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Greece’s Proposals to End the Crisis

127 points by harperlee 11y ago

cwyers 11y ago
There's a lot of people who seem to feel like the Greeks made their own bed and now they should lie in it. Well, fine, except for a few decades now most of Europe has been in the same bed, the European Common Market. And with the introduction of the Euro everyone gets to share a blanket too. This is not just a problem for Greece, and insisting that Greece should bear all the costs of solving it puts petty moralizing ahead of actually trying to solve the problem for everybody.
lkrubner 11y ago
Someone recently suggested the current mood in Europe was a bit like the mood in the spring of 1914 -- a sort of uncaring and sloppy optimism, a sense that real disaster can not possibly happen, a stumbling blindness that makes real disaster more likely, exactly because so few, among those in leaderships positions, are thinking that disaster is possible. 15 years ago German was stuck in a slump with high unemployment and little growth. It got out of that slump thanks to the euro, which created a boom in southern Europe, and thus generated export markets for Germany. The nation which benefited the most from the euro is Germany, and yet Germany seems willing to sabotage its own success. If Greece leaves the euro, it becomes more likely that Spain or Italy or Portugal or Ireland might leave the euro. Once these countries leave the euro, they will have weak currencies that will make it easy for them to underprice Germany. One can get a small sense of how this plays out by looking at the growth that Poland has enjoyed, thanks to the weakness of the zloty. Of course, Poland has not seen high growth, since all of its trade partners are stuck in, or near, recession, yet Poland has gained market share in dozens of small industries, such as coffins and beer. And the advantages that Poland has would also become advantages of Greece and Italy and Spain, etc, if they leave the euro. A rational German minister would avoid this at any cost, but the Germans themselves seem entirely blind to the disaster they are getting themselves into. If the euro dies, all of Europe will be hurt, but Germany most of all. Edited to add: interesting about the rapid upvotes and downvotes on this comment. Right now the comment has a total of 20, but every time I check it has gone up 4, then down 3, then up 2, then down 1, then up 3, down 2, etc. I've never before written a comment that drew forth such intense up and down voting.
- panarky 11y ago
  I don't believe The Spirit of 1914 [1] was about being uncaring or just blind optimism. It was euphoria that war had finally broken out, ending bitter domestic struggles and endless, fruitless diplomacy. But in hindsight, as miserable as the pre-war time must have been, open war itself was far, far worse. It seems we may be at a similar place today, at least economically, if not geo-politically. People want this Greece shit to be over with, but will Europe really be better off without Greece? Or in hindsight, will we realize that pre-Grexit was nothing compared to post-Grexit? [1] https://en.wikipedia.org/wiki/Spirit_of_1914 https://en.wikipedia.org/wiki/Spirit_of_1914
  - narrator 11y ago
    I think WWI is a bad analogy. In WWI all sides were completely caught off guard by the destructive power of modern industry applied to warfare. WWI was a case of ignoring the looming technological disruption of international relations and politics caused by modern warfare. I think WWI is basically the most panic inducing analogy anyone can come up with. It's great propaganda, but not at all realistic. I think what's going on in Greece is that the new world financial order, where permanent vassal states are created that must obey and pay tribute to their banker overlords, is slowly unravelling. Not because of outright revolt, but because it's just so impossibly awkward to operate these farces in the context of nominally democratic states. The Greek people are proud and patriotic and they aren't going to believe that their country should be essentially denationalized over debt. What is a government's power if not the way it spends its tax money?
    - Pyxl101 11y ago
      Greece borrowed a lot of money and spent more than they could afford for a long time, and now the loans are coming due and Greece can't pay. The countries who loaned them money have a right to be mad about that (they are taking a loss because of it) and demand that Greece take all reasonable measures to repay them. (Edit: And, apparently, the Greek government has likely been committing fraud by cooking its financial books, both to get into the Euro and afterward; see links elsewhere in this thread.) The organizations that Greece borrowed money from are not "banker overlords". Greece chose to take the loans, and they can choose to default on them if they wish (and accept the consequences, like a person would, including ruining their credit rating). This would likely ruin their import/export business and tank their economy even further (due to the difficulty of trading without loans), and is not something that anyone wants; but if Greece does not demonstrate a way to reign in their spending and repay money that was borrowed, it's what may happen. Greece can certainly do what it wants. Other countries are not going to stage a military invasion over a loan default. However, as I said, it will ruin their ability to trade. Would you trade with someone who doesn't keep their promises to pay their creditors? How would you feel about sending a ship to Greece with some goods they've promised to purchase from you upon arrival, when you know that the Greek government has decided to default on foreign loans? What if they refuse to pay you too? Moreover, tanking their credit score will tank their ability to borrow money, which will cause their internal banking system to seize, since credit is essential to the economy -- perhaps the company you're planning to sell the goods to wants to pay you, but can't because they can't get a loan either, or can't get their hands on the currency they owe you. Really, it's no good for anyone. Countries need to make good on their promises to trading partners.
smegel 11y ago
I get the feeling that the EU would rather forgive Greek debt than see Greece either leave the EU or suffer a prolonged economic stagnation. Smart people in Greece have probably figured this out, and are possibly just holding out for Germany to come out and say "you know, let's just write of a small fraction of our GDP to put this crisis behind us". Reminds me of the banks that were "too big to fail" after the GFC.
- pmorici 11y ago
  If Greece were the only one they just might do that but Greece is just the first of several EU countries in similar predicaments. After them you have countries like Spain and Italy. Same problems with bigger numbers. What you do for one the others will expect as well. This isn't about Greece it's about whom ever comes next.
  - craigyk 11y ago
    Germany (and lots of Europe) was rebuilt at great expense and with considerable willingness to forgive debts or reparations, because, quite rightly, the world realized impsosing draconian penalties on Germany after wwi was a major factor leading to wwii. Even since the end of the wwii, Germany had to have debt forgiven and be bailed out more than once for reckless economic policy. Now I feel like whoever is calling the shots are not just being hypocritical, but downright shortsighted. Greece messed up, but they've paid a hefty price, just tell the creditors they're SOL and are going to have to accept a haircut, forgive a majority of the debt and move on.
    - intrasight 11y ago
      That is indeed the historical facts. I think that the Greeks need to remind the Germans of this each and every day. https://en.wikipedia.org/wiki/London_Agreement_on_German_External_Debts https://en.wikipedia.org/wiki/London_Agreement_on_German_Ext... "Under the London Debts Agreement of 1953, the repayable amount was reduced by 50% to about 15 billion marks and stretched out over 30 years, and compared to the fast-growing German economy were of minor impact.[2] An important term of the agreement was that repayments were only due while West Germany ran a trade surplus, and that repayments were limited to 3% of export earnings. This gave Germany’s creditors a powerful incentive to import German goods, assisting reconstruction.[3] The agreement significantly contributed to the growth of the post-war German economy and reemergence of Germany as a world economic power. It allowed Germany to enter international economic institutions such as the World Bank, International Monetary Fund and World Trade Organization."
panarky 11y ago
The point of this, beyond Varoufakis' actual arguments, is that he's using new media to ensure his message gets out. As an individual, on his own blog, he's publishing material that the institutions sought to obscure and spin.
- PhantomGremlin 11y ago
  he's publishing material that the institutions sought to obscure and spin Interesting. Instead of "the institutions", here in the USA we used to say "the Man"[1]. As in "the Man is keeping me down". Sadly, that phrase is from the '60s and appears to have fallen out of the vernacular. The problem is that in his blog we're only seeing Varoufakis own spin on the situation. What is he himself obscuring? It's hard for us who are looking in from a distance to keep up. [1] https://en.wikipedia.org/wiki/The_Man https://en.wikipedia.org/wiki/The_Man
  - handelaar 11y ago
    No. By "the institutions" he's referring to the ECB and the EU's Council of Ministers, specifically, and making a claim about those institutions that's objectively true (regardless of the merits of his own arguments here).
  - lbruder 11y ago
    There are always three sides in every argument: The ones arguing, and the truth.
    - gonvaled 11y ago
      Usually The Truth (in human matters) doesn't exist. Most human matters are nonsensical - or so complex that there is no way of knowing "The Truth".
- pvg 11y ago
  He's the finance minister of Greece. He can have an op-ed published in the international press more or less at will. He's had no trouble doing that several times in the past.
dataker 11y ago
>Around 1 million families survive today on the meagre pension of a grandfather or a grandmother as the rest of the family members are unemployed in a country where only 9% of the unemployed receive any unemployment benefit. This is simply terrifying
- Tomte 11y ago
  It is, and that's why the institutions have urged Greece to introduce a social security net. It's not as if the other Europeans want Greece people to starve by cutting pensions etc. They want Greece to untangle this mess where there is no dependable social security and instead small social benefits like lower prices for electricity is handed out in an ad hoc way as part of election promises by the political parties who come into power.
  - TazeTSchnitzel 11y ago
    > It is, and that's why the institutions have urged Greece to introduce a social security net. What? You mean a social security net like the one that the "reforms" Greece had to implement destroyed?
    - Tomte 11y ago
      No. Greece has never had a social security system comparable to most other states AFAIK. It was always "ask for money from your grandparents' pensions".
      - atmosx 11y ago
        LOL, where did you get that from?! That's absolutely not true.
- makeitsuckless 11y ago
  It sounds terrifying, and it certainly isn't pretty, but it omits all relevant information. The height of those "meagre" pensions (insanely high compared to even the Greek economy before the collapse), the age of those retired grandparents (often much younger than people that can't afford to retire in countries currently financially supporting Greece) the number of those "rest of the family members" and the sizeable black economy those family members use to supplement that income. The whole system is terrifying, but the reality is that Greeks aren't starving in the street and this insane system needs fundamental reform to prevent that from happening. If Greece asked for billions to feed their population they would get it, but they want us to finance keeping this system up. A systems that haemorrhages money so badly it makes aid to developing nations in Africa look like the summit of effectiveness.
contingencies 11y ago
Wow, I had no idea how bad it was in Greece. This article is an incredible summary. They've removed 40% of pensions, raised taxes, agreed to sell off most public assets within 10 years, agreed to put a 'fiscal council' (read: bankers) in charge of the country's budget. As a result: Aggregate real GDP fell by 27% while nominal GDP continued to fall quarter-in-quarter-out for 18 quarters non-stop to this day; Unemployment skyrocketed to 27%; Undeclared labour reached 34%; Banks are labouring under non-performing loans that exceed 40% in value, Public debt has exceeded 180% of GDP; Young well-qualified people are abandoning Greece in droves; Poverty, hunger and energy deprivation have registered increases usually associated with a state at war; Investment in productive capacity has evaporated; young workers in several chain stores get fired as they approach their 24th birthday so that the employer hires younger workers in their place to avoid paying them the normal minimum wage which is lower for employees under the age of 24; employees are hired part time for 300 euros (340USD) a month, made to work full time and threatened with dismissal if they complain; Around 1 million families survive on the meagre pension of a grandfather or a grandmother as the rest of the family members are unemployed in a country where only 9% of the unemployed receive any unemployment benefit. ... and I didn't summarize the whole article, this is only about 10% of it! Overall it looks like the entire population is suffering, no sane young person will stay in the country, and the population are essentially being forcibly reverted to a permanent state of debt-slavery. Not sure about anyone else, but to me it sounds like it is time to cleanse the temple - https://en.wikipedia.org/wiki/Jesus_and_the_money_changers https://en.wikipedia.org/wiki/Jesus_and_the_money_changers - and default. If the state changes its name and all of its banks go under (perhaps bar one for a kickstart), it might be enough to hammer in to the minds of the rest of the Eurozone that yes, an economically failed state is not the same as its successor. The corporate world allows this to happen: it should be allowed to happen for nations. After all, it's hardly fair for a child to be born in to the world eternally cursed under the labour of a debt which, frankly, the lender(s) made in error. There is risk in money lending, as there is in borrowing, and at this juncture it's immoral to extract anything more from a victim who has already declared bankruptcy and offered up their firstborn.
- jpatokal 11y ago
  Do not confuse correlation with causation. High on cheap loans, the Greek economy had a helluva party until 2008, and they were going to have a really bad hangover no matter what. There are some pretty epic stories of the corruption of the era: http://www.theguardian.com/business/2010/may/07/greek-debt-crisis-jobs http://www.theguardian.com/business/2010/may/07/greek-debt-c... Has austerity made things worse in the short term? Almost certainly, and they've cut plenty of meat along with the fat. But there's no way Greece can pick itself up off the floor without some pretty painful reforms.
marcoperaza 11y ago
The Greeks are complaining that the EU and IMF's terms are unfair, but what's really unfair is that Greece lived beyond its means for years with other people's money and now doesn't want to face reality and tighten its belt under very generous terms. Without the EU and IMF's help, Greece wouldn't even have the luxury of manufacturing these crises every time they blow their previous agreements.
- gonvaled 11y ago
  They are guilty. They have paid a hefty price. Bail them out, so that they can start again. They will continue to pay a hefty price nevertheless - bailing out a country does not magically make them prosper. Your moral sense of justice will not be severely offended, don't worry. We will bail them out, or they will default. What is the best option for the Greeks? What is the best option for the Euro-zone? I argue that, for both parties, the best option is to bail them out and keep the Euro-zone alive.
  - marcoperaza 11y ago
    They are being bailed out, but they don't like the strings attached. They will never be a prosperous country if they don't reform their bloated public sector and onerous regulations on businesses, particularly those regarding labor. And yet those are the very reforms they refuse to implement. Without serious reforms, I don't think it's in the EU's interests to prolong this sorry drama.
    - gonvaled 11y ago
      What the Greek are arguing is that those strings attached are not going to make any difference macro-economically speaking, and that they are going to be extremely painful to an already suffering population. Those measures amount to nothing if you compare it with the cost of servicing the debt. Basically, they are bankrupt. To "end the sorry drama", either you let them fall on their own (out of the euro, maybe out of the EU), or you bail them out. I think it is in the interest of Europe (and surely of Greece), to bail them out. Even if it on the surface creates so-called moral hazards: nobody really wants to be in the situation of Greece to be bailed out. There are more aspects to the issue: - monetary: the whole world is running on the printing press. The Americans are doing it, big time. Isn't California bankrupt too? Why should Europe not do it? Just restructure the debt, print the money, create a huge investment program and start funding projects in Greece - and other parts in Europe. We will get some inflation long-term, but who cares? Why should Europe be applying a harsh monetary policy while the US is rigging the markets, just because they can? - humanitarian: do we really want to have a fallen first-world country in the middle of Europe, with third-world poverty levels? What does that say about our "community"? Can't we help one of our partners, once it has become clear that they can not get out the hole by themselves? - reciprocity: parts of Europe have been bailed out in the past (Marshall Plan). Why can't we do it now, when the economy is doing much better, comparatively? You can argue that that was a different situation, and a looong time ago. But crisis happen (luckily) once every so many decades. Now we have a big crisis: let's show that the European project is there in case of trouble too. - geopolitical: do we really want the Russian or the Chinese help one of our European partners? Do we really want to tell the world: we do not care about Greece, even if we can help them, while the Russians or the Chinese, with much looser ties to Greece and with a comparatively weaker economy, are willing (thinking on geopolitical interests, of course) to help them? How long will the European project survive if we are not there to help each other whenever a crisis arises? Greece has to make reforms. Greece has made reforms. More reforms are not going to amount to much of anything. Let's bail them out.
borgiamono 11y ago
Europe should split somewhere in the middle into two worlds, much like the Americas (which seem to be like a weird blown up model of the old world) - the Northern part - free and prosperous and forward thinking, and the Southern part - corrupt, criminal and tragically and indulgently self-defeating. Ideally the two should not mix much, as they both seem to find happiness in their own predicament...
- gonvaled 11y ago
  There are so much things wrong with this trolling comment, that I do not not were to start. Do not feed the troll they say, but I will anyway loose a couple of seconds with you, just by giving you some keywords. Marshall plan, dollar, Irak, criminal population, TTIP, interest rates, NSA, waterboarding, Guantanamo, ...
tiatia 11y ago
The Global Europe Anticipation Bulletin Newsletter reports the cumulative dept of the Euro zone with 92.1%, that of the US with 119.4%. While I am not a fan of the EU, let's see who goes "belly up" first.
- gonvaled 11y ago
  Well, the US have the dollar (reserve currency) and the bombs going for them, so they can indulge in a lot more recklessness in this regard. We in Europe need to be much more careful.
draugadrotten 11y ago
So far I can't find anyone commenting on Putin and Russia here. There are those who say the Putin is using the Greece situation to destabilize the Euro and Europe. http://www.bbc.com/news/world-europe-31837660 http://www.bbc.com/news/world-europe-31837660 http://www.washingtonpost.com/opinions/putins-global-ambitions-could-destabilize-europe/2014/03/18/69abb2a2-aec5-11e3-9627-c65021d6d572_story.html http://www.washingtonpost.com/opinions/putins-global-ambitio... http://www.dailymail.co.uk/news/article-3133035/Greece-line-Putin-s-new-cold-war-Grexit-looms-leading-historian-argues-imperialist-Russian-leader-sees-chance-swoop.html http://www.dailymail.co.uk/news/article-3133035/Greece-line-...
greendesk 11y ago
A lot of money is spent on sustaining Greek economy. Not only by lending money to it, but by EU funds stretching back decades. This money can be spent in other means: maybe a highway in Estonia or increasing pensions in Slovenia. Unemployment is not high only in Greece - Finland can also use funds to lower its own unemployment. Why would the money be spent on sustaining an early retirement in Greece, instead of adding Balkan countries, for example Albania, Macedonia and Monte Negro, to the European Union? After support from the EU for such a long time, I believe Greece should be at a point where it can help support development in other countries.
- deleted 11y ago
  [deleted]
- gonvaled 11y ago
  The Marshall plan supported the rebuild of Europe after the WWII ("supported" in a much stronger way: it was based on donations, not credit), for a long time. Without that, Europe would have probably needed a longer time to recover - which would have been bad for the world (and particular for the American) economy. Let's not be naive here: the Americans did this because it was in their interest to do it. Long-term, it payed-out. And we need to learn from them in this regard: it is in the interest of Europe to "invest" in a stabilization of the Euro-area. We need to make clear that for a long-term solution, sacrifices and restructuring is necessary - but those can only go so far. Greece has done whatever it was able to. They have no more reform margin. Greece is technically bankrupt, and the Euro-area has to bail it out. In three decades time, we will be happy. This is the first serious crisis of the Euro: how we handle it, will define if the Euro has a long-term survival chance - even if it does not mean immediately collapse. Letting go of Greece will destroy the Euro; which is what lots of short-sighted euro-parties (or self-interested outside parties) want, interestingly.
cyorir 11y ago
"It would be, I submit to you, a major error to allow such a minuscule difference to cause massive damage to the Eurozone’s integrity. " It seems like this type of language is being used a lot by all sides. It kind of irritates me that Yanis throws this out like he has no responsibility for making up this "miniscule" difference. If the difference really is "miniscule," why isn't it covered in Greece's proposals? Whether it is Yanis or Juncker, it seems they just use rhetoric to place the burden of making an actual compromise on the other side.
- Pyxl101 11y ago
  > It kind of irritates me that Yanis throws this out like he has no responsibility for making up this "miniscule" difference. If the difference really is "miniscule," why isn't it covered in Greece's proposals? And why are those proposals, like eliminating Greece's very early retirement, only being made now? Greece's average retirement age is purportedly 61, with some people retiring as early as 50. Meanwhile Germany and Spain raised their retirement age to 67 and have discussed 69. It's completely understandable to me that their taxpayers who will work until 67 do not wish to fund these pensions. It tells me something that Yanis suggests fixing the pension system now in this 11th hour proposal. If Greece was seriously committed to fiscal responsibility, the government would have done this of their own accord long ago, right? By including this as part of the "deal", presumably it will allow the Greek government to say it was "forced" on them, rather than taking responsibility and making a sovereign decision, independent from any new agreements with third parties, to do the right thing and institute policy that will allow their government and pension system to be solvent.
NicoJuicy 11y ago
Greece shouldn't be in the EU in the first place... They were only admitted into it because the altered numbers about their economy ( it got exposed afterwards)... Then again, even Belgium ( where i live) has a to high governement debt.. But nothing beats Greece in favor of manipulated / incorrect numbers though.

127 points by harperlee 11y ago

There's a lot of people who seem to feel like the Greeks made their own bed and now they should lie in it. Well, fine, except for a few decades now most of Europe has been in the same bed, the European Common Market. And with the introduction of the Euro everyone gets to share a blanket too. This is not just a problem for Greece, and insisting that Greece should bear all the costs of solving it puts petty moralizing ahead of actually trying to solve the problem for everybody.

lkrubner 11y ago

Someone recently suggested the current mood in Europe was a bit like the mood in the spring of 1914 -- a sort of uncaring and sloppy optimism, a sense that real disaster can not possibly happen, a stumbling blindness that makes real disaster more likely, exactly because so few, among those in leaderships positions, are thinking that disaster is possible. 15 years ago German was stuck in a slump with high unemployment and little growth. It got out of that slump thanks to the euro, which created a boom in southern Europe, and thus generated export markets for Germany. The nation which benefited the most from the euro is Germany, and yet Germany seems willing to sabotage its own success. If Greece leaves the euro, it becomes more likely that Spain or Italy or Portugal or Ireland might leave the euro. Once these countries leave the euro, they will have weak currencies that will make it easy for them to underprice Germany. One can get a small sense of how this plays out by looking at the growth that Poland has enjoyed, thanks to the weakness of the zloty. Of course, Poland has not seen high growth, since all of its trade partners are stuck in, or near, recession, yet Poland has gained market share in dozens of small industries, such as coffins and beer. And the advantages that Poland has would also become advantages of Greece and Italy and Spain, etc, if they leave the euro. A rational German minister would avoid this at any cost, but the Germans themselves seem entirely blind to the disaster they are getting themselves into. If the euro dies, all of Europe will be hurt, but Germany most of all. Edited to add: interesting about the rapid upvotes and downvotes on this comment. Right now the comment has a total of 20, but every time I check it has gone up 4, then down 3, then up 2, then down 1, then up 3, down 2, etc. I've never before written a comment that drew forth such intense up and down voting.

panarky 11y ago
I don't believe The Spirit of 1914 [1] was about being uncaring or just blind optimism. It was euphoria that war had finally broken out, ending bitter domestic struggles and endless, fruitless diplomacy. But in hindsight, as miserable as the pre-war time must have been, open war itself was far, far worse. It seems we may be at a similar place today, at least economically, if not geo-politically. People want this Greece shit to be over with, but will Europe really be better off without Greece? Or in hindsight, will we realize that pre-Grexit was nothing compared to post-Grexit? [1] https://en.wikipedia.org/wiki/Spirit_of_1914 https://en.wikipedia.org/wiki/Spirit_of_1914
- narrator 11y ago
  I think WWI is a bad analogy. In WWI all sides were completely caught off guard by the destructive power of modern industry applied to warfare. WWI was a case of ignoring the looming technological disruption of international relations and politics caused by modern warfare. I think WWI is basically the most panic inducing analogy anyone can come up with. It's great propaganda, but not at all realistic. I think what's going on in Greece is that the new world financial order, where permanent vassal states are created that must obey and pay tribute to their banker overlords, is slowly unravelling. Not because of outright revolt, but because it's just so impossibly awkward to operate these farces in the context of nominally democratic states. The Greek people are proud and patriotic and they aren't going to believe that their country should be essentially denationalized over debt. What is a government's power if not the way it spends its tax money?
  - Pyxl101 11y ago
    Greece borrowed a lot of money and spent more than they could afford for a long time, and now the loans are coming due and Greece can't pay. The countries who loaned them money have a right to be mad about that (they are taking a loss because of it) and demand that Greece take all reasonable measures to repay them. (Edit: And, apparently, the Greek government has likely been committing fraud by cooking its financial books, both to get into the Euro and afterward; see links elsewhere in this thread.) The organizations that Greece borrowed money from are not "banker overlords". Greece chose to take the loans, and they can choose to default on them if they wish (and accept the consequences, like a person would, including ruining their credit rating). This would likely ruin their import/export business and tank their economy even further (due to the difficulty of trading without loans), and is not something that anyone wants; but if Greece does not demonstrate a way to reign in their spending and repay money that was borrowed, it's what may happen. Greece can certainly do what it wants. Other countries are not going to stage a military invasion over a loan default. However, as I said, it will ruin their ability to trade. Would you trade with someone who doesn't keep their promises to pay their creditors? How would you feel about sending a ship to Greece with some goods they've promised to purchase from you upon arrival, when you know that the Greek government has decided to default on foreign loans? What if they refuse to pay you too? Moreover, tanking their credit score will tank their ability to borrow money, which will cause their internal banking system to seize, since credit is essential to the economy -- perhaps the company you're planning to sell the goods to wants to pay you, but can't because they can't get a loan either, or can't get their hands on the currency they owe you. Really, it's no good for anyone. Countries need to make good on their promises to trading partners.

smegel 11y ago

I get the feeling that the EU would rather forgive Greek debt than see Greece either leave the EU or suffer a prolonged economic stagnation. Smart people in Greece have probably figured this out, and are possibly just holding out for Germany to come out and say "you know, let's just write of a small fraction of our GDP to put this crisis behind us". Reminds me of the banks that were "too big to fail" after the GFC.

pmorici 11y ago
If Greece were the only one they just might do that but Greece is just the first of several EU countries in similar predicaments. After them you have countries like Spain and Italy. Same problems with bigger numbers. What you do for one the others will expect as well. This isn't about Greece it's about whom ever comes next.
- craigyk 11y ago
  Germany (and lots of Europe) was rebuilt at great expense and with considerable willingness to forgive debts or reparations, because, quite rightly, the world realized impsosing draconian penalties on Germany after wwi was a major factor leading to wwii. Even since the end of the wwii, Germany had to have debt forgiven and be bailed out more than once for reckless economic policy. Now I feel like whoever is calling the shots are not just being hypocritical, but downright shortsighted. Greece messed up, but they've paid a hefty price, just tell the creditors they're SOL and are going to have to accept a haircut, forgive a majority of the debt and move on.
  - intrasight 11y ago
    That is indeed the historical facts. I think that the Greeks need to remind the Germans of this each and every day. https://en.wikipedia.org/wiki/London_Agreement_on_German_External_Debts https://en.wikipedia.org/wiki/London_Agreement_on_German_Ext... "Under the London Debts Agreement of 1953, the repayable amount was reduced by 50% to about 15 billion marks and stretched out over 30 years, and compared to the fast-growing German economy were of minor impact.[2] An important term of the agreement was that repayments were only due while West Germany ran a trade surplus, and that repayments were limited to 3% of export earnings. This gave Germany’s creditors a powerful incentive to import German goods, assisting reconstruction.[3] The agreement significantly contributed to the growth of the post-war German economy and reemergence of Germany as a world economic power. It allowed Germany to enter international economic institutions such as the World Bank, International Monetary Fund and World Trade Organization."

panarky 11y ago

The point of this, beyond Varoufakis' actual arguments, is that he's using new media to ensure his message gets out. As an individual, on his own blog, he's publishing material that the institutions sought to obscure and spin.

PhantomGremlin 11y ago
he's publishing material that the institutions sought to obscure and spin Interesting. Instead of "the institutions", here in the USA we used to say "the Man"[1]. As in "the Man is keeping me down". Sadly, that phrase is from the '60s and appears to have fallen out of the vernacular. The problem is that in his blog we're only seeing Varoufakis own spin on the situation. What is he himself obscuring? It's hard for us who are looking in from a distance to keep up. [1] https://en.wikipedia.org/wiki/The_Man https://en.wikipedia.org/wiki/The_Man
- handelaar 11y ago
  No. By "the institutions" he's referring to the ECB and the EU's Council of Ministers, specifically, and making a claim about those institutions that's objectively true (regardless of the merits of his own arguments here).
- lbruder 11y ago
  There are always three sides in every argument: The ones arguing, and the truth.
  - gonvaled 11y ago
    Usually The Truth (in human matters) doesn't exist. Most human matters are nonsensical - or so complex that there is no way of knowing "The Truth".
pvg 11y ago
He's the finance minister of Greece. He can have an op-ed published in the international press more or less at will. He's had no trouble doing that several times in the past.

dataker 11y ago

>Around 1 million families survive today on the meagre pension of a grandfather or a grandmother as the rest of the family members are unemployed in a country where only 9% of the unemployed receive any unemployment benefit. This is simply terrifying

Tomte 11y ago
It is, and that's why the institutions have urged Greece to introduce a social security net. It's not as if the other Europeans want Greece people to starve by cutting pensions etc. They want Greece to untangle this mess where there is no dependable social security and instead small social benefits like lower prices for electricity is handed out in an ad hoc way as part of election promises by the political parties who come into power.
- TazeTSchnitzel 11y ago
  > It is, and that's why the institutions have urged Greece to introduce a social security net. What? You mean a social security net like the one that the "reforms" Greece had to implement destroyed?
  - Tomte 11y ago
    No. Greece has never had a social security system comparable to most other states AFAIK. It was always "ask for money from your grandparents' pensions".
    - atmosx 11y ago
      LOL, where did you get that from?! That's absolutely not true.
makeitsuckless 11y ago
It sounds terrifying, and it certainly isn't pretty, but it omits all relevant information. The height of those "meagre" pensions (insanely high compared to even the Greek economy before the collapse), the age of those retired grandparents (often much younger than people that can't afford to retire in countries currently financially supporting Greece) the number of those "rest of the family members" and the sizeable black economy those family members use to supplement that income. The whole system is terrifying, but the reality is that Greeks aren't starving in the street and this insane system needs fundamental reform to prevent that from happening. If Greece asked for billions to feed their population they would get it, but they want us to finance keeping this system up. A systems that haemorrhages money so badly it makes aid to developing nations in Africa look like the summit of effectiveness.

contingencies 11y ago

Wow, I had no idea how bad it was in Greece. This article is an incredible summary. They've removed 40% of pensions, raised taxes, agreed to sell off most public assets within 10 years, agreed to put a 'fiscal council' (read: bankers) in charge of the country's budget. As a result: Aggregate real GDP fell by 27% while nominal GDP continued to fall quarter-in-quarter-out for 18 quarters non-stop to this day; Unemployment skyrocketed to 27%; Undeclared labour reached 34%; Banks are labouring under non-performing loans that exceed 40% in value, Public debt has exceeded 180% of GDP; Young well-qualified people are abandoning Greece in droves; Poverty, hunger and energy deprivation have registered increases usually associated with a state at war; Investment in productive capacity has evaporated; young workers in several chain stores get fired as they approach their 24th birthday so that the employer hires younger workers in their place to avoid paying them the normal minimum wage which is lower for employees under the age of 24; employees are hired part time for 300 euros (340USD) a month, made to work full time and threatened with dismissal if they complain; Around 1 million families survive on the meagre pension of a grandfather or a grandmother as the rest of the family members are unemployed in a country where only 9% of the unemployed receive any unemployment benefit. ... and I didn't summarize the whole article, this is only about 10% of it! Overall it looks like the entire population is suffering, no sane young person will stay in the country, and the population are essentially being forcibly reverted to a permanent state of debt-slavery. Not sure about anyone else, but to me it sounds like it is time to cleanse the temple - https://en.wikipedia.org/wiki/Jesus_and_the_money_changers https://en.wikipedia.org/wiki/Jesus_and_the_money_changers - and default. If the state changes its name and all of its banks go under (perhaps bar one for a kickstart), it might be enough to hammer in to the minds of the rest of the Eurozone that yes, an economically failed state is not the same as its successor. The corporate world allows this to happen: it should be allowed to happen for nations. After all, it's hardly fair for a child to be born in to the world eternally cursed under the labour of a debt which, frankly, the lender(s) made in error. There is risk in money lending, as there is in borrowing, and at this juncture it's immoral to extract anything more from a victim who has already declared bankruptcy and offered up their firstborn.

jpatokal 11y ago
Do not confuse correlation with causation. High on cheap loans, the Greek economy had a helluva party until 2008, and they were going to have a really bad hangover no matter what. There are some pretty epic stories of the corruption of the era: http://www.theguardian.com/business/2010/may/07/greek-debt-crisis-jobs http://www.theguardian.com/business/2010/may/07/greek-debt-c... Has austerity made things worse in the short term? Almost certainly, and they've cut plenty of meat along with the fat. But there's no way Greece can pick itself up off the floor without some pretty painful reforms.

marcoperaza 11y ago

The Greeks are complaining that the EU and IMF's terms are unfair, but what's really unfair is that Greece lived beyond its means for years with other people's money and now doesn't want to face reality and tighten its belt under very generous terms. Without the EU and IMF's help, Greece wouldn't even have the luxury of manufacturing these crises every time they blow their previous agreements.

gonvaled 11y ago
They are guilty. They have paid a hefty price. Bail them out, so that they can start again. They will continue to pay a hefty price nevertheless - bailing out a country does not magically make them prosper. Your moral sense of justice will not be severely offended, don't worry. We will bail them out, or they will default. What is the best option for the Greeks? What is the best option for the Euro-zone? I argue that, for both parties, the best option is to bail them out and keep the Euro-zone alive.
- marcoperaza 11y ago
  They are being bailed out, but they don't like the strings attached. They will never be a prosperous country if they don't reform their bloated public sector and onerous regulations on businesses, particularly those regarding labor. And yet those are the very reforms they refuse to implement. Without serious reforms, I don't think it's in the EU's interests to prolong this sorry drama.
  - gonvaled 11y ago
    What the Greek are arguing is that those strings attached are not going to make any difference macro-economically speaking, and that they are going to be extremely painful to an already suffering population. Those measures amount to nothing if you compare it with the cost of servicing the debt. Basically, they are bankrupt. To "end the sorry drama", either you let them fall on their own (out of the euro, maybe out of the EU), or you bail them out. I think it is in the interest of Europe (and surely of Greece), to bail them out. Even if it on the surface creates so-called moral hazards: nobody really wants to be in the situation of Greece to be bailed out. There are more aspects to the issue: - monetary: the whole world is running on the printing press. The Americans are doing it, big time. Isn't California bankrupt too? Why should Europe not do it? Just restructure the debt, print the money, create a huge investment program and start funding projects in Greece - and other parts in Europe. We will get some inflation long-term, but who cares? Why should Europe be applying a harsh monetary policy while the US is rigging the markets, just because they can? - humanitarian: do we really want to have a fallen first-world country in the middle of Europe, with third-world poverty levels? What does that say about our "community"? Can't we help one of our partners, once it has become clear that they can not get out the hole by themselves? - reciprocity: parts of Europe have been bailed out in the past (Marshall Plan). Why can't we do it now, when the economy is doing much better, comparatively? You can argue that that was a different situation, and a looong time ago. But crisis happen (luckily) once every so many decades. Now we have a big crisis: let's show that the European project is there in case of trouble too. - geopolitical: do we really want the Russian or the Chinese help one of our European partners? Do we really want to tell the world: we do not care about Greece, even if we can help them, while the Russians or the Chinese, with much looser ties to Greece and with a comparatively weaker economy, are willing (thinking on geopolitical interests, of course) to help them? How long will the European project survive if we are not there to help each other whenever a crisis arises? Greece has to make reforms. Greece has made reforms. More reforms are not going to amount to much of anything. Let's bail them out.

borgiamono 11y ago

Europe should split somewhere in the middle into two worlds, much like the Americas (which seem to be like a weird blown up model of the old world) - the Northern part - free and prosperous and forward thinking, and the Southern part - corrupt, criminal and tragically and indulgently self-defeating. Ideally the two should not mix much, as they both seem to find happiness in their own predicament...

gonvaled 11y ago
There are so much things wrong with this trolling comment, that I do not not were to start. Do not feed the troll they say, but I will anyway loose a couple of seconds with you, just by giving you some keywords. Marshall plan, dollar, Irak, criminal population, TTIP, interest rates, NSA, waterboarding, Guantanamo, ...

tiatia 11y ago

The Global Europe Anticipation Bulletin Newsletter reports the cumulative dept of the Euro zone with 92.1%, that of the US with 119.4%. While I am not a fan of the EU, let's see who goes "belly up" first.

gonvaled 11y ago
Well, the US have the dollar (reserve currency) and the bombs going for them, so they can indulge in a lot more recklessness in this regard. We in Europe need to be much more careful.

draugadrotten 11y ago

So far I can't find anyone commenting on Putin and Russia here. There are those who say the Putin is using the Greece situation to destabilize the Euro and Europe. http://www.bbc.com/news/world-europe-31837660 http://www.bbc.com/news/world-europe-31837660 http://www.washingtonpost.com/opinions/putins-global-ambitions-could-destabilize-europe/2014/03/18/69abb2a2-aec5-11e3-9627-c65021d6d572_story.html http://www.washingtonpost.com/opinions/putins-global-ambitio... http://www.dailymail.co.uk/news/article-3133035/Greece-line-Putin-s-new-cold-war-Grexit-looms-leading-historian-argues-imperialist-Russian-leader-sees-chance-swoop.html http://www.dailymail.co.uk/news/article-3133035/Greece-line-...

greendesk 11y ago

A lot of money is spent on sustaining Greek economy. Not only by lending money to it, but by EU funds stretching back decades. This money can be spent in other means: maybe a highway in Estonia or increasing pensions in Slovenia. Unemployment is not high only in Greece - Finland can also use funds to lower its own unemployment. Why would the money be spent on sustaining an early retirement in Greece, instead of adding Balkan countries, for example Albania, Macedonia and Monte Negro, to the European Union? After support from the EU for such a long time, I believe Greece should be at a point where it can help support development in other countries.

deleted 11y ago
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gonvaled 11y ago
The Marshall plan supported the rebuild of Europe after the WWII ("supported" in a much stronger way: it was based on donations, not credit), for a long time. Without that, Europe would have probably needed a longer time to recover - which would have been bad for the world (and particular for the American) economy. Let's not be naive here: the Americans did this because it was in their interest to do it. Long-term, it payed-out. And we need to learn from them in this regard: it is in the interest of Europe to "invest" in a stabilization of the Euro-area. We need to make clear that for a long-term solution, sacrifices and restructuring is necessary - but those can only go so far. Greece has done whatever it was able to. They have no more reform margin. Greece is technically bankrupt, and the Euro-area has to bail it out. In three decades time, we will be happy. This is the first serious crisis of the Euro: how we handle it, will define if the Euro has a long-term survival chance - even if it does not mean immediately collapse. Letting go of Greece will destroy the Euro; which is what lots of short-sighted euro-parties (or self-interested outside parties) want, interestingly.

cyorir 11y ago

"It would be, I submit to you, a major error to allow such a minuscule difference to cause massive damage to the Eurozone’s integrity. " It seems like this type of language is being used a lot by all sides. It kind of irritates me that Yanis throws this out like he has no responsibility for making up this "miniscule" difference. If the difference really is "miniscule," why isn't it covered in Greece's proposals? Whether it is Yanis or Juncker, it seems they just use rhetoric to place the burden of making an actual compromise on the other side.

Pyxl101 11y ago
> It kind of irritates me that Yanis throws this out like he has no responsibility for making up this "miniscule" difference. If the difference really is "miniscule," why isn't it covered in Greece's proposals? And why are those proposals, like eliminating Greece's very early retirement, only being made now? Greece's average retirement age is purportedly 61, with some people retiring as early as 50. Meanwhile Germany and Spain raised their retirement age to 67 and have discussed 69. It's completely understandable to me that their taxpayers who will work until 67 do not wish to fund these pensions. It tells me something that Yanis suggests fixing the pension system now in this 11th hour proposal. If Greece was seriously committed to fiscal responsibility, the government would have done this of their own accord long ago, right? By including this as part of the "deal", presumably it will allow the Greek government to say it was "forced" on them, rather than taking responsibility and making a sovereign decision, independent from any new agreements with third parties, to do the right thing and institute policy that will allow their government and pension system to be solvent.

NicoJuicy 11y ago

Greece shouldn't be in the EU in the first place... They were only admitted into it because the altered numbers about their economy ( it got exposed afterwards)... Then again, even Belgium ( where i live) has a to high governement debt.. But nothing beats Greece in favor of manipulated / incorrect numbers though.