Greece Watch...

[Blue Peter]

I don't think default is a problem (for the rest of the EU). It would be giving into the Greeks which would have been a problem.

I don’t understand this position.

You seem to be saying that losing the money is not a problem, but giving into the Greeks and not losing the money is a problem. But surely the only problem with giving into the Greeks is not getting the money back? They can presumably do what they like, so long as they give the money back. But, then if you don’t care about the money, then they can do what they like anyway?

We know from many economists (including the “idiot”) and now from the IMF that Greece can’t pay the money back. Haircuts, 30+ year extensions or huge transfers are absolutely required. We also know that both theoretically and empirically that austerity such as has just been reimposed does not work - it has been tried for 5 years and has just made the situation worse.

So, what are we to conclude form all this? The EU don’t care about the money, they don’t care about Greece. We can only see this as a punishment beating. I assume that if this were one individual to another, you wouldn’t be advocating this course of action? That lenders ought to be able to beat up a few delinquent borrowers, guaranteeing that they can’t repay, pour encourager les autres?


Peter.

[johnhemming2]

Whichever way some of the money calculated on a Net Present Value is already lost, but funding the Greeks in losing even more money would then mean potentially funding other countries in the same way. The Northern European Countries would be unhappy continuing to pay for this and would want to either pull out of the Euro completely or have two separate Euros.

They already pay through the EU for a certain amount of fiscal transfer. That, however, is budgeted for and in a limited way controlled. (The EU is not that good at budgetary control).

[3rdRock]

http://www.independent.co.uk/news/world ... 97578.html

60 of Merkel’s MPs rebel but she wins support for bailout saying alternative would be 'chaos and violence'

German Chancellor Angela Merkel has been given begrudging parliamentary backing to start talks on the eurozone’s controversial €86 billion Greek bailout package, after facing an unprecedented rebellion from a record 60 MPs in her own party, who voted against the plan, and five others who abstained.

After three hours of often heated debate, the German Bundestag voted by 439 to 119 in favour of entering negotiations with Greece on the three-year bailout package.

Before the vote, Ms Merkel warned that if the EU voted against the bailout plan there would be “chaos and violence” in Greek cities. “Even if our differences are huge, we will do what we can to ensure that Greece can remain part of the eurozone,” she added.

[3rdRock]

http://www.zerohedge.com/news/2015-07-1 ... have-begun

All of Europe, and insouciant Americans and Canadians as well, are put on notice by Syriza’s surrender to the agents of the One Percent. The message from the collapse of Syriza is that the social welfare system throughout the West will be dismantled.

The Greek prime minister Alexis Tsipras has agreed to the One Percent’s looting of the Greek people of the advances in social welfare that the Greeks achieved in the post-World War II 20th century. Pensions and health care for the elderly are on the way out. The One Percent needs the money.

The protected Greek islands, ports, water companies, airports, the entire panoply of national patrimony, is to be sold to the One Percent. At bargain prices, of course, but the subsequent water bills will not be bargains.

This is the third round of austerity imposed on Greece, austerity that has required the complicity of the Greeks’ own governments. The austerity agreements serve as a cover for the looting of the Greek people literally of everything. The IMF is one member of the Troika that is imposing the austerity, despite the fact that the IMF’s economists have said that the austerity measures have proven to be a mistake. The Greek economy has been driven down by the austerity. Therefore, Greece’s indebtedness has increased as a burden. Each round of austerity makes the debt less payable.

But when the One Percent is looting, facts are of no interest. The austerity, that is the looting, has gone forward despite the fact that the IMF’s economists cannot justify it.

Greek democracy has proven itself to be impotent. The looting is going forward despite the vote one week ago by the Greek people rejecting it. So what we observe in Alexis Tsipras is an elected prime minister representing not the Greek people but the One Percent.

The One Percent’s sigh of relief has been heard around the world. The last European leftist party, or what passes as leftist, has been brought to heel, just like Britain’s Labour Party, the French Socialist Party, and all the rest.

Without an ideology to sustain it, the European left is dead, just as is the Democratic Party in the US. With the death of these political parties, the people no longer have any voice. A government in which the people have no voice is not a democracy. We can see this clearly in Greece. One week after the Greek people express themselves decisively in a referendum, their government ignores them and accommodates the One Percent.

[johnhemming2]

And about 20% of the German parliament think the deal is too generous to Greece.

[Catweazle]

So, what are we to conclude form all this? The EU don’t care about the money, they don’t care about Greece. We can only see this as a punishment beating.

And what is the point of a punishment beating ? To deter others from committing the same "offence".

Greece will die to preserve the Euro, at least for a while longer.

[3rdRock]

http://www.bbc.co.uk/news/world-europe-33578778

The former Greek finance minster has said his country's economic reforms are "going to fail", just as formal talks on a huge bailout are set to begin.

In a BBC interview, Yanis Varoufakis said Greece was subject to a programme that will "go down in history as the greatest disaster of macroeconomic management ever".

http://www.theguardian.com/world/2015/j ... dissidents

Alexis Tsipras reshuffles cabinet to get rid of bailout dissidents

http://blogs.lse.ac.uk/europpblog/2015/ ... democracy/

Andrea Mammone writes that in light of the Greek crisis, the EU appears to be an organisation focused on perpetuating a particular economic ideology, rather than on ensuring solidarity between European citizens. He argues that if this is indeed the new reality of European integration then the electorates of European states should be consulted directly and allowed to have their voice heard.

[johnhemming2]

Andrea Mammone writes that in light of the Greek crisis, the EU appears to be an organisation focused on perpetuating a particular economic ideology, rather than on ensuring solidarity between European citizens. He argues that if this is indeed the new reality of European integration then the electorates of European states should be consulted directly and allowed to have their voice heard.

It is, of course, sort of true in that there is the washington consensus. That is not necessarily best described as an ideology, but it is in essence the argument that you cannot spend your way out of bankruptcy.

The Washington Consensus refers to a set of broadly free market economic ideas, supported by prominent economists and international organisations, such as the IMF, the World Bank, the EU and the US.

https://en.wikipedia.org/wiki/Washington_Consensus

Varoufakis' big problem is that he does not seem to put any effort into understanding other people's viewpoints. He has not dealt with Hausmann's excellent article specifically about Greece.

http://www.project-syndicate.org/commen ... nn-2015-03

Accepting the argument that additional government spend gives rise to additional economic activity (which of course it does to some extent - but there is an alternative argument that it can displace activity) - obviously such spending needs to continue otherwise the additional activity stops. Therefore the affect on borrowing requirements depends entirely on the marginal tax take (or reduction in spend) from the additional activity.

This, however, does not deal with the question as to whether there is an imbalance in the economy between private activity and state stimulated activity. (too little private) If that imbalance exists having more state activity really won't help.

There are in my view limited circumstances where the additional spend may be warranted even in the short term, that is to avoid disruption. The "spend" here can be allowing for delays in paying VAT and things like that.

[UndercoverElephant]

It is, of course, sort of true in that there is the washington consensus. That is not necessarily best described as an ideology, but it is in essence the argument that you cannot spend your way out of bankruptcy.

So if you can't spend your way out of bankruptcy, how do you get out of bankruptcy? Borrow more?

The hypocrisy here is quite breathtaking. Washington itself is the past master of "spending" when bankrupt. Are you aware of the size of the US deficit, the rate it is growing, and the spending choices of that country?

[johnhemming2]

So if you can't spend your way out of bankruptcy, how do you get out of bankruptcy? Borrow more?

Spend less.

I would make the point that leaving the Euro and devaluing is a route towards spending less as a country. It would, however, hit the poorer Greeks quite hard.

The hypocrisy here is quite breathtaking. Washington itself is the past master of "spending" when bankrupt. Are you aware of the size of the US deficit, the rate it is growing, and the spending choices of that country?

I haven't particularly looked at this. What is your argument in respect of this?

[peaceful_life]

'PM requests help from military and Europe as strong winds fan flames on edge of capital and in Peloponnese region, forcing evacuations'

http://www.theguardian.com/world/2015/j ... eloponnese

[Little John]

Jesus wept. Those poor buggers aren't have much luck at the moment.

[peaceful_life]

Jesus wept. Those poor buggers aren't have much luck at the moment.

Indeed, and in real terms beyond the pseudo confines of finance, such as adaptation for climate change, Greece needs not only the freedom, but the encouragement to restructure itself to a position whereby it can do just that, as does every other country.

[UndercoverElephant]

So if you can't spend your way out of bankruptcy, how do you get out of bankruptcy? Borrow more?

Spend less.

No. Spending less helps you avoid going bankrupt in the first place. We have bankruptcy laws in the western world, and they are designed to be implemented when somebody is so far in debt that spending less isn't going to be enough.

So I'll ask you again. How do you get out of bankruptcy? Is piling on more debt a viable option?

I would make the point that leaving the Euro and devaluing is a route towards spending less as a country. It would, however, hit the poorer Greeks quite hard.

Well, you know I advocate that Greece should default and leave the euro, and that in the long term this would be the best option for the Greek people. It is the mainstream European politicians, including the fiercely pro-EU Liberal Democrats, who are resisting this option, because they fear the wider political consequences. And the Greeks are playing on this resistance.

The hypocrisy here is quite breathtaking. Washington itself is the past master of "spending" when bankrupt. Are you aware of the size of the US deficit, the rate it is growing, and the spending choices of that country?

I haven't particularly looked at this. What is your argument in respect of this?

http://www.usdebtclock.org/

US debt currently stands at $18,000,000,000,000. The federal budget deficit is $500,000,000,000 and rising all the time. Because the US dollar is still (for now) the global reserve currency, there is no pressure on the US to decrease spending. On the contracy, it just keeps "printing" money in order to spend ever more, largely on the bloated military it uses to to enforce its political will in various parts of the world.

There is a history to this. At the end of WW2, with the all of the western world in ruins apart from the US, and with the US in posession of half of the world's gold bullion, the US imposed a monetary system where the dollar was the world's reserve currency but that dollars would be exchangeable for gold. In 1971, with the Vietnam war being lost and US internal peak oil passed, the US unilaterally "closed the gold window" and ended convertibility. Since then the world has used fiat dollars as its reserve currency, and the US is free to simply print its way out of its own debt and deficit problems.

This is system is fundamentally dishonest and unfair. One rule for the US, another for everybody else. And it is why the Russians, Chinese and OPEC nations are moving ASAP to a system that bypasses the dollar. When these re-arrangements are complete, and the US is forced to play by the same rules as everybody else, the US economy will collapse.

But I have got side-tracked. The hypocrisy is this:

When the US and UK were in a position of having a serious debt problem and a nose-diving economy, the prescribed medicine was stimulus, quantitative easing and near zero interest rates designed to encourage as much borrowing as possible. In other words create and spend more money. The justification given for this was that we did not want to repeat the mistakes of the 30s, when the prescribed medicine was "spend less" and the result was a downward spiral into an ever-deepening depression.

But when Greece, which can't print its own money, is in exactly the same position, the prescribed medicine is "spend less", and the net result has been a downward spiral into an ever-deepening depression. If spending less just kills off what is left of the Greek economy then it is not a solution to Greece's debt problems. So why the double standards? Answer: to punish the Greek people for electing a left-wing government, that's why. "Punishment beating" is an accurate description. The right-wing, corporatist kleptocracy has nothing to gain by cutting Greece's debts and letting it start again. To do so would be to reward the Greek people for electing a left wing government, and would fail to channel ever more wealth into the hands of the already-wealthy (which has been the actual result of "stimulus" and "quantitative easing" i.e. giving money to banks).

[peaceful_life]

http://www.bbc.co.uk/news/world-europe-33578778

'In a damning assessment, Mr Varoufakis told the BBC's Mark Lobel: "This programme is going to fail whoever undertakes its implementation."
Asked how long that would take, he replied: "It has failed already."