Far left wins in Greece

[tankie]

Yup , the BBC is deafening in its reports of the unrest in Greece , the EU is at last coming apart and im glad about that , the sooner the better , then maybe the UK can get to grips with itself instead of NWO and close our borders ,get back to sovereignty , we send billions abroad each year and our own indigenous are expected to survive on food banks ,but camoronoccio states we are all in it together ,hahahahahaha yea ok , and the Greeks whose treacherous MPs have just signed them up for more of the same , I feel for ,,democracy my arse . Do as ve are tellink you Ja .

[kato]

Exit in solidarity? Greece ain't leaving voluntarily, we're about to kick them out of the Eurozone. Ya know, like we should do it with the UK regarding the EU though hate so much.

No, seriously, it's funny to even hear the name Cameron in connection with Greece. I mean - we (as in the Eurozone) are not giving you (as in the UK) any word in things for which you are not relevant (as in the Euro). I think Cameron - and the UK - hasn't really got that yet, but we cut you out on any discussion regarding Greece or the Euro from the very start of discussions. Cameron's opinion - or that of any other non-Eurozone politician - in this regard doesn't weigh anything to us.

The Guardian is about the only British paper that got your role right: "anxious spectator". Nothing beyond that.

And it's not like you're ever gonna leave the EU. If you want The City to survive economically that is, and not become Manchester all over your little island.

[rj1]

I mean - we (as in the Eurozone) are not giving you (as in the UK) any word in things for which you are not relevant (as in the Euro).

Then why were they using the EFSM (which has moneys from non-euro countries) to bail out Greece?


This past six months has completely destroyed a lot of the goodwill toward European integration. It was going to happen sometime obviously, but the notion of more Europe was built on the prospect of not asking anyone to sacrifice anything for it. So you have the oxymoron of Ireland being in the EU and EU having mutual defense policies yet Ireland are "neutral". And here we are in 2015 with Greece bankrupt not wanting "more Europe" to tell them how to raise and spend their money, and Germany not wanting "more Europe" to tell them to set aside more money for others. It was inevitable really. You talk about the Guardian yet there's editorials in it today saying this crisis has killed "Europe" for the left.

Personally, I think Greece should do what Schauble raised and have a 5-year timeout with their new drachma.

Anyway, interesting chart:

[kato]

(which has moneys from non-euro countries)

They set it up so that non-Eurozone money isn't affected.
http://www.bbc.com/news/uk-politics-33556085

[Monash]

[QUOTE=Bigfella;992964]You are being far too kind. The 'corrupt political elites' (and they were) simply reflected their voter base. It is easier for people to scapegoat their elites & the EU than to face up to the truth - everyone was in on the scam. All the problems Greece faces are self inflicted. They don't just owe Germany, they owe billions to nations like Spain & Italy. Not exactly nations in the best shape themselves.[QUOTE]

Agree about the nation as a whole, even now, if tax evasion was a sport Greece would be reigning world champion. I picked on the leaders because for all the popular support they may have had it was, at the end of the day their JOB to keep a clean set of books and reign in public expectations pending the period of reform needed to get the national accounts to the point where membership of the EU was a viable option. Hell, put to the test the Greek electorate when made aware of the tax hikes and spending cuts required at the time to sustain membership of the Eurozone might actally have voted to stay out, retain the drachma and keep on running the bad comic opera otherise known as the Greek economy wothout European supervision.

[Parihaka]

Greece just taught capitalists a lesson about what capitalism really means

Greece has effectively voted to default on its debt to the IMF and the EU, and it is a massive defeat for Germany’s Angela Merkel and the troika she led, which insisted there was no way out for Greece but to pay back its massive debts.

The vote is huge lesson for conservatives and anyone else who thinks this is about a dilettante government of left-wing idealists who think they can flout the law while staging some kind of Che Guevara-esque dream:

Wrong.

This is what capitalism is really about.

From the beginning, Merkel and the EU have operated from the position that because Greece took on debt, Greece now needs to pay it back. That position assumed — bizarrely, in hindsight — that debt only works one way: if you lend someone money, then they pay it back.

But that is NOT how free markets work.

Debt is not a guarantee of future payments in full. Rather, it is a risk that creditors take, in hopes of maybe being paid tomorrow.

The key word there is “risk.”

If you’re willing to take the risk, you’ll get a premium — in the form of interest.

But the downside of that risk is that you lose your money. And Greece just called Germany’s bluff.

The IMF loaned Greece 1.5 billion euros, due back in June, and Greece isn’t paying it back. Greece has another 3.5 billion due to the ECB in July, and that looks really doubtful right now.

This is how capitalism works. The fact that it took a democratically elected government whose own offices are adorned with posters of Lenin, Engels and Guevara to teach this lesson to Germany is astonishing.

More astonishing still is that Merkel et al knew Greece could not pay back this debt before these negotiations started. The IMF’s own assessment of Greek debt, published just a few days ago, states: “Coming on top of the very high existing debt, these new financing needs render the debt dynamics unsustainable …”

“Unsustainable”! Germany’s own bankers knew Greece couldn’t pay this back. And yet Merkel persisted.

Take a look at Greek GDP. In order to pay back debt, you have to have a growing economy. That’s a basic law of economics. It’s how credit cards work. It’s how mortgages work. And it is how sovereign/central bank debt works. But Greece’s economy was never in a position to benefit from debt, because it has been shrinking for years:


There is another key fact that the Greeks are keenly aware of (but which everyone else has forgotten). This debt was initially owed to private investment banks, like Goldman Sachs. But the IMF and the ECB made the suicidal decision to let those private banks transfer that debt to EU insitutions and the IMF to “rescue” Greece. As Business Insider reported back in April, former ECB president Jean-Claude Trichet insisted that the debt transfer take place:

The ECB president “blew up,” according to one attendee. “Trichet said, ‘We are an economic and monetary union, and there must be no debt restructuring!'” this person recalled. “He was shouting.”

The result was that the ECB made this catastrophically stupid deal with Greece, according to our April report:

And so there was no restructuring agreed for Greece. The country paid off its immediate debts to the private financial sector — investment banks, basically — and replacement debt was laid onto European taxpayers. The government agreed to a package of harsh government spending cuts and structural reforms in exchange for loans totalling €110 billion over three years.

Trichet made a colossal, elementary mistake. The right place for risky debt by definition is in the private markets, like Goldman. The entire point of private debt investment is that those creditors are prepared for a haircut. The risk absolutely should not be borne by central banks who rely on taxpayer money for bailouts.

In fact, had Trichet made the opposite decision — and left the Greek debt with Goldman et al — then today’s vote would be a footnote rather than a headline in history. “Goldman Sachs takes a bath on Greek debt.” Who cares? Goldman shareholders and clients, surely. But it would not have triggered a crisis at the heart of the EU.

Now Italy, Spain and Portugal are watching Greece closely, and thinking, hey, maybe we can get out of this mess too.

Now, before we all start singing “The Red Flag” and breaking out old videos of “The Young Ones” in celebration, let’s inject a note of realism. Greece isn’t actually a country full of crazy socialists who don’t understand how the FX markets work. In fact, a huge chunk of its tax collection problems stem from the fact that there are two and a half times more self-employed and small business people in Greece than there are in the average country. And small businesses are expert at avoiding tax, Greece’s former tax collector told Business Insider’s Mike Bird recently.

Conservatives who hate paying taxes and who urge small businesses to pursue tax avoidance strategies take note: Your dream just came true in Greece.

If Greece was more socialist — more like Germany, with its giant corporations that have massive unionised workforces paying taxes off their payrolls — then tax collection would be a lot higher in Greece.

Greece is now likely an international pariah on the debt markets. It may have to start printing its own devalued drachma currency. It will have no access to credit. Sure, olive oil, feta and raki will suddenly become incredibly cheap commodities on the export markets. Tourism in Greece is about to become awesome. But mostly it will be awful. Unemployment will increase as Greece’s economy implodes.

But the awfulness will be Greece’s alone. Greece is now on its own path. It is deciding its own fate.

There is something admirable about that.

Source

Published prior to the Greek govt. voting to accept the latest debt relief, which of course they'll no more be able to repay than any of the earlier debt.
I spent some time in the Imperial War Museum a few days ago, reminding myself of the idiocies that led to WWI. Autocratic morons masquerading as leaders, much like now.

[Mihais]

But those morons were smarter. :D

The guy who wrote it missed a few things.Greece isn't bad because it has so many individual entrepreneurs.Greece in big doodoo because it has so much bureaucratic red tape that hampers growth.It also has a huge welfare system and a huge,vis-a vis its population,immigrant population,that also takes its toll on the budget.That Greece missed,historically,the chance to develop an industry is one thing.That Greece,absent the interest,is perfectly sustainable is the merit of its large middle class.
Besides tourism and olive oil,Greece has a huge merchant fleet.

[Versus]

Yea, they really "won" this time. But reactions here were priceless, especially among budget lambs, they were really happy...ahhh,dreams.

[Parihaka]

They set it up so that non-Eurozone money isn't affected.
http://www.bbc.com/news/uk-politics-33556085

Heh, the second funniest thing about the grexit. A fund that was set up with specific guarantees that it wouldn't be used to bail the Euro because it had non-euro countries funds in it, was used to bail the Euro. But that's all right said the Euro members, we guarantee we'll pay it back specially to the non euro members. Just like they guaranteed they wouldn't use it in the first place. Christine Lagarde berating Greeks for not paying taxes, then admitting she didn't pay any taxes was the funniest. :)

[tankie]

And the sooner we leave the better . for myself anyway .




http://www.express.co.uk/news/politi...ean-Union-Ukip

[kato]

But that's all right said the Euro members, we guarantee we'll pay it back specially to the non euro members. Just like they guaranteed they wouldn't use it in the first place.

Eh, given that the most important non-Euro member has not paid its due fees since the 80s...

[Parihaka]

Eh, given that the most important non-Euro member has not paid its due fees since the 80s...

This is not a war. You will not be allowed to go to war.

[DOR]

Something I wrote last week that won't be published until mid-August.

The Mess in Europe

The policy options adopted by various EuroZone governments since 2008 have, almost without exception, failed. As illustrated in our graph, all of the main OECD economies grew more slowly in 2008-14 – shown on the top axis – than they did in the previous seven years (the left axis). While it is true that the large majority of the economies recovered from their slumps, austere policy options unnecessarily prolonged the pain, either for themselves or for their neighbours.

Anti-inflationary policies favoured mainly by Germany kept the value of the euro stronger than it would otherwise have been, thereby prohibiting the larger Mediterranean economies (Portugal, Spain, Italy and Greece) from taking advantage of their lower cost structures. If they had been able to operate under a weaker currency, they could have exported their way out of trouble, as did much of East Asia in 1999-2003. Instead, as happened here in Hong Kong, they are undergoing a painful deflation.

The key problem is that the euro is now both over-valued and under-valued, which does not mean it is properly valued. From the Southern perspective, it is far too strong to support exports while domestic demand remains weak. For stronger economies such as Germany, it is far too weak to either reflect underlying economic strengths or to attract the imports needed to satisfy domestic needs and stimulate neighbouring economies. As long as Greece and other Mediterranean economies are weak, the euro will remain undervalued, giving Germany (et al) a nice edge in competitiveness. As long as the largest economy in Europe remains fairly healthy, the euro will remain overvalued, undermining recovery. While it may not be in Germany's best interests to see Europe's Southern Slumpers depart the EuroZone, the only alternative would be to finance their recoveries directly, an unpalatable choice.

This isn’t 1997-98
Unlike our own experience of 18 years ago, Greece is saddled with a massive national debt and severe budget deficits. Tightening its belt would do nothing to encourage the growth that is the prerequisite for coping with debts and deficits. It is now time for Greece, and perhaps other Mediterranean economies, to take a very risky step and drop out of the euro.

Deflating, as we did, won’t work with these kinds of debt burdens and budget deficits. Greece must drop out of the EuroZone and reintroducing the drachma. It must do this in conjunction with an agreement among its creditors to reduce its overall debt burden, and in the process begin reforming its fiscal, pension and labour systems. In doing so, it will bring real wages back to levels where productivity supports exports. The longer the hard decisions are postponed, the longer Greece remains in depression.

Either Greece leaves the EuroZone, or Germany (et al) must compensate the Southern Slumpers for the value it derives from being the main beneficiary of the weak euro. But, transferring vast sums from Germany (et al) to less efficient, less disciplined economies sends a terrible message and all but guarantees the worst moral hazards will remain. In short, there is no good answer, which will encourage politicians to dither. That, in turns, raises the cost of recovery. What might hahave cost €100 billion five years ago is likely to cost ten times that much today. And, more tomorrow.

[tankie]

And Adolf Merkel can keep whats left of it .


http://www.thenewamerican.com/world-...esident-warns#

[zraver]

the unified currency really hurt the Southern countries, it artificially deflated the value of German products making competition against Germany within the Eurozone harder. Right or wrong, Southern European productivity is not up to par with Germany.