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Thanks for the obvious! My question is, HOW did they get INTO the euro in the first place? Obviously that's the insane part, and once the fraud that was perpet

Thanks for the obvious! My question is, HOW did they get INTO the euro in the first place? Obviously that's the insane part, and once the fraud that was perpetrated on Brussels became clear, why weren't they kicked out immediately?

ubernostrum 11y ago
The usual answer seems to be that financial institutions already within the EU wanted Greece to be in, and were complicit in the process.
seliopou 11y ago
This article[0] describes how it went down: oddly-priced currency swaps. Note that the article is from 2003, and makes clear that other member states such as Italy, at the very least, were using similar practices as far back as 1996. Most people are shocked to hear it when these shenanigans were revealed in 2010. But the fact of the matter is that everybody knew what was happening, when it was happening, and Europe as a whole turned a bind eye for not only Greece, but other member states that used these deals to get into the euro zone and are in trouble today as well. [0]: http://www.risk.net/risk-magazine/feature/1498135/revealed-goldman-sachs-mega-deal-greece http://www.risk.net/risk-magazine/feature/1498135/revealed-g...
Lazare 11y ago
> once the fraud that was perpetrated on Brussels became clear, why weren't they kicked out immediately? It was clear from before the Euro ever started. Everyone (by which I mean, the elites, analysts, the press, politicians, et al) knew that countries like Greece and Portugal had no business joining the Euro, and were lying through their teeth to get in. Then again, everyone knew that the entire project was founded on lies, cooked books, and ignored rules, sacrificed towards the overriding goal of ever closer union. After letting Greece in with a wink and a nod, why in the world would they have then kicked them out? The fraud, if you want to call it that, was on the voters and taxpayers, not on the people running the EU. And if they kicked them out, how could they justify not kicking out all the other countries who had engaged in blatant trickery, which would be, well, all of them? France engaged in some elaborate budget trickery to get their deficit under the line (swapping future pension obligations for one off payments to make their deficit look low enough)[1], Germany waffled a bit but the moves were accepted. How could they not be? France at least lied to make their deficit pass muster; Germany was in blatant violation from the start (which was meant to preclude their entry, or at least trigger massive fines. Naturally it did neither.) Or in short: It's the old glass houses rule. France, Germany, Italy, etc, were in NO place to demand a strict adherence to the rules in the case of Greece, since by a strict reading of the rules they shouldn't have been in the Euro zone either. The Euro project was inherently political from the start, and politically it needed as many countries to join as possible. Even if that was economic disaster. Edit: A better link[2] about how by the terms of the governing treaties, most Eurozone members did not qualify for entry, including (hilariously) Germany which had too much debt. [1]: http://www.nytimes.com/1996/09/20/news/20iht-euro.t.html http://www.nytimes.com/1996/09/20/news/20iht-euro.t.html [2]: http://www.voxeu.org/article/politics-maastricht-convergence-criteria http://www.voxeu.org/article/politics-maastricht-convergence...
tsotha 11y ago
The fact that Greece didn't meet the required criteria was well known at the time. The decision to let Greece (and others) join the union was a political one. I think the larger countries reasoned a country so small could only have a tiny effect on the overall economic picture. It's true, too - the Germans and the French have enough money pay Greece's bills indefinitely were they willing to do so. The Achilles heel of the EMU was always that monetary policy is controlled in Brussels and each country has its own fiscal policy. While the individual countries are supposed follow certain fiscal rules there's no real enforcement mechanism. In the long run that can't work. Either we're going to see a United States of Europe with both fiscal and monetary policy being set in Brussels, or the EMU is going to fall apart.

ubernostrum 11y ago

The usual answer seems to be that financial institutions already within the EU wanted Greece to be in, and were complicit in the process.

seliopou 11y ago

This article[0] describes how it went down: oddly-priced currency swaps. Note that the article is from 2003, and makes clear that other member states such as Italy, at the very least, were using similar practices as far back as 1996. Most people are shocked to hear it when these shenanigans were revealed in 2010. But the fact of the matter is that everybody knew what was happening, when it was happening, and Europe as a whole turned a bind eye for not only Greece, but other member states that used these deals to get into the euro zone and are in trouble today as well. [0]: http://www.risk.net/risk-magazine/feature/1498135/revealed-goldman-sachs-mega-deal-greece http://www.risk.net/risk-magazine/feature/1498135/revealed-g...

Lazare 11y ago

> once the fraud that was perpetrated on Brussels became clear, why weren't they kicked out immediately? It was clear from before the Euro ever started. Everyone (by which I mean, the elites, analysts, the press, politicians, et al) knew that countries like Greece and Portugal had no business joining the Euro, and were lying through their teeth to get in. Then again, everyone knew that the entire project was founded on lies, cooked books, and ignored rules, sacrificed towards the overriding goal of ever closer union. After letting Greece in with a wink and a nod, why in the world would they have then kicked them out? The fraud, if you want to call it that, was on the voters and taxpayers, not on the people running the EU. And if they kicked them out, how could they justify not kicking out all the other countries who had engaged in blatant trickery, which would be, well, all of them? France engaged in some elaborate budget trickery to get their deficit under the line (swapping future pension obligations for one off payments to make their deficit look low enough)[1], Germany waffled a bit but the moves were accepted. How could they not be? France at least lied to make their deficit pass muster; Germany was in blatant violation from the start (which was meant to preclude their entry, or at least trigger massive fines. Naturally it did neither.) Or in short: It's the old glass houses rule. France, Germany, Italy, etc, were in NO place to demand a strict adherence to the rules in the case of Greece, since by a strict reading of the rules they shouldn't have been in the Euro zone either. The Euro project was inherently political from the start, and politically it needed as many countries to join as possible. Even if that was economic disaster. Edit: A better link[2] about how by the terms of the governing treaties, most Eurozone members did not qualify for entry, including (hilariously) Germany which had too much debt. [1]: http://www.nytimes.com/1996/09/20/news/20iht-euro.t.html http://www.nytimes.com/1996/09/20/news/20iht-euro.t.html [2]: http://www.voxeu.org/article/politics-maastricht-convergence-criteria http://www.voxeu.org/article/politics-maastricht-convergence...

tsotha 11y ago

The fact that Greece didn't meet the required criteria was well known at the time. The decision to let Greece (and others) join the union was a political one. I think the larger countries reasoned a country so small could only have a tiny effect on the overall economic picture. It's true, too - the Germans and the French have enough money pay Greece's bills indefinitely were they willing to do so. The Achilles heel of the EMU was always that monetary policy is controlled in Brussels and each country has its own fiscal policy. While the individual countries are supposed follow certain fiscal rules there's no real enforcement mechanism. In the long run that can't work. Either we're going to see a United States of Europe with both fiscal and monetary policy being set in Brussels, or the EMU is going to fall apart.