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Greece Is Running Out of Money, Cannot Make June IMF Repayment
jones_supa writes: Greece, the country which has been in extreme financial trouble and high debt for years, cannot make debt repayments to the International Monetary Fund (IMF) next month, unless it achieves a deal with creditors. 'The four installments for the IMF in June are €1.6 billion ($1.8 billion). This money will not be given and is not there to be given,' Interior Minister Nikos Voutsis told Greek Mega TV's weekend show. Shut out of bond markets and with bailout aid locked, cash-strapped Athens has been scraping state coffers to meet debt obligations and to pay wages and pensions. With its future as a member of the 19-nation eurozone potentially at stake, a second government minister accused its international lenders of subjecting it to slow and calculated torture.
the funny thing is that the "austerity measurements" are just measurements to make the country not use more money than they have
It's not that simple.
The problems are mostly because of trade deficits within the eurozone. Greece doesn't really make stuff, which means they buy stuff. They buy stuff with euros. Those euros don't come back to Greece which makes Greece not have any euros. Then it doens't matter anymore what their means are because they have none.
If Greece had their own currency, then them buying more from outside means they could just print ("borrow") more. That money would then devalue making local stuff cheaper and foreign stuff more expensive, in theory. But since Greece doesn't control its money, it just means their money is drained out of Greece.
Only way of fixing this imbalance would be to have transfer payments from Germany (and others that get inflows) to Greece so Greece has currency to spend locally. This eventually ends up in Germany and other producing nations anyway.
This doesn't mean lavish spending in Greece would result, just basic standard of living could be had. As is, this is not possible.
Greece is not the only nation in this problem. Entire Eurozone has this problem whether they believe it or not. To prevent inevitable splits, transfer payments really must happen.
As an example, see the inter-provincial transfer payments in Canada. Without these, a few provinces would be bankrupt and the entire Canadian economy would be worse off.
http://en.wikipedia.org/wiki/C...
Germany stll pays Israel.
Germany "kinda" paid USSR that took most factories it came by.
Germany actually also paid Greece a while ago, although the scale of the payment was nowhere near what current government wants (and even (nominally) much less than they took from Greek bank)
In 1942, the Greek Central Bank was forced by the occupying Nazi regime to loan 476 million Reichsmarks at 0% interest to Nazi Germany. In 1960, Greece accepted 115 million Marks as compensation for Nazi crimes. Nevertheless, past Greek governments have insisted that this was only a down-payment, not complete reparations.[citation needed] In 1990, immediately prior to German reunification, West Germany and East Germany signed the Two Plus Four Agreement with the former Allied countries of the United States, Great Britain, France, and Russia. Since that time, Germany has insisted that all matters concerning World War II, including further reparations to Greece, are closed because Germany officially surrendered to the Allies and to no other parties, including Greece. On Sunday, February 8, 2015, the Greek Prime Minister, Alexis Tsipras appeared in front of the Greek parliament and officially demanded that Germany pay further reparations to Greece.[1] On April 6, 2015, Greece demanded Germany pay it the equivalent of $303 billion in reparations for the war. Germany replied that the reparations issue was resolved in 1990.[2]
German reparations for World War II/
The US gave Greece $376 Million dollars to rebuild between 1949 and 1951. This was not a loan. The US just gave Greece the money. Given that the exchange rate back then was around 4 DEM per dollar, that is over 1bn DEM that Greece got.
The point that Germany surrendered to the US to the allies is a salient one. At least one of these allies paid back Greece two fold for its trouble. And Germany doesn't have that money it stole. That was either conscripted by the allies or sent offshore by Nazi's in hiding. It is why most claims to money and treasures stolen by Germany it WWII gets made to places like Switzerland and Austria.
This argument going back to Nazi German doesn't serve Greece. The rest of the world got over WWII years ago, and nobody is holding the current German state accountable for the Nazis. It is generally accepted that one of the last place one looks for the people responsible for WWII is Germany. Those Nazi folks either got killed, when into hiding, or got good jobs with the Americans or Russians.
What Greece should be arguing is that it was irresponsible for Germany to allow Greece in the Eurozone to begin with. Greece's addition had to do with Germany's greed. At the time, it just make it easier for Germany to export, while giving a very poor Greece a credit card it obviously couldn't handle. It is kind of the same story of all those mortgage banks lending to people with bad credit in the US. And all while, Germany was telling its citizens that they would never have to bail out Greece. What a crock.
Revolution is the opium of the intellectuals.
Even the USA would split apart without these kinds of transfer payments. Most of the states in the south receive more in federal money than they pay in taxes. Actually for most of the USA you can separate red vs blue states based on if they are net positive or net negative on tax paid vs federal dollars coming back. There are states upset about this but it does stabilize the country.
Computer modeling for biotech drug manufacturing is HARD!
Yes and no. Germany isn't being nefarious. The crux of the issue is the same as it's always been - Greece should never have joined the EU. Germany and Greece have very different economies and different fiscal and monetary policies. Given Germany has more power in voting, Greece knew what they were getting into. In fact, they lied about their economy just to get in - because they wanted the benefits of the euro that all EU countries would enjoy plus the stability of the euro and the lower interest rate they could (and did) restructure their debt under when converting to the euro. This backfired during the Great Recession when they were disproportionately affected and subsequently every country in the EU was given a different interest rating for their government bonds based upon their individual risk where before, they were all given the same risk level - so they got currency stability, but lost interest rate stability.
http://www.marketoracle.co.uk/...
Germany pushed for rules to entry that require a deficit lower than 3% of GDP - Greece cooked their books and lied when they showed numbers to the EU lower than that. There was also a rule that total debt had to be lower than 60% of GDP. Greece hadn't seen numbers like that in decades, but the rule was bent and they were allowed in. HUGE mistake for all parties. Greece wasn't a good fit even with lots of safeguards in place as their needs didn't match Germany and other players.
40% of Germany's GDP comes from exports... and they got rid of exchange rates between EU countries plus lower exchange rates worldwide because the euro wouldn't increase in value as quickly as the deutschmark - the trade-off for them was that they pay higher interest rates to support the overall euro. Greece got bonuses, too -- lower interest rates, lower inflation, and cheaper imports which briefly led to a higher standard of living. Greece was on track to lowering its debt and increasing GDP...
What happened? - the market crash, the housing crash, worldwide economic collapse basically. Everyone suffered, but not equally. Greece couldn't effectively use monetary policy to help recover from the injury because it was tied to the EU - and Germany, who weathered the slump like a champ and saw no need for such measures, had more power to control that monetary policy in the EU than Greece or other suffering countries.
So, the dominoes start falling. Greece takes one measure after another to compensate for the lack of monetary policy flexibility as it crushes under debt without the ability to change the money supply and/or interest rates, or ease trade with fluctuating exchange rates. Their credit rating is downgraded making it impossible to get decent interest rates on loans needed to get themselves through the recession. There was no money for a stimulus package and the crippling debt just made the situation worse. The bailouts and debt-restructurings are nice peace-offerings, but wow... when you see how Greece was dealing with up to nearly 30% interest rates for a while there, it still feels like they're being fleeced. The whole thing smells of usury.
http://upload.wikimedia.org/wi...
Coupled with austerity measures during a recession, I'm surprised Greece didn't just get up and leave the EU long ago. I don't blame Germany for acting in their own best interests, but I do blame each EU country that allowed members to join that did not match the necessary economic requirements.
Spain and Greece are suffering high unemployment largely because their wages are in euros and they can't do much with fiscal and monetary policies to ease their current competitive disadvantage:
http://en.wikipedia.org/wiki/E...
If they hadn't joined the EU to begin with, they might have bee
Goldman-Sachs was a major player in the destruction of the Greek economy. They set up unsustainable loan arrangements and then bet that Greece would not be able to pay them off.
They pulled the same scam on US home buyers that they pulled on an entire country. They originated loans that they knew were going to default. They made money doing that. Then they sold the loans to another sucker. They made money doing that. Then the bet that the loans would fail. They made money doing that as well. In the end, both the US home buyers and an entire country were left with unpayable debts.
Goldman-Sachs was monumentally predatory. As the article says:
If you read the full article it's full of excuses why Goldman was not really a bad actor, but you must remember the source is the Business Insider, and they would happily support selling children into sex slavery if it was legal because Profit!
It's a pure swindle. Goldman had the deck stacked and the cards marked. Even a sovereign government was not up to understanding how a huge banking institution was able to manipulate the financial system to squeeze them dry and avoid any responsibility.
Why is Snark Required?