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Greece Rejects EU Terms
New submitter Thammuz writes: With almost all ballots counted, Greeks voted overwhelmingly "No" on Sunday in a bailout referendum, defying warnings from the EU that rejecting new austerity terms would set their country on a path out of the euro. Figures published by the interior ministry showed nearly 62% of those whose ballots had been counted voting "No", against 38% voting "Yes". "Today we celebrate the victory of democracy, but tomorrow all together we continue and complete a national effort for exiting this crisis," Greek Prime Minister Alexis Tsipras said in a televised address.
But it was all good-and-well when Greece, amongst 20 other nations, forgave Germany a massive swathe of her crushing debts following World War 2
Dude, I am greek and I work in Belgium, previously in the Netherlands, and you are so, but so wrong. If anything, the amount of time Belgians spend at work is ridiculous, even more compared to employees in Greece. They work so little, that we actually make fun of them. In fact, I don't even know where Belgium finds the money, as practically the state spends on everything there, from social security to public health.
Second, in Greece there have been traffic budget cuts, and everything was fine according to what was asked, it's just that the European plan was futile.
So, please spare me the melodrama, especially given that you come from Belgium.
People used to say that Americans are ignorant. At least, the average American cannot afford to go to the uni, plus they're ignorant of things on different continents. What is the excuse of the Europeans, who seem to have been so brainwashed, without even traces of critical judgment?
You're right in general, but regarding the remark about gettings things for "free"; can we switch the generic "Greeks" to "Greek politicians"? Because us Greeks in general have gotten jack shit for free, if anything, we've been paying for everything twice.
Free health care: passing doctors money under the table to get them to work on you.
Free education: Having to spend tons of money and time for private tutoring.
(In both cases, with a crumbling infrastructure.)
Democracy: Pretty much the same stacked 2 party system as any other nation, with extra corruption sprinkled on. I'm talking about major parties, not nutty ones with inconsiderable amounts of supporters. The currently governing party did shake things up though, broke the 2 previous major parties' taking turns, not sure if that is for better or worse, we'll found out in a few days.
And it's not like we've had it easy on taxes either, middle class families having their income taxed in half and paying out of pocket for all the things those taxes should have bee going to in the first place.
If you're looking for details and depth, Paul Krugman's Op-Ed is a good place to start. His blog posts also have much of the same content if you're having trouble with the NYT paywall.
Also, as an addition to my previous comment, you should have said 60% of Greeks "can't seem to come to terms with reality".
40% of us tried to be reasonable and play it safe with a matter of such importance.
I know gross generalizations sound cool when you're on your soapbox, but give credit where credit's due (pun intended).
What do you think this referendum was about? A "no" vote is effectively the equivalent of Greece saying "We will not accept your bailout deal, so if you do not give us a better one we are leaving the Euro". Unless the EU caves, Greece could be off of the Euro this week.
This referendum was about Tsipras trying to save his political (and possibly literal) skin. His government botched this thing so thoroughly that people are comparing Greece to a third world nation. Make no mistake, The lack of a renewed bailout was what Tsipras and his Left wing group wanted. They are communists. They want the existing capitalist system to collapse so they can build a new communist organization where Greece once stood. Given all of the various options available to Greece, this might not be that bad an option all things considered, but make no mistake, The citizens of Greece are going to see a dramatic reduction in standard of living no matter what the deal on the table is, or who is doing the offering. The only things that can be done for Greece now, are to make some kind of attempt to get the money back from the wealthy Greeks who took it and subsequently tucked it away in foreign banks where the Greek government couldn’t get at it even if they weren't too corrupt to bother, and try to keep the runaway income inequality from becoming institutionalized.
The irony of all this is that the Greek people themselves created this mess by electing governments that would promise anything, and never deliver. They have demonstrated perfectly why democracy is a failure, even while being a shining beacon of it. Like any other kind of government, democracy is subject to the same corruption that is the hallmark of all bad governments. It is funny that the birthplace of democracy should be such a prime example of its most potent failures.
I wish I had a good sig, but all the good ones are copyrighted
That did happen, but it's not like anyone had a crystal ball. It was that we had all seen the results of the 2 major parties' work over the decades and they kept making matters worse. A change was needed. Who the hell knows what's going to happen now.
Not even the people in charge do, from any side. Obviously the austerity measures that have already been implemented had a negative impact, making it impossible for the country to grow economically and pay its outstanding debts.
This is a seriously complicated and screwed up situation and everyone just keeps blaming everyone else (and depending on who you ask, even themselves).
How quickly you forget the unlimited swap lines the Fed opened for European banks, including the ECB, during the most recent financial crisis. You would be insolvent now if it weren't for the Fed's largesse, yet you criticize Greece for asking to borrow a tiny fraction of the amount you borrowed? As Bagehot said, "Men of business have keen sensations but short memories."
Explain why a structural reform of the economy cannot be performed in parallel with austerity. Greece owe 300 billion euros to other european countries and there was 390 billion euros on the table to sustain Greece until 2020. That's the deal they refused. Explain us how Greece will now find someone willing to lend them more money at better conditions than the dead deal? How this referendum result has given Greek govt a better position to negociate with its partners?
Achille Talon
Hop!
The Marshall Plan gave West Germany almost 4 times as much as Greece.
'funny' fact is, it's a US-bank that started this whole Greece in the EU thing.
Obviously it could only be Goldman Sachs and they made a lot of money on this.
People have been dying in Greece because of budget cuts for more than 3 years.
This really needs to stop.
New things are always on the horizon
But it was all good-and-well when Greece, amongst 20 other nations, forgave Germany a massive swathe of her crushing debts following World War 2 [news.com.au]
The alternative was to set up the exact same conditions in Germany that lead to the rise of the Nazis. The German people are an industrial people. Much like the Americans, the harder you try to keep them down, the stronger they become. Had the Allies not saddled Germany with crushing debts post WWI (a war which Germany did not start mind you), there could have been no rise to power of the Nazi party, and would probably not have been a second world war.
Germany’s debts were unjustly forced upon them as a result of loosing a war for which they had only marginally more responsibility than any other nation. Greeces debts are the result of internal mismanagement. In spite of that, the other nations of Europe including Germany had made concerted attempts to help Greece. Like a concerned parent however, a condition of the assistance was / is demonstrating fiscal responsibility by not wasting the money. This was especially important given Greece's well earned reputation for corruption. The European nations had absolutely no desire to line the pockets of the corrupt in an attempt to help the Greek people. Greece promised a lot of things, but failed to deliver, and is being petulant about it to boot. Time for some tough love. Cut them off, and post signs at the borders: Let that be a lesson to you.
I wish I had a good sig, but all the good ones are copyrighted
Pretty silly. They owe money to other European citizen, not to banks. The banks are just the convenient intermediate here. They owe a total of 300 billion euros to other european countries. I don't know how devaluation of the drachma will help here, there is a limit on the amount of olives and feta cheese I can eat. Getting paid in monopoly money won't help neither to reimburse any debt in euros. And you are wrong, they have no budget surplus now. They still need to borrow money to meet this month's end obligations.
Achille Talon
Hop!
At the time Syriza came to power the Greek economy had started growing again, albeit slowly, and the government had a primary budget surplus. This was despite that many of the obvious reforms Europe wanted hadn't been done.
Yes, the economy had shrunk a lot. No surprise - a big chunk of the Greek economy was simply jobs programs created by the state in order to buy votes. No way to fix Greece without jettisoning that part. But the reforms are mostly common sense and if Greece had stuck with them, the turnaround that was underway could probably have continued. But - they voted for Syriza instead. Syriza immediately started undoing the reforms of the previous government and, guess what, pushed Greece further under water.
So just offer Greece the same deal we offered post-NAZI Germany.
It was done already. Both partial forgiveness and extending deadlines, that no other country got. Get your facts straight. And in the end, it wouldn't matter, at this point. They lied in the Euro reports to get onboard (yah ,everyone manipulates numbers, but they were obvious artists) to hid the problem. And in 10 years, they'd be - again - at this point.
The population of Germany was about 10 times that of Greece. The typical German got about 40% of the typical Greek.
And we Americans financed the whole thing. You're welcome.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
Greece LIED/MANIPULATED their financial reports to get credits. You can't blame banksters for that.
Central banks are not funded by taxpayers. The IMF for example was funded by the US in a budget-neutral manner, as an exchange of assets. Translation: the IMF's money is created out of thin air. That the IMF won't give Greece any of their created money is shameful, sociopathic, criminal, and utterly unnecessary.
That is just plain asinine. Money doesn't come from nothing. Even wall street isn't that far out of touch with reality. If there is value there, it came from something. Consequently it is funded by something. Even if the money was printed and then given to the IMF, the moment the money was printed, the value it has came from devaluing all of the other money in circulation. In the case of the IMF, it is funded by the countries that are its members
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I'm not from Macedonia, although I know people there. Both of your sides need to read up on your history. Macedon was located between the traditional Greek city-states and the Thracian tribes (and others like the Illyrians), and had a culture and language closer to that of the Greeks but with strong Thracian and Illyrian influence (for example, they used both Greek, Thracian, and Illyrian names). The ancient Macedonians sought recognition as "Greek" from their southern neighbors, as Greece was the heart of wealth and culture; by contrast, the ancient Greeks debated heavily among themselves whether Macedonians were actually Greeks or not and many were not willing to accept them. The issue was only settled they were conquered by Philip (obviously not wanting to say that they had been conquered by barbarians ;) ) The Macedonian leaders' habits of adopting the cultures of the countries that they conquered made it a relatively moot point anyway. Macedon was near present day Thessalonica. The country of Macedonia's claim to the history of Philip and Alexander is pretty weak; they did not extend their empire particularly far up the Vardar / Axios (at the time, Illyria), and where they did they stayed near the river. However, future rulers of Macedonia did. By the time of the Roman conquest, what was Macedonia had become modern Macedonia plus modern Albania and the northern half of Greece. This become the Roman province of Macedonia, which existed for hundreds of years. Classical Greece remained its own separate entity under Roman control, Achaia.
Let's repeat: Modern Macedonia was the center of the Roman province of Macedonia for hundreds of years. Yes, they have a right to the name.
During the Byzantine times, a series of waves of Slavic invaders (the most powerful being a later wave, the Bulgars) moved into the area, overrunning not just today's Macedonia, but the entire interior of Greece. Their control of these areas lasted hundreds of years and they interbred with the local populations. Greek speakers retained control of the coasts, and eventually re-expanded back into the interior; the populations there were subsequently re-Helenized.
The area that is modern day Macedonia was subsequently traded off between one empire and the next all the way up to the modern period. Greece, after gaining its independence from the Ottomans (again, initially only in the southern portion of of what is modern Greece - the part that was traditional, pre-Macedonian-era Greece), progressively took over Ottoman lands to the north and northeast in the 1800s, expanding into the area formerly occupied by the city-state of Macedon, and even the areas once occupied by the Thracians. These areas were steadily Helenized, especially in the 1920s with the influx of large numbers of Anatolian Greek refugees - 270 thousand in Thessaloniki alone.
The basic summary of it is: there are no ancient Macedonians anymore, and nobody has a "pure" claim on the name. But both sides have ancient Macedonian "breeding". Neither speak the ancient Macedonian language (even the ancient Macedonians stopped speaking their language by the 3th century BC), although Greek is certainly closer. Both Greek Macedonia and the Republic of Macedonia are located in the heart of areas called Macedonia for centuries - Greek Macedonia being the heart of the original Macedonian empire, and the Republic of Macedonia being the heart of the later kingdom and the Roman province of Macedonia. So yes, you have every right to criticize the Republic of Macedonia's cooption of Alexander and Philip. But you're in the wrong when you try to act like they have no claim to the name.
The human body can be drained of blood in 8.6 seconds given adequate vacuuming systems.
They are communists
I'm sorry, was that huge bloody revolution in Greece these past few days, where a massive amount of people were killed, not televised? Or is it you're using words you don't seem to know the meaning of.
What this comes down to is simply.... investors privatize gains, and socialize losses.... and the Greek people no longer want to pay for the fascist demands of the EU, Merkel, and the Trioka. It used to be investors knew there was a risk when investing; now days we have so many fascists in the world (again) that those investors can warp governments to do their bidding.
Fascism: An authoritarian and nationalistic right-wing system of government and social organization. See also: NAZI's
AIG had the capability to pay its bailout money back, Greece does not. AIG received $180 billion in loans and paid back $205 billion in 4 years.
Interesting usage of "force": refusal to float an infinite supply of loans that will never be paid back.
The eurocrats are of course thugs, but limiting how much they'll shake down the rest of their subject citizens to subsidize Greece is not a great example of their thuggishness.
The Fed right now has $1.7 trillion in "toxic assets" on its balance sheet. In return, primary dealers got $1.7 trillion in deposit accounts at the Fed. No one else was going to lend to those dealers; they were tapped out, couldn't roll over their funding. But the Fed extended its unlimited safety net to them. Why not give Greece the same courtesy?
You'll need to do some googling, I can't teach a full econ class here. But the TL;DR version is that every country that tried austerity has recovered more slowly than every country that didn't. That and the entire justification for austerity was in that one spreadsheet that turned out to have a glaring error.
My proposal: have the Fed fund a basic income at zero cost to taxpayers. The Fed could structure it under Section 13 (13) of the Federal Reserve Act, as loans to individuals with negative interest. Thus, people would be paid to borrow.
Inflation is how taxpayers would pay for this "zero cost" proposal and it wouldn't be zero cost in reality.
Indexation of all incomes to price rises eliminates any potential inflation tax.
My take is that it would just create elevated inflation, perhaps even hyperinflation - where the money in question has no use as a store of value.
Now the Fed should apply that power of creating unlimited liquidity
The Fed doesn't have that power.
You're talking about banks in the U.S.A., right?
Signed,
a Canadian.
Newsflash, our government bailed out our own banks... within our means! No loans needed. No foreign bailouts requested or accepted.
I thought it was the promise of pensions to all and retirement at 50. Hint: you need to balance your books, whether you're a mom-and-pop store or a nation.
On a different note, I'm voting NO on my next CC bill. That will work, right?
A big one is just that the US controls both its currency and its monetary policy (meaning taxing and spending). That manes that it can take the steps it feels necessary to deal with loan repayments, such as increased inflation and/or a weaker currency. It doesn't have to convince other countries of it, it runs the currency.
An even bigger one at this point is that the dollar is the world's reserve currency. Things are settled in dollars on the international stage, meaning that the US can't have a current account crisis. It makes the dollars, things are paid for in dollars, so it can make more dollars to pay for things. It is unique in that situation. While it could change, that is how it stands.
In fact, that is part of the reason the US is able to borrow so much, and in some ways needs to. People and nations want to put their money in what they see as a safe reserve, and the dollar is one they seek. To make that possible, the US has to issue debt instruments. They have to be able to buy US dollars.
Yet another difference is that the US has high tax compliance. Most people in the US pay their taxes. There are those that cheat or outright evade, but they are the minority. That, combined with a generally quite low tax burden (compared to most first world nations the US has very low taxes), means that raising taxes in the US is a very valid strategy. People won't be happy, but they'll pay. Greece has real issues with tax avoidance which makes tax increases problematic.
Still another difference is in what the economy produces. Despite what you may have heard on whiny online sites, the US makes a lot of stuff. It is the #2 producer of durable goods after China, and only slightly. It builds lots of things that others in the world want. A good example would be microprocessors. Both Intel and AMD are US companies, and Intel fabs most of their newest CPUs in the US. The chips that run most computers in the world come from the US. Makes the economic situation rather different than a place that relies heavily on tourism.
Finally there's the issue of who owns the debt. Most of the US's debt, about 65%, is owned by the US itself. Of that a large part is intragovernmental holdings, and then debt held by the federal reserve. Of the nations that do hold US foreign debt the two largest, Japan and China, do so for strategic reasons to keep their currency cheap compared to the dollar and thus have a strategic interest in keeping that debt. Greece on the other hand, owes most of its debt to other countries.
It is far to simplistic to look and say "Oh this is all the same!" Public debt is actually a pretty complex issue.
Back in 2001 here in Argentina the government couldn't print more pesos than what was in the central bank reserves as US dollars. Provinces needed money (because some provinces subsidize others through federal taxes). So what did most provinces do? Print their own "money": bill-sized bonds with face values of 2, 5, 10, 20, 50 and 100 pesos. The federal government responded by printing their own bonds. So basically every province had their own "quasi-currencies" that were valid only within their boundaries, and they were accepted at a value of 80-90% face value, and only up to a certain amount for your shop (usually up to 50% in bonds). (Except LECOP, the federal bond, which was accepted at full face value up to 100%).
These bonds had (I think) a 10-year payout at 3% yearly. They were largely forgotten when Argentina exited the "convertibility" system that tied the Peso to the USD, and the bonds were "recalled". People quickly traded their bonds for true Pesos at the bank. But of course, the banks kept these bonds and cashed them 10 years later.
This is one of the possibilities for Greece, assuming Greece has any sort of local production to feed their people (Argentina does. We don't need to import food, but we do import most other things)
While true, you have to remember that the creditors were demanding austerity. Basically the creditors were telling Greece that the only way that they'd lend any more money is if Greece cut back its profligate spending.
If you switch to say, the US, creditors know that the US has far greater assets and far more people are interested in investing in the US that creditors don't have as much economic power.
You are correct in that austerity generally screws over the economy - see the Great Depression, and the intense spending and printing money that the US Treasury did helped pull the US economy out far faster. (And thankfully, the right part was in power to do so). However, that's because the US has the ability to borrow money REALLY cheaply because so many creditors want to invest in the US. The US also has a far better credit rating so creditors know they have a good chance of getting their money back.
Greece is different. People aren't so willing to invest. Pretty much all the institutional investors aren't giving Greece money. So the only reason Greece is getting any money is because the EU is being forced to prop them up, with little to no expectation of getting repaid. And they're demanding the government cut back because the government is spending more money than the economic activity they can generate.
In a more microeconomic sense, it's like spending more money than you earn. You'll eat through your savings, and many creditors will lend you cheap money at first. But continue on and if they see your debt approach your assets, they'll stop lending to you. You can still borrow, but now you're in the predatory lender category where you're basically renting to own at hugely inflated priced. You know, where you spend $50/month to rent a $500 PC for a couple of years before you own it. And miss a payment and it's repo time and you lose all your "equity".
The US is in the former category - they're basically balancing the books and have lots of assets. Greece is in the latter. And with the chaos caused by the past few weeks, they've effectively said "screw you" and the economy is in shambles. The only sector that still has promise is tourism, and even now tourists are seeing problems. Paying for stuff electronically may or may not be successful (because there's a run on the banks, withdrawals and transfers are limited, and Greeks need cash, because it's very hard to convert a card payment to cash).
Just go read the news articles on the front page - it's not finished, they're still building it. Been dragging their feet for decades.
This.
It's hard to convince your average European citizen what ACTUALLY happened to "their" money which went to bailout Greece - it actually went to Greece and then within days returned to European banks, predominantly French and German (a few others, but French and German banks account for the vast majority of it).
YOUR MONEY DIDN'T GO TO THE PEOPLE OF GREECE, IT WENT TO THE SHAREHOLDERS OF DEUTSCHE BANK AND BNP PARIBAS. IT WENT INTO THE BONUSES OF EXECS AT COMMERZBANK AND CREDIT AGRICOLE.
If Greece defaults on its' loans, these banks and their shareholders are out a ton of money - like an actual ton of money whether you weigh it in Gold, Diamonds, whatever. It was even worse a few years ago - before recent regulations requiring banks to deleverage and store more capital, a total Greek default would have brought these banks to their knees, some did not have enough liquidity to stay open if Greece defaulted on all it's commitments. Nowadays it's not QUITE so bad, but a lot of rich people stand to lose a lot (from their balance sheet) if Greece defaults.
The average Greek person might be a little more lazy and corrupt than others in Northern/Western Europe (see retirement age, hours worked, estimated percentage of people paying correct amount of income tax) but this situation is not all their fault. Their old government cooked the books and flat-out forged documents to get into the Euro, then started borrowing and spraying money around with a hosepipe.
The people who loaned them that money are to blame - they failed to do their due diligence and now their investment is at risk they have found a way to make all of us citizens provide free insurance for their investments.
Make no mistake, this is the fault of incompetent bankers, and almost identical to the banking crisis bailouts of major banks, except that this time the money changes hands briefly before arriving at the banks.
Greece should never have been allowed to join the Eurozone for so many reasons - the quicker they get out the better for everyone, but it will be a rough ride for a year or two in Greece, and we will need to pay them to keep migrants out - but that's OK, we've done that elsewhere...