8 ms·

I've sort of turned around in my opinion o Greece. I started out by seeing this as the Greek Government being cynical, corrupt or incompetent and running publi

• enraged_camel 11y ago
  >>First, is that taking away national currency is taking away the ability to print and devalue your way out of trouble, which really increases the risk of government insolvency. You basically summarized why the entire concept of Euro has been fundamentally flawed to begin with.
• tosseraccount 11y ago
  The Greek people are responsible. Greeks overspent and did not want to stop. So they kept spending. It's their own fault. They can default, start printing their own money and go the way of Argentina. Ask Argentines how that went. Or ... they can cut spending and live within their means. The narrative of "Greeks as victims" is "okay" as long as you point out that they are also the victimizers. Evil outsiders did not force them to not collect taxes. People can get public pensions before age 50, for heaven's sake. [ source : http://greece.greekreporter.com/2014/12/04/75-of-greek-pensioners-enjoy-early-retirement/ http://greece.greekreporter.com/2014/12/04/75-of-greek-pensi... ]
  • gonvaled 11y ago
    They overspent. Their economy is dysfunctional. They share a big part of the blame. But they have been following the Troika's plan for over 7 years now, they have reduced spending, they have done a huge effort, and still their GDP has collapsed. It seems that the Troika's plan is not working. That is what Tsipras is saying: we can not continue doing this, and the rest of Europe/Troika has to recognize part of the blame. Not only that: it seems it has the support of his people (we'll see on Sunday) If Greece had defaulted (or restructured the debt) at the beginning of this crisis, as Iceland did, the situation would be much better. But nobody was interested, since big banks where holding big chunks of high-paying Greek debt, and they needed some time to unload it. I still remember how the Iceland success story was completely ignored by European media - and still is.
    • tosseraccount 11y ago
      Iceland (Island) is 300,000 people and did NOT join the EU. Iceland collects their taxes. Iceland dealt with problem promptly. Greece needs to bite the bullet. Harder. Stop blaming others.
      • DannoHung 11y ago
        > On October 6, the Icelandic legislature instituted an emergency law which enabled the Financial Supervisory Authority to take control over financial institutions and made domestic deposits in the banks priority claims. In the following days, new banks were founded to take over the domestic operations of Kaupthing, Landsbanki and Glitnir. The old banks were put into receivership and liquidation, resulting in losses for their shareholders and foreign creditors. Outside Iceland, more than half a million depositors lost access to their accounts in foreign branches of Icelandic banks. This led to the 2008-2013 Icesave dispute, that ended with a ESA ruling that Iceland was not obliged to repay Dutch and British depositors minimum deposit guarantees. So, what you're saying is default and fuck over foreign investors.
• hessenwolf 11y ago
  Who says sovereign bonds need to be risk free anyway? Absolutely! Default, and we'll just charge more next time. Whatever. Move on. The motivation for this extremely anti-default push has not been clearly enough laid out, methinks. Bonds, government or not, are an investment. You think I am 100% the stocks I bought in a Ukrainian egg farm will not go bust? Hell no. All who invested in Greek government bonds should have done their homework.
  • solve 11y ago
    Imagine if we used the word "investments" instead of "loans" for these government bonds. One word change and everyone's perceptions would drastically change.
    • laichzeit0 11y ago
      Well to the layman like myself, bonds and investments sound different. With a bond I expect there to be some security or asset backing it that I could potentially recoup if you default. I don't know like say, Greece loses some it's territory in equal worth to it's debts?
  • andrepd 11y ago
    Precisely! This sort of mentality that the system has a duty to protect investors from being burned is completely upside-down in my eyes. It's the investors that must take the fall when the entity they invested in goes bust, definitely not the gov'ts at the expense of the taxpayers.
  • nisa 11y ago
    This was the problem in 2010 and as far as I understood it a lot of e.g. German banks would say: We are done if they default... that's why they shifted the debt to the IMF/European countries.
  • paulojreis 11y ago
    > All who invested in Greek government bonds should have done their homework. In the end and unfortunately, I think we'll have to admit that they did. Nice interest rates and the "whole world" making sure it's paid back.
• rogeryu 11y ago
  Greece will not leave the EU over this, and doesn't have to. Really nobody wants this. The Greek don't want that, and no EU country wants that. This is not going to happen. I'm a EU citizen - from a rich country, without much corruption, and I don't see how we can change the Greek society within a reasonable period. I don't know what will happen, but I hope the EU will help Greece with many billions to help local people to survive. This is a hard lesson for the Euro countries. They shouldn't have Greece let in, as well as several other countries. That's hindsite, but as we let them in, it's our responsibility as well. If you invite a country in which has a corrupt system, where not paying taxes is allowed on a massive scale, then you invite problems.
  • iaskwhy 11y ago
    You seem to be confusing the eurozone with the European Union.
• paganel 11y ago
  > First, is that taking away national currency is taking away the ability to print and devalue your way out of trouble, This is only true for the United States and, partially, for the UK, any other nation on this planet cannot just print their own paper-money and convince lots of foreign investors to buy local-currency-denominated debt. It pains me whenever I see this opinion posted whenever the Greek crisis is mentioned, because I grew up in a country where inflation was running in the high-double-digits for an entire decade, and trust me, there were lots of "trouble" for the Government and for us, normal citizens. Nevertheless, I think you're spot on with the rest of your comment, I never quite understood how come the Governments are so enamored with the banking system (to this day I think that the 2008 financial crisis could have been a lot less worse had Bear Stearns been allowed to go bust with no strings attached in the early spring of 2008, and its creditors to accept the haircuts). I also believe that no-one knows where this is all going.
  • digi_owl 11y ago
    Its a bit tricky but thing is that "money printing" can be used to buy domestic goods and services, that in turn help pay down business and personal debt. This while also devaluing the currency vs foreign ones, benefiting exporters while giving the population a incentive to spend domestically. But it has to be performed while there is otherwise a slump in the overall economy. I think term is countercyclical spending. And it has to be used on domestically produced goods and services. Otherwise one is just asking for trouble.
  • kamaal 11y ago
    This might be a newbie question. But why can some countries simply "print money" while others can't and have to earn it?
    • hugofirth 11y ago
      Any country can do it. It comes down to an issue of investor trust, which you only earn through a good track record.
    • netcan 11y ago
• ChuckMcM 11y ago
  I was wondering the same thing. One of the original challenges to the shared currency question was its implicit subjugating of sovereignty to the currency oversite committee. Back during the voting I recall an editorial asking people if they would let their neighbors balance their checkbook, why would they let Brussels run their currency. And of course if you can make the government do what ever you want to its people in order to keep it solvent, is it really in charge? Europe went for a much looser union than the union of the United States. It has never been clear to me how you could have an economic federal government but not a military nor social federal government. Greece is putting that question to the test and the outcome will have a big impact on the future of the EU.
  • netcan 11y ago
    I don't think a central currency necessarily means no sovereignty. Does using gold make a country lose their sovereignty? It just means you can't print money. What is violating greek sovereignty is debt, in this case. The EU is basically saying that until they get paid, they write the Greek budget.
    • green7ea 11y ago
      I don't think your gold analogy is correct because nobody can create gold out of nothing (mining requires a ton of work). Fiat currencies however can be create from nothing by central banks and normal banks (multiplicative effect due to fractional reserve lending). What violates the Greek sovereignty is the fact that a bank they don't control can create their money out of nothing.
    • ChuckMcM 11y ago
      There have been a number of great write ups on the challenges Greece faces, although two combined in a hugely negative way, one is that tax compliance (which is to say the number of people who pay their taxes as they should) is quite low, and the other is that government sinecures (jobs that don't require any work but get you paid anyway) were handed out like candy in exchange for support or other political favors leading to a lot of people (often highly paid) that were consuming government funds and producing no value. If a government has no money, no taxes and nobody willing to loan it some money, then it can't pay its workers. And while it is easy to get someone a job that has pay but no work, it is hard to get them to work with no pay. If someone could start a social media campaign, "Pay your taxes, its the Greek thing to do." and the people were able to get individuals out of government positions who were not adding value, the crisis would resolve nicely I expect.
• jfoutz 11y ago
  I like the somewhat glib cliche, "If i owe you a thousand dollars, I have a problem. If i owe you a billion dollars, you have a problem" It captures so much of the essence of the relationship. With small debt, a person or a corporation or a government can generally work something out. Skip some unnecessary spending, scale back a bit, and things all work out. But debt chokes off options. Too much debt, and growth stalls. It's a really vicious circle. If we upgrade the factory machines, we can sell more, but we can't afford to. If we move closer to work, we'd save some expenses, but we can't afford to. Opportunity becomes rare, and it's demoralizing. I totally understand creditors need their money back. Presumably there was something magical about Greece, some golden egg it was producing that enticed the lenders. I don't see how they can get their money back without killing the goose though.
  • drjesusphd 11y ago
    > I totally understand creditors need their money back. No they don't. They took a risk and lost. Other times, they get paid handsomely for taking the same risk. That's how it's supposed to work.
    • mcv 11y ago
      Thing is, Germany took over the debt from the banks, and Merkel promised the (understandably skeptical) German voters that she would get all the money back.
    • laichzeit0 11y ago
      So what happens when I borrow money from a bank to buy a house and I default on my loan? "They took a risk and lost"? Hooray. I get to keep my home.
      • gyom 11y ago
        Well, your house is used as collateral for the loan, otherwise the bank would never lend you that money. I'm not an economist, but I don't think that, in the case of Greece, the "house" (whatever it stands for) was used as collateral. I don't think there really was any collateral. I guess lenders just hoped that Greece would pay back, or would be pressured into paying back.
• anovikov 11y ago
  EU needs a way to press debtors into paying their debts. Like, aerial mining of ports will be a nice first steps for a country so dependent on shipping. After all, the problem is solvable, they CAN pay - by simply taking away part of their national territory and annexing it to say, Germany, with Germany then repaying other creditors.
• Bostonian 11y ago
  The Greeks want to default on their bonds and to have have their banks propped up by the rest of the Eurozone. They can have the former but at the price of the latter.
• robomartin 11y ago
  The only reason you have this opinion is because perhaps you have mentally disconnected from the basic idea of money. Imagine we were all still using salt to trade for goods and services. Then things might start to make sense. If a country produces nothing (or not enough) and counts on borrowed salt to survive, failure is guaranteed. If a country gives away salt to people who do nothing in exchange for it, failure is guaranteed. If a country does not develop financial discipline, failure is guaranteed. If a country elects people to government who are only there to enrich themselves and don't do what's right, failure is guaranteed. If a country manufactures starts to use devalued sand that no other country will accept instead of salt, failure is guaranteed. etc. On a global market a country IS a business. In order to be successful it has to operate at a profit. Period. This understanding is what seems to be lacking in many electorates. They vote with emotion and out of selfish positions at the cost of completely ignoring that the national balance sheet is, perhaps, the single most important determinant of how well they, their children and future generations will live. Banks have nothing to do with it. They can't force you to consume or produce salt. How responsible you are with salt is what determines the outcome. Banks just hold it and loan it. Yes, brutally oversimplified. Yet sometimes oversimplification can sometimes help someone think and understand something. Yes, reality is far more complex than you and I walking around with little sacks of salt. And yet sometimes it isn't much more complex than just that.
  • seliopou 11y ago
    > On a global market a country IS a business. In order to be successful it has to operate at a profit. Period. This understanding is what seems to be lacking in many electorates. So if countries are businesses, and they all have to operate at a profit, and one country's revenue is another country's expenditure, where are all the deficits that balance out all the surpluses? The fact of the matter is that it is impossible, like squaring the circle is impossible, for every country in the world to be surplus country as you propose. Also, as an aside, using a barter metaphor to describe a global, industrialized economy is overly simplistic to the point of being useless, as you pointed out. It's useless the point of being misleading and leading to no more of an understanding of a very complex system.
    • 11y ago
• rayiner 11y ago
  > Third, banks run the world. Governments were already very cosy with banks. That is nothing new. For centuries, European monarchs were beholden to their banks to finance their wars against each other.
• evanpw 11y ago
  I agree with a lot of what you're saying here. Greece should never have joined the Euro. There needs to be a procedure for an orderly default within the Euro. A lot of the bailout conditions were counterproductive. But I disagree with the "strings" argument. If Greece defaults, the troika is threatening to do nothing more than stop loaning money to Greece and its banks. That's it. No leg-breaking. The issue that Greece's banks are utterly dependent on constant and increasing loans from the ECB in order to stay in business. This has been especially clear in the last few days: the ECB stopped increasing the amount of money Greek banks are allowed to borrow, and in response, all of the country's banks are closed and the ATMs have been limited. I think you also have the wrong impression about banks. I agree that people overreact to something like the collapse of Lehman Brothers (an investment bank). But this is something different. The Greek banks aren't just sitting on a hoard of their own money that they're afraid of losing. The money in those banks are deposits from the Greek people. When people say they are worried about the banks failing, they aren't concerned for rich people who run the banks, they're worried for the regular people whose life savings are deposited in those banks.
  • naveen99 11y ago
    Who keeps their life savings in currency accounts in the bank ? Isn't most wealth / life savings in hard assets like land and businesses ?
• gshubert17 11y ago
  Who holds Greek debt? Private banks, governments, individuals? Isn't part of the problem that some creditors went chasing after yield and hoped there wasn't much risk to these bonds?
• mcv 11y ago
  My impression is that Germany and the Eurogroup are obsessed with punishing Greece for exposing this weakness in the Eurozone. They explicitly say they want to make an example of Greece to discourage other countries from voting for left-wing parties like Syriza with economic ideas that don't fit into the destructive "austerity" dogma. The Greek economy has never been very strong, but the austerity measures imposed on it by Germany and the Eurogroup are really running it into the ground. Greece has paid off part of the debt, and yet the debt has grown in relation to the GDP, because the GDP has gone down that much. Ruining an economy is not a good way to save that economy, and certainly not a good way to get it to pay back the debt. But they're not interested in helping, they're interested in punishing. To keep the voters of other countries in line and supporting their destructive neo-liberal policies.
• digi_owl 11y ago
  Government debt is a smokescreen. the origin of the crisis was private debt, as in loans issued to businesses and individuals. That debt, while boosting consumption in the short term, end up restricting consumption in the long term. What then happens, depending on government action, is either a deflationary depression, or a increase in government debt. The latter by having the government buy domestic products and services that would otherwise be laid fallow as the private sector instead focus on managing their debt. This is what is happening not only in Greece, but also Ireland, Spain and Italy. In all of those places euro-zone banks were offering cheap loans. This could be observed by way of building booms and similar. So in effect what the ECB, IMF and others are doing are bailing out French, German and other private banks, and that is where the majority of the payments to Greece etc end up. This while Greece etc are burdened by a domestic recession/depression as local industry etc go bankrupt from debt burdens. This in turn lead to masses of unemployed that the government is pledged to take care off via various support systems.