“If there is a mass get-out clause over the rules, what will happen in Spain in October? And in France in a year and a half?"
Here is the truth of it- it is about power, about setting examples, about punishing Greece to try and keep everyone else in line. They found the weakest country, and beat them into recession, then depression, and keep hammering them, so every other country learns to obey. But the lesson that they are teaching is the true character of Europe's leaders today- where power and money matter more than human beings. It's not a very noble rallying cry, nor a viable foundation for unity. Bleeding a country while its people starve says more about those imposing 'discipline' than about the recipients- whatever the nature of their financial sins.
Here is the truth of it- it is about power, about setting examples, about punishing Greece to try and keep everyone else in line. They found the weakest country, and beat them into recession, then depression, and keep hammering them, so every other country learns to obey. But the lesson that they are teaching is the true character of Europe's leaders today- where power and money matter more than human beings. It's not a very noble rallying cry, nor a viable foundation for unity. Bleeding a country while its people starve says more about those imposing 'discipline' than about the recipients- whatever the nature of their financial sins.
27
Greece had good points. There’s a big problem with poverty and debt, whether personal or national. There could be a ground for mutual commitment to overcome both with European and Greece’ authotities. Maybe the problem was that Syriza went head on to confrontation.
3
The issue is not austerity or which economic model works best. The issue is trust. Greece has shown itself to be untrustworthy. Greece has not kept its previous promises. The EU can give more money to Greece, but what can stop Greece from declaring 2 years later that they want another loan program.
26
The Greeks may well be right that austerity policies are wrong, but they have lost a lot of potential support in Ireland by allying themselves with Sinn Fein. Surely there must be alternatives to austerity politics that do not include a history of terrorism? And weren't more effective negotiating strategies possible? The Irish suffered through austerity in ways that were clearly unfair but we had two great advantages. The first was that we were far wealthier to begin with and the second was that more people in Ireland pay more of their taxes. But certainly its impact was catastrophic for many, especially those who were less well off.
15
The EU cannot afford to lose greece nor can the US afford greece leaving the EU. I still believe this game of chess favors greece. They can no longer survive under austerity and with their own currency they will move steadily ahead. Time for a greek vacation.
4
Amend the constitution and tax the shipping industry. Cut pensions 10 percent, 20 if over 1000 euro/month, 30 if over 5000 per month. Tax the islands. Cut defense spending 50 percent. Cut the government by a quarter.
Then, maybe I'll believe Greece needs a bailout at the expense of the taxpayers of Riga and Malaga.
Then, maybe I'll believe Greece needs a bailout at the expense of the taxpayers of Riga and Malaga.
33
The Troika's bailout included some austerity and many, many reforms.
Greece has refused for five years to implement any meaningful reforms.
What happened to the requirement to privatize many state owned enterprises? Went nowhere.
What happened to raising the retirement age (including eliminating early retirement) to say the German standard? Went nowhere. Greece is still debating if the pension reforms should start in 2017 or 2020!!!
Where would debt/GDP be with lots of privatizations and a sure elimination of early retirement all the way back in 2010?
If Greece does not want austerity and it does not want reform that is totally fine - it is their right. But it is also the right of the other 18 Eurozone nations to stop pouring money down that rat hole.
Greece has refused for five years to implement any meaningful reforms.
What happened to the requirement to privatize many state owned enterprises? Went nowhere.
What happened to raising the retirement age (including eliminating early retirement) to say the German standard? Went nowhere. Greece is still debating if the pension reforms should start in 2017 or 2020!!!
Where would debt/GDP be with lots of privatizations and a sure elimination of early retirement all the way back in 2010?
If Greece does not want austerity and it does not want reform that is totally fine - it is their right. But it is also the right of the other 18 Eurozone nations to stop pouring money down that rat hole.
48
Tsipras seems the only politian who cares deeply that Europe pull its head out of its morass and start to write history again. All these small-minded 'leaders' thumbing the books of rules while a great European Hope withers on the vine and renders its youth "wasted".
What about the the Europe that was supposed to develop dominance in ecological infrastructure and sell it to the world? Forgotten. And Replaced with? A Vacuum of leadership that will define this miserable chapter of the history books. Petty manufactured "manageable" catastrophes that distracted from the gaping hegemony hole.
What about the the Europe that was supposed to develop dominance in ecological infrastructure and sell it to the world? Forgotten. And Replaced with? A Vacuum of leadership that will define this miserable chapter of the history books. Petty manufactured "manageable" catastrophes that distracted from the gaping hegemony hole.
14
All pretty words. The only thing Tsipras has tried since he became prime minister is to undo the reforms the previous governments had committed to and attempt to wheedle fresh cash from the EU.
He has absolutely no new funding to show for all his rhetoric. Whatever happens to the Euro zone, the Greeks are dead. Maybe Tsipras will take some measure of comfort that the EU will not step over Greece's corpse without being unscathed, Greece will definitely be a corpse.
He has absolutely no new funding to show for all his rhetoric. Whatever happens to the Euro zone, the Greeks are dead. Maybe Tsipras will take some measure of comfort that the EU will not step over Greece's corpse without being unscathed, Greece will definitely be a corpse.
19
The Euro was a mistake.
Having a common fiscal policy without having a common economic policy was foolishness. Foolishness only compounded by having one player (Germany) effectively dictate the fiscal policy for its own benefit -- or, at least, the benefit of its banking sector -- first and foremost.
Inviting countries into the Eurozone when their economic systems were clearly incompatible was idiocy - but it was driven forward by political idealism and financial opportunism.
Trying to save the big banks of France and Germany the consequences of their poor choices, and doing so on the backs of pensioners, and an entire generation of unemployed youth, is worse than foolish or idiotic. It is Madness.
Germany ought know better the consequences. It was not the hyperinflation of the early 20's which brought Hitler to power. It was the experience of Austerity in the wake of the depression. Austerity, "deserved" or not, has immediate human costs - and the political consequences are radicalism, nationalism, and always, the possibility of tyranny. But Germany has opted to put its pride and self-interest over the reality of what is needed: a plan to rebuild the Greek economy, or a plan to allow their smooth exit from the Eurozone so they can reclaim their own fiscal destiny, for better or worse.
Thucydides described a world in which "The strong do what they can, and the weak do what they must." What is Greece doing other than what it must, to survive as a democracy?
Having a common fiscal policy without having a common economic policy was foolishness. Foolishness only compounded by having one player (Germany) effectively dictate the fiscal policy for its own benefit -- or, at least, the benefit of its banking sector -- first and foremost.
Inviting countries into the Eurozone when their economic systems were clearly incompatible was idiocy - but it was driven forward by political idealism and financial opportunism.
Trying to save the big banks of France and Germany the consequences of their poor choices, and doing so on the backs of pensioners, and an entire generation of unemployed youth, is worse than foolish or idiotic. It is Madness.
Germany ought know better the consequences. It was not the hyperinflation of the early 20's which brought Hitler to power. It was the experience of Austerity in the wake of the depression. Austerity, "deserved" or not, has immediate human costs - and the political consequences are radicalism, nationalism, and always, the possibility of tyranny. But Germany has opted to put its pride and self-interest over the reality of what is needed: a plan to rebuild the Greek economy, or a plan to allow their smooth exit from the Eurozone so they can reclaim their own fiscal destiny, for better or worse.
Thucydides described a world in which "The strong do what they can, and the weak do what they must." What is Greece doing other than what it must, to survive as a democracy?
25
You really have to be kidding with such overheated rhetoric like saving banks on the backs of pensioners. If you don't know that is nonsense then you haven't been reading. Greeks have defaulted before on debt, so the government could a) lie about its debt to get into the Eurozone in the first place and b) borrow money to pay for what is one of the most generous pension systems in the world and one with one of the largest government sectors. And all this in a left-leaning country with the paradoxical nature of not wanting to pay taxes. Greece has the worst tax evasion problem in the EU. No you are wrong this tragedy is largely writ by the Greeks themselves. If it were the first time they were defaulting it might be one thing, but they effectively defaulted in 2012. If the structural and societal problems of expecting early retirements and not paying taxes and having too large a government sector are not fixed this will be, to quote a more down to earth character than Thucydides "deja vu all over again."
22
People always talk about "fiscal union" - the thing is, lack of fiscal union had NOTHING to do with why this mes exists. It was Greece creating colossal debt that caused this mess. And what's more, it was doing so in contradiction to _explicit_ requirements NOT to do so and a member nation intended to specifically prevent exactly this from happening.
No one forced them to live beyond their means, they did that freely and willingly all on their own - they own the consequences of their choices. To turn a phrase, no one put the noose around their necks - they did that all on their own. The only thing anyone else did was to give them the rope _they asked for_.
No one forced them to live beyond their means, they did that freely and willingly all on their own - they own the consequences of their choices. To turn a phrase, no one put the noose around their necks - they did that all on their own. The only thing anyone else did was to give them the rope _they asked for_.
3
Greece is now suffering the pain of its own profligacy -- a situation of its own making.
26
I used to accept capitalism. I'd never loved it, but I accepted it as good enough--certainly better than the alternatives. Until Ronald Reagan. He taught me just how pernicious the whole thing is. It needs to collapse, and as it collapses we need to create a new system based on cooperation. If this is the beginning of the collapse, it's fine with me. The Greeks are going to suffer, which is a pity. I've been to Greece several times and I love the place and the people. But we are going to suffer too eventually.
16
You seem to have no idea how capitalism has kept you living in conditions far better than anyone in Greece has to suffer. Inundated by socialism as this country is, our bums have it better than the bums over there because of the capitalism that allows more of our disposable money to go to the poor instead of desperately trying to keep a tottery government led market system like Greece from crumbling.
I've been to Greece too, and would way rather be homeless in America. At least here, there'd be an economic climate that'd give me a chance to climb back into the middle class and similar charity programs to help with the mental disorders that most often lead to homelessness in the first place.
I've been to Greece too, and would way rather be homeless in America. At least here, there'd be an economic climate that'd give me a chance to climb back into the middle class and similar charity programs to help with the mental disorders that most often lead to homelessness in the first place.
3
This article misses the critically important distinction between two issues: the short term issues- Greece cannot get to a primary surplus since it appears bent on spending everything it collects with difficulty in taxes and thus needs to borrow more now, a pattern that Greece seems oblivious to AND the long term issue- a huge debt that will never be repaid- which countries in the EEC are unable to acknowledge publicly. Fussing about the long term issues when the short term is critical is one big mismatch. If Greece does not address some of the short term problems, there will be no more short term money. The long term issues... the big debt .. will never be repaid.
2
Your solution to the "short term" problem -- Austerity -- is exactly what has been attempted. And, as in every time the idea has been employed by a nation-state, it has utterly failed.
Further Austerity will result in further economic collapse, which will result in even less income, which will result in an even more impossible hole to dig out of.
I seriously do wonder what world some of my fellow commenters live in, where they believe that you can cut the inputs to an economy and somehow get more - or even keep the same - in the way of taxable output.
Further Austerity will result in further economic collapse, which will result in even less income, which will result in an even more impossible hole to dig out of.
I seriously do wonder what world some of my fellow commenters live in, where they believe that you can cut the inputs to an economy and somehow get more - or even keep the same - in the way of taxable output.
9
Reining in a bloated bureaucracy and excessive entitlements, and refusing to reform a sclerotic business climate is not austerity. Greeks can vote for bread and circuses, but they can't vote for other countries' citizens to pick up the tab. As the Italian Prime Minister so eloquently made clear.
12
The myth that a lot of economically illiterate people make that "austerity" never works is just that a myth. Lets take one not so distant example. In the mid 1990's the Canadian government had been running large deficits for two decades. One third of total government expenditures were being spent on interest payments. The Canadian government cut spending by 7% and increased taxes. Within two years Canada was the fasting growing economy in the G7. There is also the recent examples of the Baltic countries and many other examples as well. Of course there are many factors that go into recessions and growing economies, but to say austerity doesn't work is economic illiteracy.
8
Greece should leave the EU! The pain it will suffer will not be worse that the longer pain of staying in. The purpose of the EU is for capitalist growth,expansion, no? And what has the EU achieved but a greater economic divide between its members with the poorer EU members have been exploited by the more powerful-- as it being played out everywhere domestically and internationally in this economic crisis (e.g. the mortgage crisis in the US with the poor paying the price). Greece borrowed (from Germany which provided machinery?) to expand its industries only to find in the economic downturn, not enough buyers for its products. It experienced the same real estate collapse (a bubble fueled by foreign investors) as has Spain (and the US earlier and Turkey soon) . So let Greece, Spain, Portugal leave the EU. Let the EU crash!
12
Social safety nets are important. But a debt is a debt whether it's owed by a person, corporation or a nation. We can't and shouldn't escape that.
5
Unless you are a bank, in which case all you need to do is securitize the debt, sell the security, hedge against the failure of the security owned by someone else and use the proceeds from the sale of the debt-derived securities to buy politicians who will let your criminal scheme continue and will use public money to bail you out when the company you buy the hedge from fails.
If you are a homeowner or a country, you are crushed like a bug.
If you are a homeowner or a country, you are crushed like a bug.
24
Tsipras failed for three reasons. First was the belligerent style of Greece's negotiators, which all too frequently descended to ad hominem attacks, and provoked responses in kind. Second was the Greek government's entrapment in marxist ideology, which made reform, in their eyes, a matter of socking it to the rich, when Greece's problems are those of excessive entitlements and a failure by the citizenry as a whole to live up to its collective responsibilities. The third reason for failure is a combination of the first two. Greece's nemesis, Germany, is not a neo-liberal ogre. It is a welfare state that cares for the needs of workers, the old, families, and immigrants. But its people understand their responsibilities, and pull together to solve major socio-economic problems. The Germans would never have allowed themselves to get into the sort of mess that the Greeks have created, and justifiably view the Greeks as addicted to the free ride that EU membership has given them.
Left-wingers, among economists and the general public, confuse Greek malfeasance and Germany's hard-line with the easy-money-versus-austerity debate that has been going on in many countries for the past eight years. But Greece's is a case of being an errant child: not playing by basic rules or behaving civilly in its dealings with family. Tsipras needs to put his pride aside, make the reforms the EU requires, and ask in return for a good measure of debt forgiveness.
Left-wingers, among economists and the general public, confuse Greek malfeasance and Germany's hard-line with the easy-money-versus-austerity debate that has been going on in many countries for the past eight years. But Greece's is a case of being an errant child: not playing by basic rules or behaving civilly in its dealings with family. Tsipras needs to put his pride aside, make the reforms the EU requires, and ask in return for a good measure of debt forgiveness.
66
Very nicely put, thank you. Today is my Birthday and as a German this warmed my heart and made my day (plus it's also true, as a bonus).
On a more sober note, I don't think Tsipras will be able to put his pride aside: he is a full-blown sociopath, in my opinion, who has no control over his erratic and harmful behavior, or maybe not even any insight into how damaging to others it is, same for his punk finance minister Varoufakis.
So I think instead of Tsipras putting his pride aside what has to be hoped for is the Greek people putting Tsipras and his gang aside. Then recovery could begin.
On a more sober note, I don't think Tsipras will be able to put his pride aside: he is a full-blown sociopath, in my opinion, who has no control over his erratic and harmful behavior, or maybe not even any insight into how damaging to others it is, same for his punk finance minister Varoufakis.
So I think instead of Tsipras putting his pride aside what has to be hoped for is the Greek people putting Tsipras and his gang aside. Then recovery could begin.
8
"full-blown sociopath...punk finance minister".
Nothing has really changed in the German mind.
Nothing has really changed in the German mind.
3
Oh, please.
Do not pretend that "reform" is what is being offered, proposed, or demanded. It is austerity, nothing more. Austerity, which has not worked and never has worked in economic history.
The German government seems to want the power that comes with controlling the purse-strings (and thinking) of the ECB, without the responsibility that comes with that authority. Germany consistently behaves as though it is too humble to lead - while clearly being unafraid of making haughty demands on behalf of its banks, irrespective of the human cost and political consequences.
Perhaps Greece should have never been invited to the Eurozone. Perhaps it was foolhardy in the first place to put a unified currency before a unified political structure. But we are where we are now - and while Greece may need reform, it also inarguably needs to get out of a suicidal currency pact.
Do not pretend that "reform" is what is being offered, proposed, or demanded. It is austerity, nothing more. Austerity, which has not worked and never has worked in economic history.
The German government seems to want the power that comes with controlling the purse-strings (and thinking) of the ECB, without the responsibility that comes with that authority. Germany consistently behaves as though it is too humble to lead - while clearly being unafraid of making haughty demands on behalf of its banks, irrespective of the human cost and political consequences.
Perhaps Greece should have never been invited to the Eurozone. Perhaps it was foolhardy in the first place to put a unified currency before a unified political structure. But we are where we are now - and while Greece may need reform, it also inarguably needs to get out of a suicidal currency pact.
8
European bankers are trying to recover the money they irresponsibly lent to Greece. If they can't recover, they want to socialize their losses. Many readers have made these points, some eloquently. Greed and acquisitiveness are powerful motives, as we are constantly made aware.
But it would be a tragic mistake, equivalent to unilaterally disarming, to ignore or dismiss the deeper motives at play, whose embrace is nearly impossible to escape for the very reason that they exist and exert their influence at a subconscious level.
Conservatives hate subsidies to the poor. Theirs is a fanatical, Puritanical view: they believe (in Europe, too) that those of high character, the "makers," should reap the rewards of society, while those of low moral fiber, the "takers," get only what they deserve. (Guess how they regard the Greeks.)
This subconscious, character-shaping assumption reinforces the transparent motives of greed and acquisitiveness. In true Puritanical terms, this financial elite see their material success as both a sign and reward of moral superiority.
So, we have what psychologists call a "double bind," two strong emotions – greed and self-righteousness – that reinforce each other, and in so doing, block any exit from the destructive, anti-social behaviors they perpetuate.
We must first understand this mindset, if we are ultimately to isolate and defeat it.
But it would be a tragic mistake, equivalent to unilaterally disarming, to ignore or dismiss the deeper motives at play, whose embrace is nearly impossible to escape for the very reason that they exist and exert their influence at a subconscious level.
Conservatives hate subsidies to the poor. Theirs is a fanatical, Puritanical view: they believe (in Europe, too) that those of high character, the "makers," should reap the rewards of society, while those of low moral fiber, the "takers," get only what they deserve. (Guess how they regard the Greeks.)
This subconscious, character-shaping assumption reinforces the transparent motives of greed and acquisitiveness. In true Puritanical terms, this financial elite see their material success as both a sign and reward of moral superiority.
So, we have what psychologists call a "double bind," two strong emotions – greed and self-righteousness – that reinforce each other, and in so doing, block any exit from the destructive, anti-social behaviors they perpetuate.
We must first understand this mindset, if we are ultimately to isolate and defeat it.
22
Greece lied and cooked the books to enable the country to enter the Euro zone. Had they told the truth they would not have been allowed to trade their Dracma for the Euro
22
No, it was not Greece that dis that, it was a previous government since voted out. This is the dsmocratic way, vote out the miscreants. Pumishing the nation for the miscreants' crimes is NOT the democratic way.
The Troika is very anti democratic. So are all who support them.
The Troika is very anti democratic. So are all who support them.
5
If there's one person to blame for the downfall of the EU, it's Angela Merkel.
4
As you say, if there's one. But she had a lot of help in her misdeeds from Schäuble, Dijselbloem, Draghi and others. Europeans should demand they all resign.
6
What is painful to watch in this drama is the patently untruthful propaganda being promulgated by the ever intractable Angela Merkel. As if somehow, by subsisting on a diet of dirt and straw, the Greek people have some hope of escaping the financial trap that its creditors have forced them into. The idea that the European Union is anything but a means of extending the financial power of the wealthy at the expense of the financial independence of the not wealthy is a total sham. What the euro has provided is a shackling of each EU member so that they cannot devalue their currency during a time of economic downturn. It's not unlike the situation suffered by college loan indebted students who, upon graduation, find few good paying job opportunities.
The Greeks and the students both need a significant write down of their debt. However, both are faced with the reality that debt restructuring has be legislated away. This "rock vs. hard place" situation ensures that the penalty for not repaying the loan holders is more draconian than is warranted in a modern society. I dearly hope that the Greek people choose to give the EU (and especially Angela Merkel) a one fingered salute. Even the uncertainties of exiting the Euro and re floating the drachma offers a better path to solvency than a generation of indentured servitude. And one this becomes a reality, do not be surprised to see Portugal, Spain, and Italy to at least entertain their own exit from the EU.
The Greeks and the students both need a significant write down of their debt. However, both are faced with the reality that debt restructuring has be legislated away. This "rock vs. hard place" situation ensures that the penalty for not repaying the loan holders is more draconian than is warranted in a modern society. I dearly hope that the Greek people choose to give the EU (and especially Angela Merkel) a one fingered salute. Even the uncertainties of exiting the Euro and re floating the drachma offers a better path to solvency than a generation of indentured servitude. And one this becomes a reality, do not be surprised to see Portugal, Spain, and Italy to at least entertain their own exit from the EU.
15
But the Greeks have been splurging on Merkel's credit card ever since they joined the euro zone.
17
Rather like Ireland before the 1980s, one safety valve will be emigration, which is ramping up fast among those with transferable skills like doctors.
Since the C19th large numbers people have been leaving places with bad governance (and hence few opportunities) to places with better governance.
But the risk is the bad places never get better governance.
Since the C19th large numbers people have been leaving places with bad governance (and hence few opportunities) to places with better governance.
But the risk is the bad places never get better governance.
5
EUROPE A COOPERATIVE VENTURE Europe should be a cooperative venture, like a family, more than just an association of partners with a common bank account, though, of course, it is also such an association. As Mr. Irwin so reasonably analyzes, recession or even depression makes it impossible for the Gks to pay their debt. On the other hand, so many helping hands in the big partnership lie in waiting which could be employed to push Greece`s economy out of its predicament. Imagine a cenario where British financial shrewdness, French research, German management, Polish and Czech superb tool-making, Portuguese literary skills, Estonian digital technology, Italian design, and so on and on, would all be drawn into a common Gk development agenda. Millions of unemployed skilled workers would get jobs in this great common project. In the meantime, the financial deadlock would be circumscribed by means of the creation of a Special Zone, let`s say an Euro 2 Zone. This kind of handling of the Gk crisis (a Gk word, by the way) would require mediation, which could be provided by available and proven political brokers of the first class like, e.g., Mr Kofi Annan or Mr Lula from Brazil. Either Europe is a cooperative venture or forget it.
6
I think the austerity approach is wrong, but Greece has no valid response to "It’s not the case that we have taken early retirement pensions away from the people of Italy just to allow the Greeks to have them! We have brought in labor reform, but it is not the case that, with our money, a number of Greek shipowners can continue not to pay taxes. I could go on.”
Tsipiras should start chasing the Greek rich for taxes, not the EU media for soundbites.
Tsipiras should start chasing the Greek rich for taxes, not the EU media for soundbites.
21
Actually, they do have a decent response. You can find it at Varoufakis' web page. Basically, the accusation is wrong. The banksters are lying again. Outside of that straw man argument, no one is talking about taking German pensions away.
5
I know at this point that the NY Times is completely lost on the topic of Greece, but just for the record I'll try anyways.
THIS is NOT what happened: "Austerity was the price to be paid for keeping the monetary stability created by the euro currency."
Rather, what happened was that the EU tried to use the crisis to force Greece to reform its corrupt and inefficient ways, things like people retiring at 55, tax evasion as a national sport, 400 cleaning ladies for the finance ministry alone, the largest military per capita in all of NATO, an absurdly inefficient bureaucracy, and all of it financed by misdirected EU infrastructure funding and fraudulently obtained loans, billions and billions. The idea was that only under intense pressure could those ways be changed, even if some of the reforms would manifest as something looking like austerity.
Of course Greece did what it does best, faking most of the reforms, carrying out only the easy ones that would hurt only the little people, while taking the additional money, again billions and billions.
Nevertheless the Greek economy actually was improving -- until January, when Syriza came to power, which is clearly led by a bunch of complete sociopaths and habitual liars.
Keynes' method only works if a country actually has a working economy and administration. And devaluation of currency can indeed boost a country's trade -- but only if you actually have something to trade. Not the case for Greece on both counts.
THIS is NOT what happened: "Austerity was the price to be paid for keeping the monetary stability created by the euro currency."
Rather, what happened was that the EU tried to use the crisis to force Greece to reform its corrupt and inefficient ways, things like people retiring at 55, tax evasion as a national sport, 400 cleaning ladies for the finance ministry alone, the largest military per capita in all of NATO, an absurdly inefficient bureaucracy, and all of it financed by misdirected EU infrastructure funding and fraudulently obtained loans, billions and billions. The idea was that only under intense pressure could those ways be changed, even if some of the reforms would manifest as something looking like austerity.
Of course Greece did what it does best, faking most of the reforms, carrying out only the easy ones that would hurt only the little people, while taking the additional money, again billions and billions.
Nevertheless the Greek economy actually was improving -- until January, when Syriza came to power, which is clearly led by a bunch of complete sociopaths and habitual liars.
Keynes' method only works if a country actually has a working economy and administration. And devaluation of currency can indeed boost a country's trade -- but only if you actually have something to trade. Not the case for Greece on both counts.
64
Actually, the NYTimes is wrong and so are you. The Austerians really did ruin the Greek economy further by imposing fruitless austerity. Oh, btw, not one of their reform proposals made any sense. They all would have increased debt without providing real reform.
Varoufakis tried to explain this to them, but they insisted on believing their own politically motivated lies rather than admit their delusion.
Varoufakis tried to explain this to them, but they insisted on believing their own politically motivated lies rather than admit their delusion.
3
“If Greece accepts massive austerity … it can remain in the Eurozone with the help of bailouts.... Austerity without debt write-downs created a depression, making the debt burden even harder to handle. … Mr. Tsipras [argues] ‘the issue of Greece does not only concern Greece; rather, it is the very epicenter of conflict between two diametrically opposing strategies concerning the future of European unification’.”
Paul Krugman & others made the very same argument during the past several yrs. ever since the current refractory (Great) recession set in following the bursting of the housing bubble. The Republicans, as the Chicago school made the reverse argument. The latter argument has been proved wrong again & again. In fact, we have evidence to the contrary in the way of handling the Great Depression, instinctively, with trepidation by FDR. And that was the very same reason Ben Bernanke and others kept the interest rate almost at zero to deal with the current recession. Despite the Republicans’ determined efforts to run the US economy down in their attempts to beat president Obama, the economy managed to stay afloat. It was absolutely unnecessary to cut so many jobs at the public sector, which aggravated the pain and prolonged the recession.
Paul Krugman & others made the very same argument during the past several yrs. ever since the current refractory (Great) recession set in following the bursting of the housing bubble. The Republicans, as the Chicago school made the reverse argument. The latter argument has been proved wrong again & again. In fact, we have evidence to the contrary in the way of handling the Great Depression, instinctively, with trepidation by FDR. And that was the very same reason Ben Bernanke and others kept the interest rate almost at zero to deal with the current recession. Despite the Republicans’ determined efforts to run the US economy down in their attempts to beat president Obama, the economy managed to stay afloat. It was absolutely unnecessary to cut so many jobs at the public sector, which aggravated the pain and prolonged the recession.
10
You, and Krugman, are correct when it comes to the situation in the US. If a country has a developed and well-functioning economy, with low levels of corruption, then it is indeed the right course of action in a recession to keep that economy going by government-funded deficit spending until the recession passes. The reason why Republicans have been opposing this course of action is because of their insane hatred of Obama and their disdain for the working- and middle-classes who stand to gain from a well-run government. Republicans are using "austerity" as a cover for their plans to destroy good governance because they don't want a well-balanced and healthy society, and Krugman is right to call them out for that.
But the situation in Greece is fundamentally different (see also my comment above). There simply *is* no functioning economy or good governance in Greece, just a corrupt kleptocracy that has for decades been propped up by billions from the EU and fraudulently obtained loans. Now that house of cards has come crashing down and the EU demands are not those of mindless austerity for austerity's sake, as Krugman et al. claim, but rather a set of reforms to turn Greece into a functioning economy and society. Only that some of these reforms manifest as austerity in the short term. Krugman should know this and I suspect he does but feels that he can give no ground at all in his battle against Republican nihilism. I hope it's that and not his brain slowing down.
But the situation in Greece is fundamentally different (see also my comment above). There simply *is* no functioning economy or good governance in Greece, just a corrupt kleptocracy that has for decades been propped up by billions from the EU and fraudulently obtained loans. Now that house of cards has come crashing down and the EU demands are not those of mindless austerity for austerity's sake, as Krugman et al. claim, but rather a set of reforms to turn Greece into a functioning economy and society. Only that some of these reforms manifest as austerity in the short term. Krugman should know this and I suspect he does but feels that he can give no ground at all in his battle against Republican nihilism. I hope it's that and not his brain slowing down.
25
Thank you, uae, for enlightening me about Greece. I hope it may help some others too from your main comment above.
I had some knowledge of the rich in Greece evade taxes as many if not most other rich almost anywhere do, including the $billions hedge fund managers rake in at 15% federal rate until 2012; even now they pay only another 8.3%. (John Paulson made $4.9 billion, with a 'B' in 2010, or so. What a haul at 15% tax rate, instead of 91% during Eisenhower time, but effective rate was lower. Mukesh Ambani built a $B+ megamansion in Mumbai, next to Dharavi; just one toilet/1K residents available there. A sizable portion of his loot probably belongs to the millions in Dharavi & elsewhere in Mumbai. Governmets of Maharashtra & India let him amass so much, which was nothing short of criminal; no wonder Singh lost the election in 2014. But they would not stop blaming the British for India's woes. How convenient.)
I had some knowledge of the rich in Greece evade taxes as many if not most other rich almost anywhere do, including the $billions hedge fund managers rake in at 15% federal rate until 2012; even now they pay only another 8.3%. (John Paulson made $4.9 billion, with a 'B' in 2010, or so. What a haul at 15% tax rate, instead of 91% during Eisenhower time, but effective rate was lower. Mukesh Ambani built a $B+ megamansion in Mumbai, next to Dharavi; just one toilet/1K residents available there. A sizable portion of his loot probably belongs to the millions in Dharavi & elsewhere in Mumbai. Governmets of Maharashtra & India let him amass so much, which was nothing short of criminal; no wonder Singh lost the election in 2014. But they would not stop blaming the British for India's woes. How convenient.)
3
Why do Greek shipping magnates still not pay taxes after 5 years of crisis and austerity?
25
Because they have no interest in Greece.
1
Maybe because they think it's a great place to visit family, party, or take a vacation, just not a place to do business! Marxist government "makes it so"!
1
For the same reason big players like GE don't pay taxes in the US? We all have that problem with tax evasion, it is unrealistic to try to blame the Greeks for theirs.
2
This article miscasts the crisis, suggesting it is a matter of policy choices when there is no choices to be had in Europe ... this includes Greece.
Greeks must embrace austerity as it is a permanent condition. Austerity will expand to engulf all of Europe. Greeks cannot borrow to buy fuel, it's economy like the others is borrowing and nothing more. Increased real borrowing costs direct the funds back to the lenders, there are no other returns available to the Greeks.
There are no returns for the rest of Europe, either ... or for the Americans, Chinese or the rest. Driving in circles does not pay for the cars, nor does it pay for anything else. There is nothing for the Greeks but to conserve, one way or the other they will.
Greeks must embrace austerity as it is a permanent condition. Austerity will expand to engulf all of Europe. Greeks cannot borrow to buy fuel, it's economy like the others is borrowing and nothing more. Increased real borrowing costs direct the funds back to the lenders, there are no other returns available to the Greeks.
There are no returns for the rest of Europe, either ... or for the Americans, Chinese or the rest. Driving in circles does not pay for the cars, nor does it pay for anything else. There is nothing for the Greeks but to conserve, one way or the other they will.
2
The Greeks will submit and eat crow--that seems obvious. Why? Because they will put up with anything rather than leave the EZ--they want to be able to emigrate and that will be the solution to the Greece's problems. Greeks will leave and send remittances back home. Greece will be yet another failed state but one that will be colonized by other Europeans and made into a theme park since it has a lot of coastline.
8
Greeks have been emigrating for more than 100 years, much like the Irish. For a small country with not a large industrial base, it's an effective 'economic strategy', albeit an implicit one.
Still, if you look at their GDP, it was fine up to 2008 when the financial crisis hit. Their two biggest export sectors are tourism and shipping and both will eventually recover. The creditors will get paid back eventually (like 50 years from now). But, it's essential to allow the Greek economy to recover again, much like many other countries.
Still, if you look at their GDP, it was fine up to 2008 when the financial crisis hit. Their two biggest export sectors are tourism and shipping and both will eventually recover. The creditors will get paid back eventually (like 50 years from now). But, it's essential to allow the Greek economy to recover again, much like many other countries.
3
This is a classic case of thinking that the alternative to what you are complaining about (austerity) is the ideal (debt forgiveness) when often the alternative is worse than what you are complaining about (massive inflation after leaving the Eurozone). Tsipras' assumptions were wrong: he thought the Eurozone would be afraid of Greece leaving the EZ, he thought that his mandate after having been elected by the people of Greece would mean more to the leaders of the Eurozone than their own mandates from being elected by the people of their countries, he thought that the Eurozone would be more afraid of losing the money that they had already lent than they were of losing any additional money sought.
To European leaders there is nothing unfair about the economy of Greece being reduced to the level of its neighbors Bulgaria, Albania and Macedonia (or to put it another way they owe no more to Greece than they do to its neighbors).
To European leaders there is nothing unfair about the economy of Greece being reduced to the level of its neighbors Bulgaria, Albania and Macedonia (or to put it another way they owe no more to Greece than they do to its neighbors).
19
But the "massive inflation" would not last for long. Once the Drachma stabilizes, low prices will attract investers and foreign investors again. This is the usual outcome after devaluation.
1
Yes, but investors only go to places where you can do business and the levels of corruption, bureaucracy and labour strife in Greece are legendary. Many ex-pat Greeks who returned with capital to start businesses have quit in disgust. Plus, that debt will not magically disappear, as the Argentines have found. If you cannot make a mutually accepted deal with every single creditor, the defaulted debt follows a country around forever, interfering with using US banks or the selling of new bonds in any Western financial capital.
2
Reads like a press release from the troika. Premature call. Either way the referendum goes, the status quo is not an option. Greece wins. It gets harder for private capital to socialize its debt. Ireland next.
4
Greece has been going broke for years. Greece knows it and so do its creditors. The total amount of debt that the Greeks owe is smaller than the pension funds of the state of California. What is due immediately is even less. The problem though is a much political as it is economic. Both creditors and Greece have equal responsibility in this fiasco.
Greece for all practical purposes is bankrupt. The unemployment of Greece and a stagnating economy is also almost hopelessly beyond repair. Greece not only needs a bailout it needs a reality check. The government can't collect its taxes. Tax evasion and general taxing of business is a disaster. Greek pension plans and its retirees are living on promises that can't be kept. The youth of Greece has no hope for any future.
In the meantime the creditors act like collection agencies in the United States that badger and harass people with no money until they beg, borrow or steal from anyone to stop the calls and threats.
Greece doesn't need a bailout. It needs its people and its government to understand the situation as it really is. Actually exiting from the Euro would probably be less painful than borrowing more money that they can't possibly repay. Both sides know that. More austerity will not solve Greece's problems and neither will more borrowing. Both sides need to compromise and take some losses. There can be no bailout without reform for creditors and debtors.
Greece for all practical purposes is bankrupt. The unemployment of Greece and a stagnating economy is also almost hopelessly beyond repair. Greece not only needs a bailout it needs a reality check. The government can't collect its taxes. Tax evasion and general taxing of business is a disaster. Greek pension plans and its retirees are living on promises that can't be kept. The youth of Greece has no hope for any future.
In the meantime the creditors act like collection agencies in the United States that badger and harass people with no money until they beg, borrow or steal from anyone to stop the calls and threats.
Greece doesn't need a bailout. It needs its people and its government to understand the situation as it really is. Actually exiting from the Euro would probably be less painful than borrowing more money that they can't possibly repay. Both sides know that. More austerity will not solve Greece's problems and neither will more borrowing. Both sides need to compromise and take some losses. There can be no bailout without reform for creditors and debtors.
11
"It needs its people and its government to understand the situation as it really is."
That is an excellent point and what Greece is sorely lacking.
That is an excellent point and what Greece is sorely lacking.
8
Please - let's at least put to rest the canard that there is any imposition of "austerity" in the Greece economy.
The Greek national government is spending 59 cents over every dollar of GDP.
Absurd.
The Greek national government is spending 59 cents over every dollar of GDP.
Absurd.
33
And, to add to the absurdity you point out, even with his latest concession Tsipras is still insisting on not having cuts in the military budget.
6
I'm curious--would you want Greeks to starve because they are burdened with having to pay off hedge funds? The cause of this mess is #1 the Greek oligarchs and slimy politicians; and, #2 Goldman Sachs and the hedge funds.
2
Highest military spending per capita in Europe....and Tsipras still refuses to cut it, even under his latest concessions. No idea why you think Europe should subsidize that. I agree Greek oligarchs and slimy politicians are the root cause here, and neither should Europe continue to subsidize them.
2
How tragic that potential allies such as Italy oppose Greece because Italy has "suffered too." This type of resentful regressive egalitarianism characterizes much of politics today and, more importantly, takes for granted why we are engaged in this mass pauperization in the first place: to further enrich the already criminally rich.
6
You might have a point except you don't. The $$$ in question is basically transfer payments from middle/upper middle class hard working northern Europeans to a sizable segment of Greeks who subsist on these transfer payments, NOT to a few wealthy criminally rich. Other points 1) Regarding those transfer payments: Greece promised WAY too many benefits to WAY too many citizens over the years; in part because for years/decades the far left (Marxists even) held sway in Greece 2) Greece lied about its level of debt 3) Greece missed the chance to uproot corruption and in the process drive more tax revenues to its balance sheet. 4) The culture of entrepreneurship in Greece is tiny; the culture of working like the dickens to secure a nice government job with nice benefits is prevalent 5) Greece never opened its labor markets, an artifact of its political systems. 6) Greece has a culture of fatalism, largely absent in the U.S., with important secondary impacts (tolerance of corruption, sclerotic labor markets, reduced risk taking, etc) 7) The rich who are criminals are present in Greece mainly because there tax collection efforts and systems are weak at best.
9
In other words, Greeks have to go hungry and fall victim to preventable diseases such as malaria so that Germans could continue working hard. Nice system you're defending there.
2
Re the repeated claims that banks lent irresponsibly.
Banks lent on the information provided by the Government of Greece.
The Greek Government provided false data, unprecedented by any other European Government.
Banks are not the NSA, spying on foreign governments.
Commenters should read the Financial Times (London) " Greece condemned for falsifying data" 1/12/2010
Banks lent on the information provided by the Government of Greece.
The Greek Government provided false data, unprecedented by any other European Government.
Banks are not the NSA, spying on foreign governments.
Commenters should read the Financial Times (London) " Greece condemned for falsifying data" 1/12/2010
20
"By indicating that his government could accept much of what Greece’s creditors demanded as conditions for a bailout extension late last week, Mr. Tsipras seems to have finally acknowledged this inability to reset the terms of debate over austerity and democracy in Europe."
Indeed. Tsipras (and Varoufakis) is a case study on exactly what NOT to do when it comes to negotiations. By throwing up his hands, walking out of negotiations in the eleventh hour and calling a referendum for his people to vote on something that he couldn't even provide details on, it only goes to show how immature Syriza is. (ECB is smart in preempting Tsipras by putting the complete creditors' proposal online for anyone in Greece who cares to read the details before the vote.)
How can the negotiation partners continue to treat him serious and with respect when Tsipras effectively declares that he and his party, albeit being democratically elected by his countrymen to represent Greece's interest, cannot make decision on what Greece wants?
As Renzi has rightly put it, how can Greeks expect others to continue pouring money into Greece to prop up its economy and banks, when other countries are taking same medicine with grit? How can Tsipras continue to say it, with a straight face, about maintaining democracy and dignity in Europe, when he literally doesn't care about what's happening to other member states who are chipping in the help?
Indeed. Tsipras (and Varoufakis) is a case study on exactly what NOT to do when it comes to negotiations. By throwing up his hands, walking out of negotiations in the eleventh hour and calling a referendum for his people to vote on something that he couldn't even provide details on, it only goes to show how immature Syriza is. (ECB is smart in preempting Tsipras by putting the complete creditors' proposal online for anyone in Greece who cares to read the details before the vote.)
How can the negotiation partners continue to treat him serious and with respect when Tsipras effectively declares that he and his party, albeit being democratically elected by his countrymen to represent Greece's interest, cannot make decision on what Greece wants?
As Renzi has rightly put it, how can Greeks expect others to continue pouring money into Greece to prop up its economy and banks, when other countries are taking same medicine with grit? How can Tsipras continue to say it, with a straight face, about maintaining democracy and dignity in Europe, when he literally doesn't care about what's happening to other member states who are chipping in the help?
20
I think Tsipras strategy has always been to use the Greek crisis to call into question the Euro-bureaucracies and oligarchs. He and V. have always seen this as an European issue and they seek to revive the left. But the left, frankly, is moribund everywhere. The future lies with the right in Europe with people like Le Pen and others.
You're sounding like Herbert Hoover during the depression. Such a luxury, talking about trust and rules when the economy is permanently depressed. Tell me, who is defending Europe and who is trying to destroy is?
6
Its just math JFC. You ask the wrong question, but I'd say the hard working German taxpayer has been paying to defend (the currency union that is) Europe, and every Greek politician who voted to spend money they did not have and who did not stand up and say "this is unsustainable" was (inadvertently but undeniably) working to destroy it.
2
A bit like the Versailles Treaty, but this time it's Germany seeking "reparations". Yes, less vacation time and crack down on tax evasion are in order. But, austerity measures have been imposed and without good results. It's been said before, but Germany hegemony in Europe s still a consistent theme, only now it's economic rather than military. France is still their ally.
6
It's starting to look like the Euro was about asserting economic power over democratic power from the start. Remember the intensity of the propaganda preceding the referenda on joining, and how countries who voted the wrong way had to vote again? Brings the recent congressional votes on the TPP to mind.
14
Well said Martin. That's exectly what this is.
I'm currently recalling the many referendums in countries across Europse over the last twenty years that did'nt give the Masters of the Universe the answer they wanted, so made the unwashed vote again - and again - until they got the vote they wanted.
Chronic deficit of democracy.
I'm currently recalling the many referendums in countries across Europse over the last twenty years that did'nt give the Masters of the Universe the answer they wanted, so made the unwashed vote again - and again - until they got the vote they wanted.
Chronic deficit of democracy.
4
The Greeks are free to vote themselves out of the Euro any time they like.
3
We are moving away from the democratic moment in world history and going back to the perennial pattern. The oligarchs have learned to game the system and the people have little interest, in the developed countries, in taking responsibility in maintaining a democratic culture--it's over folks and a new kind of neo-feudalism is in our future.
1
Of course, the better way to serve ones debts would be to take money, invest it into a competitive economy and then get lots if taxes for paying back the debt.
Unfortunately, greece's inability to implement the last part of the idea means, that better way just does not work there.
Austerity, i.e. the direct taking of money, is, of course, the second "best" solution only. But it has the advantage of yielding immediate and verifiable cash flows.
That was why we insisted on austerity.
Unfortunately, greece's inability to implement the last part of the idea means, that better way just does not work there.
Austerity, i.e. the direct taking of money, is, of course, the second "best" solution only. But it has the advantage of yielding immediate and verifiable cash flows.
That was why we insisted on austerity.
11
I wonder how Germany would've fared after WWII without massive reconstruction loans from the U.S. that were ultimately forgiven? A war that Germany started. It seems to me that the debts cannot be repaid without destroying the economy even more. I agree with the NYTimes; rip up the I.O.U's. I am disappointed that Tsipras didn't push to separate Greece from the Euro much earlier. The sooner the Greeks get control of their own currency the sooner they will be able to begin their recovery even if it means more hardship in the short run. If Greece accedes to the creditor demands it will mean much more hardship in the short and the long run.
27
Actually, the money sent to Europe as part of the Marshall Plan, about $13 billion [or about $240 billion in today's money] was a loan, not a gift or a grant. And it eventually was all paid back, with moderate interest. The U.S. demanded, as part of the Plan, that the money be used as part of a Europe-wide plan to restart the European economies after the war, instead of on a country-by-country basis. This was radical, and it worked, and became the seed from which the Common Market and then the E.U. grew. The lesson then for all of Europe, and for Greece now, is that small countries are not economically viable in the modern, globalized world, and that only huge internal markets [e.g., the U.S., the E.U., China] can sustain a modern economy. Britain, post-empire, would be smart to heed the lesson. It is certainly true that fanatic austerity, as Paul Krugman has often noted, is sometimes worse than the condition it is supposed to address, and results in a lot of personal hardship. However, countries, like people, cannot go on borrowing forever and pushing their debts onto other countries or future generations. When the Greeks start paying their taxes in full, and stop retiring on full pension at 55, then maybe the whole bailout/austerity/retrenchment process can work.
29
Tsipras knew that Greeks did not want to leave Europe because they want to be able to emigrate--that's the selling point of the EZ/EU. Poles, Latvians and Spaniards can travel freely throughout Europe. Greeks will be happy to depopulate Greece. The era of the nation-state is passing and this crisis shows why.
Not so sure that leaving the Euro would result in inability to travel and relocate across europe,
1
This is still another example that we see in Bloomberg on the crisis in Greece -- one-sided, half-truth journalism. The article's main takeaway is that Tsipras hasn't moved nearly enough and quick enough. But there's no mention about Troika's position of tightening the austerity screws. The Troika hasn't budged on its continued insistence that the mother of Great Depressions must get worse and continue to get worse with no end in sight. Why should any Greek Prime Minister, especially one like Tsipras who believes that an economy is driven not by Supply but by Demand, agree to measures that spirals plunging Demand?
Joseph in Missoula
Joseph in Missoula
14
The Greeks need to revolt from austerity, secede from the Eurozone and also the European Union, and seek like-minded allies elsewhere to fight Wolfgang Schäuble and his ilk.
Where are today's Spartans? Where is today's Gavrilo Princip?
Where are today's Spartans? Where is today's Gavrilo Princip?
6
Gavrilo Princip was a Serb, not Greek; and his act of state sponsored terrorism precipitated WW1.
8
The Greeks will never leave Europe, again, because they want the ability to emigrate.
1
This analysis gets a few things quite wrong:
“The Greek government was surely hoping that by walking away and calling a referendum, the creditors would rethink their intransigence, fearful of the economic and geopolitical consequences of letting Greece leave the eurozone.”
Surely? Irwin seems very confident in one of the biggest current debates on the whole affair (i.e.: Tsipra’s motives for calling the referendum.) It seems to many informed people that the referendum may not be negotiating trick at all, but a genuine effort to seek a mandate on a no-win choice.
“Italian prime minister Matteo Renzi, who would seem to be a prime target to reshift the framework of Europe’s negotiations along Greek-favored lines.”
Seem to who? Renzi’s entire political platform is pushing through the kinds of pro-capital reforms on pensions, labor rules, business law, and social welfare that Syriza opposes.
“He chose the former. But with the country already having missed a debt payment to the International Monetary Fund and events unfolding quickly and unpredictably, the question now is whether he was too late.”
Ridiculous. Tsipras’ switch from trying to sweep away austerity to simply trying to protect his basic redlines came months ago. The events of the last few days haven’t changed that at all. Whether his offer today is domestic political posturing or a sincere attempt to get a deal, it wasn’t much of a shift from the final Greek offer last week before the so-called “ultimatum.”
“The Greek government was surely hoping that by walking away and calling a referendum, the creditors would rethink their intransigence, fearful of the economic and geopolitical consequences of letting Greece leave the eurozone.”
Surely? Irwin seems very confident in one of the biggest current debates on the whole affair (i.e.: Tsipra’s motives for calling the referendum.) It seems to many informed people that the referendum may not be negotiating trick at all, but a genuine effort to seek a mandate on a no-win choice.
“Italian prime minister Matteo Renzi, who would seem to be a prime target to reshift the framework of Europe’s negotiations along Greek-favored lines.”
Seem to who? Renzi’s entire political platform is pushing through the kinds of pro-capital reforms on pensions, labor rules, business law, and social welfare that Syriza opposes.
“He chose the former. But with the country already having missed a debt payment to the International Monetary Fund and events unfolding quickly and unpredictably, the question now is whether he was too late.”
Ridiculous. Tsipras’ switch from trying to sweep away austerity to simply trying to protect his basic redlines came months ago. The events of the last few days haven’t changed that at all. Whether his offer today is domestic political posturing or a sincere attempt to get a deal, it wasn’t much of a shift from the final Greek offer last week before the so-called “ultimatum.”
12
Thank you Cormac! Yours is an informed and thoughtful response to a poor journalistic analysis, which just adds to the long list of pandering articles about Greece in the corporate journals. Readers need to wake up to the fact that the corporate media will never speak for debtors when creditor interests are on the line. It's simply not very smart for a reader who is also a debtor to fall for the corporate line on Greece or any struggle between the real two classes: Debtors and Creditors. Their interests really do clash. Creditors know this, but they don't want debtors (who are most everyone) to catch on.
Joseph in Missoula
Joseph in Missoula
11
This commentary by Nobel prize winning economist Joseph Stiglitz makes it clear that the Troika's austerity measures have been a dismal failure, driving the Greek economy into a deep depression with a 25% loss of GDP. Even for debt repayment purposes, the last thing that is needed is more of the same.
https://www.project-syndicate.org/commentary/greece-referendum-troika-eu...
https://www.project-syndicate.org/commentary/greece-referendum-troika-eu...
13
No they have not been a failure if you understand that there is no such thing as "economics" as separate from politics. The current project in the Western world is to move away from democratic ideals into neo-feudalism with oligarchs in unassailable positions to be the new hereditary aristocracy and return to normalicy after the aberrations of the the American and French revolutions. It has worked perfectly in the U.S. and will work in Europe.
2
It seems to me that the word “austerity” is badly used. What the serious members of the EU are asking of Greece is a series of reforms, which almost all of them have already put into place, to make their economy more efficient, to attract investment & create jobs. Is that austerity?
Oh yes, and as Italian PM Renzi says, it also includes actually collecting taxes! It includes reforms of the grossly inflated public sector & adjusting pension benefits to be more in line with those employed by the solvent countries of the EU.
Oh yes, and as Italian PM Renzi says, it also includes actually collecting taxes! It includes reforms of the grossly inflated public sector & adjusting pension benefits to be more in line with those employed by the solvent countries of the EU.
28
The Economist, on May 9th, had it correct.
"The sorry saga of Syriza. In its first hundred days Greece’s government has failed dismally. A crunch looms"
Syriza, (which with 34% of the votes is not representative of all of Greece)
...incompetence, ideological blinkers, satisfying domestic demands for toughness. ...The government is skint, foreign investment has dried up and a small primary fiscal surplus has been wiped out ... On top of this, there is no longer much hope that Syriza will tackle the chronic pathologies of the Greek state. The government has failed to defang the country’s oligarchs and is reversing some valuable reforms from recent years. An old Greek disease, clientelism, seems as pervasive as ever. To Potami, a liberal party, discovered that 11 of the 13 regional directors of education appointed by the government were Syriza members.
In short no failure "to reframe the debate", but a glaring a failure to conduct rational, politics and most alarming, a return to the bad old ways.
"The sorry saga of Syriza. In its first hundred days Greece’s government has failed dismally. A crunch looms"
Syriza, (which with 34% of the votes is not representative of all of Greece)
...incompetence, ideological blinkers, satisfying domestic demands for toughness. ...The government is skint, foreign investment has dried up and a small primary fiscal surplus has been wiped out ... On top of this, there is no longer much hope that Syriza will tackle the chronic pathologies of the Greek state. The government has failed to defang the country’s oligarchs and is reversing some valuable reforms from recent years. An old Greek disease, clientelism, seems as pervasive as ever. To Potami, a liberal party, discovered that 11 of the 13 regional directors of education appointed by the government were Syriza members.
In short no failure "to reframe the debate", but a glaring a failure to conduct rational, politics and most alarming, a return to the bad old ways.
15
Syriza has failed but, remember, it's project was to revive the European left and use Greece to do that--it's interest was international not Greek. It failed to find allies in other in Italy, Ireland or Spain (which is attempting a new kind of decentralized left) and thus it was over. Hopefully they will resign and the same old criminals will be back in office so Greece can fulfill its function of being a theme park for weathy Europeans.
Nice phrase "chronic pathologies of the Greek state." But what does "skint" mean?
The most damming deficit is one of trust. From the beginning the Greeks promised to reform their governance of the economy. Nothing was changed. The same cronyism, corruption and judicial dysfunction. Germans and others felt that they had to "hold their feet to the fire" to get results. No doubt mistakes were made by all, but the fundamental impediment is Greece's unwillingness to change the way it does business.
27
Another facet of the true dysfunction in the current EU model is that it took Germany over 5 years to truly get reliable numbers for the Greek domestic ledger. Greece was able to use sovereignty to thwart a serious auditing of its books.
The Greek government cut its debt and was ekeing out a surplus, despite a 25% drop in its GDP. They complied with Austerity for 5 years and suffered a financial depression as a result. Please use facts. BTW, 'holding peoples feet to the fire" is a reference to a torture method. Unintentional?
Since "all politics is local;" and "all of Europe" is in recession, each center-right government has been able to chalk the negative effects of its own recessionary policies up to international conditions, and dominate elections with little doses of psychic fear, despite modestly worsening living standards. Greece's immiseration placed Syriza alone at the bargaining table, mandated to improve domestic living standards by standing against the recessionary consensus. The consensus have placed Greece in the Colosseum, against triumvirate knives, to agonize in support of recessionary rule, not "rules," as some might dissimulate.
4
I understand Mr. Irwin's points about the counter-productive nature of austerity. But looking to the future, the Greeks have showed no signs of accepting responsibility for the mess they're in, or that their hearts would really be in the necessary reforms. So even if under duress they accept the Troika's terms, in the decades to come the EU would have to expend a lot of effort and expense keeping Greece from backsliding. It's probably best to divorce at this point. Maybe someday when Greece's attitude towards debt is more responsible and its governance more mature, the EU and Greece can reconcile.
18
Italy's Prime Minister Renzi's comments addressed the issue of Greece's failure to tax ship owners as one example of domestic policy failure. Our global economy is a work-in-progress. Greece's shipowners became the largest cargo vessel owners in the world 50 years ago - since surpassed by the Danes (Maersk), Italian (MSC) and Chinese (CSCL). Island tax havens capitalized on issuing "flags of convenience" for wealthy global shipowners that offered very low regulations and zero tax to shipowners. International governance is compromised by disparate regulatory and tax regimes. The attempt to foster a level playing field a series of model tax treaties were designed since the 1960s. But the focus of these treaties continues to be avoidance of "double taxation" between nations and taxpayers - http://www.un.org/esa/ffd/documents/DoubleTaxation.pdf
The USA has trouble plugging it's global tax leaks from its own citizens and resident global companies. The global tax system is a farce: it does NOT provide a solution to leveling the playing field of global taxation to refocus business on pure economic choices instead of short-term profits. Global for-profit economic activity will gravitate to a jurisdiction that has a loose tax and regulatory compliance regime. Disharmony between national economic policies results. Greece is an accidental victim of global economic idealism that favors large resourceful nations = G3 + 1 = (USA+Japan+Germany) + China over small countries.
The USA has trouble plugging it's global tax leaks from its own citizens and resident global companies. The global tax system is a farce: it does NOT provide a solution to leveling the playing field of global taxation to refocus business on pure economic choices instead of short-term profits. Global for-profit economic activity will gravitate to a jurisdiction that has a loose tax and regulatory compliance regime. Disharmony between national economic policies results. Greece is an accidental victim of global economic idealism that favors large resourceful nations = G3 + 1 = (USA+Japan+Germany) + China over small countries.
6
Greece used just about all the additional monies provided to it over the last few years to continue to pay down it's existing debt - back to the guys who lent it to them. Only ~10% was used in it's own economy, principally to pay pensions. The 'huge sums' it's received haven't been squandered recently by the Greeks at all - quite the opposite in fact.
Also, don't be so sure that Tsipras' last 2 engagements with lenders were an illustration of him blinking first... others might argue that he's simply positioning himself as 'the guy who's willing to compromise' prior to the referendum, thereby bringing swing voters over into his camp vs the inflexible Masters of the Universe. Several commentators have called out his reputation for 'sang froid' in moments of pressure.
Still a heap of twists & turns in this one.
Also, don't be so sure that Tsipras' last 2 engagements with lenders were an illustration of him blinking first... others might argue that he's simply positioning himself as 'the guy who's willing to compromise' prior to the referendum, thereby bringing swing voters over into his camp vs the inflexible Masters of the Universe. Several commentators have called out his reputation for 'sang froid' in moments of pressure.
Still a heap of twists & turns in this one.
39
Unlike "plenty of American and British economists," Mr. Tsipras does not seem to believe he can lead Greece away from the humanitarian crisis and into economic revival outside of the Euro.
The whole point of many economists is that ditching the Euro and reinstating the Drachma will provide the ability for currency flexibility and sovereign monetary policies that are the key to reigniting economic growth. Yet Mr. Tsipras from his election campaign plea to the very last interview last night repeats endlessly that Greece will not exit the Eurozone.
Merkel has shown the steel that she is ready to let Greece go, even if it becomes a blot on her term as the reigning leader of the EU. Tsipras, however, has shown no gut that he is ready to be the prime minister that led Greece out of the Euro (and perhaps national recovery, or not). No wonder Mr. Tsipras has returned to the table, largely accepting the austerity terms.
The whole point of many economists is that ditching the Euro and reinstating the Drachma will provide the ability for currency flexibility and sovereign monetary policies that are the key to reigniting economic growth. Yet Mr. Tsipras from his election campaign plea to the very last interview last night repeats endlessly that Greece will not exit the Eurozone.
Merkel has shown the steel that she is ready to let Greece go, even if it becomes a blot on her term as the reigning leader of the EU. Tsipras, however, has shown no gut that he is ready to be the prime minister that led Greece out of the Euro (and perhaps national recovery, or not). No wonder Mr. Tsipras has returned to the table, largely accepting the austerity terms.
11
Just to put this into very basic terms. Greece cannot repay their loans. Any talk of restructuring is just fancy. The only way out os for the E.U. ( read Germany ) to write the loans off.
However, a large portion of this debt is owned by State Banks and some of them may fail if they have to write them off. Greece is in an impossible situation but one of their own making. You cannot expect Germans who pay their taxes and live responsibly to pay for the years of Greek malfeasance.
Yes there will be a terrible price to paid by he Greek people but they voted in the politicians who did this, and it's been 20 years in the making. Everyone knew 10-15 years ago that their pension numbers didn't pencil out, but so corrupt is the Greek political system that they kicked the can down the road to here. Everyone knew that the well off didn't pay income taxes. That was for suckers.
Well suckers, here you are. You cannot expect the E.U. to just write these debts off, regardless of how "rich" Germany is.
It is a disaster to be sure. But it is a home made disaster and the Greek people are going to have to tear their world apart to cope with it. My heart goes out to them.
However, a large portion of this debt is owned by State Banks and some of them may fail if they have to write them off. Greece is in an impossible situation but one of their own making. You cannot expect Germans who pay their taxes and live responsibly to pay for the years of Greek malfeasance.
Yes there will be a terrible price to paid by he Greek people but they voted in the politicians who did this, and it's been 20 years in the making. Everyone knew 10-15 years ago that their pension numbers didn't pencil out, but so corrupt is the Greek political system that they kicked the can down the road to here. Everyone knew that the well off didn't pay income taxes. That was for suckers.
Well suckers, here you are. You cannot expect the E.U. to just write these debts off, regardless of how "rich" Germany is.
It is a disaster to be sure. But it is a home made disaster and the Greek people are going to have to tear their world apart to cope with it. My heart goes out to them.
42
You've been misled by some pseudo-democrats' statements that only the well off did not pay taxes. True as it is, the middle class as well did not and still does not pay taxes while enjoying a life the middle class American paying his taxes does not. As you guessed, the well off's did not vote for Tsipras so they are the only ones to be blamed for tax evasion.
6
The Euro oligarchs want nothing less than the destruction of Greece and every other country as a sovereign country and the gradual movement towards neo-feudalism to catch up to the U.S.
The fundamental problem Greece has is simple: clientelism and the rich don't pay taxes. Those two go together.
Excessive pensions have been cut back, and probably could be cut back more if that were the only issue; but it's not.
Neither the old government nor Syriza has the power to end the clientelism and collect taxes. The rich got most of their fungible wealth out of Greece -- what remains is mostly real estate.
The total property value of Greek real-estate in private hands is about 1 Trillion Euros -- about 3 times the Greek debt. So in theory the Greeks could pay their debt, though heavy taxes on real-estate (which would force much of it to be sold). That would hit the rich hardest, but do very serious widespread harm -- no government has ever actually done such a thing.
But would it be worse than the default? I don't think so. And it would not directly hurt the poor.
But the rich will have nothing of it ... the reality is that they like default better.
Excessive pensions have been cut back, and probably could be cut back more if that were the only issue; but it's not.
Neither the old government nor Syriza has the power to end the clientelism and collect taxes. The rich got most of their fungible wealth out of Greece -- what remains is mostly real estate.
The total property value of Greek real-estate in private hands is about 1 Trillion Euros -- about 3 times the Greek debt. So in theory the Greeks could pay their debt, though heavy taxes on real-estate (which would force much of it to be sold). That would hit the rich hardest, but do very serious widespread harm -- no government has ever actually done such a thing.
But would it be worse than the default? I don't think so. And it would not directly hurt the poor.
But the rich will have nothing of it ... the reality is that they like default better.
34
Well, it is a bit different in Greece: the rich and the press may control the government, but the so called poor (?) are playing the eternal Greek theater act, they feign victimization while they own mansions and top model German cars. I don't buy that, Lee.
1
Michael Lewis had an entertaining description of greek real estate business in Boomerang...read it!
I don't know the EU charter by heart, but it would seem that bankruptcy would have been another option for the current government. That would surely have brought the creditors to the table with more favorable terms. After all the EU (...and other international markets) stand to lose far more than Greeks do, should they leave. Even Russia and China have offered to help. Iceland repudiated much of its debt and is doing far better than Greece. Affluent Orange County did the same many years ago, and it's collapse is forgotten by most. nnn j I don't know if the EU charter allows for bankruptcy, and continued EU membership, but my guess is yes, as it's common practice in almost every capitalist system.
There is no bankruptcy court for nations! Not even for Puerto Rico (yet)
3
In Greece, successive governments starting with the conservative govt of Karamalnis II back in 2004 spent freely up to the onset of the crisis. There is a desperate need to open the economy, which operates on 70s principles. But that means taking on both entrenched interests and a narrative of statism. There was no chance for any Greek politician to succeed in this with the EU pushing on austerity with no vision for a better future. Now it must be done with one foot over the financial abyss. Tragic.
In Europe, many politicians have used the greek financial crisis as the pivot to enforce austerity, or else. Between the troika and the greek government the people in Greece were given 5 years of harsh austerity with no vision for the future. Of course there was a protest vote, SYZRIZA. But the SYRIZA government with its antics has actually helped to further entrench the austerity ideology which is bad economics and bad politics. Anti-austerity and extreme parties are rising in the EU. The EU has a strong democratic deficit and awkward, ad hoc, and complex institutions. Independently of what happens to Greece, the EU faces many challenges. Is it up to them? Unknown.
Best-case scenario: the SYRIZA govt falls, national unity got takes over, new bailout negotiated. Hold your breath for some actual thinking from Brussels and Bohn in that case. Maybe things start normalizing in 4-8 weeks.
Worst-case scenario: EU/Greece divorce. 7 lean years for Greece, uncharted waters for Europe.
In Europe, many politicians have used the greek financial crisis as the pivot to enforce austerity, or else. Between the troika and the greek government the people in Greece were given 5 years of harsh austerity with no vision for the future. Of course there was a protest vote, SYZRIZA. But the SYRIZA government with its antics has actually helped to further entrench the austerity ideology which is bad economics and bad politics. Anti-austerity and extreme parties are rising in the EU. The EU has a strong democratic deficit and awkward, ad hoc, and complex institutions. Independently of what happens to Greece, the EU faces many challenges. Is it up to them? Unknown.
Best-case scenario: the SYRIZA govt falls, national unity got takes over, new bailout negotiated. Hold your breath for some actual thinking from Brussels and Bohn in that case. Maybe things start normalizing in 4-8 weeks.
Worst-case scenario: EU/Greece divorce. 7 lean years for Greece, uncharted waters for Europe.
4
IT was not Greece that engaged in these political shenanigans but its Prime Minister. Big difference.
4
Who elected him? The Russians? The Turks?
4
Greece should refuse to go along with austerity, exit the Eurozone, and endure what comes next. At least this should slow immigration into their country from the sea.
2
Greece will not be able to restructure its economy in the short term if it is required to repay its debt. The Greeks have a major resource in abundance that would provide a steady stream of clean energy - sunshine and wind: " ... Greece has a large potential for wind and solar energy and is rightly determined to fulfill this potential ..." IEA - Greece-2011-review
Greece is strategically located and its stability is in the best interests of the United States and Canada - both countries together share ~ 3 million members of the Greek diaspora (Greece's population = 11 million in 2013).
https://en.wikipedia.org/wiki/List_of_diasporas
Greece has abundant clean energy resources - sunshine and wind that can supply Italy with clean energy that is < 100 miles shore-to-shore. A longer-view of the debt challenge is needed to resolve the current impasse. German austerity demands s/be compared with capital reconstruction funds from the US/Britain after WWII, The global economy doesn't favor smaller nations without natural advantages (Norway) of abundant fossil fuels. Leveling the playing field between US-German global trade "favored nations" - nations with cheap labor costs like China, requires a longer-term approach to resolving economic problems of smaller countries that were all but forgotten victims of G8 World Trade policies.
Greece is strategically located and its stability is in the best interests of the United States and Canada - both countries together share ~ 3 million members of the Greek diaspora (Greece's population = 11 million in 2013).
https://en.wikipedia.org/wiki/List_of_diasporas
Greece has abundant clean energy resources - sunshine and wind that can supply Italy with clean energy that is < 100 miles shore-to-shore. A longer-view of the debt challenge is needed to resolve the current impasse. German austerity demands s/be compared with capital reconstruction funds from the US/Britain after WWII, The global economy doesn't favor smaller nations without natural advantages (Norway) of abundant fossil fuels. Leveling the playing field between US-German global trade "favored nations" - nations with cheap labor costs like China, requires a longer-term approach to resolving economic problems of smaller countries that were all but forgotten victims of G8 World Trade policies.
Language matters:
Why do you write " If Greece accepts massive austerity — like pension cuts and layoffs of government employees — it can remain in the eurozone with the help of bailouts, with central bank credit extended to Greek banks, and so on. Austerity was the price to be paid for keeping the monetary " ?
More correct:
If Greece accepts massive reforms — like pension cuts and layoffs of government employees — it can remain in the eurozone with the help of bailouts, with central bank credit extended to Greek banks, and so on. Reforms was the price to be paid for keeping the monetary .
Greece needs reforms, not just to stay in the EU, but to become a globally competitive country.
I
Why do you write " If Greece accepts massive austerity — like pension cuts and layoffs of government employees — it can remain in the eurozone with the help of bailouts, with central bank credit extended to Greek banks, and so on. Austerity was the price to be paid for keeping the monetary " ?
More correct:
If Greece accepts massive reforms — like pension cuts and layoffs of government employees — it can remain in the eurozone with the help of bailouts, with central bank credit extended to Greek banks, and so on. Reforms was the price to be paid for keeping the monetary .
Greece needs reforms, not just to stay in the EU, but to become a globally competitive country.
I
23
Angela Merkel, the Eurogroup, E.C.B., the Troika, and, for the moment, the Greek people have chosen the failed principles of austerity, though the Greek people made that choice because they faced economic extortion if they didn't. But austerity is its own worse enemy, so the best way for Tsipras to counter it is to borrow from Gen. William Tecumseh Sherman, who said of war, "War is the remedy that our enemies have chosen, and I say let us give them all they want." While not quite as horrible as war, austerity is bad economics that gives rise to bad economic policies which cause much misery. So, like war, Tsipras should give Merkel, the Troika, and the Eurogroup all they want of austerity by carrying out any agreement to the best of his ability. But he should make clear that the program of austerity is Merkel, the Troika, and the Eurogroup's program and not his and is contrary to what he wanted to do, so that it is the Merkel, the Eurogroup and the Troika who must own austerity, take credit for it, and who must be responsible for austerity's consequences.
The Greek people won't like penurious austerity any better now than they did before. After the latest dose of it they will know that it was the Eurozone that imposed austerity on them, contrary to Tsipras' wishes, and may be ready to abandon it, even if that means leaving the euro and reestablishing their own currency.
The Greek people won't like penurious austerity any better now than they did before. After the latest dose of it they will know that it was the Eurozone that imposed austerity on them, contrary to Tsipras' wishes, and may be ready to abandon it, even if that means leaving the euro and reestablishing their own currency.
1
If Tsipras wins the referendum, he will act as if he has a mandate... and it won't be easy for Europe to legally get rid of him (or Greece). To win the referendum, Tsipras is trying to overcome the Greeks' fear with righteous anger. So he proposes a third bailout, backtracking... and Europe shoots him down. Then he accepts most of the terms on the table... and to no one's surprise (including most defintely Tsipras), Europe shoots him down. Is that going to scare the Greek people even more, or is it going to anger them enough to vote "No"? We'll find out Sunday. Mr. Irwin missed the big picture here. Tsipras has yet to concede anything.
3
It is a case of adults, on both sides, acting as jerks without any regard for the suffering of ordinary citizens.
3
It may have helped if the Greek negotiators had read a copy of Dale Carnegie's "How to make friends and influence people" . If they had, maybe today they'd have an agreement they could live with.
8
As long as Greece remains on the Euro and beholden to Germany's fiscal priorities they may never recover economically. The problem with the Euro is that the rich European countries are unwilling to ease monetary policy to benefit depressed areas. The only solution for Greece now is to take the money and begin working night and day on an exit strategy.
1
Why blame Greece as the cause of the "failure'? From my perspective and that of most economists, Greece has played by the austerity rules for five years and their economy has shrunk by 25 percent to Great Depression levels with over 60 percent of young people unemployed. That is what brought Syriza and Mr. Tsipras to power. Despite repeated attempts to negotiate the debt, the Europeans led by Germany have not made any significant concessions or even been willing to face the failure of the austerity policy. Now, it seems clear that the German-dominated E.U. has decided to squeeze Greece hard this week with the hopes that it will lead to a "yes" vote to stay with the harsh austerity program and simultaneously force Mr. Tsipras and his party out of power. It's just the latest disgusting example of the willingness of the rich and powerful to destroy any challenge to their hegemony by the poor and helpless in a world awash in income inequality and victim-blame spin to support its callousness. My heart goes out to the people of Greece with the hopes that they can muster their ancient strength and bravery to defeat this modern threat to their existence.
103
1% primary surplus increasing to 3% over time is hardly austerity if the debtholders at the same time have agreed to interest rates and amotization schedules way below market terms. Read the wise words of Renzi and stop feel sorry for the deadbeats!
3
Greece wants Germany's money. Germany doesn't have to hand it over. Greece is unwilling to do the things that would make Germany *want* to give it money. That's all.
5
They have not played by the austerity rules, Paul! And that is the four governments in four years and the people as well to blame for. When you the senator offer a family a fake degree and a government post with 40G a year in exchange of 20 votes, that is not what the Europeans wanted when they loaned money. When you create agencies for the sake of placing the votes sellers, that is not austerity. When you the government do not know how many doctors and nurses are in any of the government hospitals and how much each makes, that is not austerity. When you know bank managers sign off loans for cash under the table and you do not get rid of them, that is not austerity. It is jungle.
6
Tsipras has led his country to an impossible position. The human cost will be --is-- terrible, with pensioners having limited access to their pensions, hospitals running out of medicines and so on.
The blame rests, more than on anything, on the Greek government. Six months ago there was a broad understanding from Renzi, Hollande and others that the EU needed to adopt more flexible rules and that austerity needed to be counterbalanced with procyclical measures. Tsipras had the unique opportunity to join that coalition and move towards a redirection of the EU economic agenda away from from austerity. But his government chose open warfare instead, making requests that amounted to "we Greeks win, rest of EU lose" that were frankly not acceptable to Germany, or Italy and France. That forced Renzi and Hollande to close ranks with Merkel, and so here we are.
The Greek economy was on the mend 6 months ago and now on in the beginning of absolute disaster. Thank you Tsipras, and thanks to the senseless arrogance of his hapless and disastrous government.
The blame rests, more than on anything, on the Greek government. Six months ago there was a broad understanding from Renzi, Hollande and others that the EU needed to adopt more flexible rules and that austerity needed to be counterbalanced with procyclical measures. Tsipras had the unique opportunity to join that coalition and move towards a redirection of the EU economic agenda away from from austerity. But his government chose open warfare instead, making requests that amounted to "we Greeks win, rest of EU lose" that were frankly not acceptable to Germany, or Italy and France. That forced Renzi and Hollande to close ranks with Merkel, and so here we are.
The Greek economy was on the mend 6 months ago and now on in the beginning of absolute disaster. Thank you Tsipras, and thanks to the senseless arrogance of his hapless and disastrous government.
41
"Six months ago there was a broad understanding from Renzi, Hollande and others that the EU needed to adopt more flexible rules and that austerity needed to be counterbalanced with procyclical measures. Tsipras had the unique opportunity to join that coalition and move towards a redirection of the
EU economic agenda away from from austerity. "
Absolutely and that is what makes it the tragedy it is! there was so much (realistic) possibility that things could have been different. Yet this inexperienced know-it-all overconfident ideologue flushed it all down the toilet.
EU economic agenda away from from austerity. "
Absolutely and that is what makes it the tragedy it is! there was so much (realistic) possibility that things could have been different. Yet this inexperienced know-it-all overconfident ideologue flushed it all down the toilet.
7
The financial solution proposed has failed. It would likely have worked if the Greeks had their own money, could revalue that currency, take a nasty hit and move forward. But the Euro dream seems to have skipped Econ 10a. I do not see the Greek situation getting better until they leave the EU. They have social issues that they must address and politicians they need to put in jail. It is regrettable and unfortunate but at some point the many countries around the world need to look at their finances and make rational decisions, not self-centered emotional ones. They need to understand that Ireland and Greece are different and political honesty counts. While the problems show up as financial, they are social, difficult and have yet to be addressed.
12
May I remind readers one of the main stipulations from IMF, etc is to cut GOVERNMENT PERSONNEL SALARIES, many of these government employees have taken big money while the poor person in Greece suffers.
The solution is not all austerity or all work/partying, but a BALANCE OF BOTH.
The solution is not all austerity or all work/partying, but a BALANCE OF BOTH.
11
Whether austerity works or doesn't work isn't much to the point. Germany has something that Greece wants, but Greece isn't willing to pay the price Germany wants for it. So Germany spends the money on something it wants more, and Greece is left free to continue practicing non-austerity. Best outcome for all involved.
1
Mr. Tsipras is, if anything, a dreamer because you simply do not win against the IMF when the rules are those of creditor nations. And, obviously, his calling a referendum and then proposing to accept some of the terms first offered seems confusing at best, and weakness at worst.
Mr. Tsipras victory (Pyrrhic victory perhaps) is that he will be proven right by history. Yes, his recent moves paint him as wobbling chaotically, but every counter-move coming from Europe's technocrats and Germany have been dictatorial, tin-eared, humiliating, and inflexible -- and Berlin and Brussels have established their enmity of democracy and economic totalitarianism while they rehash their WWII enmities.
By now everybody but the Germans have concluded that in the EU they are no more than vassals of Berlin and Brussels. On this Mr. Tsipras was right from the beginning.
Mr. Tsipras victory (Pyrrhic victory perhaps) is that he will be proven right by history. Yes, his recent moves paint him as wobbling chaotically, but every counter-move coming from Europe's technocrats and Germany have been dictatorial, tin-eared, humiliating, and inflexible -- and Berlin and Brussels have established their enmity of democracy and economic totalitarianism while they rehash their WWII enmities.
By now everybody but the Germans have concluded that in the EU they are no more than vassals of Berlin and Brussels. On this Mr. Tsipras was right from the beginning.
8
OH, Oh - here we go again: those terrible Germans! This part of Yoandel's otherwise balanced analysis has the taste of deeply ingrained negative prejudice. Name calling depreciates your analysis, Sir! By the way, I venture many, if not most, Americans sympathize with Ms. Merkel's position: You play by the rules. You got a loan and you pay back on schedule. When you have problems we can have a discussion. The real reason for austerity is the former financial behavior of the Greek elite not the EU's failure to forgive it. Tsirpas & Co comes out fools.
10
Mr. tsipras main problem was that he was never grounded in reality. He never held a position of authority in govt, either in govt or the private sector. His whole life has been spent as a party apparachek and as Marxist ideologue. How could such a person ever have accomplished any reasonable settlement?
6
You make a half a million a year and pay tax on 100G; you make 150-250 a day as a repairman and pay tax on 50-60 a day; you have a government job of 20G and make another 20G on bribes.
Who of the three is more to blame and who is the poor one?
Who of the three is more to blame and who is the poor one?
1
Tsipras has proved to be an incompetent negotiator and pumped himself and his country up to be more important than they are. The markets have already built in a Greek failure. Greece should exit the EU and return to the drachma. This would cause some pain in the beginning, but would revive a tourist industry. I was in Greece a few years ago and nothing worked. I paid exorbitant prices in Euro's and taxes. The seas had been so fished out, tiny fish were sold in grams at restaurants. I can't understand how anyone gets money out of ATM's because none of them worked. Another NYT article indicates that Greek doctors are leaving in droves and I assure you so are the other people with money and resources. This is happening throughout the world, the corrupt at the top are taking their money and parking it in real estate in New York, London and Vancouver. They don't live in these cities, but they are protected from paying taxes on their ill gotten gains. If Greece returned to the drachma, it would send a shudder through the EZ countries for a time, but those who have worked hard and adhered to austerity measures and turned their economies around, would not abandon the EU. Tsipras misread the EU when he threw a tantrum instead of cleaning his room. A lower controllable currency will encourage investment and tourism.
17
I am surprised and disappointed by many of the comments here, supposedly left by American readers. They echo the talking points that we have all had to endure for years from the Germans and others in Europe who are in thrall to them.
I have simple news for folks: If you practice "austerity" during a time of general recession, you will produce a Depression. Every time. Ask Herbert Hoover, who practiced austerity after the recession of the post-1929 era and thereby engineered a Great Depression of historic proportions. By "austerity" I mean any combination of tax increases and/or public spending cuts.
The central economic problem in the EU is not public debt or budget deficits. It is a lack of demand for goods and services, which has induced a self-reinforcing downward spiral. Households cannot afford to place orders, and businesses therefore lack them. These businesses therefore do not hire more people or invest in their production, but rather lay off people and produce less. Households have ever less money and purchase ever less. And so on and so forth. The only way out is to have a massive infusion of public investment to spur demand and initiate a self-reinforcing cycle in the opposite direction. The best kind of public spending is long-term spending on infrastructure and long-term public works that improve society.
Only afterwards can you address public debt and deficits - that is, only after the public spending has led to a sustained, self-reinforcing recovery.
I have simple news for folks: If you practice "austerity" during a time of general recession, you will produce a Depression. Every time. Ask Herbert Hoover, who practiced austerity after the recession of the post-1929 era and thereby engineered a Great Depression of historic proportions. By "austerity" I mean any combination of tax increases and/or public spending cuts.
The central economic problem in the EU is not public debt or budget deficits. It is a lack of demand for goods and services, which has induced a self-reinforcing downward spiral. Households cannot afford to place orders, and businesses therefore lack them. These businesses therefore do not hire more people or invest in their production, but rather lay off people and produce less. Households have ever less money and purchase ever less. And so on and so forth. The only way out is to have a massive infusion of public investment to spur demand and initiate a self-reinforcing cycle in the opposite direction. The best kind of public spending is long-term spending on infrastructure and long-term public works that improve society.
Only afterwards can you address public debt and deficits - that is, only after the public spending has led to a sustained, self-reinforcing recovery.
121
That would all work with an honest, competent government. Greece has neither. They are in an impossible situation, I will grant you that. But the Greek people kept electing these governments and now have to take the medicine or leave the Eurozone.
28
Zola:
While I agree with your point about public works and jobs creation, I think the greater problem is that Greece can't resurrect a strong export economy - due to global shifts in manufacturing, etc. etc.
Thus, such a program of public investment would only delay the inevitable.
Greece and many other countries will need to re-structure their entire economies to survive the 21st century.
While I agree with your point about public works and jobs creation, I think the greater problem is that Greece can't resurrect a strong export economy - due to global shifts in manufacturing, etc. etc.
Thus, such a program of public investment would only delay the inevitable.
Greece and many other countries will need to re-structure their entire economies to survive the 21st century.
4
And where would the "massive infusion of public investment" come from? Seriously.
2
Too late. The die is cast. Both the troika and Greece deserve the blame for setting a path toward a devalued Drachma, haircuts to debt-holders, and a separation (hard or soft) of Europe.
But now is not the time to second guess what has been done. The Greece situation still needs careful management to limit the downside, especially for the less protected. Greece will need to front-load the exit from the Euro and carefully dot the i's to execute as safe as a landing as possible. It will be bumpy, but it can be done. Stop trying to reignite old debates! Get working on printing and coining those Drachmas and relaunch an independent monetary and fiscal policy.
But now is not the time to second guess what has been done. The Greece situation still needs careful management to limit the downside, especially for the less protected. Greece will need to front-load the exit from the Euro and carefully dot the i's to execute as safe as a landing as possible. It will be bumpy, but it can be done. Stop trying to reignite old debates! Get working on printing and coining those Drachmas and relaunch an independent monetary and fiscal policy.
11
I doubt they will need to "coin" anything. By guess is they will start with a 3 digit drachma note and have to add digits as the inflation gets them.
1
It's beyond doubt that Greece has been run badly, has endemic corruption and seems incapable of addressing long term vested interests (despite having such a radical government). But overall the amounts of money were are talking about are chicken feed to the rest of the EU. There is a political principle here that overrides the economic or financial case. There's a collective sacred value among the nations at the heart of ever closer European Union which means they cannot back down and risk the euro coming apart. The euro is fundamentally a political not an economic construct. It is a sacred value and this is why the threat of Grexit has not worked to budge the EU, as you discuss. But there are two risks to the EU approach: 1) if Greece does leave, and then manages to emerge from the other side of a major devaluation more competitive, the cracks might begin to show elsewhere in the EU; 2) the British, looking on at this farce, may well conclude in their own forthcoming referendum that they are better off out. The euro is already politically toxic in the UK. I wonder what this bullying of Greece will do to British public opinion, not directly because it is not going to be a general matter of discussion, but to inform a deeper undercurrent of doubt and cynicism towards the whole European project.
6
Though Greece certainly bears blame for this situation, the problem was not just a matter of the country's profligate borrowing and spending. As in the US financial crisis, it was also a matter of big banks (many of them German) making irresponsible loans without paying attention to the risks involved. The banks have been bailed out by European public institutions even more than Greece has. This is one of the reasons why Stiglitz, Krugman and other leading economists have pointed out that the severe austerity imposed on Greece unjustly and counterproductively dooms the country to ongoing depression. And it raises the specter of resulting instability in Greece, which ironically could end up backfiring for Europe.
Again, I'm not absolving Greece or the way Tsipras has handled this mess. But the roots of the mess hinge as much on bailing out irresponsible banks as it does punishing the profligate.
Again, I'm not absolving Greece or the way Tsipras has handled this mess. But the roots of the mess hinge as much on bailing out irresponsible banks as it does punishing the profligate.
54
So far, the 18 Eurozone countries have given Greece over $270 billion during the past five years. And yet, here we are, and once again Greece has no money and is broke.
There is now very little sympathy left for the Greeks in Europe. There are about a half a dozen countries in the Eurozone that have a lower standard of living and a higher retirement age than Greece. In addition, Ireland, Lithuania, Spain and Portugal are particularly wary of a debt deal because their citizens have already weathered years of reform and restructuring, and are making significant progress in becoming economically more competitive.
Just because the Greek government decides to have a snap referendum on Sunday, and tells its citizens to reject the bailout terms, doesn't mean that the rest of Europe will, ipso facto, suddenly agree to their demands. And, just as in Greece, the parliaments of a number of Eurozone countries will also first have to give their consent to any new debt deal.
As the president of Lithuania said the other day, the Greeks want to party and expect the Europeans to pay the bill. The question is, when will the party stop? When will the Greeks accept responsibility and finally begin the difficult task of reforming and restructuring their economy, and, hopefully, stop blaming others for their many selfinflicted wounds?
There is now very little sympathy left for the Greeks in Europe. There are about a half a dozen countries in the Eurozone that have a lower standard of living and a higher retirement age than Greece. In addition, Ireland, Lithuania, Spain and Portugal are particularly wary of a debt deal because their citizens have already weathered years of reform and restructuring, and are making significant progress in becoming economically more competitive.
Just because the Greek government decides to have a snap referendum on Sunday, and tells its citizens to reject the bailout terms, doesn't mean that the rest of Europe will, ipso facto, suddenly agree to their demands. And, just as in Greece, the parliaments of a number of Eurozone countries will also first have to give their consent to any new debt deal.
As the president of Lithuania said the other day, the Greeks want to party and expect the Europeans to pay the bill. The question is, when will the party stop? When will the Greeks accept responsibility and finally begin the difficult task of reforming and restructuring their economy, and, hopefully, stop blaming others for their many selfinflicted wounds?
78
Nearly all of that $270 billion (if that's the right number) has been used to bail out the Financial institutions that made foolish loans to a corrupt government and oligarchy. It has not gone to ordinary Greeks. And now, why are the taxpayers of other European countries holding that debt? They are not the ones who made those failed loans. The Loans were made by supposedly sophisticated players who did so to make a profit. Let's hope that they did not keep sending good money after bad because they knew that: Heads, they make a lot of money; Tails, they don't make so much money but their friends in politics make sure the taxpayers bail them out and therefore, they really can't lose.
30
Matt, do you see no culpability on the part of the Greek government? They are the ones who asked for these loans and then wasted those monies.
As for financial institutions that made foolish loans, they lost billions of dollars loaning money to Greece. By your logic, the loans never should have been made and thus austerity would have happened many years ago.
As for financial institutions that made foolish loans, they lost billions of dollars loaning money to Greece. By your logic, the loans never should have been made and thus austerity would have happened many years ago.
15
Brian: yes, previous Greek governments (by many accounts, the most corrupt in Europe) are culpable for destroying their country. And when forced to practice austerity, they did so from the bottom up rather than going after their cronies who benefitted most from the loans. But now Greece has a new government (for now) that is not (so far) part of the corrupt old boy network and therefore has chance to change Greece for the better.
Do you not think most would have been better off if the over-flood of capital to Southern Europe had not happened? It seems the upside benefitted far fewer people than now have to suffer the downside.
In any case, what is the point of continuing troika policies which have made Greece more indebted and less able to to pay creditors than it was 5 years ago when the crises started? Yes, their pension system needs reform, etc, etc. but removing even more money from circulation now will just complete the destruction of the Greek economy. That is the logic of a debtors prison (which we don't have any more for good reason).
Do you not think most would have been better off if the over-flood of capital to Southern Europe had not happened? It seems the upside benefitted far fewer people than now have to suffer the downside.
In any case, what is the point of continuing troika policies which have made Greece more indebted and less able to to pay creditors than it was 5 years ago when the crises started? Yes, their pension system needs reform, etc, etc. but removing even more money from circulation now will just complete the destruction of the Greek economy. That is the logic of a debtors prison (which we don't have any more for good reason).
2
Tsipras realized he was going to lose the referendum, not because austerity is somehow all of a sudden better, but because when the alternative is the loss of all accrued wealth and having to start over with the drachma. No one is going to choose not to break their leg when the alternative might be to break your neck.
11
Greeks have suffered tremendously over the past five years. There's plenty of blame to go around, but few are focused on the lack of humanity from Greece's so-called EC cousins. It's hard to argue many of the actors have had the average Greek's best interests at heart.
Austerity has been disastrous, and now the EC insists on more and greater cuts. The citizens will suffer within the euro framework, and they'll suffer outside of it, presumably returning to the drachma. But by leaving the euro, at least Greece will be fully in charge of, and fully responsible for, its own economy and its own future.
Austerity has been disastrous, and now the EC insists on more and greater cuts. The citizens will suffer within the euro framework, and they'll suffer outside of it, presumably returning to the drachma. But by leaving the euro, at least Greece will be fully in charge of, and fully responsible for, its own economy and its own future.
6
You write, "For five years, the simple trade-off offered by the richer European countries and the European Central Bank has been this: If Greece accepts massive austerity — like pension cuts and layoffs of government employees — it can remain in the eurozone with the help of bailouts, with central bank credit extended to Greek banks, and so on."
Why do you think the austerity demanded are "massive"? I've looked at the recent proposals. The Europeans seem to demand austerity, but nothing massive. The requirements may even be indulgent compared to demands made on other European countries.
Why do you think the austerity demanded are "massive"? I've looked at the recent proposals. The Europeans seem to demand austerity, but nothing massive. The requirements may even be indulgent compared to demands made on other European countries.
33
From the comforts of Oakland the sacrifices demanded of ordinary Greeks may seem trivial, but consider that we Americans compare increasing marginal tax on millionaires by a few percentage points to the German invasion of Poland, and regard taxing $5 million estates as armed robbery and class war
What would we say to vastly higher taxes and vastly lower salaries to pay off foreign banks? We're the country, after all, which will spend $3+ trillion on the invasion of Iraq, with borrowed money.
Do you care to start paying it off now?
What would we say to vastly higher taxes and vastly lower salaries to pay off foreign banks? We're the country, after all, which will spend $3+ trillion on the invasion of Iraq, with borrowed money.
Do you care to start paying it off now?
11
Austerity kills - see The Body Economic http://www.theguardian.com/books/2013/may/27/economic-stuckler-money-kin... - Austerity is voodoo economics on steroids.
We can expect that the dichotomy between proponents of austerity fiscal plans and everyone else will lead to civil disobedience within nations and between global powers and lesser developed countries - what we are seeking played-out in Greece v. Germany.
Part of the solution is to reverse the long-term trend of "freebase capitalism" that permits global enterprises to legally avoid taxes on off-shore cash and lowers income taxes across the board for wealthy enterprises and individuals - i.e.) capital gains taxes are "tax expenditures" authorized by the state to increase the net wealth of a very small niche of wealthy people and enterprises. Therein lies the true demarcation line between people and private organizations that are focused on social stability and harmony and those who believe that privilege and luck are preordained by God. The current dominant economic practice is neoconservative irrespective of the color and label of the political party that forms government.
A Darwinian Economics selection process pits the vast majority of people that have limited individual resources against the few who own and control the decision-making model through campaign financing and global economic activity - like a shell game - to jurisdictions that offer the lowest labor and regulatory costs.
We can expect that the dichotomy between proponents of austerity fiscal plans and everyone else will lead to civil disobedience within nations and between global powers and lesser developed countries - what we are seeking played-out in Greece v. Germany.
Part of the solution is to reverse the long-term trend of "freebase capitalism" that permits global enterprises to legally avoid taxes on off-shore cash and lowers income taxes across the board for wealthy enterprises and individuals - i.e.) capital gains taxes are "tax expenditures" authorized by the state to increase the net wealth of a very small niche of wealthy people and enterprises. Therein lies the true demarcation line between people and private organizations that are focused on social stability and harmony and those who believe that privilege and luck are preordained by God. The current dominant economic practice is neoconservative irrespective of the color and label of the political party that forms government.
A Darwinian Economics selection process pits the vast majority of people that have limited individual resources against the few who own and control the decision-making model through campaign financing and global economic activity - like a shell game - to jurisdictions that offer the lowest labor and regulatory costs.
2
Cutting spending , any spending, during a recession leads to a financial depression. Even though Greece has cut spending by 16% of GDP, its debt ration is higher- because the loss of spending shrunk the economy by 25%
What Greece has asked for is a path toward growth. Not unreasonable, with unemployment over 25%. Europe has refused.
What Greece has asked for is a path toward growth. Not unreasonable, with unemployment over 25%. Europe has refused.
The Germans have posited, "why commit suicide because you are afraid of death". That's their terribly self centered point of view. For the Greeks, it's "Why take medicine that you are certain is going to kill you? Better to stop the medicine, perhaps you will recover without it.".
The Greeks have straightened out their financial house. Without debt service payments, their books are now balanced. They could make good on their debts if they had a plan to raise their employment numbers and provide enough hope to their young working classes to remain in Greece and keep up the worker to to retiree ratio. However, that would take dialog with their creditors.
It's hard to know what the Greeks will do at the polls. But several Nobel winning economists have written an open letter telling the Greeks that they have a brighter future outside the Euro.
And what will Germany and the rest of Europe do if the Greeks exit and end up in better shape 1 - 2 years from now? People predicted doom for Iceland .... but that turned out to be all wrong.
Germany and EU have maximum leverage now to get the best deal to recover as much money for Greece's creditors as possible. If Greece takes an exit and ends up in a better place, what will Germany and the EU do about Spain and Portugal and couple of other countries with unusually high sovereign debt? If the Greeks recover on their own, then Germany and EU will have far less leverage over Spain, Portugal and others.
The Greeks have straightened out their financial house. Without debt service payments, their books are now balanced. They could make good on their debts if they had a plan to raise their employment numbers and provide enough hope to their young working classes to remain in Greece and keep up the worker to to retiree ratio. However, that would take dialog with their creditors.
It's hard to know what the Greeks will do at the polls. But several Nobel winning economists have written an open letter telling the Greeks that they have a brighter future outside the Euro.
And what will Germany and the rest of Europe do if the Greeks exit and end up in better shape 1 - 2 years from now? People predicted doom for Iceland .... but that turned out to be all wrong.
Germany and EU have maximum leverage now to get the best deal to recover as much money for Greece's creditors as possible. If Greece takes an exit and ends up in a better place, what will Germany and the EU do about Spain and Portugal and couple of other countries with unusually high sovereign debt? If the Greeks recover on their own, then Germany and EU will have far less leverage over Spain, Portugal and others.
59
"The Greeks have straightened out their financial house." No they haven't, and that is their main problem with their current creditors. Successive Greek governments have failed to make the basic structural reforms deemed necessary for Greece's long-term financial viability.
4
"The Greeks have straightened out their financial house. Without debt service payments, their books are now balanced." This is a factually untrue statement. Maybe in November they were finally running a small primary deficit. That has been completely destroyed in the last 7 months since the election was called. They will not even be able to pay salaries and pensions at the end of June, despite the fact that they stopped paying all suppliers months ago and now owe over 10 billion to their hospitals, drug suppliers, citizens' tax refunds, pretty well anyone that does business with the government has not been paid for many months. Plus they have cleaned out any surplus pension funds, municipal bank accounts and union pensions.
As far as setting an example to other troubled EU countries, the EU is now motivated by self-interest to make sure Greece has a horrifying time of it after Grexit. No one will ever want to go through what the Greeks will experience. And, please comparing Greece to Iceland; you truly have no knowledge of either culture.
As far as setting an example to other troubled EU countries, the EU is now motivated by self-interest to make sure Greece has a horrifying time of it after Grexit. No one will ever want to go through what the Greeks will experience. And, please comparing Greece to Iceland; you truly have no knowledge of either culture.
2
Many thanks for a truly informative piece. Mr. Renzi's comments are particularly illuminating...while austerity may indeed be a poor economic policy, the issue of fairness shouldn't be entirely discounted.
That said, if we dwelt on such fairness in the USA, the massive transfer of wealth from north to south, year after year, would have to be acknowledged.
That said, if we dwelt on such fairness in the USA, the massive transfer of wealth from north to south, year after year, would have to be acknowledged.
24
There is no "massive transfer of wealth" in the US from north to south. That is a left wing myth.
The shortfall occurs because most military bases are in the Southern US. But the military bases serve and protect ALL OF US.
It is also more rural, and has greater degrees of black poverty than some parts of the North (though the North has plenty of poverty, and is far more segregated in 2015 than the South!).
The shortfall occurs because most military bases are in the Southern US. But the military bases serve and protect ALL OF US.
It is also more rural, and has greater degrees of black poverty than some parts of the North (though the North has plenty of poverty, and is far more segregated in 2015 than the South!).
Tsipras called for a populist referendum on himself and now realizes he has a good chance of losing and will be forced to resign. If I were a Greek citizen, I would frame the referendum as follows: "Do I want this guy negotiating for me?". In my view, the answer to that question is: "OXI". He has done incalculable damage to his country and appears to now be scrambling to remain in power.
28
Did you read the article? Neil Irwin is arguing something entirely different. At least he backs up his analysis with something approaching factual information.
2
What is particularly tragic about Greece is that the common Greek person appears entirely oblvious, to this day, about the poor performance of the Greek government over the last decades. The same people who must carry the burden of the Greek default do not understand why it is happening. That shows that we have a very serious deficit of education and information about the basic facts of what governments to and about the actual internal state of Greek finances. There is no other conclusion than the Greeks have been lying to themselves and failing to openly inform the public about the government and the consequences of the poor financial management of Greece.
72
I can only assume that you and your teachers must have ridden the same high horse to the polling station in 1984 to vote for Walter Mondale.
Yes, telling people that paying higher taxes and cutting frivolous spending because it's the fiscally prudent and morally sound thing to do always works well in politics....
Yes, telling people that paying higher taxes and cutting frivolous spending because it's the fiscally prudent and morally sound thing to do always works well in politics....
No, the Greek electorate are as informed as anyone else. But when you have millions of pensioners entirely dependent on the state, then this block will vote in their own interests and elect parties that promise them goodies. Unfortunately, this is very much the flaw in democracy. The people dont always do what's best for their own country.
1
"The Greek government was surely hoping that by walking away and calling a referendum, the creditors would rethink their intransigence, "
Praise the Heavens! The Amazing Kreskin has a mknd reading successor! Trained in statistics, too.
Praise the Heavens! The Amazing Kreskin has a mknd reading successor! Trained in statistics, too.
2
The Greeks made their bed. Time for them to lay in it.
18
Fascinating how we've learned to see economic policy as a moral enforcer when the banks are holding the bill, but when the banks gamble away the public's money we get all pragmatic. . .
3
Who raised an objection to including Greece in the Eurozone?
Who batted an eye when, for over a decade, the Greeks continued the same economic policy they always pursued?
No, there was no outcry -- nor even a significant spread on Greek bonds -- until the financial crisis of 2008. The banks made bad bets, and the people of Greece are being asked to pay the price.
Who batted an eye when, for over a decade, the Greeks continued the same economic policy they always pursued?
No, there was no outcry -- nor even a significant spread on Greek bonds -- until the financial crisis of 2008. The banks made bad bets, and the people of Greece are being asked to pay the price.
6
If reports that the Greek negotiators are experts in game theory are true, then they must realize they badly miscalculated the resolve of their opponents. It appears that the Game of Chicken is over, and the Greek car has been totaled. The relatively short financial blip on Monday gives the Greeks no choice but the equivalent of unconditional surrender as lines of pensioners and other frightened voters grow outside of banks.
I feel very sorry for the Greek people who are going to suffer and had no culpability in this mess. When do the first humanitarian shipments of food and medicine arrive?
I feel very sorry for the Greek people who are going to suffer and had no culpability in this mess. When do the first humanitarian shipments of food and medicine arrive?
41
The Greek people have plenty of responsibility. Over the years they have voted in governments which have given them a large government of well paid functionaries, early retirement, easy evasion of taxes etc. Then after the crisis, just as the economy had started to recover and GDP had finally turned positive in 2014 , they doubled down in the face of the austerity and voted for the Syriza party who have driven their economy into total ruin.
52
No culpability? Tsipras was not elected by the Germans. And who was it that wasn't paying their taxes?
15
I think the analogy of a game of chicken is misplaced. Far too much of the analysis of this entire situation has been of the football school of journalism: Team Syriza vs. Team Troika.
If the Greek leadership genuinely believes what they say -- that either continuing the current mandate or defaulting will lead to further economic and humanitarian disaster, then how have they "lost" to the Troika?
They said they wanted to shoot the rapids between Scylla and Charybdis if they could, but that it would require the Troika to see this was in their best interest too. Demonstrably, the Troika had a different opinion. So they are left with Scylla and Charybdis and have never made much secret about their unenthusiastic choice of the monster they don't know (leaving) over the one they do (the Troika).
It is hard to see how this is a victory for the Troika unless you accept the cynical notion that the Troika's whole agenda was to humiliate the Greeks and cripple their society. Tsipras has made some angry statements implying he has come to just that conclusion, but I would have to point out the IF that were true, Greece's "loss" to the Troika was inevitable.
Really, the whole binary way of thinking about this situation is flawed.
If the Greek leadership genuinely believes what they say -- that either continuing the current mandate or defaulting will lead to further economic and humanitarian disaster, then how have they "lost" to the Troika?
They said they wanted to shoot the rapids between Scylla and Charybdis if they could, but that it would require the Troika to see this was in their best interest too. Demonstrably, the Troika had a different opinion. So they are left with Scylla and Charybdis and have never made much secret about their unenthusiastic choice of the monster they don't know (leaving) over the one they do (the Troika).
It is hard to see how this is a victory for the Troika unless you accept the cynical notion that the Troika's whole agenda was to humiliate the Greeks and cripple their society. Tsipras has made some angry statements implying he has come to just that conclusion, but I would have to point out the IF that were true, Greece's "loss" to the Troika was inevitable.
Really, the whole binary way of thinking about this situation is flawed.
5
The fallacy behind such an absurd belief is the failure to understand that to be "bound" by the outcome of an election, one must be a party to that vote. How can you possibly think that just because you vote for something that somehow confers an obligation on someone else not involved or having a say in that vote? Did Germany get a vote in that election? No? The why would they be beholden to that election. They can have all the votes they want that Germany should just give them more money. That's never going to obligate Germany to do so just because Greece held a vote.
It's also somewhat ironic that Greece talks of "sovereignty" yet the fail to grasp the concept of sovereignty of Germany when it comes to Greece's little elections.