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Sights and Sounds: Greek Protests

Years of government spending more than it takes in, people taking a privilege and thinking it is now a right, money runs out, people revolt. O yes, it is coming.
 
One thing the Greeks know how to do well is ****ing riot and protest...
Whole country is involved in politics..
 
Coming soon to a neighborhood near you.

It's mind-blowing that something like this is occurring in the Western World.

In other news, Greece was recently forced to amend their constitution to mandate, in other words, that the repayment of debt comes before all other responsibilities of the government.

That's a loss of national sovereignty. I can understand the people's anger. The EU experiment hasn't worked out well at all for the Greeks.
 
Years of government spending more than it takes in, people taking a privilege and thinking it is now a right, money runs out, people revolt. O yes, it is coming.

25% unemployment.

If we didn't revolt by then, then I would question the balls of every American.

the Greeks are heroes.
 
It's mind-blowing that something like this is occurring in the Western World.

In other news, Greece was recently forced to amend their constitution to mandate, in other words, that the repayment of debt comes before all other responsibilities of the government.

That's a loss of national sovereignty. I can understand the people's anger. The EU experiment hasn't worked out well at all for the Greeks.

Actually, it has worked to their benefit. They are floundering as a result of public policy, and their other member nations are coming to their rescue.
 
Actually, it has worked to their benefit. They are floundering as a result of public policy, and their other member nations are coming to their rescue.

The EU wouldn't need to rescue them if Greece was monetarily sovereign.
 
Actually, it has worked to their benefit. They are floundering as a result of public policy, and their other member nations are coming to their rescue.

The reason the EU is such a burden to the Greeks is because they no longer have any control over their currency (they are on the Euro). If Greece were still using the drachma, they could devalue their currency and simultaneously ease the debt burden and promote growth.

Being in the EU is like having an anvil shackled to their ankle, and being thrown in a river. They can't do anything. They are at the mercy of their creditors.
 
The reason the EU is such a burden to the Greeks is because they no longer have any control over their currency (they are on the Euro). If Greece were still using the drachma, they could devalue their currency and simultaneously ease the debt burden and promote growth.

Being in the EU is like having an anvil shackled to their ankle, and being thrown in a river. They can't do anything. They are at the mercy of their creditors.

Well, Greece could decide to leave the eurozone unilaterally. But I assume the Greeks don't really want that, because the next step would be an inevitable bankruptcy -- even with their devaluated new drachma, they'd still have to pay back their debts in euros. And considering the dive a new drachma would experience the moment it's on the market, there is no chance on earth they could ever pay that.

But yeah, the entire situation is a mess. Greece lied when it applied for the euro, and the other Europeans turned a blind eye. Some others, including Germany, soon violated the stability pact on their own. Anyway, we're all in this together now, and nationalistic whining on either side won't solve the problem.

Changes must be in Greece, no doubt about it. But you're right that much of what we see now is not proportionate. Especially because of the impact it has on the Greek economy.

One thing that bothered me when I read it the other day was that apparently, Germany insists on Greece keeping up the plans for a billions arms deal. Greek had signed to buy tanks from Germany, but somehow, this plan is not cancelled. Although every sane person would assume that buying tanks for billions is not top priority for Greece at the moment. Apparently, Merkel disagrees.

So what are the options? Greece going bankrupt is a bad idea. It might cause a domino effect, causing more economies to tremble, like Portugal or Spain -- and many banks. We'd see a new banking crisis, probably even worse than the one in 2008. Greece would drag the eurozone into the abyss along with it.

What about eurobonds and the ECB buying more papers? Many support it. The German opposition supports it (the Greens do, the SPD too, IIRC), so does Francois Hollande, the Socialist in France who is likely to win the election in May.

So why not going for some more inflation? It's not that Germany can't afford moderate inflation. We'll see what happens if Hollande wins the election.

At least debtee banks have agreed on a partial debt relief. Of the new aid package, 130 billion are coming from the EU (most of it from Germany) and another 107 billion from the banks. IIRC.

So at least the banks are contributing *something*.

And I wonder, how is lowering the minimum wage supposed to help the economy anyway? Do they really expect the companies will hire more employees?

Most of all, an infrastructure for actually collecting taxes seems to be missing. Apparently, judging by what I've read, most people in Greece don't even pay the full amount of taxes they're required to, simply because there is no infrastructure for collecting it. Makes one think that should be priority, instead of badgering those who have very few already.
 
The 1%ers in Greece, can only fool the people for so long before they revolt in the name of social justice.
 
Well, Greece could decide to leave the eurozone unilaterally. But I assume the Greeks don't really want that, because the next step would be an inevitable bankruptcy -- even with their devaluated new drachma, they'd still have to pay back their debts in euros. And considering the dive a new drachma would experience the moment it's on the market, there is no chance on earth they could ever pay that.

But yeah, the entire situation is a mess. Greece lied when it applied for the euro, and the other Europeans turned a blind eye. Some others, including Germany, soon violated the stability pact on their own. Anyway, we're all in this together now, and nationalistic whining on either side won't solve the problem.

Changes must be in Greece, no doubt about it. But you're right that much of what we see now is not proportionate. Especially because of the impact it has on the Greek economy.

One thing that bothered me when I read it the other day was that apparently, Germany insists on Greece keeping up the plans for a billions arms deal. Greek had signed to buy tanks from Germany, but somehow, this plan is not cancelled. Although every sane person would assume that buying tanks for billions is not top priority for Greece at the moment. Apparently, Merkel disagrees.

So what are the options? Greece going bankrupt is a bad idea. It might cause a domino effect, causing more economies to tremble, like Portugal or Spain -- and many banks. We'd see a new banking crisis, probably even worse than the one in 2008. Greece would drag the eurozone into the abyss along with it.

What about eurobonds and the ECB buying more papers? Many support it. The German opposition supports it (the Greens do, the SPD too, IIRC), so does Francois Hollande, the Socialist in France who is likely to win the election in May.

So why not going for some more inflation? It's not that Germany can't afford moderate inflation. We'll see what happens if Hollande wins the election.

At least debtee banks have agreed on a partial debt relief. Of the new aid package, 130 billion are coming from the EU (most of it from Germany) and another 107 billion from the banks. IIRC.

So at least the banks are contributing *something*.

And I wonder, how is lowering the minimum wage supposed to help the economy anyway? Do they really expect the companies will hire more employees?

Most of all, an infrastructure for actually collecting taxes seems to be missing. Apparently, judging by what I've read, most people in Greece don't even pay the full amount of taxes they're required to, simply because there is no infrastructure for collecting it. Makes one think that should be priority, instead of badgering those who have very few already.

For Greece to leave unilaterally, I think they would need to buy several more of those tanks before they go. :)

I say that because in truth, they would need to cancel or unilaterally write down their debts, which would not make them very popular with their neighbors. They could never afford to pay the full value.

As you say, it is almost impossible at this point for Greece to leave the Euro on their own. Nations entered in to the agreement so blindly and nonchalantly. And now they are stuck in a bad situation.

That said, I agree with your assessment. The only option that exists is to continue to fund Greece with loans, to continue to write down loans, and to go through the painful process at the negotiating table.

What worries me is that there is nothing to stop this from happening again. I haven't even seen proposals put forth that would make the needed reforms to the EU that would prevent this, and that is concerning.

What happens if it is Spain? Italy? Germany is a strong economy, but you can't afford to bail out those much larger nations.

The Euro is like taking seventeen cats and tying their tails together. You hope to create a tiger, but probably you just have seventeen angry cats.
 
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For Greece to leave unilaterally, I think they would need to buy several more of those tanks before they go. :)

I say that because in truth, they would need to cancel or unilaterally write down their debts, which would not make them very popular with their neighbors. They could never afford to pay the full value.

As I said, leaving the euro would mean an immediate bankruptcy for Greece the moment the new drachma is on the market.

As you say, it is almost impossible at this point for Greece to leave the Euro on their own. Nations entered in to the agreement so blindly and nonchalantly. And now they are stuck in a bad situation.

That said, I agree with your assessment. The only option that exists is to continue to fund Greece with loans, to continue to write down loans, and to go through the painful process at the negotiating table with the creditors.

What worries me is that there is nothing to stop this from happening again. I haven't even seen proposals put forth that would make the needed reforms to the EU that would prevent this, and that is concerning.

Well, then you haven't paid attention. ;)

Germany

Germany and France got through this plan for a debt brake. Of the 27 EU countries, 25 have signed it, including those EU members which don't even have the euro currency yet -- the only two countries to stay out are the United Kingdom and the Czech Republic. It was the event shortly before Christmas when there was bruohaha about Britain being isolated in the EU.

What happens if it is Spain? Italy? Germany is a strong economy, but you can't afford to bail out those much larger nations.

The Euro is like taking seventeen cats and tying their tails together. You hope to create a tiger, but probably you just have seventeen angry cats.

If Greece goes bankrupt and drags others with them, such as Spain and/or Italy and many French and German banks, that would be the worst case. Probably a new banking crisis, this time worse than 2008. And I don't think the effect would be limited to the EU. You'd probably feel the shockwaves in America too.

Of course, another remaining option would be "eurobonds".

Eurobonds - Wikipedia, the free encyclopedia

You in America have the benefit that you have "dollarbonds" already: The entire USA has one single common interest rate for your government bonds. If that wasn't the case, you'd probably be in the same situation as Europe is now, because the bankruptcy of a weak state such as Mississippi or Utah could drag down stronger states such as California and Texas into the abyss, much like Greece threatens to do with the eurozone.

Eurobonds would result in a single interest rate for government papers, the same in Greece and Germany. That would mean for Greece a much, much lower interest rate than currently without eurobonds, and a higher interest rate for Germany. Basically, it would be a financial transfer from Germany to Greece.

Many say it was a stupid idea to introduce a common currency on one side, but avoiding to harmonize the government bonds on the other side. It's like wanting to have the cake and eat it too.

There are not few in Europe who support eurobonds. The French and most less prosperous EU countries did, before "Madame No" Merkel pushed through her debt brake idea. The French Socialists, including their Presidential candidate Francois Hollande, who is likely to win the election and replace Sarkozy in May, still support the idea. So do the German opposition parties.

I'd say it's not a bad idea. Merkel is playing a risky game. It'd be better if we played it safe now, instead of waiting until it's too late and even eurobonds won't help anymore.
 
no thanks ,no need for EU
 
As I said, leaving the euro would mean an immediate bankruptcy for Greece the moment the new drachma is on the market.



Well, then you haven't paid attention. ;)

Germany

Germany and France got through this plan for a debt brake. Of the 27 EU countries, 25 have signed it, including those EU members which don't even have the euro currency yet -- the only two countries to stay out are the United Kingdom and the Czech Republic. It was the event shortly before Christmas when there was bruohaha about Britain being isolated in the EU.



If Greece goes bankrupt and drags others with them, such as Spain and/or Italy and many French and German banks, that would be the worst case. Probably a new banking crisis, this time worse than 2008. And I don't think the effect would be limited to the EU. You'd probably feel the shockwaves in America too.

Of course, another remaining option would be "eurobonds".

Eurobonds - Wikipedia, the free encyclopedia

You in America have the benefit that you have "dollarbonds" already: The entire USA has one single common interest rate for your government bonds. If that wasn't the case, you'd probably be in the same situation as Europe is now, because the bankruptcy of a weak state such as Mississippi or Utah could drag down stronger states such as California and Texas into the abyss, much like Greece threatens to do with the eurozone.

Eurobonds would result in a single interest rate for government papers, the same in Greece and Germany. That would mean for Greece a much, much lower interest rate than currently without eurobonds, and a higher interest rate for Germany. Basically, it would be a financial transfer from Germany to Greece.

Many say it was a stupid idea to introduce a common currency on one side, but avoiding to harmonize the government bonds on the other side. It's like wanting to have the cake and eat it too.

There are not few in Europe who support eurobonds. The French and most less prosperous EU countries did, before "Madame No" Merkel pushed through her debt brake idea. The French Socialists, including their Presidential candidate Francois Hollande, who is likely to win the election and replace Sarkozy in May, still support the idea. So do the German opposition parties.

I'd say it's not a bad idea. Merkel is playing a risky game. It'd be better if we played it safe now, instead of waiting until it's too late and even eurobonds won't help anymore.



Fiscal responsibility is good, and I wish we could write a balanced budget amendment in to our constitution here in the United States.

The problem with Greek austerity measures is that they have not worked to restore confidence in Greece and stabilize the interest Greece owes on its debt:

greekbonds.jpg

So the Greek government is not any closer to being able to pay its own way.

Austerity measures are working much better for the Italians, though, whose bond yeilds have fallen below 6%

italianbonds.jpg

For comparison's sake, here is the German bond yield.
germanbond.jpg

Germany can borrow money much more inexpensively than the Italians or Greeks, due to the perceived strength of the German economy. Do you really want to tie German bond rates to those of the Italians and Greeks? Germany with 6 or 7% interest payments is in worse shape than Italy.

I can see why Merkel is unwilling to do this. The Germans risk more, and have much less to gain than the others do.

I would not allow it, if I were Germany.

Also, how in the world would a Eurobond be administered? Who decides how many bonds are sold? Who gets the proceeds from the bond sales? I can imagine the fighting. The difference between the United States Treasury selling bonds and some entity of the European Union is that the United States is one government, and Europe is many governments with their own interests.

Eurobonds would inevitably lead to even more interdependence among Eurozone nations, and a loss of even more national sovereignty for member states.

I could see an argument being made that pooling bond markets together could decrease borrowing costs for everybody. However, this may only be short term. Inevitably, the stronger nations like Germany would by tying their fate to nations like Spain and Greece. The debt brake is one safeguard, and certainly had to be implemented before a eurobond ever could.

However, maybe it is my mistrust for politicians, but I don't see all 17 countries abiding by the debt brake for long. If they fail to do this, just consider that one nation such as Greece lying about their budget could have much bigger negative consequences for a nation like Germany under the Eurobond system than it currently does.
 
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I could see an argument being made that pooling bond markets together could decrease borrowing costs for everybody. However, this may only be short term. Inevitably, the stronger nations like Germany would by tying their fate to nations like Spain and Greece. The debt brake is one safeguard, and certainly had to be implemented before a eurobond ever could.

However, maybe it is my mistrust for politicians, but I don't see all 17 countries abiding by the debt brake for long. If they fail to do this, just consider that one nation such as Greece lying about their budget could have much bigger negative consequences for a nation like Germany under the Eurobond system than it currently does.

You're certainly right, much about it is uncertain and there is no perfect way out.

IIRC, somewhere I read, experts estimate a Eurobond interest rate would be more like 3.5%, maximum 4.0%. That would make it much easier for Greece, although it's less comfortable for Germany, of course, than the 2% we currently have.

But I believe in the European idea. The Greek are Europeans, just like I am. I don't want to give them up. Doesn't mean, of course, Greece should become a bottomless pit we throw more and more money in without effect -- but when there really are reforms and the Greek doing something about it, I'm all for making a few sacrifices here in Germany to help them out.
 
Years of government spending more than it takes in, people taking a privilege and thinking it is now a right, money runs out, people revolt. O yes, it is coming.

Living off borrowed money is living off borrowed time. Socialism has caught up with Greece.
 
Greece could leave the Euro without going bankrupt. They simply pay back their current debts with Euros and switch over to the Drachma.
 
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