with the situation. They did, and they bankrupted the country doing so (same with Portugal, Spain, and Ireland). There is, of course, plenty of blame to go around, but this is not a situation where the Greek government borrowed a ton of money and wasted it. They borrowed a ton of money to bail out their banking system including a bunch of German banks (which is where a lot of the money originated). This is exactly what the global economic elites were telling everyone to do in 2008. Then, once things got ugly, those same elites decided that the Greek people should collectively pay the price for two bad economic policies that were only partially the fault of their government. Suggested reading: http://www.amazon.com/Austerity-The-History-Dangerous-Idea/dp/019982830X http://www.amazon.com/Austerity-The-History-Dangerous-Idea/d... - this book goes into great depth about what exactly happened in Europe. http://blog.mpettis.com/2015/02/syriza-and-the-french-indemnity-of-1871-73/ http://blog.mpettis.com/2015/02/syriza-and-the-french-indemn... - blog post that describes how what has happened in Greece, Spain, and Portugal was effectively inevitable and not the fault of the respective governments so much as it was a result of a series of pan-European financial blunders.

protomyth 12y ago
"Greece the country didn't borrow all (or even most) of that money, private borrowers borrowed it from German banks (or Greek banks that borrowed it from German banks). The money ended up as public debt because the banks got bailed out." In the US there was quite a series of legal moves requiring banks to lend mortgages to people who didn't previously meet the banks criteria. Were German banks similarly compelled or was it just bad judgement of the banks?
- 12y ago

Lazare 12y ago

Complicated topic; a couple ways of approaching it. One way is to say this: All countries (and regions) have periodic downturns. When this happens you either have fiscal flows from richer to poorer regions (the US does this), or you have currency devaluation (the EU prior to the Euro did this). After the Euro, the EU was still reluctant to have straight up fiscal flows (if the EU worked the way the US works, Germany would straight up fund Greek unemployment benefits). But with a shared currency, currency devaluation was also not possible. This left only one answer: So called internal devaluation. The standard neoliberal textbook answer is "don't ever do this, it's slow, terrible, and doesn't really work", but Greece had no other options. (Krugman is quoted at the link; in this he speaks for the neoliberal consensus.) You ask why you shouldn't think of Greece is a deadbeat; the answer is the same reason why you shouldn't think of Alaska as a deadbeat, or the north of England as a deadbeat (both relatively poorer regions of larger nations which are net recipients of government transfers); because they're people suffering from an economic downturn largely beyond their control, and they need help. Greece didn't need (or deserve) loans, they needed aid...or a devaluation. Since aid was politically impossible, and devaluation legally impossible, they got loans. Which they couldn't pay back, which forced them to make cuts which deepened the problem. To the surprise of no one, really, but what else could be done? Even Krugman never identified a politically and legalally feasible alternative. Another approach is to focus on your question "If Greece was given a clean slate, would it be a healthy, productive and growing economy?" The answer is "yes of course". Until Syriza came to power Greece was running a "primary surplus" (that means their budget balanced if you don't count interest); that means that if they simply defaulted they would be, economically, fine. Greece doesn't (or didn't, but we'll come to that in a moment) need to borrow to fund ongoing government operations; they only need to borrow to fund repayments of the money they already borrowed. And again, they were forced to borrow, because the options that would normally be open (aid or devaluation) were closed to them. (Note: Greece hasn't run a primary surplus the last two months because tax receipts crashed on the election of Syriza. Syriza ran against some of the more onerous taxes, and people stopped paying them on the assumption that they would soon be repealed, or at least unenforced. Ironically, this means that the election of Syriza has made the bargaining position of Greece's Syriza-led government much worse; the last government could credibly tell the markets to jump off a cliff, but the current one needs to continue borrowing to avoid a crisis. Not the first political party to be hamstrung by their own election promises, but it's rarely so severe.) Anyhow, when you say "Maybe that ought to be the reality for Greece?", what you're really discussing is a devaluation, where a nation collectively realises they aren't quite as rich as they thought, and scales all their expectations down. A salary that might have stretched to a new Lexus now only stretches to a new Toyota, or whatever. Devaluations are normal and healthy; southern European countries devaluated their currencies over and over and over again in the post WWII years. Greece should have done that at the start of the global financial crisis; they should probably do that now. There's just one problem: They can't do it, because they're part of the euro. Or rather, they can, but rather than it just being a matter of the drachma/deutchmark exchange rate shifting a bit, and everyone's drachma salaries being worth less, while all the tourist's pounds and marks are worth a bit more, with everyone's mortgages, employment contracts, pensions, etc. being left alone, Greece now faces the reality of an internal devaluation, where everything has to change in a brutal, grinding process. (Edit: Devaluing the currency would also decrease the loan burden; they could just print drachma to pay back the German loans. Which they can't do now, because they don't have the drachma. My point is its all linked; Greece has much less control over their finances than we would expect a "real" country to have, and all the obvious answers that countries all over the world have used and continue to use are closed to them. Personally, I struggle not to be sympathetic. The US and the UK don't—in fact, can't—face a problem like Greece faces, because they still have printing presses.) (Again, US states face the same issue, but the US has a strong federal government that transfers enormous quantities of money between regions. The EU, in comparison, is tiny. And incompetent. And (arguably) dominated by Germany.) TL;DR: Joining the euro removed every existing easy or painless way to fix the problem, but didn't add any new methods. You can blame Greece for joining the euro all those years ago, but once they did, the problems were set in stone. Calling them deadbeats now isn't really accurate, but worse, it's pointless. Ninja edit: Or, of course, Greece could exit the Euro. But that cure might be worse than the disease. Then again, there may no longer be any other options. We live in interesting times.

theophrastus 12y ago

Who is Greece? The politicians which promised its voters too much, borrowed from eager usury of the (mostly) German bankers, and thereby pauperized the nation -or- the people who were thereby fooled and taken advantage of? One should keep in mind that while in some legal sense they're one and the same; but not so in a sense of social justice.

nicolasehrhardt 12y ago

You are not wrong, Greece is a deadbeet right now. They already are living on life support from the EU-IMF, and have been for more than a year. What's wrong is that, we gave them money and forced them to do reforms (reforms that France and Germany [mostly] designed). A year and a half later, Greece is still on life support (on our money) but the reforms we forced them to do made the situation worse. Greece has a giant problem with corruption, I don't think they have a really modern state, neither can they be really productive (I mean, look at all of these small islands). But the issue is now political. I think we (France and Germany) should be ashamed of what we forced them to do, not even because we mothered them (if it had them then maybe...), but because we made their situation worse. We should find a way to losen our requirements and let them breath a little because clearly, we failed to help them so far. It's the same old problem, either the EU becomes a real political union and we can start thinking about helping each other as neighbor states, not as economic partners, to maintain the stability of the union, either we keep thinking about the money we don't have, and nothing really improves. PS: the day that the US collapses because of its giant debts, I hope you will think again about this: "shouldn't the government and people be accountable for it?".

cperciva 12y ago
we (France and Germany) should be ashamed of what we forced them to do When did France and Germany force Greece to do anything? I was under the impression that the Greek government negotiated the terms of the bailout which they're now talking about repudiating.
- 6t6t6 12y ago
  You can see it that way: the main goal of the agreements that have been signed until now between Greece and the Troika was to protect the interest of the big fortunes even if that mean misery for the citizens. Lets be clear, big mistakes have been made and someone will have to pay. The opinion if Syriza is that is not the poor who have to assume the consequences.
- speeder 12y ago
  Forced on the population. Greek protests were the population pointing out that the deals would fuck them over. The rulers of Greece ignored the population, and took the deal anyway, and France and Germany KNEW they would take the deal, because it would be profitable for them (Greek rulers then had lots of some bizarre derivatives in Switzerland that would appreciate if they had taken the bailout, thus a "legal" way to steal public money)

msabalau 12y ago

Greece is running a primary surplus, so if they were given a clean slate they'd have a chance at a productive and growing economy, despite the damage that has been recklessly been caused. If you choose to consider the Greeks deadbeats, I hope you hold the same contempt for Germans, who had a huge debt write off in 1953. Nor, indeed, have the Germans repaid the the forced loans that the Nazi extracted at gunpoint from Greece and other occupied countries.

msabalau 12y ago