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Why a Greece Deal Matters: A Visual Guide

43 points by dpflan 11y ago

jawns 11y ago
Am I the only one who found it odd for a `nytimes.com/interactive` feature to be ... non-interactive?
- andruby 11y ago
  I also expected more from the d3 visualisations.
digital-rubber 11y ago
Well i know how is going to lose votes next election in my country. The ones that push this deal through.
kwelstr 11y ago
A nice visual guide of all Euro countries. Some still have too much debt compared to GDP. Scandinavia seems to be doing just fine.
- Amezarak 11y ago
  Unfortunately it's hard to see how austerity measures (in the "bailout" deal) are going to improve debt compared to GDP. It certainly didn't in Greece, where a 6% rise in debt (post-haircut) went with a ~35% increase in debt/GDP, because austerity tanked the economy. It's also unclear what exactly "too much debt compared to GDP" means. What number is too much, and under what circumstances? Additionally, while Finland's debt/GDP may be "fine", for your definition of fine, Finland's economy is not doing fine, thanks to the constraints imposed by the Euro and the same austerity policies in place throughout Europe. [1] [2] Even now Finland has 8%+ unemployment and 0.8% growth. Indeed for these reasons, Finland is expected to become one of the most indebted countries in Europe. [3] [1] http://krugman.blogs.nytimes.com/2015/06/01/the-finnish-disease/?module=BlogPost-Title&version=Blog%20Main&contentCollection=Opinion&action=Click&pgtype=Blogs&region=Body http://krugman.blogs.nytimes.com/2015/06/01/the-finnish-dise... [2] http://www.interfluidity.com/uploads/2015/07/Greekovery.png http://www.interfluidity.com/uploads/2015/07/Greekovery.png [3] http://www.bloomberg.com/bw/articles/2014-01-23/is-finland-a-victim-of-the-austerity-medicine-it-prescribed-for-europe http://www.bloomberg.com/bw/articles/2014-01-23/is-finland-a...
  - kuschku 11y ago
    Well, one could argue that it was just a bubble that burst – but that would be ignoring a lot of the situation. Some of the issues are that the IMF wants Greece to implement the austerity stuff on a different time scale than SYRIZA plans to, and that the population is very much against those systems (which I can understand). If the greek government would improve their tax agency so they’d have 0 tax evasion (let’s just assume that), then with the next election, a party would get elected that changes that. The reason: Currently, greece has to pay back debts, but that means people have to pay a lot more taxes, and only see the infrastructure to become worse – leading to uproar. Greece can’t just stop spending completely, they have to improve the situation in many places, while simultaneously improving tax collection slowly.
    - wolfgke 11y ago
      Concerning "Some of the issues are that the IMF wants Greece to implement the austerity stuff on a different time scale than SYRIZA plans to, and that the population is very much against those systems (which I can understand). [...] The reason: Currently, greece has to pay back debts, but that means people have to pay a lot more taxes, and only see the infrastructure to become worse – leading to uproar.": If the Greek people lived beyond their means in the past, someday the moment will come where they have to tighten their belts. Bad luck, but they decided in the past to spend money that they don't have.
      - phn 11y ago
        The point is, people lent them that money, without caring if they could or not pay... Those people are demanding their terms to be met, regardless of weather that is a realistic demand or not. I am not saying who is wrong or who is right, but I don't think the blame falls only in one side. I'd argue that you take a risk when you lend money, and shit happens if you lend to people who can't pay.
        zo1 11y ago
        The way I'm seeing this is that "yes, Greece can pay", they just voted not to. If one looks at it that way, the whole argument about "lenders chose to lend to them, taking risk that they might not be able to pay, therefore they are to blame as well", falls wayside. This is because the risk they assumed to be taking was one of Greece "not being able to pay", not Greece choosing to not honour the deal. Tl;dr: There is a difference between the risk of not being able to pay, and the risk of choosing to default/not pay at all.
- fla 11y ago
  Exporting gas/oil helps alot :)
- at-fates-hands 11y ago
  If you actually look at the country's debt compared to its tax revenue, most of these countries situations become much more severe: A better comparison is to examine each country’s debt to government tax revenue, since that is the government’s income. This also offers a better comparison because different countries have very different levels of taxation. A country with high taxes can afford more debt than a low tax country. Debt to GDP ignores this difference. Comparing debt to tax revenue reveals a much truer picture of the burden of each country’s debt on its government’s finances. When I compute those figures, Japan is still #1, with a debt as a percentage of tax revenue of about 900 percent and Greece is still in second place at about 475 percent. The big change is the U.S. jumps up to third place, with a debt to income measure of 408 percent. If the U.S. were a family, it would be deep into the financial danger zone. To add a bit more perspective, the countries in fourth, fifth, and sixth place are Iceland, Portugal, and Italy, all between 300 and 310 percent. In other words, these three are starting to see a flashing yellow warning light, but only three developed countries in the world are in the red zone for national debt to income. The U.S. is one of those three. source: http://www.forbes.com/sites/jeffreydorfman/2014/07/12/forget-debt-as-a-percent-of-gdp-its-really-much-worse/ http://www.forbes.com/sites/jeffreydorfman/2014/07/12/forget... Many Scandinavian countries economies have slowed somewhat recently. Norway has been nicked from gas prices coming down since its such a big oil exporter. Even with the slow down, most countries still have robust economies.
  - bjornsing 11y ago
    An important difference between Greece those other countries is that Greece is borrowing in a currency it does not control...
  - Amezarak 11y ago
    > If the U.S. were a family, it would be deep into the financial danger zone. But the US government is not a family. Neither is the Japanese government. This analogy is disingenuous and one that should be eradicated from all economic thinking. When in debt, the rational thing for a family to do is always cut expenses to the greatest extent practicable (or to declare bankruptcy, I suppose.) This is decidedly not the most rational thing for the government to do in every situation, because it can crash the economy and actually worsen the relative debt load of the country. The US is not in danger. Interest rates are very low, sometimes still trending into negative territory. [1] The US is a sovereign nation that issues its own currency. The US can inflate its debt away, just as it did with an almost equally large debt in the late 40s and 50s. Granted, the economy needs to be growing more than it does now; in part because of anemic growth, the Fed is struggling to meet target inflation rates of 2%. http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield http://www.treasury.gov/resource-center/data-chart-center/in...
- gioele 11y ago
  > Some still have too much debt compared to GDP Some countries never defaulted except during wars (Italy, France), other did (Germany: 1931, 1953) and have now a decent debt/GDP ratio. One can say much about Italian politics, but part of current Italian debt goes to repay debts contracted to pay war reparations back to the first world war. http://www.spiegel.de/international/germany/economic-historian-germany-was-biggest-debt-transgressor-of-20th-century-a-769703.html http://www.spiegel.de/international/germany/economic-histori... https://en.wikipedia.org/wiki/List_of_sovereign_debt_crises https://en.wikipedia.org/wiki/List_of_sovereign_debt_crises
happyscrappy 11y ago
I don't understand how they plan on reducing tax evasion if it can be justified as only going to Germany anyway.
- k-mcgrady 11y ago
  Much higher VAT? Tougher penalties for tax evasion + more thorough investigation?
  - leereeves 11y ago
    And the people of Greece would vote for a government that does that?
    - k-mcgrady 11y ago
      Do they have a choice at this stage? Personally I don't think austerity is a good way out but when you have no money, no one will give you money, and nobody even wants anything to do with you, there aren't many other choices.
- jandrese 11y ago
  I think before you talk about how to reduce tax evasion, you have to figure out why tax evasion is so high to begin with. Are local tax offices hopelessly corrupt? Does there need to be some sort of "untouchables" type operation for the Greek government to root out corruption? Is it cultural? Does Greece simply need to make tax evasion uncool? Along with coming down on evaders like the US IRS of course. Is the process of paying taxes simply too onerous? Can the process be streamlined with online resources and stricter employer reporting standards? It is best if you understand the problem before trying to solve it.
dpflan 11y ago
Access via a Google query: https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CB8QqQIwAA&url=http%3A%2F%2Fwww.nytimes.com%2Finteractive%2F2015%2F07%2F12%2Fbusiness%2Finternational%2Fwhy-the-greece-bailout-deal-matters.html https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&c...
dpflan 11y ago
If you'd like to visualize the physical amount of euros relative to the size of a human and delivery trucks: http://demonocracy.info/infographics/eu/debt_greek/debt_greek.html http://demonocracy.info/infographics/eu/debt_greek/debt_gree...
dpflan 11y ago
From the OECD. Here are a few articles that explore the EU's approach on sovereign debt crisis. One is form 2011, and the other is from 2012. The 2012 article discusses the "Greece Problem": The „Greece problem‟ needs to be resolved once and for all with a 50% (or larger) haircut on its sovereign debt and necessary ancillary policies, so that its chances or remaining in the euro improve. (2012) 1. 2011 - http://www.oecd.org/finance/financial-markets/49191980.pdf http://www.oecd.org/finance/financial-markets/49191980.pdf 2. 2012 - http://www.oecd.org/finance/financial-markets/49481502.pdf http://www.oecd.org/finance/financial-markets/49481502.pdf 3. Greece @ OECD.org: https://data.oecd.org/greece.htm https://data.oecd.org/greece.htm
- dimitar 11y ago
  I'm actually surprised that the OECD has said that. Similar research has been published by the IMF as well. So these organizations have experts and yet spokesmen and officials give the opposite advice of what they tell them. Good thing they have transparency at least.
  - rhodri 11y ago
    Indeed – illustrates very clearly how governments, institutions and corporations aren't the unified hierarchies they present themselves as, and instead can be many-headed organisms pursuing sometimes contradictory aims. Compare to Samsung and Google suing each other for patent infringement while operating a revenue-share scheme on ad profits.
    - TheMagicHorsey 11y ago
      I don't think Samsung and Google have sued each other for patent infringement. I could be mistaken. Do you have a source? I believe you meant to say Samsung and Apple perhaps?
venomsnake 11y ago
The deal is terrible ... I cannot see how it will pass parliament. It is dooming Greece for a century. And on top of that the privatization fund is deeply humiliating.
- dpflan 11y ago
  Krugman agrees that the list of demands is "madness": http://krugman.blogs.nytimes.com/2015/07/12/killing-the-european-project/ http://krugman.blogs.nytimes.com/2015/07/12/killing-the-euro...
rhodri 11y ago
Most of this bailout money will go straight back to paying interest on the bad loans that caused the crisis. Much of these loans came from banks in the very same Eurozone countries that are imposing this deal onto Greece. So much for European solidarity... The austerity imposed on the Greek people will shrink the economy and ensure that the next few generations will be labouring in servitude to pay off the debts of the previous generations. The supreme irony in all of this is that Germany was able to thrive after WW2 in part because of the writing-off of more than half of their government debt, something that Angela Merkel has claimed is 'off the table'. Further reading: http://www.theguardian.com/world/2015/jun/29/where-did-the-greek-bailout-money-go http://www.theguardian.com/world/2015/jun/29/where-did-the-g... https://medium.com/@gavinschalliol/thomas-piketty-germany-has-never-repaid-7b5e7add6fff https://medium.com/@gavinschalliol/thomas-piketty-germany-ha...
- tosseraccount 11y ago
  Bad loans did not cause the crisis. Bad loans are a symptom of a poor fiscal situation. No one forced Greece to take out loans. Consider this write up :http://www.vanityfair.com/news/2010/10/greeks-bearing-bonds-201010 http://www.vanityfair.com/news/2010/10/greeks-bearing-bonds-... This was before the "Greeks as Victims" narrative gained wide currency. “The way they were keeping track of their finances—they knew how much they had agreed to spend, but no one was keeping track of what he had actually spent. It wasn’t even what you would call an emerging economy. It was a Third World country.” As it turned out, what the Greeks wanted to do, once the lights went out and they were alone in the dark with a pile of borrowed money, was turn their government into a piñata stuffed with fantastic sums and give as many citizens as possible a whack at it.
  - yequalsx 11y ago
    No one forced Greece to take the loans. No one forced banks to loan to Greece. Both parties are at fault. Both parties ought to take losses. Only one is in this case.
    - hartator 11y ago
stupandaus 11y ago
The real reason the Greece deal matters, is the rest of the EU are looking at it as a proxy for what will happen to Spain and Italy next. These two make up a much larger proportion of the EU GDP, and are facing their own major debt crises.
- tosseraccount 11y ago
  Spain and Italy have cut their deficits in half. http://www.tradingeconomics.com/spain/government-budget http://www.tradingeconomics.com/spain/government-budget http://www.tradingeconomics.com/italy/government-budget http://www.tradingeconomics.com/italy/government-budget Robust growth predicted for Spain : http://www.oecd.org/eco/outlook/spain-economic-forecast-summary.htm http://www.oecd.org/eco/outlook/spain-economic-forecast-summ... Robust growth is projected over the next two years, driven by very supportive financial conditions http://www.oecd.org/eco/outlook/italy-economic-forecast-summary.htm http://www.oecd.org/eco/outlook/italy-economic-forecast-summ... After a long recession, the Italian economy has started its gradual recovery. Output is projected to grow by 0.6% in 2015 and by 1.5% in 2016/
  - cplanas 11y ago
    If reducing your budget matters, then Greece has a very prosperous economy. Reducing your budget does not matter if doing so sends you into a (bigger) depression that makes your debt grow. Spanish debt is growing fast, having almost doubled since 2010 (http://www.tradingeconomics.com/spain/government-debt-to-gdp http://www.tradingeconomics.com/spain/government-debt-to-gdp).
    - tosseraccount 11y ago
      If.
nickik 11y ago
This is really about a institutional setup. If Greece is allowed to make debt common to the hole EU, it will set a president. The marekt thought that debt was held in common and bond yields were the same for everybody, now they have to make it clear to markets that this is not the case. Because if it was the case, then ALL the debt is held by everybody. https://2.bp.blogspot.com/-lDRRJhgiFTE/T9tShSNsaII/AAAAAAAAAqU/7LcljR9adLM/s1600/Europe+Bond+Yields.png https://2.bp.blogspot.com/-lDRRJhgiFTE/T9tShSNsaII/AAAAAAAAA... It does not need a PhD in Game Theory to see what the likly outcome of such a system is. Greece is in the unfortinate situation of beeing the case were this choice has to be made. Its not all their fault, but its also not their fault. This is just on of the problems of the EU and the Eurozone. Its my beliefe that if debt should be assumed commonly, it will break up the EU because no voters in any country would agree to this. It is really sad, and if you want to blame somebody, its the eurocrats who have steamrolled over many economists and many others who have point out the idiocy of their plans.
- kanamekun 11y ago
  << Its my beliefe that if debt should be assumed commonly, it will break up the EU because no voters in any country would agree to this. >> But that's exactly what happened in the early days of the founding of the US, when Alexander Hamilton negotiated the Funding Act of 1790: "The Funding Act authorized the federal government to receive certificates of state war-incurred debts and to issue federal securities in exchange." https://en.wikipedia.org/wiki/Funding_Act_of_1790 https://en.wikipedia.org/wiki/Funding_Act_of_1790 Without the Funding Act, the state governments would've defaulted on their Revolutionary War debt. By assuming the debt of the states, the US greatly strengthened their collective borrowing ability and also brought the states closer together into the union.
  - nickik 11y ago
    If you WANT a "United State of Europe" then yes, common debt makes sence. But in that case all nations lose their sovereignty and absolutly no nation in the EU has voted on this, and not a single one would agree to this. I, for one, am against a United States of Europe and theirfore Im against common debt. If we want to attempted such a project we should start by democratically asking people if they want it, not just imposing it. That EU doing this now would essentially be taking away sovereignty in a undemocratic way, and theirfore it would be tyranny.
hackuser 11y ago
There is a far more serious issue at stake: The threat by the hardline creditors, most importantly Germany, as well as by 'euro-skeptics' in the UK and elsewhere, that European integration and union are not goals and ideals, but transactional economic arrangements that are good only for the money. When is the last time you heard someone argue the political and security benefits of the EU and the costs of losing it?
- nickik 11y ago
  What are these politcal benefits? Security benefits, seams like the EU is more likly to cause war then to make it go away. Contrary to popular belive you can make agreements without the EU. If you want to have a security agreement, create a security agreement.
  - JamesBarney 11y ago
    The people creating the EU were not mistaken that the only way to create security benefits was by creating the EU. They instead were well acquainted with a popular theory that said trade and economic interdependence reduces the risk of war. The architects of the EU wanted to increase this interdependence not for economic gain but to tie together the economies of Europe so closely that war would be next to impossible.
    - nickik 11y ago
      Yes, they were idiots. Trade does help, true. But you can agree to free trade and free movment of people WITHOUT things like common currency and sharing of debt. These things cause problems, and many people have pointed this out. There are different visions of the EU, some wanted it to be a free-trade zone others want 'United State of Europe'.
  - hackuser 11y ago
    > What are these politcal benefits? Security benefits, seams like the EU is more likly to cause war then to make it go away. From what I understand, the primary purpose of the EU is politics and security. It was created by the survivors of WWI and WWII. They needed a way to prevent another European war, and the solution was to bind together into "ever closer union". It worked amazingly well -- one of the most successful acts of international relations I can think of -- war between EU states, who had been fighting each other for hundreds of years and had devastated the continent twice in the first half of the century, is now unthinkable. We were born with it and assume it, but from the perspective of 1945 and centuries before that, it's a miracle. Another way to think of it: Why not have a democratic mechanism to decide common issues? Democracy is what we believe in, and the alternative is the anarchy of the strong abusing the weak.
jandrese 11y ago
Why is it that nobody in the Eurozone is willing to discuss the fundamental and disastrous consequences of a unified monetary policy with independent fiscal policy? Are we going to wait until Greece has to be bailed out a fourth time? Or a fifth time? What about when Spain defaults? This is going to keep on happening until the underlying problems are addressed. Ultimately, the EU is going to need the ability to tax and spend to redistribute wealth and keep the economies working. It's the same way the US taxes New York, Massachusetts, California, etc... to give to Alabama, Mississippi, Louisiana, and so on. I know it will be unpopular politically, but the EU really needs to make itself look more like the United States of Europe if it wants this whole unified currency thing to work. They have been trying to ignore the elephant in the room for so long that smaller countries are drowning in its shit.
- cristianpascu 11y ago
  The elephant in the room can not be that big since it could enter through the door. The EU project is nothing like US. This is the XIX, with all the economical and political complications. And we're talking about a bunch of very different countries and cultures. You don't just throw them together in a bowl and stir. USofE is a solution to a problem created by a solution that was not needed in the first place. It was an ideal. It still is. The ideal of a few that got to be shared by more and more people. But not by everyone, not with any cost.
- nickik 11y ago
  You are right, exept when you say that the EU needs to make itself more like the US. If people actually want that, then we might want to do so. However not a single country will vote for this. So if you don't want to force it one people, then this will not work.
  - kuschku 11y ago
    Well, especially in border regions such stuff is popular – the people living at the border between Denmark and Sweden, or the Netherlands and Belgium would prefer more unification, as for them every bit of independence of these countries means a less convenient life.

43 points by dpflan 11y ago

jawns 11y ago

Am I the only one who found it odd for a `nytimes.com/interactive` feature to be ... non-interactive?

andruby 11y ago
I also expected more from the d3 visualisations.

digital-rubber 11y ago

Well i know how is going to lose votes next election in my country. The ones that push this deal through.

kwelstr 11y ago

A nice visual guide of all Euro countries. Some still have too much debt compared to GDP. Scandinavia seems to be doing just fine.

Amezarak 11y ago
Unfortunately it's hard to see how austerity measures (in the "bailout" deal) are going to improve debt compared to GDP. It certainly didn't in Greece, where a 6% rise in debt (post-haircut) went with a ~35% increase in debt/GDP, because austerity tanked the economy. It's also unclear what exactly "too much debt compared to GDP" means. What number is too much, and under what circumstances? Additionally, while Finland's debt/GDP may be "fine", for your definition of fine, Finland's economy is not doing fine, thanks to the constraints imposed by the Euro and the same austerity policies in place throughout Europe. [1] [2] Even now Finland has 8%+ unemployment and 0.8% growth. Indeed for these reasons, Finland is expected to become one of the most indebted countries in Europe. [3] [1] http://krugman.blogs.nytimes.com/2015/06/01/the-finnish-disease/?module=BlogPost-Title&version=Blog%20Main&contentCollection=Opinion&action=Click&pgtype=Blogs&region=Body http://krugman.blogs.nytimes.com/2015/06/01/the-finnish-dise... [2] http://www.interfluidity.com/uploads/2015/07/Greekovery.png http://www.interfluidity.com/uploads/2015/07/Greekovery.png [3] http://www.bloomberg.com/bw/articles/2014-01-23/is-finland-a-victim-of-the-austerity-medicine-it-prescribed-for-europe http://www.bloomberg.com/bw/articles/2014-01-23/is-finland-a...
- kuschku 11y ago
  Well, one could argue that it was just a bubble that burst – but that would be ignoring a lot of the situation. Some of the issues are that the IMF wants Greece to implement the austerity stuff on a different time scale than SYRIZA plans to, and that the population is very much against those systems (which I can understand). If the greek government would improve their tax agency so they’d have 0 tax evasion (let’s just assume that), then with the next election, a party would get elected that changes that. The reason: Currently, greece has to pay back debts, but that means people have to pay a lot more taxes, and only see the infrastructure to become worse – leading to uproar. Greece can’t just stop spending completely, they have to improve the situation in many places, while simultaneously improving tax collection slowly.
  - wolfgke 11y ago
    Concerning "Some of the issues are that the IMF wants Greece to implement the austerity stuff on a different time scale than SYRIZA plans to, and that the population is very much against those systems (which I can understand). [...] The reason: Currently, greece has to pay back debts, but that means people have to pay a lot more taxes, and only see the infrastructure to become worse – leading to uproar.": If the Greek people lived beyond their means in the past, someday the moment will come where they have to tighten their belts. Bad luck, but they decided in the past to spend money that they don't have.
    - phn 11y ago
      The point is, people lent them that money, without caring if they could or not pay... Those people are demanding their terms to be met, regardless of weather that is a realistic demand or not. I am not saying who is wrong or who is right, but I don't think the blame falls only in one side. I'd argue that you take a risk when you lend money, and shit happens if you lend to people who can't pay.
      - zo1 11y ago
        The way I'm seeing this is that "yes, Greece can pay", they just voted not to. If one looks at it that way, the whole argument about "lenders chose to lend to them, taking risk that they might not be able to pay, therefore they are to blame as well", falls wayside. This is because the risk they assumed to be taking was one of Greece "not being able to pay", not Greece choosing to not honour the deal. Tl;dr: There is a difference between the risk of not being able to pay, and the risk of choosing to default/not pay at all.
fla 11y ago
Exporting gas/oil helps alot :)
at-fates-hands 11y ago
If you actually look at the country's debt compared to its tax revenue, most of these countries situations become much more severe: A better comparison is to examine each country’s debt to government tax revenue, since that is the government’s income. This also offers a better comparison because different countries have very different levels of taxation. A country with high taxes can afford more debt than a low tax country. Debt to GDP ignores this difference. Comparing debt to tax revenue reveals a much truer picture of the burden of each country’s debt on its government’s finances. When I compute those figures, Japan is still #1, with a debt as a percentage of tax revenue of about 900 percent and Greece is still in second place at about 475 percent. The big change is the U.S. jumps up to third place, with a debt to income measure of 408 percent. If the U.S. were a family, it would be deep into the financial danger zone. To add a bit more perspective, the countries in fourth, fifth, and sixth place are Iceland, Portugal, and Italy, all between 300 and 310 percent. In other words, these three are starting to see a flashing yellow warning light, but only three developed countries in the world are in the red zone for national debt to income. The U.S. is one of those three. source: http://www.forbes.com/sites/jeffreydorfman/2014/07/12/forget-debt-as-a-percent-of-gdp-its-really-much-worse/ http://www.forbes.com/sites/jeffreydorfman/2014/07/12/forget... Many Scandinavian countries economies have slowed somewhat recently. Norway has been nicked from gas prices coming down since its such a big oil exporter. Even with the slow down, most countries still have robust economies.
- bjornsing 11y ago
  An important difference between Greece those other countries is that Greece is borrowing in a currency it does not control...
- Amezarak 11y ago
  > If the U.S. were a family, it would be deep into the financial danger zone. But the US government is not a family. Neither is the Japanese government. This analogy is disingenuous and one that should be eradicated from all economic thinking. When in debt, the rational thing for a family to do is always cut expenses to the greatest extent practicable (or to declare bankruptcy, I suppose.) This is decidedly not the most rational thing for the government to do in every situation, because it can crash the economy and actually worsen the relative debt load of the country. The US is not in danger. Interest rates are very low, sometimes still trending into negative territory. [1] The US is a sovereign nation that issues its own currency. The US can inflate its debt away, just as it did with an almost equally large debt in the late 40s and 50s. Granted, the economy needs to be growing more than it does now; in part because of anemic growth, the Fed is struggling to meet target inflation rates of 2%. http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield http://www.treasury.gov/resource-center/data-chart-center/in...
gioele 11y ago
> Some still have too much debt compared to GDP Some countries never defaulted except during wars (Italy, France), other did (Germany: 1931, 1953) and have now a decent debt/GDP ratio. One can say much about Italian politics, but part of current Italian debt goes to repay debts contracted to pay war reparations back to the first world war. http://www.spiegel.de/international/germany/economic-historian-germany-was-biggest-debt-transgressor-of-20th-century-a-769703.html http://www.spiegel.de/international/germany/economic-histori... https://en.wikipedia.org/wiki/List_of_sovereign_debt_crises https://en.wikipedia.org/wiki/List_of_sovereign_debt_crises

happyscrappy 11y ago

I don't understand how they plan on reducing tax evasion if it can be justified as only going to Germany anyway.

k-mcgrady 11y ago
Much higher VAT? Tougher penalties for tax evasion + more thorough investigation?
- leereeves 11y ago
  And the people of Greece would vote for a government that does that?
  - k-mcgrady 11y ago
    Do they have a choice at this stage? Personally I don't think austerity is a good way out but when you have no money, no one will give you money, and nobody even wants anything to do with you, there aren't many other choices.
jandrese 11y ago
I think before you talk about how to reduce tax evasion, you have to figure out why tax evasion is so high to begin with. Are local tax offices hopelessly corrupt? Does there need to be some sort of "untouchables" type operation for the Greek government to root out corruption? Is it cultural? Does Greece simply need to make tax evasion uncool? Along with coming down on evaders like the US IRS of course. Is the process of paying taxes simply too onerous? Can the process be streamlined with online resources and stricter employer reporting standards? It is best if you understand the problem before trying to solve it.

dpflan 11y ago

Access via a Google query: https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CB8QqQIwAA&url=http%3A%2F%2Fwww.nytimes.com%2Finteractive%2F2015%2F07%2F12%2Fbusiness%2Finternational%2Fwhy-the-greece-bailout-deal-matters.html https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&c...

dpflan 11y ago

If you'd like to visualize the physical amount of euros relative to the size of a human and delivery trucks: http://demonocracy.info/infographics/eu/debt_greek/debt_greek.html http://demonocracy.info/infographics/eu/debt_greek/debt_gree...

dpflan 11y ago

From the OECD. Here are a few articles that explore the EU's approach on sovereign debt crisis. One is form 2011, and the other is from 2012. The 2012 article discusses the "Greece Problem": The „Greece problem‟ needs to be resolved once and for all with a 50% (or larger) haircut on its sovereign debt and necessary ancillary policies, so that its chances or remaining in the euro improve. (2012) 1. 2011 - http://www.oecd.org/finance/financial-markets/49191980.pdf http://www.oecd.org/finance/financial-markets/49191980.pdf 2. 2012 - http://www.oecd.org/finance/financial-markets/49481502.pdf http://www.oecd.org/finance/financial-markets/49481502.pdf 3. Greece @ OECD.org: https://data.oecd.org/greece.htm https://data.oecd.org/greece.htm

dimitar 11y ago
I'm actually surprised that the OECD has said that. Similar research has been published by the IMF as well. So these organizations have experts and yet spokesmen and officials give the opposite advice of what they tell them. Good thing they have transparency at least.
- rhodri 11y ago
  Indeed – illustrates very clearly how governments, institutions and corporations aren't the unified hierarchies they present themselves as, and instead can be many-headed organisms pursuing sometimes contradictory aims. Compare to Samsung and Google suing each other for patent infringement while operating a revenue-share scheme on ad profits.
  - TheMagicHorsey 11y ago
    I don't think Samsung and Google have sued each other for patent infringement. I could be mistaken. Do you have a source? I believe you meant to say Samsung and Apple perhaps?

venomsnake 11y ago

The deal is terrible ... I cannot see how it will pass parliament. It is dooming Greece for a century. And on top of that the privatization fund is deeply humiliating.

dpflan 11y ago
Krugman agrees that the list of demands is "madness": http://krugman.blogs.nytimes.com/2015/07/12/killing-the-european-project/ http://krugman.blogs.nytimes.com/2015/07/12/killing-the-euro...

rhodri 11y ago

Most of this bailout money will go straight back to paying interest on the bad loans that caused the crisis. Much of these loans came from banks in the very same Eurozone countries that are imposing this deal onto Greece. So much for European solidarity... The austerity imposed on the Greek people will shrink the economy and ensure that the next few generations will be labouring in servitude to pay off the debts of the previous generations. The supreme irony in all of this is that Germany was able to thrive after WW2 in part because of the writing-off of more than half of their government debt, something that Angela Merkel has claimed is 'off the table'. Further reading: http://www.theguardian.com/world/2015/jun/29/where-did-the-greek-bailout-money-go http://www.theguardian.com/world/2015/jun/29/where-did-the-g... https://medium.com/@gavinschalliol/thomas-piketty-germany-has-never-repaid-7b5e7add6fff https://medium.com/@gavinschalliol/thomas-piketty-germany-ha...

tosseraccount 11y ago
Bad loans did not cause the crisis. Bad loans are a symptom of a poor fiscal situation. No one forced Greece to take out loans. Consider this write up :http://www.vanityfair.com/news/2010/10/greeks-bearing-bonds-201010 http://www.vanityfair.com/news/2010/10/greeks-bearing-bonds-... This was before the "Greeks as Victims" narrative gained wide currency. “The way they were keeping track of their finances—they knew how much they had agreed to spend, but no one was keeping track of what he had actually spent. It wasn’t even what you would call an emerging economy. It was a Third World country.” As it turned out, what the Greeks wanted to do, once the lights went out and they were alone in the dark with a pile of borrowed money, was turn their government into a piñata stuffed with fantastic sums and give as many citizens as possible a whack at it.
- yequalsx 11y ago
  No one forced Greece to take the loans. No one forced banks to loan to Greece. Both parties are at fault. Both parties ought to take losses. Only one is in this case.
  - hartator 11y ago

stupandaus 11y ago

The real reason the Greece deal matters, is the rest of the EU are looking at it as a proxy for what will happen to Spain and Italy next. These two make up a much larger proportion of the EU GDP, and are facing their own major debt crises.

tosseraccount 11y ago
Spain and Italy have cut their deficits in half. http://www.tradingeconomics.com/spain/government-budget http://www.tradingeconomics.com/spain/government-budget http://www.tradingeconomics.com/italy/government-budget http://www.tradingeconomics.com/italy/government-budget Robust growth predicted for Spain : http://www.oecd.org/eco/outlook/spain-economic-forecast-summary.htm http://www.oecd.org/eco/outlook/spain-economic-forecast-summ... Robust growth is projected over the next two years, driven by very supportive financial conditions http://www.oecd.org/eco/outlook/italy-economic-forecast-summary.htm http://www.oecd.org/eco/outlook/italy-economic-forecast-summ... After a long recession, the Italian economy has started its gradual recovery. Output is projected to grow by 0.6% in 2015 and by 1.5% in 2016/
- cplanas 11y ago
  If reducing your budget matters, then Greece has a very prosperous economy. Reducing your budget does not matter if doing so sends you into a (bigger) depression that makes your debt grow. Spanish debt is growing fast, having almost doubled since 2010 (http://www.tradingeconomics.com/spain/government-debt-to-gdp http://www.tradingeconomics.com/spain/government-debt-to-gdp).
  - tosseraccount 11y ago
    If.

nickik 11y ago

This is really about a institutional setup. If Greece is allowed to make debt common to the hole EU, it will set a president. The marekt thought that debt was held in common and bond yields were the same for everybody, now they have to make it clear to markets that this is not the case. Because if it was the case, then ALL the debt is held by everybody. https://2.bp.blogspot.com/-lDRRJhgiFTE/T9tShSNsaII/AAAAAAAAAqU/7LcljR9adLM/s1600/Europe+Bond+Yields.png https://2.bp.blogspot.com/-lDRRJhgiFTE/T9tShSNsaII/AAAAAAAAA... It does not need a PhD in Game Theory to see what the likly outcome of such a system is. Greece is in the unfortinate situation of beeing the case were this choice has to be made. Its not all their fault, but its also not their fault. This is just on of the problems of the EU and the Eurozone. Its my beliefe that if debt should be assumed commonly, it will break up the EU because no voters in any country would agree to this. It is really sad, and if you want to blame somebody, its the eurocrats who have steamrolled over many economists and many others who have point out the idiocy of their plans.

kanamekun 11y ago
<< Its my beliefe that if debt should be assumed commonly, it will break up the EU because no voters in any country would agree to this. >> But that's exactly what happened in the early days of the founding of the US, when Alexander Hamilton negotiated the Funding Act of 1790: "The Funding Act authorized the federal government to receive certificates of state war-incurred debts and to issue federal securities in exchange." https://en.wikipedia.org/wiki/Funding_Act_of_1790 https://en.wikipedia.org/wiki/Funding_Act_of_1790 Without the Funding Act, the state governments would've defaulted on their Revolutionary War debt. By assuming the debt of the states, the US greatly strengthened their collective borrowing ability and also brought the states closer together into the union.
- nickik 11y ago
  If you WANT a "United State of Europe" then yes, common debt makes sence. But in that case all nations lose their sovereignty and absolutly no nation in the EU has voted on this, and not a single one would agree to this. I, for one, am against a United States of Europe and theirfore Im against common debt. If we want to attempted such a project we should start by democratically asking people if they want it, not just imposing it. That EU doing this now would essentially be taking away sovereignty in a undemocratic way, and theirfore it would be tyranny.

hackuser 11y ago

There is a far more serious issue at stake: The threat by the hardline creditors, most importantly Germany, as well as by 'euro-skeptics' in the UK and elsewhere, that European integration and union are not goals and ideals, but transactional economic arrangements that are good only for the money. When is the last time you heard someone argue the political and security benefits of the EU and the costs of losing it?

nickik 11y ago
What are these politcal benefits? Security benefits, seams like the EU is more likly to cause war then to make it go away. Contrary to popular belive you can make agreements without the EU. If you want to have a security agreement, create a security agreement.
- JamesBarney 11y ago
  The people creating the EU were not mistaken that the only way to create security benefits was by creating the EU. They instead were well acquainted with a popular theory that said trade and economic interdependence reduces the risk of war. The architects of the EU wanted to increase this interdependence not for economic gain but to tie together the economies of Europe so closely that war would be next to impossible.
  - nickik 11y ago
    Yes, they were idiots. Trade does help, true. But you can agree to free trade and free movment of people WITHOUT things like common currency and sharing of debt. These things cause problems, and many people have pointed this out. There are different visions of the EU, some wanted it to be a free-trade zone others want 'United State of Europe'.
- hackuser 11y ago
  > What are these politcal benefits? Security benefits, seams like the EU is more likly to cause war then to make it go away. From what I understand, the primary purpose of the EU is politics and security. It was created by the survivors of WWI and WWII. They needed a way to prevent another European war, and the solution was to bind together into "ever closer union". It worked amazingly well -- one of the most successful acts of international relations I can think of -- war between EU states, who had been fighting each other for hundreds of years and had devastated the continent twice in the first half of the century, is now unthinkable. We were born with it and assume it, but from the perspective of 1945 and centuries before that, it's a miracle. Another way to think of it: Why not have a democratic mechanism to decide common issues? Democracy is what we believe in, and the alternative is the anarchy of the strong abusing the weak.

jandrese 11y ago

Why is it that nobody in the Eurozone is willing to discuss the fundamental and disastrous consequences of a unified monetary policy with independent fiscal policy? Are we going to wait until Greece has to be bailed out a fourth time? Or a fifth time? What about when Spain defaults? This is going to keep on happening until the underlying problems are addressed. Ultimately, the EU is going to need the ability to tax and spend to redistribute wealth and keep the economies working. It's the same way the US taxes New York, Massachusetts, California, etc... to give to Alabama, Mississippi, Louisiana, and so on. I know it will be unpopular politically, but the EU really needs to make itself look more like the United States of Europe if it wants this whole unified currency thing to work. They have been trying to ignore the elephant in the room for so long that smaller countries are drowning in its shit.

cristianpascu 11y ago
The elephant in the room can not be that big since it could enter through the door. The EU project is nothing like US. This is the XIX, with all the economical and political complications. And we're talking about a bunch of very different countries and cultures. You don't just throw them together in a bowl and stir. USofE is a solution to a problem created by a solution that was not needed in the first place. It was an ideal. It still is. The ideal of a few that got to be shared by more and more people. But not by everyone, not with any cost.
nickik 11y ago
You are right, exept when you say that the EU needs to make itself more like the US. If people actually want that, then we might want to do so. However not a single country will vote for this. So if you don't want to force it one people, then this will not work.
- kuschku 11y ago
  Well, especially in border regions such stuff is popular – the people living at the border between Denmark and Sweden, or the Netherlands and Belgium would prefer more unification, as for them every bit of independence of these countries means a less convenient life.