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Not necessarily. In the short run, perhaps, but that's not the point. The point is that your analysis reflects a very poor grasp of what's happening.

by alexqgb 11y ago

tptacek 11y ago
I believe you, but could you flesh that critique out some more? My understanding of Greek's fundamentals start here: http://pseudoerasmus.com/2015/02/23/greece-orthodoxy-peronism/ http://pseudoerasmus.com/2015/02/23/greece-orthodoxy-peronis... (this was linked from the Interfluidity thing everyone was talking about before) and continues through here: http://www.imf.org/external/pubs/ft/scr/2015/cr15165.pdf http://www.imf.org/external/pubs/ft/scr/2015/cr15165.pdf (which I read when someone claimed Greece had a 2014 primary surplus, which IMF disputes), and is colored by Tyler Cowen: http://marginalrevolution.com/marginalrevolution/2015/07/the-greeks-vote-for-austerity-now.html http://marginalrevolution.com/marginalrevolution/2015/07/the... ... who I do not agree with on most things, to the extent that matters, but whose commentary on Syriza and Greek financing I now understand a little better.
- JamesBarney 11y ago
  Hope the following helps, I think we all are trying to learn as much as possible about this as it unfolds. I thought the article about Peronis Democracy was interesting but I need some help seeing the connection to the current crisis. Judging from your comments it seems like you believe the Greek government is spending more than it's taking in(primary budget deficit). Which is not true at least for 2014 according to the Wall Street Journal. The Greek government needs to borrow more money not to fund additional purchases but to pay off debt that is coming due. For example they have $5 billion(not sure on exact number) worth of debt that matures in 2015 but they will run a primary budget surplus of $2.25 billion so they need to borrow an additional $2.75 billion to pay off the additional debt. The next few years will be very terrible for Greece, but so have the last few years. The fundamental problem with Greece comes down the idea of a fiscal multiplier, which is how much gdp changes when government spending is cut[1]. Right now the IMF estimates that the fiscal multiplier is 1.7.[0] This means that every dollar the government cuts(increasing the primary budget deficit) reduces the size of the economy by $1.7(which also reduces the governments tax revenue). So the current austerity measures of a surplus of $2.24 billion reduce the size of the Greece economy by at least $3.8 billion[2]. The current Great Depression level unemployment in Greece is the result of cuts in government spending that generated a surplus of just 1%. Imagine what Greece would be like if they achieve their target of 3.5%(was 4.5%). P.S. excuse any spelling or grammatical errors, its too late for me to be on hacker news. [0]http://www.eurointelligence.com/news-details/article/imf-admits-it-underestimated-the-fiscal-multiplier.html http://www.eurointelligence.com/news-details/article/imf-adm... [1]http://www.wsj.com/articles/greece-misses-target-on-budget-surplus-1421244654 http://www.wsj.com/articles/greece-misses-target-on-budget-s... - behind paywall unfortunately, so there will be a need to google. [2]https://en.wikipedia.org/wiki/Fiscal_multiplier#Net_Government_Spending https://en.wikipedia.org/wiki/Fiscal_multiplier#Net_Governme... [3](at least because of the feed back loop of +surplus-> -gdp -> -taxes -> -surplus so to achieve a surplus of 2.24 billion more than 2.24 billion in cuts would need to be mead)
  - mike_hearn 11y ago
    Greece stopped having a primary surplus the moment Syriza came to power, as one of the first things they did was reverse tax rises and rehire fired civil servants.
  - tptacek 11y ago
    Thank you! The IMF analyzed the 2014 primary surplus and found it illusory: * They counted revenue sources that aren't conventionally accounted for in primary budgets * They undercounted liabilities, notably from tax refund and pension payables * Some of the unorthodox revenue they counted were privatization proceeds, which turned out less lucrative than projected The IMF's trued-up numbers suggest there was no 2014 primary surplus.

Not necessarily. In the short run, perhaps, but that's not the point. The point is that your analysis reflects a very poor grasp of what's happening.

by alexqgb 11y ago

Not necessarily. In the short run, perhaps, but that's not the point. The point is that your analysis reflects a very poor grasp of what's happening.

tptacek 11y ago

I believe you, but could you flesh that critique out some more? My understanding of Greek's fundamentals start here: http://pseudoerasmus.com/2015/02/23/greece-orthodoxy-peronism/ http://pseudoerasmus.com/2015/02/23/greece-orthodoxy-peronis... (this was linked from the Interfluidity thing everyone was talking about before) and continues through here: http://www.imf.org/external/pubs/ft/scr/2015/cr15165.pdf http://www.imf.org/external/pubs/ft/scr/2015/cr15165.pdf (which I read when someone claimed Greece had a 2014 primary surplus, which IMF disputes), and is colored by Tyler Cowen: http://marginalrevolution.com/marginalrevolution/2015/07/the-greeks-vote-for-austerity-now.html http://marginalrevolution.com/marginalrevolution/2015/07/the... ... who I do not agree with on most things, to the extent that matters, but whose commentary on Syriza and Greek financing I now understand a little better.

JamesBarney 11y ago
Hope the following helps, I think we all are trying to learn as much as possible about this as it unfolds. I thought the article about Peronis Democracy was interesting but I need some help seeing the connection to the current crisis. Judging from your comments it seems like you believe the Greek government is spending more than it's taking in(primary budget deficit). Which is not true at least for 2014 according to the Wall Street Journal. The Greek government needs to borrow more money not to fund additional purchases but to pay off debt that is coming due. For example they have $5 billion(not sure on exact number) worth of debt that matures in 2015 but they will run a primary budget surplus of $2.25 billion so they need to borrow an additional $2.75 billion to pay off the additional debt. The next few years will be very terrible for Greece, but so have the last few years. The fundamental problem with Greece comes down the idea of a fiscal multiplier, which is how much gdp changes when government spending is cut[1]. Right now the IMF estimates that the fiscal multiplier is 1.7.[0] This means that every dollar the government cuts(increasing the primary budget deficit) reduces the size of the economy by $1.7(which also reduces the governments tax revenue). So the current austerity measures of a surplus of $2.24 billion reduce the size of the Greece economy by at least $3.8 billion[2]. The current Great Depression level unemployment in Greece is the result of cuts in government spending that generated a surplus of just 1%. Imagine what Greece would be like if they achieve their target of 3.5%(was 4.5%). P.S. excuse any spelling or grammatical errors, its too late for me to be on hacker news. [0]http://www.eurointelligence.com/news-details/article/imf-admits-it-underestimated-the-fiscal-multiplier.html http://www.eurointelligence.com/news-details/article/imf-adm... [1]http://www.wsj.com/articles/greece-misses-target-on-budget-surplus-1421244654 http://www.wsj.com/articles/greece-misses-target-on-budget-s... - behind paywall unfortunately, so there will be a need to google. [2]https://en.wikipedia.org/wiki/Fiscal_multiplier#Net_Government_Spending https://en.wikipedia.org/wiki/Fiscal_multiplier#Net_Governme... [3](at least because of the feed back loop of +surplus-> -gdp -> -taxes -> -surplus so to achieve a surplus of 2.24 billion more than 2.24 billion in cuts would need to be mead)
- mike_hearn 11y ago
  Greece stopped having a primary surplus the moment Syriza came to power, as one of the first things they did was reverse tax rises and rehire fired civil servants.
- tptacek 11y ago
  Thank you! The IMF analyzed the 2014 primary surplus and found it illusory: * They counted revenue sources that aren't conventionally accounted for in primary budgets * They undercounted liabilities, notably from tax refund and pension payables * Some of the unorthodox revenue they counted were privatization proceeds, which turned out less lucrative than projected The IMF's trued-up numbers suggest there was no 2014 primary surplus.