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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.
It's that eventually, Germany is going to get tired of you riding on their back. If you borrow money, eventually the people you borrow it from want to be repaid. You can negotiate for more time, but only so many times before they get tired of it.
It might be better to let Greece default. It'll be painful, yes, but better deal with that pain sooner than later. The longer this goes on, the bigger the problem is going to get.
I am nervous as this feels like early 2008 all over again.
People though ack a few banks will be late paying each other for it's silly home instruments. Big deal let's buy banking shares now while they are cheap etc ...
We all know what happened next? Last year we finally came close to full recovery. The house of cards collapsed and is still being pumped up by the federal Reserve as we never had a full collapse!
Japan, America, and the EU may be next should Greece not to pay with skyrocketing rates and a great depression awaiting as the Federal Reserve won't be able to pump borrowed money to the banks, again.
Am I the only one who sees this?
http://saveie6.com/
And that is never going to happen because peace after WWII was settled on a basis to avoid the mistakes of the settlement of WWI which imposed a heavy financial load on Germany as reparation and led to WWII or social conditions in Germany for WWII. So, they did it differently for WWII. Nobody can tell what the situation would be today if the financial charges on Germany after WWII would have been comparable to those of WWI. This is then a theoretical and rhetoretical discussion to make the hypothesis Germany should pay war reparations for WWII to Greece.
Achille Talon
Hop!
Sovereign debt denominated in a country's own fiat currency (the US situation) is VERY different from sovereign debt denominated in some other currency (the Greek situation).
I just learned that the fines for illegal activity paid by banks since the economic collapse have totaled more than a quarter trillion dollars which is more than the entire economy of Greece. And that number is from 2014, before the $13 billion from Citi and the recent $5 billion for the banks involved in the price-fixing scandal.
Coincidence?
One of the traders for those banks, who was part of a collusion group that called itself (I'm not making this up), "The Cabal", said, in an email to the group, "If you're not cheating, you're not trying." That's $5 billion in fines for activity that made them hundreds of billions of dollars and bonuses.
And so far, not one of the members of "The Cabal" have been charged with a crime, and they'll be keeping their record bonuses. In fact, no one from those banks will be facing criminal charges of any kind.
So if you want me to be mad at Greece for letting the IMF dangle, I'm sorry. There are much bigger fish to fry.
There's so much more to this Greece story than just, "Oh those lazy Greeks with their big pensions." The IMF and the biggest banks were basically doing what those sketchy "payday loan" places in the strip mall do. They were basically doing what the home-lending institutions were doing in the 2000s. They were giving big bonuses to loan brokers for making loans - any loans - to people because they knew they could flip them on the secondary and CDO market. Investors were chasing yield so the word went out to mortgage lenders to "just get it done" and they basically defrauded as many people as possible. That's what the IMF does in countries like Greece and many South American companies. I think we're going to start seeing more of these countries deciding to just tell the IMF to go eff itself and take their monetary policy medicine and just be done with it. Then you'll start seeing the CIA-backed and German-backed and UK-backed coups start to happen.
You are welcome on my lawn.
Maybe Greeks are different but in Germany, if you borrow money, you are fully expected to pay it back. As soon as possible. Greece can make as much racket as it likes, but the Germans still want their money back. And frankly, I agree. If Greece is not willing to pay back what they take, that's theft, and they can go without aid for all I care. Especially when the borrowed money doesn't actually go to fixing its major economic issues.
"Set a man a fire, he'll be warm for the rest of the night. Set a man afire, he'll be warm for the rest of his life."
making an example?
how?
they're not yet made an example. if they get busted and thrown out of eurozone, THEN they're an example. the sad funny thing is that a lot of greeks want that to happen and their goverment to go all venezuela with monetary policy.
and if greeks weren't in the monetary union, they would have done that already three times in past 15 years.
the funny thing is that the "austerity measurements" are just measurements to make the country not use more money than they have. like, it doesn't matter if someone loans them more money if they don't fix that, 1 year down the road they'll be out of money and in even more debt. but the greeks do not want to live withing budget - they promised to live within budget when they joined the monetary union, they promised it 10 times in 10 years already but never lived up to it.
world was created 5 seconds before this post as it is.
The Greek government lied to its population, and the EU, about how much debt the country had. When the other party got into office they revealed the prior party's cover-up. So far so good.
The EU demands that Greece make deep budget cuts in return for aid. These cuts were made. Unfortunately, debt to GDP ratio is debt/GDP. Debt went down but GDP went down more. Austerity is like any other kind of easy answer, it sounds good but doesn't work.
Austerity is the reapers of nations. A country that tries to cut its way out of a debt crisis can end up in vicious cycle where each cuts drops revenue by more than it saves. Historically, either something happens to break the cycle of Austerity or things get to a point when the situation becomes unsustainable. Unsustainable situations often end in a situation where the people of a country must pull down the government out of a need for sheer self preservation. You want to pull a country apart, convince it's government to engage in Austerity until their is an uprising.
The Greeks, not wanting to have to pull their leaders out into the square and shoot them, elected an anti-Austerity party. Syriza has been pretty clear. They'll compromise if a demand could arguably help the nation. Selling off a port to Dubai Ports World? Well the government isn't going to like it, but if the purchaser will contract to improve the port, perhaps its a good idea. Ditto tax reform. If tax reform means going after rich tax dodgers, then the government thinks its a good idea.
Unfortunately, this isn't enough for many European nations. The EU is insisting that the Greek people collectively feel the pain as a result of their governments actions. It does not matter that making the people feel pain won't actually help. Remember, the issue here is debt/GPD. Making the people feel pain translates into things that cause GDP to drop. The EU has to pretend that pain is an economic reform. Article 33 of the Fourth Geneva convention states that. "No persons may be punished for an offense he or she has not personally committed. Collective penalties and likewise all measures of intimidation or of terrorism are prohibited." If the EU came out and said that it intends to hurt the Greek people to punish them for the crimes of the Greek government, then the EU would be committing a crime against humanity. As a result, retaliation has to be clothed in the idea of some kind of reform plan.
Making things worse, the Greeks are in a week enough position that they don't feel that they can leak the state of negotiations to the press. This means that all the press coverage so far has been one sided. On the non-Greek side, this is bringing about a self-reinforcing cycle of bad thinking. For example, a number of German politicians have called on the ECB to cut off support to otherwise solvent Greek banks to force the Greek government to capitulate. Let's break this down. Banks are private institutions. The Greek government is a public body. Attacking private institutions to force the Greek government to do something would be, in essence, weaponizing the banking system. Once banks become a weapon that can be wielded against a country's national interest they become a national security issue. Does anyone really think that turning banking into a national security threat is a good, long term, idea for the Eurozone? Self reinforcing cycles of bad thinking like this are how elites bumble their way to the Guillotine.
So now the game is up. A normally functioning country can roll its debt over. A rich country can, over time, pay down its debt (though this might not be a good idea as it can create a bubble in government debt by shrinking the supply of bonds). Almost no nation can pay off all of their debts right now. The Greeks are basically being told to either capitulate or find some way, without further borrowing, to pay off all of their debts in short order. To put this in prospective, what if somebody told you that you had to pay off all of your student loans
I'm a bit surprised that the Euro hasn't cracked yet.
Europe is too diverse to be able to sustain a single currency without tensions that can lead to disaster.
It's more a question of when than if Greece is forced to leave the Euro. But when that happens there are going to be other countries that follows.
If builders built buildings the way programmers wrote programs, then the first woodpecker would destroy civilization.
Anything that's likely to take down the entire EU if not handled just right will seriously impact the livelyhood of a large number of us.
Maybe it's just to piss of people who keep asking why various articles are on Slashdot.
If you aren't interested in the subject, don't bother clicking on the link.
If Germany paid war reparations for the brutal occupation and raping of the country of Greece, it would amount to something like $150-200 Billion owed.
Scotland should also pay reparations to Italy for crossing Hadrian's Wall and looting Britannia. If you include 16 centuries of interest, it would be way more than a measly $200B.
Companies shouldshould try to pay as little as possible. That's the system: it depends on human greed at every exchange. Any system that doesn't is purest foolishness.
BTW, if you expect the police to "find the guy you beat you up" today, lets me say from experience the police give 0 fucks about you as a victim. The problem many large cities face today is the propensity of the police themselves to beat people up for fun and profit. I doubt private policing could actually work, but lets not pretend the current system is some fucking utopia, OK?
Socialism: a lie told by totalitarians and believed by fools.
What business did Greece have joining the EU? It fudged its numbers to get in (while everyone turned a blind eye) so that idiot lefties could create a United States of Europe. Europe is made up of countries that are far to different in culture and economic prospects to ever fly under the same flag effectively.
Greece's weak economy was never capable of withstanding the monetary troubles of an entire continent. The single market/currency gives it no flexibility to do simple things like adjust interest rates and devalue currency to alleviate the debt.
Who gave it all that money anyway? What were they thinking? How much blame do they have for giving Greece infinite credit?
You seem to know a lot about Greece. Have you been there or is it all just internet lore?
I have to live there and I can tell you we are neither lazy nor entitled. Those of us that can actually find a job end up working for scraps. Wages for people with degrees and postgrad studies are often less than what you find for unskilled labour in other "developed" parts of Europe.
Employment is always precarious so people do not dare even claim overtime hours often in fear of losing their jobs.
Even the public sector, which has always been considered the domain of the "privileged" among greek salaried employees has for years been shrunk to sensible size.
And retirement? I don't expect to be able to retire before 70 the way things are going, and even then, it will be for pocket money, a fraction of what I will have paid in welfare taxes. Not to mention taxes for (a practically inexistent by now) health service.
Yes, for years things have been different. That was in the 80's and 90's mostly. You could say we "deserve" our fate but you wouldn't be so quick to say it if it were you picking up the bill for stuff that was certainly not your fault.
Personally I wish they would let us out of the euro. I have no illusions and understand it will be a long and hard period (perhaps even 10 years) of adaptation, during which living standards will drop even further, but what is going on right now is just pointless. In the long run, we just cannot go on like this
This kind of ridiculous stunt is why the Germans are sick and tired of giving Greece money. They've been model world citizens and have been subsidizing Greece for decades, and trying to use this now is the ultimate in spoiled screaming teenager tactics. Nobody bankrupted Greece except Greece - as the Nordics, who actually got their shit together, very painfully, like to point out.
Germany are somewhat dour and grumpy parents, and a Grexit now is much less harmful to Eurozone than it would have been two years ago, so being kicked out of the house isn't out of the question at all. I wouldn't push it too hard.
I'm not German or Greek, but have been following this for years in the Economist and Bloomberg, and I know lazy scammers trying to wheedle more money rather than earn it.
Maybe they should shake down Italy and Turkey too.
Funny how Poland isn't flat broke; anyone that thinks Greece came out of WW2 worse off than Poland is delusional or a member of the Greek Parliament. Oh, wait, I'm being redundant. :)
I want peace on earth and goodwill toward man.
We are the United States Government! We don't do that sort of thing.
You don't know anything. Germany has benefited tremendously from the Euro. Having the same currency as Greece has allowed German exports to remain disproportionately cheap, and Greece's exports disproportionately expensive. Greece has actually had a major account surplus for the last few years, but it's all bring drained into paying off impossible debts. They cut into their programs to pay off debt, which leads to more unemployment, which lowers government revenue, which forces more cuts, and on and on.
They *are* productive. Do you understand that the Euro is zero sum? If Germany runs a surplus, someone else in the Euro has to run a deficit. It's literally impossible for Greece to run an annual surplus unless they become more productive than Germany, which would then put Germany in a deficit.
It's a tiny economy, 2.5% of Eurozone GDP, its less than when France sneezed recently.
So PR aside, it has no real value keeping it a-float.
On the plus side, Spain just elected a bunch of anti-austerity MPs, and if you bail out the bail out of the bail out of Greece (this is the third bail out, they didn't make the requested improvements from the previous two bailouts), then Spain can rightfully demand free money too without restructuring.
The Euro zone treaties made this situate inevitable. They prevent Greece from running a deficit or devaluing their currency in order to subsidize their economy during a down-turn.
09F91102 no, 455FE104 nope, F190A1E8 uh-uh, 7A5F8A09 that's not it, C87294CE no. Ah! 452F6E403CDF10714E41DFAA257D313F.
German war spoils were forcibly taken back. Their country was divided in two and all the property gained by them taken away. This resulted in genocide in the newly created nation states whose political borders did not follow ethnic borders. Take Yugoslavia as an example. Or for that matter the Israeli Inquisition on Germany and their allies is still going on 60 years afterwards.
This was a repeat of WWI and was even worse, especially for their Axis allies. The Ottoman empire was effectively dismantled, the Austro-Hungarian Empire ripped apart to the devastation of everyone concerned. Again, the new geopolitical borders did not follow ethnic borders. That's why you have faction strife in the Middle East now, why countries like Hungary lost 75% of their land.
After WWII: Forced emigration - over 3 million Germans had to resettle, raging communist thugs, purges (Tito for example) of their own people, ethnic xenophobia. You name it. Yeah the Allies really stuffed it up badly causing isolation and terrible political unrest.
Those war reparations destroyed Central Europe and they're only just starting to recover.
Now some of you have the educated opinion that Germany should repay Ally losses? That is cruel and unreasonable.
Now Greece wants 303 billion dollars as full reparations when the matter was already settled on the eve of unification in 1990.
Greece's problems are relatively new and are not the result of WWII. It's just a money grabbing attempt by Tsipras.
Even if Greece and the EU can forgive the debt fully, Greece still needs to show that their economy is good enough to support themselves. So far there is no sign of that.
Don't be apathetic. Procrastinate!
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...
You're a freaking idiot. Greece is nothing like Venezuela. They've been severely hampered by the Euro, unable to enact proper monetary or fiscal stimuli to deal with their recession and 25% unemployment. Even running an account surplus the last few years they've been drained by these nonstop debt repayments, all while their export prices are artificially inflated by a strong Euro.
Then they shouldn't have joined in the first place.
You talk as if their debt repayments are struck upon them by some natural disaster, but the fact was that every debt they had, their government borrowed knowing full well in advance the payment schedule. Everyone, including themselves, knew that if they keep their spending level unchanged, eventually they won't be able to repay their debts. Everyone knew, but they still did nothing.
If staying in the Euro zone is hampering their ability to deal with their recession, the responsible thing to do is to leave. I think a Eurozone without these countries would fare even better, and these same countries would clamoring to join in 5-10 years' time, or less.
Looking at this from Asia, I have say this is not surprising at all. Many Asian countries have had a taste of IMF's "help" back in 2003, that left many of them devastated. As a result, most of them saved up a sizable reserve in foreign currencies, and that's why Asian stood strong during the 2008 crisis. We will see the Greeks learned anything this time.
You're a freaking idiot. Greece is nothing like Venezuela.
Just FYI, no matter the veracity of your points, starting a conversation that way is a sure way to get them (and yourself) discounted as a dishonest opponent in a debate.
They've been severely hampered by the Euro, unable to enact proper monetary or fiscal stimuli to deal with their recession and 25% unemployment. Even running an account surplus the last few years they've been drained by these nonstop debt repayments, all while their export prices are artificially inflated by a strong Euro.
A few points:
1. I remember and still hear the "we're all keysians now" and "the economy is bad, now is the time to spend!" arguments. There are two issues with this: (a) The countries doing the best in the EU are generally the ones that enacted "austerity" and (b) borrowing money to pay for large infrastructure projects that will pay off is one thing, but borrowing more and more money to pay pensions that aren't affordable or other things generally means those pensions really, really need to be realigned as they simply aren't affordable.
2. Greece got themselves in a position where they getting into the EU allowed them to borrow tons of money (which germany and others benefited from, because they sold them the new fancier goods bought with that money) that they can't repay. At some point, you have to live within your means. Greece should be angry at their government and older citizens who saddled their children with debt to live outside their means -- not the EU.
3. Everyone in the EU has export prices to other parts of the world hampered by the strong euro, it's one of the reasons why the UK is looking at it leaving -- but it probably won't, because while its exports to China and Brazil might suffer slightly, they'd have to do most of what was necessary anyways. You're basically saying if Greece could print it's own currency it could be super cheap and help exports... which is kind of true in the short term! However, it wouldn't be part of the EU, and it would still fiscally implode because it couldn't pay the debt it keeps taking on -- and paying that debt would be even harder due to the super-weak currency.
4. Greece keeps taking money as part of bailouts and saying it'll do things, and then doesn't do them. They are the definition of a bad credit risk, and can't be surprised when people stop giving them money. It's kept happening because Greece was/is sitting on a box of dynamite saying if you kick us out or let us fail it could cause a spiral for the whole EU.
>the "austerity measurements" are just measurements to make the country not use more money than they have
Sadly naive economics like this have brought us in this situation. Greece already has a primary surplus so they can cover their own needs.
The problem is that the external debt is simply not viable. Up to 2030 greek debt obligations are up to 140billion euros. So while Greece managed with great sucrifices to have an unhealthy surplus based on neoliberal policies that finely IMF imposes for decades now, they still need 140/15 = 9 billions in average extra surplus for the next 15 years. That's simply imposible to happen, not in this world. In other words the greek debt is not sustainable and it's not a matter of if they make a haircut (voluntary or otherwise) but when.
Btw, all this mess started back to 2009 with greek external debt of 140% to GDP and after all those years of neoliberal policies it is closing to 180%.
If Germany paid war reparations for the brutal occupation and raping of the country of Greece, it would amount to something like $150-200 Billion owed.
Do you actually believe that, or are you a paid member of the Greek government?
Actually, I'm not such which would be worse...
Germany did pay, nearly 50 years ago, and settled its legal obligations at the time, money which Greece accepted.
The issue is closed, it doesn't get reopened every few decades for convenience. Frankly, most of the people alive in 1945 are no longer here, it has passed into history, let it go...
You may want to ad in that if Greece was on the Drachma again and it was devalued compared to the Euro, they would get a huge influx of tourist currency as Greece would become the cheap place for the rest of the euros to vacation.
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/
My grandparents were fallout of WW I - They left the Ukrainian part of the Austro-Hungarian Empire and came to the USA. I never met them, since they died young, working in shitty jobs like rubber factories (cancer) in Detroit.
Fast-forward... since I never met the "folks from the old country" and only knew my mom and a step father who raised me as American, with no particular culture, other than American, I don't have any animosity towards past aggressors, I am happy with my lot in life.
My take-away, as trite as it may seem, is "what you don't know can't hurt you", and if you forget your (possibly shitty) past and just go forward you will be fine.
If you think you are owed something from those who went before you, you are in for a big disappointment, since those people are dead, and those who are here today only want to know "what have you done for me lately".
Do something and stop whining.
This issue is a bit more complicated than you think.
Greek here as well.
We are indeed lazy, and we simply are unaware of that.
We think that spending a day in the office is what productivity is about.
Number one rule amongst us greeks is this: if nobody is watching, then don't do the work.
It is no coincidence that the word we use for work also means slavery. We equate work with slavery in our minds.
And that is why there is no real progress in Greece the last few decades.
Yeah, force the Germans to pay reparations. What could possibly go wrong?
For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
Nobody bankrupted Greece except Greece -
As I keep pointing out, weak economies have nothing to gain and everything to lose if they cannot control the production of their currency. The weakest EU member (currently Greece) will always be at a trade disadvantage if forced to use money not under their control. Weak economies use a mixture of both currency and interest rates to reign in a spiral. Greece can't do this if they're using the euro.
Grexit now is much less harmful to Eurozone than it would have been two years ago, so being kicked out of the house isn't out of the question at all.
Hah! The EU would be much more harmed by a country leaving than the country that leaves. The country that leaves instantly get's the ability to control their economy. All the EU gets, OTOH, is the danger set by a precedent. Only the rich countries benefit from a common currency. Should all the poor countries leave those rich countries would be in more than a little trouble.
I'm a minority race. Save your vitriol for white people.
The funny thing is that Greece already has its budget balanced better than most other countries.
Any idiot can generate an operating surplus by borrowing money to buy income-producing assets. But if the surplus is not enough to at least cover the interest, it is a failure.
You cannot make generalizations based on a number. Self-employment currently in Greece means women making hand-made jewellery instead of a job on what they studied, people working without insurance at random jobs ad hoc and doing any work that can find, meaning living with 200 euros per month and free lancers trying constantly to pay their taxes to the point they give up their current jobs. The society in which they benefit provides poor public health with even basic medicine supplies missing, people loosing their homes to banks, public sector stripped down to essentials and a state that lies every minute. Clearly you have no idea about greek people, just reciting something you read and making shallow deductions from it usually lead you to false stereotype-infested opinions
If someone tells you he knows the whole truth with certainty, the only certainty is that he is a liar
And that was new loans AT INSANE RATES.
Last time I've checked check dept per citizen numbers, Greek was roughly on the level of Germany.
But interest rates they are paying (and that mostly to German banks), oh my goodness:
Interest rates reflect the lenders perceived risk of not being able to retrieve the loan on time or at all.German citizens are vastly more productive than Greek citizens.
If I were to lend 10.000 euros to someone, I'd have a better chance of having that loan paid in full from a German citizen living and working in Germany than from a Greek citizen living and working in Greece. That does not mean that I would not lend to Greece, but it means that I would take a higher interest rate to compensate for the risk.
It is not a diabolic German plan to put Greece down. It's just economics.
Reading slashdot one-liner: (irm http://rss.slashdot.org/Slashdot/slashdot).rdf.item | fl title,desc*
I've been following the Greek debt crisis for at least five years, Greece's problem is that they absolutely refuse to stop spending money they don't have. Remember: Greece has never practiced real austerity (cutting deficits to match receipts) since they joined the Eurozone. Not once. (By contrast, Estonia did eliminate their deficit, and as a result started recovering from The Great Recession quicker than other EU economies.) Greece merely slowed the rate at which they were going more broke (or at least pretended to). Despite being right at the edge of complete national bankruptcy, Greece continues to insist that there will be “no wage or pension cuts” for government workers.
Greece lied about their economic situation to get into the Eurozone, lied about it before the crisis broke, lied after it broke, and continue to lie now.
Keep in mind that the past four years of bank loans from the ECB have not been to save Greece. What they were really designed to do was to keep the card game running long enough to let EU insiders and favored national banks unload Greek bonds, and to reduce their exposure to Greek default risks long enough to put European taxpayers onto the hook in the inevitable event of a Greek default. They pretended to save Greece, and Greece pretended to reform. And now here we are.
The adoption of the Euro hastened and deepened Greece's crisis, but was not the central cause, which was their refusal to stop spending money they didn't have to prop up their extravagant (even by European standards) welfare state. This modern welfare state has now become more sacred to voters than the capitalist economics that make it possible. As Mark Steyn put it, "People’s sense of entitlement endures long after the entitlement has ceased to make sense."
The problem is that with declining demographics, the cradle-to-grave European welfare state is unsustainable. Greece and the rest of the PIIGS are discovering that first, but birth rates are declining all across Europe, and modern welfare states are unsustainable without a new generation to stick with the bill. Most economists believe that Greece will never be able to pay back what they've already borrowed.
Syriza was elected on a platform of ignoring basic economic reality, but they've finally run out of people willing to loan them money to spend. The risk of a Grexit is already priced into all the European markets, But leaving the Eurozone doesn't provide relief for any of the Euro-denominated debt Greece already owes, and there's no guarantee European markets would even be willing to exchange refloated drachmas for real(er) money. And since it's hard to see any sane institution buying Greek debt after a default, Greece's government would undoubtedly start printing drachmas like mad and trigger hyperinflation.
If Greece was willing to pare back its welfare state to much saner levels, they might have a chance to slowly dig their way out of the crisis. Since they refuse to, they're in for a whole lot more economic pain...
Lawrence Person (lawrencepersonh@gmailh.com (remove all "h"s to mail)
http://www.lawrenceperson.com/
This kind of ridiculous stunt is why the Germans are sick and tired of giving Greece money. They've been model world citizens and have been subsidizing Greece for decades, and trying to use this now is the ultimate in spoiled screaming teenager tactics. Nobody bankrupted Greece except Greece - as the Nordics, who actually got their shit together, very painfully, like to point out.
If I remember correctly, it was the 3rd party auditors that made the economical recommendations that led Greece to bankruptcy. In a perfect world, the financial institutions and auditors that pushed Greece onto such a road would pay for the economical disaster that they directly contributed to. But I guess that they're busy giving bonuses to C*Os. If your financial consultant (or tax consultant) makes wrong calculations/projections/recommendations for you and puts you into default, wouldn't you seek compensation from him? You did pay him to give you realistic results. How can one country's rating go down from AAA to Junk in one day?
Germany are somewhat dour and grumpy parents, and a Grexit now is much less harmful to Eurozone than it would have been two years ago, so being kicked out of the house isn't out of the question at all. I wouldn't push it too hard.
You're claiming that it's not fair, but the IMF and ECB gave Greece loans at rates that are not sustainable. I can get an EURO credit at a lower rate than Greece has. Furthermore, for Germany it's win/win. They bought out a lot of Greek companies for pennies. Think of OTE that was bought by Deutsche Telekom. I personally feel like this is looting and not helping out. Private corporations from the US, UK and Germany (financial and audit) bankrupted Greece with bad advice, while earning serious money for it (think Deloitte, S&P, etc.). When the bubble burst, the Greek government received help at ridiculously high rates from a few countries and multi-national institutions. Then came the major companies from those countries and bought everything for pennies. Afterwards, they are still complaining that the Greek can't make the payments.
I'm not German or Greek, but have been following this for years in the Economist and Bloomberg, and I know lazy scammers trying to wheedle more money rather than earn it.
I see your problem right there: you're reading it from Economist or Bloomberg. How about checking out the bare survival conditions of a lot of Greek citizens? Should Greece abandon them because Germany said austerity is the way? The Greek government's responsibility is to it's citizens. P.S.: I'm not Greek or German either. I don't live in Greece or Germany, but I try to get my news from newspapers that aren't necessarily in New York, London, Frankfurt, Tokyo or Hong Kong.
UNIX was not designed to stop you from doing stupid things, because that would also stop you from doing clever ones.
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.
That doesn't really help. If they print more than they produce, the currency will drop in value.
That's the whole point. Devaluing the currency means everyone in the country takes a pay cut, at least with respect to imports. but internal prices don't change (at least not immediately). This has the effect of discouraging imports and encouraging exports. Taken to extremes it will mean hyperinflation and financial collapse but used judiciously it's a good economic tool.
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!
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?
I agree with everything you said but will add this....
I have yet to see any country taking IMF funds come out any better in the end. The demands of the IMF are too extreme for any country it goes into to "rescue". Not to long ago the IMF went into South American countries and now they are in serious financial trouble I argue because of the IMF.
In my opinion, it would be better for Greece to declare insolvency, pull out of the Eurozone and begin again. It will be less torture than dealing with the IMF.
This is a sig. This is only a sig. Had this been an actual sig you would have been informed where to tune for more sigs.
The intention of the IMF is not to help those it gives money to. The intention is basically to control them.
When Franz Josef Strauss, a German politician who was renowned for being hardcore anti-communist and would generally fit well into the right edge of the current US Republicans, was asked why he offered a billion Marks loan to the GDR, he pretty much said "We have to make them dependent on our money like the addict to the drug".
And that's basically the IWFs function now. Though FJS could not even dictate how they may spend the money, unlike the IWF now.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Then they shouldn't have joined in the first place.
Greece shouldn't have been allowed into the Eurozone in the first place. The government at the time falsified and hacked balance sheets, economic and financial data to be allowed into the Eurozone.
I'm not rooting for the whip master. I'm rooting for being responsible and reaping the consequences of failing to be responsible.
I'm also rooting for this example of extreme, heavy handed socialism to fail in a spectacular fashion so that it can be used as a warning to my country, which is also surviving on massive deficit spending. It's bad. It shouldn't be done. Do you want to collapse like Greece? No? Okay, then stop, set up a real budget (not the "we balanced the budget because we borrowed money" bullshit), and be responsible.
Love sees no species.
The US always pays its debts when they are due. I think perhaps the problem is you don't understand how US debt works, and why it is a bit special:
So the most important thing to understand is the US doesn't go and beg people to give it money, rather it auctions debt. People come and purchase the debt. You can do it yourself on their Treasury Direct site. The US sells debt instruments to interested buyers. They are bid on, and whoever bids the lowest interest rate wins. The upshot is the US sets the terms of the debt instruments sold. They have a variety, some are as short as 4 weeks, some as long as 30 years. When you buy something, the terms of repayment are stated up front: What it'll pay, and when. There is no provision to cash out early, and you don't get to dictate any terms, you just choose what note you want to buy (if they are available).
This is how public debt works in a lot of countries, but it isn't how things go when you are getting loans from the IMF.
The other important thing is that all US debt is denominated in US dollars. A US debt instrument specifies how many dollars it'll pay out and that number is NOT inflation adjusted, except in a few very special cases. Well the US government also controls the US mint, which makes US dollars. So the US government can literally print money, and inflate its way in to payments. There are negatives to that, of course, but it is perfectly doable. The US controls its fiscal and monetary policy regarding its debt. Since all its debts are in US dollars, and since US dollars are the world's reserve currency, the US cannot face a crisis where it can't pay, unless such a crisis is internally generated (via the debt limit).
Not the case with Greek debt, it is in Euros and Greece doesn't control the Euro.
Finally, there's the fact that the US has great credit. Doesn't matter if you disagree that it should, fact is it does. Investors are willing to loan the US money for extremely low interest rates because they see it as a very safe investment. 4 week T-Bills have been going for between 0%-0.015%. 30-year bonds have been going for 2.5%-3.75%. Investors bid the interest rates very low because they desire it as a safe investment.