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Can anyone explain how things got this bad? I've been following this but it's gone on so long now I've no idea why Greece got hit so hard relative to other coun

Can anyone explain how things got this bad? I've been following this but it's gone on so long now I've no idea why Greece got hit so hard relative to other countries in Europe. edit: Thanks for the explanations.

deleted 11y ago
[deleted]
tim333 11y ago
There's a long but entertaining article on it here http://www.vanityfair.com/news/2010/10/greeks-bearing-bonds-201010 http://www.vanityfair.com/news/2010/10/greeks-bearing-bonds-... Sample quotes: >"How in the hell is it possible for a member of the euro area to say the deficit was 3 percent of G.D.P. when it was really 15 percent?” a senior I.M.F. official asks. “How could you possibly do something like that?” >In just the past decade the wage bill of the Greek public sector has doubled, in real terms—and that number doesn’t take into account the bribes collected by public officials. The average government job pays almost three times the average private-sector job. > The average state railroad employee earns 65,000 euros a year. Twenty years ago a successful businessman turned minister of finance named Stefanos Manos pointed out that it would be cheaper to put all Greece’s rail passengers into taxicabs: it’s still true. “We have a railroad company which is bankrupt beyond comprehension,”
- arethuza 11y ago
  I had posted a link to that and then removed it as although the article is highly entertaining it is also very one-sided. Now actual reality might be one-sided but I've sort of come to the view that how the Greeks got into this mess is almost irrelevant at this point and the focus should be on what concrete measures can be done to save Greece as a functioning country while giving the best possible deal to their creditors. Spending too much time on digging over the mistakes both sides made just leads to name calling and extreme polarization of arguments - look at previous discussion on HN on this topic.
  - tim333 11y ago
    I agree it's a bit one sided as portraying Greece as mucked up and also it's old history and one should focus on how to fix things now. The same author wrote a similar article on what went wrong in Iceland "its debt is 850 percent of G.D.P" and it's interesting that Iceland took a completely different policy to Greece's so far, defaulting, and is doing quite well really. I think the austerity inflicted on Greece is kind of dumb. They should try to keep up the aggregate spending so the economy doesn't crater. But by encouraging new business etc to provide jobs for the 50% unemployed young people rather than paying huge salaries and pensions to incumbent government employees.
    - arethuza 11y ago
      Worth noting that the situation in Iceland was completely different. Iceland had a few investment banks who decided to borrow vast sums and buy lots of dodgy assets, the government wasn't really directly involved (apart perhaps from poor regulation). In Greek crisis the government is the main actor and the Greek banks were actually fairly well behaved.
awjr 11y ago
My reading of the situation is that Greece has a very politicised government administration and very poor tax collection regimes. One of the reasons getting tax through utility companies (e.g. electricity) are one of the approaches the government uses. Joining the EU, enabled Greece to get very cheap loans and to pursue vote winning agendas. They even charged one of the mathematicians (with treason iirc) as he proved that Greek government had the incorrect financial model.
mseebach 11y ago
Greece was way more messed up than other Euro-zone countries long before the crisis. > "during the 1980s, Greece experienced the rise of irresponsible populism, unrestrained patronage politics, and a powerful culture of ethnocentrism that worked against the country’s full europeanization." https://www.opendemocracy.net/openeconomy/takis-s-pappas/causes-of-greek-crisis-are-in-greek-politics https://www.opendemocracy.net/openeconomy/takis-s-pappas/cau...

deleted 11y ago

[deleted]

tim333 11y ago

There's a long but entertaining article on it here http://www.vanityfair.com/news/2010/10/greeks-bearing-bonds-201010 http://www.vanityfair.com/news/2010/10/greeks-bearing-bonds-... Sample quotes: >"How in the hell is it possible for a member of the euro area to say the deficit was 3 percent of G.D.P. when it was really 15 percent?” a senior I.M.F. official asks. “How could you possibly do something like that?” >In just the past decade the wage bill of the Greek public sector has doubled, in real terms—and that number doesn’t take into account the bribes collected by public officials. The average government job pays almost three times the average private-sector job. > The average state railroad employee earns 65,000 euros a year. Twenty years ago a successful businessman turned minister of finance named Stefanos Manos pointed out that it would be cheaper to put all Greece’s rail passengers into taxicabs: it’s still true. “We have a railroad company which is bankrupt beyond comprehension,”

arethuza 11y ago
I had posted a link to that and then removed it as although the article is highly entertaining it is also very one-sided. Now actual reality might be one-sided but I've sort of come to the view that how the Greeks got into this mess is almost irrelevant at this point and the focus should be on what concrete measures can be done to save Greece as a functioning country while giving the best possible deal to their creditors. Spending too much time on digging over the mistakes both sides made just leads to name calling and extreme polarization of arguments - look at previous discussion on HN on this topic.
- tim333 11y ago
  I agree it's a bit one sided as portraying Greece as mucked up and also it's old history and one should focus on how to fix things now. The same author wrote a similar article on what went wrong in Iceland "its debt is 850 percent of G.D.P" and it's interesting that Iceland took a completely different policy to Greece's so far, defaulting, and is doing quite well really. I think the austerity inflicted on Greece is kind of dumb. They should try to keep up the aggregate spending so the economy doesn't crater. But by encouraging new business etc to provide jobs for the 50% unemployed young people rather than paying huge salaries and pensions to incumbent government employees.
  - arethuza 11y ago
    Worth noting that the situation in Iceland was completely different. Iceland had a few investment banks who decided to borrow vast sums and buy lots of dodgy assets, the government wasn't really directly involved (apart perhaps from poor regulation). In Greek crisis the government is the main actor and the Greek banks were actually fairly well behaved.

awjr 11y ago

My reading of the situation is that Greece has a very politicised government administration and very poor tax collection regimes. One of the reasons getting tax through utility companies (e.g. electricity) are one of the approaches the government uses. Joining the EU, enabled Greece to get very cheap loans and to pursue vote winning agendas. They even charged one of the mathematicians (with treason iirc) as he proved that Greek government had the incorrect financial model.

mseebach 11y ago

Greece was way more messed up than other Euro-zone countries long before the crisis. > "during the 1980s, Greece experienced the rise of irresponsible populism, unrestrained patronage politics, and a powerful culture of ethnocentrism that worked against the country’s full europeanization." https://www.opendemocracy.net/openeconomy/takis-s-pappas/causes-of-greek-crisis-are-in-greek-politics https://www.opendemocracy.net/openeconomy/takis-s-pappas/cau...