tell me one country with IMF that gone well..I do agree that the IMF enforced policies in many countries that were not immediately successful and often not even successful long-term. But I'd also like to make the point that the IMF is an international institution financed by the citizens of the rest of the world. If they offer you credit you can refuse! If you don't refuse you should be thankful that people offer you money at a point in time when nobody else does. You don't need to accept!
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they sold all their resources in 1/100 of real price and then they destroyed..after that they throw away the IMF and they rise again from the ashes..This is drastically exaggerated.
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so what is happening now to southern countries will not help them in the long run, it will help the bankers to have the smallest possible loses from the crisisIt is true that the money the EU gives to Greece will mostly flow towards banks. Most importantly, Greek banks, which manage money for Greeks. It would be much cheaper for Europe to just save its own banks. Europe has decided against this.
It's also very important to distinguish between Banks and (past) bank managers. Banks right now are in dire trouble because they lost lots of money. Banks profit from what the EU does because they are supposed to profit. They need to profit unless you want them to go bankrupt which would cause dire problems for Greece and the rest of the world.
Now, as for the (past) managers: they swim in money. The money the banks lost went towards their managers and some customers. I'd be very willing to use legislation to get this money back. It's a result of a broken economic system during (at least) the last decade, when some people (most prominently many bank managers) made lots of money without giving society anything remotely as valuable in return.
But unfortunately such legislature could have bad side effects and it's also a moral problem. If you are a bank manager and rewarded for behaving in a specific way, and then you spend your money on houses and wives and cars, is it 'just' for society to come to you a decade later and tell you that while you, like most other people, behaved according to incentives and laws, you did wrong and now have to sell your house and your car? I don't think this question is easy to answer.
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some times we must just put numbers aside and think that these numbers are humans starving, humans suicide..in my country 3 days go we had the 1200 suicide...Agreed. 100%. But we also know from aid to 3rd world countries that just handing over money indefinitely isn't helpful, either.
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400.000 more unemployed people, how this can help in the long run?It does not help. But 400.000 people who work for companies which don't make enough revenue to pay them and thus are paid with the taxes from citizen from other European nations isn't going to happen.
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Can you name me 1 country in the world that don't have a debt?only 1..Greece have debt, Germany also have a debt, USA have the biggest debt..to whom all these countries own money?if Greece owns to Germany and other europian countries as I hear in the @@ media, then Germany owns to whom?USA owns to whom? the whole economical system is a joke and the whole humanity are in debt to some bankers that you can count in the fingers of 1 hand...All countries have companies, public and private, which collect money from customers and invest it in e.g. bonds. If you have any insurance, your insurance company does exactly this with the money you transfer every month: they invest it. This way, should the insured event happen, they can give what you agreed on. There's also people giving companies money to give it back to them when they are old. The companies invest this money in e.g. bonds. Of course, there's also rich people who don't know where to put their money and some of them buy bonds with it.
All of these, and many more, are the private creditors.
Governments do not usually own much money to each other. Moreover, the system of public debt is quite useful in many ways. It only gets into trouble if creditors lend money to people who turn out to not repay it. As this is a very common thing to happen, we should probably rethink public debt a bit. The market is not very efficient here - otherwise it hadn't given money to Greece for such a long time at such low interest rates.
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you accept their rules and you talk based on these rules and their right and wrong, I just don't accept the rules..if Greeks in the coming elections do not vote for a party that will throw IMF away and they will deny the illegal debt, they are lost..Maybe so. But the alternative is not much better. Look, the basic narrative is this:
(1) Since Greece joined the Eurozone, the Greek government borrowed money from the rest of the world and gave this money to their citizens (in a very unfair way. Some got incredibly rich, some got nothing. Most got something).
(2) A few years ago, creditors (insurance companies, pension fonds, rich people, etc.) suddenly (lol) realized that the Greek government won't be able (willing?) to repay this money. At this point they stopped giving money to the Greek government.
(3) Unfortunately, this meant that the Greek government couldn't pass the money on to their citizens. And if there's no money then there's no money. If you think time is hard right now, you are right. But imagine what would have happened if overnight nobody had given any money to the Greek government !!
(4) Instead of accepting that Greece turns into a failed state with a government unable to pay virtually anybody, European citizen started to give many hundreds of billions of Euros in form of credit to the Greek government in return for the promise to slowly adjust to the fact that private investors aren't willing to give them any more money.
(5) But Europe isn't going to give ever more billions indefinitely. The citizen of the rest of Europe know that they take an enormous risk: if the Greek government doesn't repay them (just as it didn't plan to repay the private investors), all the tax payer money will be lost and taxes will have to be raised to pay back their debt now. And, let's be honest: Greece won't pay back the debt ...
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yes illegal..when Germany take money with 1% interest from the CEB and then it gives it to Greece for 7% interest, I can safely say that this is not a Europian help but I can say it is a loan shark7% is wrong. It's rather 3-5% while inflation is at about 3% right now. So the effective rate is rather 0% to 2%. The fact that no private investor wants to give Greece this amount of money right now, should be proof enough that it's not a very profitable thing. Would you be willing to give some of your money to the Greek government right now? Neither would I; it is NOT profitable!
First of all thank you for taking my comment and answering, although I guess you have no idea what is going on to Greece and don't blame you for this...
ReplyDelete"Nils said:If they offer you credit you can refuse! If you don't refuse you should be thankful that people offer you money at a point in time when nobody else does. You don't need to accept!"
here is the difference. 90+% of Greek people in demo-scopes said no to IMF although the government said yes. The majority of the people here believe that politicians are betraying their country..the 2 big parties that have govern Greece last 30 years have now ~8% in Demoscopes and people are always in the streets to change the government yet they use police to destroy the people..Also the majority of the people in Demo-scopes does not believe we have Democracy now in Greece and they promise to change all things and all the things our traitor have signed in the loan sharks.
When the government won the elections, they said that everything is going fine..in truth they were giving faulse statistics both to Greek people and Europian people all those years...
Before Greece enter to IMF other countries, like Russia and China wanted to give us loans with low interest and generally help us but our traitors refused as their main plan was to put the Country into the IMF so someday in the future to sell all natural resources in 1/100 of the price for illegal loans.
"Nils said:Agreed. 100%. But we also know from aid to 3rd world countries that just handing over money indefinitely isn't helpful, either."
I am surprised you think of Greece as a 3rd world country..They didn't economical attacked Greece because it is poor, but the opposite..English and French researches are talking for 1 trillion of gas and oil only..not to mention about land in islands that is a tourist destination for long years..Do some researches about Greece and if it is a Rich country or poor..
If you don't believe that there is a global economical mafia(George Soros is an example) that attack into countries by bribing local governments in order to get loads of money,and you believe that everything is going as intended, then really I cannot convince you in anything nor we can come to a slight agreement...
Just remember, Greek government represent around 8-10% of the people right now and sign agreements for 20-30 years that will destroy Greece. Also have in mind that once Greeks restore their Democratic rights and a real Greek government take over, they will withdraw all this agreements and they will punish the traitors..
ReplyDeleteA huge and dirty economical war is going against Greek now..if you think that we are just lazy bastards that eat your money then you(and all of the people think like this) have no idea how the world and media operates..
Really sorry for bad English, tried my best
Giannis, so what is Europe supposed to do? Invade Greece, remove the 'regime' and install a government of 'the people'?
ReplyDeletePoint is: Europe gives the Greece government lots and lots of money right now. If you have a problem with how your government distributes this money (I do !!) then YOU should change that. You are the electorate! You elect your government! After you elected it, you, the people, are responsible for having elected it.
"Nils:are paid with the taxes from citizen from other European nations isn't going to happen"
ReplyDeleteDo you understand that Germany have strong economy because Greece has lot of Debt? Do you understand that we were forced from EU to buy weapons for example from Germany and France?while we could find even in half the price from other countries?Do you know about Siemens?Again I don't want to talk with the rules of a failed economical system, but those citizens are not pay any Greek!!their money goes to their banks...
An organization have been created recently. All the loans Greece will get is going to this organization plus all the income Greece have. This organization that is ruled by EU will first make sure all the loans and interests get payed and IF any money left they will give it to greece to pay for salaries and help its economy..this is what they signed..so no, the money of your citizen doesn't go to Greece..never went to greece..
Could we just agree that giving credit to the Greece government is not profitable? And that, thus, Europe doesn't do it to 'make money' ?
DeleteOh - and I don't understand why the Greek government continues to buy German weapons. It's ridiculous. But I don't blame private companies for selling weapons to buyers.
DeleteInstead, I blame your government for using the money the European tax payer gives you to buy weapons instead of bread.
WE TRY to CHANGE that!!every day...over 6000 thousand police are guarding our parliament every day..this is the Democracy in Greek now!!!
ReplyDeleteWhat Europe is supposed to do??Nothing..they don't help us!they help their banks..Europe and our politicians help the bankers to not lose anything from the loan sharks.You don't understand this!!do you believe Europe are too nice to help the greeks?
They just give the money to the bankers..greece never see those money..
You have a chance to vote in April. I can promise you that many Germans would be happy if the new Greece government declared that Greece is going to exit the Eurozone. But it won't help the Greece people.
Delete"Could we just agree that giving credit to the Greece government is not profitable? And that, thus, Europe doesn't do it to 'make money' ?"
ReplyDeleteOf course we can agree..The Greek people don't want the money..trust me. the greek people already got bankrupted and they don't want to see their country being sold for 1 euro...
You can use the 'reply' button next to the comment .. ;)
DeleteWe will see what the Greek people say in the election. And that's good. Until now I haven't seen a majority of Greeks on the streets ...
http://www.youtube.com/watch?v=MSHILnq5g4Q&feature=player_embedded
Deletesee there, they are just kids and normal people beaten by police..no one is showing these
http://www.youtube.com/watch?v=zoxxmGpp6HI&feature=related
Deletehttp://www.youtube.com/watch?v=trDWC7UsvTs&feature=related
Nils:Oh - and I don't understand why thy Greek government continues to buy German weapons. It's ridiculous. But I don't blame private companies for sell weapons to buyers.
ReplyDeleteInstead, I blame your government for using the money the European tax payer gives you to buy weapons instead of bread."
Nils all of these things you say are very right, the thing is that you have to understand that Greek people say exactly these things..also you must understand that we don't have Democracy in Greece now. the current president is not elected by the people , is a banker(former banker in the ECB) that politicians put him as president for only 1 purpose, to save the banks.
people are fighting in the streets to win again Democracy, although the media are put down those things..in the last big people revolution, over 1.000.000 Greeks were in the streets fighting with police and 6/7 Major tv Media in Greece had movies and documentaries on their program..I think the same is happening with Europian Media, they don't show you what is happening here!they just tell you that we are lazy bastards eating your money
The language barrier is certain the biggest problem here. I'd like to watch Greek television. And I wished Greeks could watch German talk shows about the Euro crisis.
DeleteSee, if you want to blame the past Greek governments, you're welcome. Whole of Europe agrees! Since, you didn't have lot of voter fraud, you should also blame those who elected these governments or didn't create new parties!
If you want to blame Europe for giving you money and then asking for some things to change in return, then please reconsider this: giving money to the Greece government is not profitable!
Now, it is true that giving money also saves German banks. But it would be cheaper to save just the German banks and not the Greek ones, too!
Yes, some people fear a chain reaction with Portugal and then Spain, should Greece leave the Eurozone. I consider this unlikely, but not impossible, today.
Finally, it is dramatically important to distinguish between saving banks and saving bankers!
the problem is that the politicians were giving faulse statistics and they were taking secret loans..and I am very sure Europe knew all of these but did nothing because all these faulse statistics and secret loans was mostly weapons from Germany and France and also business with Siemens and other Europian companies..
Deletenow some of those are coming to light and people find out all the lies of those years..and more is waiting to discover..
I agree to a degree. German companies, like Siemens, said that you have to pay bribes in Greece because that's how business is done in Greece. Without it some other company had done it ..
DeleteI do think they have a point, albeit not a very good one.
What I don't like is Greeks (and those videos you posted) blaming the IMF or Europe. Sure, the IMF forces the Greek government to fire people. But without the money from the IMF the Greek government couldn't have paid these people, anyway !
Blame your politicians, elect better ones.
One more thing: If you blame the IMF or 'Europe', or think it's all an outside conspiracy, then you are believing the lies from your politicians once again!
DeleteIt's the typical excuse:
Greek politician: "I will resist the IMF when it asks us to fire more people"
Reality: Then the IMF will not give you money and you won't be able to pay those people you didn't fire.
Why does the IMF do this? Because the IMF is giving money to a government that spends more money than it takes in. The IMF cannot give this government ever more money if it stays like that ... the IMF is the taxpayers of the rest of the world !
again Nils, the IMF and Europe are using our politicians to invade greece economical..to buy greece for 1 euro, and to save the europian banks from a possible greek bankrupt
Deletenot 1 cent from this money have gone to greek people, please do some research...These days the ECB have given around 500-600 billion Euro to the Euopian Banks for 1% interest...these PRIVATE Banks will buy Greek Bonds and will loan Greece with at least 5% interest..
my question to you, Why the ECB loan to Private baks with 1% interest and do not directly loan countries?or better, why the Europian Bank that type currency for Europe currency loan this currency??isn't ECB belong to Europian People?
Lots of the money is going to the Greece people! Your government is still running a deficit, for example, by paying its employees. Where do you think this money comes from?
DeleteYes, lots of money also goes to banks. For example Greek banks, to make sure that you can take out money from your bank account!
As I said: Distinguish between banks and bankers. Banks aren't evil. They are soulless organizations which are critically important for our economies.
Some of the money goes to bankers and hedge fund managers, true. But that's not most of it. Most of it goes to banks and indirectly insurances and pension funds which are important for many Greeks, Europeans.
"Because the IMF is giving money to a government that spends more money than it takes in."
ReplyDeletehttp://en.wikipedia.org/wiki/List_of_countries_by_external_debt
so please explain me why a country that don't spend more that it takes have debt?If they doesn't spend more than they make or take, how can they have billions or trillions of debt??
How can the Mighty Germany have debt?The England? the USA?and to whom they own..you didn't answered to this..all these Mighty countries in the list to whom the own money?
you said that Greece spend the money of Europian citizens that pay taxes, tell me please the europian citizens and their countries that "spend less of what the make", to whom they own?
do we all own money to Aliens?Or something very wrong is happening?
please do some research nils...the whole humanity need to put an end to this bad/deadly joke and move forward with true economical system...they want our Air, our Sun, our Oil, our Gas, our Islands this is what is happening..they just realized that there is a much easier way to invade and conquer countries and this is Debt and traitors who recognize this Debt as real
Because there's internal and external debt. .. I tried to explain this before: here.
DeleteVery short:
1) Distinguish between the government and the society.
2) Governments can take credit from their own citizens (internal debt), and from people / organizations / nations outside of the country (external debt).
The German society as a whole does not have any debt. In fact, lots of non-Germans owe money to parts of the German society.
But the German government has lots of debt with Germans. Thus, Germans gave money to their own government and hope to get it back in the future. Germany has lots of internal debt.
Many people / organization / nations / institutions owe money to each other .. there's nothing mystical about it.
I think the current system - compared to our history as mankind - works pretty damn well! Is it perfect? No ... but one should understand it before one criticizes it ..
the list above is the External Debt...Germany have 4,713,000,000,000 external Debt..
DeleteI know the difference of internal and external debt..also I want to inform you that also another dirty trick took part in Greece..our private banks had lots of external debt and Greek government took that debt and "transformed it" into a Greek Debt to save the banks...
you don't know what terrible things happened to greece under the table..thats why we are fighting. You as a Europian maybe you should be thankful for our politicians and maybe you will make them a statue that they give to your companies greece for 1 euro..
I use a different terminology than that link. ;(
DeleteBut here's the important quote:
"Note that while a country may have a relatively large external debt (either in absolute or per capita terms), it could be a "net international creditor" if its external debt is less than the total of the external debt of other countries held by it. For example, Luxembourg, Switzerland, and China are net international creditors."
Instead of super-technical terms you can think of the government and the society (which includes the government) and these two parties having debt towards citizens/organizations of the same nation (internal) or to parts of other societies (external).
The Wikipedia link is about the debt of the entire society to be paid towards other societies. But without subtracting what other societies own back. That's why it is a little useless. Yes, the German society owes lots of money to parts of other societies, but other societies also even more money to parts of the German society.
It starts within a country. People realize that they can force their politicians to give them ever increasing amounts of money. Soon the money from that country dries up. But the demand stays the same or even increases.
ReplyDeleteSo they go to private lendors outside their country. Soon that money dires up. Then they ask other governments for money.
When does it stop? When will this type of model finally be railized as a complete failure? Does it hurt people? Of course it does. But those same people are the ones that started themselves down that path.
At some point in time goverments and people need to learn to live within their means.
Finally, Giannis you have not offered what your solution would be. You blame your government, the IMF, the Germans and the bankers. But what would you do?
as long as people support the current economical system there is not much we can do..what will Greece must do is to deny their debt as illegal since the politicians secretly took those loans and no money gone to the people..this happened lot of times in the past..
Deletealso I see you are all fine that there is some PRIVATE bankers who create/print the money and then they loan this money to Countries..but you are not fine that people that work hard need more money?
also since every money that is created/printed have an interest, there is no way people will not go into Debt..to pay the debt, new money must be printed, but since these money also have an interest, it creates more debt...
The solution is that Governments must Create/Print money, not private Bankers..the last Big President tried to do this was Kennedy..he made a law that gave the opportunity to American country print money..you know what followed...
If you are fine that the whole world is a big jungle , and the international mafia governs the world, every solution I can give you you will snub it. i will leave you with this poem..
First they came for the communists,
and I didn't speak out because I wasn't a communist.
Then they came for the trade unionists,
and I didn't speak out because I wasn't a trade unionist.
Then they came for the Jews,
and I didn't speak out because I wasn't a Jew.
Then they came for me
and there was no one left to speak out for me.
Debt, by itself, isn't bad, Giannis. Debt is one reason humanity enjoys incredible riches today!
DeleteWe only get into trouble if debt is not repaid..
As for politicians printing money. This was reality some centuries ago. The king didn't use taxes, he just printed money. It let to inflation. Because there's no such thing as a free lunch.
DeleteDebt itself is not a problem ..
OK lets go with what you stated so far. All debt that Greece owes is somehow erased. Let's also assume for arguments sake that nothing bad happens because of this.
DeleteSo you now have Geece with zero debt. You are still running a deficit and your only choices are:
1) be given money with no strings attached.
2) run up new debt.
3) print money.
Only the third option is actually possible as previous lendors won't loan new money and who will just give it away? That means you have to leave the Eurozone and go back to the drakma. You can't print euros after all.
Is this correct so far?
Now what happens when other coutnries refuse to accept drakma's in exchange for their goods? You will either have to use gold or the 'hard currencies'. That means massive inflation in Greece or back to living within the budget. Or point out where I'm wrong.
Giannis, the influx of money to finance the debt has never been intended to pay you directly, although part of it may go to keep the government running.
DeleteYou pay off the interest bearers first. That alleviates pressure on the credit market so that the internal businesses can get credit to pay the Greek people their salaries. With sovereign debt casting such an ugly shadow, no one is going to be doing any business in Greece.
And you can't get rid of it by giving out welfare checks to 'the people'. That's where this whole mess started.
There are 3 parties here.
ReplyDeleteGreek Government, Greek People, Creditors (Various groups).
Problems:
Greek Government- Lied, painted a picture like everything was ok when it wasn't. The debt was bad, but was managable at the time due to good economic conditions.
Greek People- Didn't realize that their labors did not add up to the riches they were swimming in. No one ever wants the party to end. And if you speak up about it, you are cursed at and marginalized.
Creditors- Probably had the best chance to end this before it became a real problem. They had the tools to measure the Greek Economy and realize that the numbers coming out of the Greek Government didn't add up. At that point, they should have started to pull out of the market and easing a decline. There were people that realized this. But again, when profits and big bonuses are flying, no one wants to hear about it and you are marginalized.
Its ok though live in gluttony. When the chickens come home to roost, the central bank will bail you out.
Clarification:
DeleteWhen I said the creditors had the best chance to end the cycle, I really meant second best chance since Greek Government had best chance.
The precognitive smart creditor would have pulled out and walked away like you said. A normal smart creditor would have taken CDS on their bonds while insurance costs were still low.
DeleteThat said, given the 'voluntary' haircuts, the 'smartest' may have been those that were selling the swaps.
So I'll add in the fourth party, the CDS sellers. That is, unless the greek government invokes the retroactive collective action clause, they've made a pretty good sum (for taking a horrible horrible risk).
Now, back to creditors: I think creditors pulling out of the market is exactly the reason why the yield graph shows a steady rise, and not a discontinuous jump. On whole, they did do as you suggest. The ones that are left are those without chairs in this game of musical chairs, and no sucker is going to join the game after the music stops.
Goodmongo wrote:
ReplyDeleteNow what happens when other coutnries refuse to accept drakma's in exchange for their goods?
There's actually a much larger problem here, Goodmongo. Introducing a new currency isn't something you can do just-like-that. When Germany introduced the Deutsche Mark in 1948 this had been prepared for three years in top-top secrecy!
Remember how long the Euro had been prepared? You first need to print enough of the currency, then you need to prepare legislation for the new currency. Then you need to close borders and transform all existing Euros inside the country to new Drakma. This would make Greeks revolt! After all, the new Drakma is going to be worth MUCH, MUCH less than the Euro (that is the whole point) and, thus, all Greeks are suddenly much, much poorer. (Well, arguably they have been this poor all the time and the richness with the Euro was just a temporary illusion).
Now, Greeks themselves might not accept the new Drakma!
Also, consider the injustice: All Greeks who are even a little bit smart have transferred their Euros outside the country by now. The only Greeks who didn't do it are those who can't because their Euros were part of the pension plan and similar things. Thus, only the poor and stupid would suffer while the rich and smart have brought their Euros into safety. The legal Euros went to Germany, the illegal Euros (tax evasion) went to Switzerland.
The conversion from Euro to Drakma would most probably be complete chaos - anarchy! And in anarchy the powerful do well at the expense of the rest. And since the rest is the majority, the rest revolts.
You get a completely breakdown of the modern economic system. People start to trade stuff against stuff because there's no credible legal currency!
If you want to buy meat - have fun! Greece doesn't produce enough meat on its own! And they don't have a credible currency with which to buy meat. Consequently .. (almost) no meat! And that's just meat; now think about .. semiconductors!
Europe would have to offer humanitarian help with all the problems attached to humanitarian help: you never know who really profits, it's very hard to avoid bad incentives.
One point regularly made on German television is that we rather give money as long as we can have some influence on how it is spend than that we give humanitarian aid with little control over it.
And last and maybe least: the whole thing would be terribly bad for the public image of United Europe ... We might end up financing Greece for almost forever just because we don't want to have a humanitarian catastrophe inside the Eurozone! That would be a disgrace.
Nils I agree with you. I was trying to be really superficial and ignore many of the problems to focus on what his 'solution' would be. Based on his responses I got the impression it was to wipe out the debt, and print money. But since they can't print Euros the only option is Drakmas.
DeleteSo I'm trying to logically walk him through each step. The bottom line is I see Giannis upset (who wouldn't be), but what alternative solution do they have? Even his solution leads to the same or worse problems.
Or as you pointed out welfare forever to the Greek state.
Well, as I see it Giannis is just very dissatisfied with everything (perfectly understandable) and wants to change the entire economic system of the world. Now, I'm not even completely against this. The world's economic system, while hardly the result of a conspiracy, is certainly not perfect or even just.
DeleteBut at this point in time this is the wrong thing to worry about. Giannis should rather read every economic plan of all the politicians he can elect in April and then use his considerable energy to understand which plan is best for Greece and how to influence other Greeks to vote for the corresponding politician.
first of all Nils, Greece produce the 94% of food they eat. I am sure you heard that we nuy food from other countries and this is true but this doesn't mean we don't produce that food..we buy food that we we have 140% of what we eat..
Deleteas you know we are an agricultural society and we have plenty of food and water. I never said that going to Drakma is a walk in the park. The Dilemma is if we will bankrupt while we cannot print our own currency and make it worth much less than Euro so we can sell things, or if we bankrupt while "others" print money for us and are controlling the inflation...so you chose if you are slave and poor without country, or if you are just poor...
but there is no Europian law that say Europians can throw a country out of the Eurozone or the Euro..they just lie..do a research and find 1 law that clearly say that Europe can throw away a country if x reason happens..when we entered to Eurozone, all our gold from our Central Bank transferred to ECB..
You urged Giannis (and his compatriots) to choose what is better not only for themselves, but for Greece. This presents some problems: people may behave rationally (truly only choose the action that benefits them according to prevailing information and reasoning capability – Herbert Simon’s bounded rationality) but I very much doubt they can choose the better course of action taking to account other peoples actions and desires (what has been called hyper rationality).
ReplyDeleteEven if the Greets would be able to act hyperrationally, wouldn’t their best course of action to continue brinkmanship? In an union where the countries and not the people are the actors, isn’t the best course of action usually zero-sum (that is, try to achieve the biggest concessions possible from the others)?
But in fact, if the Greeks are expect to act both hyperrationally and with a constructive attitude should not the same thing be expected from all the European governments (that they chose what is better not for their particular national interests but for those of the majority of the European people?). And how to square this with things like national interest, the duty of national governments to their constituency and the fact of national elections?
Very interesting exchange between the German and the Greek, whose flow I wouldn't have wanted to interrupt. :)
ReplyDeleteThe long-term answer (related to Iv's point above that the Greek public isn't the only public that should swallow a few bitter pills) is, of course, political integration of Europe.
No one cares that the prosperity of West Virginia and Mississippi is dependent on the value of the dollar (and national credit rating, and a myriad other things) sustained by the coasts.
"sustained by the coasts"??? Please don't make me laugh.
DeleteRight now the coasts and Illinois are a drain on the US as a whole. California because of their radical green lobby and illegal immigration issues. Illinois because it is bankrupt and has runaway public unions and coasts. And the east coast DC because Washington is out of control.
It isn't necessarily cheaper by the way for the EU governments to just "fix" their banks and kick Greece out. There are a lot of hidden claims on Greece via Target2. Target2 was set up without end-of-day balance sweeping, which was a staggering oversight. As a consequence, the Bundesbank via the ECB is owed many hundreds of billions of additional euros (for the deposit outflows).
ReplyDeleteAnyway, this is neither here nor there. The only point I was trying to make is that there are good economic reasons why Greece hasn't left the euro - even though on the face of it a managed exit combined with capital controls and EU support would be the best solution for the Greeks. But these reasons MAINLY have to do with the rest of the eurozone. The rest of the euro zone...
(1) doesn't want to deal with the intractable problems of Target2,
(2) doesn't want to deal with the default of the debt assistance already granted,
(3) doesn't want to deal with contagion flowing to Italy and Spain, and
(4) doesn't want to deal with the end of the post-WW2 European "project".
It's just a question of motive. The eurozone won't let Greece go. Unless the eurozone is stupid and irrational (which by and large it isn't), there must be an underlying motive, that perhaps isn't immediately apparent. Too many people write the politicians of the eurozone off as stupid, when my personal view is that they are actually somewhat evil, and willing to watch Greece *burn* to avoid the list of things that I set out above (1-4), that they don't want to deal with.
With luck elections will lead us towards a better resolution.
That's obvious. It's all about power.
ReplyDelete1. Banks will lose money, and their power to influence the making of money.
2. Politicians and officials in the Eurozone will lose power and influence if the Eurozone starts to break up. Once country leaving could start a chain reaction. Public opinion tends to run in waves.
3. In the event of 2 every country leaving makes the money problems worse as countries start going back to their own currencies and attempting their own individual plans to help their own individual populace. Massive inflation to pay the debt down quickly in many countries Would likely be the result. That would result in upset people who can't afford anything and then more discontent and more riots and perhaps even worse.
I'd imagine the leaders are operating on the assumption that the Devil you know is better than the Devil you don't know. At least you know what the consequences of the known are.
Also you need to consider what it means to world politics if Europe is not united. The Eurozone makes Europe a power player on the world stage. If you start tearing down parts of that unity, it will begin to fall apart. At the same time you have other powerhouses on the world stage that will begin carving out world influence. US, China, etc..
DeleteA non-unified europe would upset that balance of power.
Absolutely it's all about power. The status quo is benefecial to the US, China, russia and those that hold power in the Euro-zone. Thus everyone with a voice in the decision making is for maintaining the status quo.
ReplyDeleteRocking the boat and changing things is only helpful to people trying to gain power.
As an American I have found this discussion very interesting. I also, for what it is worth, want to compliment you guys for clearly having different views and opinions but remaining civil, something that in my country is very difficult to find in political discussions these days.
ReplyDelete