European leaders have effectively taken a stance that supports the same austerity policies some believe to be responsible for the collapse of the Greek economy since 2010.
-------------------------
No one with any sense believes that. The Greek government borrowed money and then used to buy votes. They made large segments of the population rely on government goodies. There is, of course, a price to pay. The Greek government doesn't want to pay it but somebody must. Why shouldn't it be Greece? They are the ones who caused it.
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No one with any sense believes that. The Greek government borrowed money and then used to buy votes. They made large segments of the population rely on government goodies. There is, of course, a price to pay. The Greek government doesn't want to pay it but somebody must. Why shouldn't it be Greece? They are the ones who caused it.
1
Greek borrowing, and cooking the books to qualify to join the euro, were sovereign Greek decisions taken by democratically elected politicians. Greeks are certainly far more responsible for the ensuing mess than German taxpayers. Greece has proven worse at handling its own finances than most Third World countries (despite agricultural subsidies and structural funds from Brussels), and the near-disaster of the Athens Olympics (in contrast to the South African World Cup or the Mexico City Olympics) showcased just how dysfunctional Greece is. On the other hand, letting Greece join the euro had no economically rational basis; when major economic decisions are taken solely on the basis of politics and ideology ("ever-closer union"), the result tends to be an economic crisis. Unfortunately outright delusional denial seems to be prevailing - with Greeks blaming everyone else for their mess, and others acting as if Greece merely had a liquidity problem instead of being fundamentally bankrupt. Add in the inept Greek strategy of insulting their creditors while asking them to lend more money, and it's no wonder there are no good solutions.
4
Money rules! The leadership in Athens knows that a game of chicken will hurt Greece more, leading to a default and a possible "Grexit". Leaving the Eurozone and returning to its Drachma will only be too costly for Greece. It doesn't have the time and resources to start from the scratch. With an unemployment rate at 28-30% it will take decades for Greece's economy to regain strength. Meanwhile austerity measures, however unpopular are less devastating.
3
Merkel is a strong leader doing the only thing that makes sense. The Greek government was elected by promising something that was not possible. The Greeks have had one irresponsible government after another. Greece is like Detroit only one is a city and the other a country. The answer that the state of Michigan had was to send in an administrator and then go through bankruptcy. I doubt that is possible to send in an administrator, but Merkel should read upon how Detroit was handled.
12
Detroit wasn't destroyed by mismanagement, but by white flight. The suburbs of Detroit, even ones that lost auto plants, are quite prosperous. It is outrageous that many people in the suburbs whose livelihoods depend on Detroit don't have to take any responsibility for its problems.
2
Europe needs to think strategically; if the Chinese or the Russians come in and buy up that Greek debt, the Greeks will be in their pockets, bases and influence will follow. Europe will be sorry then. It's going to cost a lot more than the Greek debt ever did. All the Greeks want is some austerity relief, people have to eat. Get off your high horse Europe, before the Greek leave NATO too.
3
Then maybe the Greeks should reduce the size and cost of their government instead of electing people who just promise more goodies. They spent the money, now they need to pay it back.
8
It's always easier to preach from a podium. Let's say that Greeks are responsible for their current situation and fate. But let's look at the reality of the situation. One in four Greeks are unemployed. The US was in near depression when 1 in 10 Americans were unemployed. The Tea Party was born and the aftermath has been a political earthquake.
One third of shops in Athens are closed. The GDP is down by 25%. Yes there are people with money, much of which is in foreign banks. But it's is absolutely true that shoving more austerity down Greeks' throats will do nothing to better their situation. Let's go back to the US. Had it not been for QE, borrowing would have disappeared and so would have the recovery, with unemployment down to 1 in 16 Americans.
There is no chance in hell that Greeks will repay back the loans under even more austerity. The Northern Alliance (not in the Afghan one) knows that and is playing tough to teach other drifters a lesson. This alliance had a chance to improve things when Greece was run by a center right govt. They blew it and got a left wing govt instead to deal with. Both sides got what they deserved. And things will get much worse for both if they don't compromise, which is fundamentally to acknowledge that austerity will not drag Europe out of its economic hole.
One third of shops in Athens are closed. The GDP is down by 25%. Yes there are people with money, much of which is in foreign banks. But it's is absolutely true that shoving more austerity down Greeks' throats will do nothing to better their situation. Let's go back to the US. Had it not been for QE, borrowing would have disappeared and so would have the recovery, with unemployment down to 1 in 16 Americans.
There is no chance in hell that Greeks will repay back the loans under even more austerity. The Northern Alliance (not in the Afghan one) knows that and is playing tough to teach other drifters a lesson. This alliance had a chance to improve things when Greece was run by a center right govt. They blew it and got a left wing govt instead to deal with. Both sides got what they deserved. And things will get much worse for both if they don't compromise, which is fundamentally to acknowledge that austerity will not drag Europe out of its economic hole.
10
A few assumptions worth challenging - (1), that the QE has not had capital distorting effects that may cause the Mother of All Recessions; (2), that profligate cross-border socialism is sustainable when intra-border socialism is failing in the West; and, (3) that government is the engine of development and growth, when the capital engine is fueled by people, innovation, and markets - government regulation and interference can only dull that engine.
@ Barry O'Connor
"'Ordinary Greeks' elected the clowns..."
I, for one, refuse to accept responsibility for the actions of all politicians elected during my adult life. For instance, I consider myself in no way responsible for the Iraq War. I didn't vote for Bush or any of the Senators or Congressmen from my state who voted for it but I will be paying for that debacle for the rest of my life.
The average Greek citizen found himself/herself in a similar position. They likely didn't want any of the clowns running for office but, as no one else was running, they had no other choices.
Perhaps you opposed the Iraq War or some other policy, ... perhaps ObamaCare? Do you consider yourself responsible for the outcome of policies supported by politicians whom you didn't support?
"'Ordinary Greeks' elected the clowns..."
I, for one, refuse to accept responsibility for the actions of all politicians elected during my adult life. For instance, I consider myself in no way responsible for the Iraq War. I didn't vote for Bush or any of the Senators or Congressmen from my state who voted for it but I will be paying for that debacle for the rest of my life.
The average Greek citizen found himself/herself in a similar position. They likely didn't want any of the clowns running for office but, as no one else was running, they had no other choices.
Perhaps you opposed the Iraq War or some other policy, ... perhaps ObamaCare? Do you consider yourself responsible for the outcome of policies supported by politicians whom you didn't support?
7
I wonder when China comes in to become their lender of last resort...
2
The Chinese are smart business people. They don't lend money to deadbeats.
1
In all the headlines about the issues surrounding Greece, the world seems to have forgotten that the issue comes from a poorly "technocrat" designed currency that loosely brings a group of nations - with significant economic and cultural differences together - in a fragile union which a severe crisis can rupture.
Changes to the order will be difficult to put through and again expose the fragility of the union. I wouldn't want my country to be part of it!
Changes to the order will be difficult to put through and again expose the fragility of the union. I wouldn't want my country to be part of it!
The Greek national sport is tax evasion. Close that loophole and their is a roade out of the problem. Give in to the Greek demands and forgive the loans and the situation will just reappear in a few years (months?).
6
A simplistic explanation to a complex problem. While tax evasion is a problem that Greece needs to address, it will NOT happen overnight; it certainly will NOT reverse the damage done to the Greek economy from the outlandish austerity measures imposed by EU and IMF.
5
I believe that Greece agony of economical death sustained long by EU credit line of life support.
But Greece sick economy is not going anywhere, somewhere the solution is leaving Euro and liberation of economy.
There was a huge mistakes in the beginning of euro, but all power players are down playing that issues.
Greece in their life time never a better economy than Poland, Since 1990 Poland should advance much earlier than Greece in Eurozone.
Greece need reset, total reset, get rid of creditors , watching this agony is heartbreaking.
But Greece sick economy is not going anywhere, somewhere the solution is leaving Euro and liberation of economy.
There was a huge mistakes in the beginning of euro, but all power players are down playing that issues.
Greece in their life time never a better economy than Poland, Since 1990 Poland should advance much earlier than Greece in Eurozone.
Greece need reset, total reset, get rid of creditors , watching this agony is heartbreaking.
Read what is being said. Greece can not pay what they owe this month unless they borrow the money to do it.
You simply can't solve a debt problem by borrowing more. Greece should declare bankruptcy. The lenders should book the losses. Greece should then adopt a budget that makes sense including reducing expenditures to a level that is supported by income. Anything else is simply deferring the inevitable.
You simply can't solve a debt problem by borrowing more. Greece should declare bankruptcy. The lenders should book the losses. Greece should then adopt a budget that makes sense including reducing expenditures to a level that is supported by income. Anything else is simply deferring the inevitable.
16
"...European leaders...supports the same ...policies ...responsible for the collapse of the Greek economy..."
Wrong - the Greek economy did not "collapse"; the fact is, it was NEVER that good. Instead, Greeks were LIED TO by their political leaders, who invented statistics showing the countries economic situation was strong. When the real numbers were revealed, those same leaders just moved on, leaving the country in the [same] current position.
Wrong - the Greek economy did not "collapse"; the fact is, it was NEVER that good. Instead, Greeks were LIED TO by their political leaders, who invented statistics showing the countries economic situation was strong. When the real numbers were revealed, those same leaders just moved on, leaving the country in the [same] current position.
6
I agree, no doubt that Greece 1990's politicians way worse than Junta.
They sold the Greece's future, they never be forgiven.
They sold the Greece's future, they never be forgiven.
1
Nobody wants to think they got fleeced by a con man. Greece is looking like a con man to the rest of the EU. Don't lie about your finances, then say you can't repay your obligations. I'm no fan of austerity politics, but Greece has been out on a financial limb for decades now. "And when the bough breaks, the cradle will fall, and down tumbles Greece, the Euro, and all"
10
Actually, the real con men are the bankers who made those loans to Greece, took a minor haircut and SOLD these loans to the IMF and ECB. So, instead of a bunch of French and German banks taking a hit, the risk was transferred to the remainder of EU.
6
Dimitri in Wilmington, VT: if you loan me money using a written contract, I have told you, in so many words, that I intend to repay you. If I avoid paying you back by continually renegotiating the original contract, for years on end, at some point, you are going to realize I am welching on my debt to you. If you have spread your risk around by selling our original contract to someone else, your doing so doesn't remove my obligation to repay the loan. In this example, I am Greece and you are the EU. Your point doesn't negate what I said.
4
"The Greek government has warned that it could run out of money this month and fail to make loan payments to creditors, thereby plunging into default."
Really?! The Greek government warns??
Greece's government finally gets what the IMF and ECB had warned it of, namely that if the Greek government did not make huge dents in corruption, tax evasion, fiscal incompetence, and trying to hire most Greeks, the government would go bust.
"Many analysts say that Greece might be forced to abandon the euro."
How long will the Greek government take to figure this one out?
How long will creditors keep encouraging Greek government escapism?
Really?! The Greek government warns??
Greece's government finally gets what the IMF and ECB had warned it of, namely that if the Greek government did not make huge dents in corruption, tax evasion, fiscal incompetence, and trying to hire most Greeks, the government would go bust.
"Many analysts say that Greece might be forced to abandon the euro."
How long will the Greek government take to figure this one out?
How long will creditors keep encouraging Greek government escapism?
8
The real story starts at the time when Greece joined the Common Market in 1973. At that time Greece was a country with a nascent industry. Greek industry and some of its agriculture was thwarted against the much more developed economies of the Western Europe. This situation coupled with easy credit and the money provided by the economic and social programs of the Union created an illusory economy in Greece. The program dictated by the Troika does nothing to alleviate this situation.
1
From reading this article, you would think that Spain has implemented much more austerity than Greece has done -- but this is not the case. The level of the primary surplus as a percentage of GDP in Greece has been truly astounding -- much, much higher than in any other EU nation. The Greeks have done austerity -- EXTREME austerity -- and it has been brutal for their economy and the well-being of their population. (Greek primary surplus was over 5% of GDP in 2013-14.) There was an article a year or so ago about Greek kindergartners not getting enough to EAT -- in the EU!
8
"The Greeks have done austerity -- EXTREME austerity..."
Really? Have the 13 pension payments every year been reduced to 12, as in the rest of the world? Or at least to 12.9?
Really? Have the 13 pension payments every year been reduced to 12, as in the rest of the world? Or at least to 12.9?
6
I'm sorry, but Greece is NOT running primary surpluses (i.e. a budget surpluses before debts are paid). It is EXPECTED to run a primary surplus by its creditors, and, in particular, by the IMF, but that's a different matter. Running primary surpluses would force the Greek government to either cut spending or raise revenue or both, and Syriza is utterly unwilling to do one or the other.
Now if you still believe that Greece is running primary surpluses, you should read this piece by Yanis Varoufakis, which he wrote last year. Enjoy...
http://yanisvaroufakis.eu/2014/04/24/greek-statistics-are-back-primary-d...
Now if you still believe that Greece is running primary surpluses, you should read this piece by Yanis Varoufakis, which he wrote last year. Enjoy...
http://yanisvaroufakis.eu/2014/04/24/greek-statistics-are-back-primary-d...
8
Anyway what does it mean to do austerity ?
If a country just can spend what it get in by taxes ?
In fact if people talk about austerity they imply, that there is no funding from somewhere else ? What is so wrong about this ?
If a country just can spend what it get in by taxes ?
In fact if people talk about austerity they imply, that there is no funding from somewhere else ? What is so wrong about this ?
3
Forgive their debts Austerity never ever in the history of mankind has it worked.
Because noone used this term Austerity before.
Germany did 50 years of austerity and is one of the most powerful and stable economies. Do you thing austerity does not describe our situation ? Well, all we did was living within our means and maintain our economy, in my opinion this is exactly austerity, and it is a worked out.
Germany did 50 years of austerity and is one of the most powerful and stable economies. Do you thing austerity does not describe our situation ? Well, all we did was living within our means and maintain our economy, in my opinion this is exactly austerity, and it is a worked out.
1
Do not call usual German life style is an Austerity, this what Germany is all about , Austerity.
A key sentence is: "People in Spain know that whether austerity may be the wrong remedy, the crisis was not caused by Germany or the I.M.F., but by local politicians." In other words, buying votes, and now they want the rest of Europe to pay for the buying of votes.
9
Greece's soverign debt problem was created by two parties; previous Greek leaders and foreign bankers in northern Europe. Any plan to equitably restructure Greek soverign debt for the long term must include concessions from both parties within their respective current capabilities. The fact the Greek government requires new loans to make payments on existing debt is undeniable evidence of debtor insolvamcy.
Therefore any restructuring of Greece's soverign debt must focus on recovery of the domestic economy and stability not unrealistic ideologies of austirity. The political consequences of a balanced restructuring of Greece's debt cannot be impacted by possible reprecussions in other EU countries with debt issues. The complexities of each EU member's historical, political, social and macroeconomic conditions makes a "one solution fits all" approach ineffectual.
The prescence of other EU nations with soverign debt issues or creditor national banks in the negotiations is addding counterproductive elements to a process requiring an impartial lender/arbitrator of last resort unencumbered by conflicts of interest. Greece cannot be expected to propose long term solutions to its debt problems and reconcile the internal political reactions of other troubled soverign debtors simultaneously. The soverign debt crisis in Europe continues to evolve and the response of the IMF and governments of foreign debtor banks must do so as well.
Therefore any restructuring of Greece's soverign debt must focus on recovery of the domestic economy and stability not unrealistic ideologies of austirity. The political consequences of a balanced restructuring of Greece's debt cannot be impacted by possible reprecussions in other EU countries with debt issues. The complexities of each EU member's historical, political, social and macroeconomic conditions makes a "one solution fits all" approach ineffectual.
The prescence of other EU nations with soverign debt issues or creditor national banks in the negotiations is addding counterproductive elements to a process requiring an impartial lender/arbitrator of last resort unencumbered by conflicts of interest. Greece cannot be expected to propose long term solutions to its debt problems and reconcile the internal political reactions of other troubled soverign debtors simultaneously. The soverign debt crisis in Europe continues to evolve and the response of the IMF and governments of foreign debtor banks must do so as well.
So Greece needs to borrow still more billions from the rest of Europe so it can make payments due now on what it has already borrowed but it wants to set the terms for this? It's a problem without a solution except one, severing Greece from the Euro.
4
Again, it amazes me the logic (or non-logic) that is applied to this situation. Lets review. Greece was running an unsustainable fiscal system predicated on its continuing ability to borrow, distributing much of the largess to its citizens through transfer payments and subsidies, etc. Then the global wheels fell off. Greece couldn't borrow. Disaster loomed, not only for existing creditors but for its people as well. The days of wine and roses were over, one way or another. The EU, ECB and IMF came to the rescue (not once but twice) and demanded in return that Greece put together a multi-year plan to live within its means. This is blackmail? Greece could have turned it down. In short, can we stop paying homage to the Leftist populists who promise to fight the evil group of lenders? It plays well in domestic circles but its bromides for the masses. Its easy to be democratic using other people's money. But as Greece is finding out, it doesn't get you very far. Demonizing the bailout bloc is easy, undeserved and ultimately counter productive. Was anyone else offering Greece a quarter of a trillion dollars?
8
Greece makes for great media material. Unfortunately the only concern of Greece defaulting is educated guess of the precedent it may set for other EU members who struggle with their debt. Greece was a corrupt run country and probably never belonged in the EU model to begin with. We should be reminded the entire EU model was hatched as a trade bloc to counter Nafta and Asia. As with most economic schemes someone excels as in this case Germany, with France tagging along and Britain still making up their mind.
1
The EU have saved itself a lot of trouble by requiring Greece to reform tax collection, liberalize closed industries, and slash its public sector before letting it borrow money, rather than as conditions of bailing it out. The pain of such fundamental and wrenching changes might have been cushioned by the buoyant economy of the early 2000s, and not have spurred Greeks to elect the populist government that vexes the Eurozone today.
1
The most fundamental issue is what fiscal policies, debt management arrangements and growth strategies will allow Greece to return to economic health in order to be able to sustain growth and eventually meet its obligations. Unless that question is thoroughly understood and the answers agreed on both sides, the rest of it short-term fiddling that will end-up helping no one. Economic history tells us that without a combination of real medium-term debt relief, pro-growth policies and an adequate social safety net there will be precious little about which to be optimistic. One would hope these questions will be the main topics of conversation between Greece and its creditors. But one wonders. It seems as if being repaid and retribution for past sins are the preoccupying themes. The economists in the room should constantly remind the politicians about the futility of focusing on sunk costs. It's only the future that can be managed.
2
"It's only the future that can be managed."
How can it be managed when the Greek government won't keep its promises? Not once, not twice, but over and over.
Unless it does what it says, there's no way to fix the problem.
And I haven't even mentioned 'moral hazard', the danger of encouraging further bad behaviour by rewarding Greece for its past bad behaviour.
How can it be managed when the Greek government won't keep its promises? Not once, not twice, but over and over.
Unless it does what it says, there's no way to fix the problem.
And I haven't even mentioned 'moral hazard', the danger of encouraging further bad behaviour by rewarding Greece for its past bad behaviour.
5
I should add, the longer it takes to come to terms with the creditors, the more Greece will bleed due to capital flight, disinvestment and under-consumption.
7
Many posters don't understand what a Greek default would mean. In the event of a default, every single Greek bank would go under, because the ECB would be forced to cut off its emergency liquidity assistance (ELA), which currently keeps Greece's banks afloat. This is because the Greek government has forced its banks to buy billions worth of short term government bonds (so-called T-bills), which would become worthless over night. Likewise, Greece would remain cut off from the international bond market, and could only spend what it takes in in taxes. This means that the Greek government would have to slash domestic spending, because, contrary to an urban myth, Greece is not running primary surpluses. And, of course, Greece's debts wouldn't go away. They would probably be sold to private investors, which would hassle Greece for decades to come.
Another complication is that Greece can't leave the Euro without leaving the EU, which, among other things, would cost Greece billions in EU structural funds. And even if Greece were to leave the EU, it would not have the reserves to successfully start a new currency.
So Greece is in deep trouble, and only European solidarity has kept the country afloat for the last six years. The NYT doesn't acknowledge this, and neither did Syriza, which lost all it's friend because it tried to divide Europe with a silly anti-German strategy and insulted its partners, which were lending a helping hand, as incompetent proconsuls.
Another complication is that Greece can't leave the Euro without leaving the EU, which, among other things, would cost Greece billions in EU structural funds. And even if Greece were to leave the EU, it would not have the reserves to successfully start a new currency.
So Greece is in deep trouble, and only European solidarity has kept the country afloat for the last six years. The NYT doesn't acknowledge this, and neither did Syriza, which lost all it's friend because it tried to divide Europe with a silly anti-German strategy and insulted its partners, which were lending a helping hand, as incompetent proconsuls.
12
If Greece defaults and accepts serious help from Putin, it will have trouble remaining a sovereign nation. That would be a problem for Europe and the United States as well as Greece.
It would be a worst case scenario for Putin. Do you really think the russians can finance the greeks ? Do you remember why the warsaw pact collapsed ?
Don't fear the russians, it would be a very short honeymoon.
Don't fear the russians, it would be a very short honeymoon.
8
The USSR supported many basket cases and ended up a basket case itself. Putin is not our friend or Europe's, but he has learned from the USSR's mistakes.
1
Just what is a "populist threat"? My reading indicates a "populist threat" in a democratic nation is the people speaking to the current leadership. It really doesn't bode well when officials view the voters who put them there as the enemy.
5
In the case of Greece, "Populist Threat" is when a naive populace tells the government to implement policies which sound like they will benefit "the people" but in reality are either counterproductive or downright impossible. Think Venezuela - those fuel subsidies sure are a blessing. Think Tea Party - let's just default on the national debt, what harm can it really do? And for Syriza, what are they going to pay those inflated pensions with when nobody will loan them money? Default will provide temporary relief, but guarantee much more pain down the road.
If pensions remain high, but are not paid, is that not austerity?
I think that corruption and dysfunctional institutions are probably far more of a problem in Greece than austerity, but austerity is what the voters rejected.
If pensions remain high, but are not paid, is that not austerity?
I think that corruption and dysfunctional institutions are probably far more of a problem in Greece than austerity, but austerity is what the voters rejected.
Greece (and Krugman) simply states that austerity doesn't work, ignoring the fact that it worked very well in the other states. Spain and Ireland are the economic frontrunners by now. Increasing GDP and hiring again after the early contraction.
Other states implemented austerity measures by themselves to get their finance back on track like Germany in the early 2000s, the baltic state mid 2000s and most recently Finland which elected an austerity government. Why should these governments support Greece if it's not willing to implement reforms?
Instead of tackling corruption Syriza gave high paid jobs to its relatives (e.g. the cousin of Tsipras and the nephews of the deputy prime minister). Of the 2062 names on the Lagarde list of tax cheats only 49 have been investigated till now.
Varafoukis claims this to the lack of qualified investigators. But instead of hiring new tax inspectors, Syriza hires Syriza-supporting cleaning women and TV presenters.
Greece takes the GDP of 2009 as reference, but this GDP was achieved by bloating the public sector, increasing salaries and pensions and running a deficit year after year till it couldn't be financed any longer.
The solution to Greeces malaise can't be pouring ever new money into this leaking bucket, but a complete overhaul by implementing reforms.
Other states implemented austerity measures by themselves to get their finance back on track like Germany in the early 2000s, the baltic state mid 2000s and most recently Finland which elected an austerity government. Why should these governments support Greece if it's not willing to implement reforms?
Instead of tackling corruption Syriza gave high paid jobs to its relatives (e.g. the cousin of Tsipras and the nephews of the deputy prime minister). Of the 2062 names on the Lagarde list of tax cheats only 49 have been investigated till now.
Varafoukis claims this to the lack of qualified investigators. But instead of hiring new tax inspectors, Syriza hires Syriza-supporting cleaning women and TV presenters.
Greece takes the GDP of 2009 as reference, but this GDP was achieved by bloating the public sector, increasing salaries and pensions and running a deficit year after year till it couldn't be financed any longer.
The solution to Greeces malaise can't be pouring ever new money into this leaking bucket, but a complete overhaul by implementing reforms.
4
Poverty in Greece is so rampant that forcing even more 'austerity' on that country tells us that Europe can not deal with the problems itself created and amplified.Saving the utopian dream of a euro based political union is what counts now, not the fate of millions of people. By a kind of primitive blaming the victim( the Greek made a mess of it, let them now suffer) the real problem is not even touched.The french and german banks that pulled Greece into its debt crisis were somehow saved by the European taxpayer (ECB), but the Greek people who had no say nor grip on the financial adventures their elites concocted are left in the cold.This may well happen to more European populations because they all lost the parliamentary power to influence their monetary foundations. Europe is ruled by the 'euro savers' and the citizens will understand in the next ten years what this means.
2
Doesn't it seem as though we're living in an age of misery? Maybe for the prosperous and lucky ones, it's the opposite. But for an awful lot of people around the world, including surprisingly large numbers here in the US, the past few years have been a non-stop struggle.
What makes it worse, if possible, is the moralizing from the rich and powerful.
Meanwhile, expenses go up and up and up and up.
There's a point beyond which you just can't squeeze ordinary people. We don't have anything left to give. And we didn't cause all these financial crises.
What makes it worse, if possible, is the moralizing from the rich and powerful.
Meanwhile, expenses go up and up and up and up.
There's a point beyond which you just can't squeeze ordinary people. We don't have anything left to give. And we didn't cause all these financial crises.
1
The problem with the "end austerity" argument as it is presented is that it is unrealistically anchored in a redistributionist plan rather than an economic development program. What Syriza represents is the degeneration of the Western left, which once fought for productive jobs and is today fighting for wealth transfers through the banking system (ECB QE, emergency liquidity assistance, capital transfers through Target II). In this way, Syriza is just a left-wing version of the finance-obsessed Western governments, who all prefer talking about money flows rather than production programs. That's why the conversation never moves on. It's a dead end approach to crisis.
1
As the saying goes you can't get blood from stone: Greece is broke and can't afford to repay their debts. There are steps they could take -- for example, they could and should reform their pension systems so that people can't retire at 50 -- but those won't make a quick difference.
If the creditors are comfortable being entirely stiffed or maybe being repaid in new drachmas -- worth whatever value a to-be Greek bank assigns them -- then they should dig their heels in because that is what they'll soon receive. If they want real repayment, in euros, then they should come up with realistic, sustainable repayment terms.
If the creditors are comfortable being entirely stiffed or maybe being repaid in new drachmas -- worth whatever value a to-be Greek bank assigns them -- then they should dig their heels in because that is what they'll soon receive. If they want real repayment, in euros, then they should come up with realistic, sustainable repayment terms.
We're talking short term pain vs long term gain if Greece leaves the eurozone.
The euro has been a benefit for bankers and multinationals corps. For ordinary citizens in every european country it has only helped inflate prices. Eurocollapse and even EU collapse would certainly not only be beneficial to the Greeks, but everyone in the perverse system. Except, of course, the many politicians and bureaucrats who parasite on it.
I've lived part-time in Europe since it was all but a twinkle in the eye. The initial intention of facilitating the movement of citizens and goods was accomplished by the mid-'80s. Then the political corruption of the original idea was introduced and the downhill ride began.
The euro has been a benefit for bankers and multinationals corps. For ordinary citizens in every european country it has only helped inflate prices. Eurocollapse and even EU collapse would certainly not only be beneficial to the Greeks, but everyone in the perverse system. Except, of course, the many politicians and bureaucrats who parasite on it.
I've lived part-time in Europe since it was all but a twinkle in the eye. The initial intention of facilitating the movement of citizens and goods was accomplished by the mid-'80s. Then the political corruption of the original idea was introduced and the downhill ride began.
1
First and foremost the Greeks have NO intentions of paying back anything. Having lived in Greece during the 1960s, it was a training camp for avoiding paying taxes by the general public. It was a national sport. It has not stopped with current generations and the new generations are learning fast.
Dealing with my insurance carrier i.e. was a real effort attempting to insure I didn't pay twice for the same coverage. This was accompanied by a joy for trying, sorry about the words, of screwing me and my Greek neighbors into doing same. Ohhh, so sorry!
So, get over it northern Europe. Let them leave and save yourself a lot of grief. The Greeks will not pay and any extension of their "loan" is victory for them.
England has it right! You can't have deadbeats scalping your economy and making any recovery that much more difficult..
Dealing with my insurance carrier i.e. was a real effort attempting to insure I didn't pay twice for the same coverage. This was accompanied by a joy for trying, sorry about the words, of screwing me and my Greek neighbors into doing same. Ohhh, so sorry!
So, get over it northern Europe. Let them leave and save yourself a lot of grief. The Greeks will not pay and any extension of their "loan" is victory for them.
England has it right! You can't have deadbeats scalping your economy and making any recovery that much more difficult..
8
In the second half of last century, Latin America was a basket case of economies prone to public debt default. This is no longer the case. Even 'serial' debtor nations (e.g Argentina and Brazil) have learned the lesson and avoid unsustainable public debt nowadays.
'Austerity' is just the cost paid by societies ruled by populist politicians/parties promising to deliver prosperity on the cheap without sacrifice. Brazil of recently re elected President Dilma Rousseff/PT is a good case in point.
After making economic policy mistakes in the first mandate, Ms. Rousseff is being forced - by credit rating agencies - to address existing economic imbalances. Particularly an unsustainable public deficit jeopardizing the country's hard earned investment grade. Not by choice but necessity, austerity is back in Brazil's macroeconomic policy in 2015.
By hook or by crook, Greece will eventually learn the Latin American lesson. Otherwise, the only alternative left is to exit the eurozone. A decision not ready to be accepted by the Greek population at this juncture.
'Austerity' is just the cost paid by societies ruled by populist politicians/parties promising to deliver prosperity on the cheap without sacrifice. Brazil of recently re elected President Dilma Rousseff/PT is a good case in point.
After making economic policy mistakes in the first mandate, Ms. Rousseff is being forced - by credit rating agencies - to address existing economic imbalances. Particularly an unsustainable public deficit jeopardizing the country's hard earned investment grade. Not by choice but necessity, austerity is back in Brazil's macroeconomic policy in 2015.
By hook or by crook, Greece will eventually learn the Latin American lesson. Otherwise, the only alternative left is to exit the eurozone. A decision not ready to be accepted by the Greek population at this juncture.
1
Keep in mind, when the inevitable "Austerity caused this", or "Austerity is a failure", that the alternative to austerity is to keep taking money from taxpayers of Germany and Northern Europe and handing it over to Greece, with no end in sight. Would we do the same for another country, to support their high percentage of civil-servants, their liberal retirement policy, and their cultural aversion to paying taxes?
8
Fact is Greece will never be able to pay its creditors 100 cents on the dollar. That is a fact. How much can it repay and at what pace? This is what the creditors are trying to determine. They know they will get a haircut, just trying to limit the losses.
3
If you go about it honestly and with the target of making your situation better, austerity works.
Even if sometimes measures are only half way, austerity has worked as one can see clearly with Spain, Portugal or Ireland.
Only if you do not, for a second, want it to work but instead rely on a "look at us, aren't we all friends" approach and only pretend to make things work, then austerity, like any other method fails.
This is what happened in Greece and this the simple truth behind the problems.
Make Greece stick to the contracts signed or close the lid on Greece and kick them out of the Eurozone.
European taxpayers have had to fund the Greece chicken games for way too long.
If Greece does not want, it does not have to, but it will have to accept the consequences.
Even if sometimes measures are only half way, austerity has worked as one can see clearly with Spain, Portugal or Ireland.
Only if you do not, for a second, want it to work but instead rely on a "look at us, aren't we all friends" approach and only pretend to make things work, then austerity, like any other method fails.
This is what happened in Greece and this the simple truth behind the problems.
Make Greece stick to the contracts signed or close the lid on Greece and kick them out of the Eurozone.
European taxpayers have had to fund the Greece chicken games for way too long.
If Greece does not want, it does not have to, but it will have to accept the consequences.
8
Perhaps a fair start to these negotiations would include payment for the Greek antiquities looted over the last couple of centuries by european nations. The Elgin Marbles would make a nice dent in the Greek debt and I'm sure France and Germany would be happy to write off the fair market value of their trophies.
And, while the United States does not have a first hand dog in this situation, we are blessed with several billion dollars of Greek culture for which no Greek was ever paid a single drachma. My own, single, Athenian tetradrachma was purchased from an American auction house without a single Attic name in its staff, and since it presence on my desk is an unending source of joy, I'm willing to kick back a fair fraction of its value to contemporary Athens.
Please send forwarding address.
And, while the United States does not have a first hand dog in this situation, we are blessed with several billion dollars of Greek culture for which no Greek was ever paid a single drachma. My own, single, Athenian tetradrachma was purchased from an American auction house without a single Attic name in its staff, and since it presence on my desk is an unending source of joy, I'm willing to kick back a fair fraction of its value to contemporary Athens.
Please send forwarding address.
Of course, there are lots of claims that could be advanced against Greece (which insists Macedonia is part of Greece) for actions by Alexander the Great. Let the (lawyer) games begin!
" European leaders have effectively taken a stance that supports the same austerity policies some believe to be responsible for the collapse of the Greek economy since 2010."
It's not the austerity policies that were responsible for Greece's collapse but decades of mismanagement, overspending and corruption by successive Greek governments. Greece's attitude is like someone who issues a check without funds and then blames the creditor when the check bounces. The word "austerity" is a red herring. The more accurate description of this policy is "living within your means". Governments are not different from individuals or businesses and, if you fail to live within your means, you will have to accept the consequences and not blame everyone else for our problems.
It's not the austerity policies that were responsible for Greece's collapse but decades of mismanagement, overspending and corruption by successive Greek governments. Greece's attitude is like someone who issues a check without funds and then blames the creditor when the check bounces. The word "austerity" is a red herring. The more accurate description of this policy is "living within your means". Governments are not different from individuals or businesses and, if you fail to live within your means, you will have to accept the consequences and not blame everyone else for our problems.
8
The thing I find hard to understand is the debtor makes demands of the creditor? I buy a house under contract to repay loan. If things go south, I can restructure the loan but am not in a position to DEMAND anything. The loan is my responsibility. It really is thy simply.
6
Despite the efforts to form a true union of European states into a national entity, it is clear that Europe remains seriously divided on many important issues that will, unless satisfactorily solved, will seriously disrupt, if not completely destroy, the dream that Europe can some day become a true nation. Greece is just the tip of the iceberg, and, even though it is a small part of the whole, its problems could become the catalyst for the break up of the EU. The UK's departure would be a bigger blow, but Greece's departure could provide the road map and the incentive for a UK departure. If that occurs, the future of the EU would be in serious jeopardy.
1
The EU finance ministers opposition to ANY proposal by the Greek government is obvious. First if Greece decides on GREXIT it will cost the Euro-nations around 280 billion Euro's which no finance minister or PM wants to tell its taxpayers. For Germany it would mean between 60-80 billion euro's and France about 40 billion euros, the Netherlands 14 billion and so on. Besides EU Finance Ministers would lose all their credibilities and so does the EU.
Secondly, the European Union is NOT popular with European citizens, Cameron was re-elected probably because of Brexit and many Euro-nations are not happy with the lack of leadership in Brussels since 8 years of recession, 23 million unemployed or 12% of the 460 million inhabitants, no economic growth but a lot of talks - 8 years - but NO decisions and/or concrete action to turn the EU economy around. So after Grexit we could see other nations joining Greece such as Portugal, Italy and Spain.
On top of that Greece has approached Russia for help and signed a gas deal together with Turkey to supply gas to the EU. Greece will invest $ 2 billion on this pipeline eventually employing 20.000 people.
Secondly, the European Union is NOT popular with European citizens, Cameron was re-elected probably because of Brexit and many Euro-nations are not happy with the lack of leadership in Brussels since 8 years of recession, 23 million unemployed or 12% of the 460 million inhabitants, no economic growth but a lot of talks - 8 years - but NO decisions and/or concrete action to turn the EU economy around. So after Grexit we could see other nations joining Greece such as Portugal, Italy and Spain.
On top of that Greece has approached Russia for help and signed a gas deal together with Turkey to supply gas to the EU. Greece will invest $ 2 billion on this pipeline eventually employing 20.000 people.
2
I have no doubt this is a huge deal for Greece. What I don't get is why it is a big deal for the rest of the world economy and able to drive markets up and down wildly. In the interests of economic stability, it might be time to make a decision and go with it and get it over with. Instead of taking pain killers for this tooth ache maybe the tooth should be pulled? In terms of all this talk of austerity, I have yet to see any analysis of exactly what that means in Greece? What specifically are you talking about?
2
Could things be worse for Greece if it did default and exit the Euro? I am having my doubts. Default, and at least Greece can save its pride and remain a sovereign nation.
16
If you have to choose sides, it's always smart to back the stronger side in a fight. This is not related to the merits.
1
More appropriate headline: Greece, running out if other people's money.
13
Since when has "austerity" become a synonym for cleaning out corruption? What demagogic group is responsible for mis-introducing the "A" word into the Greek debacle?
2
All it takes is to be Marxist and shout that the bad bad bad capitalists are the reason why you do not want to pay back loans and why you do not want honour contracts you signed.
And soon you get not only Mr. Krugman's undying support but also a public image of being a poor victim.
This has worked in Europe for decades.
In real life however, I stick with the saying that it really puzzles me that all that Marxists understand about money is that they want it from someone else.
Or to quote Thatcher "Strange how Leftists always run out of other people's money".
So no, this is not about austerity but about rolling up your sleeves and start working, kicking out corrupt and non tax payers and start earning tax money yourself.
Not a very popular concept on Greece, but it worked in Spain, Portugal and Ireland.
Austerity is not the issue here, as you so rightly say.
And soon you get not only Mr. Krugman's undying support but also a public image of being a poor victim.
This has worked in Europe for decades.
In real life however, I stick with the saying that it really puzzles me that all that Marxists understand about money is that they want it from someone else.
Or to quote Thatcher "Strange how Leftists always run out of other people's money".
So no, this is not about austerity but about rolling up your sleeves and start working, kicking out corrupt and non tax payers and start earning tax money yourself.
Not a very popular concept on Greece, but it worked in Spain, Portugal and Ireland.
Austerity is not the issue here, as you so rightly say.
I am Liberal Democratic and favor a balanced fiscal compact in Europe is enough to put an end to corruption hands habits bad laws tax evasion and swollen bureaucracy The Greece must take watering The Euro if not let them go and set up their economic growth
1
This reminds me of a play by Molière. Monsieur Jourdain has loaned up to 4.800 pounds to a man named Dorante, who then comes to "settle accounts" with Monsieur Jourdain, and ends up borrowing 200 more, saying, its better that way, it will make a round 5.000 pounds...
8
---Syriza has no one to blame for its "lack of friends," but itself. Prime Minister Tsipris--and even more so, Finance Minister Varoufakis, were simply too "Marxist," in both affiliation and tone, to appeal much to potential allies in the EU.
---Backing Putin, and rejecting EU sanctions against Russia for its Ukraine incursions mere days after taking office didn't endear Tsipris to many leaders...nor did Syriza's ultra-aggressive tone and the diatribes against Germany during negotiations (fellow FinMins also didn't appreciate Varoufakis's condescending lectures on the failure of EU financial rules during FinMin meetings)....In short, Syriza alienated potential allies by their own words and actions.
----Perhaps a more mature, less combative political party would have had more success in rallying other EU members against austerity, but one thing is certain: "mature" and "non combative" are adjectives most would not apply to Syriza.
---Backing Putin, and rejecting EU sanctions against Russia for its Ukraine incursions mere days after taking office didn't endear Tsipris to many leaders...nor did Syriza's ultra-aggressive tone and the diatribes against Germany during negotiations (fellow FinMins also didn't appreciate Varoufakis's condescending lectures on the failure of EU financial rules during FinMin meetings)....In short, Syriza alienated potential allies by their own words and actions.
----Perhaps a more mature, less combative political party would have had more success in rallying other EU members against austerity, but one thing is certain: "mature" and "non combative" are adjectives most would not apply to Syriza.
11
Imagine - acting like a sovereign nation in the realm of the IMF and the European Banksters!
Get it over with. The money has long disappeared, gone for good. Both parties are fooling themselves and each other. One is promising repayment if given more time. They want foreign aid but packaged in face-saving "bailout". Ha!
The other is thinks repayment can happen if austerity measures are promised, re-promised, and get this: measurably implemented. Ha, ha.
Time to smell the coffee. Creditors - stay the ground, write-off losses now and don't create new ones with bailouts. Greece - exit, restart, rebuild. Both - cut the acrimony, shake hands, go your own ways.
The other is thinks repayment can happen if austerity measures are promised, re-promised, and get this: measurably implemented. Ha, ha.
Time to smell the coffee. Creditors - stay the ground, write-off losses now and don't create new ones with bailouts. Greece - exit, restart, rebuild. Both - cut the acrimony, shake hands, go your own ways.
9
This commentary is all about the solidarity of Eurozone members in the face of Greek antics so how is European unity being threatened? The NYT also errs in continuing to characterize this debate as about austerity when in fact it's really about reforming the Greek economic system. The Greeks obviously have no intention of doing this (I've lost count but have they now reneged on six commitments since Syriza took over negotiations back in February). It's possible Merkel may decide to kick the can down the road (she has a history of doing this) but really it would be better for all concerned if the bullet were bit.
15
Austerity is a failure - as an economic policy.
The problem is, that austerity is first choice in gaming theory. Every nation fears, that it must boot the bill for the folly of other nations. And they fear this transfer of own revenue so much that they rather accept a policy that hurts themself.
Europe is divided in countries, that either have left or right-populists (or both), to much austerity, and the left wins, to little, and the right gain.
The only viable way for debtor countries to relief the pressure of austerity are tight controls, but by refusing the Troika instead of taking advantage of a more stringent bureaucracy the greeks have made the other nations just more unwilling to give a leeway.
By the way, blaming austerians for the woes in greece is absolut pointless, and who does, even if he is a nobel laureate, won't be taken seriously. Greece has massive problems with corruption and tax dodging, that's the fundamental causes for their economic tailspin. Austerity is just in short saying, that other nations are not dressing up a dystopia. Of course we could spend greek out of poverty - but i wonder can people like krugman be so naive, that that wouldn't have a populistic backlash in the creditor nations ? What would be worse, Syriza in greece or Front Nationale in France and UKIP in Britain ?
The problem is, that austerity is first choice in gaming theory. Every nation fears, that it must boot the bill for the folly of other nations. And they fear this transfer of own revenue so much that they rather accept a policy that hurts themself.
Europe is divided in countries, that either have left or right-populists (or both), to much austerity, and the left wins, to little, and the right gain.
The only viable way for debtor countries to relief the pressure of austerity are tight controls, but by refusing the Troika instead of taking advantage of a more stringent bureaucracy the greeks have made the other nations just more unwilling to give a leeway.
By the way, blaming austerians for the woes in greece is absolut pointless, and who does, even if he is a nobel laureate, won't be taken seriously. Greece has massive problems with corruption and tax dodging, that's the fundamental causes for their economic tailspin. Austerity is just in short saying, that other nations are not dressing up a dystopia. Of course we could spend greek out of poverty - but i wonder can people like krugman be so naive, that that wouldn't have a populistic backlash in the creditor nations ? What would be worse, Syriza in greece or Front Nationale in France and UKIP in Britain ?
19
Mathias: your are partially correct... you need to add the complicity of big banks like Goldman saks, JP morgan chase and others for profitably pushing financing on these countries (in sweetheart deals w/ pols) that were blatantly unsustainable and just pushed the problem down to road... to the dead end they've been driven into now.
1
greece has suffered with corruption among the ruling elites since its creation in 1830 - the country has even declared bankruptcy 2 times!
how can anyone possibly expect a country with 30% unemployment to make deep payments?
unfortunately, greece joined the EU under very tough terms...in a few years, local industry was bought off and shut down by foreign investors (greece once made fridges and stoves pitsos electrical - the company was purchased by siemens and shut down) and agriculture has been nearly destroyed by EU regulations on what crop is permitted to be grown... almost no dairy production (replaced by dutch milk!)
and much of the 300 billion euro given to greece for development since the 80's were spent on:
-german leopard tanks
-german siemens submarines
-german and french anti missle technology
-french exocet missles
-mirage jets
and god knows how many mercedes automobiles...
so i don't believe that germany suffered too much with the model of united europe...
how can anyone possibly expect a country with 30% unemployment to make deep payments?
unfortunately, greece joined the EU under very tough terms...in a few years, local industry was bought off and shut down by foreign investors (greece once made fridges and stoves pitsos electrical - the company was purchased by siemens and shut down) and agriculture has been nearly destroyed by EU regulations on what crop is permitted to be grown... almost no dairy production (replaced by dutch milk!)
and much of the 300 billion euro given to greece for development since the 80's were spent on:
-german leopard tanks
-german siemens submarines
-german and french anti missle technology
-french exocet missles
-mirage jets
and god knows how many mercedes automobiles...
so i don't believe that germany suffered too much with the model of united europe...
@reminore
the greeks got a fair bargain for their money (which they borrowed), unlike the toxic paper, the US sold.
They could have spend that on Abrams Tanks and Chevrolets, and their situation were not that much different, and i bet no US-citizen would feel an obligation to spend money for that, too.
In fact no US-citizen even feel an obligation to fund greece for the damage, goldman sucks did by cooking their books.
Don't play an altruistic ally, you never have been, and never will be, you country ripped off several nations here in europe, but when it comes down to responsebility, it has been always just wallstreet and not the common joe on the street, and for yourself this is a difference that matters.
the greeks got a fair bargain for their money (which they borrowed), unlike the toxic paper, the US sold.
They could have spend that on Abrams Tanks and Chevrolets, and their situation were not that much different, and i bet no US-citizen would feel an obligation to spend money for that, too.
In fact no US-citizen even feel an obligation to fund greece for the damage, goldman sucks did by cooking their books.
Don't play an altruistic ally, you never have been, and never will be, you country ripped off several nations here in europe, but when it comes down to responsebility, it has been always just wallstreet and not the common joe on the street, and for yourself this is a difference that matters.
2
With no concern for the European unity or the likely economic/financial instability that's going to impact the eurozone, the North European leaders and bankers seem hell bent on pushining Greece to the brink by insisting on austerity that the latter can't really adopt under the present hardship conditions, and demanding debt repayment almost in an usurious manner which is nothing short of an economic blackmail through using the financial clout of the bankers.
23
Senor Sharma,
Are you aware that Greece lied its way into the EU? That after they confessed, they were given not one but two bailouts? That they failed to implement the reforms that they promised?
And that those bankers were forced to take a substantial haircut? I'm not sure of the exact amount, but on the order of 50%.
The money that's to be repaid is money that belongs to the EU taxpayers; naturally they want their money back. They weren't asked to approve the bailouts, as far as I know, and even countries like Latvia are now helping the greedy, dishonest Greeks.
It's all well and good for you to rail about the North Europeans and the 'bankers', although, as I've pointed out, those bankers took a severe drubbing. But what do you actually advise? Any reason to believe that the EU wouldn't be throwing good money after bad unless they continue to insist that the Greeks honour the agreements they've made?
Are you aware that Greece lied its way into the EU? That after they confessed, they were given not one but two bailouts? That they failed to implement the reforms that they promised?
And that those bankers were forced to take a substantial haircut? I'm not sure of the exact amount, but on the order of 50%.
The money that's to be repaid is money that belongs to the EU taxpayers; naturally they want their money back. They weren't asked to approve the bailouts, as far as I know, and even countries like Latvia are now helping the greedy, dishonest Greeks.
It's all well and good for you to rail about the North Europeans and the 'bankers', although, as I've pointed out, those bankers took a severe drubbing. But what do you actually advise? Any reason to believe that the EU wouldn't be throwing good money after bad unless they continue to insist that the Greeks honour the agreements they've made?
14
Greece has about 2% of the Eurozone's GDP, a loss of that size can and will be written off with no more than a few newspaper articles.
In the event of a GREXIT there will be no economic fallout.
What will happen is that Greece will have sunk billions of EU taxpayers money, money that the Greek taxpayer would have had to but did not pay himself (and never earned it as well).
Greece's lenders already had to write off a first haircut in 2010, worth USD 110 bn. and a second haircut in 2012, worth USD 130 bn.
There is no reason why there should be a single USD or EUR cut this time or in the future.
Greece did not, at no time at all, ever had the economic data or strength to join the Eurozone and was only accepted when it sent a fraudulent report to the ECB which since has been found out.
So the reason why Greece is in the Eurozone was a crime.
Time to stop the charade and kick Greece out of the Eurozone and write off the loss.
The markets will not have a problem with that at all, only the European taxpayers and pension systems, as they have paid for the Greek holidays for the past 10 years.
In the event of a GREXIT there will be no economic fallout.
What will happen is that Greece will have sunk billions of EU taxpayers money, money that the Greek taxpayer would have had to but did not pay himself (and never earned it as well).
Greece's lenders already had to write off a first haircut in 2010, worth USD 110 bn. and a second haircut in 2012, worth USD 130 bn.
There is no reason why there should be a single USD or EUR cut this time or in the future.
Greece did not, at no time at all, ever had the economic data or strength to join the Eurozone and was only accepted when it sent a fraudulent report to the ECB which since has been found out.
So the reason why Greece is in the Eurozone was a crime.
Time to stop the charade and kick Greece out of the Eurozone and write off the loss.
The markets will not have a problem with that at all, only the European taxpayers and pension systems, as they have paid for the Greek holidays for the past 10 years.
1
Doesn't anybody get how perversely absurd this situation is now? The so-called "bailout" funds that are being "negotiated" for will simply be returned to the institutional "lenders" while what remains of the bled-dry-by-austerity Greek economy is forced to accept the prescription of more leeches. The Germans have now forced the IMF to give up its push for Greek debt relief, so the hardline Austrians are now in full command. Under such circumstances, it is clear that Greece cannot accept the conditions -- ones which may have been crafted to set up a confrontation with Syriza that the Germars think they can "win" but will be ruinous.
27
@ Mitchell Hirsch
The Germans didn't have to do any forcing. Defaulting on debt payments to the IMF is generally considered unthinkable. Apparently you're also unaware that 80% of the Greek debt has already been transferred from institutional lenders and taken over by the troika who have extended maturities to 30 plus years and reduced interest payments to around 0.5%. Meanwhile the Greeks have largely reneged on the commitments they made when the crisis first erupted and it was revealed that Greece had lied to enter the Euro and continued to do so about the state of its public finances for the best part of a decade. As for the outcome, assuming a Greek default the only people it will be ruinous for is the Greeks.
The Germans didn't have to do any forcing. Defaulting on debt payments to the IMF is generally considered unthinkable. Apparently you're also unaware that 80% of the Greek debt has already been transferred from institutional lenders and taken over by the troika who have extended maturities to 30 plus years and reduced interest payments to around 0.5%. Meanwhile the Greeks have largely reneged on the commitments they made when the crisis first erupted and it was revealed that Greece had lied to enter the Euro and continued to do so about the state of its public finances for the best part of a decade. As for the outcome, assuming a Greek default the only people it will be ruinous for is the Greeks.
7
Mr. Hirsch, that is nonsense, even as it is written over and over again.
No one made Greece sign contracts it broke from day one and no one made Greece take on more credit just to cover day to day expenses.
And no one made Greece lie about it's economic data to join an expensive club called the Eurozone.
This is entirely Greece's fault and that includes the unwillingness to run reforms as other states have had to in the past - like Spain, Portugal and Ireland.
All of which made austerity measures work and back on their feet.
The Germans and the millions of European taxpayers, whose money and pension funds are now in danger, certainly never pressed Greece into criminal behaviour.
No one made Greece sign contracts it broke from day one and no one made Greece take on more credit just to cover day to day expenses.
And no one made Greece lie about it's economic data to join an expensive club called the Eurozone.
This is entirely Greece's fault and that includes the unwillingness to run reforms as other states have had to in the past - like Spain, Portugal and Ireland.
All of which made austerity measures work and back on their feet.
The Germans and the millions of European taxpayers, whose money and pension funds are now in danger, certainly never pressed Greece into criminal behaviour.
4
The interesting thing is that although the Leftists did not create the current economic quagmire for Greece, they did burn all their bridges with potential friends who could help continue bailing them out. Through its own childish actions, it has truly isolated itself. Too bad. I have liked every Greek I ever met.
31
I've noticed that the media in the US has headlines that consistently imply that Greek government demands are overly excessive, stubborn, and utterly senseless. Thank goodness for the lone wolf, Krugman, who tells the other side -- about how worshipers of the Austrian school have not only made it impossible for the Greek economy to advance but tore it to pieces by thrusting it into a deflationary whirlpool. Twenty six percent unemployment folks! How's that for treating your neighbor? No wonder why the history of Europe is a long history of war.
Joseph in Missoula
Joseph in Missoula
36
Moralizing is pointless. The situation is what it is. The current Greek government's whole reason for existence is ending austerity, so it makes no sense to expect them to back off from that. Meanwhile, the ECB and IMF may care about Greece but they care more about demonstrating that their deals mean something when push comes to shove. So the situation is: two trains heading in opposite directions on the same track. My guess is we'll get to see how well the firewall works.
9
Joseph, as the article says, the creditors did not create this problem. The Greeks themselves did. You are blaming the wrong people.
39
Agreed! There is corruption in Greece and in nations and banks that leant money that should not have been leant. To restore trust, the world must hold lenders responsible for bad loans. They are motivated by profit and must earn it by lending responsibly.
2
Greece was welcomed into the Euro zone with full backing from Germany. Banks from Germany lent billions to the Greek Government. As political backers and creditors, they must share the burden of their bad bid. This is what federalism is about. Abandoning Greece would be like renouncing to the whole idea of a European federation. Just like the US letting go of Detroit or New Oleans in bad times. Germans know better, especially with the help they got from the US after WW2.
22
Greece entered the Euro area under false premises, supplying - btw with the help of Goldman Sachs - fudged numbers .
It may well leave the Euro area under false premises, blaming everything on Germany whose 's household with a median wealth half of that of Greek ones, have supported Greece patiently for over a decade.
Having lived in Greece I can assure you that its political class, including Syriza, is too corrupt and too inbred to reform the country.
See
http://m.parismatch.com/Actu/Economie/Le-ministre-star-nous-a-recu-chez-...
for Syriza's left wing finance minister lavish standard of living.
It may well leave the Euro area under false premises, blaming everything on Germany whose 's household with a median wealth half of that of Greek ones, have supported Greece patiently for over a decade.
Having lived in Greece I can assure you that its political class, including Syriza, is too corrupt and too inbred to reform the country.
See
http://m.parismatch.com/Actu/Economie/Le-ministre-star-nous-a-recu-chez-...
for Syriza's left wing finance minister lavish standard of living.
43
@Nicolas
The US helped Europe with what would today have a net worth of 160 Billion Euro, and this help was not cash, but material assets and working capacity.
Yes, everybody is grateful for that. And this money was a originally a loan, that was turned into a grant.
But compare that to the 240 Billions the greek already got, and this is just on small country, not devastated by war.
There is a difference if you throw a lifeline, or keep funding a failed and corrupt country with oligarch who will tranfer billions to swiss banking accounts. It shouldn't be hard to distinguish, especially for americans, who stopped funding iraq after they have messed it up.
The US helped Europe with what would today have a net worth of 160 Billion Euro, and this help was not cash, but material assets and working capacity.
Yes, everybody is grateful for that. And this money was a originally a loan, that was turned into a grant.
But compare that to the 240 Billions the greek already got, and this is just on small country, not devastated by war.
There is a difference if you throw a lifeline, or keep funding a failed and corrupt country with oligarch who will tranfer billions to swiss banking accounts. It shouldn't be hard to distinguish, especially for americans, who stopped funding iraq after they have messed it up.
11
O.K., Iraq was a blunder, but don't throw us into the mess created by a dream of a U.S. of Europe. It was a European idea and we in the USA would just as soon it is kept that way.
And as an individual AMERICAN, you can publish this, I've had just about enough of the USA saving the world. Ya make a problem; ya solve it!
And as an individual AMERICAN, you can publish this, I've had just about enough of the USA saving the world. Ya make a problem; ya solve it!
3
Tsipras' use of the word "realistic" is the giveaway. It means his proposal will restate the idea that the creditors ought to be more accommodating. But it's virtually certain that that's the last thing on their minds. The only real question, then, is whether the Syriza government will climb down. It'd have to be a pretty far climb-down. My guess is that Tsipras' comment indicates they will not do it and default will be the consequence.
8
There is no choice but to default. The U.S. of Europe made the problem, they can solve it. The whole purpose of this new "government" (ha, ha, ha) was to deadbeat the loans and with years of game playing to avoid paying their way the Greek voters thought, oh boy, we have another way of not paying our own way.
As a Greek-American with family and friends very familiar with and living in Greece a common refrain is the failure of the Greek government to push reforms that free up the private economy. New businesses and expansion of old ones require a myriad of licenses and permits. To simplify this process means that many bureaucrats become even more redundant so those in government jobs fight tooth and nail to frustrate change.
I am sympathetic to the average Greek who has lost their job (I have relatives and acquanitances in that position) and would favor a lenghtening out of repayments while the economy improves. Other than this suggestion I cannot think of any real solution at this time to the Greek mess.
I am sympathetic to the average Greek who has lost their job (I have relatives and acquanitances in that position) and would favor a lenghtening out of repayments while the economy improves. Other than this suggestion I cannot think of any real solution at this time to the Greek mess.
36
Myriad! You said it! That is part of the a finger in every bowl attitude. It's a game and now the Greeks have realized there will be no winners; not even the sticky finger bunch. We call it five finger discount in this part of the world.
The only way there will be an end to the habits of corruption, bad laws, tax dodging and bloated bureaucracy endemic to Greece is for them to bear the full brunt of the long term results of those habits. Even now, when help is available, they are not willing to propose real change. The northern Europeans are right: if the Greeks won't propose real change, let them go over the precipice.
42
"help is available" You obviously don't get the fact that the "bailout" funds being negotiated would simply be returned to the institutional creditors. I'll leave your callous disregard for the unnecessary suffering and impoverishment of ordinary Greeks out of this.
17
@Mitchell Hirsch
If you think it is unmoral to pay back loans, you just should stop making loans.
Greece is still very happy in making loans and want to extend that (just look up for ELA, emergency loans from the european central bank).
All this 'bailouts just get returned' evil narrative has just achieved one big accomplishment, there are no private lenders for greece anymore, greece is junk status. So keep on pushing, you will learn the hard way what does it means to scare away all creditors.
If you think it is unmoral to pay back loans, you just should stop making loans.
Greece is still very happy in making loans and want to extend that (just look up for ELA, emergency loans from the european central bank).
All this 'bailouts just get returned' evil narrative has just achieved one big accomplishment, there are no private lenders for greece anymore, greece is junk status. So keep on pushing, you will learn the hard way what does it means to scare away all creditors.
10
'Ordinary Greeks' elected the clowns that got them into this mess and have being doing so for decades. The Spanish, Portuguese, Irish and others have sacrificed to bring debt into line with income and are now recovering. So why not Greeks?
11
That's what's so hard to stomach. Yet as happened here in the US and now in Europe, it is the government (Germany and Holland in particular) that act like goons collecting for those same banksters in order to ensure they aren't left one penny short of what they're "owed."
It kind of makes you wonder who's running the world? And could someone remind me again what rule of law exactly we are upholding?