There is a sure fire way to end the crisis but it will not happen. If the poorer Eastern European countries either withdraw their applications or threaten to exit that will be the end of this crisis. When there is solidarity among the poorer countries of the EU, then the EU will make them strongly
1
“an average maturity of 16.5 years and carries low interest rates, so it is easily serviceable” —This point about lenders is important; they have no one other to turn to, it seems, now or later. “Grexit” is a misnomer: there is no exit from hell.
1
My thoughts: I learned a great deal from this essay and thank Prof. Hardouvelis for it.
7
My wife and I have voted to stop payment on the mortgage on our house and to keep living in the house.
We will need a second mortgage this year to renovate the house.
We will need a second mortgage this year to renovate the house.
4
Please read Krugman's columns (search the archive) where he patiently explains to the how a family's finances cannot be used to analogize the situation obtaining in a nation.
11
And actually, what you are describing often happens. It's called bankruptcy.
5
As I read this I see people calling out the "Bad Bankers" and the "good Greek People", ok, would there have been a need for Bad Bankers if the Good Greeks had paid their fair share in taxes (Greece has the reputation of having the most tax scofflaws anywhere) or perhaps not accepted the fact they they can retire at 55 with full pensions - which if you look father, allows Greeks on pensions to work, trade, etc..... to make even more money without paying back into the system.
Didn't anyone ever sit them down and show them simple economics?
Please correct me if I am wrong.
Didn't anyone ever sit them down and show them simple economics?
Please correct me if I am wrong.
11
German government is surely no indulgent Boss. Yet in trying to get by with charming fibs, and childish independence, sorry Greek excuses for national leaders definitely act like devil-may-care Zorbas, until it got nasty. Greece's voters and politicians were meant for each other.
Whoever said that voters deserve leaders they vote for, got it right with Greece.
Whoever said that voters deserve leaders they vote for, got it right with Greece.
13
"Whoever said that voters deserve the leaders they vote for got it right."
I agree entirely. Wouldn't it be great if American voters showed that much intelligence!
I agree entirely. Wouldn't it be great if American voters showed that much intelligence!
2
Good ideas, but getting the Greeks to mend their economy through a reduction of public control and pension entitlement bloat (particularly with the Leftists in charge) is hope over experience.
2
Many articles on Greece in the NYTimes today, and most. Obviously the editorial board, perhaps led by the theories of Krugman that austerity is bad, may have an influence here.
Fact: Greece has spent 50 out of the last 200 years insolvent and in debt. And they have failed to pay on time countless times.
Fact: Greece is corrupt and has been for decades; more people work for the government and are able to collect their full pay for life by retiring at 55 or younger than any in the private sector. And there are way too many working for the government. They don't collect taxes, charge exorbitant fees (and blackmail) to small start-ups; you cannot open a smoothie shop without paying off tons of 'officials' each step of the way (kind of like Puerto Rico).
Fact: It's not the evil banksters or the investors (you might be an investor in Greece and not even know it) that have caused this issue or that are driving it forward.
Fact: Austerity worked for Iceland, it worked for Turkey, and at some point (sorry NYTimes) it is time for austerity. This is not about the housing bust, the bank bailouts in 2008. It's about a culture of largesse and government corruption and their unwillingness to continue austerity when it was working is unacceptable.
PS and the 'no' vote was not reflective of a history of resistance and romantic ideals. 60% have nothing to lose, the 40% have everything to lose. Guess when you spend other peoples money and run out, it's somehow their fault?!
Fact: Greece has spent 50 out of the last 200 years insolvent and in debt. And they have failed to pay on time countless times.
Fact: Greece is corrupt and has been for decades; more people work for the government and are able to collect their full pay for life by retiring at 55 or younger than any in the private sector. And there are way too many working for the government. They don't collect taxes, charge exorbitant fees (and blackmail) to small start-ups; you cannot open a smoothie shop without paying off tons of 'officials' each step of the way (kind of like Puerto Rico).
Fact: It's not the evil banksters or the investors (you might be an investor in Greece and not even know it) that have caused this issue or that are driving it forward.
Fact: Austerity worked for Iceland, it worked for Turkey, and at some point (sorry NYTimes) it is time for austerity. This is not about the housing bust, the bank bailouts in 2008. It's about a culture of largesse and government corruption and their unwillingness to continue austerity when it was working is unacceptable.
PS and the 'no' vote was not reflective of a history of resistance and romantic ideals. 60% have nothing to lose, the 40% have everything to lose. Guess when you spend other peoples money and run out, it's somehow their fault?!
12
And of course the Europeans knew this but admitted them to the EC anyway!
2
Iceland and Turkey do not share the euro currency, this is important to remember.
Fiscal austerity is far harsher and recovery from a severe economic downturn is much harder to achieve for countries that use the euro because they also no longer have control of monetary policy, this is why the euro is seen as a "straightjacket". Eurozone countries are all dependent on the ECB for monetary policy. The ECB could do more for Greece but it is unwilling given the pressure from other eurozone nations.
Fiscal austerity is far harsher and recovery from a severe economic downturn is much harder to achieve for countries that use the euro because they also no longer have control of monetary policy, this is why the euro is seen as a "straightjacket". Eurozone countries are all dependent on the ECB for monetary policy. The ECB could do more for Greece but it is unwilling given the pressure from other eurozone nations.
8
Professor Hardouvelis ignores the most fundamental element of any Greek reform - collect taxes. If the Greek government could effectively collect taxes from its self-employed professionals, tax receipts would increase by $31 billion per year (based on 2012 data). A further crackdown on small businesses, etc. would yield additional revenues. Thus, if Greece simply collected what it was owed by its own citizens, there would be no crisis.
The core problem facing Greece is the behavior of its people. Democracy does not mean that a country can vote its way into the pockets other countries. It is pointless to lend more to the Greeks when they have sufficient funds available to meet their own needs but refuse to collect those funds.
Perhaps the Greek people need the massive shock that follows from their collective decision to finally confront the core problem - that they are dishonest deadbeats and no one can help them until they reform themselves.
The core problem facing Greece is the behavior of its people. Democracy does not mean that a country can vote its way into the pockets other countries. It is pointless to lend more to the Greeks when they have sufficient funds available to meet their own needs but refuse to collect those funds.
Perhaps the Greek people need the massive shock that follows from their collective decision to finally confront the core problem - that they are dishonest deadbeats and no one can help them until they reform themselves.
5
European Countries should give tax breaks to citizens for vacations in Greece based on the length of their stay and euros spent while in Greece. Thus the tourist industry among others would enhance debt reduction.
2
The following passage is quite revealing:
"But in late summer 2014, the previous government, in which I served, became excessively anxious to have one of the lenders, the International Monetary Fund, cease its program at the end of 2014, more than a year earlier than had been previously planned. Since European lending programs were also ending, this would have allowed the government to claim it had finished with austerity and lenders’ strict rules. Yet this move prompted a reaction by the I.M.F., which became tougher in its demands during the second half of 2014.
A presidential election was due in early 2015. At that time, polls were showing that Syriza, a leftist party, would win. I believe that this prospect led the I.M.F. to prevent cash from flowing into the Greek government’s coffers in order to ensure there was enough leverage on the side of the lenders to force a potentially new and untested government to behave rationally."
In other words, just as Greece was about to climb out of a hole, the IMF did what it did to Syriza--it upped the ante and increased its demands. It tanked the Greek economy deliberately so as to increase the IMF's leverage over the government in the event Syriza won. And this is being said by a minister of the former government who is opposed to Syriza.
Wow. Just wow.
"But in late summer 2014, the previous government, in which I served, became excessively anxious to have one of the lenders, the International Monetary Fund, cease its program at the end of 2014, more than a year earlier than had been previously planned. Since European lending programs were also ending, this would have allowed the government to claim it had finished with austerity and lenders’ strict rules. Yet this move prompted a reaction by the I.M.F., which became tougher in its demands during the second half of 2014.
A presidential election was due in early 2015. At that time, polls were showing that Syriza, a leftist party, would win. I believe that this prospect led the I.M.F. to prevent cash from flowing into the Greek government’s coffers in order to ensure there was enough leverage on the side of the lenders to force a potentially new and untested government to behave rationally."
In other words, just as Greece was about to climb out of a hole, the IMF did what it did to Syriza--it upped the ante and increased its demands. It tanked the Greek economy deliberately so as to increase the IMF's leverage over the government in the event Syriza won. And this is being said by a minister of the former government who is opposed to Syriza.
Wow. Just wow.
18
If true, the IMF and other lenders acted rationally and well within their rights as creditors. Or are the Greeks- with a new leftist givernment that promises to reject previous agreements- the only ones who can exert themselves?
3
Germany is reflecting its own fears and weakness. I hope this does not end as badly as I believe.
1
The only way Greece can climb out of the hole they're in is to undergo a basic revision of their culture of dependence on "other people's money," government pensions, a lazy work ethic, and rampant tax evasion.
How can the government change these ingrained behavioral attitudes?
I'm not sure the government can do it, but if enough citizens of Greece can face these facts, admit to them, and demand a change, it can happen.
Citizens can persuade the government take drastic steps to enforce tax laws, perhaps even contracting with outside parties to undertake this chore (German accountants/enforcement officers? probably not). Perhaps the pensions can be frozen at their current level until certain goals are reached.
Shame can be a powerful motivator: Probably never been done, but drastic circumstances demand drastic steps: Publicize who pays what in taxes! Let the citizens of Greece see what their neighbors are (or are not) paying. Publicize what people are being paid for pensions, or government salaries.
Positive motivation efforts to contribute to the country's recovery would be even more important. The WWII war effort in the US included posters and publicity used to propel Americans to change their behavior: "LOOSE LIPS CAN SINK SHIPS", "TOGETHER WE CAN DO IT!", "Are YOU a Victory Canner?" (sic), "We Can Do It!" (young woman blue shirt, perceptible biceps, and red scarf around her head).
The rest of the world can cheer them on!
How can the government change these ingrained behavioral attitudes?
I'm not sure the government can do it, but if enough citizens of Greece can face these facts, admit to them, and demand a change, it can happen.
Citizens can persuade the government take drastic steps to enforce tax laws, perhaps even contracting with outside parties to undertake this chore (German accountants/enforcement officers? probably not). Perhaps the pensions can be frozen at their current level until certain goals are reached.
Shame can be a powerful motivator: Probably never been done, but drastic circumstances demand drastic steps: Publicize who pays what in taxes! Let the citizens of Greece see what their neighbors are (or are not) paying. Publicize what people are being paid for pensions, or government salaries.
Positive motivation efforts to contribute to the country's recovery would be even more important. The WWII war effort in the US included posters and publicity used to propel Americans to change their behavior: "LOOSE LIPS CAN SINK SHIPS", "TOGETHER WE CAN DO IT!", "Are YOU a Victory Canner?" (sic), "We Can Do It!" (young woman blue shirt, perceptible biceps, and red scarf around her head).
The rest of the world can cheer them on!
1
I hear the absurd "it represents southern pride" all the time.
My follow up questions are:
1. Can you detail what we are proud off that the flag represents?
2. Is this pride of/for the whole South, or just the white South?
4. Should our non-white fellow citizens feel this same pride when they see the flag?
5. Are non-whites even considered citizens of the South by the South?
These result in stuttering brains trying to reconcile their beliefs with their conscience. As someone once answered, "I know it's wrong, but it is how I was raised."
When I see the flag, I see black bodies hanging from trees, black bodies bent under the lash, black bodies cowering in fear with fire all around, black bodies dragged behind pickup trucks or laying gunned down in a church. To say the flag is anything else, is to deny so many things, but more importantly one's conscience.
Still, I have little hope these things will change in my lifetime. In Northern Ireland, when the Orange Order marches in defiance, they are remembering events from the 1600's. We have centuries more to go.
My follow up questions are:
1. Can you detail what we are proud off that the flag represents?
2. Is this pride of/for the whole South, or just the white South?
4. Should our non-white fellow citizens feel this same pride when they see the flag?
5. Are non-whites even considered citizens of the South by the South?
These result in stuttering brains trying to reconcile their beliefs with their conscience. As someone once answered, "I know it's wrong, but it is how I was raised."
When I see the flag, I see black bodies hanging from trees, black bodies bent under the lash, black bodies cowering in fear with fire all around, black bodies dragged behind pickup trucks or laying gunned down in a church. To say the flag is anything else, is to deny so many things, but more importantly one's conscience.
Still, I have little hope these things will change in my lifetime. In Northern Ireland, when the Orange Order marches in defiance, they are remembering events from the 1600's. We have centuries more to go.
4
No matter what is done it will be the next generation or two which will bear the brunt of the fix. The current and previous generations of Grecian taxpayers took far more out than they put in and they should be charged with theft by their own children if a fair settlement is to be ensued. There is no easy out. The Greek people not only are going to have to suffer for at least another generation if they agree to pay for their own stealing from one another but they could really fall apart and become another group of nations if too many of their professionals exit, like the current number of medical professionals who have left for a better life, whereby they are left with even less to sell.
2
We have forgotten that a monetary union requires a reasonably well specified fiscal union. Greece has no macroeconomic policy alternatives; It has been part of ECB monetary policy and is too weak to use fiscal policy (it cannot borrow to run a deficit, even though it is in the midst of a depression). All sides are to blame in this situation. The Greek government for making things worse by assuring capital outflows. The Eurozone for insisting that belt tightening works when the patient is losing weight.
Quite by accident and not brilliance, the Federal Reserve came into existence the same year the US Constitution was amended to allow a national income tax. This time--unlike before--a single currency worked in the US.
Quite by accident and not brilliance, the Federal Reserve came into existence the same year the US Constitution was amended to allow a national income tax. This time--unlike before--a single currency worked in the US.
1
Everybody must follow the rules. If nobody follows the rules then all is lost. The proproganda of the elite. If one derives nothing from the present system then nothing is lost. The people have figured this out. Poverty is created by government.
1
I live in Sicily whose economic situation is similar to Greece. So, I think that Countries in the Southern part of Europe try to take advantage of their location in the Mediterranean area to threaten EU stability. Who knows, maybe this is a part of the Russian bully strategy to contrast the sanctions extension...
Now this just in, 6.30 EST:
Greece proposes to the EU the same plan that the Tsipras Government had LOUDLY rejected throught the vote last weekend! Give it to the Greeks!!! I think kindergardeners or first grades act more rational......Could the USA please come as a nanny and babysit this this spoiled, tantrum thowing child, its European parents are coming to their wits end......
Greece proposes to the EU the same plan that the Tsipras Government had LOUDLY rejected throught the vote last weekend! Give it to the Greeks!!! I think kindergardeners or first grades act more rational......Could the USA please come as a nanny and babysit this this spoiled, tantrum thowing child, its European parents are coming to their wits end......
2
>
Start by paying taxes. 85% of Greece's Tax revenue is not collected, Germany 2.3%.
Here is another example of the GOP's model (no or low taxes) going down in flames.
“When there is an income tax, the just man will pay more and the unjust less on the same amount of income."
Plato
Start by paying taxes. 85% of Greece's Tax revenue is not collected, Germany 2.3%.
Here is another example of the GOP's model (no or low taxes) going down in flames.
“When there is an income tax, the just man will pay more and the unjust less on the same amount of income."
Plato
1
Greece faces calamity. Well that's a headline grabbing opener.
Here's an article from the BBC, from 2001, when Greece joined the euro:
http://news.bbc.co.uk/2/hi/business/1095783.stm
"president of the European Central Bank, Wim Duisenberg, warned that Greece still had a lot of work to do to improve its economy"
"Public sector borrowing is also much higher than would be permitted normally under the EU rules governing entry to the project."
"They have seen the tough decisions they have to make in order to qualify for EU and euro membership. At the same time, it shows that the EU decision makers can be somewhat lenient towards aspiring euro countries."
So for 15 years it has been known that nobody in power was able to execute the tough decisions, including this article's author, and they all share the blame for this situation. I doubt if the relative amateurs of Syrizia have the ability to fix the problem, and they certainly seem only currently to be making the situation worse, but attempts to rewrite history like this article are just contemptible.
You just have to feel sorry for all Greeks in their 20s and 30s who did not contribute to the problem but will spend their lives contributing to the solution.
Here's an article from the BBC, from 2001, when Greece joined the euro:
http://news.bbc.co.uk/2/hi/business/1095783.stm
"president of the European Central Bank, Wim Duisenberg, warned that Greece still had a lot of work to do to improve its economy"
"Public sector borrowing is also much higher than would be permitted normally under the EU rules governing entry to the project."
"They have seen the tough decisions they have to make in order to qualify for EU and euro membership. At the same time, it shows that the EU decision makers can be somewhat lenient towards aspiring euro countries."
So for 15 years it has been known that nobody in power was able to execute the tough decisions, including this article's author, and they all share the blame for this situation. I doubt if the relative amateurs of Syrizia have the ability to fix the problem, and they certainly seem only currently to be making the situation worse, but attempts to rewrite history like this article are just contemptible.
You just have to feel sorry for all Greeks in their 20s and 30s who did not contribute to the problem but will spend their lives contributing to the solution.
4
Bullying. That is the IMF and ECB mode of operation. Small countries or those weakened by unscrupulous lending and speculation are to fall in line and march to northern orders or else.
The United States was blessed and cursed by forming it's Constitution while fighting for it's life. Our "great compromise" enabled ratification of the Constitution by providing small states with disproportionate representation in the legislative branch, giving all states 2 Senators. Today, that maneuver is a burden to representative democracy as California has 70 times more people than Wyoming and both have 2 Senators. Nuts! But it did get the Constitution ratified by all 13 colonies.
The EU has to compromise if it wishes to continue. At this moment the Greek revolt against the north has not caught on in Ireland, Spain, Portugal, or Italy. It will. Imperial behavior by Germany and other states toward smaller weaker nations is repugnant and imperialistic. The world cannot stand by and allow Germany to dictate terms to weaker states. A great compromise is necessary in Europe.
The United States was blessed and cursed by forming it's Constitution while fighting for it's life. Our "great compromise" enabled ratification of the Constitution by providing small states with disproportionate representation in the legislative branch, giving all states 2 Senators. Today, that maneuver is a burden to representative democracy as California has 70 times more people than Wyoming and both have 2 Senators. Nuts! But it did get the Constitution ratified by all 13 colonies.
The EU has to compromise if it wishes to continue. At this moment the Greek revolt against the north has not caught on in Ireland, Spain, Portugal, or Italy. It will. Imperial behavior by Germany and other states toward smaller weaker nations is repugnant and imperialistic. The world cannot stand by and allow Germany to dictate terms to weaker states. A great compromise is necessary in Europe.
3
The Greek financial crisis is reaching a point of no return. It has an eerie resemblance to Argentina's financial debacle of December 2001. I had a first hand experience of watching portenos reacting to banks being closed, deposits being frozen and teller machines expending limited amounts of pesos daily.
The huge political victory of Alexis Tsipras on the NO referendum can be short lived and evaporate overnight if banks continue to be closed. Youngster Tsipras has promised to get a quick and better deal with the eurozone leaders. Can he deliver now?
If that promise is not delivered, the population will lose faith in Tsipras. Then, what comes next is the worst of two worlds. A country with a demoralized political leadership and a catastrophic financial crisis.
Greeks will soon find out a (hard) lesson learned by Argentinians in 2001. During a financial crisis, banks once closed cannot be open easily. It will take years to restore the lost trust.
The huge political victory of Alexis Tsipras on the NO referendum can be short lived and evaporate overnight if banks continue to be closed. Youngster Tsipras has promised to get a quick and better deal with the eurozone leaders. Can he deliver now?
If that promise is not delivered, the population will lose faith in Tsipras. Then, what comes next is the worst of two worlds. A country with a demoralized political leadership and a catastrophic financial crisis.
Greeks will soon find out a (hard) lesson learned by Argentinians in 2001. During a financial crisis, banks once closed cannot be open easily. It will take years to restore the lost trust.
3
An exit from the Euro might doom the country to a bleak future and jeopardize the livelihood of future generations of Greeks. The current plan wherein the economy is shrinking, the overall unemployment rate is 25%, the unemployment rate for the young is 60% and more and more Greeks are descending into poverty every day insures it.
2
As I read this commentary it appears that leaders of EU and bankers dislike leftist governments. As leftist party in Greece became closer to win their attitude changed and changes were considered the closed minds failed to consider. Now the election in Greece showed a large number of voters agreed with their government what will the closed minded EU and bankers do now?
3
Quid pro quo we fix the government you lend the money. No fix no no money. Do it in increments and restructure in the context economic and political progress
2
It's really all about 'perspective regardless of what analogy is used. If you are a banker, the "elite", retiree, student or professional your Interest and views will differ, as will be your alternatives. In a situation like this any Monterey infusion circulates at the top with little if any domino effects downward. The conditions for the lower classes doesn't change, just worsens. The 1% has all the capital and is not making any new investments causing a worldwide economic stagnation. The lower classes will have to create alternatives, like the sharing economy, to survive.
1
I agree entirely with GIKAS HARDOUVELIS. The recent Finance Minister, Yanis Varoufakis seemed to be more interested in fighting, rather than negotiating, with the lenders. Finance ministers need to bring their civil servants into the 21st century, and at the same time make tax paying easier than tax avoidance. Varoufakis failed in this endeavour.
2
The deal that European lenders can accept would break the promise Mr. Tsipras made to get elected. That has been the problem from the beginning.
The only workable solution is that Mr. Tsipras resigns and is replaced by a technocrat, with no political affiliation.
The only workable solution is that Mr. Tsipras resigns and is replaced by a technocrat, with no political affiliation.
1
Whatis being missed by most commentators is that the immediate problem is the deficit and not the debt. The debt has been rescheduled and can be further rescheduled in the future. The deficit needs to be addressed now.
Greece has a richer pension system than Germany. Greece has a lower effective tax rate than everyone else in Europe. Greece has a resource -- its tourist attracting climate -- that it shares with few in Europe. Greeks have a higher standard of living than people in many of the nations in the EU.
Why should the worker bees of Europe fund the drones of Greece into the indefinite future?
Greece has a richer pension system than Germany. Greece has a lower effective tax rate than everyone else in Europe. Greece has a resource -- its tourist attracting climate -- that it shares with few in Europe. Greeks have a higher standard of living than people in many of the nations in the EU.
Why should the worker bees of Europe fund the drones of Greece into the indefinite future?
4
I don't think Greek finance minister should inspire anyone nor a badge to be worn. The Greek crisis is not a current event but one that just came to light. Their books were cooked before entrance into the EU.
2
Who would reach into their private savings account and buy Greek debt, even on the most generous terms? No one, and most of all no Greeks would do it. Greeks are so distrustful of their own banks and their own government, that it been years since tourists could use VISA cards.
And on top of all this, no one in Greece is having children. A nation can't have a future that doesn't show up for it.
Hardouvelis says X,Y,Z will return Greece to sustainable growth. He knows full well it won't. The only interesting question here is what is he trying to accomplish with this column?
And on top of all this, no one in Greece is having children. A nation can't have a future that doesn't show up for it.
Hardouvelis says X,Y,Z will return Greece to sustainable growth. He knows full well it won't. The only interesting question here is what is he trying to accomplish with this column?
1
It should be crystal-clear that "Greece" doesn't have the financial maturity to be part of a common-currency-union.
Any additional funding will only be good money thrown after bad.
It is unlikely that any previous loans will be repaid, why would anybody but a fool think that future loans would be treated any different.
Greece doesn't want help, they want an allowance.
They don't want to tax their citizens to cover the cost of the government they want to have.
They want to have a super generous pension system that is paid for not by it's own citizens, but by the citizens of other countries.
They need to leave the Euro, at whatever cost. Then when they stretch their economic system beyond the boundaries of sanity, they will have to devalue their own currency to do a reset/reboot.
After a certain number of devaluations (hopefully only 1), as a society, they will decide that living approximately within their means is a much better strategy than the nonsense path they have previously been on.
Any additional funding will only be good money thrown after bad.
It is unlikely that any previous loans will be repaid, why would anybody but a fool think that future loans would be treated any different.
Greece doesn't want help, they want an allowance.
They don't want to tax their citizens to cover the cost of the government they want to have.
They want to have a super generous pension system that is paid for not by it's own citizens, but by the citizens of other countries.
They need to leave the Euro, at whatever cost. Then when they stretch their economic system beyond the boundaries of sanity, they will have to devalue their own currency to do a reset/reboot.
After a certain number of devaluations (hopefully only 1), as a society, they will decide that living approximately within their means is a much better strategy than the nonsense path they have previously been on.
4
Living within their means had nothing to do with this crisis . Dishonest rightwing Politicians and criminal bankers caused this.
How to Undo the Damage in Greece?
Um, become a different country? You know, one that does honest accounting, one that doesn't believe it should be an international charity case which should be given money with no accountability for how it is spent, one that can be something other than Europe's defiant child who won't take its medicine, one that takes in enough money from taxes to pay for its excessive and exorbitant system of government-employee pensions?
Greece is Haiti on the Mediterranean. Anyone expecting much change or improvement should look elsewhere, or face repeated disappointments. There is no cure for dishonesty and bad government if its own people don't know what is going on, don't know the difference, and don't insist on something better for themselves.
3
The respondents to this column seems to have made up their minds even though the Prof. Hardouvelis was up close and personal with the events in Greece for the past five years. Sadly, all the armchair critics don't have to live in the conditions most Greeks have to endure.
10
The author writes: "Prime Minister Alexis Tsipras seems to believe that the referendum’s overwhelming outcome will give the government additional negotiating power ... [But] it is hard to see how its negotiating power would increase; instead, it will restrict the choices of the Greek government."
If you go to a car dealer to negotiate a price on a new car, and the listed price is 25k but you know that the dealer could go as low as 20k and still make a little money, then it would be a very good idea to go there with a signed note from your spouse saying he/she will divorce you if you pay one bit more than 20k. Limiting your options strengthens your negotiation position. Basic game theory.
Good that the author isn't the one at the negotiating table anymore! But apparently these are the kinds of minds at work in this mess.
If you go to a car dealer to negotiate a price on a new car, and the listed price is 25k but you know that the dealer could go as low as 20k and still make a little money, then it would be a very good idea to go there with a signed note from your spouse saying he/she will divorce you if you pay one bit more than 20k. Limiting your options strengthens your negotiation position. Basic game theory.
Good that the author isn't the one at the negotiating table anymore! But apparently these are the kinds of minds at work in this mess.
5
The is exactly what the author thought might be the problem. People possess one point of view without the ability/willingness to see through another person's lenses. Using the respondent's analogy, he forgot to mention the car dealer didn't need to poor guy's business and she has to answer to her own board of directors. She has no mention of the buyer's marital status, especially when he has tried to trade in his older model car at a much higher price and his credit score shows he is one of those subprime borrower at risk of default
4
This analogy doesn't work because a) Europe *doesn't* make a little money at $20K, and b) Europe is increasingly OK with not selling Greece the car at all and letting them walk.
The writer is part of the previous ruling establishment responsible for Greece's problems. He states that if Syriza isn't careful Greece will fall into poverty. As a Euopean cable tv viewer, it is clear to me that the suffering of the Greek people was the reason a radical party like Syriza was elected and now has won a landslide referendum . Curiously, the writer fails to mention how he voted on the referendum. In addition, coming from a (formally) middle class Spanish family. Allow me to clearly state that while other countries may have repaid their debts, 'austerity' is a disaster. People under 30 everywhere from Portugal to Sicily have absolutely no hope. The government in power in those other countries are in grave danger of being cast out as well.
19
My view on this. The Greeks are fed up with big government, big business, big banks, big bureaucracy's, big anything, big elites, big media, and big intrusions into their lives.
Same is true in the USA as Bernie Sanders and Donald Trump rise in the polls. Spain, Italy and Portugal are next.
Same is true in the USA as Bernie Sanders and Donald Trump rise in the polls. Spain, Italy and Portugal are next.
6
Unfortunately, the "damage" in Greece won't be undone by Greeks agreeing to more stop-gap measures imposed externally in return for yet more money to allow them to run 3%-5% deficits. It can only be undone by Greeks recognizing that living beyond their rational means so long as someone else pays for it is an eternal Sword of Damocles that can fall at any instant that an Angela Merkel gets tired of being the one who pays for it; and recognizing as well that the structure of their governance freights their economy dreadfully with dysfunction, immense barriers to growth as it actively discourages new business with endless bureaucracy, excessive labor protections and downright corruption.
Europe can't help Greece address these challenges: GREECE must address and resolve them.
Yet the author seeks to establish as a premise to his arguments that the OBJECTIVE is to allow Greece to continue on its merry way, spending beyond its means and resisting reform of its governance.
The only way to force Greece to transform itself into something strategically viable is to force an exit from the eurozone and a cutting off of debt. This will happen sooner or later anyway, so it may as well happen now, so that they can begin fresh and not years hence.
Europe does no favors for Greece by letting it skate.
Europe can't help Greece address these challenges: GREECE must address and resolve them.
Yet the author seeks to establish as a premise to his arguments that the OBJECTIVE is to allow Greece to continue on its merry way, spending beyond its means and resisting reform of its governance.
The only way to force Greece to transform itself into something strategically viable is to force an exit from the eurozone and a cutting off of debt. This will happen sooner or later anyway, so it may as well happen now, so that they can begin fresh and not years hence.
Europe does no favors for Greece by letting it skate.
11
Who were the Greeks sponging off, living beyond their means? How about you provide some evidence rather than just repeat MSM nostrums?
The ECB protects other states from paying for excessive spending in the EU. The EU is monetarily sovereign and can pay all it's bills with new money. It does have restrictions but gas already been working around them.
It's purely political, the choices being made, not economic.
The ECB protects other states from paying for excessive spending in the EU. The EU is monetarily sovereign and can pay all it's bills with new money. It does have restrictions but gas already been working around them.
It's purely political, the choices being made, not economic.
Like voters everywhere, those over 55 make up a large percentage of the vote...and they are unlikely to vote to reduce their pension benefits. Either are those nearing 55. Greece's aging demographic and flight of young people has compounded this. Likewise, those with influence aren't likely to sit back and allow the tax collectors to do their duty without a fight. Voting yes was Greece's only chance to make structural changes in one fell swoop against the special interests. That opportunity has passed. Anything less than that is just buying time before they find themselves unable to pay their bills again and have to go back to the EU and beg for more money.
1
The crisis of Greece which is played out in the world stage is an indication of European Union has grown big, and unaccountable threatens to collapse in on itself.
For Leopold Kohr a little known author of Break Down of Nations it would have been crisis which prophetical predicted 50 years ago that the gigantic global system would grow until it imploded.He argued in his book that small states, small nations and small economies are more peaceful, more prosperous and more creative than great powers or super states.
Bigness, predicted Kohr, could only lead to more bigness, for "whatever outgrows certain limits begins to suffer from the irrepressible problem of unmanageable proportions". Beyond those limits it was forced to accumulate more power in order to manage the power it already had. Growth would become cancerous and unstoppable, until there was only one possible endpoint: collapse.
We have now reached the point that Kohr warned about over half a century ago: the point where "instead of growth serving life, life must now serve growth, perverting the very purpose of existence".
Kohr's "crisis of bigness" is upon us in Greece.
Sad to see the crisis is being tackle it with more of the same: closer fiscal unions, tighter global governance, even more economic growth.
.
For Leopold Kohr a little known author of Break Down of Nations it would have been crisis which prophetical predicted 50 years ago that the gigantic global system would grow until it imploded.He argued in his book that small states, small nations and small economies are more peaceful, more prosperous and more creative than great powers or super states.
Bigness, predicted Kohr, could only lead to more bigness, for "whatever outgrows certain limits begins to suffer from the irrepressible problem of unmanageable proportions". Beyond those limits it was forced to accumulate more power in order to manage the power it already had. Growth would become cancerous and unstoppable, until there was only one possible endpoint: collapse.
We have now reached the point that Kohr warned about over half a century ago: the point where "instead of growth serving life, life must now serve growth, perverting the very purpose of existence".
Kohr's "crisis of bigness" is upon us in Greece.
Sad to see the crisis is being tackle it with more of the same: closer fiscal unions, tighter global governance, even more economic growth.
.
3
We treat this conflict as between Germany and Greece,
Sovereign Bonds were sold on by any brokerage, and individuals bought them based on a consideration of the stability of the Euro, the government and economy of the country. If Greece were to default, not only individual bond holders would lose, but so would major funds including giant pension trusts in this country.
All of these funds are over optimistic, pretending they can earn 7.5% every year, so states and cities can get investment grades, and pay low interest rates. How the Federal Government is treating Puerto Rico, is more shameful than how the Wealthy countries of the EU are treating Greece.
In spite of making the laws and fiscal policy for this territory the administration is reating this part of the U.S. as "them."
When the party was going full speed, the early years of the century, and housing prices were booming, no one in political power wanted to quash the fun, the riches that were flowing to everyone. Bankers were just getting their piece of the action, and the music was never supposed to stop.
O.K. it did, and countries that had been thriving on renewed property taxes and construction jobs hit the wall. Now, there's pain all around. Yet, the Fed once again has lowered down payments to near zero, as with the cost of money to, of course, banks --
If we get out of this one, let's learn something from it.
AlRodbell.com
Sovereign Bonds were sold on by any brokerage, and individuals bought them based on a consideration of the stability of the Euro, the government and economy of the country. If Greece were to default, not only individual bond holders would lose, but so would major funds including giant pension trusts in this country.
All of these funds are over optimistic, pretending they can earn 7.5% every year, so states and cities can get investment grades, and pay low interest rates. How the Federal Government is treating Puerto Rico, is more shameful than how the Wealthy countries of the EU are treating Greece.
In spite of making the laws and fiscal policy for this territory the administration is reating this part of the U.S. as "them."
When the party was going full speed, the early years of the century, and housing prices were booming, no one in political power wanted to quash the fun, the riches that were flowing to everyone. Bankers were just getting their piece of the action, and the music was never supposed to stop.
O.K. it did, and countries that had been thriving on renewed property taxes and construction jobs hit the wall. Now, there's pain all around. Yet, the Fed once again has lowered down payments to near zero, as with the cost of money to, of course, banks --
If we get out of this one, let's learn something from it.
AlRodbell.com
3
All for one and one for all is what holds families together and is what will hold the European Union together.
Not complicated.
Not complicated.
The Samaras administration, which you were part of, failed to convince the people of Greece that reforms were vital. As part of the 2012 bailout, Greece was given a grant of nearly EUR10 billion that was meant to help stabilize the economy and ensure support for the newly elected government led by Antonis Samaras. Despite huge debt write-offs and a massive infusion of cash, support for Samaras declined steadily.
You argue that had Europe and the IMF given Greece more money and expressed more support in the run up to the January 2015 elections, Syriza would not have won and we would not be in this mess. The assertion is highly dubious, but even if New Democracy had been able to cling on to power, could it have instituted the much needed cuts to pensions? Like Tsiprais, Samaras was equally resistant to cutting pensions any further because of the political implications.
If the people of Greece refuse to allow pensions to be adjusted so that the retirement system is made sustainable and affordable, then they really do not want the reforms that must happen if Greece is to stay in the euro. Respect the will of the Greek people. They have rejected reforms and have thus chosen to leave.
You argue that had Europe and the IMF given Greece more money and expressed more support in the run up to the January 2015 elections, Syriza would not have won and we would not be in this mess. The assertion is highly dubious, but even if New Democracy had been able to cling on to power, could it have instituted the much needed cuts to pensions? Like Tsiprais, Samaras was equally resistant to cutting pensions any further because of the political implications.
If the people of Greece refuse to allow pensions to be adjusted so that the retirement system is made sustainable and affordable, then they really do not want the reforms that must happen if Greece is to stay in the euro. Respect the will of the Greek people. They have rejected reforms and have thus chosen to leave.
3
The author's opinion is vague and does not offer any solution. Its not a surprise its an NYT piece. Its not about what the creditors like or dislike. They are after all, unelected cases trying to influence politics in Europe, which is a shame for the EU. So, Tsipras is right - the eurozone can't survive without Greece. It need not offer any 'humanitarian aid' now, it has to look at its own survival, instead of pretending to help others when its own survival in question.
Greece should drop out of the euro and go back to their drachma. Greek communists and socialists have a much happier time when they are lying to each other, rather than when they are lying to the IMF, the ECB and European Union.
7
What was the money for....
With all due respect to the esteemed and experienced former minister, Greece's liquidity crisis is the result of hypocrisy and hubrius on both sides, not macroeconomic forces. As he stated, under the previous Greek government fiscal targets and social services spending reforms were being met but at a very steep and painful price. It is clear from reports divisive internal politics and inappropriate personal conflicts were allowed to intrude on crucial negotaitions where the integrity of the EU and welfare of 11 million of Greek citizens were at stake.
The principle values of maintainence of the EU at a critical time and insuring the Greek people received lfinanacial support and incentives, not to repay excessive levels of prior debt with new credits, but to assist their economy's transition and stabilization were wantonly and irresponsibly disregarded.
Several state and private banks in the EU received unprecedented financial support for the US Federal Reserve and Treasury Department during the Meltdown without recriminations or concerns of moral suasion. If the U.S. concluded the stability of EU based banks were vital interests to reach across the Atlantic and provide stability without recrimination or moralizing, the EU Central Bank is obligated to extend the same accomodation to its fellow member state, Greece.
Hopefully the referendum has provided the opportunity for EU Central Bank and the Greek government to recalibrate and refocus these considerations.
The principle values of maintainence of the EU at a critical time and insuring the Greek people received lfinanacial support and incentives, not to repay excessive levels of prior debt with new credits, but to assist their economy's transition and stabilization were wantonly and irresponsibly disregarded.
Several state and private banks in the EU received unprecedented financial support for the US Federal Reserve and Treasury Department during the Meltdown without recriminations or concerns of moral suasion. If the U.S. concluded the stability of EU based banks were vital interests to reach across the Atlantic and provide stability without recrimination or moralizing, the EU Central Bank is obligated to extend the same accomodation to its fellow member state, Greece.
Hopefully the referendum has provided the opportunity for EU Central Bank and the Greek government to recalibrate and refocus these considerations.
1
It would be nice if you had the editors carried the same opinion with every state of the US. Every state has an unfunded public pension plan (or 12) that has the future generations contributing to the costs of already retired public employees.
And we have provided bad rules to let these people take money from the system before social security recipients, the police unions have raped us and can retire at 52, the judges and mayors and governors have fleeced us and can get retirements from several sources well above $100k. Take a look at F. Pena'
Will the editor have the same opinion when Illinois goes down?
And we have provided bad rules to let these people take money from the system before social security recipients, the police unions have raped us and can retire at 52, the judges and mayors and governors have fleeced us and can get retirements from several sources well above $100k. Take a look at F. Pena'
Will the editor have the same opinion when Illinois goes down?
3
On Oct. 3, 2010, the 20th anniversary of German unification, also marked the completion of the final chapter of World War I with the end of reparations payments 92 years after the country's defeat. Angela Merkel should have historical perspective when dealing with the debt of Greece. After all, the rising Nazi party was a result of dire economic situation resulting from the demand of the allies from Germany to pay reparation, without considering the consequences. The world had paid a huge price. I applaude the Greeks for voting NO. All understand that they should pay the debt, but the cycle of getting more loans to pay interest for previous loans had destroyed the Greek economy and society, and only the Germans profited. This cycle had to stop. It is time for restructuring the debt, allowing the Greek economy to rebound. What is needed is a payment schedule connected to the state of the Greek economy. It will be wise to deffer payments for now, and start them only once unemployment in Greece has dropped to an agreed upon level. The Greek will have to adjust their labor practices to those of successful European countries, establish a reasonable retirement age, etc. Greece is just the beginning, and Spain, Portugal and Italy might be next. The actions of the European leaders are critical if keeping united states of Europe together is what they want. They must rise to the occasion.
2
This is the most sensible comment on the entire page. And a very simple solution. It should be politically viable on both sides - the debt gets paid, the Greek economy gets re-established. Intransigence and nationalist pandering on both sides prevents it from happening.
There have been some hints of the following point in the discussion, but perhaps it can be pulled out more: where was the money loaned to the Greeks years back (that keeps getting refinanced) used or invested? Clearly, like in many other cases (Puerto Rico) the money was not invested at all but paid out to cover ongoing expenses (pensions, gov't salaries, social costs) and not hard assets (like infrastructure) that can generate long term benefits that reduce cost and build opportunities for growth. In short those earlier investments did not return enough to repay the loans. Governments do this kind of thing all the time in the name of politics (paying one of it favorite groups to get votes in the short term). Greek is clearly guilty of this and thus write downs of the loans are required because the returns on investment will never be there.
For democracy to work in a capitalist system, this flaw of mis-allocation of loans to governments has to be addressed. Otherwise this is a cycle of that will continue (and has been going on for decades). In the private sector assets can be taken, losses taken, and payments can be required to satisfy a loan gone bad. Doing this for nations doesn't work that well.
For democracy to work in a capitalist system, this flaw of mis-allocation of loans to governments has to be addressed. Otherwise this is a cycle of that will continue (and has been going on for decades). In the private sector assets can be taken, losses taken, and payments can be required to satisfy a loan gone bad. Doing this for nations doesn't work that well.
2
How can someone intimately involved in the negotiations, attempt to summarize the events thus far without acknowledging that during the period when Greece was accommodating all of the EU's austerity demands, Greece's total debt actually increased?
5
It was a huge mistake to have the people vote for painful austerity or reckless default. It's using a machete to cut a deck of cards.
3
The Greek people used democracy to wish for a more lavish life style. The EU will vote democratically to deny them this wish.
A "lavish lifestyle" now means feeding your children.
The author of this piece has held positions of power & responsibility within the Greek Government during some of it's worst sins of accounting fraud (for example that wonderful currency swap gambit to hide debt- with the help of Goldman Sachs, circa 2002).
And now he's here to lecture a 6-month old government on what they've done wrong?
And now he's here to lecture a 6-month old government on what they've done wrong?
23
When you said that Greece was drifting in anxiety, I immediately thought of our bizarrely inappropriate excuse for a leader, Golfer-Tourist Man. He has intentionally allowed America and its foreign relations to just drift along, and be's probably shocked that his waterfall hasn't shown up yet despite his best efforts.
The worst president for black Americans since James Buchanan is intent on drift, his default in times when he simply could not care less. Even Greece, Kenya, and all of Western Europe have better leaders.
The worst president for black Americans since James Buchanan is intent on drift, his default in times when he simply could not care less. Even Greece, Kenya, and all of Western Europe have better leaders.
2
How many things do you read about in the news that do not make you think about whatever grievances you have with Obama?
I think there's a meme about this somewhere...
I think there's a meme about this somewhere...
1
It is time that everyone stepped back and considered how they can make things work rather than increase confrontation.
Gerry
Gerry
4
So right. If the goal is to punish countries that are not as rich as Germany, as few unemployed as Germany and the arrogance of Merkel, why not everyone.
I love too many Germans to tar brush them for their past, but looking at Merkel and her deadlines and ultimatums, I am wondering whether some of them have learned no lessons at all from what has passed before.
Not just a question of wars and really bad behavior, but imperial rivalry (more than one sin there). We overlook that its Democratic origins in the distant past, Greece suffered through centuries of Ottoman domination and absorbed untold numbers of Greeks expelled or forcibly moved from Anatolia and that there was a Greek genocide.
There may seem to be no modern connection, but imperial arrogance breeds contempt. As the most powerful, richest and most fully employed country in Europe, Germany as with most creditor could understand not only the issues of the borrowers, but their own failures.
The ECB is not the center of Imperial Germany , it is the European Central Bank and without question, Germany is the richest and most powerful member.
Greece has a bad choice between two bad choices. One is to default and take what comes with it - or surrender to the Germans and still default. The other is more rational which is for Europe to pull up the struggling countries, including Portugal and Greece and Spain and Portugal etc.
Everyone would benefit including the Germans despite a lack of comfort.
I love too many Germans to tar brush them for their past, but looking at Merkel and her deadlines and ultimatums, I am wondering whether some of them have learned no lessons at all from what has passed before.
Not just a question of wars and really bad behavior, but imperial rivalry (more than one sin there). We overlook that its Democratic origins in the distant past, Greece suffered through centuries of Ottoman domination and absorbed untold numbers of Greeks expelled or forcibly moved from Anatolia and that there was a Greek genocide.
There may seem to be no modern connection, but imperial arrogance breeds contempt. As the most powerful, richest and most fully employed country in Europe, Germany as with most creditor could understand not only the issues of the borrowers, but their own failures.
The ECB is not the center of Imperial Germany , it is the European Central Bank and without question, Germany is the richest and most powerful member.
Greece has a bad choice between two bad choices. One is to default and take what comes with it - or surrender to the Germans and still default. The other is more rational which is for Europe to pull up the struggling countries, including Portugal and Greece and Spain and Portugal etc.
Everyone would benefit including the Germans despite a lack of comfort.
Spending more than one makes, with the difference borrowed, cannot go on forever. Greece has chosen not to face that truth. The socialists, the Krugmans, the Democrats will not voluntarily face that FACT. Greece, Puerto Rico and Detroit are partners in poverty. Democrats in the U. S. concentrate on the Confederate Flag, fantasy not the real world. Obama's national debt has skyrocketed to nearing $20,000,000,000,000! Keep spending for Democrat reelection and borrowing from China is the Obama-American mantra,
Http://www.periodictablet.com
Http://www.periodictablet.com
4
The hole in your "Keep spending for Democrat reelection" argument is that the percentage change in public debt increased more under Reagan, Bush 1 and Bush 2 than it did under Carter, Clinton or Obama.
8
California sends more the Federal Government than it gets. The rest goes to states like Mississippi who are needy.
4
Greece, like Puerto Rico, Detroit and Chicago has been lulled into believing that there is an endless source of Other Peoples' Money to provide over generous pensions to their citizenry. Couple that with excessive welfare payments to those who should be working, but have been bred into a culture of dependency and who aspire to get a Government job if they want to work at all . And finally, tax evasion is a national pastime openly on display in every sector of the economy.
These conditions promote a Black Market Economy and breed rampant corruption at every level of society. Now the chickens have come home to roost in Greece, but there is no grain in the bin to feed them so we will watch as they begin devouring one another and the feathers begin to fly.
These conditions promote a Black Market Economy and breed rampant corruption at every level of society. Now the chickens have come home to roost in Greece, but there is no grain in the bin to feed them so we will watch as they begin devouring one another and the feathers begin to fly.
16
"Greece ... has been lulled into believing that there is an endless source of Other Peoples' Money..."
Maybe they were watching how generously reckless banks were treated.
Maybe they were watching how generously reckless banks were treated.
Why is it always "other people's money"? How did a few "other people" manage to get all the money -- so that the rest of us have to live with a yoke around our necks.
Big mistake by citizens of Greece for standing up to lenders with big egos and lot of power. Creditors may take losses but at the same time will liquidate Greece so that no debtor in the future try to defy the creditors. It may seem like a mafia rule but it has its appeal for political leaders who has big egos and addiction to power.
8
Isn't it interesting how people in the financial world assume that "moral hazard" applies only to debtors and not to creditors? In their view, bailing out banks and subprime lenders is seen as even-handed justice, rather than an enabling of future irresponsible lending.
34
One of the things Greece, and, in fact, the rest of the EU, needs to do is to tax its citizens on their worldwide income regardless of where they may be resident (which is what the US does). If you want to remain a citizen of the EU, you should pay your dues.
Of course, Greece, in particular, must also collect taxes from its residents, which it has not done a good job of.
Of course, Greece, in particular, must also collect taxes from its residents, which it has not done a good job of.
6
Greece needs additional money this week -- far in advance of when the ECB or the EU could provide it.
That time "leverage" is what caused Tsipras to stage this disastrous referendum, running out the clock on last week's IMF payment and this week's actual cash needs.
Tsipras has harmed his country beyond belief. If Greeks don't see that, it is unlikely that they will be able to recognize any deal that is truly in their favor, and even unlikelier that Europe will care to offer it.
That time "leverage" is what caused Tsipras to stage this disastrous referendum, running out the clock on last week's IMF payment and this week's actual cash needs.
Tsipras has harmed his country beyond belief. If Greeks don't see that, it is unlikely that they will be able to recognize any deal that is truly in their favor, and even unlikelier that Europe will care to offer it.
5
"Give me a Drachma, or give me death!" I think I read that somewhere... sometime....
Ironically, some enterprising capitalist bought up all the old Greek pre-Euro coims, probably at cents on the ton. They'll have to come up with a totally new design or the boatload of old ones will start drifting back.
1
It wasn’t rational to admit Greece into the Euro. I can’t imagine anyone thought Greece could live the 3% deficit rule. However, given that was the decision, what’s now needed, by all parties, are a series of decisions that are in the long term interests of the Greek people and the broader European (Eurozone) community. That includes funding for Greece that is targeted at reviving the economy – infrastructure, bank liquidity, extending unemployment support (which will be spent on goods and services further reinforcing growth in the economy), and so on. What must not be done with any new funding is passing it on to banks that then use it to make payments back to the IMF or ECB. Greece needs investments in growth generating activities – not wealth transfers. Second the Greeks must reform their tax system and get real about collecting taxes, particularly from the wealthy who have developed tax avoidance into an art form that has been allowed to go on by multiple Greek governments for decades.
3
The no vote should strengthen Greece's bargaining position when coupled with the IMF report, because both clearly point out that the creditors' position has been unrealistic. Push the economy of nearly any democratic country to the unemployment and contraction that has happened in Greece, and you will get significant unrest and political turmoil; blaming the Greek people for rejecting the proposed terms is simply armchair moralizing by people who have no real connection with the conditions ordinary Greeks are living under. What is troubling about this article, though, is that it doesn't address the credible criticisms of rampant tax evasion and economic inefficiency due to crony capitalism that have made the creditors reluctant to make concessions. If the debt is restructured and a new program put in place, what will be different this time? Clearly, the economy needs to grow before new levels of repayment are realistic, but it's up to Greece to demonstrate that conditions for growth will be present now that weren't last year. Apologists for the system that failed abysmally over the past 10 or 15 years aren't the best ones to make that demonstration.
1
Mr. Hardouvelis seems to be extending blame to Syriza for events that occurred even before it took power, while chiding the ECB and IMF as the real culprits in the drama of the last 6 months. The idea that the IMF and ECB would withhold funds before the January elections, so as to place the expected new "leftist" government into a weaker position, and accept terms that were already unpopular, says less about Syriza's "credibility" than it does about the EU's.
And why wouldn't the ECB and the IMF -- if they were so activist and against Syriza -- have done everything they could to help the incumbent party of Mr. Hardouvelis stay in power? Something does not was in this argument.
Regardless, if these are the "small steps" that EU negotiators indulge in, then it seems that it is not Greece who is guilty of the "extreme solutions" that Mr. Hardouvelis blames Syriza for, but Europe itself for misreading or blatantly trying to manipulate Greek politics so as to extract the outcome they prefer.
Who can blame the Greek government for their "hostility" towards the Troika after an attempted end-run like that?
And why wouldn't the ECB and the IMF -- if they were so activist and against Syriza -- have done everything they could to help the incumbent party of Mr. Hardouvelis stay in power? Something does not was in this argument.
Regardless, if these are the "small steps" that EU negotiators indulge in, then it seems that it is not Greece who is guilty of the "extreme solutions" that Mr. Hardouvelis blames Syriza for, but Europe itself for misreading or blatantly trying to manipulate Greek politics so as to extract the outcome they prefer.
Who can blame the Greek government for their "hostility" towards the Troika after an attempted end-run like that?
8
I've always found that when one is bankrupt that hostility against those who might lend you money is the best policy. In fact, I've found that the more hostile you are, the greater chances that someone will loan you more money. You should try it some time and see if it works as well for you as it has for me.
Re: "Exiting the euro and issuing a new currency would unleash inflation, destroy institutions and bring poverty."
I believe this is the exact opposite of what Paul Klugman a few days ago said would happen.
I believe this is the exact opposite of what Paul Klugman a few days ago said would happen.
6
Well, it's sure gonna be interesting to see if Paul is right or not. I'm betting ten gazillion to one he's wrong, btw.
"The lenders must compromise without sacrificing their principles." What principles? The ONLY principle the lenders seem to care about is that Greece pay it's payday loans on time orelse. This whole sorry drama reminds me of the Family Guy episode where Brian ( their dog) owes Stewie some money he borrowed from him and Stewie gets increasingly violent and nasty trying to get Brian to pay back the loan. Stewie keeps screaming in Brian's face as he knee caps him shouting "Where's my Money man!" The Greeks are just trying to escape this kind of vicious treatment. Good luck to them.
3
"The Greeks are just trying to escape this kind of vicious treatment."
Absolutely! Oh, wait. No, that's not quite right. The Greeks are already asking for 300 billion MORE euros to be loaned to them right away! Oh, now I understand. The Greeks are trying to escape paying back their EXISTING loans, but are NOT trying to escape getting NEW loans.
Absolutely! Oh, wait. No, that's not quite right. The Greeks are already asking for 300 billion MORE euros to be loaned to them right away! Oh, now I understand. The Greeks are trying to escape paying back their EXISTING loans, but are NOT trying to escape getting NEW loans.
I see no rational bases for his assertion that exiting the euro would produce inflation. If concurrent with exiting the euro the Greek government were to also mandate trust banking, outlawing fractional reserve banking, the government would then be significantly enriched by the conversion to a trust banking system.
3
Greece imports 100% of its fuel, 50% of its food, 100% of its medicines, 100% of its computers etc tec.. The neo-drachma would be worthless from day one and fall in value daily and yet that would be the currency ordinary Greeks are paid in. Inflation would be massive regardless of the banking system.
Would you also outlaw Greece printing unlimited New Drachmas backed by nothing but, oh, say, thin air? If not, then expect massive inflation and the inability to import food, medicines, fuel, and manufactured goods, because no one in their right mind outside of Greece will value new Drachmas more than the value of the paper they are printed on.
Well, I am impressed, Mr. Hardouvelis. It sounds like you know the details and history of what happened in much more detail and nuance than anyone else I have read. But do your suggestions really address the structural and cultural difficulties Greece is facing? Will taxes be collected and non-payers prosecuted, will pensions be brought to a sustainable level, will widespread corruption be rooted out? Is there the political and national will to do that? Because without that, in my view, there is either eternal debt bondage or bankruptcy awaiting Greece.
12
Germany's enormous debts were largely forgiven - many billions of dollars in reparations for the two world wars that Germany started. Perhaps Germany should forgive an equal amount of Greek debt. After all, Germany was guilty of epic crimes, whereas Greece is guilty only of improvidence. Germany seems to me most unsuited to the role of the punctilious debt-collector.
30
Greece was a major recipient of aid under the Marshall plan. If the US is so keen then let the US pay off the Greek debt after all in terms of the total US budget 360 billion Euro is a tiny amount
1
Economic theory has no solution to the Greek conundrum i.e., the good money after bad money and moral hazard questions to be tackled by the ECB. Mario Draghi's decision to continue financing a faltering banking system must be based on political criteria and not strict financial rules.
Fundamentally, Eurozone political leaders must forget about billions of euros lent to prop up an unsustainable public debt load. The only solution -- to avoid a forced exit of Greece from the eurozone -- is to give Athens 100 years to pay the debt and to sustain via ECB an insolvent banking system.
Fundamentally, Eurozone political leaders must forget about billions of euros lent to prop up an unsustainable public debt load. The only solution -- to avoid a forced exit of Greece from the eurozone -- is to give Athens 100 years to pay the debt and to sustain via ECB an insolvent banking system.
3
This is a reasoned and fair analysis of the problem
from someone on the inside negotiations pre-Jan 2015.
And the entire Greek problem
started many years ago
with Age 50 retirement and extreme pensions
and low tax collection and rampant corruption.
The Greeks need to accept the blame themselves.
Tsipiras did overplay his hand.
Totally blew it.
from someone on the inside negotiations pre-Jan 2015.
And the entire Greek problem
started many years ago
with Age 50 retirement and extreme pensions
and low tax collection and rampant corruption.
The Greeks need to accept the blame themselves.
Tsipiras did overplay his hand.
Totally blew it.
8
As an average citizen, I always regret one thing about the crowds behavior, in the chaos and panic , one thing always forgotten. Punishment of real responsible persons.
Today, Greece future is not different than the Saturday, One Greek mom summarized this one very sublimely" My children will live a life like my grandparents and parents lived"
Knowing this is heartbreaking.
So, why we forget or sheepishly forgive who did this. It is really not difficult to identify key people who put Greece in this situation and put them in prison.
It is always we the people forget who did this ?
Today, Greece future is not different than the Saturday, One Greek mom summarized this one very sublimely" My children will live a life like my grandparents and parents lived"
Knowing this is heartbreaking.
So, why we forget or sheepishly forgive who did this. It is really not difficult to identify key people who put Greece in this situation and put them in prison.
It is always we the people forget who did this ?
1
Last Sunday I watched European Journal ( Deutche Welle DW) and they featured 40 medical clinics all over Greece run by volunteer doctors and nurses who have gathered together free drugs at the pharmacy associated with the medical clinics and serving the people of Greece who are broke but have life threatening illnesses.
Greece cannot become a failed state! They are at the forfront of fleeing citizens from Syria, Africa, Afghanistan etc.
Europe must sustain Greece- find more people who will volunteer like the nurses and doctors--In 2007-08 noone bailed out Lehman Brothers. This turned out to be a huge mistake.
The whole world loves Greece- please back them!
Greece cannot become a failed state! They are at the forfront of fleeing citizens from Syria, Africa, Afghanistan etc.
Europe must sustain Greece- find more people who will volunteer like the nurses and doctors--In 2007-08 noone bailed out Lehman Brothers. This turned out to be a huge mistake.
The whole world loves Greece- please back them!
1
Throwing money into the streets of Athens would make a lot more sense than giving any more money to its government.
3
The only way forward is for both Greece AND the Eurogroup (especially Germany) to own up each's mistakes. However Germans, as a superior race, will never admit that part of the eurozone's problems were caused by Germans.
2
The author, not unlike his countrymen, just does not get it. Europe will be stronger without Greece. This stuff here is just wishful thinking.
Way back when the union was formed Greece cooked its books to get in. They might have survived, but the downturn showed those Goldman Sachs reports as merely lipstick on the pig.
The economy could never sustain the borrowing and, while the terms may have been able to be met, they were enough to drag both the Union and Greece down.
Cut them loose. The drachma will teach the discipline that is so sadly lacking...And Europe will survive and even thrive without them...
Way back when the union was formed Greece cooked its books to get in. They might have survived, but the downturn showed those Goldman Sachs reports as merely lipstick on the pig.
The economy could never sustain the borrowing and, while the terms may have been able to be met, they were enough to drag both the Union and Greece down.
Cut them loose. The drachma will teach the discipline that is so sadly lacking...And Europe will survive and even thrive without them...
2
then why all the fighting? just let 'em go...
Other than "the Greek government must now stop and work constructively" I didn't find out much about how to undo the damage that Greeks (and others) have done to their country. I did learn more about wrong turns both sides made beforehand - one side hoping to forestall moral hazards, the other side acting mostly out of ideological stubborness and incompetence.
If I were a gambler, I wouldn't bet that a government known for its mismanagement and immaturity would suddenly start making "right" decisions for itself and others at the 11th hour. A chaotic, painful, disorderly exit from the euro - followed by the collapse of people's savings and mortgages - seems inevitable. But you can bet that the Tsipras government will claim this was a terrorist bolt out of the blue that nobody could have predicted.
If I were a gambler, I wouldn't bet that a government known for its mismanagement and immaturity would suddenly start making "right" decisions for itself and others at the 11th hour. A chaotic, painful, disorderly exit from the euro - followed by the collapse of people's savings and mortgages - seems inevitable. But you can bet that the Tsipras government will claim this was a terrorist bolt out of the blue that nobody could have predicted.
1
I have a sense of tragedy. Economists (and bureaucrats) are bad on tragedy. That's why Maynard Keynes was so great - not because he was the first Keynesian. The economic consequences of the Euro is a pamphlet yet to be written. As Keynes would have said the facts change each day - and we have to change our minds with them. "Pray sir", as he said, "what do you do?" The only fact that doesn't change is the suffering of Greek people - and that's the most important fact. The other important fact is that the Euro exists - even if it was an error, which I think is the case - and this is maybe not the best time for a country like Greece to figure out what it means to leave it. So a deal is best. Hope for a deal!
5
And what, pray, is the connection between Hardouvelis and Goldman Sachs?
4
It is an urban legend that the IMF, which BTW has about 1/4 of it's funds invested in Greece, has a problem with a leftist government.
It is also an urban legend that the rest of the lenders have a problem with leftist government as there are quite a number of leftist governments in the EU.
What these lenders have in common is a problem with a government that tells them that they are terrorists and that they should have to accept a default for no other reason than ideology.
" ... The next few days will be crucial. ..."
Yes, and I certainly hope that the taxpayers of the lenders countries will be asked in a democratic election if they want to continue paying money to Greece.
E.g. Portugal, which has done it's homework, accepted austerity measures and is back on the track to full economic recovery, will lose some EUR 9 bn. for supporting Greece which has, despite the fact that is does not even collect more than 15% of all taxes due and has nearly no industry, much higher state pensions and much higher public servant's payments than Portugal.
So why not ask the European taxpayers in a democratic way, if they want to continue support for Greece?
Greece does have a history of breaking contracts and going bankrupt.
If the Greek are deciding on their expectancies of the creditors, why not ask the creditors as well?
And BTW, the banks do not have sufficient cash for their ATMs to operate beyond his Friday.
Not a good starting point for negotiations with your creditors.
It is also an urban legend that the rest of the lenders have a problem with leftist government as there are quite a number of leftist governments in the EU.
What these lenders have in common is a problem with a government that tells them that they are terrorists and that they should have to accept a default for no other reason than ideology.
" ... The next few days will be crucial. ..."
Yes, and I certainly hope that the taxpayers of the lenders countries will be asked in a democratic election if they want to continue paying money to Greece.
E.g. Portugal, which has done it's homework, accepted austerity measures and is back on the track to full economic recovery, will lose some EUR 9 bn. for supporting Greece which has, despite the fact that is does not even collect more than 15% of all taxes due and has nearly no industry, much higher state pensions and much higher public servant's payments than Portugal.
So why not ask the European taxpayers in a democratic way, if they want to continue support for Greece?
Greece does have a history of breaking contracts and going bankrupt.
If the Greek are deciding on their expectancies of the creditors, why not ask the creditors as well?
And BTW, the banks do not have sufficient cash for their ATMs to operate beyond his Friday.
Not a good starting point for negotiations with your creditors.
3
Greece cooked the books for years. If a nation operates under a concept of "nations of laws", then the "rules" must also be followed. No nation can pick and choose the rules to follow under the concept of a nation of laws.
4
So the finance minister who was in place when the problems morphed from bad to severe as the government he was part of followed the failed austerity model is heaping scorn upon the party which replaced his own. Sorry, you and your pals failed big time. You tanked the economy and the deficit worsened. You have not a leg to stand upon in rejecting the approach of the new government. This is just political sour grapes from a guy who can't admit that his approach failed.
14
While this makes some very good points, it doesn't address the issue that the currency union is not helping the Greek economy grow as it should and is not providing enough liquidity. This is the same sort or stupid error that European leaders have made time and again with the worst example the start of the Great War and its aftermath, the Treaty of Versailles, which destroyed the German economy and directly lead to the emergence of the Nazis.
3
The title of this piece is entirely misleading. It was 17 paragraphs saying what the new govt has done wrong, and then two generic and vague but obvious paragraphs with no solution at all proposed.
5
Although Francis Fukuyama got a lot of the details wrong, he nailed the big picture in his essay "The End of History?" (1989) (my additions in parentheses):
"The end of history will be a very sad time. The struggle for recognition, the willingness to risk one's life for a purely abstract goal, the worldwide ideological struggle that called forth daring, courage, imagination, and idealism (in the Historic West), will be replaced by economic calculation, the endless solving of technical problems, environmental concerns, and the satisfaction of sophisticated consumer demands (in the Post-Historic West). In the post-historical period there will be neither art nor philosophy, just the perpetual caretaking of the museum of human history. I can feel in myself, and see in others around me, a powerful nostalgia for the time when history existed. Such nostalgia, in fact, will continue to fuel competition and conflict even in the post-historical world for some time to come" (Fukuyama, 17).
In fact sadly, the first part of Fukuyama's closing paragraph:
"The struggle for recognition, the willingness to risk one's life for a purely abstract goal, the worldwide ideological struggle that called forth daring, courage, imagination, and idealism..."
now applies to the followers of ISIS more than it applies to we the peoples of the Post-Historic West. ISIS is, of course, a group whose core beliefs spring from History, the Dark Ages to be specific.
"The end of history will be a very sad time. The struggle for recognition, the willingness to risk one's life for a purely abstract goal, the worldwide ideological struggle that called forth daring, courage, imagination, and idealism (in the Historic West), will be replaced by economic calculation, the endless solving of technical problems, environmental concerns, and the satisfaction of sophisticated consumer demands (in the Post-Historic West). In the post-historical period there will be neither art nor philosophy, just the perpetual caretaking of the museum of human history. I can feel in myself, and see in others around me, a powerful nostalgia for the time when history existed. Such nostalgia, in fact, will continue to fuel competition and conflict even in the post-historical world for some time to come" (Fukuyama, 17).
In fact sadly, the first part of Fukuyama's closing paragraph:
"The struggle for recognition, the willingness to risk one's life for a purely abstract goal, the worldwide ideological struggle that called forth daring, courage, imagination, and idealism..."
now applies to the followers of ISIS more than it applies to we the peoples of the Post-Historic West. ISIS is, of course, a group whose core beliefs spring from History, the Dark Ages to be specific.
3
"Exiting the euro and issuing a new currency would unleash inflation, destroy institutions and bring poverty."
Paul Krugman disagrees. He says Greece should never have adopted the euro, and that most of the suffering that would result from an exit has already occurred, so now is the time to exit.
The author's take on the errors made by Syriza is interesting. It seems a succession of Greek governments have made a long series of mistakes: the decision to join the euro, the decision to misrepresent the financial position of the country, the decision to borrow more than it could repay, the decision to pay pensions it could not afford, the decision to take no action to fix the ineffective tax collection system.
Organizations like the IMF or the ECB must take the government of a country at face value. They cannot look past the government and read the minds of the citizens. It is not their role to steer the course for Greece or to save Greece from itself. Greece must make its choices, and unless it wants to go it alone it must find a course that others are willing to support.
Paul Krugman disagrees. He says Greece should never have adopted the euro, and that most of the suffering that would result from an exit has already occurred, so now is the time to exit.
The author's take on the errors made by Syriza is interesting. It seems a succession of Greek governments have made a long series of mistakes: the decision to join the euro, the decision to misrepresent the financial position of the country, the decision to borrow more than it could repay, the decision to pay pensions it could not afford, the decision to take no action to fix the ineffective tax collection system.
Organizations like the IMF or the ECB must take the government of a country at face value. They cannot look past the government and read the minds of the citizens. It is not their role to steer the course for Greece or to save Greece from itself. Greece must make its choices, and unless it wants to go it alone it must find a course that others are willing to support.
In other words the I.M.F. screwed the pooch by reacting to the politics in Greece instead of appreciating the weaknesses of the limits of the Greek economy, setting in motion a series of events that led to this crisis. Tsipras's government was concerned about relaxing the austerity which had hurt people and increased unemployment. Had the former conservative government not changed the circumstances that supported a slow recovery without a thought about whether this might halt that slow recovery for political considerations, Tsipras might have had to settle for a compromise that allowed recovery to continue while relaxing austerity as it recovered. The conservatives should have known that they were too unpopular to stay in office but they would not accept that fact and eliminated the slow recovery which might have constrained Tsipras.
1
Accelerating economic growth in Greece should be the overarching joint goal of Greece and its creditors. Key to achieving this is finding ways for increasing private foreign investment, not more government bail-outs. Potential opportunities for profitable investment must be explored aggressively in sectors including tourism, agriculture, energy, and software production. The Greek government must create strong incentives for foreign investment. Regulatory barriers should be rapidly removed. A positive climate for foreign investment also requires concerted actions demonstrating the Greek government’s resolve to eradicate corruption including favoritism to the established oligarchs and privileged elites.
Yet the focus in the creditors’ reform proposals and actions since 2008 has been on austerity not growth. And there are no signs that any of the governments of Greece over the last five years has done anything to mount growth initiatives working with the Greek private sector and companies abroad. The tens of thousands of small enterprises owned and operated by Greek families account for nearly three-quarters of the economy of Greece. Such a level of fragmentation negates exploitation of economies of scale and scope essential to competing in the global markets. Mr. Tsipras, in the process of reshuffling your cabinet, consider the involvement of young Greek entrepreneurs with strong multinational track records for building world-class business enterprises.
Yet the focus in the creditors’ reform proposals and actions since 2008 has been on austerity not growth. And there are no signs that any of the governments of Greece over the last five years has done anything to mount growth initiatives working with the Greek private sector and companies abroad. The tens of thousands of small enterprises owned and operated by Greek families account for nearly three-quarters of the economy of Greece. Such a level of fragmentation negates exploitation of economies of scale and scope essential to competing in the global markets. Mr. Tsipras, in the process of reshuffling your cabinet, consider the involvement of young Greek entrepreneurs with strong multinational track records for building world-class business enterprises.
1
If an individual spends more that can afford and covers it with loans, while at the same time cuts his income, he will go bankrupt. The court may declare him in bankruptcy, but will require a sound, supervised plan for getting out of it. . The same happens with states. Greece's principal income, like of any other state, comes from taxes. Have the Greeks paid their fair share of taxes? What about Greek oligarchs making zillions? As to spending: of course it is necessary to cut it, but do not start with cutting pensions of poor people.
EU should have learned, that its membership should not be awarded on the basis of politics, but on sound assessment of country's economical practices and evidenced by its history. Perhaps Greece (and other countries from that region) with history of corruption and tax avoidance should have never been in EU in the first place.
EU should have learned, that its membership should not be awarded on the basis of politics, but on sound assessment of country's economical practices and evidenced by its history. Perhaps Greece (and other countries from that region) with history of corruption and tax avoidance should have never been in EU in the first place.
If they stay in the Eurozone then they will never be anything but a welfare state to the other 18 members; and they'll never restructure their economy. Even if all of the debt is forgiven they'll still be running a deficit. The real issue is that the problems of Greece are also the problems of Italy, Spain and Portugal. But, looking even deeper these structural imbalances are also the problems of the U.S. At some point we are all going to have to pay the piper. The world cannot print its way out of debt.
2
International banking is more politics than rational financing practice. Banks do not keep reserves adequate to cover the failure of risky investments and loans as the numbers predict must sometimes happen. Instead, in order to use that money they have been able to convince governments to provide guarantees to cover them when these poor outcomes happen. The result is a culture of making risky bets without any concern for the scope and frequency of any losses that can be expected because governments bail them out. It is just this kind of failure to act reasonably the enable the former Greek governments to borrow more than the people of Greece could repay. The rational and ethical thing to do is to forgive most of the debt, write off most of the losses as part of the risks of high stakes betting, and to move on.
1
The world won't improve until some discipline is imposed on those who engage in risky financial transactions - in this case the private banks who made bad loans to Greece. Stop bailing the banksters out, it only encourages their recklessness.
3
How about the moral hazard of letting the original lenders off the hook by bailing them out at the expense of the Greek people. The banks should have shared the losses instead of escaping with a whole skin. Also, inflation of Greek currency would make their products and services cheaper leading to an improved economy rather than the destruction the writer suggests.
4
Please contribute to the crowdfunded Bailout Fund on indigogo: https://www.indiegogo.com/greek-bailout-fund.html
Even though the fund won't make it to the goal, it's a statement. For 3 euros each, we can stop all the suffering (and all the endless news stories).
Even though the fund won't make it to the goal, it's a statement. For 3 euros each, we can stop all the suffering (and all the endless news stories).
1
It's unfortunate that an apologist for the failed former Greek government, a government that the author served in, is given an opportunity to point his finger and say "the other guy did it". If only politicians and academics would admit their faults rather than trying to deflect blame and deny responsibility.
6
What we have here is the 'half full, half empty' problem. Now that Greece has decided to go there own way, the issue become how to prevent Greece from causing damage to the Euro. The answer is simple, withdraw from the Greece the ability to use the Euro, forcing them to provide and operate there own currency. Greece has clearly voted they do not wish to be part of the Euro club. Let them go, and go quickly. No reason to prolong there misery.
Greeks should stop worrying about "humiliation." They deserve to feel humiliated for their irresponsible behavior. Instead, they should start thinking about setting some goals for themselves, and sticking to them. This is the only way they will regain their self-esteem. They have no collateral, no credit rating. They have nothing to bargain. They have already allowed their oligarchs to depart, with their money. Any wealthy Greek who escaped this crisis should not be allowed to come back. Their assets should be confiscated immediately.
The euro is not a good idea, and either really, is the EU. Yes, the EU gives European countries bargaining power given that it's collective, but it's predicated on European countries - with long histories of differing priorities, customs, languages, allegiances, hostilities and perspectives to essentially, see their financial affairs through the same lens. And they don't, nor should they. Germany is dominant at the moment because she values the competitive global trade that others see as a threat to their sovereignty because it is. Greeks aren't Germans. They don't want to be "industrious" on that level or they would be. They want to be Greeks. They have their own ways, so the world should allow them manage their own affairs and get a handle on what their country needs internally. Iceland managed beautifully.
The EU essentially benefits conglomerates and huge banks. The people who suffer are those forced to pay into the system with low to middle class wages, and of course, the unemployed. It's another oligarchic scheme that should be abandoned, especially by the Mediterranean countries. Spain, Portugal and Italy were all better off with their own currency and their own policies, and France - which has already felt the pinch - is going to find public resentment alarmingly high if she continues the EU policy of taxing citizens and denying them their socialist cover to bail out others. The EU is designed to solely benefit the financial sector and conglomerates.
The EU essentially benefits conglomerates and huge banks. The people who suffer are those forced to pay into the system with low to middle class wages, and of course, the unemployed. It's another oligarchic scheme that should be abandoned, especially by the Mediterranean countries. Spain, Portugal and Italy were all better off with their own currency and their own policies, and France - which has already felt the pinch - is going to find public resentment alarmingly high if she continues the EU policy of taxing citizens and denying them their socialist cover to bail out others. The EU is designed to solely benefit the financial sector and conglomerates.
3
As Mr. Harddouvelis accurately says: “Domestically, reforms that seek to level the playing field, minimize bureaucracy, fight oligopolies and give more power to the people are badly needed.” I do not consider any of these reforms “austerity”, and Greece’s principal creditor nations resent the Greeks’ unwillingness to implement these and other sensible reforms such as adjusting the age of retirement for public sector employees & lowering pension payments for early retirement individuals more in line with the levels in place in most of the rest of Europe.
Until which ever government is representing the Greek people accept these reforms it is going to be very difficult for the leaders of the more prosperous EU countries to ask their taxpayers to sacrifice more to bail out a country which is viewed as not having made a sufficient effort to bring its economy into the 21st century.
Until which ever government is representing the Greek people accept these reforms it is going to be very difficult for the leaders of the more prosperous EU countries to ask their taxpayers to sacrifice more to bail out a country which is viewed as not having made a sufficient effort to bring its economy into the 21st century.
3
What strikes me most is that it I s not only that Gre ec e and Germany are. Members of an all inclusive Union but that Greece presumes to have and yield the same amount of power .
That cannot reasonably be in matters financial or economic .
That cannot reasonably be in matters financial or economic .
1
It is not the first time that greece was thrown out of a currency union for fiddling the rules.
It happend 1906 with the Latin Monetary Union, the creditor countries back then had been france and italy. Nevertheless, greece was allowed to rejoin the Latin Monetary Union again in 1908 and stayed it's member until the union dissolved in 1929.
We should grant greece a time-out, with a strong promise for rejoining, when they fulfill the criteria for real.
It happend 1906 with the Latin Monetary Union, the creditor countries back then had been france and italy. Nevertheless, greece was allowed to rejoin the Latin Monetary Union again in 1908 and stayed it's member until the union dissolved in 1929.
We should grant greece a time-out, with a strong promise for rejoining, when they fulfill the criteria for real.
9
Given that the choices are:
1) A punishing existence OUTSIDE of the Eurozone, or
2) An equally punishing existence WITHIN the Eurozone,
Greeks might as well leave the Eurozone...and NATO, and seek to align themselves with China and/or Russia, at least, economically.
Of course, some will point out that any new ties to China or Russia will be dangerous. So it's funny how the same IMF and Wall Street bankers who are going to make an example out of Greece, and who are warning Greece, have sold the US and Europe out to the Central Committee of the Chinese Community Party.
1) A punishing existence OUTSIDE of the Eurozone, or
2) An equally punishing existence WITHIN the Eurozone,
Greeks might as well leave the Eurozone...and NATO, and seek to align themselves with China and/or Russia, at least, economically.
Of course, some will point out that any new ties to China or Russia will be dangerous. So it's funny how the same IMF and Wall Street bankers who are going to make an example out of Greece, and who are warning Greece, have sold the US and Europe out to the Central Committee of the Chinese Community Party.
Yes, in the end this is probably the only solution.
The debt will not be repaid, we (or more rightly you, since Sweden is not in the EZ) will have to accept that that.
At the same time, the taps must close. Greece has shown little interest in actually modernizing its economy. It is senseless to try to keep Greece afloat in an environment that is toxic for such an immature market.
Greece needs to leave the Euro so it can find the shelter of a currency it can control independently and devalue when needed.
Only in that setting will it have the time to heal its wounds (granted many of them sustained in the difficult transition to monetary independence) and begin the long trek toward being a modern economy.
It shows how disastrous the decision to join the Euro was. They were just not ready and now they will have lost a generation in economic development as a result.
The debt will not be repaid, we (or more rightly you, since Sweden is not in the EZ) will have to accept that that.
At the same time, the taps must close. Greece has shown little interest in actually modernizing its economy. It is senseless to try to keep Greece afloat in an environment that is toxic for such an immature market.
Greece needs to leave the Euro so it can find the shelter of a currency it can control independently and devalue when needed.
Only in that setting will it have the time to heal its wounds (granted many of them sustained in the difficult transition to monetary independence) and begin the long trek toward being a modern economy.
It shows how disastrous the decision to join the Euro was. They were just not ready and now they will have lost a generation in economic development as a result.
More I.M.F. double talk, the Greeks should go after Goldman Sachs who started this mess in 2002 and the complicit politicians who are shills for the tax avoiding oligarchs. Exiting the E.U., returning to their own currency, nationalizing the shipping industry and the banks as well confiscating properties of the elite who have been bleeding Greece dry for decades would be a good start rather than allowing the privatization of that which belongs to the Greek people which has been the goal from the beginning. The rest of Europe should follow suit: the dream of Mitterand and Kohl was just that, a dream; the reality of a world being destroyed by the greed of bankers is the reality.
44
the view from an Obama voter.
Who are these tax avoiding oligarchs in Greece you are talking about? can you name at least one. Talk is cheap.
Good ole Goldman Sachs. They had their similar effect on our old Montana Power Company in the 80's. Just got bigger since then.
In my opinion, structural reforms should be postponed for a while and Europe should halp Greece grow a bit without worrying about moral hazard too much. Greece is in Irving Fisher's debt-deflation vicious cycle. Actually, to help all of Europe, the ECB should follow its mandate and create an inflation rate of 2%. This would increase the odds for Europe tremendously. good article, though. Dr. Hardouvelis is an excellent researcher in macro-finance.
3
During this severe economic crisis, place the Greek Government aside during the next few days, and have Athens create an independent emergency financial corporation, authorizing the sale of bonds issued by the City to enable a cash flow to its municipal workers. The banks to advance the City additional funds to assist the revamping of their financial state and tide them over until enough of the new bonds can be issued.
New York was able to do this in the mid 70s. Is this a feasible beginning to restoring financial solvency to the people of Greece?
New York was able to do this in the mid 70s. Is this a feasible beginning to restoring financial solvency to the people of Greece?
2
From: http://www.interfluidity.com/v2/5965.html?utm_source=dlvr.it&utm_med...
"The world is full of unworthy and unscrupulous entities willing to take your money and call the transaction a “loan”. It always will be. That is why responsibility for, and the consequences of, extending credit badly must fall upon creditors, not debtors. There is one morality tale that says the debtor must repay, or she has sinned and must be punished. There is another morality tale that says the creditor must invest wisely, or she has stewarded resources poorly and must be punished. We get to choose which morality tale we most use to make sense of the world. We do, and surely should, use both to some degree. But if we emphasize the first story, we end up in a world full of bad loans, wasted resources, and people trapped in debtors’ prison, metaphorical or literal. If we emphasize the second story, we end up in a world where dumb expenditures are never financed in the first place."
I guess it wasn't just Syriza who "forgot the moral hazard issue", but also the Eurocrats who opted to bail out private banks (the reckless lenders in this situation) by loaning to Greece on a severe austerity package and having the lion's share of that loan package going to paying back those private institutions.
"The world is full of unworthy and unscrupulous entities willing to take your money and call the transaction a “loan”. It always will be. That is why responsibility for, and the consequences of, extending credit badly must fall upon creditors, not debtors. There is one morality tale that says the debtor must repay, or she has sinned and must be punished. There is another morality tale that says the creditor must invest wisely, or she has stewarded resources poorly and must be punished. We get to choose which morality tale we most use to make sense of the world. We do, and surely should, use both to some degree. But if we emphasize the first story, we end up in a world full of bad loans, wasted resources, and people trapped in debtors’ prison, metaphorical or literal. If we emphasize the second story, we end up in a world where dumb expenditures are never financed in the first place."
I guess it wasn't just Syriza who "forgot the moral hazard issue", but also the Eurocrats who opted to bail out private banks (the reckless lenders in this situation) by loaning to Greece on a severe austerity package and having the lion's share of that loan package going to paying back those private institutions.
42
To extrapolate, if all possible creditors now do believe, further loans to greece are folly, and shouldn't be granted, would you rather accept greece running out of cash and into default than accepting risky loans ?
4
Our point exactly--no more bad loans to Greece. Any loan to Greece is bad. No more loans to Greece.
Greece may need money from loans, but the loans it has been receiving from the Troika are going 80+% to its creditors and not helping the Greek people. The rest of Europe has basically been lending more $ to itself, while Greece pays interest-only on its debts, such that the debtors don't have to write off the loans.
1
This column from an inside player makes it clear that the troika's goal was to effect a regime change in Greece, even though that was not their publicly stated goal. But as they say, do not wish for things that you don't fully control or understand. The troika succeeded in bringing a change in Greece's government, just not what they had intended or wanted. And now they are stuck with the unenviable task of having to negotiate with a government they do not like.
This is not to say that Greece was without her problems. Their bloated public sector and corruption are well known. But the austerians in the troika pushed Greece so hard that they had no choice but to react in the manner they did.
it is high time for both sides to coll down and calmly come back and negotiate a settlement that will forgive much of Greece's debt. Yes, there is a moral hazard issue, but the EU and USA have overlooked many others in the past. So, why not have a more humanitarian attitude and help the people of Greece.
This is not to say that Greece was without her problems. Their bloated public sector and corruption are well known. But the austerians in the troika pushed Greece so hard that they had no choice but to react in the manner they did.
it is high time for both sides to coll down and calmly come back and negotiate a settlement that will forgive much of Greece's debt. Yes, there is a moral hazard issue, but the EU and USA have overlooked many others in the past. So, why not have a more humanitarian attitude and help the people of Greece.
5
The Greeks should leave the Euro and reissue the drachma. That way the Greeks can continue to pay pensions to workers at age 55, provide free health care and not collect taxes from the rich and middle class. Greece can become the true dream nation.
11
Yes, who will sell them anything for a drachma? They still have to eat. They still need fuel and electricity. What fools.
Yes, all that and 20% (or more) inflation.
Monies created by the state and not some private corp (bank), is there for the state to use. The major care the state must be aware of is the horde of money changers who would without doubt prey on the state's new currency.... but in the end, the value of the created money is all about the worth of the trust of the state's people. The Greek people have demonstrated that they are indeed a great industrious people and worthy of our trust.
I don't think that an opinion from the previous Greek government is worth a damn. They represent the incompetent establishment for sure.
20
It is possible that the situation in the short run coul could have been better if the financial aspects had been handled differently.
But it should be obvious by now that the exchange rate of the Euro prevents the counntry from recovering, regardless of financial "smart" moves. The EU should take Greece out of the Euro zone in an orderly fashion. That seems rather far-fetched. Why?
Let us remind ourselves that the Euro primarily serves a political purpose. It is an instrument to force a semblance of a federal state on a recalcitrant Europe; a federal state based squarely on market liberalism. As a result, democracy is eroding all across the continent. This article gives a good hint; the prospect of Syriza winning the election this year led the IMF to hold back funds "...in order to ensure there was enough leverage on the side of the lenders to force a potentially new and untested government to behave rationally." Rationally - indeed! Following the financial market rules to the letter, with no regard for the country´s social needs.
Greece will pay a heavy price for their "no" on Sunday. 60 years of chafing, bureaucratized market liberalism has, at long last, been challenged.
Let us hope it will be the start of a serious questioning of the "reign of the market" in Europe.
Greece is still at the mercy of the "Troika". The next weeks and months will give us a good picture of the prospects for democracy in Europe.
But it should be obvious by now that the exchange rate of the Euro prevents the counntry from recovering, regardless of financial "smart" moves. The EU should take Greece out of the Euro zone in an orderly fashion. That seems rather far-fetched. Why?
Let us remind ourselves that the Euro primarily serves a political purpose. It is an instrument to force a semblance of a federal state on a recalcitrant Europe; a federal state based squarely on market liberalism. As a result, democracy is eroding all across the continent. This article gives a good hint; the prospect of Syriza winning the election this year led the IMF to hold back funds "...in order to ensure there was enough leverage on the side of the lenders to force a potentially new and untested government to behave rationally." Rationally - indeed! Following the financial market rules to the letter, with no regard for the country´s social needs.
Greece will pay a heavy price for their "no" on Sunday. 60 years of chafing, bureaucratized market liberalism has, at long last, been challenged.
Let us hope it will be the start of a serious questioning of the "reign of the market" in Europe.
Greece is still at the mercy of the "Troika". The next weeks and months will give us a good picture of the prospects for democracy in Europe.
30
Why would anyone trust in this wisdom offered by one of the architects of Greece's economic disaster, a person who apparently saw signs of recovery early this year that was not seen by the electorate, why?
10
On Oct. 3, 2010, the 20th anniversary of German unification, also marked the completion of the final chapter of World War I with the end of reparations payments 92 years after the country's defeat. Angela Merkel should have historical perspective when dealing with the debt of Greece. After all, the rising Nazi party was a result of dire economic situation resulting from the demand of the allies from Germany to pay reparation, without considering the consequences. The world had paid a huge price. I applaude the Greeks for voting NO. All understand that they should pay the debt, but the cycle of getting more loans to pay interest for previous loans had destroyed the Greek economy and society, and only the Germans profited. This cycle had to stop. It is time for restructuring the debt, allowing the Greek economy to rebound. What is needed is a payment schedule connected to the state of the Greek economy. It will be wise to deffer payments for now, and start them only once unemployment in Greece has dropped to an agreed upon level. The Greek will have to adjust their labor practices to those of successful European countries, establish a reasonable retirement age, etc. Greece is just the beginning, and Spain, Portugal and Italy might be next. The actions of the European leaders are critical if keeping united states of Europe together is what they want. They must rise to the occasion.
7
At this point how much damage has been done to Greece is not countable anymore.
1- Loss of GDP
2- Loss of trust
3- Loss of Youth jobs
4- Loss of educated people
5- Loss of simply the future.
Greece lost many things and nobody can easily replenish those losses.
1- Loss of GDP
2- Loss of trust
3- Loss of Youth jobs
4- Loss of educated people
5- Loss of simply the future.
Greece lost many things and nobody can easily replenish those losses.
31
This sounds like an echo of how some Americans feel. While tempting to weep, this may be the time to fight. Whether we understand the damage inflicted on Greece first-hand is not relevant perhaps. Greece is in an emergency situation of a magnitude yet to be seen by the Modern World.
Another countryman of yours has cautioned the wisdom of keeping a cool head. We do not wish to hear for whom the bell tolls because it tolls for us in the end. Go the heart of the Country, the State Capital, and let a temporary emergency relief institution be created to tide some workers over the next few days, while inviting the leading financial experts and advisers on a global-basis, to figure out a long-term basis, an economic solution to redress Greece in light of the failure of the Government and IMF.
Another countryman of yours has cautioned the wisdom of keeping a cool head. We do not wish to hear for whom the bell tolls because it tolls for us in the end. Go the heart of the Country, the State Capital, and let a temporary emergency relief institution be created to tide some workers over the next few days, while inviting the leading financial experts and advisers on a global-basis, to figure out a long-term basis, an economic solution to redress Greece in light of the failure of the Government and IMF.
This whole affair just goes to show that that the Eurozone is not there for people, but rather for the convenience and benefit of the bankers. The small mom/pop has little say in what has happened. It was all engineered by the banking cartels of the world.... and I would speculate.... for the purpose of acquiring worthy Greek assets... roads, ports, power systems, water systems. etc., all at fire sale prices.
32
Really?
So having 20+ different currencies and trading laws would help the average European citizen?
Please explain your dark world view...
So having 20+ different currencies and trading laws would help the average European citizen?
Please explain your dark world view...
Unfortunately, i fear a deal may still be reached and more European taxpayer money will be thrown down a pit at Greece. Never underestimate the spinelessness of French and Italian politicians. They will not want to have to explain to their constituents how they lost hundreds of billions of euros from a Greek default. Together France and Italy have a larger economy than Germany so they may try to force something through and cave to the Greeks.
3
Let's be clear here. The money that was lent to Greece was the same kind of money created by our Fed... it's "thin air" money that has no real value. Only money that ha been created by a government (people) owned bank and has been circulated and trusted by the people has any real value. The money lent to Greece didn't come from the governments of Europe but from the European private banking system. The European taxpayers have little input or say about the whole affair.
"Mr. Tsipras’s government behaved as if the flow of cash into the economy didn’t matter."
This is what happens when theorists instead of people with real business experience try to run countries. On our side, see: Obama.
This is what happens when theorists instead of people with real business experience try to run countries. On our side, see: Obama.
2
The statement by this former finance minister of Greece, Mr. Hardouvelis, that "Mr. Tsipras's government behaved as if the flow of cash into the economy didn't matter', it the ultimate chutzpah. After all, his right-wing government coalition was the ultimate culprit of getting Greece into this economic mess. They supported the banksters and ultra-rich tax cheats that parked their money in foreign tax havens.
As to your last few words, no matter the subject - even one that you obviously don't understand -, it only shows your sick obsession with anything 'Obama'.
As to your last few words, no matter the subject - even one that you obviously don't understand -, it only shows your sick obsession with anything 'Obama'.
Obama was one of the people responsible for rescuing the USA from the financial disaster brought on by the previous government. Our economy is in good shape now because of steps taken by him. Let's hope for the sake of the Greek nation that your analogy holds.
1
On our side, see "trickle down."
There isn't any sacred fundamental law that requires Greece to be inside the Euro, and it's this rigid dogmatic adherence to this idea that has only helped to create this oddball marriage of opposites in the first place. Let the Greeks be outside the Eurozone, just as Britain is outside it, and let absence make the heart grow fonder.
4
One of the better descriptions of the crisis that I have read.
3
Not really, Bashing the leftist with a subtle tones.
Greece: We don't need your stinking money (as long as we don't have to pay you back what you lent us & the ECB keeps pumping liquidity into our banking system).
EU: What about your earlier promises to repay all of our loans?
Greece: Promises, schromises. We had our fingers crossed the whole time, anyway.
EU: What about your earlier promises to repay all of our loans?
Greece: Promises, schromises. We had our fingers crossed the whole time, anyway.
8
"The “no” vote in Sunday’s referendum…has put the burden on the Greek government to deliver a better outcome in its negotiations with the lenders"
Typical IMF-speak. A better outcome? Have the Editors of this Op-Ed page read the suppressed debt sustainability analysis of the IMF that was revealed a few days ago in the Guardian? Probably not. The IMF actually agreed with "Greece’s argument that it needs substantial debt relief for a lasting economic recovery"; that "even after 15 years of sustained growth, their debt is still unsustainable"; the "estimate is that the debt would be 118% of GDP in 2030, even with the tax and spending reforms demanded." Greece's debt is 175% of GDP and the IMF admits that “significant concessions” are necessary for permanent relief of its debt financing woes. Even under the best case growth scenario of 4% a year for the next five years, Greece’s debt levels will drop to only 124%."
The IMF expects "€15bn from proceeds of privatizations, 5 TIMES the best scenario estimate." No matter what Greece does, they will be up to their eyes in debt even if they privatize companies the IMF and friends have targeted, cut pensions to the bone, shed public services and institute capital controls.
The media's attempts to keep the debt sustainability analysis under wraps was intended to dupe the people of Greece, and blame the "No" vote for an "outcome" that wouldn't change no matter if Greece defaulted, rejected, or accepted the IMF proposals.
Typical IMF-speak. A better outcome? Have the Editors of this Op-Ed page read the suppressed debt sustainability analysis of the IMF that was revealed a few days ago in the Guardian? Probably not. The IMF actually agreed with "Greece’s argument that it needs substantial debt relief for a lasting economic recovery"; that "even after 15 years of sustained growth, their debt is still unsustainable"; the "estimate is that the debt would be 118% of GDP in 2030, even with the tax and spending reforms demanded." Greece's debt is 175% of GDP and the IMF admits that “significant concessions” are necessary for permanent relief of its debt financing woes. Even under the best case growth scenario of 4% a year for the next five years, Greece’s debt levels will drop to only 124%."
The IMF expects "€15bn from proceeds of privatizations, 5 TIMES the best scenario estimate." No matter what Greece does, they will be up to their eyes in debt even if they privatize companies the IMF and friends have targeted, cut pensions to the bone, shed public services and institute capital controls.
The media's attempts to keep the debt sustainability analysis under wraps was intended to dupe the people of Greece, and blame the "No" vote for an "outcome" that wouldn't change no matter if Greece defaulted, rejected, or accepted the IMF proposals.
18
The IMF report is immaterial. Anyone paying any attention to this tragedy knows full well that Greece cannot pay the full debt.
The main reason not to just forgive it is to have a mechanism to continue trying to push Greece down the path of market reforms. I don't just mean austerity, which was greatly overemphasized and probably prevented an earlier recovery, I mean opening closed industries and professions, streamlining the bureaucracy, turning arround or privatizing woefully mismanaged publicly owned industries, actually collecting taxes. Without a these steps Greece will never be able to prosper in a Euro monetary union.
That was the fundamental choice for the Greeks: modernize their economy or leave the Euro. It may be too late to choose the former.
The main reason not to just forgive it is to have a mechanism to continue trying to push Greece down the path of market reforms. I don't just mean austerity, which was greatly overemphasized and probably prevented an earlier recovery, I mean opening closed industries and professions, streamlining the bureaucracy, turning arround or privatizing woefully mismanaged publicly owned industries, actually collecting taxes. Without a these steps Greece will never be able to prosper in a Euro monetary union.
That was the fundamental choice for the Greeks: modernize their economy or leave the Euro. It may be too late to choose the former.
The Greek people have signaled that they want no more austerity. It is unlikely that Greece can or will ever pay back what it owes. Lenders are not likely to lend more. As negotiations fail and Greece defaults on its obligations, real austerity waits for Greece. The only question that remains, will the EU or perhaps Russia continue to support Greece on life support? It's time to recognize that the Greek socialism experiment has failed. They have run out of other people's money.
11
Greek socialism has failed? What a joke.
Well before this very new left-wing government was voted into power, Greece was already in deep doo-doo, the one caused by the prior right-wing government coalition with their tight links to the oligarchs and super-rich tax cheaters of that country.
Well before this very new left-wing government was voted into power, Greece was already in deep doo-doo, the one caused by the prior right-wing government coalition with their tight links to the oligarchs and super-rich tax cheaters of that country.
1
At this point, if they don't knuckle under, they haven't begun to experience "austerity.
"Today Greece faces calamity."
But tomorrow the whole world economy could face calamity, because after Greece exit the EU, other poor countries will go after it, and it will lead to the collapse of the EU and destabilization of the Monetary Fund and the World Economy.
But tomorrow the whole world economy could face calamity, because after Greece exit the EU, other poor countries will go after it, and it will lead to the collapse of the EU and destabilization of the Monetary Fund and the World Economy.
2
Interesting information from a former insider. It reflects badly on everyone and every institution, especially the IMF. The contention, however, that Greece's debt is sustainable is contradicted by the IMF, and by some rather hard math that has been done by economists that show that the debt and austerity condemn Greece to misery for the foreseeable future. I can imagine that the new Greek govt. has made many mistakes, but none that equals the fundamental mistakes of the troika and earlier Greek govts. The way forward requires forgiving a large portion of Greece's debt. Think of it as a transfer payment from the wealthier euro countries, mainly Germany and France, to rescue Greece (a "reformed" Greece), to keep Greece within the eurozone (a mixed blessing, of course, for Greece), and to counter the charge that the EU and eurozone have become undemocratic and authoritarian, as well as hopelessly ideological, as far as economics is concerned. I don't believe that the euro leaders, especially Germany, are capable of this about-face. I expect Greece to be forced out of the eurozone, probably to its ultimate advantage, but only after passing through some rather horrible times. That is its fate if it remains in the eurozone, only it will likely last longer.
24
"Think of it as a transfer payment from the wealthier euro countries, mainly Germany and France"
The precedent would lead to an untenable situation. Merkel must know that the current French government is likely to continue down its present path of ruin and destruction of this country. If a bailout is possible or painful in the case of Greece, it will be impossible and severely bloody for France.
The precedent would lead to an untenable situation. Merkel must know that the current French government is likely to continue down its present path of ruin and destruction of this country. If a bailout is possible or painful in the case of Greece, it will be impossible and severely bloody for France.
Mr. Hardouvelis left out the part about the "money and brain drain" by the wealthiest Greeks to avoid paying taxes, the same thing that is happening around the world. Where are these "doctors and other professionals" going? Germany and Switzerland where the proceeds of the Greeks' largess to them is "safe", there is Universal Health Care, strong unions and everything else the financial elite are trying to destroy. French and German governments had better listen to their people because all but the wealthiest applaud Greece's courage. Time to destroy the Euro that has brought economic strangulation to so many small European countries.
22
I believe that we are looking at four different issues.
The first issue is the Greek debt: this is probably the least problematic, as it is increasingly clear it will never be repaid. It is only a question of principle, though nobody wants to admit it.
The second issue is the Greek deficit: even if, by magic or Putin’s wand, the debt were to be instantaneously repaid, tomorrow Greece would be in debt again, as it is spending much more than it is earning.
The third issue is the fact that the EU/IMF/ECB tried to address the deficit issue by forcing on Greece an austerity policy which has gutted Greece’s economy.
The fourth is a political problem: both sides have taken an extreme stance, drawn a line in the sand, and issued an ultimatum; neither wants to be perceived as the first to step back and admit its errors.
However this brings us directly to the solution which looks like being played out: Tsipras calls a referendum, on a European proposal which has already been withdrawn, and wins it. Juncker issues a new proposal, which, guess what, implements almost only those measures which would correct the excess spending without depressing the economy. Tsipras states that even if he were to win, Greece would not leave the Euro, and the next day he would be in Brussels to sign an agreement; and Varoufakis resigns.
What about Greece’s debt? It will be discussed, analysed, renegotiated, extended, and as soon at it will be out of the limelight, quietly forgotten.
The first issue is the Greek debt: this is probably the least problematic, as it is increasingly clear it will never be repaid. It is only a question of principle, though nobody wants to admit it.
The second issue is the Greek deficit: even if, by magic or Putin’s wand, the debt were to be instantaneously repaid, tomorrow Greece would be in debt again, as it is spending much more than it is earning.
The third issue is the fact that the EU/IMF/ECB tried to address the deficit issue by forcing on Greece an austerity policy which has gutted Greece’s economy.
The fourth is a political problem: both sides have taken an extreme stance, drawn a line in the sand, and issued an ultimatum; neither wants to be perceived as the first to step back and admit its errors.
However this brings us directly to the solution which looks like being played out: Tsipras calls a referendum, on a European proposal which has already been withdrawn, and wins it. Juncker issues a new proposal, which, guess what, implements almost only those measures which would correct the excess spending without depressing the economy. Tsipras states that even if he were to win, Greece would not leave the Euro, and the next day he would be in Brussels to sign an agreement; and Varoufakis resigns.
What about Greece’s debt? It will be discussed, analysed, renegotiated, extended, and as soon at it will be out of the limelight, quietly forgotten.
1
Either we believe in Democracy, or we don't. Greece's voters have spoken, let them leave the Euro and bring back the Drachma.
20
The vote was not about leaving the Euro, it was about not to give in to further punishing austerity measures by the Troika- of which the cheer leader was Angela Merkel -, measures that harmed the middle class and those below the most.
The problem with introducing the drachma will create quite a few more problems until they can really devalue that new (old) currency to be competitive again.
The problem with introducing the drachma will create quite a few more problems until they can really devalue that new (old) currency to be competitive again.
4
Yes but the no side they would not leave the euro so they did not actually vote for this. This might have been wishful thinking or ignorance.
Frankly the best solution for Greece and all of Europe would be for Merkel to resign and take all of the austerity hawks into well deserved oblivion with her. Her insistence that German bankers be paid with funds destined for the relief of the Greek people is unconscionable, especially in light of the fact that Germany was forgiven it's debt after it's wars of aggression in the 20th century.
No one should be surprised by Germany's behavior here. The Eurozone has given them what they always craved, total dominance of Europe. And like their military aggression of the past, their economic aggression will result ultimately in the destruction of what they wish to dominate.
No one should be surprised by Germany's behavior here. The Eurozone has given them what they always craved, total dominance of Europe. And like their military aggression of the past, their economic aggression will result ultimately in the destruction of what they wish to dominate.
71
As an American citizen and a native of Germany I would like to recommend your comment numerous times because it is spot on.
6
Since Germany has the best economy in Europe and German citizens are the ones paying money to Greek citizens I think you have it backwards. Why should they work to pay for someone who won't work? Who does not pay their taXes, who retires early or gets a false disability claim? The Germans have it right, not the Greeks. If destruction does occur it will be because of the freeloaders who want the money but don't want to work for it.
5
So Germany (and by extension the Eurozone) is guilty of "economic aggression"
Seriously, what would you have them do?
Because they loaned money to Greece for a time, they will never be allowed to stop?
Is your credit card company obligated to extend more and more credit to you when you refuse to make your minimum payments?
I find the notion repeated here again and again that somehow Greece has a right to perpetual support from the rest of the Eurozone bizarre.
Seriously, what would you have them do?
Because they loaned money to Greece for a time, they will never be allowed to stop?
Is your credit card company obligated to extend more and more credit to you when you refuse to make your minimum payments?
I find the notion repeated here again and again that somehow Greece has a right to perpetual support from the rest of the Eurozone bizarre.
3
So Mr. Hardouvelis you were working for the oppositions objectives. I get it !
Using words like "disobey / small steps / behaved / debt issue can wait - is indicative of why there was a NO vote yesterday. "You" were part of the problem by not acknowledging the debt was largely private debt dumped on the people or public debt that was incurred by compromised politicians and all of which is odious debt that should be eliminated so Greece can be set on the right foot for recovery.
The Icelandic People should be grateful you were not working for them.
Using words like "disobey / small steps / behaved / debt issue can wait - is indicative of why there was a NO vote yesterday. "You" were part of the problem by not acknowledging the debt was largely private debt dumped on the people or public debt that was incurred by compromised politicians and all of which is odious debt that should be eliminated so Greece can be set on the right foot for recovery.
The Icelandic People should be grateful you were not working for them.
77
There are two different points of view. 1) The crisis, and therefore the economic problems of the greeks, spaniards and other europeans, is an ''act of god'', and one must comply with some rules to survive the storm. 2) The crisis is an act of man, that is, a robbery of the poor by the rich, and therefore the poor must redress the insult and recover their money. Hardouvelis supports the first and Tsipras the second point of view. It is difficult to accept the crisis as an ''act of god'', like a storm, because the economy is not a natural phenomenon but a system of money fluxes controlled buy men. In Spain, the ''crisis'' as resulted in 40% more millionaires as before 2007. So the crisis looks much more a transfer of money from some pockets to others, that is, an inverse Robin Hood robbery. Terefore Tsipras and a good part of greek society are prepared to suffer fight and chaos in order to redress the crime, while the robbers will try everything to keep the money in their pockets. Included in ''everything'' is the misinformation as one of the best weapons.
52
"...the economy is not a natural phenomena but a system of money fluxes controlled by men."
But the economy connects not only people to other people, but it connects the appetites of humanity to the natural non-human world, such as apples, wheat, iron, mountains, seas, fish, oil. The market price is like language, built by individual choices, but in result never really controlled by an individual or organization, despite many attempts and temporary exceptions. Your vague "money fluxes" may refer to changes in market price. Such changes translates the complex intersections of different economic phenomena, fickle weather effects, surprising technological innovation, human fashion, etc., etc., etc., into quantified market supply and demand, which freely change, fluctuate all the time.
Surely, financial systems seek to tame the market but, based on historical record, without long term success. This whole complexity, of course, is why Marx and Lenin, who thought it so simple, were so incompetent in economic analysis. Witness the Soviet Union's consumer goods, and China's total abandonment of them, except as regards monopolizing political power. That is, socialism may impose a legal price, but the market price it cannot.
So, au contraire, the economy is a natural phenomena which people and institutions never fully control, with few exceptions. Hardouvelis?
But the economy connects not only people to other people, but it connects the appetites of humanity to the natural non-human world, such as apples, wheat, iron, mountains, seas, fish, oil. The market price is like language, built by individual choices, but in result never really controlled by an individual or organization, despite many attempts and temporary exceptions. Your vague "money fluxes" may refer to changes in market price. Such changes translates the complex intersections of different economic phenomena, fickle weather effects, surprising technological innovation, human fashion, etc., etc., etc., into quantified market supply and demand, which freely change, fluctuate all the time.
Surely, financial systems seek to tame the market but, based on historical record, without long term success. This whole complexity, of course, is why Marx and Lenin, who thought it so simple, were so incompetent in economic analysis. Witness the Soviet Union's consumer goods, and China's total abandonment of them, except as regards monopolizing political power. That is, socialism may impose a legal price, but the market price it cannot.
So, au contraire, the economy is a natural phenomena which people and institutions never fully control, with few exceptions. Hardouvelis?
The writer, Mr. Hardouvelis was part of the governance of Greece that bankrupted the country and created this crisis. Therefore you'd expect he might show a little humility here. But no, like Greek and Euro establishments he treats the problem like it existed since Syriza took power. If that were the case the Greek people would not have supported the Syriza position in every electoral district in the country on Sunday.
40
The Greek people have supported the Syriza position because he is telling them they can have something for nothing.
1
You naïvely overestimate the good faith of electorates. The simple fact is that the Greek populace has to take its share of the blame for the election of successive lying and thieving governments. There is no reason why Western European or Mitteleuroper taxpayers should be made to foot the bill, and we all know perfectly well that it WILL be the taxpayers, and not the banks, who foot it.
The most important line in this articel is:
"The lenders could have instead distributed their money gradually in response to the fulfillment of a set of milestones that stretched beyond the elections and thus met all the I.M.F. benchmarks."
What makes the author of this article even imagine, never mind serious contemplate, that the current Greek Prime Minister and Govt would ever fulfill any set of milestones? How conceivably can any serious person say this considering the actions of the current govt?
"The lenders could have instead distributed their money gradually in response to the fulfillment of a set of milestones that stretched beyond the elections and thus met all the I.M.F. benchmarks."
What makes the author of this article even imagine, never mind serious contemplate, that the current Greek Prime Minister and Govt would ever fulfill any set of milestones? How conceivably can any serious person say this considering the actions of the current govt?
7
This just may be the most sensible, piece I've read yet in the media. No hyperbole. No chest thumping. No politicians (or public) in a snit. Just rational, solution oriented writing that gives us a solid context to ponder.
9
This column was written by one of the culprits who created this nightmare, austerity, economic collapse, and unpayable debt terms.
He writes about how everyone else is wrong.
He insists they should have done more of what he did. Hint: that is why Greeks threw out his government.
He writes about how everyone else is wrong.
He insists they should have done more of what he did. Hint: that is why Greeks threw out his government.
79
The Greeks want money for nothing.
1
What grandiosity. The article describes well how European politics works, but you are not interested. Brussels has given us strong consumer rights and excellent ecological legislation. The step-by-step approach could have been successful in the Greek crisis, had earlier governments implemented all those reforms.
3
It's time for Greece to "pay the piper".
11
The Greeks have no to the terms of the bailout. I think that is the answer. No more money.
The Greek government saw this coming and decided it could bully its way out of it. Enough. They should have stopped corproate and billionaire tax evasion and avoidance (note: to US Congress its time you did too.) it now wants other members of the EU to pick up the slack. Many of those members have had to tighten their belts and ride out a storm to right their economic ship. Why should they allow Greece to skate.
The humans living in Greece have been betrayed by their leaders. They should hold them accountable and while they are at it someone should go after Goldman Sachs...they help engineer this disaster.
The Greek government saw this coming and decided it could bully its way out of it. Enough. They should have stopped corproate and billionaire tax evasion and avoidance (note: to US Congress its time you did too.) it now wants other members of the EU to pick up the slack. Many of those members have had to tighten their belts and ride out a storm to right their economic ship. Why should they allow Greece to skate.
The humans living in Greece have been betrayed by their leaders. They should hold them accountable and while they are at it someone should go after Goldman Sachs...they help engineer this disaster.
9
Post-referendum both sides should avoid their respective extreme positions that brought things to this pass and come back to negotiate a way out of the crisis to save Greece as also the eurozone.
3
This reads like an ex-post rationalisation of the appeasement of the former government. In truth they presided over the decimation of the Greek economy over an extended period. The nuances of the final few months of their government are hardly the point.
75
Living on other's money, not collecting taxes, retire full salary at 55. What's not to like? Well, the piper must be paid. Greeks voted the "finger" to the EU. Angela will determine the course. It will be bad times, but well-deserved for the Greek people. As for the people who loaned Greece money they knew would not be repaid - they should be fired or perhaps investigated for criminal activity.
8
@ wing-ding
Your comment shows that you have not paid attention to what happened in Greece, and just love the right-wing constant attacks on so-called moochers.
The retirement age in Greece was raised to 66 years for men in 20014 already and to 67 years of age in 2015 by the new government. For women it starts lower - as in almost all advanced nation - , and they can retire between the age 60 and 67.
In addition, saying they retire 'at full salary' is another little imagination of yours and not a fact.
Your comment shows that you have not paid attention to what happened in Greece, and just love the right-wing constant attacks on so-called moochers.
The retirement age in Greece was raised to 66 years for men in 20014 already and to 67 years of age in 2015 by the new government. For women it starts lower - as in almost all advanced nation - , and they can retire between the age 60 and 67.
In addition, saying they retire 'at full salary' is another little imagination of yours and not a fact.
11
Women cannot retire on a pension at a younger age in the US. Where is your proof that women can retire at a younger age in other developed countries?
2
Greeks are now demonstrating to the world their determination to continue living freely off-of other people's money. Many Americans believe similarly that their college educations, college loans and health care costs should be paid-for by other people. It is truly inspiring to see two old democracies united like this. Long may they both continue to freeload.
5
Pretty funny. Just exactly the words and feelings I'd expect from a resident of Texas. When one considers all the corruption from Texas oil men to Texas farm scams, I don't think you should be holding up Texas as an example we all want to follow.
3
I agree. I feel like we were chumps for saving and sacrificing to pay for our kids to go to college, after spending years paying off our own college loans. Now everyone wants the loans to be 'forgiven'. Great, so while we lived below our means and keep cars for 10 years and you were living in the Mcmansion with the new eXpensive cars and gadgets we're the ones who are punished. Well, my kids are certainly learning.
There are basic human needs in these times that include a college education and adequate health care. When the prices for these needs are set by the hordes of people working in administration, accounting, "strategic management", marketing and any other redundant intermediary position that sits between the producer and the consumer, the system breaks down. The personal labors of the average consumer are no longer enough to pay for education and healthcare; there are too many ambitiously superfluous middlemen and middlewomen taking their cut from the revenue stream, and the prices are beyond most people's means.
You can either:
1) Support all these tailgaters with government subsidies for tuition and healthcare.
2) Restrict education and healthcare services to those stalwart citizens who either had the competitive will to be born into a wealthy family, or the larcenous pluck to take out loans they'll never be able to pay back.
You can either:
1) Support all these tailgaters with government subsidies for tuition and healthcare.
2) Restrict education and healthcare services to those stalwart citizens who either had the competitive will to be born into a wealthy family, or the larcenous pluck to take out loans they'll never be able to pay back.
The Greek government has enforced a decision on the Euro's key problem: a common currency between countries with significantly different economic power can only survive with a significant cash transfer from the rich to the poor. Angela Merkel has to decide now between her German electorate or the monetary union of Northern and Mediterranian countries. The time to hide behind some non-democratic institutions is over.
45
Finally a totally rational assessment of the situation from the Greek perspective! What a tragedy that this opinion had not prevailed over the course of the last 6 months. Tsipras would do well reappointing Hardouvelis as finance minister. Greece would have a workable agreement in its hands in no time!
1
A consensus to restructure Greece’s debt would be difficult to achieve, but feasible; restructuring Greece’s political and economic culture is unimaginable.
6
Quite simply, Greece's creditors should have taken ' yes ' for an answer to creditor payment terms, instead of insisting that Greece re-structure its economy to strangle pensioners while not raising taxes on the wealthy, as detailed in James Galbraith's piece:
http://prospect.org/article/greece-only-no-can-save-euro
Combined with the suppressed IMF data that was finally made public Friday, regarding the unsustainability of austerity:
http://www.newyorker.com/news/john-cassidy/greeces-debt-burden-the-truth...
northern YURP's meme of " the beatings will continue until morale improves ",
is what is bankrupt, all the more so considering Greece's leniency with Germany's debt following WWII.
And historically, Germany has gone bankrupt 1 more time than Greece anyway:
http://www.huffingtonpost.com/2015/07/01/greece-germany-bankruptcy-_n_77...
so Germany should stop with the ' high and mighty ' posturings, and accept the ' yes ' answer Greece gave.
http://prospect.org/article/greece-only-no-can-save-euro
Combined with the suppressed IMF data that was finally made public Friday, regarding the unsustainability of austerity:
http://www.newyorker.com/news/john-cassidy/greeces-debt-burden-the-truth...
northern YURP's meme of " the beatings will continue until morale improves ",
is what is bankrupt, all the more so considering Greece's leniency with Germany's debt following WWII.
And historically, Germany has gone bankrupt 1 more time than Greece anyway:
http://www.huffingtonpost.com/2015/07/01/greece-germany-bankruptcy-_n_77...
so Germany should stop with the ' high and mighty ' posturings, and accept the ' yes ' answer Greece gave.
101
But what did Greece give a yes answer to? They left the negotiating table to call a referendum, in that order. Then, the offer was off the table while the referendum took place. In the ensuing week, so much damage was done to what remained of the country's remaining fiscal health, that any new offer on the table would necessarily be different.
Your comment, backed up by the grammatically-challenged HuffPo, strikes me as fairly elementary. Germany's "high and might attitude" is, in fact, much more differentiated and complex than you assume. There are strong elements in the Bundestag that are very open to re-opening a discussion on Greek war reparations. But not in conjunction with EU loans, which are decided on an 18 country basis and together with the three lending institutions. The two, as nice and simple as it sounds, cannot be conflated.
Germany is clear about never seeing a penny of what it has loaned. But Finland, Slovakia and many other countries are taking an even harder stance. Slovakian pensions are 1/3 of Greek pensions, so why should they subsidize them, when Greece makes no move to any cuts?? Please explain that, R. Law. Also, what has transpired is a permanent transfer union. So as seductive as the good Greek/bad German dichotomy is, it's simply a fairy tale.
Your comment, backed up by the grammatically-challenged HuffPo, strikes me as fairly elementary. Germany's "high and might attitude" is, in fact, much more differentiated and complex than you assume. There are strong elements in the Bundestag that are very open to re-opening a discussion on Greek war reparations. But not in conjunction with EU loans, which are decided on an 18 country basis and together with the three lending institutions. The two, as nice and simple as it sounds, cannot be conflated.
Germany is clear about never seeing a penny of what it has loaned. But Finland, Slovakia and many other countries are taking an even harder stance. Slovakian pensions are 1/3 of Greek pensions, so why should they subsidize them, when Greece makes no move to any cuts?? Please explain that, R. Law. Also, what has transpired is a permanent transfer union. So as seductive as the good Greek/bad German dichotomy is, it's simply a fairy tale.
34
West Germany, saved from bankruptcy by the Marshall Plan, was not willing to pay full war reparations to Greece, arguing that 'all' of Germany was responsible for those debt, but that the East German Government was not willing to pay its dues.
25 years have passed since reunification, and the a united Federal Republic of Germany still has not even come close to repaying for the damage done to Greece, a country that was forced to finance the occupying German and Italian armies.
And no, as a native of Germany, and quite well read on what is going on in the Bundestag, there are no 'strong elements' in that governing body seriously discussing war reparations to Greece.
25 years have passed since reunification, and the a united Federal Republic of Germany still has not even come close to repaying for the damage done to Greece, a country that was forced to finance the occupying German and Italian armies.
And no, as a native of Germany, and quite well read on what is going on in the Bundestag, there are no 'strong elements' in that governing body seriously discussing war reparations to Greece.
2
The average Greek pension is not only higher than in many European countries, it is higher than the average Social Security benefit in the US and, until recently, started at age 53 for many people, with 50% benefits paid at age 40 for many women.
3
TAKE THE HIGH ROAD Both Greek and EU officials must back away from jumping over the cliff into the abyss and the resultant pandemonium. It serves no one well that either side in the current war of words attempt to savage the other at the cost of causing the collapse of the EU and the euro. The result of such a calamity would be be to bring down the global economy, plunging it into the Great Depression 3.0 (since the Great Recession is, by the numbers the Great Depression 2.0, named differently for PR purposes, in my opinion). I believe that there would be little sympathy here in the US for the bad actors who could easily reek havoc on the EU and the euro, thereby causing our own economy to take a fierce and smashing nosedive. And for what? In the Greek tragedy being played out, we are now seeing the true consequences of Milton Friedman's misnamed "free market." As to Friedman, it's been said that his greatest tragedy is that his theories have been put into practice. The current Greek Tragedy is clear evidence of the accuracy of that claim. Let that serve as a warning to all who have been led to worship at the alter of the "free market." No Free Lunch = No Free Market!
7
Really helpful in understanding the situation. He's a European who understand the situation. The Times should get him to continue commenting on the situation. Much as I love Paul Krugman on US economy, he has been a real disappointment on Greece. Too many Americans seem to bear anti-European grudges!
31
Prof. Krugman not only understands the US economy, he understands the world economy quite well.
He always argued that the introduction of a common currency - the euro - for a large number of diverse countries without a common political union - was a mistake.
He argued as well that punishing austerity measures would always hurt those that they are imposed on, and make the situation even worse.
He always argued that the introduction of a common currency - the euro - for a large number of diverse countries without a common political union - was a mistake.
He argued as well that punishing austerity measures would always hurt those that they are imposed on, and make the situation even worse.
68
And what is anti-European about supporting Greece? Last I checked, it was part of Europe -- almost the founding member of the club. Indeed, the world owes Greece a debt that can never be erased, a debt by comparison to which its current indebtedness is trivial.
14
Paul Krugman does not bear a grudge here, he is one of the few rational commentators on this issue. The fact is Europe has developed some quite alarming anti-democratic tendencies led by a truculent Germany who seems intent on punishing Greece until they comply with Germany's requirements in both the short and long term. The virtual annihilation of the Greek economy in the name of austerity and the euphemistically labelled 'adjustment' programmes has been nothing short of scandalous. It would never happen in the US where richer states cannot economically bully weaker ones.
14