5 ms·

The Greeks were getting a shitty deal, and knew they were getting a shitty deal. Good for them for decisively telling the Germans to get stuffed (who convenient

The Greeks were getting a shitty deal, and knew they were getting a shitty deal. Good for them for decisively telling the Germans to get stuffed (who conveniently forget about their WWII related debts being forgiven). Iceland demonstrated that it's possible to say no to perpetual debt peonage and go on to do well. If Greece has to leave the Euro, so be it. The Euro made sense as the Deutschfranc, but that's about it.

spiralpolitik 11y ago
By leaving the Euro Greece will have the opportunity to put their country back together without 20 years of crippling austerity. They still need to fix their broken tax system and keep spending with their means but they have a much better chance of doing this on their own terms rather than under the cosh of the Troika. If only other countries could be so brave.
- tptacek 11y ago
  What is the difference between "crippling austerity" and "keeping spending within their means"? Isn't the biggest financial problem in Greece the relative enormity of the public sector? Wouldn't fiscal reform basically amount to slashing entitlements and public sector employment?
  - tormeh 11y ago
    A public sector can be enormous without damaging the economy. In Scandinavian countries it's about 50% and used to be higher. The problem is that the Greek government is both bad and weak. The Greek public sector's purpose is not really to provide utility to the populace, but to buy votes from the unions. It's very hard to pay for because it does not enrichen the private sector nearly as much as it should. And because the Greek oligarchs own the media (and many parliamentarians) so taxing the rich is absurdly hard. Greece is not just insolvent, it's also practically a failed state.
    - peterfirefly 11y ago
      I can assure you that the sizes of the public sectors in Scandinavia damage our economies! Our private sectors are a lot freer than in Greece, though, which is why we can afford them and why Greece can't.
    - quonn 11y ago
      > Greece is not just insolvent, it's also practically a failed state. Syria, Iraq - those are failed states. Greece just managed to organise a democratic referendum peacefully and efficiently - within a week. A failed state looks different to me.
      - corin_ 11y ago
        I don't entirely agree with the concept that it's a failed state, but the fact that it doesn't look like other "failed states" doesn't mean much. If two companies go out of business and one had a crazy employee go on a killing spree you wouldn't say the other company hadn't failed because all it's former employees were still alive.
    - tptacek 11y ago
      Right! There are so many ideologues using Greece to support an agenda, I should probably be more careful to distance myself from "public sector bad, private sector good". The issue with Greece seems to be that they have an enormous public sector, and extraordinarily generous (literally: extra-ordinary) entitlements, "financed" by a nominal tax rate that is decoupled from their actual tax income. From the little reading I've done, it seems like there's been a theme throughout the 1990s of "raising tax rates" to fund a populist spoils-system government, with scare quotes deliberately applied to "raising tax rates".
      - spiralpolitik 11y ago
        They also have a bad record on actually collecting taxes due. Tax Evasion is at 6% of GDP which is considerably higher than similar economies.
  - maxerickson 11y ago
    If they devote less of their economy to debt service (my understanding is that this is why they would leave the Euro), then they can have higher consumption at a given level of economic activity. (I don't really understand the situation well enough to say whether or not they could possibly maintain the same level of activity outside of the Euro, but I think this is the logic behind that argument)
    - tptacek 11y ago
      Poking around, it looks like Greek debt service as a percentage of GDP is not particularly high (it's closer to France's than to Spain's). What does Ireland's interest/GDP look like? Iceland? Those are two former basket-case economies that seem to be recovering without total bail-outs. (I'm asking, not telling; I don't know what the answer is.)
- pcrh 11y ago
  Leaving the Euro and deflating will destroy savings...
fennecfoxen 11y ago
The problem with Greece is that you can't just forgive its debts. Its deficit is still like 9-10% of GDP. Who's going to lend them money after a sovereign default? It's not lending anymore, it's donating. Heck, all they've been loaned so far is basically donations so that Europe could say to Eurozone members, "well don't anyone say we didn't try". What Greece needs is a mix of debt forgiveness, market reform (labor market and otherwise) to unfreeze a sclerotic economy which is more about bribing the bureaucracy than actual competitiveness, and a measure of austerity (starting with a later retirement age, and going from there). They were starting to go down that road! They made real progress with economic growth during the recovery! But the reforms were unpopular and might be impossible to do with their internal politics, leading us to the current crisis. So instead they're going to do the alternate version of hard-and-mean austerity by replacing euros with worthless drachmas and making everyone poorer (hope you don't owe money in Euros). Then they'll either rot for a while in stagnation before gradually getting their act together after all, or they'll turn to Vladimir Putin for bailouts from the great petro-state as long as they last (with all the relevant geopolitical consequences and "screw you Europe" strings attached).
- natrius 11y ago
  "Its deficit is still like 9-10% of GDP." This is very wrong. Greece has run primary surpluses in recent years. They will probably miss that goal this year, but not by 9-10% of GDP. Forgiving Greek debts would solve the problem. http://mainlymacro.blogspot.com/2015/02/greece-and-primary-surpluses.html http://mainlymacro.blogspot.com/2015/02/greece-and-primary-s...
  - tptacek 11y ago
    Apparently the deficit is more like 3% (depending on whether you believe Greece's own stats, or the EU's. Forgiving debt by definition doesn't change the primary surplus, right? The primary surplus is the budget before taking interest payments into account. And that's the whole premise of not bailing Greece out on Greek terms, right? That bailing them out doesn't accomplish anything if they're still on a course to rack up more debts due to unsustainable fiscal policy.
deleted 11y ago
[deleted]

spiralpolitik 11y ago

By leaving the Euro Greece will have the opportunity to put their country back together without 20 years of crippling austerity. They still need to fix their broken tax system and keep spending with their means but they have a much better chance of doing this on their own terms rather than under the cosh of the Troika. If only other countries could be so brave.

tptacek 11y ago
What is the difference between "crippling austerity" and "keeping spending within their means"? Isn't the biggest financial problem in Greece the relative enormity of the public sector? Wouldn't fiscal reform basically amount to slashing entitlements and public sector employment?
- tormeh 11y ago
  A public sector can be enormous without damaging the economy. In Scandinavian countries it's about 50% and used to be higher. The problem is that the Greek government is both bad and weak. The Greek public sector's purpose is not really to provide utility to the populace, but to buy votes from the unions. It's very hard to pay for because it does not enrichen the private sector nearly as much as it should. And because the Greek oligarchs own the media (and many parliamentarians) so taxing the rich is absurdly hard. Greece is not just insolvent, it's also practically a failed state.
  - peterfirefly 11y ago
    I can assure you that the sizes of the public sectors in Scandinavia damage our economies! Our private sectors are a lot freer than in Greece, though, which is why we can afford them and why Greece can't.
  - quonn 11y ago
    > Greece is not just insolvent, it's also practically a failed state. Syria, Iraq - those are failed states. Greece just managed to organise a democratic referendum peacefully and efficiently - within a week. A failed state looks different to me.
    - corin_ 11y ago
      I don't entirely agree with the concept that it's a failed state, but the fact that it doesn't look like other "failed states" doesn't mean much. If two companies go out of business and one had a crazy employee go on a killing spree you wouldn't say the other company hadn't failed because all it's former employees were still alive.
  - tptacek 11y ago
    Right! There are so many ideologues using Greece to support an agenda, I should probably be more careful to distance myself from "public sector bad, private sector good". The issue with Greece seems to be that they have an enormous public sector, and extraordinarily generous (literally: extra-ordinary) entitlements, "financed" by a nominal tax rate that is decoupled from their actual tax income. From the little reading I've done, it seems like there's been a theme throughout the 1990s of "raising tax rates" to fund a populist spoils-system government, with scare quotes deliberately applied to "raising tax rates".
    - spiralpolitik 11y ago
      They also have a bad record on actually collecting taxes due. Tax Evasion is at 6% of GDP which is considerably higher than similar economies.
- maxerickson 11y ago
  If they devote less of their economy to debt service (my understanding is that this is why they would leave the Euro), then they can have higher consumption at a given level of economic activity. (I don't really understand the situation well enough to say whether or not they could possibly maintain the same level of activity outside of the Euro, but I think this is the logic behind that argument)
  - tptacek 11y ago
    Poking around, it looks like Greek debt service as a percentage of GDP is not particularly high (it's closer to France's than to Spain's). What does Ireland's interest/GDP look like? Iceland? Those are two former basket-case economies that seem to be recovering without total bail-outs. (I'm asking, not telling; I don't know what the answer is.)
pcrh 11y ago
Leaving the Euro and deflating will destroy savings...

fennecfoxen 11y ago

The problem with Greece is that you can't just forgive its debts. Its deficit is still like 9-10% of GDP. Who's going to lend them money after a sovereign default? It's not lending anymore, it's donating. Heck, all they've been loaned so far is basically donations so that Europe could say to Eurozone members, "well don't anyone say we didn't try". What Greece needs is a mix of debt forgiveness, market reform (labor market and otherwise) to unfreeze a sclerotic economy which is more about bribing the bureaucracy than actual competitiveness, and a measure of austerity (starting with a later retirement age, and going from there). They were starting to go down that road! They made real progress with economic growth during the recovery! But the reforms were unpopular and might be impossible to do with their internal politics, leading us to the current crisis. So instead they're going to do the alternate version of hard-and-mean austerity by replacing euros with worthless drachmas and making everyone poorer (hope you don't owe money in Euros). Then they'll either rot for a while in stagnation before gradually getting their act together after all, or they'll turn to Vladimir Putin for bailouts from the great petro-state as long as they last (with all the relevant geopolitical consequences and "screw you Europe" strings attached).

natrius 11y ago
"Its deficit is still like 9-10% of GDP." This is very wrong. Greece has run primary surpluses in recent years. They will probably miss that goal this year, but not by 9-10% of GDP. Forgiving Greek debts would solve the problem. http://mainlymacro.blogspot.com/2015/02/greece-and-primary-surpluses.html http://mainlymacro.blogspot.com/2015/02/greece-and-primary-s...
- tptacek 11y ago
  Apparently the deficit is more like 3% (depending on whether you believe Greece's own stats, or the EU's. Forgiving debt by definition doesn't change the primary surplus, right? The primary surplus is the budget before taking interest payments into account. And that's the whole premise of not bailing Greece out on Greek terms, right? That bailing them out doesn't accomplish anything if they're still on a course to rack up more debts due to unsustainable fiscal policy.

deleted 11y ago

[deleted]