A typical liberal response... encourage aquiring debt for "social" reasons and then when they realize that they cannot service the debt, call for forgivness. The inevitable result of this socialist policy is that everyone becomes a ward of the state and the state consumes all income in taxes.... no more freedom.
8
Unclear why Grexit means that the Euro fails (although it already has, but not because of Greece.) Greece is a pipsqueak. Nobody except the Greeks will even notice that it has gone. Its economy is the same size as that of Dallas.
5
Creditors ripping up I.O.U.s? Preposterous! More likely to see kings and queens abdicate, and presidents and prime ministers resign!
I agree with the sentiments of the editorial, but it isn't going to happen.
European leaders approved loans to Greece they knew were bad. Then they insisted on austerity rather than stimulus to pull Europe out of recession - a misjudgment harmful to Europe's economy and disastrous to the Greek economy.
The suggestion that they write-off hundreds of billions in bad debts is tantamount to admitting their massive misjudgments. To avoid being blamed for such bad decisions and policies, these leaders desperately need Greece to valid their acts by making payments on the debt and agreeing to more austerity.
European leaders approved loans to Greece they knew were bad. Then they insisted on austerity rather than stimulus to pull Europe out of recession - a misjudgment harmful to Europe's economy and disastrous to the Greek economy.
The suggestion that they write-off hundreds of billions in bad debts is tantamount to admitting their massive misjudgments. To avoid being blamed for such bad decisions and policies, these leaders desperately need Greece to valid their acts by making payments on the debt and agreeing to more austerity.
"For Greece, an exit could mean losing the ability to borrow from foreign investors..."
How so? The ability to borrow is largely predicated upon the ability to repay. If Greece once again becomes a monetary sovereign (of a drachma) then it will have an unquestionable ability to repay (because it can always print drachmas, but not euros). Non-sovereigns like Italy, Texas and Apple can't print money and therefore there is default risk.
The drachmas might be devalued, that's not default risk. At least the creditors would know that all the other drachma holders (i.e. wealthy Greeks) would suffer the inflation too. This is why monetary sovereigns pay lower interest.
Unless the central bank and central gov't are reasonable, there simply is no way for a state to maintain its sovereignty while in a monetary union. By gratuitously punishing Greeks for no good purpose other than to try to force the world to work the way they wish it would work (i.e. a morality play), the IMF & european central bank have demonstrated their unreasonability.
Time for Grexit.
How so? The ability to borrow is largely predicated upon the ability to repay. If Greece once again becomes a monetary sovereign (of a drachma) then it will have an unquestionable ability to repay (because it can always print drachmas, but not euros). Non-sovereigns like Italy, Texas and Apple can't print money and therefore there is default risk.
The drachmas might be devalued, that's not default risk. At least the creditors would know that all the other drachma holders (i.e. wealthy Greeks) would suffer the inflation too. This is why monetary sovereigns pay lower interest.
Unless the central bank and central gov't are reasonable, there simply is no way for a state to maintain its sovereignty while in a monetary union. By gratuitously punishing Greeks for no good purpose other than to try to force the world to work the way they wish it would work (i.e. a morality play), the IMF & european central bank have demonstrated their unreasonability.
Time for Grexit.
This referendum is the only way for Mr. Tsipras to try to save what little face he has left. He's shot himself in the foot several times already when trying to strike a deal with Angela Merkel, and certainly didn't win any friends by floating the idea that Germany start to pay war reparations. And when that didn't work, he went running off to Russia with hat in hand, only to not have that work either. Meanwhile, Greece sinks deeper and deeper in debt with little chance of getting out of that hole any time soon.
In the end, it won't be up to the 'referendum', as much as Christine LaGarde and the IMF.
In the end, it won't be up to the 'referendum', as much as Christine LaGarde and the IMF.
4
Another example of the increasingly desperate need for teaching love (doable) to humanity.
No human system can survive without a prevalent love expressed by its human participants. Einstein, knew this when he warned at the first nuclear test explosion, “The splitting of the atom has changed everything SAVE MAN’S MODE OF THINKING; THUS, (my emphasis) we drift toward unparalleled catastrophe.” Today, our civilization, including its democracies, heads away from love and toward that catastrophe. Yet, learning to love greatly is life’s purpose, not amassing “the most toys,” as many in Germany adhere to today. The beautiful science of love can be taught and learned; it must be.
Else, unparalleled catastrophe awaits us.
No human system can survive without a prevalent love expressed by its human participants. Einstein, knew this when he warned at the first nuclear test explosion, “The splitting of the atom has changed everything SAVE MAN’S MODE OF THINKING; THUS, (my emphasis) we drift toward unparalleled catastrophe.” Today, our civilization, including its democracies, heads away from love and toward that catastrophe. Yet, learning to love greatly is life’s purpose, not amassing “the most toys,” as many in Germany adhere to today. The beautiful science of love can be taught and learned; it must be.
Else, unparalleled catastrophe awaits us.
It seems that somewhere along the way in the world, we have lost the common sense logic..." you buy what you can afford." When did we decide that anything we want can be bought with credit ? What happened to that bit of character that put a mental lock on getting into debt ? Most everyone, now, is in "over their heads." I miss the days when people worked hard for a dollar, and didn't spend it foolishly. Perhaps it's time we rewind and look at the days when common sense WAS common.
1
If a single-currency has to work, it should be linked to a system for providing funding from more efficient to lower efficient states. We have that here in the US, and it kinda works - there are surplus states sending more money to DC than they get back, anddeficit states where the opposite is true.
Since this is active at all times, not only in crisis mode, the transfers are not highly visible and therefore not "painful".
Maybe something to set up over there. Greece is a deficit state. Maybe so are Italy, Spain. How many do we have ?
Since this is active at all times, not only in crisis mode, the transfers are not highly visible and therefore not "painful".
Maybe something to set up over there. Greece is a deficit state. Maybe so are Italy, Spain. How many do we have ?
1
Greece's problems stem from all the taxes that its residents evade by using foreign tax shelters and Swiss bank accounts. Does this sound somewhat familiar as one of the major sources of United States financial problems. We have hosts of corporations and individuals who avoid paying their share of the country's operating costs by whatever tricks and twists they can fashion to hide their profits and wealth overseas and thus shift their tax obligations to the rest of the tax paying corporations and citizens. This kind of game playing has finally caught up with Greece, and if the current market downtrend around the world is any indication the same game playing may now be catching up with all the rest of the economies that have allowed some tax owing individuals to ride home free on the backs of their fellows.
1
Give me a new loan that I could service the old one?!
Who is crazier here, the Greek government or her desperate creditors?
The bankruptcy is the best way to write off the bad loans and take a new direction.
Those who believed that they could make hundreds billions dollars by lending the money to the poorest people in the world are proven wrong.
You either give away a money to the people in need or you directly invest there, build your own factories, hire the local workers and improve their standard of living.
Greed has for centuries prodded the investors to make extremely shortsighted decisions like borrowing hundreds of thousands dollars to the fellow Americans to buy their homes and then exporting their factories and the jobs overseas the maximize the profits.
If it sounds too good to be true, don’t believe in it...
Greed greased the Greek troubles. Greed has harmed America too...
Who is crazier here, the Greek government or her desperate creditors?
The bankruptcy is the best way to write off the bad loans and take a new direction.
Those who believed that they could make hundreds billions dollars by lending the money to the poorest people in the world are proven wrong.
You either give away a money to the people in need or you directly invest there, build your own factories, hire the local workers and improve their standard of living.
Greed has for centuries prodded the investors to make extremely shortsighted decisions like borrowing hundreds of thousands dollars to the fellow Americans to buy their homes and then exporting their factories and the jobs overseas the maximize the profits.
If it sounds too good to be true, don’t believe in it...
Greed greased the Greek troubles. Greed has harmed America too...
1
The best way to save Greece is to reform the western capitalism.
The fundamental premise of the modern capitalism doesn’t work. The capital doesn’t create a new value. The human work and efforts create the extra value.
If the capital could create anything new, by now we would have at least three Earths.
How come?
Planet Earth consists of a lot of land. That’s a lot of capital. Since allegedly the capital can create a new value without any work, that initial capital over the last millions of years should have created a few extra planets...
The economic model of lending the money to the people without enough income so they could pay back both the principal and the interest while simultaneously slashing their wages in order to fulfill the basic principle of the free trade that we should compete with the worst paid people without basic human right is wrong and delusional.
Greece is just the beginning of great unraveling that will end up with the admission that America cannot pay off the national debt. The only way to eliminate the colossal obligations is to print the money.
Such a step will dilute the existing capital and prove that the capital cannot create the additional values without a human work and efforts.
Can you imagine the factories delivering the goods that nobody buys with the intelligent machines digging ore, transporting and melting it and the robots fabricating new cars to sit on the parking lots?
The fundamental premise of the modern capitalism doesn’t work. The capital doesn’t create a new value. The human work and efforts create the extra value.
If the capital could create anything new, by now we would have at least three Earths.
How come?
Planet Earth consists of a lot of land. That’s a lot of capital. Since allegedly the capital can create a new value without any work, that initial capital over the last millions of years should have created a few extra planets...
The economic model of lending the money to the people without enough income so they could pay back both the principal and the interest while simultaneously slashing their wages in order to fulfill the basic principle of the free trade that we should compete with the worst paid people without basic human right is wrong and delusional.
Greece is just the beginning of great unraveling that will end up with the admission that America cannot pay off the national debt. The only way to eliminate the colossal obligations is to print the money.
Such a step will dilute the existing capital and prove that the capital cannot create the additional values without a human work and efforts.
Can you imagine the factories delivering the goods that nobody buys with the intelligent machines digging ore, transporting and melting it and the robots fabricating new cars to sit on the parking lots?
Just limit citizens' beach use to 5 days a week. That should get some work done.
This is the referendum question that the Greeks will vote on:
" Should the draft agreement submitted by the EC, ECB, IMF to the eurogroup on June 25, which consists of two parts that make up their full proposal, be accepted? The first document is titled ‘Reforms for the completion of the current programme and beyond’ and the second, ‘Preliminary debt sustainability analysis’'
" Should the draft agreement submitted by the EC, ECB, IMF to the eurogroup on June 25, which consists of two parts that make up their full proposal, be accepted? The first document is titled ‘Reforms for the completion of the current programme and beyond’ and the second, ‘Preliminary debt sustainability analysis’'
1
When the euro was initially proposed, back in the day, my first question was, "How are Germany and Greece going to be on the same currency?"
The euro proves what should be obvious: you need a central bank for a currency--any currency. Having the lenders serve in that role at least to police the whole endeavor is a next-best alternative.
In no economic system of which I am aware does letting a profligate, deceiving borrower rip up its i.o.u. incentivize the borrower to reform its ways. Quite the contrary. It is an invitation to continue nasty habits.
The Germans have only just finished paying for having overpaid the Russians for East Germany--which is, at least, heavily populated by Germans--when they have been called upon to overpay for Greece--which isn't all that German and which they don't get to keep in any event. The German middle class ends up paying for both through their taxes--even as far too many in the Greek upper class and upper middle class, as studies have shown, view the payment of taxes as a sign of personal failure, ever to be avoided. The only possible reason the Germans have put up with this as long as they have is that, were they still using the mark (the former national currency), their exports would be prohibitively expensive to many.
Markets don't like uncertainty, but if Greece leaves the euro, the currency will be stronger, not weaker, and the markets should respond positively.
The euro proves what should be obvious: you need a central bank for a currency--any currency. Having the lenders serve in that role at least to police the whole endeavor is a next-best alternative.
In no economic system of which I am aware does letting a profligate, deceiving borrower rip up its i.o.u. incentivize the borrower to reform its ways. Quite the contrary. It is an invitation to continue nasty habits.
The Germans have only just finished paying for having overpaid the Russians for East Germany--which is, at least, heavily populated by Germans--when they have been called upon to overpay for Greece--which isn't all that German and which they don't get to keep in any event. The German middle class ends up paying for both through their taxes--even as far too many in the Greek upper class and upper middle class, as studies have shown, view the payment of taxes as a sign of personal failure, ever to be avoided. The only possible reason the Germans have put up with this as long as they have is that, were they still using the mark (the former national currency), their exports would be prohibitively expensive to many.
Markets don't like uncertainty, but if Greece leaves the euro, the currency will be stronger, not weaker, and the markets should respond positively.
1
Another aspect not mentioned is that much of this debt was incurred by criminal conspiracy involving knowing actions of the lenders. Two examples stand out.
1) Germany sold a vast amount of useless military gear to the Greeks, missile boats that rust in port, and used tanks at premium prices that rust in parking lots. There was much else like that. German lending was financing German sales of this stuff.
2) German lending ended in the pockets of Greek elites, and the Germans knew it would when they made the loans. Either it was directly siphoned, or it was replacement for what was stolen from Greek finances, including by the elite privileging itself not to pay its taxes.
Lenders KNEW this. They conspired in it. It was criminal. Criminals don't get paid off for their crimes by enforcement through courts and international processes.
This does not apply to all the debt, just as vulture funds don't apply to all the debt, but one or the other applies to enough of the debt to make a real difference, and to aid a solution.
1) Germany sold a vast amount of useless military gear to the Greeks, missile boats that rust in port, and used tanks at premium prices that rust in parking lots. There was much else like that. German lending was financing German sales of this stuff.
2) German lending ended in the pockets of Greek elites, and the Germans knew it would when they made the loans. Either it was directly siphoned, or it was replacement for what was stolen from Greek finances, including by the elite privileging itself not to pay its taxes.
Lenders KNEW this. They conspired in it. It was criminal. Criminals don't get paid off for their crimes by enforcement through courts and international processes.
This does not apply to all the debt, just as vulture funds don't apply to all the debt, but one or the other applies to enough of the debt to make a real difference, and to aid a solution.
10
Despite being a complicated scenario it's nothing that a bit of German bashing won't fix!
1
Mark,
While you are at it, you should mention that Greece spent even more money for arms from the US over the last 10 years. So who should be blamed for that?
While you are at it, you should mention that Greece spent even more money for arms from the US over the last 10 years. So who should be blamed for that?
3
"Even though public debt is high as a share of GDP, this year the interest that Greece is paying is very low at 3% of GDP helped by a deferral of payments on most of its loans from the euro zpne's rescue funds until 2022". The Economist June 20, 2015. The write off of "IOU's will take place but only when Greece embraces true structural reform in labor law, taxes, property rights and privatization of inefficient state enterprises.
5
The euro has never been a good idea imply because it eliminates the possibility of a country controlling its currency. But the effect of the euro has been far more onerous. It has enabled Germany to acquire the financial power in Europe that it was unable to do by starting two World Wars. Right now, its economic strength is greater than it has ever been, and it need not be responsible for people that it has conquered economically. as it might had it conquered them militarily. If the euro fails, Europe will not fail, but Germany's economic hegemony will fail. And that is a good thing, notwithstanding the upheaval through which we may all need to slog for a few years. History is worth remembering and respecting as a teacher; a strong Germany is never a good thing.
9
Why is it that the Times always wants to play and pay with other people's money? Where is there any sense of personal responsibility? Repaying one's debts is also about character. Who is responsible for the present plight of Greece? Has the NYT considered what the reaction of similar left wing parties will be when they see this kind of brinksmanship can be successful? Podemos, for example? Too often the left is pushing an agenda which involves dependence. And that is why this democrat is seriously thinking of voting for a Republican.
9
"Where is there any sense of personal responsibility?"
That phrase here as so often refers only to the responsibility of one side. Usually as here it refers to those poorest from whom a rich elite wants to take more.
How about the responsibility of the rich? They got themselves into this mess with eyes open too. They knew how the money they were lending was to be misused by some but charged to others, which is criminal conspiracy.
So lets have responsibility of BOTH sides.
That phrase here as so often refers only to the responsibility of one side. Usually as here it refers to those poorest from whom a rich elite wants to take more.
How about the responsibility of the rich? They got themselves into this mess with eyes open too. They knew how the money they were lending was to be misused by some but charged to others, which is criminal conspiracy.
So lets have responsibility of BOTH sides.
10
Good point, Bryan. When folks begin to EXPECT others to get them out of debt, rather than look objectively at WHY they own the debt, it just may be time to use the old saying " you made your bed....now you must sleep in it."
1
It's incumbent on a lender not to lend to a poor credit risk. They knew that when the loans were made with an unrealistic idea of repayment and they knew that the Greek Government of the time manipulated the books to gain entry to the Euro day 1. Conversely, Greece has a dysfunctional tax and VAT system that their own parliament has failed to fix. Now we have an impasse with sides blaming each other. Bit like a playground really.
5
Any law student knows the the Roman law: pacta sunt servanda (pacts should be upheld/ you should do as we agreed). And funnily enough it was also a Roman who reminded us: timeo Danaos et donna ferentes (I fear the Greeks, even if they bring gifts). But somehow the European ministers of finance somehow missed this at school...
History is therefore an extremely important subject in school, me thinks.
Democracy started in Greece. The Greeks elected this government, as the previous ones. You get what you elected. In this case the poverty you wanted.
I know this is very questionable. But some countries are better off not being a democracy i.e. their countrymen can not handle this freedom.
Salazar was a dictator but only through being one could he restore Portugal's finances. Spain was relatively stable under Franco. And Russia has always needed a czar, a Stalin or now a Putin.
Perhaps it is time, again, for some Greek colonels to stand up and lead their people to a more prosperous future?
History is therefore an extremely important subject in school, me thinks.
Democracy started in Greece. The Greeks elected this government, as the previous ones. You get what you elected. In this case the poverty you wanted.
I know this is very questionable. But some countries are better off not being a democracy i.e. their countrymen can not handle this freedom.
Salazar was a dictator but only through being one could he restore Portugal's finances. Spain was relatively stable under Franco. And Russia has always needed a czar, a Stalin or now a Putin.
Perhaps it is time, again, for some Greek colonels to stand up and lead their people to a more prosperous future?
2
Due to their extraordinary debt usage, banks are especially sensitive to downgrades in the sovereign debt and related devaluations, such as Greece's, in which they have invested their customers' and shareholders' funds. At 15/1 (debt/stockholders' equity) ratio goals, they have a cushion of only about [(1/(15 + 1)), or ((1/16) x 100 = 6.25%)] 6.25% of net worth to protect against volatile revaluations. And it is banks as the primary fund allocators, who allot their investors' funds among competing alternative users, that are so essential to the markets efficiently allocating this banking capital. This market revaluation of corporate stocks, debt instruments and their derivatives was foreseeable for some time. As a result of this revaluation, investors with money expertise and foresight shorted many vulnerable securities to profit from their quickly reduced values. However, investors in index funds took few or no protective measures and their investments passively followed the market downward. Average investors whose pension funds are invested in these index funds probably took a hard hit to their retirement savings plans. As a result, the distribution of incomes, a current hot topic being criticized by many editorial boards, probably worsened considerably with this reallocation of market funds. [Tuesday, June 30, 2015, 12:45 p.m.] cc
The fundamental problem with the euro is that all accrued value in the system is shared, while any debt problem is isolated and blame fixed and retribution demanded at the point of Germany's fiscal guns.
A common currency without a central bank linked to it is a disaster waiting to happen. As long as the euro persists in its present form the burdens of the zone will keep falling on those least able to shoulder them.
Best outcome: A new European convention reforming the euro so that it is tied to a central bank, which means economic hardships (as well as benefits) are shared by all eurozone members. Otherwise, let Greece exit the euro and have the whole rotten thing collapse. Then perhaps a proper monetary system can replace it.
A common currency without a central bank linked to it is a disaster waiting to happen. As long as the euro persists in its present form the burdens of the zone will keep falling on those least able to shoulder them.
Best outcome: A new European convention reforming the euro so that it is tied to a central bank, which means economic hardships (as well as benefits) are shared by all eurozone members. Otherwise, let Greece exit the euro and have the whole rotten thing collapse. Then perhaps a proper monetary system can replace it.
15
As someone living in the Netherlands, let me give you a short summary of what Euro rescue policies are about: bailing out insolvent French and German banks using Greece as a conduit, whilst forcing austerity on the poor and middle class.
That's all you need to know. The ECB/EU/IMF are trying to prop up the unsustainable financial-economic system a little bit more. Why don't people understand that in the long term, economic growth comes only from population growth, not from 'reforms' or whatever.
That's all you need to know. The ECB/EU/IMF are trying to prop up the unsustainable financial-economic system a little bit more. Why don't people understand that in the long term, economic growth comes only from population growth, not from 'reforms' or whatever.
19
Argentina was once so deep in debt that the interest exceeded the debt itself. So the debt was simply forgiven. Argentina is a much bigger country than Greece, with much more to offer in foreign trade. It also was free to devalue its currency from dollar to peso. Greece at present can't do that because it is entirely in the euro. But debt forgiveness, coupled with some kind of stimulus action to replace the always ruinous austerity policy, is the most promising avenue back to a solvent, ultimately prosperous Greece. And let's not let Putin lure Greece into connecting with Russia and disconnecting with the EU.
5
Perrsonally I think Goldman-Sachs should bail Greece out, after all they were the ones who showed the Greek government how to hide their debt.
When they finish with that they can do what the did to get themselves back in the game by using the Treasury to get the US taxpayers to pay off their debt again.
When they finish with that they can do what the did to get themselves back in the game by using the Treasury to get the US taxpayers to pay off their debt again.
8
For a succinct, straightforward explanation of the origin and consequences of the Greek financial crisis read this.
https://www.stratfor.com/weekly/beyond-greek-impasse
https://www.stratfor.com/weekly/beyond-greek-impasse
Karma is rough. For 25 years Greece has block its neighbor, Macedonia, from ascending the to EU. The ramifications for Macedonia have been devastating, 30% "official" unemployment, no access to capital, corroding political system, on an on. Generations of Macedonians raised in poverty and little hope because of Greece. Maybe this was blessing in disguise for Macedonia, given the way the EU has handling all of this too. Maybe, Macedonia should look to the Singapore's of the world as the best example for the future, not Greece or it's other toxic neighbors. But, culture is culture and the Balkans are the Balkans. Evolution is slow in our part of the world.
The Greeks have lived with Teutonic austerity for six years; they understand its implications all too well. The referendum is not about Grexit, it is about their right to control their economic destiny. Austerity is a failed economic policy with enormous social costs.
There is no plausible scenario in which the Greeks can repay all their debts. German insistence on additional cuts in Greek social welfare can only undermine Greek government and society.
Are the Greeks responsible for their huge debt? Sure, but so are the lenders who extended credit, counting on the European Commission to bail them out. But casting moral blame does not solve the economic crisis. The Greeks are bankrupt, and the only credible solutions entail a write-down of their debts.
Tsipras has shown courage in telling the truth in negotiations. The Greeks cannot and will not pay back their debts. They have proposed a credible alternative, demanding the debtors write down the debt and link debt service on the state of the Greek economy. It is the stubborn German denial to accept this reality that raises the specter of Grexit.
Tsipras is doing exactly what he was elected to do. Rather than allow the bankers to blame Tsipras personally, he is empowering his people. No doubt they will vote no. And then the decision on Grexit will explicitly rest with Juncker, Draghi, and Merkel. If the Euro collapses, they will be to blame.
There is no plausible scenario in which the Greeks can repay all their debts. German insistence on additional cuts in Greek social welfare can only undermine Greek government and society.
Are the Greeks responsible for their huge debt? Sure, but so are the lenders who extended credit, counting on the European Commission to bail them out. But casting moral blame does not solve the economic crisis. The Greeks are bankrupt, and the only credible solutions entail a write-down of their debts.
Tsipras has shown courage in telling the truth in negotiations. The Greeks cannot and will not pay back their debts. They have proposed a credible alternative, demanding the debtors write down the debt and link debt service on the state of the Greek economy. It is the stubborn German denial to accept this reality that raises the specter of Grexit.
Tsipras is doing exactly what he was elected to do. Rather than allow the bankers to blame Tsipras personally, he is empowering his people. No doubt they will vote no. And then the decision on Grexit will explicitly rest with Juncker, Draghi, and Merkel. If the Euro collapses, they will be to blame.
35
The pressure by the EU on Greek to conform is about power and control. Most all the money the EU "graciously" granted Greece went to German and French banks. Greece received only a pittance. This crisis clearly brings to light the rise, once again, of European fascism led by Germany. The psychoanalyst Carl Jung, in the 1940's warned about this rise, as a phenomenon within the German unconscious.
5
Fairness has been quoted a lot in regard to the Greek people who must ultimately bear the cost however it concludes. But who is to say the poor in the lending countries should foot the bill which is what a bail out is. More, I have no pity for creditors who chose to take the risk and lose but this does not give license for borrowers to provide false facts.
The responsible parties are ultimately they who convinced the Greek people they could live well beyond their means without repercussion..The solution lies with a willingness to recognize culpability and to find not financial solutions but political reform that holds office holders accountable.
The responsible parties are ultimately they who convinced the Greek people they could live well beyond their means without repercussion..The solution lies with a willingness to recognize culpability and to find not financial solutions but political reform that holds office holders accountable.
5
Bankers are moralistic hypocrites - make poorer countries and individuals PAY for not having enough "moral fortitude" to pay their debts. But the banks bow out of investments, allow themselves to play by special forgiving rules. Austerity has truly broken Greece but those in charge will not help Greece grow, but rather keep demanding austerity measures even as we see these measures DO NOT PERFORM.
I much prefer columnist Krugman's compassionate opinion for Greece to stop the fear vs. this banker-serving NY Times brow- beating nonsense:
http://mobile.nytimes.com/2015/06/29/opinion/paul-krugman-greece-over-th...
Let's all plan a vacation to Greece in the next few years and spend as much as we each can afford. I hope they vote to exit the Euro Zone because the country has truly been betrayed by the rich Euro countries.
I much prefer columnist Krugman's compassionate opinion for Greece to stop the fear vs. this banker-serving NY Times brow- beating nonsense:
http://mobile.nytimes.com/2015/06/29/opinion/paul-krugman-greece-over-th...
Let's all plan a vacation to Greece in the next few years and spend as much as we each can afford. I hope they vote to exit the Euro Zone because the country has truly been betrayed by the rich Euro countries.
2
What kind of a crazy economic system do we have, where the default of a country with an economy as small as that of Greece can send markets tumbling worldwide? In a sane world, we'd say, "Oh, that's too bad", and then turn to the sports page.
12
Greeks cannot have both ways. That is, stay in the eurozone enjoying the benefits of a rich man's club and play the economic-political game using the same rules of the past. A Spanish economist came up with the best description of Greece: Argentina inside the European Union.
1
The thought that a Greek 'failure' suggests a failure of the euro and Europe is nonsense. Kicking out a member of a club for not adhering to rules voluntarily accepted and oftentimes deliberately bypassed, is no less than reinforcing the probity and discipline of the club as a whole. Let it happen.
2
Greece has resisted austerity because, well.... they just don't want to suffer more. Once they default and Greece is cut off from credit and financial markets, real austerity begins. Paraphrasing Thatcher, eventually you run out of other people's money. Socialism just doesn't work.
2
It's a Greek tragedy no matter what. When a country is desperate it fears nothing, because every case scenario is polluted.
People travel to Greece and it's biggest industry is it's natural beauty. The Greeks simply do not need Europe, Europe comes to them to spend European money regardless.
Germany also does not need to throw money in a pit, so secretly Germany is relieved that this deal does not happen, Germany is better off saving it's money to build a military and navy. The German people sure do not want to loan money to Greece, because it is absurd. It's like giving your teenage son a large allowance so he can party and talk back to his parents.
Let Germany build up it's resources so it can contain Russia and thus keep American foreign policy out of europe.
In the end, Germany should go it's way and Greece theirs. Everything will be fine.
People travel to Greece and it's biggest industry is it's natural beauty. The Greeks simply do not need Europe, Europe comes to them to spend European money regardless.
Germany also does not need to throw money in a pit, so secretly Germany is relieved that this deal does not happen, Germany is better off saving it's money to build a military and navy. The German people sure do not want to loan money to Greece, because it is absurd. It's like giving your teenage son a large allowance so he can party and talk back to his parents.
Let Germany build up it's resources so it can contain Russia and thus keep American foreign policy out of europe.
In the end, Germany should go it's way and Greece theirs. Everything will be fine.
2
Disagree with idea to forgive Greece's loans and debt!
1
Due to their extraordinary debt usage, banks are especially sensitive to downgrades in the sovereign debt and related devaluations, such as Greece's, in which they have invested their customers' and shareholders' funds. At 15/1 (debt/stockholders' equity) ratio goals, they have a cushion of only about
[(1/(15 + 1)), or ((1/16) x 100 = 6.25%)] 6.25% of net worth to protect against volatile revaluations. And it is banks as the primary fund allocators, who allot their investors' funds among competing alternative users, that are so essential to the markets efficiently allocating this banking capital. This market revaluation of corporate stocks, debt instruments and their derivatives was foreseeable for some time. As a result of this revaluation, investors with money expertise and foresight shorted many vulnerable securities to profit from their quickly reduced values. However, investors in index funds took few or no protective measures and their investments passively followed the market downward. Average investors whose pension funds are invested in these index funds probably took a hard hit to their retirement savings plans. As a result, the distribution of incomes, a current hot topic being criticized by many editorial boards, probably worsened considerably with this reallocation of market funds. [Tuesday, June 30, 2015, 12:45 p.m.]
[(1/(15 + 1)), or ((1/16) x 100 = 6.25%)] 6.25% of net worth to protect against volatile revaluations. And it is banks as the primary fund allocators, who allot their investors' funds among competing alternative users, that are so essential to the markets efficiently allocating this banking capital. This market revaluation of corporate stocks, debt instruments and their derivatives was foreseeable for some time. As a result of this revaluation, investors with money expertise and foresight shorted many vulnerable securities to profit from their quickly reduced values. However, investors in index funds took few or no protective measures and their investments passively followed the market downward. Average investors whose pension funds are invested in these index funds probably took a hard hit to their retirement savings plans. As a result, the distribution of incomes, a current hot topic being criticized by many editorial boards, probably worsened considerably with this reallocation of market funds. [Tuesday, June 30, 2015, 12:45 p.m.]
A debt jubilee has always been the only viable option. But that is only viable if both the Greek government and the Greek pensioners are convinced that the end is nigh. For the younger pensioners who could survive the reduction in their pensions by returning to work must have an economy that can absorb additional workers.
Of all the possible alternatives to outright debt forgiveness austerity is the only one that is guaranteed to never work.
Of all the possible alternatives to outright debt forgiveness austerity is the only one that is guaranteed to never work.
2
Seriously, everyone knows that the nominal amount of debt is too high, but lenders have indicated a willingness to amend the terms of such debt so that the value of the debt may be cut in half ( this may be an abstraction level too high for Tsipras to understand...). But, more importantly, the greeks have been less than diligent in changing their financially irresponsible ways. Italian PM Renzi put it right :" We did not eliminate early retirement schemes in Italy in order to enable the greeks to retire early"...
2
If governments expect their citizens to adjust for financial short falls, then why don't they? Governments or should I say politicians have been promising voters what ever they want to hear in order to get their votes. Anyone with a marginal understanding of economics knows this but politicians know most voters are as dumb as a rock. I believe that a voter of any country should be required to take an exam on economics in order to vote. We would probably get better results if we gave a chimpanzee one tart for each office and what ever name the tart hit won the election. Just think about it. Look at all the money we would save and the endless campaigning the electorate has to endure. It really is that simple.
How about the investors who bought that debt at ~10 cents on the dollar get their money back? That would be a 90% haircut on the debt. That would also be the loss already taken by the real investors, not the vulture funds that bought the debt cheap. That way, no investor would be required to take any further loss.
This is no longer about "repayment." It is about massive profit for vulture funds. It is not reason to wreck a country and the Euro.
This is no longer about "repayment." It is about massive profit for vulture funds. It is not reason to wreck a country and the Euro.
15
Mark,
You missed something fairly obvious. The reason the investors were able to get the 10%, was because the "vulture funds" were willing to buy it at 10%. Otherwise, the original investors would probably have gotten zero. Would that have made you happy?
You missed something fairly obvious. The reason the investors were able to get the 10%, was because the "vulture funds" were willing to buy it at 10%. Otherwise, the original investors would probably have gotten zero. Would that have made you happy?
California and Illinois should take note. They have the same pension situation that helped Greece get into this position.
Umm, actually, most of the debt is owned by other governments, not "vulture funds."
What real reforms does the NYTs suggest. The country's economy has been ruined by the austerity called for by their creditors. The best thing for Greece would be to devalue their currency, which they can't.
7
The greek economy has been ruined by reckless spending. Greece has not balanced a budget for 42 years....The chickens have come home to roost...
No need to feel sorry for hairdressers who retire at age 50 because they work under hazardous conditions...all that hairspray..
No need to feel sorry for hairdressers who retire at age 50 because they work under hazardous conditions...all that hairspray..
Greece's economy was ruined long before austerity started.
Don't worry - its a great idea because Tsipras has said a NO is not a NO against the Euro - as he actually wants Greece to stay in the Euro - and as the other Europeans have said that a YES is a YES for the Euro. So we have this wonderful situation that whatever the Greeks are voting for - as YES or a NO it always will be a 100 percent vote for the Euro!
1
Bravo NYT! I'm an average guy with average intelligence. I think of my intellectual ability akin to a 40 watt bulb lighting the universe. Its difficult to figure out what's going on out there. But I read widely and believe that the best strategy is to listen to what people far smarter than myself have to say about complex issues like Greece.
When Paul Krugman, Joseph Stiglitz, Martin Wolf & Larry Summers and the NYT all agree that Greece is getting ground down, and that the current policies pursued by the EU is self defeating, that solution to the problem is to cut Greece some slack, I think it behooves us to listen.
I hope for the sake of Europe and the EU, if Greeks vote "yes" to stay in the EU. The EU will finally cut them some slack and forgive a large portion of their debt. By all accounts its the only way Greece will get back onto its feet which is ultimately good for everybody.
When Paul Krugman, Joseph Stiglitz, Martin Wolf & Larry Summers and the NYT all agree that Greece is getting ground down, and that the current policies pursued by the EU is self defeating, that solution to the problem is to cut Greece some slack, I think it behooves us to listen.
I hope for the sake of Europe and the EU, if Greeks vote "yes" to stay in the EU. The EU will finally cut them some slack and forgive a large portion of their debt. By all accounts its the only way Greece will get back onto its feet which is ultimately good for everybody.
8
Here's another thought: ask the Syriza government to print Greek bonds for sale to the Greek people. What would the reaction in Greece be? During times of national emergencies, other countries have issued "patriotic" bonds. Since the end of 2014, some $20 to $30 billion Euros have been withdrawn from the Greek banks. Some of those funds are now stored "in the mattress" so to speak. It would be extremely educational to the Greek voter to be asked to buy these "patriotic" bonds. The debate would be very revealing.
6
Kudos! (That type of patriotism does not exist in Greece..)
Rip up their IOU’s ? to the IMF or the Investors.
Either way it is a bad idea, forcing the investors to take a complete loss undermines the International lending(Bonds) system. The haircuts that the investors had to take as part of loan restructuring are bad enough as is.
Forgiving Greece’s loans to the IMF raises the threat of moral hazard, the other struggling members of the EU could follow suit.
If the EU does not want to bail Greece out now or create a redemption fund ,then the Greeks need to choose whether they want to stay with the Euro and prolong their suffering with the extreme austerity measures being demanded of them or exit the Euro, default on their loans and face the consequences.
Either way it is a bad idea, forcing the investors to take a complete loss undermines the International lending(Bonds) system. The haircuts that the investors had to take as part of loan restructuring are bad enough as is.
Forgiving Greece’s loans to the IMF raises the threat of moral hazard, the other struggling members of the EU could follow suit.
If the EU does not want to bail Greece out now or create a redemption fund ,then the Greeks need to choose whether they want to stay with the Euro and prolong their suffering with the extreme austerity measures being demanded of them or exit the Euro, default on their loans and face the consequences.
3
defaulting on loans does not mean that Greece gets rid of loans....
There is no bankruptcy court for countries..
There is no bankruptcy court for countries..
Austerity compliance is easier to track than tax reform; therefore...
The absurd reasoning provided by the leaders of the European banks and the political leaders of Greece's Euro-zone partners amounts to a public fleecing. The Greek economy cannot recover from what damage has already been absorbed from nearly three years of austerity. Using other, more industrialized countries (such as Italy or Ireland) as examples of the program working is balderdash. It's like prescribing chemotherapy for an 85-year-old cancer victim because it worked so well on younger patients. The supposed cure is sure to kill him sooner than the cancer. Greece is not equipped to rebound as quickly as other economies. As such, they require a more personalized regimen. They won't get it, though, so the only hope to eventual recovery is default. Get it over with.
5
Austerity is wrong as hell, but the IMF wants it because it will allow the financiers to buy up what remains after the collapse at fire sale prices. Keynes has not been proven wrong, the opposite in fact, austerity kills. It's just uncomfortable the the big banks and billionaires, who are literally making a killing in Greece.
7
Very interesting insight. You make a good point here.
Greece nor Puerto Rico did not create this mess with austerity, they did it with spending, debt and high taxes. The bills finally came due and now you want to try more Keynes theories?
1
You cannot seriously think that private creditors will forgo their payments with interest. Only if their governments guarantee their loans. Capitalism for the poor and socialism for the rich, that is the Milton Freidman way.
9
I think that the referendum is a brilliant idea. Democracy should still matter, even in the Euro Zone. I think the Greek people will vote overwhelmingly to exit the Euro and to get out from under the oppressive and counterproductive austerity measures inflicted on them primarily by Germany.
Once Greece leaves the Euro there is bound to be a period of adjustment and the break will be bad for bankers and hedge-funders but after time passes I think the people will be better off. The Euro will be a distant memory very fast.
Once Greece leaves the Euro there is bound to be a period of adjustment and the break will be bad for bankers and hedge-funders but after time passes I think the people will be better off. The Euro will be a distant memory very fast.
5
The account of the 2012 meeting between former Treasury Secretary Geithner and German Finance Minister Schäuble in "The Hard Line on Greece" (NY Times, June 29, 2015) quotes Mr. Geithner's memoir on Mr. Schäuble's view that "with Greece out, Germany would be more likely to provide the financial support the eurozone needed because the German people would no longer perceive aid to Europe as a bailout for the Greeks”. Mr. Geithner's perception of his German counterpart's argument was "that letting Greece burn would make it easier to build a stronger Europe with a more credible firewall."
The above lends weight to the Greek Prime Minister's recent accusations of deliberate obstruction of resolution of Greece's debt crisis. The negotiation tactics used by its private and institutional lenders apparently have toed the German Finance Minister's line, not to elicit Greek agreement but rather as a long-term strategy to damage Greece's economy sufficiently that it would, ostensibly of its free will, leave the EU.
In pointing to a "crucial decision" made last weekend by the E.C.B. to deny Greece further emergency lending. the article also bolsters the conclusion that Greece's creditors have all along intended to force Greece out of the monetary union. By cutting off this aid, "the E.C.B. managed to instill additional fear and panic into the day-to-day lives of the Greek people, ahead of the vote on the referendum."
Shame on those EU countries and institutions.
The above lends weight to the Greek Prime Minister's recent accusations of deliberate obstruction of resolution of Greece's debt crisis. The negotiation tactics used by its private and institutional lenders apparently have toed the German Finance Minister's line, not to elicit Greek agreement but rather as a long-term strategy to damage Greece's economy sufficiently that it would, ostensibly of its free will, leave the EU.
In pointing to a "crucial decision" made last weekend by the E.C.B. to deny Greece further emergency lending. the article also bolsters the conclusion that Greece's creditors have all along intended to force Greece out of the monetary union. By cutting off this aid, "the E.C.B. managed to instill additional fear and panic into the day-to-day lives of the Greek people, ahead of the vote on the referendum."
Shame on those EU countries and institutions.
15
Listen to Paul Krugman. The Euro is untenable in Greece, simply because the Greek economy cannot compete with those of France and Germany. Read him and weep, then re-write.
4
Krugman would have the US in he same situation as Puerto Rico, Greece and Chicago. He simply lives in an alternative universe where high debt, unbridled spending and high taxes are all great things. These events should put to rest any notion that Krugman's advice should be trusted,
1
so... european institution lent greeks money from their own, european banks, from the taxes of european citizens, then they bought that same debt and they expect the money back? That's money laundering, of course they should rip up their I.O.U.s, they already got the money back
2
What austerity? Greek government spending as a share of GDP has RISEN over the last seven years!
4
That is because austerity has caused the GDP to collapse. Spending has fallen, and there is a primary surplus.
The economy is wrecked. That is not a reason to wreck it even further.
The economy is wrecked. That is not a reason to wreck it even further.
4
Greece is a small domino in the array of world finance, but the momentum of its fall may be enough to initiate a relay of larger endangered nations and institutions tumbling successively against one another, leading to the falling over of a major part (Eurozone) of the array. Setting up all those pieces again would not be easy and the disarray of the interim could endanger other sets proximate enough to be struck, leading to more disarray, and a greater risk of uncontained panic and disorder.
That this involves a tenuous European economic and social order (the EU) on the brink of transformation or dissolution, a Balkan nation (Greece) in conflict with an emerging Central economic power (Germany) at the anniversary of WWI seems an eerie coincidence. In 1914 dominoes of an established yet fragile order fell from the force of a single event in Serbia, with “The lamps…going out all over Europe,” almost sequentially.
Until now Greece has had the false power conferred from the darkly humorous position of being so far into debt that a default is worse for your creditor than for you. As with most hostage takings, though, this one, too, could get out of hand and bring unintended consequences that domino-like follow one upon the other. A Greek-like tragedy is playing out right in front of us and no one knows how it will end.
That this involves a tenuous European economic and social order (the EU) on the brink of transformation or dissolution, a Balkan nation (Greece) in conflict with an emerging Central economic power (Germany) at the anniversary of WWI seems an eerie coincidence. In 1914 dominoes of an established yet fragile order fell from the force of a single event in Serbia, with “The lamps…going out all over Europe,” almost sequentially.
Until now Greece has had the false power conferred from the darkly humorous position of being so far into debt that a default is worse for your creditor than for you. As with most hostage takings, though, this one, too, could get out of hand and bring unintended consequences that domino-like follow one upon the other. A Greek-like tragedy is playing out right in front of us and no one knows how it will end.
Both Greece and EU are to be blamed for the mess. As many comments here suggest that Greece has massive corruption
and bloated bureauracy and a system of patronage. It
wasn't hidden and yet EU admitted Greece and German
banks lent money with inadequate risk asessment. EU
should let Greece exit. Troika's prescription of austerity
is doing nothing to grow economy and create jobs. It is
inflicting more pain on the ordinary people who didn't
benefit from massive borrowing except those who retired
early on generous pension. However, it is important to
to reconsider the policies of EU because it is not working
well. Even big economies like France and Italy are
struggling with high unemployment. Germany is doing
better on exports and having the wages frozen for years.
It is not a thriving group and decision making is cumbersome.
and bloated bureauracy and a system of patronage. It
wasn't hidden and yet EU admitted Greece and German
banks lent money with inadequate risk asessment. EU
should let Greece exit. Troika's prescription of austerity
is doing nothing to grow economy and create jobs. It is
inflicting more pain on the ordinary people who didn't
benefit from massive borrowing except those who retired
early on generous pension. However, it is important to
to reconsider the policies of EU because it is not working
well. Even big economies like France and Italy are
struggling with high unemployment. Germany is doing
better on exports and having the wages frozen for years.
It is not a thriving group and decision making is cumbersome.
2
This is a complex issue.
The euro will not fail if Greece exits. There is more risk to the euro in allowing Greece to avoid its debts and stay in the euro.
Hold the Greeks to the requirements that any country must meet to stay in the euro, then let them make their own decisions, and live with the consequences.
If they default and exit, so be it. Perhaps they can reform their economy and reenter at a later date.
The euro will not fail if Greece exits. There is more risk to the euro in allowing Greece to avoid its debts and stay in the euro.
Hold the Greeks to the requirements that any country must meet to stay in the euro, then let them make their own decisions, and live with the consequences.
If they default and exit, so be it. Perhaps they can reform their economy and reenter at a later date.
5
It's all too clear in hindsight, that having countries economically joined by a common currency, yet separately elected governance, creates a fusion of both that produces a monster. I'm reminded of the David Cronenberg film "The Fly." In that memorable film, our protagonist is a scientist working to teleport matter. All works well enough when single life forms are sent through the "telepod." By the 2nd act, a fly joins our hapless scientist in the device. The result is a grotesque fusion of human and fly DNA resulting is a mutating mess that has qualities of both. There is NOT a happy ending to this story.
Such is the case with Greece. Europe, and especially Germany, is treating Greece like a parasitic twin. They want avoid risky surgery that removing it might entail, but they want to put a sheet over it and pretend it doesn't exist. Aside from the moral implications of keeping the Greek people in a perpetual "underclass" status, there is the very real fact that Greece can NEVER hope to satisfy its debts.
The tissue of lies (on both sides!) that allowed Greece to become a partner in the Eurozone has now been exposed. It would be far better to grant Greece some permanent debt relief paid for by the whole of the EU. Unfortunately, the political consequences have made cowards of Europe's leaders. A bloody amputation is the only choice. However, open wounds like this can spread infection. Who will become sick next? Spain? Italy? Portugal? Only time will tell.
Such is the case with Greece. Europe, and especially Germany, is treating Greece like a parasitic twin. They want avoid risky surgery that removing it might entail, but they want to put a sheet over it and pretend it doesn't exist. Aside from the moral implications of keeping the Greek people in a perpetual "underclass" status, there is the very real fact that Greece can NEVER hope to satisfy its debts.
The tissue of lies (on both sides!) that allowed Greece to become a partner in the Eurozone has now been exposed. It would be far better to grant Greece some permanent debt relief paid for by the whole of the EU. Unfortunately, the political consequences have made cowards of Europe's leaders. A bloody amputation is the only choice. However, open wounds like this can spread infection. Who will become sick next? Spain? Italy? Portugal? Only time will tell.
As has been pointed out by Krugman and others, the Troika ultimatum was an offer that Syriza could neither accept or reject and survive. The purpose was to rid the Troika of Syriza and teach the Greeks who they are and are not allowed to elect. The Troika may succeed in getting rid of Syriza . . . and regret it.
Syriza won election by promising the voters they could get better terms and stay in the Euro. That having failed, who knows what the next government must promise to get elected, what it must appeal to in the Greeks.
Syriza won election by promising the voters they could get better terms and stay in the Euro. That having failed, who knows what the next government must promise to get elected, what it must appeal to in the Greeks.
this article misses the very important points of structural reforms that the EU has demanded and that Greece seperately needs. For example, there is no land registry in Greece (the only nation in Europe not to have one). Labor markets are rigid. It is very difficult to hire and fire people. The civil service is not merit (i.e., exam based). It is impossible to fire corrupt or incompetent civil servants. Clientelism and corruption are rampant. There is, de facto, no real tax service. The little there is filled with corruption.
The EU is very justifiable in its views that there be changes here. Yet the current Greek govt refuses.
The EU is very justifiable in its views that there be changes here. Yet the current Greek govt refuses.
2
Well, you give a party. Everybody comes. Then the piper has to be paid. Debt forgiveness [half was forgiven some years ago] on one side means eating the loss on the lending side. No free lunch. Fine for the Greek partygoers; bad for the German, French, Dutch, etc. who "loaned" the party money in the first place. There is nothing left to negotiate. Facts are facts. Sad, but true, contagion can proliferate. Greece should never have been permitted to join.
Care has to be taken such that Spain and Italy [the two BIG problems] don't resolve on ideas similar to Greece. Germany hasn't the resources to bail them out. France is a non sequitur in this situation.
Besides, the Euro was an imperfect concept in the first place, absent political cohesion of a sort. Europe can never "coalesce" as did the American colonies.
Care has to be taken such that Spain and Italy [the two BIG problems] don't resolve on ideas similar to Greece. Germany hasn't the resources to bail them out. France is a non sequitur in this situation.
Besides, the Euro was an imperfect concept in the first place, absent political cohesion of a sort. Europe can never "coalesce" as did the American colonies.
3
The situation in Greece is surely taxing (no pen intended).* Either all sides are wrong or all sides are right. Ordinary Greek citizens face the nasty choice of economic stabilization on untenable terms, or obligation relief that will devalue the entire country to the point of fiscal dysfunction.
For its creditors, Greece is small enough to bully but too big to fail. Some choice! No wonder Europe's best financial wunderkinds have reached a dead-end. Further posturing on both sides will fail to secure any break-through.
* I lied. The pun was intended.
For its creditors, Greece is small enough to bully but too big to fail. Some choice! No wonder Europe's best financial wunderkinds have reached a dead-end. Further posturing on both sides will fail to secure any break-through.
* I lied. The pun was intended.
Kick the Greeks out of the EU. It would be fun to watch and only strengthen the EU.
1
In the words of Haley Mills, I have a scathingly brilliant idea. Get 5 or more of the worlds richest individuals with net worths in the tens of billions. Form a consortium, each puts in say 2 billion or so, then they approach Greece and say, hey guys, we will take over and pay your debt, for that we want a tax haven and perhaps a nice little island - hey why not? Then the consortium would help -through their combined business knowledge and connections - get the country back in gear. I think this is a winner.
Unusual as your idea sounds, it is not a bad one at all.
While EU bankers argue over how to avoid a Greek default payment of $8 billion. the world's pensioners and working class investors are losing out. The global market cap is $52 trillion. Yesterday's 2% drop represents a total loss of more than $1 trillion.
This is totalitarian capitalism: all the little people take a hit to save the big banks.
This is totalitarian capitalism: all the little people take a hit to save the big banks.
4
Greece did not arrive at this cliff under cover of darkness and stealth. Being a partner in a currency and economic union left political power to each cat in the herd to fracture and destroy. The birthplace of classical history and democracy has fallen on hard times. With their soiled history the European behemoths- Germany, the United Kingdom, France, Spain, Portugal, Belgium, Austria, Hungary and Italy- are in no moral high ground space to allow this to happen. Fascism has always been a favorite European sport since the collapse of empires.
2
Isn't the notion of your first sentence unreal? Check the facts. Further, I saw politicians in Portugal (and Argentina) admitting "we both politicians and the people made mistakes,n ow we must unite and help the country". Find one Greek politician who did the same.
Definitely not a good idea. Greece is no Haiti.
Greek politicians of all parties need a clear message that their typical and sometimes suave monkey business no longer works. At the same time, Greek voters need a nudge to quit putting their faith in such latter-day klephts.
When trickiness no longer gets them anywhere, Greeks will figure something out.
Greek politicians of all parties need a clear message that their typical and sometimes suave monkey business no longer works. At the same time, Greek voters need a nudge to quit putting their faith in such latter-day klephts.
When trickiness no longer gets them anywhere, Greeks will figure something out.
2
Beware of Greeks demanding gifts.
6
This is new to me and a good one!
Reckless spending, borrowing and entitlement programs made Greece what it is today. Puerto Rico is in the identical situation for the same reason. Krugman needs to wake up and start living in the real world. The gravy train does end and it always ends badly.
7
You know James, I had similar views until recently, but after reading excerpts of Krugman's Economic Textbook which cost $178 (I haven't bought it yet, but probably will.) I realized that this is a man who is not some wannabe talking head who doesn't know what he's talking about. The guy is super smart and knows what he's talking about. (Not to mention that he's got a Nobel Prize.) The other thing is that other highly respected Economists Joseph Stieglitz, Martin Wolf, Larry Summers among a few echo his views.
All of these people, suggest that driving Greece into perpetual poverty serves absolutely no purpose and actually threatens the world economy.
I think like bankruptcy for corporations and people, sometimes it is necessary to wipe the slate clean and begin over again.
After what Greece has gone through I very much doubt that it will be profligate and irresponsible in the future.
All of these people, suggest that driving Greece into perpetual poverty serves absolutely no purpose and actually threatens the world economy.
I think like bankruptcy for corporations and people, sometimes it is necessary to wipe the slate clean and begin over again.
After what Greece has gone through I very much doubt that it will be profligate and irresponsible in the future.
1
No. Greece, like its Mediterranean Eurozone neighbors Italy, Spain and Portugal, was the victim of an overpriced euro that drove tourists to non-euro countries. Athens watched helplessly as tourists chose to go to Istanbul instead. France was hit too by the expensive euro, but its larger, wealthier and more diversified economy saved it from some of the damage. Even so, unemployment in France is very high.
The euro has now returned to a more reasonable and realistic level, but the damage has been done. Even without the interference by the austerians in Brussels and Berlin, recovery in Greece would take years. But the destruction wrought by the unelected dictocrats in Brussels has destroyed an entire generation -- and unfortunately shows no sign of ending.
The euro has now returned to a more reasonable and realistic level, but the damage has been done. Even without the interference by the austerians in Brussels and Berlin, recovery in Greece would take years. But the destruction wrought by the unelected dictocrats in Brussels has destroyed an entire generation -- and unfortunately shows no sign of ending.
European and other international bankers are intent on beating Greek populism into submission and probably will succeed one way or another.
The banks' objective is not as much collecting their obviously worthless loans as beating down any population that refuses to submit to corporate cannibal capitalism.
The banks' objective is not as much collecting their obviously worthless loans as beating down any population that refuses to submit to corporate cannibal capitalism.
16
so it is the responsibility of european taxpayers to subsidize largress? In most of Europe, for example, pensions are received in the mid-1960s. in greece well before then. In all of europe (except greece) there are national land registries. In Greece corruption and clientelism runs rampant. Do eurupean governments (and hence their taxpayers) have to continue paying for this, with no promise for reform?
Greece could exit cleanly from the Euro if the rest of the world would support them a bit, but I'm willing to believe the banks won't allow that. Better not to risk the ire of the parasite by dislodging it from its victim's neck. Did you ever wonder how the next big age of political turmoil and open revolt would start?
7
What does "support them a bit" mean, Jim K? How much is "a bit" and how long does that "bit" last? And what happens when that support does not manage to change the culture of not paying taxes and retiring very early with pensions that would make Chicago blush? What would YOU do in that case?
This case (in contrast with steps that other ECB countries have taken to tighten their belts, reduce deficits, handouts and increase their GDPs) shows you that badly constructed agreements with bad partners will never end well.
Greece should decide to stay with the euro and take on 10 years of austerity or go it alone and see who rescues them from themselves. I would suggest that Putin might like a port on the Aegean, but he would have to reconcile himself to paying for an asset that won't pay off until oil is about $150 on the world market.
This case (in contrast with steps that other ECB countries have taken to tighten their belts, reduce deficits, handouts and increase their GDPs) shows you that badly constructed agreements with bad partners will never end well.
Greece should decide to stay with the euro and take on 10 years of austerity or go it alone and see who rescues them from themselves. I would suggest that Putin might like a port on the Aegean, but he would have to reconcile himself to paying for an asset that won't pay off until oil is about $150 on the world market.
I don't advocate for austerity in times of depression. But Greece hasn't done the structural reforms to free the economy from the corrupt governmental mafia. It's like the anti-Uber violence approved by the French government but on a much larger scale. The Greek system is actively promoting unemployment by its extreme hostility against any modern private business. You simply can't do business in Greece without having to pay enormous amounts of money to the governmental mafia. At the same time the government is not even collecting taxes. Only a few rich criminal companies can still do business in Greece. Greeks have done nothing to stop that. Krugman is of course right about austerity but the reality on the ground is that you can't work in Greece without miles of red tape, bribes and connections to the mafia. They should not only leave euro but also the EU.
13
Antii-uber viiolence? Against a company that exploits its drivers by calling them contractors, denying employment benefits, and bringing back the 19th century tyranny of piece work?
1
I think the Greek people need to return to their economic roots. The euro has been no blessing for them, and staying with it will only cause them more insecurity and hardship. Germany and the rest of the better off European countries are dictating a burden practically impossible for the Greeks to shoulder, given their culture, the size of their country and their resources. Greeks aren't Germans. Greeks are Greeks, and they need to return to a national currency so they can begin an economic recovery and a concomitant social healing.
38
The Greeks have brought this tragedy upon themselves.
Was Germany to blame for the irresponsible decision of past Greek governments to permit early retirement at 53?
Are Germany, France et al. responsible for the massive, endemic corruption throughout all walks of Greece's socio-economic life?
Is the rest of the E.U. responsible for the extreme-socialist economy and a bloated public sector 'labour' force that still works at most for 3 hours officially and 5 hours in the untaxed 'black economy'?
Are Spain, Portugal and Ireland the stupid nations for successfully executing fiscal reforms while Greece continues to pursue bail-outs?
There is too much sympathy and not enough pressure on Greece to instigate serious reforms. Greeks still retire 7 years earlier than German workers. Such laziness is inexcusable and, more importantly, unsustainable. Greece should revert to the Drachma and then nobody will care how long Greeks work, or if they decide to work at all.
Was Germany to blame for the irresponsible decision of past Greek governments to permit early retirement at 53?
Are Germany, France et al. responsible for the massive, endemic corruption throughout all walks of Greece's socio-economic life?
Is the rest of the E.U. responsible for the extreme-socialist economy and a bloated public sector 'labour' force that still works at most for 3 hours officially and 5 hours in the untaxed 'black economy'?
Are Spain, Portugal and Ireland the stupid nations for successfully executing fiscal reforms while Greece continues to pursue bail-outs?
There is too much sympathy and not enough pressure on Greece to instigate serious reforms. Greeks still retire 7 years earlier than German workers. Such laziness is inexcusable and, more importantly, unsustainable. Greece should revert to the Drachma and then nobody will care how long Greeks work, or if they decide to work at all.
21
Spot on Hamid!
It's a pity that the NYT doesn't agree with you, not that the NYT has ANY clout on the world economic stage with serious political and market watchers.
It's a pity that the NYT doesn't agree with you, not that the NYT has ANY clout on the world economic stage with serious political and market watchers.
1
Sir you are miss-representing the issue.
We have deep sympathy to deeply suffering Greek people.
We are aware of how almost 500 billion USD credit pocketed by past RIGHT wing Greek parties and Greece rich and banks.
We do not have any sympathy for those swamp leeches ( right wing politicians, Rich tax evaders and Greece banking sector)
We do not have also any sympathy, who enable these immense debt accumulation from EU and US side such as Deutsche bank, Goldman Sachs etc.
So lets be clear about why we have empathy to main street Greek people.
Retirement age too early 53 years, so since 1982 where were the Brussels's EU bureaucrats who is in charge of unification, after almost 30 years nothing achieved. Why in the first place Greece accepted to Eurozone, wasn't known at that moment retirement was early.
I am sorry but lenders side , I am seeing only loan sharks.
We have deep sympathy to deeply suffering Greek people.
We are aware of how almost 500 billion USD credit pocketed by past RIGHT wing Greek parties and Greece rich and banks.
We do not have any sympathy for those swamp leeches ( right wing politicians, Rich tax evaders and Greece banking sector)
We do not have also any sympathy, who enable these immense debt accumulation from EU and US side such as Deutsche bank, Goldman Sachs etc.
So lets be clear about why we have empathy to main street Greek people.
Retirement age too early 53 years, so since 1982 where were the Brussels's EU bureaucrats who is in charge of unification, after almost 30 years nothing achieved. Why in the first place Greece accepted to Eurozone, wasn't known at that moment retirement was early.
I am sorry but lenders side , I am seeing only loan sharks.
1
In reply to Mr.Varzi, while it is true that the Greek government urgently needs to reform the pension & tax laws, what is inexcusable is your insults to the hard working citizens of Greece. You perpetuate the myth & prejudice that southern Europeans are lazy & therefore undeserving of help, while their northern European counterparts are hardworking & deserving of all benefits bestowed on them. The austerity imposed upon the Greek people is crushing them. The situation is devolving into a state of neofuedalism & the Troika would turn Greece into a slave economy for their exclusive benefit. Time t dump the euro & go back to the drachma.
1
Will the referendum include the following question:
"In exchange for Europe bailing us out, will you commit to paying your taxes this year?"
"In exchange for Europe bailing us out, will you commit to paying your taxes this year?"
9
I don't agree with the conclusion of this oped. Unless Greece changes the way it spends public dollars and reforms its tax collection system the problems (debt) will persist. For the EU to continue to fund such behavior is akin to throwing good money after bad. The EU could forgive all the debt and unless Greece changes internally nothing will change. I would say to Greece: hold this referendum and you are out of the EU. At the very least, lose the referendum and send Tsipras and his finance minister to Hades for eternity.
11
Why would Greece have to pay their debts? Isn't it the right of the citizens of that nation to live way beyond their means? Why do all those mean people who hold the notes want to be paid? The IMF should not only "forgive" the debts, but should engage in even larger loans to Greece in the future. American version coming to a city near you soon!
9
'A “Grexit” would seriously undermine the credibility of the euro currency, threatening a global contagion.' What an uninformed, statement ! None of that is going to happen, as a matter of fact a Grexit is going to strengthen the Euro.
6
Greece debt situation can be rendered one single concept , Predatory lending.
Or
Any one can explain me why any financial creditor knowingly gives a 12 million population country , 500 billion USD? anybody.
This is predatory loaning, knowing lender cannot pay so confiscate everything.
Or
Any one can explain me why any financial creditor knowingly gives a 12 million population country , 500 billion USD? anybody.
This is predatory loaning, knowing lender cannot pay so confiscate everything.
7
WHO BLINKS So Angela Merkel augers the failure of Europe. The question is, Does she have the power to avert the collapse? The answer will center around emergency meetings to prevent Greece from imploding, setting off economic collapse on the rest of the Continent and beyond. So if Merkel has posed the question but not called for emergency meetings to implement crisis management, her answer is clear. Let the cards fall where they may. The rest of the world had best get ready for the economic tsunamis, wreckage and disaster that hang in the balance. Now if the time for action. Angela Merkel, wake up and get to work! If you make your best effort to prevent crisis and collapse you will almost surely succeed. If you ignore the pending doom and destruction, the corpse of Europe wil be lain at your feet. Which will you choose?
"Rip up their IOU's"?
This just won't work; the reason people - both governments and private investors alike - are willing to lend money is the expectation that they will be paid back, on the terms mutually agreed to.
If the IOU's get ripped up (they have already been rewritten many times, with repeated easing of the terms) there will be no international lending in the future, and that will benefit no one.
Politicians, be they from Athens or Illinois or wherever, like to give large benefits to today's voters, and leave the bills to generations yet unborn. But for the majority of the world not fortunate enough to live on large oil fields, this doesn't work; one needs to pay ones fair share of taxes, and work for a living.
Austerity is no fun, but it is necessary to live within ones means; sooner or later the piper demands payment. The most telling piece I read recently in the Times described the lack of sympathy towards Greece felt by the truly poor countries of Europe, whose people must live on pensions a fraction of the size enjoyed by many Greeks.
I fervently hope that the birthplace of democracy does not descend into tyranny, and that the world's financial system survives without falling into another recession or worse. But I do believe it is necessary for Greece to take its medicine. And I hope we all learn the lesson: you can't get something for nothing, at least not for long; the politicians who claim otherwise are simply not telling the truth.
This just won't work; the reason people - both governments and private investors alike - are willing to lend money is the expectation that they will be paid back, on the terms mutually agreed to.
If the IOU's get ripped up (they have already been rewritten many times, with repeated easing of the terms) there will be no international lending in the future, and that will benefit no one.
Politicians, be they from Athens or Illinois or wherever, like to give large benefits to today's voters, and leave the bills to generations yet unborn. But for the majority of the world not fortunate enough to live on large oil fields, this doesn't work; one needs to pay ones fair share of taxes, and work for a living.
Austerity is no fun, but it is necessary to live within ones means; sooner or later the piper demands payment. The most telling piece I read recently in the Times described the lack of sympathy towards Greece felt by the truly poor countries of Europe, whose people must live on pensions a fraction of the size enjoyed by many Greeks.
I fervently hope that the birthplace of democracy does not descend into tyranny, and that the world's financial system survives without falling into another recession or worse. But I do believe it is necessary for Greece to take its medicine. And I hope we all learn the lesson: you can't get something for nothing, at least not for long; the politicians who claim otherwise are simply not telling the truth.
28
If the medicine kills you, what's the point of taking it? There are two parties to blame, Greece and its lenders. As Paul Krugman has said, Economics is not a morality play. While we recognize that debts ought to be paid, sometimes it's just not possible, moral hazard notwithstanding.
..."ripping up their i.o.u.s"... before giving out such easy lectures let's wait and see what the USA do about the $72 billions from Puerto Rico and if they give that up so easily?
2
Merckel should go to Greece. If the euro system is important the leaders need to start leading rather than hiding behind bureaucrats
1
For what purpose ?
It's not Queen Merkel, she is chancellor of a parliament that is becoming more and more reluctant, a german electorate that can already chose between different anti-euro parties. She can tell exactly what the greeks want to hear, and that would make it very likely that she won't be there after the next election.
Maybe people start to realize, that there are other peoples around, and some of them see in Syriza as a threat to their own revenue. And it's not like all germans are filthy rich.
You should be glad that Merkel is around, but you shouldn't count on her, because the germans are much more fed up, and they are the one who go to the ballots.
It's not Queen Merkel, she is chancellor of a parliament that is becoming more and more reluctant, a german electorate that can already chose between different anti-euro parties. She can tell exactly what the greeks want to hear, and that would make it very likely that she won't be there after the next election.
Maybe people start to realize, that there are other peoples around, and some of them see in Syriza as a threat to their own revenue. And it's not like all germans are filthy rich.
You should be glad that Merkel is around, but you shouldn't count on her, because the germans are much more fed up, and they are the one who go to the ballots.
1
I must say I find it rather strange that The Times seems to find it quite reasonable that Spain, Portugal, Slovakia and the Baltic states should pay the bill for the incomptence of the Greek government.
If the government of Latvia had behaved so stupid and irresponsible, would The Times then have been so supportive?
Perhaps it has something to do With Greece "being the cradle of civilisation"?
A pity then that Greek government have retarded to this stage.
If the government of Latvia had behaved so stupid and irresponsible, would The Times then have been so supportive?
Perhaps it has something to do With Greece "being the cradle of civilisation"?
A pity then that Greek government have retarded to this stage.
9
I read a book before I retired called "Vandals Banquet." It celebrated the pillage of Europe by those barbarians who do well in up and down markets (bond traders in the eighties) by making the rules, so that they never have to break the rules, in order to always come out on top in the never ending game of chance, which represents life for most of us.
Politics determines who shall have, and who shall have not, and as we can see the modern Vandal Bankers have no use for politics because no matter who wins or loses, they always win, because they transcend the system. Even if there were a modern Aetius in a business suit, abetted by a roughneck Theodoric, the battle for civilization would still be lost because the principles which have buttressed Western Civilization have been abandoned in the name of Market Forces. Greece is misunderstood to be a victim in isolation, but the Huns know better..........
Politics determines who shall have, and who shall have not, and as we can see the modern Vandal Bankers have no use for politics because no matter who wins or loses, they always win, because they transcend the system. Even if there were a modern Aetius in a business suit, abetted by a roughneck Theodoric, the battle for civilization would still be lost because the principles which have buttressed Western Civilization have been abandoned in the name of Market Forces. Greece is misunderstood to be a victim in isolation, but the Huns know better..........
3
This whole story just smacks of the classic loan-sharking tale. Make a "friendly" loan to a desperate guy who has little ability to repay, and demand ever increasing payments at the threat of some broken kneecaps.
I think the creditors involved in the Marshall plan should start demanding a few trillion in repayment from Germany (the primary shark). What goes around, comes around.
I think the creditors involved in the Marshall plan should start demanding a few trillion in repayment from Germany (the primary shark). What goes around, comes around.
11
Reminiscent of our subprime mortgage crisis
2
the difference between germany and greece is,
that the germans were and still are grateful for the marshall-plan and did exactly what the americans wanted from us.
We had to pay back half of the Marshall-Plan, and we considered this as an honorable duty.
that the germans were and still are grateful for the marshall-plan and did exactly what the americans wanted from us.
We had to pay back half of the Marshall-Plan, and we considered this as an honorable duty.
4
A reminder of "Pay Day Loan" and "Cash Advance" businesses
that prey on the poor. Interest amount grows to be several
times the principle. These businesses thrive in the free
narket economy of USA. It is the same stroy with Hedge
fund that bought the bonds of Argentina and later ran
around US courts to recover the money while many
other bondholders took haircut. Do these Hedge fund
and banks know anything about risk assessment?
that prey on the poor. Interest amount grows to be several
times the principle. These businesses thrive in the free
narket economy of USA. It is the same stroy with Hedge
fund that bought the bonds of Argentina and later ran
around US courts to recover the money while many
other bondholders took haircut. Do these Hedge fund
and banks know anything about risk assessment?
"If the euro fails, Europe fails." You know what? Europe is failing in so many different ways anyway. I'm back living in the UK, where I grew up and after living in the US for decades. The country is a mess, and a lot of the blame can be laid at the feet of the EU.
Last week it was announced that there were 64 million people living the UK. Do you know what that means for an island nation the size of ours? It means that health care and social services are stretched to their limit, and people end up suffering.
Open borders have been a disaster for the UK. The introduction of the hated "Health & Safety" EU rules has resulted in farcical If my late dad had fallen while in the company of the care worker who visited every day, she was not allowed to help him get up due to the "'Elf and safety" regulations so derided here.
The EU is a forced alliance of nations and people very different from each other. I hate what my country has become.
Last week it was announced that there were 64 million people living the UK. Do you know what that means for an island nation the size of ours? It means that health care and social services are stretched to their limit, and people end up suffering.
Open borders have been a disaster for the UK. The introduction of the hated "Health & Safety" EU rules has resulted in farcical If my late dad had fallen while in the company of the care worker who visited every day, she was not allowed to help him get up due to the "'Elf and safety" regulations so derided here.
The EU is a forced alliance of nations and people very different from each other. I hate what my country has become.
1
Debt = ?
Debt for production = risk. Debt for consumption = death.
“As a very important source of strength and security, cherish public credit. One method of preserving it is, to use it as sparingly as possible; .... .” -George Washington
In these times of secular relativism, the problem of applying morality to economics, or to anything else, is that one man’s morality is another’s immorality. Unless we return to an operational acceptance of Judeo-Christian principles, an unlikely event in the near future, arguing about morality is akin to arguing about asparagus, and there’s no accounting for taste.
Morality notwithstanding, in true capitalism, a currently non-existent system, incurring debt to promote production is “good” ... incurring debt to promote consumption is “bad”; good and bad being judged by the consequences of the economic behavior. In this regard, one should keep in mind that both borrowing and lending are behaviors and are described by the scientific laws of behavior.
"Scientific laws? Can’t we just stick to opinions? More entertaining and less taxing," some might opine. We can although mere opinion ultimately leads only to sophistry unless based upon scientific principles and demonstrated facts. The point is that combine modern biobehavioral science with true capitalism, and what do you have? Poof! Scientific capitalism (www.inescapableconsequences.com).
Don’t bother telling most politicians, however. Few are interested.
Debt for production = risk. Debt for consumption = death.
“As a very important source of strength and security, cherish public credit. One method of preserving it is, to use it as sparingly as possible; .... .” -George Washington
In these times of secular relativism, the problem of applying morality to economics, or to anything else, is that one man’s morality is another’s immorality. Unless we return to an operational acceptance of Judeo-Christian principles, an unlikely event in the near future, arguing about morality is akin to arguing about asparagus, and there’s no accounting for taste.
Morality notwithstanding, in true capitalism, a currently non-existent system, incurring debt to promote production is “good” ... incurring debt to promote consumption is “bad”; good and bad being judged by the consequences of the economic behavior. In this regard, one should keep in mind that both borrowing and lending are behaviors and are described by the scientific laws of behavior.
"Scientific laws? Can’t we just stick to opinions? More entertaining and less taxing," some might opine. We can although mere opinion ultimately leads only to sophistry unless based upon scientific principles and demonstrated facts. The point is that combine modern biobehavioral science with true capitalism, and what do you have? Poof! Scientific capitalism (www.inescapableconsequences.com).
Don’t bother telling most politicians, however. Few are interested.
1
If you rip up the IOU's for Greece you have to rip them up for other countries as well. In the end what it would mean is that lying and cheating ( the Greeks have done it from the moment the joined the EU ) by governments
pays off.
pays off.
5
If Greece had not been in the Euro, and had thus been able to devalue its own currency and boost exports, Greece's economy would have been in much better shape by now -- at the very least. If Greece does not leave the Euro, how is this ever going to end? Without devaluing its currency, how can Greece boost its economy? The Euro is a ball and chain.
58
And what does Greece export that will make a difference? Aristotle and Plato have been gone for centuries.
Before joining the Eurozone Greece had its own currency which its government could inflate and devalue at will, yet Greece was one of the poorer countries of Europe and far from an economic success story. Is there any reason to believe that if it shed the "ball and chain " of the Euro it would be more successful than it was then ? Is there any reason to believe that inflation and devaluation of its currency would be an adequate substitute for the cultural and structural changes needed to bring Greece into the 21st century ?
I cannot believe how ill-informed this editorial is.
1. Whether Greece has the means to repay the IMF, no one knows. Greece has instead refused to repay, which is another matter.
2. The referendum pertains to whether the terms of the troika should be accepted or not. Not whether Greece should remain in the euro. Those are two separate issues
3. The terms of the troika are not solely about austerity, but mainly about structural reform so that future aid is not wasted as in the past. Retirement benefits in Greece, e.g., absorb 18% of its GDP, compared to 4% in Germany. That’s unsustainable.
4. Grexit is probably the best long-term measure to restore Greece’s competitiveness and presently shows no signs of destabilizing the markets as the editorial will have us believe.
5. Throwing money at the structural problems besetting Greece will not provide solutions. The power to change things in Greece for the better lies in the hands of the Greeks and not with the Eurozone or the IMF.
6. Greece has already been given a huge haircut on its debt without any noticeable improvement. To the contrary, it bankrupted the Greek banks which held much of the debt so that they had to be nationalized.
7. This is not a standoff between Greece and Germany but rather between Greece and the ECB, IMF and other Eurozone members.
In German there is expression for unwanted advice: “Sweep before your own doorstep”, i.e., put your own house (Puerto Rico) in order.
1. Whether Greece has the means to repay the IMF, no one knows. Greece has instead refused to repay, which is another matter.
2. The referendum pertains to whether the terms of the troika should be accepted or not. Not whether Greece should remain in the euro. Those are two separate issues
3. The terms of the troika are not solely about austerity, but mainly about structural reform so that future aid is not wasted as in the past. Retirement benefits in Greece, e.g., absorb 18% of its GDP, compared to 4% in Germany. That’s unsustainable.
4. Grexit is probably the best long-term measure to restore Greece’s competitiveness and presently shows no signs of destabilizing the markets as the editorial will have us believe.
5. Throwing money at the structural problems besetting Greece will not provide solutions. The power to change things in Greece for the better lies in the hands of the Greeks and not with the Eurozone or the IMF.
6. Greece has already been given a huge haircut on its debt without any noticeable improvement. To the contrary, it bankrupted the Greek banks which held much of the debt so that they had to be nationalized.
7. This is not a standoff between Greece and Germany but rather between Greece and the ECB, IMF and other Eurozone members.
In German there is expression for unwanted advice: “Sweep before your own doorstep”, i.e., put your own house (Puerto Rico) in order.
7
The biggest problem was the European banks and the IMF giving money to Greece in the first place, over the last few decades. The country should have been permitted to sink or swim, on its own.
An individual produces things to trade with other individuals. Businesses - groups of individuals working together - produce things to trade with individuals or businesses. Each side of the trade gives up something it values less for something it values more. Trade happens within a nation, and trade happens across national boundaries. Wealth is generated as a result of production and trade.
Note that government is not involved - at all - in the above. Government interference in trade will destroy it. If Greeks want to earn wealth, they must produce and trade. It's that simple.
Why did the lenders lend? Because their politicians told them to.
Greek Government: Failure.
European banks (government): Failure.
IMF (multi-government): Failure
The Greek people can produce and trade themselves out of the hole they are in. And if they cannot, they should not be propped up by taxing non-Greeks. It's pretty simple.
An individual produces things to trade with other individuals. Businesses - groups of individuals working together - produce things to trade with individuals or businesses. Each side of the trade gives up something it values less for something it values more. Trade happens within a nation, and trade happens across national boundaries. Wealth is generated as a result of production and trade.
Note that government is not involved - at all - in the above. Government interference in trade will destroy it. If Greeks want to earn wealth, they must produce and trade. It's that simple.
Why did the lenders lend? Because their politicians told them to.
Greek Government: Failure.
European banks (government): Failure.
IMF (multi-government): Failure
The Greek people can produce and trade themselves out of the hole they are in. And if they cannot, they should not be propped up by taxing non-Greeks. It's pretty simple.
2
Yes a voice of reason and that's why I'm a subscriber.
'But given the huge consequences of what is about to happen, the Greeks deserve a chance to say whether they want to stay in the euro, with all the continuing sacrifice that entails, or whether they are prepared for the near-term calamity and long-term unknowns of opting out.'
Yet, the Greeks already had the opportunity to express democratically their opinion on the matter in January when they elected Tsipras' Government. The Syriza Party's platform was presented in no uncertain terms to the Greek people: a rejection of austerity measures. The Finance Minister, Varoufakis' editorial on these pages from 16 February 2015 uncompromisingly declared: 'The great difference between this government and previous Greek governments is twofold: We are determined to clash with mighty vested interests in order to reboot Greece and gain our partners’ trust. We are also determined not to be treated as a debt colony that should suffer what it must.' Having been elected to present this position to their creditors, the Government has decided to punt in a desperate attempt to avoid the responsibility for their irresponsible promises. Having failed to shame other European nations into accepting the notion that Greek need constituted a moral claim to their neighbors welfare, the Greek Government has abdicated its democratic responsibility to represent the will of the Greek people as expressed in an election where the circumstances were the exact same. Shame on the Greek Government.
Yet, the Greeks already had the opportunity to express democratically their opinion on the matter in January when they elected Tsipras' Government. The Syriza Party's platform was presented in no uncertain terms to the Greek people: a rejection of austerity measures. The Finance Minister, Varoufakis' editorial on these pages from 16 February 2015 uncompromisingly declared: 'The great difference between this government and previous Greek governments is twofold: We are determined to clash with mighty vested interests in order to reboot Greece and gain our partners’ trust. We are also determined not to be treated as a debt colony that should suffer what it must.' Having been elected to present this position to their creditors, the Government has decided to punt in a desperate attempt to avoid the responsibility for their irresponsible promises. Having failed to shame other European nations into accepting the notion that Greek need constituted a moral claim to their neighbors welfare, the Greek Government has abdicated its democratic responsibility to represent the will of the Greek people as expressed in an election where the circumstances were the exact same. Shame on the Greek Government.
1
Democracy is a wonderful thing, but too much of it can be a dangerous thing. The NYT portrays the Greeks as "confused and battered," and somehow incapable of deciding their own fate. The call for a referendum always drives the power elite crazy; they would much prefer to concoct self-serving outcomes without the messy, unpredictable interference of the populace. Look at how the the Obama administration ignored the people and colluded with the bankers in the 2008 financial debacle. The inconvenient fact is that the euro experiment comes with losers and winners. Why should the losers continue playing a rigged game?
This editorial is disingenuous, because it continues the smoke and mirrors falsehood that this conflict is solely about money. In fact, this is an ideological conflict, since the IMF is on record as being against unions, collective bargaining, and against pensions for working class people on PRINCIPLE. They are against these things world wide, not just in Greece, because they are a plutocratic, anti democratic organization. The EU was probably a well marketed con job from the beginning. It was not designed to prevent war, but to bring more low wage workers into western European job markets, and to weaken labor unions, again goals of the plutocracy. Greece has challenged the neoliberal agenda, and the IMF doesn't like dissent.
1
"For Greece, an exit could mean losing the ability to borrow from foreign investors, the potential collapse of its banking system and a wave of litigation from creditors and suppliers."
This statement misinforms us. Greece already cannot borrow from foreign investors and has experienced an ECB-provoked collapse of its banking system. A business would suffer a wave of litigation from creditors and suppliers; a country printing its own currency would not. In Greece's case suppliers will be paid in drachmas (or like in Croatia there will be exchanges of euros and drachmas). As the drachma valuation stabilizes there will be plenty of economic activity in Greece and investors looking for bargains.
This statement misinforms us. Greece already cannot borrow from foreign investors and has experienced an ECB-provoked collapse of its banking system. A business would suffer a wave of litigation from creditors and suppliers; a country printing its own currency would not. In Greece's case suppliers will be paid in drachmas (or like in Croatia there will be exchanges of euros and drachmas). As the drachma valuation stabilizes there will be plenty of economic activity in Greece and investors looking for bargains.
1
Is the creditor class the only class worth saving? Greece needs to regain its independence and, thus, its ability to recover both its dignity and its economy. Armed with its own currency, a currency exclusively for domestic commerce, and a central bank to recapitalize local banks and the economy in general, Greece can begin its recovery. It won't need to issue debt. It can concentrate on financing itself and building infrastructure assets it will need to regain its economic health. Greece is in a muddle, but with independence it can clear out the debris without asking permission from anyone but the citizens of Greece.
19
Greece faces 27% unemployment and has been in a depression since the start of their debt crisis. By now it should be clear that austerity is not working for Greece, but rather is a method of kicking the can down the road for Greece's creditors.
Greece staying in the Euro means a decade of depression and non-growth for the country under it's crippling debt. Their economy will stay non-competitive.
However, a Grexit would mean a return to the Drachma, control of their own economic fate, and a path forward. Will it damage their buying power? Yes. Will it pull them out of depression immediately? No. But it will provide a path.
A Grexit seems like the only move at the moment.
Greece staying in the Euro means a decade of depression and non-growth for the country under it's crippling debt. Their economy will stay non-competitive.
However, a Grexit would mean a return to the Drachma, control of their own economic fate, and a path forward. Will it damage their buying power? Yes. Will it pull them out of depression immediately? No. But it will provide a path.
A Grexit seems like the only move at the moment.
31
To suggest this is too complex for the Greeks to vote on is ludicrous. After all they have beern suffering with the effects of austerity for quite some time and the result is further hardship. Germany and the IMF have to come up with better solutions then punishment if they don't want to see the Humpty Dumpty Euro fall.
1
If the Euro nations can't solve this problem with its smallest member's economy how will it deal with crises that may arise with larger economies? Imagine if France was in the position Greece is in.
20
If the end game was to coerce Greece to harmonize their policies with other so-called "advanced economies" its been very poorly played.
There was a moment, now passed, in which a grand bargain could have been offered to the Hellenic Parliament and the parliaments of other EU member states. Eurobonds in exchange for modernizing/harmonizing, more closer political union. A very EUROPEAN solution; where the Commission, EU Parliament, and ECB take center stage to lead - and the public responds to the ever advancing European project.
Instead we have the worst fears of the far right playing out.
It's clear to the Greeks and anyone else watching that this is not a UNION of any kind. Its creditor vs debtor, exporter vs. importer, seller vs buyer, north vs south, live to work vs work to live, beer vs. wine, protestant vs. Catholic, pick one. Same old story.
Germany's domination has been cemented in the minds of the entire European population. Merkel's boisterous ministers are pontificating on Twitter - issuing communiques from the court of Charlemagne. Adding insult to injury (AND annoying everyone), the prime minister of Finland is making provocative statements. FINLAND?!
Nigel Farange, Beppe Grillo and Marine Le Pen could not have written a better script. Should she fail, Merkel will have fumbled the ball and set the EU project back a generation. And we want Britain to vote to stay in the EU? For-get-about-it.
It's a circus. And it's a shame.
There was a moment, now passed, in which a grand bargain could have been offered to the Hellenic Parliament and the parliaments of other EU member states. Eurobonds in exchange for modernizing/harmonizing, more closer political union. A very EUROPEAN solution; where the Commission, EU Parliament, and ECB take center stage to lead - and the public responds to the ever advancing European project.
Instead we have the worst fears of the far right playing out.
It's clear to the Greeks and anyone else watching that this is not a UNION of any kind. Its creditor vs debtor, exporter vs. importer, seller vs buyer, north vs south, live to work vs work to live, beer vs. wine, protestant vs. Catholic, pick one. Same old story.
Germany's domination has been cemented in the minds of the entire European population. Merkel's boisterous ministers are pontificating on Twitter - issuing communiques from the court of Charlemagne. Adding insult to injury (AND annoying everyone), the prime minister of Finland is making provocative statements. FINLAND?!
Nigel Farange, Beppe Grillo and Marine Le Pen could not have written a better script. Should she fail, Merkel will have fumbled the ball and set the EU project back a generation. And we want Britain to vote to stay in the EU? For-get-about-it.
It's a circus. And it's a shame.
26
I agree Greece should go bankrupt. If anyone is crazy enough to lend them money after that, that will be fine by me. They are basically a failed state and only the Greeks can fix that.
Take the hit, wall them off
Take the hit, wall them off
4
I wish the American readers would understand that the real problem of Greece is not the weight of its debts. The times for payment have been lengthened and could be lengthened more, and the interest rates are very low. The yearly payments are not very heavy. In fact, Europe would be happy to continue financing sensible reforms.
The problem is that the Greek public sector has been unsustainably bloated and inefficient for decades. After the crisis, they have continually postponed the sensible efforts to fight against corruption, upper middle-class tax-dodgers, protected oligopolies, some ridiculously low retirement ages, etc. Instead, they have seen it better to lay off hard-working nurses and cut the lowest pensions. Each government has helped its own supporters and made others suffer.
Europe is not imposing poverty on Greece. Europe is only asking Greece to take small steps towards civilized standards of governance. It just appears to be difficult to make this point to a people that have lived 1500 years under Byzantine and Ottoman Empires. Greeks used to be taxed by their emperors, then each ruling political group robbed other groups to benefit their own. Maybe it is time to build accountable state institutions that work for all the Greeks. Europe has been and will be ready to help in this. Europe just does not want to be yet another sucker to be fleeced and then blamed.
The problem is that the Greek public sector has been unsustainably bloated and inefficient for decades. After the crisis, they have continually postponed the sensible efforts to fight against corruption, upper middle-class tax-dodgers, protected oligopolies, some ridiculously low retirement ages, etc. Instead, they have seen it better to lay off hard-working nurses and cut the lowest pensions. Each government has helped its own supporters and made others suffer.
Europe is not imposing poverty on Greece. Europe is only asking Greece to take small steps towards civilized standards of governance. It just appears to be difficult to make this point to a people that have lived 1500 years under Byzantine and Ottoman Empires. Greeks used to be taxed by their emperors, then each ruling political group robbed other groups to benefit their own. Maybe it is time to build accountable state institutions that work for all the Greeks. Europe has been and will be ready to help in this. Europe just does not want to be yet another sucker to be fleeced and then blamed.
12
I think a Greek exit from the Euro is totally appropriate. It will not weaken the Euro but rather enhance it. Greece is not worthy of being in the Euro zone. They are have consistently not lived up to agreements they have signed. Their pension system is ridiculous (very high payments, the average is higher than my SS!). Let them go. Good riddance.
3
All The Times can come up with is forgive their debts. As in the case of U.S. underwater home borrowers The Times advocated principal reduction, which is another word for loan forgiveness. Who will be forgiven next? Puerto Rico? Who's paying for this.
2
Will the money triumvirat seize Greece and sell it to its creditors?
1
Any debt retirement is passing that debt to another country taxpayers.
Should we taxpayers in USA pay for Greece's 40 year socialist party?
Should German taxpayers pay for Greece's 40 year socialist party?
Its easy to say forgive all the debt and let Greece off the hook.
Greece needs
DRAMATIC reductions in pension and retirement age
for the next 20 years.
EXTEND all debts out to 50 years at low rates.
AND new investments in infrastructure to create jobs.
Should we taxpayers in USA pay for Greece's 40 year socialist party?
Should German taxpayers pay for Greece's 40 year socialist party?
Its easy to say forgive all the debt and let Greece off the hook.
Greece needs
DRAMATIC reductions in pension and retirement age
for the next 20 years.
EXTEND all debts out to 50 years at low rates.
AND new investments in infrastructure to create jobs.
6
Greece - and other such underpowered, high debt countries - should swtich to using Chinese Yuans.
1
A Grexit will eventually make the Eurozone stronger by demonstrating their is a cost to bad economic policies. Simply falling over backwards to paper over bad (greek) policy is no recipe for eurzone survival and sets a precedent left wing parties elsewhere will seek to emulate. The Eurozone then becomes a forum for the fiscally weak to blackmail the rest into fiscal transfers.
20
But of course! The liberal solution to all problems is to take money from people who have earned it and give it to people who are irresponsible and would like to have the benefits of having worked hard, without of course actually working hard. We can expect the NY Times and the Obama Administration, which has greatly expanded redistributionist policies in the US, to go to bat for the Greek (communist) government.
2
The Greek crisis has exposed a major vulnerability of the globalized economy. How one relatively small economy can drive the world's economy into a major crisis.
Tsipras will run back to Putin for help. Putin will cut a deal to base his Russian Navy in Greek harbors and pipe his GAZPROM gas through Greece in exchange for 1.2 billion dollars. To Putin these billions are chump change. Tsipras is now in Putin's pocket!
1
"To Putin these billions are chump change."
actually, they are not. The Russian economy is currently in pretty bad shape. It is unlikely he will find it reasonable to dish out billiions for a few military bases. Not feasible, not logical. This is a pipe dream. The current Greek Prime Minister might believe this fantasy (considering his not being in touch with reality) but it is not reality.
actually, they are not. The Russian economy is currently in pretty bad shape. It is unlikely he will find it reasonable to dish out billiions for a few military bases. Not feasible, not logical. This is a pipe dream. The current Greek Prime Minister might believe this fantasy (considering his not being in touch with reality) but it is not reality.
Greece has to pay. Stop the tax cheats. Everybody has to pay taxes, that is how the world works. The E.U was the best thing that happened to Greece, it made Greece a better country. The Greeks are better than than they are behaving. They have to tighten their belts and grow up. All Greek citizens have to pay their taxes. It is the way of the world. Let Governor Jerry Brown of California handle Greece, he seems to be doing a pretty good job in bringing California back to life.
2
According to the Chair of the EU Parliament's Committee on Constitutional Affairs, "a Member State's expulsion from the EU or the EMU would be legally next to impossible." So, there is no legal or constitutional grounds for Greece leaving either the EU or EMU. Unless Germany intends to try to push through revisions to the relevant monetary agreements and the constitution.
The EU needs to borrow a policy used by Alexander Hamilton as he and others faced the weakness of the Articles of Confederation during and after the revolutionary war: assume state debts as the only means to unite America.
This is the only way to fix the Greek problem and create a new confidence in the Euro and the union itself. It can be done perhaps more easily than Merkel and other leaders think, certainly easier than the vexing problems of state rivalry that Hamilton faced around 1781.
This is the only way to fix the Greek problem and create a new confidence in the Euro and the union itself. It can be done perhaps more easily than Merkel and other leaders think, certainly easier than the vexing problems of state rivalry that Hamilton faced around 1781.
and how, exactly, will that bring about much needed structural changes in Greece. The debts will be paid off and the government will continue on in its merry unsustainable ways collecting debts that, once again, have to be paid off by european tax payers. Structural changes are needed. If greece agrees, fine. If not, they need to leave.
Unless Merkel and her allies are willing to give hope to the Greek people instead of just using the Greek debt as a mechanism to transfer enormous wealth to German and French banks, the Greek people have no choice but to vote NO and leave the euro. Yes, in the short run they will suffer, but Greece will recover. The alternative is years of ongoing austerity which, in Greece as in all of the world, does nothing but crush the people to enrich the wealthy.
Unfortunately that transfer to the banks has long happened and now it's the German taxpayer's money i.e. the little guy must pay.
Strange isn't it? The only people being bailed out are European Bankers, mostly German and French, with money which is recycled through Greece and back to the banks, as if the debt payments were being made on time. The Greek Economy isn't in recession. It is in depression, and since Greece has no currency with which it can devalue its way out of depression, and no European political mechanism which could cause Europe to be forced to value Greece, Greece has no hope as long as it is affiliated with the Euro. Democracy in a Europe without political union is ultimately moribund, and how ironic that Democracy in Europe first died in Greece, which had first nurtured democracy and the principles of modern money, by its understanding of Mesopotamian accounting and Hellenic concepts of intrinsic value. Greece has no choice but to vote no on the current referendum. To submit to the current regime of abuse by bankers is absurd.
53
What banks? Basically the only banks that presently own Greek debt are the ECB and IMF. All the other private-sector holders (save a few vulture funds) were wiped out when Greece forced private-sector bondholders to take two haircuts back in 2012. I'm not sure the narrative here matches the facts on the ground.
Angela Merkel has too much power.
1
No one forced the Greeks to borrow beyond their means. It was their own greed and hubris plus the unexpected access to cheap money from the ECB and others on the country's joining the euro. The money was spent on outdated pension laws enabling 508 professions to retire after 25 years at full pension (the most generous in the world) plus no system of PAYE tax collection or proper collection of corporate taxes. Even municipal and state telephone, electric, and gas bills could be fudged if the right person was around to take a bribe. VAT fraud was normal. And successive Greek governments did nothing to clean up the system. Instead of spending money on infrastructure or manufacturing or agricultural improvement, the Greeks wasted it on ego projects like the Olympic Games or on their ludicrously over-supplied Armed Services (justifying the huge costs and waste by claiming fellow NATO ally Turkey was a threat!) Now the Greeks don't want to pay even the principal back let alone the interest. Nor does this government want to take the hard action of putting in place proper collection of taxes (individual and corporate and VAT) or payment for municipal services (electricity, gas, telephone, water) in case such actions alienate the electorate. The Greeks could approach AIIB for a loan to get the IMF off their backs; they could look sensibly at establishing a free trade zone in the old US naval and air bases near Athens, and the Russian gas pipeline to achieve growth and jobs.
23
@politics 12: much of what you state is, unfortunately, so very true about the failures of the Greeks. But your suggestions for remedy and new growth are not quite as convincing.
You are right. No one forced the Greeks to borrow. But commercial lending is a business transaction, not a moral obligation. The lenders took on a risk of default, and based on the economics, default was very likely unless the EU bailed Greece out. So the lenders took advantage of "moral hazard" -- taking a risk with other people's money. And now that they are facing default, they are very angry. Too bad.
1
"Rip up the IOU's.
We all know how things got this far; in a nutshell, it's simply because the investors with their billions at risk, cannot countenance the loss of a dime, and will do anything, including mounting a campaign to replace Tsipras, to insure Greece stays in the Union.
That campaign will unite the Greeks.
All of this could have been prevented, if Germany had taken the lead, and devised a method of forgiving the debt, and risk Ireland, Italy, Spain, and Portugal, demanding the same.
Austerity for the sake of saving the .01%ters the loss of a tiny portion of their ill-gotten wealth, will result in their loss of many millions more than they contemplated.
And the achingly slow recovery in the United States is due to the exact same thinking.
Unbridled avarice has blinded them.
We all know how things got this far; in a nutshell, it's simply because the investors with their billions at risk, cannot countenance the loss of a dime, and will do anything, including mounting a campaign to replace Tsipras, to insure Greece stays in the Union.
That campaign will unite the Greeks.
All of this could have been prevented, if Germany had taken the lead, and devised a method of forgiving the debt, and risk Ireland, Italy, Spain, and Portugal, demanding the same.
Austerity for the sake of saving the .01%ters the loss of a tiny portion of their ill-gotten wealth, will result in their loss of many millions more than they contemplated.
And the achingly slow recovery in the United States is due to the exact same thinking.
Unbridled avarice has blinded them.
1
seems everyone here has answers; I have a question... who exactly does Greece owe this debt? Where are these payments going?
The referendum on July 5 will allow the Greek people to accept or reject the reform proposals by the EU without informing them at all about their intended benefits. Incredibly, the statement on the proposed reforms is silent on any of their impacts on the welfare of Greek society. Specifically, nothing is stated on how these reforms will contribute to the growth of the economy of Greece in general and its global competitiveness in particular. It is inconceivable that Chancellor Angela Merkel and the political leaders of the other EU nations financially burdened by the Greek crisis have failed to concentrate on this core objective. Regrettably, this is not the focus of their proposals. Moreover, there is no evidence of any analysis by any of them that growth of the economy of Greece has been considered, even peripherally, in their calculations and the formulation of their proposals. Indeed, over the five years of the accelerating collapse of the economy of Greece driven harshly by EU austerity measures, essentially nothing has been said on how they will help Greece become economically self-sustaining. The Tsipras government has been both wrong and inept in many regards but, by far the gravest blunder, has been the EU’s utter failure to treat in any of its proposals since 2009 the growth of the economy of Greece as the governing objective.
16
"If the euro fails, Europe fails."
Well, in the first place, I don't see how that's true. Europe existed, for better or for worse, for a long time without the Euro.
And in the second place, Merkel and the troika seem to be doing everything they can to ensure that the Euro fails.
The best explanation I have ever heard of the Euro and what is wrong with it is a talk by Warren Mosler here https://www.youtube.com/watch?v=0YhrtktLQQw.
Well, in the first place, I don't see how that's true. Europe existed, for better or for worse, for a long time without the Euro.
And in the second place, Merkel and the troika seem to be doing everything they can to ensure that the Euro fails.
The best explanation I have ever heard of the Euro and what is wrong with it is a talk by Warren Mosler here https://www.youtube.com/watch?v=0YhrtktLQQw.
Germany is beginning to look like the heartless rent collector in the old silent film melodramas. Demanding that Lillian Gish or Mary Pickford submit to his awful demands or he will toss her and her baby siblings out into the night with the blizzard raging in the streets. It was just such demands for unreasonable reparations by the Allies following WW1 that brought Germany to collapse and gave us the rise of Hitler. If we want to encourage the fascists in Europe there is nothing like an economic disaster that impoverishes a people to help their cause. For all of Greece's profligacy in the past, Germany's refusal to forgive a large part of the massive debt - is worse. It is self-destructive cruelty to a people to whom they - the Germans - owe an enormous historical debt - the Nazi occupation of Greece in the forties - the death of many thousands resulting from it. I am not suggesting that Ms. Merkel is a fascist, far from it, but she is a short-sighted and self-righteous leader who may bring down Europe's economy through her stubborn and unrealistic acts. Not that we in the USA are much better about student debt, the Republicans refusing to forgive or ameliorate any of the massive student debt that haunts and hounds young people through their lives. We need the Pope to speak out or world leaders to state that the cradle of civilization should not be tossed into the dumpster as broken furniture.
47
As a German I am always annoyed by such comments. German Banks carry very little Greece debt. There has been a mandatory debt cut a few years ago and most German banks decided to write off as far as accounting rules permit. The biggest creditors these days are the European Central Bank and US-hedgefunds, who bought Greece debt for dimes to the Dollar. Should the ECB write Greek loans off, Germany will bear 27% of these losses. Being the strongest economy in Europe with a budget surplus this would be bad, but not a desaster. It would be different for weak economies such as France, Italy or Spain. As far as Ms. Merkel is concerned, she believes -as most German's do- that you should not spend more than you earn and if you take debt it is your duty to repay it. This may sound strange to Americans, I know, but it is not a bad concept. In the past economies followed this principle and much of the economic wealth generated in the last century was a result of this principle. Much of the mayhem these days is the result of more and more economic entities (people, companies and states) violating these principles. The construction of the Euro has been a bad mistake, but it was not to create German dominance - on the contrary, it was a central point for the reunification that Germany would join the Euro and give up its Deutschmark. As for the 'enormous historical debt' Germans owe - yes, we do, but not only for many thousand Greeks but for millions worldwide.
It was not my intention to give offense to any German citizen. Indeed, Berlin happens to be my favorite European city. But your lecture than one should not spend more than you earn is a little late in the day for Greece. Greece - a poor country - was exploited by the same kind of predatory lenders who brought on the US financial crises. What is required now is a humanitarian approach to the debt crises - the choice is to forgive most of the debt or watch Greece sink into a true Depression, and take most of Europe with her - hardly an intelligent solution to the Euro problem. And dare I say part of the reason for the common currency, the Euro, and for other forms of European unification was to prevent a future German leader from casting a rapacious glance at the rest of Europe - something that happened twice in the 20th century - and it was thought that the best way to do so was by wedding Germany to Europe in currency and democracy. The breakup of Greece from the Euro may have higher costs to much of Europe and the world than shortsighted leaders believe.
Utter nonsense. Greece does *not* belong in the euro because too much of its society opposes the basic economics accepted by other countries. They have had five years after the previous bailout to reform themselves fundamentally, but they remain insular and thoroughly corrupt.
My company spent a year trying to create a division in Greece and looked to hire newly minuted graduate students for a risk management practice. We got nowhere because EVERYONE -- from admin assistants to government ministers -- had their hand out for bribes we would not pay.
And despite offering solid two year contracts at 65,000 euros starting salary for a masters degree and 85,000 euros starting for a doctorate, we were ordered off two major campuses because we weren't offering life employment. One student group actually accused us of being there to exploit them.
Idiots. Absolutely indoctrinated IDIOTS. Good riddance to bad rubbish. As a failed state they will be useful as a cautionary tale to others.
My company spent a year trying to create a division in Greece and looked to hire newly minuted graduate students for a risk management practice. We got nowhere because EVERYONE -- from admin assistants to government ministers -- had their hand out for bribes we would not pay.
And despite offering solid two year contracts at 65,000 euros starting salary for a masters degree and 85,000 euros starting for a doctorate, we were ordered off two major campuses because we weren't offering life employment. One student group actually accused us of being there to exploit them.
Idiots. Absolutely indoctrinated IDIOTS. Good riddance to bad rubbish. As a failed state they will be useful as a cautionary tale to others.
9
Rip up the I.o.u.'s? Moral hazard, moral hazard, moral hazard.
5
Debt and general excess define the current era. Repudiation of debt and denial of this excess are fundamental to this trend.
Obesitiy is now a world wide epidemic, right next to living beyond one's means by incurring debt.
Egocentricity is rampant. Me! Me! Me!
"The wrong people rule this planet."
We are the wrong people, but most people point to others. Just look at the poster here who say it's the others' fault.
Obesitiy is now a world wide epidemic, right next to living beyond one's means by incurring debt.
Egocentricity is rampant. Me! Me! Me!
"The wrong people rule this planet."
We are the wrong people, but most people point to others. Just look at the poster here who say it's the others' fault.
3
For some strange reason leftists and leftist leaning media in the US have this illusion that the Eurogroup are simply going to allow Greek debt write offs without serious reform of the Greek economic system. This is never going to happen. This is what this dispute is really all about. And the smaller, poorer members of the zone feel just as strongly about this as the richer members as an article elsewhere in this newspaper makes very clear because they have voters too! It must be abundantly obvious by now that that are prepared so cut the Greeks loose without these commitments. The Eurogroup (as another article in this newspaper makes clear) are not bluffing.
7
Reform in the current sense means "drop your gun and hand over your valuables."
@Stephen J Johnston
The far left in the US, who seem to have adopted Tsiras and his sidekick, as family pets are ever with simplistic formulations. Apparently, in their minds the Greeks occupy some morally superior position to the citizens of Lithuania, Ireland, Spain, Italy, Germany et al.
The far left in the US, who seem to have adopted Tsiras and his sidekick, as family pets are ever with simplistic formulations. Apparently, in their minds the Greeks occupy some morally superior position to the citizens of Lithuania, Ireland, Spain, Italy, Germany et al.
Also read in the Huffington Post that the IMF nixed a deal because of a suggestion that Greece cut their military budget…IMF said no way! Amazing, as purchasing weapons Greece doesn't need was part of the original requirement by the IMF to get funding! Greece's problems were built in by the lender! Where is the justice in this?
40
IMF and it 's chief Lagarde are disrespectful to their loaners and their treatment to them always with contempt. IMF gives loan but doesn't stay there, starts to assert their contempt towards you in every aspect of life.
I am happy to announcement of new world wide bank of Chinese, IMF and world bank monopoly should be break down, their contempt too.
I am happy to announcement of new world wide bank of Chinese, IMF and world bank monopoly should be break down, their contempt too.
THis is not a problem too complex for the Greeks to figure out and vote on in a referendum. How patronizing! It is democracy, unless some have come to believe the masses are not only undeserving of a decent life, but also not fit to vote? This decision belongs to the Greeks and no one else.
50
What are the other countries in the eurozone if not democracies? Why does the vote of one democracy override that vastly larger population?
And yes it IS too complex for them. Greece has had decades to create a fundamentally fair system in which public service didn't entail salaries three times those of the public sector and in which bribes weren't a regular part of life.
And yes it IS too complex for them. Greece has had decades to create a fundamentally fair system in which public service didn't entail salaries three times those of the public sector and in which bribes weren't a regular part of life.
Carol,
If it's OK to vote on not paying your bills, it must be OK to vote on all sorts of other things too? That's it? The only requirement is a majority vote in favor of it in some geographic area?
I wonder what would happen here if a state or even several voted to not pay taxes to the IRS or even voted to not pay some portion spent on something with which they disagreeded?
If it's OK to vote on not paying your bills, it must be OK to vote on all sorts of other things too? That's it? The only requirement is a majority vote in favor of it in some geographic area?
I wonder what would happen here if a state or even several voted to not pay taxes to the IRS or even voted to not pay some portion spent on something with which they disagreeded?
The debt in Greece is a phony one trumped up by the IMF to keep selling arms to the Greeks.
Germany has a lot to answer for.
17
Like what:
Why the Germans save so much?
Why they work so hard and take money so seriously?
Why don't they take more vacations to Greek islands?
Why their unemployment in meagre 5% for the last 3 years?
Germany paid a lot for Greek's lazy cause, at some point you need to pull the plug and stop. Moreover, Germany doesn't run the Euro. Yes, it is the powerhouse, but it doesn't have the ultimate say.
Have you read what the Bulgarain PM said, today? I will quote, "Greece deserves it. We are far poorer than Greece, but we know how to check."
I do feel bad for Greece, but they are in trouble mostly because of their own policies, and not because of Germany.
Why the Germans save so much?
Why they work so hard and take money so seriously?
Why don't they take more vacations to Greek islands?
Why their unemployment in meagre 5% for the last 3 years?
Germany paid a lot for Greek's lazy cause, at some point you need to pull the plug and stop. Moreover, Germany doesn't run the Euro. Yes, it is the powerhouse, but it doesn't have the ultimate say.
Have you read what the Bulgarain PM said, today? I will quote, "Greece deserves it. We are far poorer than Greece, but we know how to check."
I do feel bad for Greece, but they are in trouble mostly because of their own policies, and not because of Germany.
The fault lies with both the EU and Greece. The EU loaded debt upon debt, interest upon interest till it can't be paid in full ever. The Greek government accepted it because they could and the day of reckoning is far off into the future which is now here. The scenario is this: the EU throws out the next lifeline and extends the charade and the Greeks accept it or the referendum on the too late date of July 5 produces a yes vote to stay in the EU (duh - of course they will). Ultimately the EU will have to significantly cut back the debt or the Greeks will have to become the poorest citizens on earth - which will it be? Both are losers and have been for years and that is their destiny. May the Germans enjoy their Mercedes and their well earned cheap spending and coldhearted overseas reputations.
7
Did anyone think Greece would ever pay it back? Anyone at all? Did Krugman ever imagine that?
9
Apparently, the European banks that made irresponsible loans did. Apparently, the ''troika" believes they really can squeeze blood from a stone. It appears the only real question left for the Eurozone is how do you they want to take your haircut: "ripping up the i.ou.s" or Grexit.
No , not even dog in the street. But in that case real question or VERITAS is, How come Germany's and France's banks gave almost 500 billion USD loan to Greece?
They knew that for their money they will capitulate the Greece. A European tradition which is remained from World Wars.
Eastern European nations should be very aware about what is the heart of power brokers of Europe. Even my self awakened from the deep sleep, Europe is still living with Napoleonic conspiracy, Hitler's gran-delusions.
Very pitiful.
They knew that for their money they will capitulate the Greece. A European tradition which is remained from World Wars.
Eastern European nations should be very aware about what is the heart of power brokers of Europe. Even my self awakened from the deep sleep, Europe is still living with Napoleonic conspiracy, Hitler's gran-delusions.
Very pitiful.
The British, Danish and Swiss were wise not to get involved with the Euro. There can be no economic unity unless there is political unity. And, that will never happen in Europe. The Greek government should go back to using the drachma , continue to crack down on tax cheaters and reform the archaic laws that make it difficult to do business in the country.
58
the ultimate winners if Greece leaves the Euro-bloc will be Greek fascist & xenophobic politcal parties. Syriza won't last in power (the initial euphoria of standing up to the Germans, et al. will ebb & the every day pain of Greek voters will be too great) and once the drachma is re-instated and Greece is shut out from international financing and hyper-Inflation sets in, the political conversation will be about Greek nationalism & "Greece for Greeks!"
7
The proposal that the current Greek government has advised the Greek electorate to reject was: 1) a reflection of economic reality, and 2) the best thing for the Greek economy. The current rules regarding retirement, pensions, regulations, government efficiency, and crony capitalism inhibit economic growth and are unsustainable. Recognizing unsustainability is exactly analogous to recognizing that Bernie Madoff fraud, except, rather than a private trickster doing the lying, politicians lied. The electorate is not entirely innocent; if you truly believe that you can get something for nothing, then you are too stupid to vote. On the other hand if you voted expecting someone else to pay for your "benefits," then you are complicit with the fraudsters. There may be some lessons here for the United States.
10
This was true back in 2010 and 2012, but not today. The Greek government would be running a budget surplus were it not for debt over 175% of GDP. Without the debt they could meet their pension obligations. The population is aging and the obligations will grow, but the fact remains they're supporting it at 25% unemployment with an economy in sharp contraction. This is the sort of stress condition you'd expect to break a pension system. Since absent the debt it wouldn't have broken, it seems that while the pensions may be generous, even perhaps unwise, they aren't unsustainable.
Sorry, but people who worked for decades HAVE paid for their benefits. And Greece has ALREADY agreed to raise the retirement age. Pensions were ALREADY slashed by 45 percent. Is that not enough misery to please you?
While I feel for the plight of the vulnerable in Greece who suffer the most, this editorial fails to stress this crisis has been going on for five years. By ripping up the I.O.U.s without any sign of real reform does not bode well because other PIIGS countries will demand the same. Then contagion will spread
To be clear, I do not agree with austerity as the sole or even the main driver of reform. Instead, there are plenty of ways Greece can help itself
To begin with, the tax burden should be distributed evenly. Taxing the poor while allowing the rich to sail the Mediterranean tax free is a bad formula. Tax evasion must be dealt with. Naturally, Greece hate others to interfere with its domestic affairs; however, this is linked to its indebtedness. When a person is bankrupted, the court has the right to dictate how he spends his money
Next, Greece cannot take everything but give nothing. Again, when a person is bankrupted, he may be allowed to keep his home and horse, but his jewelries are fair game
Talking about fairness, the world is hard pressed to understand why Greeks could retire at 55 or even before while people elsewhere have to work till 65 or beyond. Again, if Greece is self-sufficient, its citizens can go about their own work habits. Or not at all. But it is not. Could you blame the German or even the French being upset with their politicians if the latter are responsible for giving Greece a free pass?
Tsipras is playing a dangerous game and Greece will suffer
To be clear, I do not agree with austerity as the sole or even the main driver of reform. Instead, there are plenty of ways Greece can help itself
To begin with, the tax burden should be distributed evenly. Taxing the poor while allowing the rich to sail the Mediterranean tax free is a bad formula. Tax evasion must be dealt with. Naturally, Greece hate others to interfere with its domestic affairs; however, this is linked to its indebtedness. When a person is bankrupted, the court has the right to dictate how he spends his money
Next, Greece cannot take everything but give nothing. Again, when a person is bankrupted, he may be allowed to keep his home and horse, but his jewelries are fair game
Talking about fairness, the world is hard pressed to understand why Greeks could retire at 55 or even before while people elsewhere have to work till 65 or beyond. Again, if Greece is self-sufficient, its citizens can go about their own work habits. Or not at all. But it is not. Could you blame the German or even the French being upset with their politicians if the latter are responsible for giving Greece a free pass?
Tsipras is playing a dangerous game and Greece will suffer
23
Correct, a lot of commentators forget the all the countries in the Euro are also democracies and those politicians are answerable to their electorate - who have no wish to take on the burden of Greek debt. Also the Greek shipping industry which is a world leader pay's little or no taxes - retirement at 55 its 67 here!!
7
Tsipras already agreed to raise the retirement age. And, if retirement at age 50 is a crime to you, why is it perfectly fine when the Chinese, many French and US military personnel retire at 50? In fact, US military personnel can retire BEFORE age 50 and with very large pensions for life.
Greeks retire at 67 now, if they get any retirement at all. Many Greeks who lost their jobs will probably die before they get any pension. The VAT that the IMF wants Greece to impose is the worst possible way to "distribute the tax burden". The present government is the only thinkable government in Greece that would try to distibute the tax burden fairly. Greece hasn't "given nothing". They've made painful and politically difficult adjustments. But further austerity won't even give the creditors more money than they will get in a default. It will just prolong suffering and delay the day of reckoning.
1
Tear up the IOU's? Now there's a precedent for Italy, Spain and others to follow. And then? How do these governments fund their on-going deficits? Of course, write out another IOU. Don't send in the clowns, they're here.
6
The US never called in debts from WWII a, nor reparations. This created the so called "German Miracle" and the "Japanese Miracle" and ushered in widespread global prosperity in the first world. That seems a fine precedent.
The fable of the grasshopper and the ant come to mind with regards to Greece and it's financial woes. Greece's lackadaisical economic policies along with unbridled government spending have created an economic tsunami that somehow is the fault of Germany's Merkle. Greece's economic reforms should have commenced with the first euro they borrowed. Now the debt is too immense to pay and too hefty to forgive. At this point IMF and other lenders may have no choice but to forgive large portions of the debt and be more careful about loaning money in the future
8
"A “Grexit” would seriously undermine the credibility of the euro currency, threatening a global contagion."
That sounds like "too big too fail" to me. A Grexit would be a big disturbance, but how harmful it would be will be primarily determined by how the world leaders deal with it. Sooner or later we will reach a new equilibrium. However, by leaving troublesome elements like unpayable debts floating around, our leaders might leave us with a quite unpleasant equilibrium.
Unfortunately the refusal of the EU leaders until now to deal realistically with the Greek debt and with economic diversity within the eurozone in general suggests that they may once more take decisions that - by refusing to accept short term pain - result in long term trouble.
That sounds like "too big too fail" to me. A Grexit would be a big disturbance, but how harmful it would be will be primarily determined by how the world leaders deal with it. Sooner or later we will reach a new equilibrium. However, by leaving troublesome elements like unpayable debts floating around, our leaders might leave us with a quite unpleasant equilibrium.
Unfortunately the refusal of the EU leaders until now to deal realistically with the Greek debt and with economic diversity within the eurozone in general suggests that they may once more take decisions that - by refusing to accept short term pain - result in long term trouble.
17
"Grexit" might be just the incentive for the Eurozone to make the necessary reforms needed to keep the Euro flexible and competitive in the world markets. Economists have warned us repeatedly for throughout this crisis that the euro is broken and vulnerable to reactions from its independent members. It is time to step and make an honest assessment of changes required for success in the future.
You have mixed up some narrative.
Merkel said: “If the euro fails, Europe fails.”
She didn't say: “If the greece fails, the Euro fails.”
The rules of the euro are minted by the germans - just live with that fact. It is our currency, and everyone was well aware of that when they joint.
The greeks want to make something different out of that, something we germans don't want. The greeks want to make this to an excluding decision, the euro to be more like a deutschmark or a drachme. One choice has a future, the other don't.
Merkel said: “If the euro fails, Europe fails.”
She didn't say: “If the greece fails, the Euro fails.”
The rules of the euro are minted by the germans - just live with that fact. It is our currency, and everyone was well aware of that when they joint.
The greeks want to make something different out of that, something we germans don't want. The greeks want to make this to an excluding decision, the euro to be more like a deutschmark or a drachme. One choice has a future, the other don't.
4
Mr Weitz, I couldn't disagree more.
5
"What the Germans want" should not necessarily be the key factor in all EU decisions, although unfortunately it all too often seems to be! If the rules of the Euro are indeed minted by the Germans, as you so arrogantly proclaim, then maybe everybody else should get out. So far, it seems to be the Germans alone who have benefited from the shared currency, i.e., it brings down the cost of their exports, on which their economy depends. But what about the war reparations the Germans were supposed to pay to the Greeks and never did? What about the gold the Germans took from the Greek Treasury during WWII and never paid back? Finally, what about the massive debt relief the Germans received in 1953? The Marshall Plan that enabled them to rebuild their shattered country after a war they had themselves started? As one commentator remarked, it is time for a Merkel Plan for Greece.
11
No offense but this my-way-or-highway attitude can be dangerous. To say the least, Germany itself was once a recipient of loan forgiveness. So be careful of the American saying: "what goes around comes around!" History aside, Germany has reaped huge benefits from the Euro unification. In a way, he is partially responsible by conceiving a monetary but not political unification. This does not excuse Greece but Germany is certainly not an innocent bystander. This is not an attempt to cause a border war but let's call a spade a spade. There are plenty of blames to go around.
3
According to Juncker talks about debt relief were planned to follow "in autumn", as a second step after Greece had accepted to finish the 2nd bailout. The last tranche came with conditions; the gap between both sides wasn't huge.
"Talk about debt relief" in autumn is a bit vague, but I believe that Mr Tsipras made a mistake not to inform the Greek public about this debt relief further down the road, when he announced the referendum.
The creditors were not willing to put concrete numbers to said debt relief, and why should they? Mr Tsipras and Mr Varoufakis consistently broke the rules, and keep numbers on debt relief confidential? This would have remained a secret for about 90 seconds until Mr Varoufakis' next twitter post. Still, I think the Greek public should have heard from Mr Tsipras about the "talks in autumn". Even Prof. Krugman might reconsider his opinion that a "no" in the referendum was the better option, given that a major debt relief was coming.
At the end of the day, of course, it is a matter of trust. The Greek don't have much trust left after years of suffering. And Paul Krugman believes that the creditors are evil, medieval torturers, even Anti-Keynesians. Personally, I think if the creditors signalled "talks on debt relief" in autumn, this would be a big turn-around in the assessment of the situation. The creditors are now closer to Paul Krugman's position than they would ever be willing to admit in public.
"Talk about debt relief" in autumn is a bit vague, but I believe that Mr Tsipras made a mistake not to inform the Greek public about this debt relief further down the road, when he announced the referendum.
The creditors were not willing to put concrete numbers to said debt relief, and why should they? Mr Tsipras and Mr Varoufakis consistently broke the rules, and keep numbers on debt relief confidential? This would have remained a secret for about 90 seconds until Mr Varoufakis' next twitter post. Still, I think the Greek public should have heard from Mr Tsipras about the "talks in autumn". Even Prof. Krugman might reconsider his opinion that a "no" in the referendum was the better option, given that a major debt relief was coming.
At the end of the day, of course, it is a matter of trust. The Greek don't have much trust left after years of suffering. And Paul Krugman believes that the creditors are evil, medieval torturers, even Anti-Keynesians. Personally, I think if the creditors signalled "talks on debt relief" in autumn, this would be a big turn-around in the assessment of the situation. The creditors are now closer to Paul Krugman's position than they would ever be willing to admit in public.
3
I cannot understand why people think that banks have infinite piles of own money they can give or take at a whim. Do you have your money deposited in some bank? Then Greece owes you. If they default, you get less interest (if any, and maybe worse). Want to take a loan to e.g. expand business? Pay more interest if Greece defaults.
Having said that, there might be sound business and humanitarian reasons (those are NOT contradictory) to bail Greece out. At the cost similar I wrote above, we will all pay the cost one way or another.
The true issue is which way (default or bailout) will be best long term. People of Greece included.
Having said that, there might be sound business and humanitarian reasons (those are NOT contradictory) to bail Greece out. At the cost similar I wrote above, we will all pay the cost one way or another.
The true issue is which way (default or bailout) will be best long term. People of Greece included.
6
Creditors do a good job of posing as cheated, but anyone in finance knows that of the nearly 100 last billions lent to Greece, only a little less than 10% actually went to Greece, the rest going straigth back into creditors's pockets. That's the rule of the game, and the game is as unhealthy as was how Greece's was governed up to six months ago.
The consequences of Greece bowing down to the messy and clumsy solutions imposed onto them by the EU and the IMF would certainly lead to dramatic, possibly violent unrest that might cost much more to Europe as a whole, than giving more maturity to the debt, more manoeuvering space to Tsypras who stands as quite a different head of state: young, cool and imaginative
The consequences of Greece bowing down to the messy and clumsy solutions imposed onto them by the EU and the IMF would certainly lead to dramatic, possibly violent unrest that might cost much more to Europe as a whole, than giving more maturity to the debt, more manoeuvering space to Tsypras who stands as quite a different head of state: young, cool and imaginative
19
Tsypras who stands as quite a different head of state: young, cool and imaginative
You do know the man has never had a job outside of his political party and there are Stalinists in his cabinet that he appointed?
You do know the man has never had a job outside of his political party and there are Stalinists in his cabinet that he appointed?
Paul Krugman yesterday offered the best deconstruction of this argument. "If the euro fails, Europe fails", maybe but the point is that the euro without mechanisms of financial solidarity was a bad idea & remains a bad idea. Only Germany and the Northern countries connected to the former DM benefited from this common currency. All the others, notably France and Italy, which lost the possibility of devaluing their currencies lost out. So maintaining Greece within the euro would mean that Germany is willing to shore up the Greek economy in a real way, not by imposing debts that cannot be repaid. As Krugman repeats frequently if Greece were in the same relation to the EU as Florida is to the US then there would be no euro crisis.
If the Greeks vote yes it will only kick the can down the road till the next crisis and in the end Greece will default and the euro will be in bad shape. Germany has a lot to answer for. The European hegemon pushed its luck and is trying to impose on others what it itself escaped in the 50s. The US then helped Germany for geopolitical reasons but now Germans are not willing to help Greeks, not even willing to pay for the gold stolen by the Nazis. Merkel is the chief culprit in the failure of Europe (although her finance minister is even worse). Obama should stop using the NSA to spy on leaders and companies but put pressure on Europeans to show solidarity with a country which should not have joined the euro--but it's too late now.
If the Greeks vote yes it will only kick the can down the road till the next crisis and in the end Greece will default and the euro will be in bad shape. Germany has a lot to answer for. The European hegemon pushed its luck and is trying to impose on others what it itself escaped in the 50s. The US then helped Germany for geopolitical reasons but now Germans are not willing to help Greeks, not even willing to pay for the gold stolen by the Nazis. Merkel is the chief culprit in the failure of Europe (although her finance minister is even worse). Obama should stop using the NSA to spy on leaders and companies but put pressure on Europeans to show solidarity with a country which should not have joined the euro--but it's too late now.
6
@Guerlain. The euro was a bad idea. May I remind you it was a French idea? What I can't understand: why France, Italy, Spain, Greece and other countries that do not profit from the euro in the same extent as Germany obviously does, are not combining forces and strive for full fiscal integration of the eurozone.
3
Yes Ruppert and Giscard pushed for Greece to be admitted in the E-U. (bad move) But ideas are not necessarily national in themselves. Krugman is interesting not because he's American and his critique of Germany and the E-U (which I totally share) is based upon an economic analysis, not a national prejudice.
Now southern European countries might yet rise against Germany's hegemony if Podemos comes to power. We'll see.
Now southern European countries might yet rise against Germany's hegemony if Podemos comes to power. We'll see.
In today's global economic climate forgiving sovereign debt is not the answer. Rather, debt "realignment" is what is called for given the numbers, which those in power and elsewhere do not understand. A millions seconds = 11.5 days. A billion seconds = 32 years. A trillion seconds = 32,000 years. This is worth repeating so it really sinks in: A trillion seconds = 32,000 years. Global debt is estimated to be beyond $200 trillion. Austerity and taxation cannot pay this off. This is not the place to explain why or how this happened. It is what it is and must be addressed, not with measures fit for lower numbers; but with a process equal to the problem. This writer has advocated for years a global summit be held where all sovereign debt - and it could include other debt as well such as state and municipal debt - where all the debt was not forgiven, but realigned.
This global debt realignment would not be like debt forgiveness where a creditor loses; on the contrary, it is a win-win for all with debtors losing the yoke which hampers progress and prosperity for the debtor, and credits placed in the creditor''s accounts. We have the means to do this. We only need insight into the problem and the possibilities; and the boldness for its solution.
If one googles global debt realignment the process is outlined. It is hoped many of the Time's readers will do so and we can change the world as we know it by replacing old thinking with a new, and viable, approach.
This global debt realignment would not be like debt forgiveness where a creditor loses; on the contrary, it is a win-win for all with debtors losing the yoke which hampers progress and prosperity for the debtor, and credits placed in the creditor''s accounts. We have the means to do this. We only need insight into the problem and the possibilities; and the boldness for its solution.
If one googles global debt realignment the process is outlined. It is hoped many of the Time's readers will do so and we can change the world as we know it by replacing old thinking with a new, and viable, approach.
2
Its total nonsense to claim that a grexit will undermine the euro. If anything, it will strengthen it. At the end of the day countries like Germany, France, Netherlands, Austria are going to share a common currency, you can call it whatever you want. Countries like Greece are mere appendages to that.
Merkels comment is also nonsense. The euro is not failing if Greece leaves. If anything it shows competent management of the currency not to let Greece get away with these shenanigans. I'd definitely have less faith in the euro if we were just giving cash to Greece in perpetuity to allow them to retire early on generous pensions.
Merkels comment is also nonsense. The euro is not failing if Greece leaves. If anything it shows competent management of the currency not to let Greece get away with these shenanigans. I'd definitely have less faith in the euro if we were just giving cash to Greece in perpetuity to allow them to retire early on generous pensions.
5
Tsipras ALREADY agreed to raise the retirement age, and Greek pensions have ALREADY been cut in half. Further cuts, along with increases in taxes on food, medicine, and electricity amount to mass murder, which is what you want, apparently.
1
The European Union has to thank Greece for electing Alexis Tsipras.
Never was there so much unity among European leaders in hating his little political turns and tricks.
About the referendum I think it's a waste of time and money.
With voting Syriza into government the Greek people already have shown what they want:
No reforms but staying in the Eurozone and get financed by the the other members.
They will not get money without further reforms no matter what they vote in the referendum.
I agree with other commentators that Greece can never repay their debt and I vote to forgive debts
to help (as German I hope that my country will be generous here). I don't thonk that even a cut in debt in the long run help will help. Syriza and the preceding Greek govenments didn't show much intention to do needed reforms and as long this behaviour persists they don't belong in the Eurozone.
My respect goes to countries like Ireland, Lithuania or Portugal who did the requested reforms and took the suffering that came along with it. I wouldn't have a problem in financing their deficits because they did their part to get back on track (as Greece did until January...).
Never was there so much unity among European leaders in hating his little political turns and tricks.
About the referendum I think it's a waste of time and money.
With voting Syriza into government the Greek people already have shown what they want:
No reforms but staying in the Eurozone and get financed by the the other members.
They will not get money without further reforms no matter what they vote in the referendum.
I agree with other commentators that Greece can never repay their debt and I vote to forgive debts
to help (as German I hope that my country will be generous here). I don't thonk that even a cut in debt in the long run help will help. Syriza and the preceding Greek govenments didn't show much intention to do needed reforms and as long this behaviour persists they don't belong in the Eurozone.
My respect goes to countries like Ireland, Lithuania or Portugal who did the requested reforms and took the suffering that came along with it. I wouldn't have a problem in financing their deficits because they did their part to get back on track (as Greece did until January...).
4
There are a number of comments here criticizing Greece's management of their economy - over generous pensions, corruption etc.
How could the economic failings of the Greek Goverment not have been known in 1981, when Greece was admitted to the EU? The country had been a democracy for less than 10 years.
Of course, such failings were known and the strong EU countries took advantage of those failings.
Time for Germany to admit they got it wrong and to suck it up. And, maybe next time, don't ignore the findings of your due diligence.
How could the economic failings of the Greek Goverment not have been known in 1981, when Greece was admitted to the EU? The country had been a democracy for less than 10 years.
Of course, such failings were known and the strong EU countries took advantage of those failings.
Time for Germany to admit they got it wrong and to suck it up. And, maybe next time, don't ignore the findings of your due diligence.
1
Maybe you underestimate the folly of trusting someone, especially when you don't know that they have engaged Goldman and Sachs to hide their real economic standing.
But by some point you are right, we should get someone concrete to be punished for this fraud, and this also should include Goldman and Sachs.
But by some point you are right, we should get someone concrete to be punished for this fraud, and this also should include Goldman and Sachs.
7
You are right. Here in the US we can not punish Goldman Sachs because our government (GOP) protects big business at the expense of the people. Maybe Germany will have better luck.
7
Making a case for Greece by blaming (implicating) other nations and International banking institutions is hardly a basis for any mutual trust in a relation. Unfortunately the ideologues have stepped in and find in Greece's suffering a public platform for their jaded views of all manner of global economic and social disorder. Casting all as callus who are not persuaded by the bailout voices from Krugman et.al. is hardly the course for any reconciliation with a Greece that shows no prospect for contributing to the economic and social well-being of the Union.
Greece should be spared ignominious terms. Greece's crisis deserves sympathy if for no other reason than it is looming human tragedy.
That said it is not unreasonable for their to come into existence an acknowledged, viable, recovery plan. (The Marshall PLAN was more than just delivering money bags.) There is something to be said for a society that well merits orderly administration of its public affairs. That seeks standing in a Union for its exemplary conduct of public administration.
Those that plead the case for absolving Greece from its obligations seem somehow ready overlook that there should exist some firm means (accountable plans) that afford confidence to other members of the Union
that greece has the prospect to contribute to the Union ...not only by its presence but by its girding of the Union's foundation.
Greece should be spared ignominious terms. Greece's crisis deserves sympathy if for no other reason than it is looming human tragedy.
That said it is not unreasonable for their to come into existence an acknowledged, viable, recovery plan. (The Marshall PLAN was more than just delivering money bags.) There is something to be said for a society that well merits orderly administration of its public affairs. That seeks standing in a Union for its exemplary conduct of public administration.
Those that plead the case for absolving Greece from its obligations seem somehow ready overlook that there should exist some firm means (accountable plans) that afford confidence to other members of the Union
that greece has the prospect to contribute to the Union ...not only by its presence but by its girding of the Union's foundation.
5
Much better for Greece to be done with the Unions punitive, failed, incompetent austerity. Within a few years Greece will be better off .
1
As Ms. Merkel pointed out yesterday, the current Greek government wants to change the rules of the Euro zone and receive unconditional aid. Tsipras and his allies have said so publicly many times, and, by now, it is clear that they really mean it.
Trouble is, the 18 other equally democratically elected governments of the Euro zone disagree. They feel that the Euro is working for them, and want to keep the current regulations and rules.
It's another matter whether they are right, but in a club of democracies 18 vs 1 is a pretty overwhelming vote and the citizens of one country can't dictate the rules for eighteen others.
Greece entered the Euro zone by cooking its books with the help of Goldman and Sachs. Its economy was never sufficiently advanced for joining the common currency, and the nationalist rhetoric and the economic ideology of its largely neo-Marxist government are so far removed from mainstream European politics that it would be better for Greece and Europe if they parted ways: by leaving not just the Euro but also the EU.
Given Greece's relative insignificance, it would not be an amputation but an appendicitis and send a strong message to countries like Hungary that EU membership is not forever and linked to values and policies, like a commitment to the European ideal of an ever closer union, a free market economy, and good government.
At this point, there is a good chance that pruning the European tree will make the EU and the Euro stronger, not weaker.
Trouble is, the 18 other equally democratically elected governments of the Euro zone disagree. They feel that the Euro is working for them, and want to keep the current regulations and rules.
It's another matter whether they are right, but in a club of democracies 18 vs 1 is a pretty overwhelming vote and the citizens of one country can't dictate the rules for eighteen others.
Greece entered the Euro zone by cooking its books with the help of Goldman and Sachs. Its economy was never sufficiently advanced for joining the common currency, and the nationalist rhetoric and the economic ideology of its largely neo-Marxist government are so far removed from mainstream European politics that it would be better for Greece and Europe if they parted ways: by leaving not just the Euro but also the EU.
Given Greece's relative insignificance, it would not be an amputation but an appendicitis and send a strong message to countries like Hungary that EU membership is not forever and linked to values and policies, like a commitment to the European ideal of an ever closer union, a free market economy, and good government.
At this point, there is a good chance that pruning the European tree will make the EU and the Euro stronger, not weaker.
16
"The answer should be a resounding commitment to keep Greece in the euro. .. A “Grexit” would seriously undermine the credibility of the euro currency, threatening a global contagion. ".
This is totally wrong.
Getting Greece out of the Euro will strengthen, not weaken, this currency.
Greece has been a huge drag on the Euro for the past 5 years.
European countries have "lent" 240 billions to Greece in the past 3 years alone to absolutely no avail.
Greece has cheated and lied to enter the Euro and the Eurozone, they have cheated and lied since then and are still cheating and lying.
And extending further financial assistance to them will only make them cheat and lie some more as well as laugh their heads off at how gullible the rest of Europe easy and how easy it is for them to get more money that they can then waste away as they have done since joining the Euro.
If the other european keep falling for the Greeks new ploy : in 6 months they will have the same exact problem of 15 "last chance" meetings to "solve" the Greek problem and you will be back telling that the only solution is to keep Grece living under life-support from the other nations.
Enough is enough ! The Greek will NEVER change, and taking their (selfish and dishonnest perspective) who could blame them : Europe keeps throwing tens of billions of "good money" after "bad" and knowing that they have no reason and motivation to straighten their act ..
This is totally wrong.
Getting Greece out of the Euro will strengthen, not weaken, this currency.
Greece has been a huge drag on the Euro for the past 5 years.
European countries have "lent" 240 billions to Greece in the past 3 years alone to absolutely no avail.
Greece has cheated and lied to enter the Euro and the Eurozone, they have cheated and lied since then and are still cheating and lying.
And extending further financial assistance to them will only make them cheat and lie some more as well as laugh their heads off at how gullible the rest of Europe easy and how easy it is for them to get more money that they can then waste away as they have done since joining the Euro.
If the other european keep falling for the Greeks new ploy : in 6 months they will have the same exact problem of 15 "last chance" meetings to "solve" the Greek problem and you will be back telling that the only solution is to keep Grece living under life-support from the other nations.
Enough is enough ! The Greek will NEVER change, and taking their (selfish and dishonnest perspective) who could blame them : Europe keeps throwing tens of billions of "good money" after "bad" and knowing that they have no reason and motivation to straighten their act ..
2
It is nice to see that greeks are thought to be like that. Let's see ... Of the billions that were lent to Greece only small fraction actually reached Greece. Most of these bailouts were used to pay the interests of our debts. So in the end they used money in order to get them back.
How do u survive with 400 euros pensions when most of the goods have similar prices as in other parts of europe?
You don't even know what was proposed from the Greek Goverment nor can I be sure either but what I do know is that this cannot go on. I don't hate anyone , I didn't steal anyone's money. I am an unemployed IT graduate with masters in Embedded Systems and the only option I see if I want to make a family and be able to raise kids is to migrate to some other country.
How is further austerity going to help when whole families survive on one person's pension due to unemployment? How would further increase in VAT and other taxes help ?
I understand you have your opinions and by all means you are entitled to them but do not call me a liar and selfish when even for more work we are paid less than you are and so little that we have trouble surviving while you stand on your high chair and advocate that we don't deserve help. None asked you to erase everything. We only ask to be given a chance to prosper and thus return the money. If 5 years of following the austerity policies didn't help doesn't prove to you that it's a failed program i don't know what will .
How do u survive with 400 euros pensions when most of the goods have similar prices as in other parts of europe?
You don't even know what was proposed from the Greek Goverment nor can I be sure either but what I do know is that this cannot go on. I don't hate anyone , I didn't steal anyone's money. I am an unemployed IT graduate with masters in Embedded Systems and the only option I see if I want to make a family and be able to raise kids is to migrate to some other country.
How is further austerity going to help when whole families survive on one person's pension due to unemployment? How would further increase in VAT and other taxes help ?
I understand you have your opinions and by all means you are entitled to them but do not call me a liar and selfish when even for more work we are paid less than you are and so little that we have trouble surviving while you stand on your high chair and advocate that we don't deserve help. None asked you to erase everything. We only ask to be given a chance to prosper and thus return the money. If 5 years of following the austerity policies didn't help doesn't prove to you that it's a failed program i don't know what will .
46
Right. Pensioners, who worked 40 years and have ALREADY seen their pensions slashed by almost 50 percent, are "selfish" for wanting more than 350 euros a month. (And Michel lives in Santa Barbara, a haven for the 1%.)
4
I'm deeply ambivalent on the question of who is right -- the EU for demanding Greece live up to its obligations OR Greece who is fed up and frustrated due to their inability to carry the burden.
Time to reason from first principles. What is the point of all the institutions we built? Is it not in pursuit of a better life for PEOPLE. Remember People? The young, the old, the tired, the retired. Why should people suffer the indignity they are currently suffering in Greece?
We have all watched the European and American governments and Central bankers move heaven and earth to ensure the bankers didn't suffer the consequences of their poor decisions. Many of those bankers deserved to lose every single penny they risked and thrown in jail for abusing the financial system.
If the powers could find it in their hearts to bailout rich bankers in trouble, they have to be able to remember why all of this exists in the first place. It's the PEOPLE silly.
Everything we built is for people to live in dignity and pursue a fulfilling life. I hope the monsters running the financial show remember this simple truth.
Time to reason from first principles. What is the point of all the institutions we built? Is it not in pursuit of a better life for PEOPLE. Remember People? The young, the old, the tired, the retired. Why should people suffer the indignity they are currently suffering in Greece?
We have all watched the European and American governments and Central bankers move heaven and earth to ensure the bankers didn't suffer the consequences of their poor decisions. Many of those bankers deserved to lose every single penny they risked and thrown in jail for abusing the financial system.
If the powers could find it in their hearts to bailout rich bankers in trouble, they have to be able to remember why all of this exists in the first place. It's the PEOPLE silly.
Everything we built is for people to live in dignity and pursue a fulfilling life. I hope the monsters running the financial show remember this simple truth.
1
Is Greece abandoning the Euro or has the Euro abandoned Greece?
Greek debt is currently about $340 billion euros in an economy with a GDP of 200 billion euros. Unemployment is at 25%. The economy is shrinking under the duress of austerity. Paying just 5% a year on the principle, not including interest, would be 17 billion euros. That is 8.5% of GDP, a staggering amount.
The economy has already contracted 25%. Just to get back to ground zero and make that 5% payment would require an expansion of GDP of nearly 35%. Can't be done. You can't get there from here. The debt cannot be paid.
The European union is using a completely unworkable solution to the Greek debt situation. Loaning Greece more money to pay existing debt is similar to what happens if you don't pay a bookie or loan shark off in time. The debt keeps growing at ever increasing rates.
Much of the debt must be written off and the creditors and bondholders will have to take the losses. Markets contain risk. If you can't afford the risk, don't make the investment. Those that pumped money into Greece with the intent of profiting, did so at their own peril.
Greece messed up. No question about it and they are suffering for their errors. But Greece had enablers. The pushers of endless unsecured debt are going to have to realize their losses. Otherwise, this nightmare never ends. Political instability often results from economic collapse. That's not a solution.
Greek debt is currently about $340 billion euros in an economy with a GDP of 200 billion euros. Unemployment is at 25%. The economy is shrinking under the duress of austerity. Paying just 5% a year on the principle, not including interest, would be 17 billion euros. That is 8.5% of GDP, a staggering amount.
The economy has already contracted 25%. Just to get back to ground zero and make that 5% payment would require an expansion of GDP of nearly 35%. Can't be done. You can't get there from here. The debt cannot be paid.
The European union is using a completely unworkable solution to the Greek debt situation. Loaning Greece more money to pay existing debt is similar to what happens if you don't pay a bookie or loan shark off in time. The debt keeps growing at ever increasing rates.
Much of the debt must be written off and the creditors and bondholders will have to take the losses. Markets contain risk. If you can't afford the risk, don't make the investment. Those that pumped money into Greece with the intent of profiting, did so at their own peril.
Greece messed up. No question about it and they are suffering for their errors. But Greece had enablers. The pushers of endless unsecured debt are going to have to realize their losses. Otherwise, this nightmare never ends. Political instability often results from economic collapse. That's not a solution.
10
If the European leaders tear up Greece's IOUs, then that will be great for Greece, but it means that citizens of the other European countries are losing a lot of money. This situation is not such a simple moral and economic equation as the editorial board seems to imply.
1
Tsipras will be gone in a week. Greece's largest economic driver is tourism and now that is going to go into a big decline with fears of civil war. They are already refusing to accept credit cards from locals. What is of great concern here is also that if Greece goes down, it makes them vulnerable to Putin who is only itching to get his navy into European waters. They'll be unable to refuse his offers to establish naval bases and then the whole of Europe is more at risk to the Russian's ambitions that go beyond existing borders. Terrifying.
2
No, the Greek people had their chance at the ballot box and they elected Tsipras et al. Sorry, time to pay up or burn.
1
Why would other Europeans continue to pay taxes to repair for Greek's government mismanagement? Didn't the former Greek governments cook the books to get into the Eurozone? If Greeks are not willing to pay taxes and making sacrifices why would other European countries have to do it for them?
Let's be serious!
Let's be serious!
5
If one assumes that plutocrats are pulling the strings, then the question becomes: what's better for a billionaire, Greece in or out of the Euro?
1
Somehow all attention is being focused on the Greeks vs Germans which is not the issue. The Greeks can't pay their debts and no one (including Paul Krugman) will lend them any more money unless certain covenants are agreed to. I suggest the lenders are in the best position to decided how to best protect their bad debts and Greece is in the best position to know what medicine to swallow.
1
Sometimes the right medicine is not the medicine that tastes best, and sometimes people are reluctant to accept this.
The deal offered by the EU is clearly designed to crush the sitting government. If you read Varoufakis' blog from June, the proposal put forth in that is very reasonable but was rejected out of hand by the EU. Greece has much reform to implement, which will take years such as effective tax collection system. They can close pension loopholes now as part of the reform. However, the EU must recognize the humanitarian crisis that they are now instrumental in prolonging. They must also see the obvious result of continuing the failed course. I suggest the Greeks (I am not Greek) vote no on July 5.
1
"A bad idea... putting so complex and fateful a question on such short notice to a nation already so confused and battered is fraught with danger..." Really? In Greece, where every voter seems engaged and where, after all, Democracy was born the Greeks should not be allowed to vote on their own destiny?
Since when are we Americans so worried about democracy? Didn't we believe in Democracy versus the all-knowing elites when we signed the Declaration of Independence? Isn't America a monument to the *common* man (and woman) doing extraordinary things?
Even with the political games being played, this is exactly where a bailout belongs --on the hands of the voters. If indeed the elites, the macro experts, the IMF, Prime Minister Merkel, all those wizened sages know best, let them convince the average grandmother and office worker, the farmer, the new mother about their wisdom and expertise. Or is it that the elites have no stool to stand on, and that they are emperors with no clothes --the arbitrariness of their power left on the open to shrivel and die unraveled by the will of the people?
I just wonder how much better and more responsible our Wall Street and our politicians would be if they had to often face the Will of the people, and if our President had a single ounce of Mr. Tsipras' courage and a bit of his loyalty to the voters that elected him.
Since when are we Americans so worried about democracy? Didn't we believe in Democracy versus the all-knowing elites when we signed the Declaration of Independence? Isn't America a monument to the *common* man (and woman) doing extraordinary things?
Even with the political games being played, this is exactly where a bailout belongs --on the hands of the voters. If indeed the elites, the macro experts, the IMF, Prime Minister Merkel, all those wizened sages know best, let them convince the average grandmother and office worker, the farmer, the new mother about their wisdom and expertise. Or is it that the elites have no stool to stand on, and that they are emperors with no clothes --the arbitrariness of their power left on the open to shrivel and die unraveled by the will of the people?
I just wonder how much better and more responsible our Wall Street and our politicians would be if they had to often face the Will of the people, and if our President had a single ounce of Mr. Tsipras' courage and a bit of his loyalty to the voters that elected him.
3
Just wondering if the Editorial Board of the NY Times would lend me money and then rip up the IOU.
6
The future of the Euro is in no imminent danger. 18 out of 19 countries using the Euro are very happy with their currency. The citizens on the 19th country (Greece) overwhelmingly want to continue to have it as their currency. Multiple other European countries are dying to join the Euro, even if tough adjustments are needed.
It is only Syriza and Tsipras who are winning about the requirements to be part of the Euro. And the Eurozon squarely put the choice to them. Follow the rules and stay in the Euro or walk.
If Greece leaves the Euro, the worse the consequences, the better it is for the Euro. If the Greek economy completely collapses (like that of the latest leftist take over - Venezuela), it would be a positive for the Euro. It would be a reminder for Spain, Portugal et al, that there is no salvation outside the Eurozone.
So if Greece wants to commit economic suicide recommended by Krugman and Tsipras, by all means - do so. And for the benefit of the Euro, the EU should provide no help. Because the worse the outcome, the stronger the EU and Eurozone will be.
It is only Syriza and Tsipras who are winning about the requirements to be part of the Euro. And the Eurozon squarely put the choice to them. Follow the rules and stay in the Euro or walk.
If Greece leaves the Euro, the worse the consequences, the better it is for the Euro. If the Greek economy completely collapses (like that of the latest leftist take over - Venezuela), it would be a positive for the Euro. It would be a reminder for Spain, Portugal et al, that there is no salvation outside the Eurozone.
So if Greece wants to commit economic suicide recommended by Krugman and Tsipras, by all means - do so. And for the benefit of the Euro, the EU should provide no help. Because the worse the outcome, the stronger the EU and Eurozone will be.
4
Riches given by the gods will last.
Riches won by injustice and violence only foster ate (ἂτη), which comes swiftly. (Solon)
Chancellor Ludwig Erchard in the 1960s said that Germany will repay the forced loan to Greece once it reunited. He assumed this would never happen. In 1990 with the help of the USA Government, France, England and the Soviets, Germany deliberately avoided calling the “2 + 4 agreement” a peace accord, undermining the Greek claims for the forced loan and the reparations. Mr. Schäuble was the mastermind of this arrangement. Greece it was not a signatory of the treaty, and argued that the treaty could not have wiped out its claims. The Greeks was told before 1990 that it was too early to deal with the issue of reparations and the forced loan. Then, they were told it was too late.
So after 1952 Greece was forced by Germany’s protectors to write a fat check to German people to use it as they please!
Incidentally technically Greece is still at war with Germany. Greece offered to sign the peace treaty in the 1050s and Germany refused, to avoid discussion for the forced loan and the reparations.
Anyway after the humiliation, the devastation, the depression, or who knows, after a possible collapse of the Greek State and even its disappearance of the world map, the Greeks whoever they are still will proudly whisper “The Glory that was Greece.” And this will never be said for the Germans.
Riches won by injustice and violence only foster ate (ἂτη), which comes swiftly. (Solon)
Chancellor Ludwig Erchard in the 1960s said that Germany will repay the forced loan to Greece once it reunited. He assumed this would never happen. In 1990 with the help of the USA Government, France, England and the Soviets, Germany deliberately avoided calling the “2 + 4 agreement” a peace accord, undermining the Greek claims for the forced loan and the reparations. Mr. Schäuble was the mastermind of this arrangement. Greece it was not a signatory of the treaty, and argued that the treaty could not have wiped out its claims. The Greeks was told before 1990 that it was too early to deal with the issue of reparations and the forced loan. Then, they were told it was too late.
So after 1952 Greece was forced by Germany’s protectors to write a fat check to German people to use it as they please!
Incidentally technically Greece is still at war with Germany. Greece offered to sign the peace treaty in the 1050s and Germany refused, to avoid discussion for the forced loan and the reparations.
Anyway after the humiliation, the devastation, the depression, or who knows, after a possible collapse of the Greek State and even its disappearance of the world map, the Greeks whoever they are still will proudly whisper “The Glory that was Greece.” And this will never be said for the Germans.
3
let's pitch up any german obligation against any greek obligation.
And if you claim you defaulted on your debts - so did we.
And if you claim a contract can made void by public vote - so can we.
And if you claim we had an 50% haircut in 1953 - so did you in 2012.
By the way, even most conservative estimates say, that the claims from the greeks could sum up to 13 billion, that would be an handout against to the 84 billion we have lend you and we are about going to lose.
And if you claim you defaulted on your debts - so did we.
And if you claim a contract can made void by public vote - so can we.
And if you claim we had an 50% haircut in 1953 - so did you in 2012.
By the way, even most conservative estimates say, that the claims from the greeks could sum up to 13 billion, that would be an handout against to the 84 billion we have lend you and we are about going to lose.
Hey, NYT editorial board, don't pretend you are an independent voice. You are lackies of the establishment. Greece will never be free until it breaks this EU bond. It can be the first to respond to Pope Francis call for revolution.
1
It is becoming obvious that the inclusion of Greece in the European Union was a mistake, and the consideration of Turkey is another. Greece is an Asian country with different motivations than the West. Our mistake is to assume that first world economics is best for everyone. China is leading the marginal economies in finding a middle ground for developing nations that is not based on European philosophies and economics. Africa, Asia, much of South America need basic infrastructure and investment regardless of American/European cultural imperatives (yes, same root as imperialism). Currently we are trying to keep them within check, but I predict the tide will soon turn in their favor - if for no other reason than there are more of them than us. Greece will thrive in a socialist/capitalist infrastructure, far more than in the European capitalist structure. Russia and China will have far more success than the West has in bringing Greece back from the brink.
1
Greece is an Asian country? Hilarious. The word Europe is a Greek word. The basis of "western" values is Hellenic Greek. Even the architecture of European capitals is directly copied from the Greek. Your language is based on the Greek, your bible was translated by the Greeks, your medical terms are ALL derived from the Greek ...
Thanks for the laugh though.
Thanks for the laugh though.
It is said that Greece is where the West begins and ends. While true Europe has borrowed much from the Greeks - actually their Roman conquerors, but Greece was part of the Turkish Ottoman Empire for centuries and missed out on much of the industrial revolution that defined European economics. "Greece’s contemporary culture was largely shaped by the trends and conventions of Southeastern Europe and the Near East – which are wildly different from Western European norms." http://www.ibtimes.com/are-greeks-really-european-212891
1
The euro has clearly expanded too much, likely in some peculiar attempt to challenge global hegemons such as the United States. Although possible, this goal is not practical. The cultural, economic, and social differences are simply too wide to bridge. The idea that Greece or even Italy has any realistic chance to run with the likes of Germany and other northern European economies is asinine. Unfortunately, this mistake is going to roil the world economy for some time. An economic alliance among northern European countries, including France, is more workable.
I miss the days of the mark, guilder, and franc. I suspect many European do as well! If only we could put the genie back in the bottle.
I miss the days of the mark, guilder, and franc. I suspect many European do as well! If only we could put the genie back in the bottle.
1
The Guns of August updated now might be the Debts of August. As in the run up to WWI, the Law of Unintended Consequences starts to rear its ugly head. An inability to compromise and miscommunication doomed Europe in 1914; will the same feckless mistake doom Europe in 2015?
Amazing how history is a flat circle. In 1914 Europe's fate was in the Germans' hands ( specifically Kaiser Wilhelm ); today it is STILL in Germany's hands ( specifically Chancellor Merkel ).
A Bette Davis moment: ' buckle up, it's going to be a bumpy ride. '
Amazing how history is a flat circle. In 1914 Europe's fate was in the Germans' hands ( specifically Kaiser Wilhelm ); today it is STILL in Germany's hands ( specifically Chancellor Merkel ).
A Bette Davis moment: ' buckle up, it's going to be a bumpy ride. '
For the love of sanity, what kind of sadists run the troika? Watching a peaceful, lovely country that has been a stalwart ally of the West (Greece delivered the first Allied victory against the Axis during WWII) treated so horribly is appalling.
We are talking about Greece here -- not Nazi Germany who was rewarded with lavish terms of debt forgiveness, the largest in the history of the world, and heavy international investment to build Germany into a "miracle" manufacturing giant.
What happened to the West? It has veered far off course by embracing neoliberalism, disaster capitalism, propaganda politics and arrogance.
I wish Greece could leave behind the E.U, a *union* that boasts classical Hellenic values while leaving the birthplace of democracy to wither and die in solitude. If she left, I feel that civilized people of the world would rally and help her.
Shame on Germany, but shame also on Italy and Spain who don't stand up for their southern neighbor. Shame on all the E.U countries with right wing leaders who cower before their German masters.
We are talking about Greece here -- not Nazi Germany who was rewarded with lavish terms of debt forgiveness, the largest in the history of the world, and heavy international investment to build Germany into a "miracle" manufacturing giant.
What happened to the West? It has veered far off course by embracing neoliberalism, disaster capitalism, propaganda politics and arrogance.
I wish Greece could leave behind the E.U, a *union* that boasts classical Hellenic values while leaving the birthplace of democracy to wither and die in solitude. If she left, I feel that civilized people of the world would rally and help her.
Shame on Germany, but shame also on Italy and Spain who don't stand up for their southern neighbor. Shame on all the E.U countries with right wing leaders who cower before their German masters.
3
How did the Greek government, which falsified its financial data when reporting to the other nations utilizing the euro, go from perpetrator to victim the moment that it confessed that it could not pay back the "gargantuan debts" that it incurred while causing the problem for all? If Germany were a mortgage lender and Greece a homeowner, Germany would have every right to sue for fraud.
4
"They would make a far stronger case if they also vowed to do the one thing that would give Greeks a real incentive to stay and to initiate real reforms. That is to start ripping up their i.o.u.s."
Such a curiously cautious and timid way to call for a Jubilee. Why not just call for a Jubilee throughout this otherwise pretty good story?
Such a curiously cautious and timid way to call for a Jubilee. Why not just call for a Jubilee throughout this otherwise pretty good story?
It is very odd to me that commenters here seem decidedly in favor of the lenders being cut short in order to give Greece a chance to repay some lesser amount and to "forgive" the rest.
Ok, lets try an experiment - how about the NYT readers pour money into a fund to do just that?
What? No one?
Didn't think so.
Its very easy to dismiss other people's money, isn't it?
Ok, lets try an experiment - how about the NYT readers pour money into a fund to do just that?
What? No one?
Didn't think so.
Its very easy to dismiss other people's money, isn't it?
1
I have lent a lot of money to what I thought were good risks and what I knew to be bad risks and have effectively forgiven large sums. I don't mind since I am fortunate to be so blessed to have a lot and am willing to share/give away/forgive even though I was promised repayment. The main factor for me is the ability to pay back: you can't squeeze blood out of a turnip.
The problem is that there are countries in the EU that have been practicing prudent financial behavior who think "why should I get stuck with their debt?"
"They would make a far stronger case if they also vowed to do the one thing that would give Greeks a real incentive to stay and to initiate real reforms. That is to start ripping up their i.o.u.s."
I cannot believe all the outcry on Greece's so-called "austerity measures".
Greece's failed economy is their own doing and the only reason last 5 years couldn't revive it is because of a failure to implement austerity measures effectively rather than the opposite.
how does such a tiny country that manufactures nothing amass such debt anyway ? Socialism exploited to its maximum by lazy citizens. I think there should be an article outlining that its time for Greece to earn its living instead of freeloading on others.
If IMF/Euro banks really want to start ripping up the i.o.u.s, why not do it for other far more deserving countries as well?
I cannot believe all the outcry on Greece's so-called "austerity measures".
Greece's failed economy is their own doing and the only reason last 5 years couldn't revive it is because of a failure to implement austerity measures effectively rather than the opposite.
how does such a tiny country that manufactures nothing amass such debt anyway ? Socialism exploited to its maximum by lazy citizens. I think there should be an article outlining that its time for Greece to earn its living instead of freeloading on others.
If IMF/Euro banks really want to start ripping up the i.o.u.s, why not do it for other far more deserving countries as well?
1
Greece will probably have no future unless it exits the EU. No way is their debt going to be written down by the "troika."
Greek's debt actually exploded, almost doubled under the austerity policies engineered by the eurozone countries and the ECB. The hierarchy at the IMF allowed itself to be dictated to by the Europeans (mostly, Germany) even though many non-European members of the IMF opposed such severe austerity.
Unemployment skyrocketed, household incomes diminished, often drastically, and the social safety net has nearly collapsed. In the last five years, Greek GDP has declined an incredibe 25%, making it impossible to pay down debt. And still, the "troika" refused to change course.
The bozos that put themselves in charge of fixing this mess have created a much bigger mess than they found and now they act like they had nothing to do with it.
What a colossal failure the austerity hounds have produced and what tragedy they've unleashed. The Greeks brought more than a little of this on themselves but this latest, bleakest chapter was written by those who promised to set them on a better course and then, broke their word.
Greek's debt actually exploded, almost doubled under the austerity policies engineered by the eurozone countries and the ECB. The hierarchy at the IMF allowed itself to be dictated to by the Europeans (mostly, Germany) even though many non-European members of the IMF opposed such severe austerity.
Unemployment skyrocketed, household incomes diminished, often drastically, and the social safety net has nearly collapsed. In the last five years, Greek GDP has declined an incredibe 25%, making it impossible to pay down debt. And still, the "troika" refused to change course.
The bozos that put themselves in charge of fixing this mess have created a much bigger mess than they found and now they act like they had nothing to do with it.
What a colossal failure the austerity hounds have produced and what tragedy they've unleashed. The Greeks brought more than a little of this on themselves but this latest, bleakest chapter was written by those who promised to set them on a better course and then, broke their word.
22
How much did the world forgive Germany after WWII, after it sought to annihilate humanity and caused MASSIVE damage to infrastructure all over Europe?
In today's dollars, it would number in the tens of trillions.
Yet we forgave them this debt - MUCH higher than the Greeks and the result of MUCH, MUCH more sinister, immoral actions.
This was just a few years ago.
Germany should be kicked out of the EU and left to rot with its closest moral relative - Russia.
In today's dollars, it would number in the tens of trillions.
Yet we forgave them this debt - MUCH higher than the Greeks and the result of MUCH, MUCH more sinister, immoral actions.
This was just a few years ago.
Germany should be kicked out of the EU and left to rot with its closest moral relative - Russia.
5
I have always wondered about the sustainability and desirability of the Euro. Europe are not united states; the domination of the German economy has always assured that government an out-sized voice in a Euro-dominated European economy. History suggests that is unsustainable. Might not be the worst thing to see the end of the Euro and the reinstatement of individual country monetary policy. If any given sovereign country is economically irresponsible, it would be nice if it could be a bit more contained. And by the way, editorial board -- you objected to "to big to fail" bailouts when it involved US banks, I wonder why you find it palatable when it involves Greek banks.
2
Germany is not as dominant as you might think. It only makes up about 20% of the EU economy. It just takes a combination of two other large nations for it to be out muscled (eg France & UK, or Italy & France)
What it does have though are annual trade surpluses of about 200 billion euros. That gives it a lot of capital to play with.
What it does have though are annual trade surpluses of about 200 billion euros. That gives it a lot of capital to play with.
Its tough to support Greece's resistance to austerity measures - living in the U.S. with the retirement age at 67; comparing to Greece where the retirement age is 58. Beggars can't be choosers. BTW, Germany's retirement age is 67.
4
Wrong. They are a country that needs to get real about their lax tax enforcement, corrupt civil servants, and virtually socialist benefit policies.
17
The credibility of defaulters on this scale is always hurt and I think there should be a better way to pay down the debt than the editorial board's suggestion. They have 6000 islands out of which 227 are inhabited. Sell or lease the islands to the Europeans and Americans who have fallen in love with Greek Islands. An absurd idea? Of course it is but are there any better ideas than the ones proposed by the NYT editorial board? Mind you, don't blame the average helpless Greek citizen for this colossal mess on the islands in the Aegean sea. Place the blame where it belongs if you find the right persons to accept the blame.
1
The current European Currency Union is nothing more or less than a giant credit card company. Like VISA or Master Card. You apply for a credit card then when you get it your are supposed to keep up the payments or not spend beyond your means. If you do spend beyond your means then there are enforcement methods like limiting your credit or garnish the country until they have paid up. The Greek government just did not read the fine print in the contract they signed to get the credit card. It is a s simple as that.
3
You know, the Times and its columnists keep saying that Greece's creditors should just write off its debt, as if that wouldn't cause more problems than it would solve.
For one thing, if you want a social democracy/"welfare state", that's fine, but you need to be willing to pay for it through taxes. Greece's finances are so much worse than those of other European states both because of benefits that are exorbitant even by Western European standards as well as rampant tax evasion. It was good for Greece (and other states) to receive a short-term bailout five years ago, but this was intended to buy them time to enact structural reforms (i.e., paying taxes!) necessary to make their spending sustainable in the long-term. Greece has not done this, and if their debt is forgiven now, we will be right back to Greek bailout negotiations within 5-10 years because any current impetus behind reform will evaporate.
More significantly, other countries in Southern Europe *did* make structural reforms in return for their bailouts, and their economies have now stabilized and are returning to growth. If they see that electing a defiantly socialist government gets Greece out of reforms, though, their electorates may do the same, and further economic crises in Spain and Italy really would be large enough to destabilize the eurozone and the world economy. That's the real threat of contagion from this crisis--not fallout from Grexit, but what might happen if Greece is unconditionally bailed out.
For one thing, if you want a social democracy/"welfare state", that's fine, but you need to be willing to pay for it through taxes. Greece's finances are so much worse than those of other European states both because of benefits that are exorbitant even by Western European standards as well as rampant tax evasion. It was good for Greece (and other states) to receive a short-term bailout five years ago, but this was intended to buy them time to enact structural reforms (i.e., paying taxes!) necessary to make their spending sustainable in the long-term. Greece has not done this, and if their debt is forgiven now, we will be right back to Greek bailout negotiations within 5-10 years because any current impetus behind reform will evaporate.
More significantly, other countries in Southern Europe *did* make structural reforms in return for their bailouts, and their economies have now stabilized and are returning to growth. If they see that electing a defiantly socialist government gets Greece out of reforms, though, their electorates may do the same, and further economic crises in Spain and Italy really would be large enough to destabilize the eurozone and the world economy. That's the real threat of contagion from this crisis--not fallout from Grexit, but what might happen if Greece is unconditionally bailed out.
11
There's blame aplenty to go around -- on the one hand there is Greece's profligate borrowing and fiscal irresponsibility by its aversion to paying taxes; and on the other hand is the eagerness of the European banks, especially Germany's, to lend Greece huge sums of money at a time when there was not a prayer of its ability to repay. Unclean hands all round. Time to scrap this debt and start a clean slate. Let Greece rebuild itself either within or outside the Eurozone. Either way, the creditors will not be repaid, and the people of Greece will be able to reset their existence in a fiscally responsible way.
1
Greece is a failed state. It should have never joined the European Union in the first place. Forgiving debts ad infinitum will solves nothing. Greece needs to leave the Euro and the European Union and sort out its own problems. Both Greece and Europe will be better off by parting company.
13
Greece is bankrupt. See, it's not hard to say. Bankruptcy means Greece's creditors will not get paid. So in that sense the "IOU's" will be ripped up. But it also means Greece's credit cards get ripped up too. Greece will have to pay cash for the foreseeable future. The only question is how many drachma will equal 1 cent?
5
Norman,
You can look to Zimbabwe for that answer, they just scrapped their own national currency and started officially using dollars. Greece will end up doing the same thing with euros under the table as is usual and customary there. It is also the true source of this problem.
You can look to Zimbabwe for that answer, they just scrapped their own national currency and started officially using dollars. Greece will end up doing the same thing with euros under the table as is usual and customary there. It is also the true source of this problem.
Yes. Tear up the IOUs. This in effect what happens in a Grexit anyway, isn't it? Why not accept the fact and work to make Europe function instead of helping it fall apart?
What I don't understand is why everything Mr. Tsipras says outside of the negotiations is such a 'surprise' to his counterparts in the negotiations. Is he saying something to them in private that he's contradicting in public? From what I can tell the bailout plan might have worked if it hadn't caused the economy of Greece to tank, but it did, so the plan is not working. When Germany and the bankers lecture Greece and insist on more austerity they're using magical thinking not common sense. And they see themselves as the grown-up, responsible parties.
Nonsense.
Mr. Tsipras has been doing exactly what Greek voters elected him to do and is correct to refer any possible change of course directly to the voters.
What I don't understand is why everything Mr. Tsipras says outside of the negotiations is such a 'surprise' to his counterparts in the negotiations. Is he saying something to them in private that he's contradicting in public? From what I can tell the bailout plan might have worked if it hadn't caused the economy of Greece to tank, but it did, so the plan is not working. When Germany and the bankers lecture Greece and insist on more austerity they're using magical thinking not common sense. And they see themselves as the grown-up, responsible parties.
Nonsense.
Mr. Tsipras has been doing exactly what Greek voters elected him to do and is correct to refer any possible change of course directly to the voters.
Should the Troika rip up the debts for Greece, Portugal, Italy and likely Spain will ask for the same treatment. I doubt this will happen.
Of course if the world had addressed this during the Nearly Great Depression of 2008, confronted the financial shenanigans and outright cheating, actually clawed back the ill gotten gains rather than actually giving them a pass, maybe we none of us, not just the Greeks, would find us where we are, being asked once again to bail out the bad decisions of the financial wizards whose only skill seems to be stripping the place of any valuables not nailed down.
Of course if the world had addressed this during the Nearly Great Depression of 2008, confronted the financial shenanigans and outright cheating, actually clawed back the ill gotten gains rather than actually giving them a pass, maybe we none of us, not just the Greeks, would find us where we are, being asked once again to bail out the bad decisions of the financial wizards whose only skill seems to be stripping the place of any valuables not nailed down.
1
While Tsipras' referendum takes brinkmanship to a whole new level, it is not quite true to say that the referendum is forcing Greeks to chose between the Euro and the drachma. Tsipras point is that he wants the debt reduced or forgiven; he wants the "Troika" to respond by re-opening negotiations on more favorable terms. The NYT makes the mistaken inference that this means that the Greek referendum is a choice the Greeks must make; it is not - it forces a choice back on the EU leaders who have announced in advance what that choice will be, thus interfering in the legitimate (if ultimately ill-advised) decision of the Greek people to accept or reject the latest "Troika" proposals. This highlights the political dimension of this crisis; the EU leaders want to make a brutal point to Italy, Spain and Portugal. Yes the Greeks have been outrageously profligate and fiscally irresponsible, but a) everyone knew this when they were accepted into the Euro but the truth was fudged for political reasons and b) moralizing does not help them get out of the mess they are in. One does not have to be sympathetic to Tsipras' tactics to see this. The Greeks lived large on others' money, but the are now being threatened with an impossible choice - a brutal economic future on the EU's term or go it alone into the unknown.
There is no way the European governments will forgive Greek sovereign debt. There would be too great a risk of moral hazard--it would invite Italy, Spain and other troubled debtor member states to seek similar relief. In addition, Tsipras's game-playing has infuriated the "troika" to the point where they are declaring "game over". The sudden calling of a plebiscite was viewed as just another cynical stratagem. The New York Times editorial board should ger real. Its recommendations will, and should, fall on deaf ears.
4
"The answer should be a resounding commitment to keep Greece in the euro."
Why should they stay in the Euro if it means perpetual slavery to reckless lenders? Tearing off the IOUs *was* the right thing to do. I doubt it still is on the table. The single currency is such a stupid idea... The Greek situation is simply revealing that the Emperor is (and always was) naked. It will be interesting to watch how he will be hastily dressed up in the next few days.
Why should they stay in the Euro if it means perpetual slavery to reckless lenders? Tearing off the IOUs *was* the right thing to do. I doubt it still is on the table. The single currency is such a stupid idea... The Greek situation is simply revealing that the Emperor is (and always was) naked. It will be interesting to watch how he will be hastily dressed up in the next few days.
Over the decades the Greeks have demonstrated their inability to be fiscally responsible. The Syriza govt got elected by painting a rosy picture to the Greek citizens at the expense of somebody else's nickel. Even today the Syriza government is refusing to take responsibility and take the necessary steps to fix the issues.
They claim that the creditor's demands are wrong and the Greek's should be allowed to work out their own plan to fix the issue. Well hello, this didn't happen for past decades and the track record is bad. So how to trust them now and throw more good money after the bad?
I don't understand how the leaders of the Eurozone countries can ethically and morally go to their citizens and say that it is ok to throw out more of their money even when they truly believe that the money is not coming back.
It is easy to be generous and make a case asking someone else to write off the money.
They claim that the creditor's demands are wrong and the Greek's should be allowed to work out their own plan to fix the issue. Well hello, this didn't happen for past decades and the track record is bad. So how to trust them now and throw more good money after the bad?
I don't understand how the leaders of the Eurozone countries can ethically and morally go to their citizens and say that it is ok to throw out more of their money even when they truly believe that the money is not coming back.
It is easy to be generous and make a case asking someone else to write off the money.
4
The solution suggested by this editorial, "to start ripping up their I.O.U.s.", is the only solution that makes sense. What the creditors are asking of the Greeks is impossible to fulfill. That country will be struggling till the middle of the century in an effort to repay its debt and the economy will continue to languish as long as that burden is thrust upon the Greeks.
If Greece walks away from the euro, they will have a hard time for a number of years, but eventually their economy will recover and prosper. Then other European countries will see Greece as an example of what can happen when a country's economy is not dictated by outside voices. And that could bring about unraveling of the monetary union.
It sure seems like there are a lot of boneheads calling the shots in Europe these days.
If Greece walks away from the euro, they will have a hard time for a number of years, but eventually their economy will recover and prosper. Then other European countries will see Greece as an example of what can happen when a country's economy is not dictated by outside voices. And that could bring about unraveling of the monetary union.
It sure seems like there are a lot of boneheads calling the shots in Europe these days.
1
Agree with the article- but not with ripping off the "IOUs". Yes the terms have to be more humane and it is in the interest of all parties if Greece economy gets some breathing space and the necessary time to become viable again. However, forgoing all debts would send an extremely calamitous signal and in the long term won't resolve the matter.
For Germany, a Grexit would lead to a loss of 87 billion euros - mostly German taxpayers' money.
How can anybody say the Germans didn’t show goodwill? They spend 87 BILLION EUROS of their hard earned money to help Greece… just to be demonized for their efforts.
The Germans deserve to be called gullible fools but it’s not fair to relegate them as mean-spirited in this Greek drama.
How can anybody say the Germans didn’t show goodwill? They spend 87 BILLION EUROS of their hard earned money to help Greece… just to be demonized for their efforts.
The Germans deserve to be called gullible fools but it’s not fair to relegate them as mean-spirited in this Greek drama.
1
The present debt burden will have to be reduced dramatically. Extending maturities and lowering interest rates will not by themselves be sufficient. Large amounts of principal will simply have to be written off.
The only way to prevent this unhappy situation being repeated in the future is to condition major debt relief upon sweeping reforms (privatization of many state enterprises, deregulation of labor and other markets, and reductions in the size of the bloated bureaucracy).
The chances of the present far-left government agreeing to such measures is about zero. However, Greece must take such measures to regain international competitiveness if it want to continue to use the Euro.
The alternative is the traditional southern European approach of a local currently which is devalued continuously. Examples are the French Franc and Italian Lira in the 1950s. This seems to be the likely outcome at present.
The only way to prevent this unhappy situation being repeated in the future is to condition major debt relief upon sweeping reforms (privatization of many state enterprises, deregulation of labor and other markets, and reductions in the size of the bloated bureaucracy).
The chances of the present far-left government agreeing to such measures is about zero. However, Greece must take such measures to regain international competitiveness if it want to continue to use the Euro.
The alternative is the traditional southern European approach of a local currently which is devalued continuously. Examples are the French Franc and Italian Lira in the 1950s. This seems to be the likely outcome at present.
1
I'm having just a little difficulty following the Times' logic: Forgiving Greek debt will entice them into reform? Isn't it more likely to entice them into further intransigence? In what world does free money result in more prudent behavior from the beneficiary?
1
Haven't European leaders studied any history? When debts led whole nations to despair, war ensued. When debts were slashed or forgotten, economies prospered and Europe experienced decades of peace.
The idea that somehow 10 million Greeks spent 240 billion Euro reincarnating Zorba is ludicrous. After five years of vicious austerity the main result is a 25% reduction in their GDP and a whole generation being unable to contribute with work. At the same time rivers of dollars were printed and poured inside the US as stimulus, and anyone not admitting its beneficial influence on the US economy is ideologically blind.
The idea that somehow 10 million Greeks spent 240 billion Euro reincarnating Zorba is ludicrous. After five years of vicious austerity the main result is a 25% reduction in their GDP and a whole generation being unable to contribute with work. At the same time rivers of dollars were printed and poured inside the US as stimulus, and anyone not admitting its beneficial influence on the US economy is ideologically blind.
That is what I am asking too, but not many.
Many in this section, saying that 500 billion USD credit is normal for Greece.?
Many in this section, saying that 500 billion USD credit is normal for Greece.?
How predictable. Leave it to the NY Times to spend other people's money.
6
It's ironic that international bankers are more dangerous to global stability than terrorists are.
The Geek debts can be paid back.
The Greek people have made virtually no reforms.
Their society don't w to work. The would rather collect welfare and generous pensions when they are 55.
They want other Europeans to pay for them!
Another solution is for Liberals all around the world (Paul Krugman included) to simply send money to Greece, so they can avoid having to work.
Debt is not good.
Puerto Rico is proving this point. Chicago& Illinois is proving this point. The US will soon be facing the same problem!
Can't we learn from past mistakes ???
The Greek people have made virtually no reforms.
Their society don't w to work. The would rather collect welfare and generous pensions when they are 55.
They want other Europeans to pay for them!
Another solution is for Liberals all around the world (Paul Krugman included) to simply send money to Greece, so they can avoid having to work.
Debt is not good.
Puerto Rico is proving this point. Chicago& Illinois is proving this point. The US will soon be facing the same problem!
Can't we learn from past mistakes ???
6
The Greek economy was in a modest recovery at the end of 2014 until the leftest Tsipras was elected. The economy has been in free fall since the election. They believed they could continue to spend and the rest of Europe, specifically Germany, would pay their bills. That is not going to happen. The choice is now in their hands, tighten their belts or go into deep recession. If they thought austerity was bad the next phase outside the Euro will be a catastrophe. But again they keep making bad decisions. The NYT Editorial board seems to forget that the other European tax payers do not want to continue to sacrifice so that Greeks can live well beyond their means.
3
If panic now breaks out on the financial markets and the European economy collapses, Greece will not be to blame, but rather the fact that the entire trans-Atlantic system is hopelessly bankrupt.
Instead of using the threatened meltdown around the bankruptcy of Lehman Brothers and AIG in September 2008 to regulate the banking system and to ban speculative excesses, a gigantic redistribution took place, transforming private gambling debts into public debts, and the taxpayers had to pay for the bailouts. In the case of Greece, only 3% of the bailout funds stayed in the country, while the rest flowed back into the European banks, allowing the speculators to dance even more wildly around the Golden Calf. The reality is that the trans-Atlantic banks, which are supposedly "too big to fail," are 40% larger today than they were in 2008, and the total of derivatives amounts to something approaching $2 quadrillion. And that is exactly what could disappear into thin air in an uncontrollable crash, in a "Grexit".
A drastic debt "haircut," in tandem with the introduction of a Glass-Steagall two-tier banking system on both sides of the Atlantic, must put an end to the casino economy. In its place, we need to establish a credit system, similar, for example, to the Kreditanstalt für Wiederaufbau [Reconstruction Finance Agency], which was created after World War II to finance the real economy, generating the German "economic miracle.
Instead of using the threatened meltdown around the bankruptcy of Lehman Brothers and AIG in September 2008 to regulate the banking system and to ban speculative excesses, a gigantic redistribution took place, transforming private gambling debts into public debts, and the taxpayers had to pay for the bailouts. In the case of Greece, only 3% of the bailout funds stayed in the country, while the rest flowed back into the European banks, allowing the speculators to dance even more wildly around the Golden Calf. The reality is that the trans-Atlantic banks, which are supposedly "too big to fail," are 40% larger today than they were in 2008, and the total of derivatives amounts to something approaching $2 quadrillion. And that is exactly what could disappear into thin air in an uncontrollable crash, in a "Grexit".
A drastic debt "haircut," in tandem with the introduction of a Glass-Steagall two-tier banking system on both sides of the Atlantic, must put an end to the casino economy. In its place, we need to establish a credit system, similar, for example, to the Kreditanstalt für Wiederaufbau [Reconstruction Finance Agency], which was created after World War II to finance the real economy, generating the German "economic miracle.
4
Please, New York Times, call my banker and insist they cancel my loans, its only fair. I don't have the money to repay, I've been living on credit for the past five years. I am sure you understand, I need a bailout with Times money. Some call me a deadbeat, others a Greek. Is there a difference.
No, the power to make things better lies with the Greek people. Until they demand an honest and truthful government that is interested in driving corruption from the system, nothing will change. You make your bed, no one else.
No, the power to make things better lies with the Greek people. Until they demand an honest and truthful government that is interested in driving corruption from the system, nothing will change. You make your bed, no one else.
33
That's absurd. International finance isn't like the state of your bedroom, or your household; it's a complicated net of relationships and obligations, over which no country has anything like the control you have over your household (which itself isn't absolute).
Yes, Greek corruption is to some extent to fault for the current situation, but the Greeks have been tied to a single currency which has created massive wealth in the North and suffering in the South since the largest export economies have been able to export their goods in an artificially weak currency. Not to mention the need for moral solidarity, well expressed in Jack Archer's comment above (currently the most popular). The Germans , in particular, have no right to smug self-righteousness.
Yes, Greek corruption is to some extent to fault for the current situation, but the Greeks have been tied to a single currency which has created massive wealth in the North and suffering in the South since the largest export economies have been able to export their goods in an artificially weak currency. Not to mention the need for moral solidarity, well expressed in Jack Archer's comment above (currently the most popular). The Germans , in particular, have no right to smug self-righteousness.
The only thing you left out is, "and start paying their taxes!".
1
This comment is pure ignorance, mixed with the usual dose of arrogance that comes with ignorance.
The prior Greek government, in cahoots with (mostly) German and Dutch banks "adjusted" the books to make it appear the Greece was in better financial shape than it actually was. When the pre-speculation bubble burst — that is, when the holier-than-everyone U.S. speculation brought down the world's economy in 2008 — the Greek government and its creditors were caught up short.
Rather than default on their loans, the Greeks tried to repay them and make things work. But the austerity measures, which punish people who had nothing to do with creating the problem, make repayment impossible. The country can't get its economy going under those proscriptions.
And no one, the Greeks, the N.Y. Times, Krugman, Stiglitz…no one is saying that Greece should not repay its loans. But the country can't raise any money in debtor's prison.
After five years of being pushed around by (mostly) the Germans — five years of suffering conditions that are as bad or worse than the Great Depression was in the U.S. — the Greek people have had enough. With luck they will exit the Eurozone, and do exactly as you want — fix their own problems without interference from the neoliberal lackey's of Europe's investor classes.
The prior Greek government, in cahoots with (mostly) German and Dutch banks "adjusted" the books to make it appear the Greece was in better financial shape than it actually was. When the pre-speculation bubble burst — that is, when the holier-than-everyone U.S. speculation brought down the world's economy in 2008 — the Greek government and its creditors were caught up short.
Rather than default on their loans, the Greeks tried to repay them and make things work. But the austerity measures, which punish people who had nothing to do with creating the problem, make repayment impossible. The country can't get its economy going under those proscriptions.
And no one, the Greeks, the N.Y. Times, Krugman, Stiglitz…no one is saying that Greece should not repay its loans. But the country can't raise any money in debtor's prison.
After five years of being pushed around by (mostly) the Germans — five years of suffering conditions that are as bad or worse than the Great Depression was in the U.S. — the Greek people have had enough. With luck they will exit the Eurozone, and do exactly as you want — fix their own problems without interference from the neoliberal lackey's of Europe's investor classes.
What could be more Greek, the home of both ancient and modern democracy, than to have its people decide their fate in a national referendum on whether to accept or reject continuing with the European Union's harsh austerity program and stay with the Euro. The E.U., its central bank and the International Monetary Fund have not been willing to accept the failure of austerity to revive the Greek economy which is on the verge of collapse no matter how the vote turns out. This so-called "troika" has all the economic power to abandon the "group think" that has produced, after five years of compliance, the total failure of the Greek experiment with austerity. They would be well advised to listen to President Obama's elegy on entrenched bias and victim blame, and to take note and to act on "amazing grace" where to paraphrase "they were blind, now they see" the damage and utter failure of austerity. To inflict so much damage on Greece, and now perhaps the entire E.U., based on a discredited economic theory speaks of a psychological rigidity out of touch with both economic and political reality. Unfortunately, unlike the Greeks, the history of western Europe, especially Germany, in the last century provides little comfort on their ability to avoid such self-destructive behavior.
1
So, investors must take a haircut; maybe a big one. Fat chance!
What? Forgive all 240 billion euros that have been loaned to Greece over the past 5 years?
What message does that send to the rest of the EU countries - all of whom have some debt?
Tsipras has called the conditions from the lenders as 'insulting' - his not repaying the loans nor, by the looks of it, intending to repay them is tantamount to 'criminal'
Surely these loans were incentive enough for the Greeks to get their house in order? Where has all that money gone?
What message does that send to the rest of the EU countries - all of whom have some debt?
Tsipras has called the conditions from the lenders as 'insulting' - his not repaying the loans nor, by the looks of it, intending to repay them is tantamount to 'criminal'
Surely these loans were incentive enough for the Greeks to get their house in order? Where has all that money gone?
1
"Surely these loans were incentive enough for the Greeks to get their house in order? Where has all that money gone?"
All that money has gone back to the lenders. It's called a vicious cycle.
All that money has gone back to the lenders. It's called a vicious cycle.
There is an answer -- but it will be rejected by the technocrats. First -- the current debt in excess of 50% of gdp needs to be converted into an equity equivalent -- perhaps a 30% share of all incremental revenue collected by the government over and above 2014 levels. Second -- the Greeks need to actually pay their taxes so hire the Finns or the Swiss as collectors for a few years. Third the work rules that stifle employemnt must be trashed -- and new rules modelled on say Singapore established. Then everyone will be on the same page -- committed to Greek growth.
Sure, why not rip up the IOU's which is to ignore the profligate spending, systemic corruption, and cultural tax evasion of the Greeks which, as in Mexico, stifles any chance of growth but for the oligarchs? As with the continuing U.S. mortgage default crisis and investment bank bailout fiasco, the buck in Greece is stopping short of the people's pocketbooks. Call it what you will, class warfare or market economics, it comes down to a burdgeoning stock market, higher than ever corporate profits and a fast dwindling middle class able to provide food and shelter for the family. I fear near term social upheaval in the face of no realistic and fair economic model.
Nobody put a gun to Greece's head and forced them into the position they now find themselves in. The problem has been reasonably obvious and growing for years - a nation that does not even make an attempt to live within its means and an unwillingness on the part of the Greek "elite" to make even a token effort to pay their part in maintaining a nation. Socrates would be ashamed of what has befallen his nation, although it was not really a nation per se back then.
1
The NYT is probably wrong in thinking that the sticking point is the payment of all debts. Of course Greece is bankrupt and won't be able to pay every cent they borrowed--that's be beside the point. The question is, will Greece play by the European rules going forward? Given their continuous deception over the past 5 months, the answer is no. Forgiving Greek debt without making the reforms necessary to make Greece VIABLE within the EU would weaken the EU more than allowing Greece to default on debts. In fact, EU is wasting way too much of their leaders' time on Greece. The opportunity cost of Merkel and co. trying to convince Greece of doing ANYTHING is not working on solving the refugee crisis, the terrorist attacks in Northern Africa and Middle East, the Russian aggression and so on. Greece is just too costly to keep in the Euro.
1
I'm for anything that hurts bankers. The only positive in this whole mess is seeing hedge fund managers suffer; having to sell one of the Lears and cut back on hookers.
"They would make a far stronger case if they also vowed to do the one thing that would give Greeks a real incentive to stay and to initiate real reforms. That is to start ripping up their I.O.U.s."
The trouble with that logic is it doesn't take into account the reaction on the part of euroskeptic parties across the eurozone. Or the anti-austerity parties in Spain and Portugal, both of which face elections this year and both of which have implemented austerity. (And seen some positive results.) If the troika sends the message that you can go back and invalidate austerity and throw away taxpayer bailout money in a write down, there could be even greater tension than if Greece leaves. In that way, a Grexit could make the euro stronger.
The trouble with that logic is it doesn't take into account the reaction on the part of euroskeptic parties across the eurozone. Or the anti-austerity parties in Spain and Portugal, both of which face elections this year and both of which have implemented austerity. (And seen some positive results.) If the troika sends the message that you can go back and invalidate austerity and throw away taxpayer bailout money in a write down, there could be even greater tension than if Greece leaves. In that way, a Grexit could make the euro stronger.
10
I think it is clear that the Germans will never allow loans to be forgiven and that the Greeks will leave the Euro. I think it is equally evident that others will follow, especially Spain whose citizens are fed up with the never ending austerity obsession of their German overlords. When Spain leaves, the Euro era will end. Good riddance!
It is a sad day that a reputed publication like New York Times is saying that countries should not pay their debts.
2
Well, they are consistent in this regard.
They don't ever seem to believe that debts should be repaid, whether the debt is student loans, mortgages, municipal bonds...
They don't ever seem to believe that debts should be repaid, whether the debt is student loans, mortgages, municipal bonds...
It seems to me that Europe has a very long to become something similar to the US. There are some fundamental difference: too many languages while we may be inching
just towards two (English and Spanish). Few thousands of history vs. just over two hundred.
Is it time to say RIP euro, RIP Eurozone? Perhaps.
Europe, of course, will survive.
just towards two (English and Spanish). Few thousands of history vs. just over two hundred.
Is it time to say RIP euro, RIP Eurozone? Perhaps.
Europe, of course, will survive.
I don't see that Tsipras had much choice. His party, Syriza, was elected because Greeks are sick of the crippling austerity demanded by the "troika."
Greece has cut public pensions, their debt, and raised taxes. The response of the "troika" has been the same: you owe, cut all public expenditures even more, and keep paying us. It's not a 'negotiation' when one side presents the same set of discredited "solutions" over and over again. The Euro has been a disaster for Greece since the crash; if Ms. Merkel is so concerned about preserving the Euro, she should start pushing the rest of the members to offer Greece a real incentive to stay.
Greece has cut public pensions, their debt, and raised taxes. The response of the "troika" has been the same: you owe, cut all public expenditures even more, and keep paying us. It's not a 'negotiation' when one side presents the same set of discredited "solutions" over and over again. The Euro has been a disaster for Greece since the crash; if Ms. Merkel is so concerned about preserving the Euro, she should start pushing the rest of the members to offer Greece a real incentive to stay.
46
the Greeks haven't cut their debt - that's what the NY Times Editorial Board and Syriza want the Troika to do - and raising taxes doesn't mean anything if they're not paid/collected. And before the crash, the Euro was pretty darn good for Greece.
The greek government is not taxing the church, the ship owners, nor has it established a land registry (taxing land alone will allow it to pay its debts). It has increased the burden on the weakest and is using their suffering to blackmail the rest of Europe. ENOUGH!
I usually agree with the NYT editorial board but in this case the sooner Greece abandons the straight jacket of the Euro the better. The country needs its own currency to reflect the true economic performance of the country. A depreciated currency improves the country's ability to compete. Let's face it - Greece is like Alabama except that the US is willing to subsidize states like Alabama (at least so far) because they are part of the country.
3
Of course the NYT editors are in favor of "ripping up the IOU's". More IOU tearing coming soon to a place near you - Puerto Rico, Chicago, etc.
All part of the failed Keynesian experiment so boisterously promulgated by Krugman and his ilk.
All part of the failed Keynesian experiment so boisterously promulgated by Krugman and his ilk.
2
A condescending and "confused" editorial by the Editorial Board. Could you perhaps specify the "real reforms" you'd like to see "initiated" in a country with 25% unemployment? The Greeks have had plenty of time to reflect on the benefits of being in the euro zone. They need to take charge of their own fate. The insolent, non-compromising stance of the European bankers toward the current Greek government has little to do with debt and everything to do with politics, i.e., showing the Greeks who is the boss. Greece has done quite well before any of the European players have even thought of nationhood. It has been subjugated and bullied since. Greece needs to fix itself.
In the meantime, "If the euro fails, Europe fails." By "Europe", Angela Merkel means Germany, a country that has benefited the most from the euro, artificially devalued currency relative to the Deutsche Mark and perfect for an export economy.
In the meantime, "If the euro fails, Europe fails." By "Europe", Angela Merkel means Germany, a country that has benefited the most from the euro, artificially devalued currency relative to the Deutsche Mark and perfect for an export economy.
1
No doubt that Greece need immense transformation, one could wonder , how come that transformation hasn't happened since they enter EU and euro? Beyond the pale.
This also explains another negligence which is EU's credibility.
We are talking almost half trillion USD money tied Greek debt which has no prospect to be paid off timely, that money is stolen by creditors from European tax payers and wasted.
But nobody is willing to investigate how rich people behaves and jeopardizes the entire Union future, Rich always getaway with their crime.
Lay people of German and Greece blaming each other and almost creating aura of pre WW I period.
Lets be clear what banks did to us cannot be forgiven.
This also explains another negligence which is EU's credibility.
We are talking almost half trillion USD money tied Greek debt which has no prospect to be paid off timely, that money is stolen by creditors from European tax payers and wasted.
But nobody is willing to investigate how rich people behaves and jeopardizes the entire Union future, Rich always getaway with their crime.
Lay people of German and Greece blaming each other and almost creating aura of pre WW I period.
Lets be clear what banks did to us cannot be forgiven.
Perpetual moral hazard:
Gamblers Capitalize gains
CRASH
Central Banks socialize losses
Gamblers Capitalize gains exponentially
CRASH
Central Banks socialize exponential losses
Gamblers Capitalize gains exponentially
CRASH
Central Banks socialize exponential losses
ad infinitum??????
And what is even more annoying is we have to tolerate the ideologues who brought us this dangerous situation congratulating themselves for saving the economy!
Gamblers Capitalize gains
CRASH
Central Banks socialize losses
Gamblers Capitalize gains exponentially
CRASH
Central Banks socialize exponential losses
Gamblers Capitalize gains exponentially
CRASH
Central Banks socialize exponential losses
ad infinitum??????
And what is even more annoying is we have to tolerate the ideologues who brought us this dangerous situation congratulating themselves for saving the economy!
NY Times simply doesn't get it. The world has experimented with Socialism many times over the last 100 years. Experiments have been tried in Russia, Eastern Europe, Britain, Chile and dozens of African countries. The results are in and unanimous -socialism doesn't work. The lefties at NY Times simply cannot emotionally afford to look at that data and ramble on with apologetic. A people that willfully chooses socialism will feel the effect eventually and pay the price. Greece is destined to join the failing states of Argentina and Venezuela. The remaining European states eschew socialistic policy or are learning from their failures. It is foolhardy to suggest that the willful decision for failure by the citizens of Greece should or can be supported by other states. Would that the editors of the Times would learn from history and produce more erudite prose.
3
Does the Editorial Board have the same view of Puerto Rico debt?
1
It will take a Merikel to save Greece.
For many decades, I thought it was racism that motivated the IMF to drive so many peoples of Latin American, Caribbean, and African countries into poverty. However, watching disdain in which the IMF and Ec has treated the Greeks, I now understand that these financial institutions are driven by capitalistic greed and heartlessness. They will show the Greeks no mercy. The Greeks are better off outside of the Euro in the long run. I hope that they vote "no."
1
The tragedy is that the Eurozone has refused to negotiate about the unsustainable debt that no Greek government will ever be able to pay off, no matter what policies they adopt. Instead, the Eurozone has attempted to get the new government to prove it can implement policies that would bring it into slight surplus. This makes sense if one is dealing with textbooks but not when one is dealing with a government that was elected NOT to impose further austerity on the poor. The only way that there can be a settlement is if refinancing or forgiving part of the Greek debt is on the negotiating table. The fact that it has not been, despite repeated Greek requests, is a terrible lapse of diplomatic imagination on the part of the Eurozone leadership. Certainly, previous Greek governments have their share of the blame for the huge debt, but the current government is right that is now everybody’s political and strategic problem.
4
“If the euro fails, Europe fails.” -- But does the euro fail, if Greece fails? If a country with 2.1% of the population of the European Union and about 1.5% of its Gross National Product is a keystone of the whole EU construct, then something is very wrong with the EU.
Apart from the artificiality of the Union, no ruler since the Middle Ages to the 20th century was able to unite or unify Europe, and the present structure of the EU has failed to produce a constitutional foundation for the Union. The single currency means no more than the past use in international payments of gold or silver coins of different countries, that replaced one another in the course of time, such as the bezants, Venetian ducats, Maria Theresa thalers, and English sovereigns.
Apart from the artificiality of the Union, no ruler since the Middle Ages to the 20th century was able to unite or unify Europe, and the present structure of the EU has failed to produce a constitutional foundation for the Union. The single currency means no more than the past use in international payments of gold or silver coins of different countries, that replaced one another in the course of time, such as the bezants, Venetian ducats, Maria Theresa thalers, and English sovereigns.
3
I concur. Perhaps sacrificing the cost of a few cruise missiles by using that money to buy some Greek debt and liquidate it would be a thoughtful and constructive contribution from the United Sates.
1
This editorial is a recipe for the failure of the euro and of Europe.
What is the end game for the Eurozone if every distressed European country has carte blanche to demand unending financial relief from their European partners? This is what will "seriously undermine the credibility of the euro currency," and European fiscal and monetary stability.
What is the end game for the Eurozone if every distressed European country has carte blanche to demand unending financial relief from their European partners? This is what will "seriously undermine the credibility of the euro currency," and European fiscal and monetary stability.
6
What have Greece's IOUs got to do with anything?
True, Greece's public debt burden is almost 180% of GDP. But, as the Economist pointed out, "thanks to the generous terms of its debt, including long maturities and low interest rates, its servicing costs as a share of GDP are actually lower than in many other countries in the euro zone."
The Economist goes on: "Yet while Greece has aggressively cut some components of government spending it has done little to tackle its biggest fiscal mess: an extraordinarily generous pension system. The government owes pensioners and civil servants €2.4 billion in April alone, and the it may be forced to choose whether to shortchange its lenders or the Greek people who put it in power. Greece's repayment schedule may extend beyond 2050, but markets seem more concerned that Greece will not make it to the summer."
So how is debt relief going to make a difference if (a) the cost of servicing its Greece's debt is already relatively small and (b) Greece isn't serious about reforming its budget and its economy? Without (b), debt relief isn't going to make an iota of difference. The Greeks will be back with their tin cups and their foul-mouthed insults within five years, I would guess.
True, Greece's public debt burden is almost 180% of GDP. But, as the Economist pointed out, "thanks to the generous terms of its debt, including long maturities and low interest rates, its servicing costs as a share of GDP are actually lower than in many other countries in the euro zone."
The Economist goes on: "Yet while Greece has aggressively cut some components of government spending it has done little to tackle its biggest fiscal mess: an extraordinarily generous pension system. The government owes pensioners and civil servants €2.4 billion in April alone, and the it may be forced to choose whether to shortchange its lenders or the Greek people who put it in power. Greece's repayment schedule may extend beyond 2050, but markets seem more concerned that Greece will not make it to the summer."
So how is debt relief going to make a difference if (a) the cost of servicing its Greece's debt is already relatively small and (b) Greece isn't serious about reforming its budget and its economy? Without (b), debt relief isn't going to make an iota of difference. The Greeks will be back with their tin cups and their foul-mouthed insults within five years, I would guess.
14
Please explain who will "tear up the IOUs" I understand the EU assumed the loans to protect the private banks that originally made them. Why not let the private banks eat their bad loans instead of bailing them out?
7
There is no plan for Greece to avoid default. The question being debated is to default now or default at the end of the year.
1
The Greeks were and are proliferate government spenders. There is no reason to forgive the debts of the Greek government; other than to reward their irresponsibility. Leftist regimes like the Greeks deserve to fail completely to serve as an example of the fallacy of a socialist economy.
2
How does Greece exit the euro when there is no provision for doing so? And how is Greece better off re-introducing the drachma?
NY Times Editorial Staff, that's a terrible idea. The whole problem with Greece is they refuse to craft the labor-business-pension regulations and budget disciplines necessary to create a growing thriving economy. It has nothing to do with the amount of debt to GDP they currently have on the books. Basic finance means that it's not the total debt owed, it's a formula of when it must be paid and how much interest is owed. It's a basic present value calculation, and Greece has the benefit of a very gracious present value calculation. The EU has provided Greece with every indication that they will assist them with meeting their long term debt obligations, but I completely agree with the Germans. The Syriza government is not to be trusted and the Greek people are consistently kidding themselves. Greece must be forced to reform; either within the EU Zone or through the Drachma austerity which lost purchasing power will impose upon them. This drama is purely a Greek tragedy and choice.
24
I feel bad for the average Greek citizen, because I don't like to see anyone suffer.
But I know people in Greece and some who have left, like my wife who lived there as an expat for a number of years.
And the bottom line is they have some well documented toxic patterns in their culture, and they are ultimately responsible for their condition in life.
People almost never change in significant ways except as a result of colossal pain. Seems to be a basic human shortcoming we all have, along with blaming everyone else.
I wish them luck, but clearly the reaper will collect at some point. Self reflection may also have its place. And of course the only realistic option that makes sense is to default, leave the Euro and take the medicine.
But I know people in Greece and some who have left, like my wife who lived there as an expat for a number of years.
And the bottom line is they have some well documented toxic patterns in their culture, and they are ultimately responsible for their condition in life.
People almost never change in significant ways except as a result of colossal pain. Seems to be a basic human shortcoming we all have, along with blaming everyone else.
I wish them luck, but clearly the reaper will collect at some point. Self reflection may also have its place. And of course the only realistic option that makes sense is to default, leave the Euro and take the medicine.
29
"The answer should be a resounding commitment to keep Greece in the euro. .. A “Grexit” would seriously undermine the credibility of the euro currency, threatening a global contagion. ".
This is totally wrong.
Getting Greece out of the Euro will strengthen, not weaken, this currency.
Greece has been a huge drag on the Euro for the past 5 years.
European countries have "lent" 240 billions to Greece in the past 3 years alone to absolutely no avail.
Greece has cheated and lied to enter the Euro and the Eurozone, they have cheated and lied since then and are still cheating and lying.
And extending further financial assistance to them will only make them cheat and lie some more as well as laugh their heads off at how gullible the rest of Europe easy and how easy it is for them to get more money that they can then waste away as they have done since joining the Euro.
If the other european keep falling for the Greeks new ploy : in 6 months they will have the same exact problem of 15 "last chance" meetings to "solve" the Greek problem and you will be back telling that the only solution is to keep Grece living under life-support from the other nations.
Enough is enough ! The Greek will NEVER change, and taking their (selfish and dishonnest perspective) who could blame them : Europe keeps throwing tens of billions of "good money" after "bad" and knowing that they have no reason and motivation to straighten their act ..
This is totally wrong.
Getting Greece out of the Euro will strengthen, not weaken, this currency.
Greece has been a huge drag on the Euro for the past 5 years.
European countries have "lent" 240 billions to Greece in the past 3 years alone to absolutely no avail.
Greece has cheated and lied to enter the Euro and the Eurozone, they have cheated and lied since then and are still cheating and lying.
And extending further financial assistance to them will only make them cheat and lie some more as well as laugh their heads off at how gullible the rest of Europe easy and how easy it is for them to get more money that they can then waste away as they have done since joining the Euro.
If the other european keep falling for the Greeks new ploy : in 6 months they will have the same exact problem of 15 "last chance" meetings to "solve" the Greek problem and you will be back telling that the only solution is to keep Grece living under life-support from the other nations.
Enough is enough ! The Greek will NEVER change, and taking their (selfish and dishonnest perspective) who could blame them : Europe keeps throwing tens of billions of "good money" after "bad" and knowing that they have no reason and motivation to straighten their act ..
7
"That is to start ripping up their I.O.U.s."
And how would you ensure that any future loans would be repaid?
You've given the Greeks in general and the Tsipras government in particular a sweeping absolution for their sins. Do they bear no responsibility for the mess they're in?
I think the troika deserves thanks for putting about $260 billion at risk in an effort to help Greece.
Would you have been as forgiving if AIG and the banks hadn't repaid the billions lent to them?
And how would you ensure that any future loans would be repaid?
You've given the Greeks in general and the Tsipras government in particular a sweeping absolution for their sins. Do they bear no responsibility for the mess they're in?
I think the troika deserves thanks for putting about $260 billion at risk in an effort to help Greece.
Would you have been as forgiving if AIG and the banks hadn't repaid the billions lent to them?
2
If a private citizen fails to repay a loan, he is called a "deadbeat". If a nation borrows billions, and defaults, it is treated as the "victim".
1
What the editorial is calling for is: Vote to stay in the Eurozone, get the creditors to rip up the IOU's, borrow some more money on the strength of more promises for reform that will never be kept; and repeat.
Many words what Europe should do for Greece, yet nothing what the U.S. should do for Puerto Rico.This turns on its head the old Fleet Street maxim, in deciding what to print, that one Brit is worth ten Frenchman who is worth one hundred Turks. Further from home is, apparently to the NYT, more important than closer to home. It almost seems to come down to a kind of American racism, that to them Europeans are more important than Puerto Ricans. Or is it perhaps, closer to home, one realizes that the problem is more difficult than seen from afar and easy solutions (ripping up their i.o.u.s) have consequences, not all good?
2
abo,
You would have to live here to understand it. There is a Liberal love affair with Europe's state socialism in the pages of the NYT.
The fact that both Greece and Puerto Rico have gone broke practicing "State Socialism" as championed by the NYT while more countries are waiting to go broke for the same reason is not a topic popular in these pages.
It's easer here to blame the party who loaned you the money and always has been. It's ironic that this time the pejorative word is "German Banker"! Usually a different word was used in the past when discussing "usury" and often by Germans at that!
You would have to live here to understand it. There is a Liberal love affair with Europe's state socialism in the pages of the NYT.
The fact that both Greece and Puerto Rico have gone broke practicing "State Socialism" as championed by the NYT while more countries are waiting to go broke for the same reason is not a topic popular in these pages.
It's easer here to blame the party who loaned you the money and always has been. It's ironic that this time the pejorative word is "German Banker"! Usually a different word was used in the past when discussing "usury" and often by Germans at that!
2
(To Commenter Jack Archer): Krugman isn't the only one making the case for the Greeks to reject the austerity shackles put on the Greek people by the neoliberal cabal. Read Joseph Stiglitz's take on the matter here: http://www.theguardian.com/business/2015/jun/29/joseph-stiglitz-how-i-wo....
Stiglitz's bottom line is that austerity is a treadmill — the Greek economy will not recover for decades if it continues to operate under the conditions imposed by the Troika. Whereas if they just say NO to neoliberalism, they at least stand a chance of rebuilding their country.
My own hope is that the Greek people back Tsirpras in telling the Troika where it can store its paperwork. They take enormous risks by doing so, but risk comes with the job of standing up for yourself. (Witness the American Revolution.) Enough of the rich sticking it everyone else.
Stiglitz's bottom line is that austerity is a treadmill — the Greek economy will not recover for decades if it continues to operate under the conditions imposed by the Troika. Whereas if they just say NO to neoliberalism, they at least stand a chance of rebuilding their country.
My own hope is that the Greek people back Tsirpras in telling the Troika where it can store its paperwork. They take enormous risks by doing so, but risk comes with the job of standing up for yourself. (Witness the American Revolution.) Enough of the rich sticking it everyone else.
89
To paraphrase the WSJ, the supporters of Greece are American Keynesians and British Eurosceptics, neither with any skin in the game and many with axes to grind. The mental model you should use for both Krugman and Stiglitz are management consultants looking to get hired for their next gig; they're full of advice about how wonderful they will make things, but if they were ever to get hired, they would quickly make the situation an even greater disaster.
6
abo, everyone has skin in the game whether they know it or not. Also, nothing Krugman or Stiglitz has written suggests that they think they can things wonderful.
1
Where is there a leader in Europe with the strength of character of an Adenauer, who would never have allowed Greece to endure such pain? Any leader of decency to match and assist Tsipras? The perversity of European leadership that would allow Greeks to suffer so is astonishing and deeply dismaying.
112
Where is there a leader in the U.S. with the strength of character of an F.D.R., who would never have allowed Puerto Rico to endure such pain? Any leader of decency to match and assist Padilla? The perversity of American leadership that would allow Puerto Rico to suffer so is astonishing and deeply dismaying.
4
America does not care about Puerto Rico.
1
It is surely not a Ronald Reagan or Dubja you are asking for, it's even not an Obama.
Greece will lead prisoners of global plutocratic debt machinations, similarly to black youth leading populations cowed by authoritarian regimentation, similarly to indigenous people leading human beings bewildered by the death of everything on planet Earth that used to support life.
The old world order is a house of cards, built on violence, leveraged beyond the hilt, milking a bankrupt, dried up game that ended years ago. It can be blown over with a gentle puff of fearlessness, solidarity among people willing to work together to live simply.
Entitled sharpies who assume that everyone else must toil drearily to support their luxurious top of the pyramid are the past. Silly fools who think that they can live off slaves, too, will come around.
Knock it down. The wrong people manage capital. They use it to victimize and exploit. Capital is a natural resource, like water and air. It should -- and easily can -- be used for the common good. A handful of greedy characters appropriating capital for their own wealth and power are enemies of the human race. Capital should be managed by public banks and should be used to finance industry for the common good.
The wrong people rule this planet. They can be deposed without one shot being fired. Refuse to play their game.
The old world order is a house of cards, built on violence, leveraged beyond the hilt, milking a bankrupt, dried up game that ended years ago. It can be blown over with a gentle puff of fearlessness, solidarity among people willing to work together to live simply.
Entitled sharpies who assume that everyone else must toil drearily to support their luxurious top of the pyramid are the past. Silly fools who think that they can live off slaves, too, will come around.
Knock it down. The wrong people manage capital. They use it to victimize and exploit. Capital is a natural resource, like water and air. It should -- and easily can -- be used for the common good. A handful of greedy characters appropriating capital for their own wealth and power are enemies of the human race. Capital should be managed by public banks and should be used to finance industry for the common good.
The wrong people rule this planet. They can be deposed without one shot being fired. Refuse to play their game.
124
Bravo. The intentional dismantling of Greek society by its creditors has already been in play for five years. Continuing this path will lead to a destruction so grave that it would rival the Treaty of Versailles.
1
To Appledorf:
Debt and general excess define the current era. Repudiation of debt and denial of this excess are fundamental to this trend.
Obesitiy is now a world wide epidemic, right next to living beyond one's means by incurring debt.
Egocentricity is rampant. Me! Me! Me!
"The wrong people rule this planet."
We are the wrong people, but most people point to others. Just look at the poster here who say it's the others' fault.
Debt and general excess define the current era. Repudiation of debt and denial of this excess are fundamental to this trend.
Obesitiy is now a world wide epidemic, right next to living beyond one's means by incurring debt.
Egocentricity is rampant. Me! Me! Me!
"The wrong people rule this planet."
We are the wrong people, but most people point to others. Just look at the poster here who say it's the others' fault.
2
Are these the world wars of the here and now? Can the essentially minor economy of Greece bring Europe and the world to its knees, like the assassination of the Archduke, almost precisely 101 years ago to the day? I have no doubt Greece has been profligate, but "teaching the Greeks a lesson" by destroying the Eurozone experiment (as flawed as it is) seems reckless in the extreme. And finally, what of the bankers who slither behind the scenes? What is their culpability?
It is well past the witching hour here in Europe. What will be wake to?
It is well past the witching hour here in Europe. What will be wake to?
101
Kudos, That is exactly the issue, what Is the bankers role in This catastrophe, we knew and learned very well here in 2008.
1
Paul Krugman has made a compelling case for the Greeks to choose to reject the latest terms from the "troika", which offer more of the same austerity they have suffered through without any end in sight. Writing off a big portion of the debt would ease the burden on the Greeks and their govt., while forcing Greece into default and Grexit does little for the creditors. Why this simple fact can't be acknowledged, particularly by the Germans, is difficult to understand. The Germans, after all, were the prime beneficiaries of debt and reparations forgiveness after WWII, not to mention the billions in aid given to them and which they were never asked to repay. They seem to have forgotten the generosity of their former enemies, and of the Greeks themselves, who had their national treasure stolen from them by the Germans. Oops! We're not supposed to remind them of all this -- it causes them so much pain, etc. Some of us, however, haven't forgotten.
224
Thanks Jack. Well said.
1
Are you sure you're not mixing up apples with peaches?
Heard of the repayments since WW1 the Germans have been paying until recently? What national treasures have been "stolen"....last I heard the Acropolis
is still standing on it's original place above Athens.
The German bashing should really stop - being a German Jew and not living
there I can't take these comments anymore....I have not forgotten my family's slaughter....enough is enough.
Heard of the repayments since WW1 the Germans have been paying until recently? What national treasures have been "stolen"....last I heard the Acropolis
is still standing on it's original place above Athens.
The German bashing should really stop - being a German Jew and not living
there I can't take these comments anymore....I have not forgotten my family's slaughter....enough is enough.
What have the Germans given to the world in the last hundred years? ..i mean what GOOD have they done?!.. Think about it. Well made cars and vacumns may count for something but not really very much, after all. It is high time for the German nation to step up and stop just thinking about themselves.
1