Greece Watch...

[Little John]

Yep; pathetic.

[johnhemming2]

Here's a link to the article:
http://www.livemint.com/Opinion/F7nX8zM ... oblem.html

[johnhemming2]

Yep; pathetic.

Ricardo Hausmann explains why Greece is in a particularly bad state. If you then can manage to be clear on a question I will answer it.

There is always a danger in debate when people are unwilling to consider that they may be wrong. Resorting to abuse is symptomatic of that.

[UndercoverElephant]

Here's a link to the article:
http://www.livemint.com/Opinion/F7nX8zM ... oblem.html

But by 2007, Greece was spending more than 14% of GDP in excess of what it was producing, the largest such gap in Europe—more than twice that of Spain and 55% higher than Ireland’s. In Spain and Ireland, though, the gap reflected a construction boom; euro accession suddenly gave people access to much cheaper mortgages. In Greece, by contrast, the gap was mostly fiscal and used for consumption, not investment.

Too much of the debate since then has focused on what Germany, the European Union, or the International Monetary Fund must do. But the bottom line is that Greece needs to develop its productive capabilities if it wants to grow. The unfocused set of structural reforms prescribed by its current financing agreement will not do that. Instead, Greece should concentrate on activist policies that attract globally competitive firms, an area where Ireland has much to teach—and where Stiglitz has sensible things to say.

Greece is Greece. It is not Germany. It is not Ireland. It is not Spain.

Mistakes were made when the eurozone was put together, and when Greece joined the Euro. Mistakes were made by politicians, and by bankers.

The question is what should be done now, and unfortunately the solution that needs to be implemented is being rejected by both sides. The Euro does not work. It's a monetary/economic experiment that has failed, but neither the Germans nor the Greeks want to admit it is a failure.

Greece needs to leave the Euro, and the rest of the eurozone needs to have a serious rethink about the future of the single currency. That is both a monetary/economic and political rethink. Especially as there are concurrently two other euro-crises brewing: the UK referendum and potential Brexit, and the de-facto breakdown of the Shengen agreement with regard to migrants from Africa and the Middle East.

[johnhemming2]

Leaving the Euro will force change on Greece at a much faster pace than the Eurozone.

[UndercoverElephant]

Leaving the Euro will force change on Greece at a much faster pace than the Eurozone.

Yes. It would also place them back in control of their own future.

Greece needs to leave the Euro like a man with gangrene needs to leave his rotting leg.

[johnhemming2]

The analogy is wrong. It is more like giving up on crutches because they cause sores in the armpits.

[peaceful_life]

Here's a link to the article:
http://www.livemint.com/Opinion/F7nX8zM ... oblem.html

'Unsustainable growth paths often end in a sudden stop of capital inflows'

Well...yes.


'Fiscal deficits, like unwanted pregnancies, are the unintended consequence of actions taken by more than one person who had other objectives in mind'

Consequences such as..climate change, whereby entropy increases?

'The problem is that Greece produces very little of what the world wants to consume. Its exports of goods comprise mainly fruits, olive oil, raw cotton, tobacco, and some refined petroleum products'

Am guessing the fruits taste better than a BMW on loan, although it's possible to stick the olive oil in it's tank.

Econophysics, now there's a thing to teach King Cnut a thing or two.

[Little John]

Leaving the Euro will force change on Greece at a much faster pace than the Eurozone.

Yes. It would also place them back in control of their own future.

Greece needs to leave the Euro like a man with gangrene needs to leave his rotting leg.

I agree with this. Syriza, at least on the face of it, appear to be in the same denial as the Northern Europeans about the fundamentally flawed nature of the EU, as it stands. That is to say, they are playing the same game of "let's pretend" when it comes to the idea of national sovereignty versus what it takes to make a fully coherent super-state. In this, the EU is neither fish nor fowl. Either that, or Syriza are playing the game in the way they believe they need to prior to an inevitable exit. A case of better poverty on your own terms than someone else's.

[biffvernon]

Greeks are not the only ones with debts. What about the American fracking industry?

Bloomberg finds that driller’s debts increased to almost $235 billion by the end of the first quarter this year.

http://oilprice.com/Energy/Crude-Oil/Th ... e9058.html
and see discussion at http://www.powerswitch.org.uk/forum/vie ... &start=585

[johnhemming2]

I agree with this.

Still no question - on the assumption you have read the article.

Greece's problem (whether they stay in the Euro or leave the Euro) is that they need to earn more as a country within the world. They built up their entitlements on borrowed money and have not managed to shift their priorities.

The economic damage done by the current government also needs to be recognised.

[clv101]

Greece's problem (whether they stay in the Euro or leave the Euro) is that they need to earn more as a country within the world. They built up their entitlements on borrowed money and have not managed to shift their priorities.

Indeed - but the same (and more) can be said about Liverpool or Mississippi.

Many folk live beyond their means. We've long ago figured out political and economic solutions whereby the rich carry, to some extent, the poor.

If the EU isn't ready for this wrt Greece (and I don't think it is without closer political union which isn't happening any time soon), then there's a cost to be borne by the creditors. Bad debts, written off.

[johnhemming2]

Indeed - but the same (and more) can be said about Liverpool or Mississippi.

Liverpool is required in law to set a balanced budget which includes paying interest in the debt owed. If the Mayor and/or Councillors fail to follow the law they can be removed.

Local government debt in the UK tends to be funded through central government.

I am not sure how things are done in the US, but if you make a comparison to Liverpool for Greece then the previous Greek government would probably have been removed for not following the agreement and central government appointees would have been put in.

The different situation for Greece is that they have the choice. It is not a good one. Either they implement spending cuts and tax increases or their banks go bust in Euros and they have to implement worse spending cuts and tax increases in real terms (although in cash new Drachma terms they may not be as great as the new Drachma would be reduced in value).

[UndercoverElephant]

Greece's problem (whether they stay in the Euro or leave the Euro) is that they need to earn more as a country within the world.

If they leave the euro then Greece would become an extremely attractive tourist destination once again. Far more so than it is now, because it would be very cheap for western Europeans to go on holiday there.

[johnhemming2]

That indeed is likely to be true, but the Greek pensioners would find life a lot more expensive.