This is desperately sad and upsetting (Greek Crisis)
Discussion
As has already been said, the figures given for US, UK, German and French bank bailouts are wrong, but perhaps worse still they are an illustration of what you can do if you've got vaguely adequate fiscal policies and reasonably effective revenue collection. Those countries had the credibility to be able to increase their debt hugely at the drop of a hat to recapitalise their banks, and thereby to recapitalise their economies.
The Greeks have got no credibility in this space at all under their current government.
The Greeks have got no credibility in this space at all under their current government.
I'm amazed how many people seem to simply view this as a moral failure of Greece. It almost seems to betray a misunderstanding about what debt is.
This wasn't something the generous Germans lent the lazy Greeks out of the goodness of their hearts.
Banks bought Greek sovereign debt for profit, believing it would be backed by the European Union. It was.
The EU and the German (and other) governments bought this debt off the banks, saddling their tax payers with the debt.
It was inevitable since before Greece joined the Euro that they would sooner or later come crashing out.
It was inevitable from 2010 that Greece would never be able to service the mountain of debt it had built up.
This whole system was there because in the absence of fiscal transfers of the kind that take place through the taxation system in a fiscal union, it was thought this would enable a financial crisis to be contained and the stricken country to return to growth while imposing fiscal discipline on the country crisis. This didn't happen. In fact it has led to Greece having a recession which is worse than the Great Depression, and has gone on for 6 years.
This is a failure of the Euro and the systems put in place to prevent such a failure from happening, or contain it when it does.
This wasn't something the generous Germans lent the lazy Greeks out of the goodness of their hearts.
Banks bought Greek sovereign debt for profit, believing it would be backed by the European Union. It was.
The EU and the German (and other) governments bought this debt off the banks, saddling their tax payers with the debt.
It was inevitable since before Greece joined the Euro that they would sooner or later come crashing out.
It was inevitable from 2010 that Greece would never be able to service the mountain of debt it had built up.
This whole system was there because in the absence of fiscal transfers of the kind that take place through the taxation system in a fiscal union, it was thought this would enable a financial crisis to be contained and the stricken country to return to growth while imposing fiscal discipline on the country crisis. This didn't happen. In fact it has led to Greece having a recession which is worse than the Great Depression, and has gone on for 6 years.
This is a failure of the Euro and the systems put in place to prevent such a failure from happening, or contain it when it does.
AJS- said:
I'm amazed how many people seem to simply view this as a moral failure of Greece. It almost seems to betray a misunderstanding about what debt is.
This wasn't something the generous Germans lent the lazy Greeks out of the goodness of their hearts.
Banks bought Greek sovereign debt for profit, believing it would be backed by the European Union. It was.
The EU and the German (and other) governments bought this debt off the banks, saddling their tax payers with the debt.
It was inevitable since before Greece joined the Euro that they would sooner or later come crashing out.
It was inevitable from 2010 that Greece would never be able to service the mountain of debt it had built up.
This whole system was there because in the absence of fiscal transfers of the kind that take place through the taxation system in a fiscal union, it was thought this would enable a financial crisis to be contained and the stricken country to return to growth while imposing fiscal discipline on the country crisis. This didn't happen. In fact it has led to Greece having a recession which is worse than the Great Depression, and has gone on for 6 years.
This is a failure of the Euro and the systems put in place to prevent such a failure from happening, or contain it when it does.
Agreed but the debt that was purchased had to be generated somehow and generated it was, on an industrial scale, by the Greek government - hence the argument that the failing is to rest solely on the shoulders of Greece.This wasn't something the generous Germans lent the lazy Greeks out of the goodness of their hearts.
Banks bought Greek sovereign debt for profit, believing it would be backed by the European Union. It was.
The EU and the German (and other) governments bought this debt off the banks, saddling their tax payers with the debt.
It was inevitable since before Greece joined the Euro that they would sooner or later come crashing out.
It was inevitable from 2010 that Greece would never be able to service the mountain of debt it had built up.
This whole system was there because in the absence of fiscal transfers of the kind that take place through the taxation system in a fiscal union, it was thought this would enable a financial crisis to be contained and the stricken country to return to growth while imposing fiscal discipline on the country crisis. This didn't happen. In fact it has led to Greece having a recession which is worse than the Great Depression, and has gone on for 6 years.
This is a failure of the Euro and the systems put in place to prevent such a failure from happening, or contain it when it does.
MrBarry123 said:
Agreed but the debt that was purchased had to be generated somehow and generated it was, on an industrial scale, by the Greek government - hence the argument that the failing is to rest solely on the shoulders of Greece.
It was funded by the lenders and allowed to grow to it's current levels by the Eurozone "partners." Either one could have stopped this earlier as well, but chose not to for their own interests. I'm not especially defending Greece here, whose government has quite obviously screwed up in a huge way. But it's a system failure, not a moral one.
AJS- said:
It was funded by the lenders and allowed to grow to it's current levels by the Eurozone "partners." Either one could have stopped this earlier as well, but chose not to for their own interests.
I'm not especially defending Greece here, whose government has quite obviously screwed up in a huge way. But it's a system failure, not a moral one.
It's both. The system meant the consequences of fiscal indiscipline would be serious. The Greeks made little effort to protect themselves from the obvious danger.I'm not especially defending Greece here, whose government has quite obviously screwed up in a huge way. But it's a system failure, not a moral one.
Did the EU members cut them too much slack? Maybe, but they'd have just precipitated this crisis earlier if they hadn't. At the time they had a choice of giving Greece an immediate hard landing or risking a load more of the German and French taxpayers' money to buy Greece time to try to achieve a soft landing. Greece signed up for the latter and is now reneging on that agreement.
Efbe said:
Am I wrong here?
Condi said:
Interesting stuff
ATG said:
More interesting Stuff
Then isn't it the case that not only the underperforming countries will break the euro, but also the over-performing countries.So long as one or two countries (I assume Germany is prime candidate here) are doing so much better than everyone else, this will push up the value of the euro, making it even harder for the underperforming countries.
Therefore, even if/when Greece leaves, the same pattern will occur again, and will keep on occuring until only the highest performing country is left...
...who will during this period do very very well out of it indeed.
Is the answer for the top performing countries to leave?
Efbe said:
Then isn't it the case that not only the underperforming countries will break the euro, but also the over-performing countries.
So long as one or two countries (I assume Germany is prime candidate here) are doing so much better than everyone else, this will push up the value of the euro, making it even harder for the underperforming countries.
Therefore, even if/when Greece leaves, the same pattern will occur again, and will keep on occuring until only the highest performing country is left...
...who will during this period do very very well out of it indeed.
Is the answer for the top performing countries to leave?
seemed apt as Im sure most of us on here will have seen before. Thus UK should leave asap:So long as one or two countries (I assume Germany is prime candidate here) are doing so much better than everyone else, this will push up the value of the euro, making it even harder for the underperforming countries.
Therefore, even if/when Greece leaves, the same pattern will occur again, and will keep on occuring until only the highest performing country is left...
...who will during this period do very very well out of it indeed.
Is the answer for the top performing countries to leave?
The cost of dinner
Each and every day, 10 men go to a restaurant for dinner together. The bill for all 10 comes to $100 each day. If the bill were paid the way we pay our taxes, the first four would pay nothing; the fifth would pay $1; the sixth would pay $3; the seventh $7; the eighth $12; the ninth $18. The 10th man – the richest – would pay $59. Although the 10 men didn’t share the bill equally, they all seemed content enough with the arrangement – until the restaurant owner threw them a curve.
“You’re all very good customers,” the owner said, “so I’m going to reduce the cost of your daily meal by $20. I’m going to charge you just $80 in total.” The 10 men looked at each other and seemed genuinely surprised, but quite happy about the news.
The first four men, of course, are unaffected because they weren’t paying anything for their meals anyway. They’ll still eat for free. The big question is how to divvy up the $20 in savings among the remaining six in a way that’s fair for each of them. They realized that $20 divided by six is $3.33, but if they subtract that amount from each person’s share, then the fifth and sixth men would end up being paid to eat their meals. The restaurant owner suggested that it would be fair to reduce each person’s bill by roughly the same percentage, and he proceeded to work out the amounts that each should pay.
The results? The fifth man paid nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid $9, the ninth paid $14, leaving the 10th man with a bill of $50 instead of $59. Outside the restaurant, the men began to compare their savings. “I only got one dollar out of the $20,” said the sixth man, pointing to the 10th man, “and he got $9!” “Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar, too! It’s not fair that he got nine times more than me!” “That’s true,” shouted the seventh man. “Why should he get back $9 when I only got $2? The rich get all the breaks!” “Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!”
The nine outraged men surrounded the 10th and brutally assaulted him. The next day, he didn’t show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they faced a problem that they hadn’t faced before. They were $50 short.
The moral
There are a couple of lessons to be learned here. I’m going to suggest that the approach taken by the restaurant owner in the story is exactly the right approach to divvying up tax cuts. It’s how our system should work. The people who pay the highest taxes should get the greatest relief from a tax cut, in absolute dollars.
The fact is, if you overtax the rich, they just might not show up for dinner next time.
Edited by superlightr on Monday 6th July 14:18
The problem for Greece now, is that they are where they are now, and have been for years, and years, But now they have also built up a huge national debt in EU bailouts on top of the dire position they were in when they joined `the club'
As others have correctly pointed out, this was known, and should have been addressed by the EU at the time Greece applied for membership, but they chose to look the other way so the EU itself must now accept a fair proportion of the blame for what has happened.
As posted earlier only the Greeks can get themselves out of where they are now, but currently it looks like they do not want to, and prefer taking cash for nothing off others.
Who now would lend cash to a country with Greece`s track record? (except perhaps Putin, and I would not be sure that even he would want to lose vast sums into the one way money pit especially with current problems of falling oil and gas revenues)
As others have correctly pointed out, this was known, and should have been addressed by the EU at the time Greece applied for membership, but they chose to look the other way so the EU itself must now accept a fair proportion of the blame for what has happened.
As posted earlier only the Greeks can get themselves out of where they are now, but currently it looks like they do not want to, and prefer taking cash for nothing off others.
Who now would lend cash to a country with Greece`s track record? (except perhaps Putin, and I would not be sure that even he would want to lose vast sums into the one way money pit especially with current problems of falling oil and gas revenues)
Pan Pan Pan said:
The problem for Greece now, is that they are where they are now, and have been for years, and years, But now they have also built up a huge national debt in EU bailouts on top of the dire position they were in when they joined `the club'
As others have correctly pointed out, this was known, and should have been addressed by the EU at the time Greece applied for membership, but they chose to look the other way so the EU itself must now accept a fair proportion of the blame for what has happened.
As posted earlier only the Greeks can get themselves out of where they are now, but currently it looks like they do not want to, and prefer taking cash for nothing off others.
Who now would lend cash to a country with Greece`s track record? (except perhaps Putin, and I would not be sure that even he would want to lose vast sums into the one way money pit especially with current problems of falling oil and gas revenues)
Putin may well say to Greece lease me an island for 99 years, I will build a base there and pay off half of your debt or something similar.As others have correctly pointed out, this was known, and should have been addressed by the EU at the time Greece applied for membership, but they chose to look the other way so the EU itself must now accept a fair proportion of the blame for what has happened.
As posted earlier only the Greeks can get themselves out of where they are now, but currently it looks like they do not want to, and prefer taking cash for nothing off others.
Who now would lend cash to a country with Greece`s track record? (except perhaps Putin, and I would not be sure that even he would want to lose vast sums into the one way money pit especially with current problems of falling oil and gas revenues)
superlightr said:
Putin may well say to Greece lease me an island for 99 years, I will build a base there and pay off half of your debt or something similar.
The Greeks have something he wants, and he has oil and gas without which, Greece will grind to a halt very quickly and nastily.ATG said:
AJS- said:
It was funded by the lenders and allowed to grow to it's current levels by the Eurozone "partners." Either one could have stopped this earlier as well, but chose not to for their own interests.
I'm not especially defending Greece here, whose government has quite obviously screwed up in a huge way. But it's a system failure, not a moral one.
It's both. The system meant the consequences of fiscal indiscipline would be serious. The Greeks made little effort to protect themselves from the obvious danger.I'm not especially defending Greece here, whose government has quite obviously screwed up in a huge way. But it's a system failure, not a moral one.
Did the EU members cut them too much slack? Maybe, but they'd have just precipitated this crisis earlier if they hadn't. At the time they had a choice of giving Greece an immediate hard landing or risking a load more of the German and French taxpayers' money to buy Greece time to try to achieve a soft landing. Greece signed up for the latter and is now reneging on that agreement.
Digga said:
superlightr said:
Putin may well say to Greece lease me an island for 99 years, I will build a base there and pay off half of your debt or something similar.
The Greeks have something he wants, and he has oil and gas without which, Greece will grind to a halt very quickly and nastily.Scuffers said:
here's a question..
Which one of our esteemed financial consultancy companies do we have to blame for misrepresenting the Greek books to get it into the Euro in the first place?
http://www.spiegel.de/international/europe/greek-d...Which one of our esteemed financial consultancy companies do we have to blame for misrepresenting the Greek books to get it into the Euro in the first place?
Allegedly.
Presumably, much of the debt was incurred in paying their fees.
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