Perhaps Germany should purchase Greece, assume the outstanding debt, indenture the Greek politicians. The newly indentured political class could then work to pay the assumed debt. After a few generations time, the debt (might) be repaid. Greece could be provided the opportunity to regain their sovereignty after the note is satisfied in full.
Schauble is being set up in this as a scapegoat - not surprising but still disappointing. The Eurozone is designed to NOT be a transfer union - ie. no debt forgiveness within the system. This is not comparable to temporary situations of being beyond the deficit limit or the inflation limits - it is a direct revocation of the basis of the treaty. Schauble agrees with everyone else that debt relief is needed, and therefor is willing to say what needs to be done - arrange a temporary exit from the Eurozone. If Greece still wants the benefits of a stable currency after they get themselves back in order, they can reapply. (This time with honest numbers of course.) I don't think an anti-democratic, underhanded rewrite of the treaty without any consent from the countries involved is an appropriate solution.
6
Greece has humiliated itself - no outside help needed. Though, it would not be this bad if the private banks had taken a haircut in their large profits from loaning to Greece. They are the entities we should demonize as heartless- but since we revere banks over people, we hold them unaccountable. We don't even utter their names to shame them.
I should assume that Schäuble knows his German history. During the Weimar Republic, the extreme austerity policy, instituted after the great depression by Chancellor Brüning led to mass unemployment and is seen as a major cause for the rise of Hitler's National Socialist Party.
Schäuble may be fiscally correct but he cannot ignore socio-political long-term consequences.
There are plently in the government and in the opposition who disagree with him. Time to convince Chancellor Merkel to put pressure on Schäuble to take a long-term view or step down.
Schäuble may be fiscally correct but he cannot ignore socio-political long-term consequences.
There are plently in the government and in the opposition who disagree with him. Time to convince Chancellor Merkel to put pressure on Schäuble to take a long-term view or step down.
5
Two thoughts
1) Seems it only takes a generation or two for Germany to forget that absent external aid, they would not have the dominant economy they have today.
2) Germany's DNA seems to include a component that makes them think that they are running all of Europe (or would like to).
They have no more right to exert undue influence in their neighbors governments than the US has to interfere world wide. If the Germans want to be involved in other countries, they need to recognize their responsibility of not only holding them accountable but also providing needed support. The whole thing is starting to have echoes of superior and inferior counties. Where have we seen this in the last 100 years of European history.
1) Seems it only takes a generation or two for Germany to forget that absent external aid, they would not have the dominant economy they have today.
2) Germany's DNA seems to include a component that makes them think that they are running all of Europe (or would like to).
They have no more right to exert undue influence in their neighbors governments than the US has to interfere world wide. If the Germans want to be involved in other countries, they need to recognize their responsibility of not only holding them accountable but also providing needed support. The whole thing is starting to have echoes of superior and inferior counties. Where have we seen this in the last 100 years of European history.
4
One can only hope that Greece is now seriously preparing to transition to a monetary sovereign. Having a German dictate their future is a very bad idea. I should think obviously a very bad idea.
3
Let me see if II have this right: Central banks offer Greece a debt bailout, rejected by public plebiscite, offer a second deal essentially the same as the first, and is accepted by the government of Greece. Now Germany is suggesting Greece leave the Eurozone, probably something that wasn’t on the table for either deal in serious form. Which part defines a bait and switch?
2
Germany is owed a major portion of some $390 billion bailouts for Greece in the last five years, and most people rich and poor pay their fair share of taxes as compared to the crooked timber of humanity in Greece. Hence in this day and age it is entitled to demand Greece own up to its obligations.
9
Apparently 60 years is about how long it takes in Germany to entirely forget the past and revert to type.
4
The irony is that after causing WWII, Germany's debt was forgiven. According to economist Michael Hudson, the most successful debt jubilee in recent times was gifted to Germany, the country now most opposed to doing the same for Greece. The German Economic Miracle followed massive debt forgiveness by the Allies:
All domestic German debts were annulled, except employer wage debts to their labor force, and basic working balances. Later, in 1953, its international debts were written down.
http://ellenbrown.com/2015/07/14/grexit-or-jubilee-how-greek-debt-could-...
All domestic German debts were annulled, except employer wage debts to their labor force, and basic working balances. Later, in 1953, its international debts were written down.
http://ellenbrown.com/2015/07/14/grexit-or-jubilee-how-greek-debt-could-...
5
Greece already received a larger debt reduction than the Germans. Even 60 years ago the Germans paid taxes... Greece still does not pay taxes.
5
They paid some reparations. Is that not a fact?
2
Mr Krugman, as much as I agree with him in other areas is wrong on this one. Greece cannot simply exit the euro and go back to drachmans. Varoufakis explained the reasons quite well and he is right (lol at trying to negotiate afterwards). The problem with greece is not really the massive debt. Yes it is a problem but look at Japan. The main issue is investor confidence. No one wants to invest in greece and that will not change no matter what greece does after leaving the Euro.
Greece can exist outside the euro only by going to say china and say come build factories and we will pass any law you want, give you the best tax rate you can get anywhere and if anyone strikes we will hang them in syntagma square. A shewed negotiator might have pulled something off. The political environment outside greece would vehemently oppose this though so it would take an extremely skill negotiator. Syriza would fail 100%.
For all their political incompetence however Syriza and varoufakis are mostly right on the economics. Greece can turn itself around within the EZ:
1) Relax austerity immediately. 2) Prolong maturities once more to create a debt holiday for greece 3) Incentivize EU investment in greece (this may require relaxing temporarily certain EU regulations). 4) Make statement that the EZ stands behind Greece 100%.
The new deal does pretty much the opposite. The only way it will work is if EU through ELSTAT cooks the books again to pretend that as if by miracle austerity worked.
Greece can exist outside the euro only by going to say china and say come build factories and we will pass any law you want, give you the best tax rate you can get anywhere and if anyone strikes we will hang them in syntagma square. A shewed negotiator might have pulled something off. The political environment outside greece would vehemently oppose this though so it would take an extremely skill negotiator. Syriza would fail 100%.
For all their political incompetence however Syriza and varoufakis are mostly right on the economics. Greece can turn itself around within the EZ:
1) Relax austerity immediately. 2) Prolong maturities once more to create a debt holiday for greece 3) Incentivize EU investment in greece (this may require relaxing temporarily certain EU regulations). 4) Make statement that the EZ stands behind Greece 100%.
The new deal does pretty much the opposite. The only way it will work is if EU through ELSTAT cooks the books again to pretend that as if by miracle austerity worked.
6
As Ashoka Mody wrote in Bloomberg View today, perhaps Germany should be the first to leave the euro, not Greece.
The latest round of wrangling between Greece and its creditors has demonstrated yet again that nations with such disparate economies should never have entered a currency union. It would be better for all involved, though, if Germany instead of Greece were the first to exit.
After months of grueling negotiations, recriminations and reversals, it's hard to see any winners. The deal Greece reached with its creditors -- if it lasts -- pursues the same economic strategy that has failed repeatedly to heal the country. Greeks will get more of the brutal belt-tightening that they voted against. The creditors will probably see even less of their money than they would with a package of reduced austerity and immediate debt relief.
If, however, Germany left the euro area, there really would be no losers.
A German return to the deutsche mark would cause the value of the euro to fall immediately, giving countries in Europe's periphery - like Greece, Italy and Portugal - a much-needed boost in competitiveness. A weaker euro would give them a chance to jump-start growth.
By playing the role of bully with a moral veneer, Germany is doing the region a disservice. Rather than building "an ever closer union" in Europe, Germany is endangering its delicate fabric. To stay close, Europe's nations may need to loosen the ties that bind them so tightly.
The latest round of wrangling between Greece and its creditors has demonstrated yet again that nations with such disparate economies should never have entered a currency union. It would be better for all involved, though, if Germany instead of Greece were the first to exit.
After months of grueling negotiations, recriminations and reversals, it's hard to see any winners. The deal Greece reached with its creditors -- if it lasts -- pursues the same economic strategy that has failed repeatedly to heal the country. Greeks will get more of the brutal belt-tightening that they voted against. The creditors will probably see even less of their money than they would with a package of reduced austerity and immediate debt relief.
If, however, Germany left the euro area, there really would be no losers.
A German return to the deutsche mark would cause the value of the euro to fall immediately, giving countries in Europe's periphery - like Greece, Italy and Portugal - a much-needed boost in competitiveness. A weaker euro would give them a chance to jump-start growth.
By playing the role of bully with a moral veneer, Germany is doing the region a disservice. Rather than building "an ever closer union" in Europe, Germany is endangering its delicate fabric. To stay close, Europe's nations may need to loosen the ties that bind them so tightly.
7
I thought that we had gotten past the German bashing after the media finally started reporting the truth, that German was far from the most antagonistic to a Greek deal. But you can't get the same headlines using Latvia, Finland, Spain, Portugal and more. The Greeks are being put under a form of "supervision', and they should be as they have proven untrustworthy in the past. That is why the Europeans demanded that Greece past the reforms before getting the money this time. As I have said before, remember how we got here. The Greek government lied to its European partners and the Greek people somehow believe they do not have to pay taxes. Unless both end then Greece will be right back here in a few years and then they will be kicked out of the Euro.
11
Mr Schauble and the President of the Eurogroup can be well correct however for them it is not right to be doing deals with the Greeks it they are not committed to this cause your shoedule conflict with the mission of the Eurozone They blame the Greeks for not change their ways but they are stuck in a world of obsolete watering and flawed
It will be interesting to see whether the IMF offers to cancel some of Greece's debt to it in order to fulfill the debt cut proposed by that organization.
What the NYT and other newspapers hardly ever write about is how Greece got itself into these problems. The facts are in small part that their businesses do not keep records and do not provide receipts for purposes of enabling the government to collect any kind of sales taxes and income tax collection barely exists. Being able to retire at age 50 with the same salary earned while working? Why should other Europeans pay for these kinds of rip offs. Come on NYT tell the world how Greece got to have so much debt.
What the NYT and other newspapers hardly ever write about is how Greece got itself into these problems. The facts are in small part that their businesses do not keep records and do not provide receipts for purposes of enabling the government to collect any kind of sales taxes and income tax collection barely exists. Being able to retire at age 50 with the same salary earned while working? Why should other Europeans pay for these kinds of rip offs. Come on NYT tell the world how Greece got to have so much debt.
4
Germany and the Eurozone moralize to Greece about paying 100% of its debt back to banks. But where is German & European moral outrage at banks, that gave Greece loans to get into and stay in the Eurozone, knowing the debt load was unsustainable? Neither Greece nor Germany are blameless, but will no one stand up to the banks? Of course, we couldn't stand up to banks in the US over their subprime folly either, when they made housing loans to people who could not afford such. Will no one stand up to the banks and ask for reasonable accountability of their actions? No one?
4
This is not a "Greek bailout." This is a "European government and bank bailout." The money goes into Greece, then goes right back to EU institutions to pay off debt. Then Greece is left with more loans to pay. Without the EU governments and banks accepting Greece debt reduction, this is not going to work. If it did not work twice in the last 5 years, why should it work now. A definition of insanity is doing the same thing over and over and expecting different results.
4
Last week I was looking for the scientific name of field marigold, one of the plants in my garden. I found it in one of my old Dutch plant books: Calendula officinalis. The book taught me something else. Calendula comes from the Latin calendae, in old Rome the day interest had to be paid. From this came the old Roman expression ad calendas graecas, “the Greek calenda”, another way of saying “never”. The Greeks were known to the Romans for never paying their bills. It struck a chord with me, just coming from Europe this summer. Many people there are mad for having to bail out Greece, because they can’t pay their bills! Nothing new under the sun!
Marigolds are known as calendar flowers: they bloom every day of the calendar (well, outside of Minnesota of course).
Bram Middeldorp
Marigolds are known as calendar flowers: they bloom every day of the calendar (well, outside of Minnesota of course).
Bram Middeldorp
10
The German proposal keep Greece in poverty. It shows Germany in a total negative light inflicting pain on the poorest people in the country. Germany should be ashamed of its actions. I feel German conduct has diminished in international eyes the person of Angela Merkel and Wolfgang Schauble. They both embarrassed themselves and brought shame on their country for the public examples of their greed and selfishness.
3
Greece brought poverty to themselves, not Germany...
9
The German people -Das Volk- and their political system have prevailed and prospered under unimaginable circumstances and hardships, including two devastating total wars in the 20th century.
To lead the European integration process in the 21st century is, perhaps, an even greater challenge. A German society organized on strict discipline, rule of law, hard work and analytical thinking dealing with partners with opposite cultures, values, thinking and vision about life.
The Greek debacle poses a fundamental question. Whether the European integration process will be shaped by Germany's principles or the other way around.
In other words, can Greeks, Portuguese, Spaniards, Italians and French start to behave more like Germans?
To lead the European integration process in the 21st century is, perhaps, an even greater challenge. A German society organized on strict discipline, rule of law, hard work and analytical thinking dealing with partners with opposite cultures, values, thinking and vision about life.
The Greek debacle poses a fundamental question. Whether the European integration process will be shaped by Germany's principles or the other way around.
In other words, can Greeks, Portuguese, Spaniards, Italians and French start to behave more like Germans?
7
All this German bashing...Greece is like the American homeowners who saw the value of their homes go up in the 90's and took out massive home equity loans to buy expensive cars (the Olympic Games) and spend more than they were making (not collecting taxes). When the housing bubble burst and home prices plunged, many of those homeowners suddenly found themselves underwater. But in their view it was all the fault of the banks, they made us take out those loans and spend that money!
I am NO friend of the banking sector. They are rotten to the core and are the key players to blame for the crash in 2008, but there was an equal amount of greed by some in the public who ran with the easy money without any thought of a rainy day. I see Greece in the same light.
Like in the movie Casablanca when the chief of police is "shocked" that gambling is going on at Rick's, Greece cannot play the victim here. This is the third or fourth recent financial crisis, yet Greece never seems to really believe the problem is with them. Finally there was some fiscal progress being made, but the socialist government was elected and reform went by the wayside.
Solutions- A safety net for the poor needs to exist. Taxes must be paid/collected. Reductions in some services. Debt interest rate reduction. Some debt forgiveness. A new government. No scapegoating Germany.
I am NO friend of the banking sector. They are rotten to the core and are the key players to blame for the crash in 2008, but there was an equal amount of greed by some in the public who ran with the easy money without any thought of a rainy day. I see Greece in the same light.
Like in the movie Casablanca when the chief of police is "shocked" that gambling is going on at Rick's, Greece cannot play the victim here. This is the third or fourth recent financial crisis, yet Greece never seems to really believe the problem is with them. Finally there was some fiscal progress being made, but the socialist government was elected and reform went by the wayside.
Solutions- A safety net for the poor needs to exist. Taxes must be paid/collected. Reductions in some services. Debt interest rate reduction. Some debt forgiveness. A new government. No scapegoating Germany.
5
Why does the NYTimes keep printing hate articles about Germany? No one in their right mind would loan more money to Greece. And all this austerity talk is nonsense too. It's not like Greece had a turn of bad luck and needs help. They've squandered their money and over promised government employees for decades!
6
Because Germany led us in two world wars with millions of deaths and immense destruction, received debt forgiveness from the word in1953 and now is insisting on wrecking Greece, which by the way did not start wars, with austerity measures that doubles its debt and ruined the economy. It has not worked then and will not work now because most of the bailout money went straight back to the banks.
4
Why keep moralizing over Greek actions? Better to moralize over corrupt, unsustainable banking practices - the banks know these loans are FAR above and beyond the ability of Greece to pay. Why keep loaning money over and over again to a country clearly unable to repay? The banks, ie German banks & Goldman Sachs, are vultures, opportunistically waiting to seize Ancient Greek properties as their own. Hold the banks accountable. Why give them a free pass?
1
Although I tend to share Schäuble's perspective on Greece, I don't think a temporary Grexit is the right measure. The pressure would be lifted to actually change the way the country is run. Quite indisputably, it has been run badly by incompetent and/or corrupt administrations through an equally incompetent and/or corrupt bureaucracy, and there hasn't been any sign to alleviate the situation. Anyone care to explain why an allegedly socialist party in power is unable to adequately and consequently tax wealthy Greeks?
If, in the end, a reformed Greece remains in the Euro zone and in an intact European Union due to in no small parts German efforts, I can live with Germany's role as the scapegoat. Decision makers polarize. The US should know that.
If, in the end, a reformed Greece remains in the Euro zone and in an intact European Union due to in no small parts German efforts, I can live with Germany's role as the scapegoat. Decision makers polarize. The US should know that.
3
The IMF also has a history of granting loans to countries (although not EU countries) that have a very low ability, and therefore likelihood, of repayment. This situation inevitably results in the imposition of draconian measures for repayment resulting in an effectively indentured country. This will not end well for any country so affected. I find it particularly worrisome that, this time, it has been practiced on an EU country.
1
The Germans have been reduced to a caricature of themselves in this Greek debacle.
If they had any sense of the larger vision at stake they might consider how the Americans have behaved toward them in the past. Billions in direct foreign aid with no thought of repayment. A multitude of advisors and experts to assist in reorganizing things. Support for private companies to establish economically viable enterprises. In the long run, the foreign aid came back with interest in the form of a profitable trading partner.
But what do the Germans do instead? Vent their anger that Greeks are not more like Germans.
If they had any sense of the larger vision at stake they might consider how the Americans have behaved toward them in the past. Billions in direct foreign aid with no thought of repayment. A multitude of advisors and experts to assist in reorganizing things. Support for private companies to establish economically viable enterprises. In the long run, the foreign aid came back with interest in the form of a profitable trading partner.
But what do the Germans do instead? Vent their anger that Greeks are not more like Germans.
6
It's nonsense to heap all the blame on Germany.
What else was supposed to happen ? Perpetually fund free spending Greece ?
The Greeks could have walked away at any time, they asked for the money every time.
What else was supposed to happen ? Perpetually fund free spending Greece ?
The Greeks could have walked away at any time, they asked for the money every time.
5
The German position on punishing Greece instead of helping is politically enabled by Germany having much more economic power than the rest of the EU countries.
One solution would be for the rest of the EU ti withdraw from the EU and set up their own union. Then they could work together until they had more parity with Germany. Then they could decide whether to enter negotiations about rejoining Germany.
After WWII, Germany was the only European country to receive sizable help in dealing with the wartime devastation. I wonder how much of the economic advantage Germany now has was due to that leg up. And I wonder how much of Germany's reticence to actually help other countries is based on a desire to hold on to their current advantage. Any studies of these questions would make interesting reading.
One solution would be for the rest of the EU ti withdraw from the EU and set up their own union. Then they could work together until they had more parity with Germany. Then they could decide whether to enter negotiations about rejoining Germany.
After WWII, Germany was the only European country to receive sizable help in dealing with the wartime devastation. I wonder how much of the economic advantage Germany now has was due to that leg up. And I wonder how much of Germany's reticence to actually help other countries is based on a desire to hold on to their current advantage. Any studies of these questions would make interesting reading.
4
Grrmany is to be commended for their discipline. All roads lead to more debt forgiveness with no prospect of Greek reform. They simply are being realistic.
6
My suggestions:
Reduce the interest rate for the past loans
Reduce the Greek government pensions by 5%
Increase hotel and other tourist tax rates by a similar amount
Reduce Government jobs by 10% by attrition
Create more jobs for tax auditors and improve collections
Increase tax compliance by 200%
If the Greeks show fiscal responsibility going forward the lending agencies can start considering writing off part of the older debt.
In ten years I would want a free holiday in Greece in appreciation of my suggestions.
Reduce the interest rate for the past loans
Reduce the Greek government pensions by 5%
Increase hotel and other tourist tax rates by a similar amount
Reduce Government jobs by 10% by attrition
Create more jobs for tax auditors and improve collections
Increase tax compliance by 200%
If the Greeks show fiscal responsibility going forward the lending agencies can start considering writing off part of the older debt.
In ten years I would want a free holiday in Greece in appreciation of my suggestions.
2
"Supporters point to Ireland, Portugal and Spain as nations that have bounced back to varying degrees after austerity programs; critics point to Greece, which has remained economically troubled."
This is part of the demagoguery spewed ad nauseum regarding austerity and "profligate" Greece.
Portugal's austerity was 1/4 the level imposed on Greece. Ireland's was less than that. The austerity policies about to pound Greece now are even deeper cuts to an already battered economy.
It is mind boggling that journalists can't square this simple fact: Greece's austerity was the most shocking disruption of a country in peace, in the history of modern economics. That is why Greece suffers more deeply than the others: the poison was far far more potent.
If Schauble doesn't recognize this, he is incompetent. But I don't think that's the case. I believe he is punitive, and enjoys twisting the knife.
This is part of the demagoguery spewed ad nauseum regarding austerity and "profligate" Greece.
Portugal's austerity was 1/4 the level imposed on Greece. Ireland's was less than that. The austerity policies about to pound Greece now are even deeper cuts to an already battered economy.
It is mind boggling that journalists can't square this simple fact: Greece's austerity was the most shocking disruption of a country in peace, in the history of modern economics. That is why Greece suffers more deeply than the others: the poison was far far more potent.
If Schauble doesn't recognize this, he is incompetent. But I don't think that's the case. I believe he is punitive, and enjoys twisting the knife.
5
" . . . the path to sustained economic recovery for financially troubled countries is to slash spending, raise taxes when necessary and win back the trust of bond markets and other investors by displaying commitment to fiscal prudence . . . "
Conservatives/Republicans: Take note. "raise taxes, when necessary". You only got the formula half-correct (slash spending). Look at the top tax rates after the Market Crash of 1929 - and throughout the Post-Great Depression and Post-WWII period. The Top 1% (these were the ultra-rich, at the time - in this era, it would be the top 1/10th of 1%) tax rates soared from around 20% to almost 90%. It wasn't until 1963 that those rates fell back to approximately 70% (with adjustments down to 50%, in certain circumstances).
Growth and employment throughout the post-war era (1945-63) was steady and relatively continuous. Yes, there were some recessions. That is the inevitable consequence of economic cycles. However, there were NO market crashes or severely disruptive economic busts. Period! Moreover, for the first time in modern economic history a burgeoning middle class emerged.
Since tax rates for the rich have been cut in 1981 we have had three very severe market crashes (1987, 2000, 2008). Count them and weep. You all are entitled to your own opinions, but you are not entitled to your own set of facts. Nor can you cannot rationalize away the evidence. You know not that of which you speak.
So act accordingly.
Conservatives/Republicans: Take note. "raise taxes, when necessary". You only got the formula half-correct (slash spending). Look at the top tax rates after the Market Crash of 1929 - and throughout the Post-Great Depression and Post-WWII period. The Top 1% (these were the ultra-rich, at the time - in this era, it would be the top 1/10th of 1%) tax rates soared from around 20% to almost 90%. It wasn't until 1963 that those rates fell back to approximately 70% (with adjustments down to 50%, in certain circumstances).
Growth and employment throughout the post-war era (1945-63) was steady and relatively continuous. Yes, there were some recessions. That is the inevitable consequence of economic cycles. However, there were NO market crashes or severely disruptive economic busts. Period! Moreover, for the first time in modern economic history a burgeoning middle class emerged.
Since tax rates for the rich have been cut in 1981 we have had three very severe market crashes (1987, 2000, 2008). Count them and weep. You all are entitled to your own opinions, but you are not entitled to your own set of facts. Nor can you cannot rationalize away the evidence. You know not that of which you speak.
So act accordingly.
3
Why is it not the Greeks who are "selfish"? Are not they the ones who are taking money from the taxpayers of other countries? Greece has accepted state corruption for years. Why should the Germans or the French or the Dutch continue to pay for this? They should be cut loose until they get their act together.
7
It is time that Greece tackle its problems alone. The Greek citizens have been bailed out time and time again with the same results: Greece continues to amass debt when it has the ability to manage its own finances, bite the bullet, so to speak, and bail itself out of its spendthrift ways once and for all. Unless the people of Greece find the will to cut back on pensions and wages and spending, the financial problems of Greece will continue to spiral out of control. This is a problem for Greece and Greece alone to confront.
11
Anybody here believe that Greece shamed itself by borrowing money and not being able to pay it back?
The world is upside down. The Germans are being "harsh" because they expect the Greeks to keep their side of the bargain? Yikes
The world is upside down. The Germans are being "harsh" because they expect the Greeks to keep their side of the bargain? Yikes
6
Now everyone is starting to rush and join a chorus to forget the debt. But what is the rush? Unsustainable debts is not a short term issue and the repayments are required only after many years.
Let Greeks "earn" the debt forgiveness? There are massive issues to solve. Corruption is rampant. People don't want to pay the taxes (i.e. do their duty). There is not sufficient progress In the past years to tackle the problems. Without fixing these issues, it is sure to throw money in a black hole. Soon we will be back and talk about the 4th bailout.
Fixing these issues is difficult. It will require significant political will and social changes. Political will comes from the people. So instead of demonstrating against the creditors, the Greeks need to start organizing against corruption, put pressure on the government to do the right things that are in the interest of common people. They need to start paying their taxes ...
All of this requires sacrifices. But the nation building always does. There are no short cuts. Once they demonstrate their willingness to address the issues, they will have "earned" the sympathy of others to help them. But right now it feels like the Greeks keep asking for more and more money so that it can be channelled to the crooks in their country.
Who wants to sign up for the 4th bailout?
Let Greeks "earn" the debt forgiveness? There are massive issues to solve. Corruption is rampant. People don't want to pay the taxes (i.e. do their duty). There is not sufficient progress In the past years to tackle the problems. Without fixing these issues, it is sure to throw money in a black hole. Soon we will be back and talk about the 4th bailout.
Fixing these issues is difficult. It will require significant political will and social changes. Political will comes from the people. So instead of demonstrating against the creditors, the Greeks need to start organizing against corruption, put pressure on the government to do the right things that are in the interest of common people. They need to start paying their taxes ...
All of this requires sacrifices. But the nation building always does. There are no short cuts. Once they demonstrate their willingness to address the issues, they will have "earned" the sympathy of others to help them. But right now it feels like the Greeks keep asking for more and more money so that it can be channelled to the crooks in their country.
Who wants to sign up for the 4th bailout?
5
This makes me think of the drunk uncle who keeps asking for money to support his family, with a promise to change his ways. You fund him the first time or two out of compassion for his family and a hope he is really going to change. When he makes no change but asks for more money you are faced with the choice of cutting him off with immediate pain for him and his innocent family that you will be blamed for, or continuing to throw good money after bad while the problem becomes worse.
As difficult as it will be to watch, it is time for everyone to quit kicking the can down the road and enabling a bad situation to become worse. Kick Greece out of the Euro, forcing them to take care of themselves, and if they get their act together maybe they can come to Thanksgiving dinner in a couple of years.
As difficult as it will be to watch, it is time for everyone to quit kicking the can down the road and enabling a bad situation to become worse. Kick Greece out of the Euro, forcing them to take care of themselves, and if they get their act together maybe they can come to Thanksgiving dinner in a couple of years.
4
German conservatives sound to close to historic views. It is the aura of better than others and total lack of empathy that send chills down my back.
4
Germany and the German people are beginning to feel the same resentment as the shrinking middle class in America, asked to pay all the bills for social program and in return, get preyed on by the pariahs and despised by the government elite.
3
For a group of sovereign nations, the European Union has done astonishingly well financially. In 2014, it outstripped the US in trade in goods and services. This success was not due to Germany's insistence on austerity, but to a keen eye for trade opportunities, long term global trade relationships, welcoming multinational corporations and use of a carrot, rather than a stick, philosophy to motivate member states.
Germany has never repaid one cent of its WWII war debt, and it is now in the number one financial position in the European Union.
Clearly, Germany has not shown interest in repaying its old debt, yet ironically, insists on inflicting further pain and suffering on a member state.
What some in the EU are forgetting is that it takes a lot of money to run a continent and support its people. If Germany does not want this responsibility, they should opt-out of the EU.
They are also forgetting that any society, any nation, rises, or falls, on the basis of how it treats its weakest members, although I am not certain that Schauble and Merkel's government give credence to this point.
Germany has never repaid one cent of its WWII war debt, and it is now in the number one financial position in the European Union.
Clearly, Germany has not shown interest in repaying its old debt, yet ironically, insists on inflicting further pain and suffering on a member state.
What some in the EU are forgetting is that it takes a lot of money to run a continent and support its people. If Germany does not want this responsibility, they should opt-out of the EU.
They are also forgetting that any society, any nation, rises, or falls, on the basis of how it treats its weakest members, although I am not certain that Schauble and Merkel's government give credence to this point.
2
You can be sure that those complaining about Germany being too harsh are counting on someone else putting up the money to bail Greece out. You can also be sure they are the same ones who trade with Greece and would loose the most if Greece went away.
To those who take that position I have one suggestion. Put your money where your mouth is.
To those who take that position I have one suggestion. Put your money where your mouth is.
3
What the NYTs describes as selfish a lot of the rest of us consider common sense. Anyone looking at the Greek situation rationally can already see that even more austerity on top of the austerity that has them screaming like a stuck pig will not work.
Greece can never pay back the money it owes and if German's are ticked off because they know this and they know that they're the ones looking at the largest haircut. Calling such thinking selfish is one way to look at it--on the other hand. This haircut will have to be followed by many others and even then Greece's economy will still be moribund.
Greece never really qualified to get in the EU, continuing to pretend that they do is going to be expensive. The wisest course of action is to devalue the currency and build a real economy--outside of the EU. Maybe a five year hiatus from the Euro is the answer, but I doubt it.
In the end, Greece is like Kansas or Nebraska they can't support their own and take in far more from the larger economy then they put out. It works in the states because the poorer ones also have lower populations, per capita income, and so on. Such is not the case for Greece. She is adrift in a sea of debt about to be swamped by more...
Greece can never pay back the money it owes and if German's are ticked off because they know this and they know that they're the ones looking at the largest haircut. Calling such thinking selfish is one way to look at it--on the other hand. This haircut will have to be followed by many others and even then Greece's economy will still be moribund.
Greece never really qualified to get in the EU, continuing to pretend that they do is going to be expensive. The wisest course of action is to devalue the currency and build a real economy--outside of the EU. Maybe a five year hiatus from the Euro is the answer, but I doubt it.
In the end, Greece is like Kansas or Nebraska they can't support their own and take in far more from the larger economy then they put out. It works in the states because the poorer ones also have lower populations, per capita income, and so on. Such is not the case for Greece. She is adrift in a sea of debt about to be swamped by more...
1
The liberal mantra is that it is selfish to not want the government take your money and give it to people who don't feel like working very much. Those of us who pay federal income taxes (most of whom vote against the Democrat Party) understand liberals perfectly. It's good that Germany is finally pushing back.
This is not to say that Greeks are somehow inferior to Germans. Greeks have suffered from corrupt giveaway governments for many years and as a result many have forgotten that life is not a gravy train provided by someone else. If a new reality arrives in Greece, then those who are willing to work hard will be better rewarded and those who are not willing will suffer until they decide they, too, need to work hard. And Greek society will be the better for it.
This is not to say that Greeks are somehow inferior to Germans. Greeks have suffered from corrupt giveaway governments for many years and as a result many have forgotten that life is not a gravy train provided by someone else. If a new reality arrives in Greece, then those who are willing to work hard will be better rewarded and those who are not willing will suffer until they decide they, too, need to work hard. And Greek society will be the better for it.
2
Which perspective better fits reality concerning Greece?
Greece has been or is still out of touch with its own flaws? If so, then Greece will stay a charity case and not a contributor.
Germany selfish? If so, then Germany which has kept its own house in order, should roll the dice with its own future and progress.
Greece has been or is still out of touch with its own flaws? If so, then Greece will stay a charity case and not a contributor.
Germany selfish? If so, then Germany which has kept its own house in order, should roll the dice with its own future and progress.
1
The initial bailout, approved in 2010, was really a stealth bailout of European banks (e.g. Commerzbank, which held some 17 b euro in Greek debt). The much maligned Greeks could not have been so "profligate" had German and other banks not been so eager to throw money at them. As economist Barry Eichengreen puts it, "What was at stake..was not just the solvency of the Greek government but the stability of the German financial system." (HALL OF MIRRORS p. 347). It wasn't a question of "generosity" at all; or at least not generosity to the Greeks. But of course it is easier to scapegoat the Greeks than to address miscreant banks.
The austerity packages shrank the Greek economy by more than a quarter and only worsened the debt problem (from about 125% of GDP to 177% today and 200% in the next couple of years). The troika's economic forecasts were way off. They expected the economy to contract by about 6% in the first two years, then return to growth.
Sovereign defaults and debt forgiveness are completely normal things. Any currency union involves a flow of funds from more to less productive areas (like from blue states to red states in USA). Europe is caught at an uncertain way station between a true federation and a loose customs union. The self-righteous and economically illiterate German leadership is sowing the seeds of disarray.
Mr. Schaubel stands at the center of disastrous policy failures. The Greeks do need reform, yes, but at a survivable pace. He needs to go.
The austerity packages shrank the Greek economy by more than a quarter and only worsened the debt problem (from about 125% of GDP to 177% today and 200% in the next couple of years). The troika's economic forecasts were way off. They expected the economy to contract by about 6% in the first two years, then return to growth.
Sovereign defaults and debt forgiveness are completely normal things. Any currency union involves a flow of funds from more to less productive areas (like from blue states to red states in USA). Europe is caught at an uncertain way station between a true federation and a loose customs union. The self-righteous and economically illiterate German leadership is sowing the seeds of disarray.
Mr. Schaubel stands at the center of disastrous policy failures. The Greeks do need reform, yes, but at a survivable pace. He needs to go.
2
Draghi said the ECB exposure to Greek debt is 130 billion Euros out of the total of about 300 plus billion Euros the Greeks owe. Given the ECB's capital, a Greek walk away from this mountain of debt would "bankrupt" the ECB. Schauble knows this. He also knows the huge derivative books held by banks on Euro debt. So what is his ultimate goal?
1
Sometimes, if you want to really offend someone and to be called names and have your character and integrity challenged - lend them money - and worse, expect to be paid back. Fortunately, most people pay their debts because they value their reputation and credit and probably think it is moral. It is no different for countries.
5
I've said all along that Greece should leave the Euro. Greece cannot repay its debts and if the Euro is ever to be seen as anything other than a bogus currency, the never-ending stream of bailouts must stop.
But the Germans' hypocrisy in this kerfuffle is through the roof.
But the Germans' hypocrisy in this kerfuffle is through the roof.
1
Come on folks, this is free money. Not having to repay for thirty years means it will never be repaid. Greece should wean itself off the teat of Germany. And lets face facts people, Germany is basically carrying all of Europe at this point. They are being taken for suckers, a fact they are well aware of, and it's chaffing their backside. The free ride is surely coming to an end.
6
If Greece is loaned 86 billion Euros then gets an 86 billion write off, how is that a loan? It's a gift. Can't happen with them staying in the Euro.
1
Germany has done a poor job of explaining its position, and as a result, others have been able to paint Germany as the bad cop in all this.
All one hears is that Germany is forcing "austerity" on Greece. When in fact it is a package that should be labeled "aid for reform." If the Greeks reform to come up to EU fiduciary standards, Germany and the EU will provide massive aid for those reforms.
It's a very different, and far more positive offer than what has been presented so negatively by the media.
All one hears is that Germany is forcing "austerity" on Greece. When in fact it is a package that should be labeled "aid for reform." If the Greeks reform to come up to EU fiduciary standards, Germany and the EU will provide massive aid for those reforms.
It's a very different, and far more positive offer than what has been presented so negatively by the media.
5
I have been following the Greek crisis, however from what I have been reading, Chancellor Angela Merkel and Mr. Schäuble appear to be downright mean..and punitive. Stop it!
2
So many comments here are based on a belief that Greece can actually manage an exit from the euro. It can't! Even economists who recommended exit are not informed. Tsipris and Varoufakis knew well that Greece hasn't the resources to do this within a time frame that didn't also see a collapse of everything.
The NYT would do a service here if they reported on the costs and mechanism of an exit and how this is prohibitive now for Greece. Schauble probably knows this too but depends on the ignorance of his audience. Essentially all the small nations are trapped!
The NYT would do a service here if they reported on the costs and mechanism of an exit and how this is prohibitive now for Greece. Schauble probably knows this too but depends on the ignorance of his audience. Essentially all the small nations are trapped!
3
Perhaps it is Germany that belongs outside the European Union.
2
The NY Times continues to ignore that the great majority of EU foreign ministers agree with Schauble, some with even stronger rhetoric. Their countries have ALREADY made the tough changes that Greece promised five years ago and then ignored. Imagine the reaction in NY or NJ if Texans got social security at 55 and didn't have to pay income taxes or property taxes while demanding NY and NJ raise their taxes to send them more money?
7
In the 50's, many countries forgave Germany's debt in to help Germany build it's economy. Germany would not have an economy today, if it were not for the debt relief that Germany was given. Now, Germany can find no compassion or logic to give Greece the same debt relief, that Germany given. If I were Italy, Spain, or other countries, I would look closely at the way Germany is handling this situation, and then I would get out of the Euro as fast as possible. Germany has proven that countries will have no support, no real help, if they have a problem. By being in the Euro, a country cannot control it's exchange rate and manage it's economy. The Euro has turned into a nightmare. If I was Greece, Italy, Spain, or any other country in the Euro, I would get out of the Euro. With the current organization, the Euro is only benefiting large German banks. Greece should tell Germany to pay for all the damage Germany did to Greece during WWII, and to compensate families for the tens of thousands of people that Germany killed in Greece. Heir Merkel will cause many people to lose respect for today's Germany, and that is sad for Germany, and for Europe. Germany has destroyed the EU.
3
Look at the history of how the entente treated Germany after WWI and you will see why that is not a very good idea.
Germany wants Greece's tourist dollars and as long as their currency is on a par it might work. Greece should go back to it's own reasonable currency and open the floodgates of tourism that has helped it flourish over the years. The entire country should be named a UNESCO Heritage Site and be supported with international government assistance because they, more than any country, have restored and taken care of OUR western civilization heritage sites. Leave the Euro, Greece!
2
Which are the other european countries complaining about Germany? On the contrary, there has been remarkable solidarity in Europe throughout the crisis, despite constant tendentious and vague statements, unsupported by any real evidence, in the US press. Of course some members of the social democrats party in Germany are not in line with Schäuble. That would be like saying that Bernie Sanders and Ted Cruz don't agree. Making such an observation, however, does not mean that the rest of the country and certainly not the rest of the world is of the opinion of either of the gentlemen quoted.
5
A question for Mr. Schauble:
What did your father and grandfather do in the war? Yes, that war. Answer that and we will know if you have or deserve the moral authority to questions others or whether you and your family forfeited that for 1,000 years.
What did your father and grandfather do in the war? Yes, that war. Answer that and we will know if you have or deserve the moral authority to questions others or whether you and your family forfeited that for 1,000 years.
2
"Harder, more selfish edge", "unjustifiably humiliated Greece" - leaving aside the obvious need for government reform in Greece, if you want to think about how Greeks might resent Germany's attitude, its moralistic meanness, consider that the "reform" package includes a proviso that Greek stores be legally permitted to remain open on Sundays. By constitutional law, stores in Germany are closed on Sundays. France has long had mandatory Sunday [or Sabbath] closing laws, which have been modified somewhat in recent years to allow occasional Sundays hours (for example, in Christmas season). The Greek "reform" package has ramifications far beyond Greece in this one simple provision, quite apart from possible spillover from its other articles.
2
Rules are rules. Euro members are supposed to keep their national debt within a certain limit or balance their budget. Greece has repeatedly violated this rule. If not now when will Greece discipline itself? Also, when will money lenders and investors say NO to bad prospects?
4
The author get's it all wrong. Schäuble is indeed right. It's in Greece best interest to exit. Also no one seems to remember that the Greek people just voted clearly against more oppression through cutting pensions and raising taxes. Now it seems Tsipras used this vote only instrumentally in further debt negotiations. And nothing will be won, except more misery for the population. All what it's really about is to satisfy the lenders: the big banks. Disgusting and thoroughly undemocratic! The European Union and the media reporting become more and more a farce.
1
Who's kidding who. Greece is never going to repay anybody. They can't. Their economic engine is stalled and certainly won't restart under austerity. So, from their perspective, let the Good Times Roll. Have another party on Europe's dime.
1
Restructuring Greek debt and cutting the interest rates drastically on that debt is imperative otherwise we will all be commenting on the same subject in 3 years or less when the absolute default will occur. The German economy is so strong and their advantage is that the US and allies rebuilt Germany under the Marshall Plan without repayment or reparations. The Euro is actually a god send for Germany since it's lower value creates an advantageous situation for selling it's high value goods within the EU zone. If it were to reverse to the D-Mark, the currency would be so highly valued that it would plunge Germany in a horrible recession. Germany - Merkle, it time to step up to the plate and help with the restructuring of Greek Debt and allow the Greeks to dig out of their deep pit.
1
Germany paid reparations until 2010. The Marshall Plan was a loan that was repaid.
Either he is a loose cannon and Merkel should let him go for insubordination or he is flying kites that Merkel approves of in which case she is giving herself a Varoufakis problem (a negotiator in bad faith bent on sabotaging the process). Either way a parallel resignation might make sense.
Krugman is not saying that Greece can 're-arrange their debts' better outside the Eurozone he is saying that they need a devaluation to grow (as well as debt relief or repudiation) since wage and benefit cuts 'at a stroke' through devaluation is faster and less painful other methods, and you more quickly get growth from a new, lower baseline.
It is pretty clear that the Greek electorate don't want to return to endless devaluations and the even greater government incompetence that they had in the past. They probably don't think they would get back in quickly to the Eurozone, especially if they unilaterally repudiated the debt (consider Iceland, which still has strict capital controls and can't borrow from abroad eight years after they repudiated the overseas liabilities of their banks).
Yet something has to give since the process of wage and benefit cuts is indeed proving long, painful and ineffective.
Krugman is not saying that Greece can 're-arrange their debts' better outside the Eurozone he is saying that they need a devaluation to grow (as well as debt relief or repudiation) since wage and benefit cuts 'at a stroke' through devaluation is faster and less painful other methods, and you more quickly get growth from a new, lower baseline.
It is pretty clear that the Greek electorate don't want to return to endless devaluations and the even greater government incompetence that they had in the past. They probably don't think they would get back in quickly to the Eurozone, especially if they unilaterally repudiated the debt (consider Iceland, which still has strict capital controls and can't borrow from abroad eight years after they repudiated the overseas liabilities of their banks).
Yet something has to give since the process of wage and benefit cuts is indeed proving long, painful and ineffective.
After the Greek referendum, Greek Finance Minister Yanis Varoufakis resigned, clearing the air for final negotiations that led to the recent deal. Perhaps Wolfgang Schauble should also do the right thing, as he's clearly not interested in consensual discussions.
1
To ignore the suffering of the Greek people under the yoke of austerity imposed by Germany is surprising, coming from a nation that has a long history of humanitarianism and benevolence toward its neighbors and regards itself as having a great national soul.
1
The world must make an example of Greece or else every nation will try to keep from paying debt.
Render unto Caesar.
Render unto Caesar.
3
All the previous "rescue packages" for Greece burdened every inhabitant of Germany with the sum of 1100 Euros per capita, and only half of the German populace does pay Income Tax at all. But that is only money that will not flow back in future, and coming generations have to shoulder the losses over time. The new measures now in progess will cost every inhabitant of Germany about 250 Euros in real money, right now. How much did the funding of the Marshall Plan cost U.S. Taxpayers?
The discussion has already be opened in Germany to raise taxes to finance those transfers to Greece. Most Germans reject to pay even more taxes only to finance the Greek who are unable or unwilling to collect their own taxes.
The discussion has already be opened in Germany to raise taxes to finance those transfers to Greece. Most Germans reject to pay even more taxes only to finance the Greek who are unable or unwilling to collect their own taxes.
8
I am sure it would come as a great surprise to most Portuguese that their country has "bounced back"...certainly to all those who continue to leave to seek jobs in foreign lands and to the many (13%) who are unemployed.
5
Greece entered the EU under pretenses, had manipulated its finaqnces to make them appear more stable than they aactually were. In addition, it has already received so much help that Germany is already saddled with roughly €82 billion it would have to kiss good-bye if Greece defaulted. As I write this, there is a suggestion that our "Unity Tax," which originally was meant to help the former GDR provinces to reach the lvel of the western ones, be increased to 8% of our income tax in order to make up for the total of the funds needed to carry our share of the bailout.
Whoever calls German demands egoistical should put his shoe on the other foot and consider whether he would be willing to take over an indebted relative's or friends debts and, if he wasn't repaid, forget about the money, then throw good money after the bad.
Whoever calls German demands egoistical should put his shoe on the other foot and consider whether he would be willing to take over an indebted relative's or friends debts and, if he wasn't repaid, forget about the money, then throw good money after the bad.
7
CMD, I hear your frustration, however, why not direct it towards the German banks that made bad loans and instead of taking the hit foisted that debt onto the German citizens to pay? Why are you not angry about being played like this? Of course you shouldn't be paying for this. this whole debacle is about protecting French and German banks from debt write-offs.
By the way, 90% of all those loans made to Greece bypassed the Greeks and went straight to private French and German banks for interest payments, debt payment, and for domestic recapitalization demanded by: the LENDERS. Direct your rage at being played by your own banks and Gov't. It's so much easier to blame the Greeks- and that's exactly what your gov't/banks want you to do. You are being played.
By the way, 90% of all those loans made to Greece bypassed the Greeks and went straight to private French and German banks for interest payments, debt payment, and for domestic recapitalization demanded by: the LENDERS. Direct your rage at being played by your own banks and Gov't. It's so much easier to blame the Greeks- and that's exactly what your gov't/banks want you to do. You are being played.
The country that benefits out of the Greek crisis is Germany. Germany has humiliated a nation. German leaders know that the Greek debt burden is not sustainable but still are pushing the Greeks into drowning. Is that the Europe that everybody wants? You push nations into poverty and at the end you will chaos. The German would be the first to know, Germany after the first Word war !!
5
Why is it always the lender and never the borrower's fault?
stop the madness and fights .............. KILL THE EU ............gonna happen, its all just pain and misery trying to deny the future
"Mr. Schäuble emphasized that no one was trying to dictate to Greece how it should proceed." This is such a fine example of what Freud called "denial"(Verneinung). Not only did Schäuble and Merkel dictate to Greece they inist on their view of punishing economics which is putting the whole of the EU at risk as Krugman, Stiglitz, the IMF, Obama & Lew argue. The lemon can only be squeezed so much but when there is no juice in it, no moral rhetoric can produce it. German hegemony in Europe, like any hegemony anywhere, is problematic. The US, for geopolitical reasons, is putting pressure on Germany. In this particular case, it is welcome. The way the euro works (or rather fails to work) might lead to European disintegration and the rise of the far right.
3
"German hypocrisy knows no bounds. Happy to accept debt forgiveness and write-downs when they are the beneficiary, but never to offer the same. "
I do not know if some people in the us are just completely wrong informed or simply deliberately lying. The Greeks get a haircut about 50% in 2012 - mainly payed from Germany. Germany makes haircuts for poor countrys every year. firstly - the greeks are not poor. secondly german´s have no problems with haircuts , but they have a big problem with the greek mentality.
The Greeks send their money abroad and then they ask for an haircut.
I do not know if some people in the us are just completely wrong informed or simply deliberately lying. The Greeks get a haircut about 50% in 2012 - mainly payed from Germany. Germany makes haircuts for poor countrys every year. firstly - the greeks are not poor. secondly german´s have no problems with haircuts , but they have a big problem with the greek mentality.
The Greeks send their money abroad and then they ask for an haircut.
5
Schäuble is a realist. It's going to take a generation or more to modernize the Greek economy, and in the meantime Greece and its people are going to wallow in economic misery. An exit from the Euro, on the other hand, would quickly reduce the debt burden and would let Greece be Greece. An aphorism translated from the German: Better a frightful end than a fright without end.
5
Why should Germany pay for the mistakes and excesses of Greece? Germany has carefully managed its economy. The Greeks have spent and spent, and the politicians should be blamed there.
3
The logic that led here included the need to overcome to challenges of the original free trade zone, which required currency exchange controls (the "snake in the tunnel") in order to prevent excessive competitive devaluations. Since that was an imposed system, the markets eventually priced and forced some currencies outside the limits, particularly the GPB. That led to the perception that a single currency was the only manageable way forward.
But that idea also included the understanding that currency union would require effective and free labor mobility across the entire union, common fiscal and social welfare policies, and banks to be regulated under the same regime. This has not been done, so we have regions that need different policies all chafing under a single, myopic view, sold by Schäuble as 'EU rules,' but in reality a policy choice.
The equivalent in the US would be to require, say, an unemployed man from West Virginia to learn a new language, apply for permission to reside and work in another state, while learning that any contributions made in that new state would not count toward the Social Security system of WVA, and that he could be kicked out following a job loss.
This does not work, Schäuble, and your empty moralizing, based on slavery to dogma and not actual rules, is as ignorant as it is offensive. Let's scrap the euro, Wolfgang. What? You need it to have a softer currency that protects your export-driven model? Should've thought of that beforehand.
But that idea also included the understanding that currency union would require effective and free labor mobility across the entire union, common fiscal and social welfare policies, and banks to be regulated under the same regime. This has not been done, so we have regions that need different policies all chafing under a single, myopic view, sold by Schäuble as 'EU rules,' but in reality a policy choice.
The equivalent in the US would be to require, say, an unemployed man from West Virginia to learn a new language, apply for permission to reside and work in another state, while learning that any contributions made in that new state would not count toward the Social Security system of WVA, and that he could be kicked out following a job loss.
This does not work, Schäuble, and your empty moralizing, based on slavery to dogma and not actual rules, is as ignorant as it is offensive. Let's scrap the euro, Wolfgang. What? You need it to have a softer currency that protects your export-driven model? Should've thought of that beforehand.
3
And in the future, when Greek unemployed start flowing into Germany in search of jobs, Ms. Merkel will put a hand on their shoulder and tell them that Germany cannot accept all of them because "we just can't manage it." The Germans look more and more like the little boy who draws the "coco" (a monster) and then he is scared of it. They should stop generating what the will not be able to handle in the future.
It is not true that Spain and Portugal have "bounced back" to any degree at all. Millions have fled to find work in other countries or survive only because their retired parents--receiving 'bloated pensions that their kids will never see-- are supporting them. The banks were saved on the backs of an entire generation that will never become the kind of consumers Europe needs for growth. Greece is but the dead canary in the mine and all the Germans can do is rage at its corpse.
3
The German anti-Greek rhetorics and its resistance against cancelling debts are related. With the refusal to forgive debts the German population is given the impression that the continuing economic strangulation of Greece has no consequence for the ability of Greece to pay back its debts. This is a false impression that gives populist anti-Greek activists cover.
2
This is of course all utterly nonsense. That is not to say they wont exit the Euro, but Germany which it s export driven economy benefited greatly from the Greek melt down, which is pulling down the value of the Euro on foreign markets and is now in the position to compete with a deeply discounted Euro and lifting up their economy resulting with record low unemployment despite
their usual weak domestic consumption, due to frugality and focus on export.
An exit of Greece from the Euro , means they won t be able to pay back the loans and will not be able to re- join the Euro in the unforeseeable future.
But overall it will help people to live on a fixed income more easily, if the inflation with the new currency will be kept in check.
So, no, Germany is not a victim, but they also benefiting greatly from this situation. I m surprised that they don t see it that way. But others will and do and are more uneasy about the passive aggressive, victim playing role Germany is playing. I believe the best remedy is for Europe to let Germany go back to their D-Mark, so they are happy to be in control and don t have to work for others, as they claim and will have strong currency like the Swiss Franc and see what happens to the much loved exports. Siemens and Co will be on the phone with Merkel never to let that happen.
their usual weak domestic consumption, due to frugality and focus on export.
An exit of Greece from the Euro , means they won t be able to pay back the loans and will not be able to re- join the Euro in the unforeseeable future.
But overall it will help people to live on a fixed income more easily, if the inflation with the new currency will be kept in check.
So, no, Germany is not a victim, but they also benefiting greatly from this situation. I m surprised that they don t see it that way. But others will and do and are more uneasy about the passive aggressive, victim playing role Germany is playing. I believe the best remedy is for Europe to let Germany go back to their D-Mark, so they are happy to be in control and don t have to work for others, as they claim and will have strong currency like the Swiss Franc and see what happens to the much loved exports. Siemens and Co will be on the phone with Merkel never to let that happen.
1
NY Times still pushing their parallel reality here.
The whole point of the package for Greece is not "painful austerity" -- it is REFORM !!
Reform so Greece will start collecting taxes. match pension payments and pension contributions, privatize dysfunctional transportation and utility infrastructure, cut the jungle of restrictions that choke the society, stop having fantasy government jobs, not retire years earlier than in rest of EU and not have armed forces that are larger per capita than anywhere else in NATO.
Those are all obvious necessities in the rest of the developed World. And all the cutting of debt or "ending of austerity" would not fix Greece and turn its economy into a self-sustaining one without these reforms.
And none of these reforms will happen if Greece is not forced to carry them out using the crisis as leverage.
These statements are not hypotheticals but rather borne out by completely obvious facts and years of observations.
Why the NY Times instead insists on its oftentimes shameful crusade against "the evils of German-imposed austerity" and for the cure-all of debt-cutting is not entirely clear. It could be not wanting to give US republicans/reactionaries any chance to demand "austerity" as a cover for their goal of gutting US society?
But is it really necessary to construct an entire parallel reality for that, wouldn't a well reasoned argument explaining the differences between Greece and the US be more useful, and far less morally dubious ?!
The whole point of the package for Greece is not "painful austerity" -- it is REFORM !!
Reform so Greece will start collecting taxes. match pension payments and pension contributions, privatize dysfunctional transportation and utility infrastructure, cut the jungle of restrictions that choke the society, stop having fantasy government jobs, not retire years earlier than in rest of EU and not have armed forces that are larger per capita than anywhere else in NATO.
Those are all obvious necessities in the rest of the developed World. And all the cutting of debt or "ending of austerity" would not fix Greece and turn its economy into a self-sustaining one without these reforms.
And none of these reforms will happen if Greece is not forced to carry them out using the crisis as leverage.
These statements are not hypotheticals but rather borne out by completely obvious facts and years of observations.
Why the NY Times instead insists on its oftentimes shameful crusade against "the evils of German-imposed austerity" and for the cure-all of debt-cutting is not entirely clear. It could be not wanting to give US republicans/reactionaries any chance to demand "austerity" as a cover for their goal of gutting US society?
But is it really necessary to construct an entire parallel reality for that, wouldn't a well reasoned argument explaining the differences between Greece and the US be more useful, and far less morally dubious ?!
17
Bravo.
To be honest I too don't understand why would Greece cling to Euro so much, especially given a fact that it could exit the currency temporarily with the oppotrunity to get back. This move would stabilise the domestic market probably in a matter of weeks and make greek exports boom.
On the other hand, Germans should really let go of their moral notions of "Schuld" (in german debt, but also guilt) and finally get into terms with the fact the larger than average profits they were making off of greek bonds were the prize for higer risk that the bonds go belly-up. If Germans really want the debt to be unnegotiable, they should give Greece back all the interest they earned on the loans (no risk - no gain).
On the other hand, Germans should really let go of their moral notions of "Schuld" (in german debt, but also guilt) and finally get into terms with the fact the larger than average profits they were making off of greek bonds were the prize for higer risk that the bonds go belly-up. If Germans really want the debt to be unnegotiable, they should give Greece back all the interest they earned on the loans (no risk - no gain).
2
There is a lesson here for all of us: When you borrow money the lender wants you to pay it back.
Always remember that when you sign on the dotted line.
Always remember that when you sign on the dotted line.
10
Schäuble is being condemned for honouring rules and contracts while Greece is being hailed for breaking them.
Every banker and every investor I know, and that is quite a large number, tells me the same, if the EU continues to break it's own rules the damage will be much larger than a GREXIT which would only strengthen the the EU and the Euro Zone's image as a strong and reliable partner.
So why hail Greece?
Why try to blackmail the Euro Zone into weakening?
Every banker and every investor I know, and that is quite a large number, tells me the same, if the EU continues to break it's own rules the damage will be much larger than a GREXIT which would only strengthen the the EU and the Euro Zone's image as a strong and reliable partner.
So why hail Greece?
Why try to blackmail the Euro Zone into weakening?
13
I'm not in favor of bailing out a country where tax evasion is commonplace. Collecting taxes due should be done before cutting social services.
8
I don't think most Germans actually want to *conquor* Europe. Nor do they imagine that is what is happening. However they do believe, probably without even being aware of it, in the wisdom of "am deutschen Wesen soll die Welt genesen" (difficult to translate, but something like: The German character shall heal the world.).
Germans are sincerely convinced that they know best what is good for everyone else. Look how successful, how efficient they are. So they must be right.
G.K.Chesterton put it best: Most of us would rather have German measles than German efficiency.
Germans are sincerely convinced that they know best what is good for everyone else. Look how successful, how efficient they are. So they must be right.
G.K.Chesterton put it best: Most of us would rather have German measles than German efficiency.
4
Speaking as an American immigrant from California living in Austria, it's annoying that the NY Times continues to report on this crisis through a distorted lense. In many ways this is similar to the U.S. not allowing debt forgiveness (bankruptcy) for a U.S. state, an issue that the NY Times itself reported on in 2011.
Californians would have LOVED to have a transfer of wealth from every other state in 2001 and again in 2008-present to get out from under crushing levels of debt. We weren't allowed that option because the constitution says states are sovereign and are responsible for their own debts (sound familiar?). As a long-time subscriber, some in depth journalism on the issue that truly illuminates the issues would be most welcome.
Californians would have LOVED to have a transfer of wealth from every other state in 2001 and again in 2008-present to get out from under crushing levels of debt. We weren't allowed that option because the constitution says states are sovereign and are responsible for their own debts (sound familiar?). As a long-time subscriber, some in depth journalism on the issue that truly illuminates the issues would be most welcome.
14
You failed to mrention the entire history of this affair. The debts now held by the German central bank were first loans extended to Greece by German private banks and other lenders. During the worlwide macroeconomic liquidity crisis, the German central bank transfered these dubious assests to its people instead of having these failed loans settled as private transactions and then if necessary, provide liquidity to the german banks whose equity would have been impacted by the write offs of uncollectabe Greek debt.
Therefore Chancellor Merkel and Finance Minister Schauble have previously written off all of Greece's debt for private German lenders and transferred these impaired assests to the public portfolios of the German people. It is the epitome of hypocrisy for the German government take uncollectable private debts onto the German people and then insist Greece pay them.
If Chancellor Merkel beleived Greece could pay off these loans, there would have been no reason for the German central bank to hsve assumed the impaired Greek loans into the public portfolio from the German private lenders in the first place. And no, the German private lenders weren't defrauded, they were advised of Greece's financial position.
Chancellor Merkel government insistence these impaired Greek loans are not written off, as the would have been had they remained in private portfolios, to avoid the ire of the German people for assuming them.
Therefore Chancellor Merkel and Finance Minister Schauble have previously written off all of Greece's debt for private German lenders and transferred these impaired assests to the public portfolios of the German people. It is the epitome of hypocrisy for the German government take uncollectable private debts onto the German people and then insist Greece pay them.
If Chancellor Merkel beleived Greece could pay off these loans, there would have been no reason for the German central bank to hsve assumed the impaired Greek loans into the public portfolio from the German private lenders in the first place. And no, the German private lenders weren't defrauded, they were advised of Greece's financial position.
Chancellor Merkel government insistence these impaired Greek loans are not written off, as the would have been had they remained in private portfolios, to avoid the ire of the German people for assuming them.
1
The jejeune attitude of this article is what has created the debacle -----
"Just one more time, and everything will be OK." As Herb Stein said,
"If something can't keep going on, it will stop."
"Just one more time, and everything will be OK." As Herb Stein said,
"If something can't keep going on, it will stop."
7
The reporter, Ms. Eddy, is biased and factually wrong in her reporting. Germany did not display a "harder, more selfish edge." Most of the eurozone members have the same position. It is a realistic position. Also, it is not only "conservatives" who are concerned about the costs. The SPD also is wary and condemns Greece.
Has Ms Eddy even spoken to the "little German" the average Volk? I have. Across the spectrum, left to right, poor to solidly middle class, they have all expressed disgust with Greece and often with Merkel. At least Schaeuble is saying what is on the average German's mind.
The NYT would do well to speak with the "person in the street" from Munich to Kiel, from Riga to Rotterdam, from Helsinki to Graz. It is not just the Germans who feel this way.
Has Ms Eddy even spoken to the "little German" the average Volk? I have. Across the spectrum, left to right, poor to solidly middle class, they have all expressed disgust with Greece and often with Merkel. At least Schaeuble is saying what is on the average German's mind.
The NYT would do well to speak with the "person in the street" from Munich to Kiel, from Riga to Rotterdam, from Helsinki to Graz. It is not just the Germans who feel this way.
11
There are some wonderful benefits to the EU. However, at the end of the day it does not work for the average citizens. Only the elite benefit. There is no democracy here.
Down with the EU.
Down with the EU.
3
I remember when the Times used to keep its editorials on the editorial page. This piece is a disgrace. It all but ignores the number of other EZ nations that lined up with Germany and the many economists, including the Times own Dr. Krugman, who think Greece would be better off with the drachma.
7
Imagine the pure heartless, selfish, parsimonious greed behind Germany's insistence that the Greeks abandon their generous, openhearted, free spending, fun-loving indolence before loaning them more money that the Greeks have no chance of ever repaying. You would almost think that the Germans failed to appreciate the joie de vivre and charming insouciance underlying the Greek electorate's reluctance to accede to draconian demands to abandon their traditional and long accustomed indolence. It is hard to find words sufficient to adequately condemn the outrageous, narrow minded unwillingness of the Germans to advance even a measly hundred billion Euros to the inventors of democracy.
7
What lazy reporting: "Supporters point to Ireland, Portugal and Spain as nations that have bounced back to varying degrees after austerity programs; critics point to Greece, which has remained economically troubled." In this very newspaper, Paul Krugman, a prominent critic if there ever was one, has been pointing to Ireland, Portugal and Spain not as nations that have bounced back but as examples of why austerity doesn't work to reduce debt.
4
Generosity, sympathy, and mercy are fundamentally different from fairness or reason in that they can never be expected or demanded. Sure, Germany is being selfish in the sense every human being or institution is. What people blame Germany for is not for being selfish but for not being more selfless, as if being selfless can be an obligation. We may ask and hope for generosity but never blame one for the lack of it. We can for unfairness, but would it be unfair for Germany to not give more than what she has so far? It is a difficult case to argue especially for those who would find it not so agreeable to take in even a thousand more refugees into their own countries.
4
With all the talk (including German talk) about Greece’s debt, the world needs to be reminded about the fact that Germany has not paid back one penny of the war loan (with 73 years interest) they forced the Greek central bank to grant them in 1942. In addition, Germany has not compensated the relatives of the thousands of Greek civilians, men, women and children, killed in the massacres of Domenicon, Kalavryta etc. You can read about the massacres on:
https://en.wikipedia.org/wiki/List_of_massacres_in_Greece
The Germans have indeed paid war reparations (not the loan) to Greece, but not by far to an adequate extent.
You can read about what the Greeks and the Germans claim with regard to the subject, on http://www.euronews.com/2015/04/07/greeces-claim-for-war-reparations-fro...
https://en.wikipedia.org/wiki/List_of_massacres_in_Greece
The Germans have indeed paid war reparations (not the loan) to Greece, but not by far to an adequate extent.
You can read about what the Greeks and the Germans claim with regard to the subject, on http://www.euronews.com/2015/04/07/greeces-claim-for-war-reparations-fro...
4
Seems to me that Germany is the only responsible Country in Europe. The rest think that printing money is the solution to Greek problems along with having taxpayers eat a 100 Billion or two. Maybe the rest of them France,Spain, Portugal, Italy and Ireland will be back looking for some debt forgiveness as well. ....and of course the US thinks that is OK since they have run up deficits to the tune of $18 Trillion or $60,000 for every man woman and child in this country.
7
This stress test for the EU has revealed deep flaws in structure and design, not the least of which is the animosity between members. Some partnership!
1
Angela Merkel from East Germany has no regrets about the transfer of 2 Trillion Euros (some $100 Billion Euros/year) from West Germany (~65 million people) to East Germany (~13 million people) in order to accomplish the reunification of the two. The "solidarity surcharge" was accepted by West Germans as their duty to help their significantly poorer relations and they suffered with less wealth than they might have had than if they had simply left East Germany to its own devices and its own currency. Even today after all of the financial "bailout" East German states have unemployment rates nearly twice the West German states and per capita income that is only 84% of the west. Germans like Merkel are clearly able and willing to substantially subsidize in the cause of a united Germany but feel less so in the cause of a united Europe. In the end it may be if Greece (11 million people) can be kicked out of the Euro with the resultant loss of Greeks' purchasing power outside their borders (and probably within) in an integrated European economy then so can other Euro nations like Italy et al. Hard to imagine Germans will be better off with disrupted, dysfunctional European economies unable to purchase German goods with worthless currencies.
1
Can I say many Germans - this one included - are also extremely unhappy (in my case actually, furious) with the policy and behaviour of the German government. One does not have to agree with anglo-saxon international macroeconomics (which in my opinion treats national economies too much as black boxes whose internal functioning or politics is irrelevant and who can be completely described by a small set of numbers available from World Bank and IMF) to be outraged by the bullying and inhumane approach the German government has taken.
Greece badly needs its own currency. After many years of easy borrowing which being in the Euro zone facilitated, they have a huge public sector and very little private enterprise. The devaluation which would come with their own currency would make Greek businesses competitive again and would lead to growth of the Greek economy. If they stay in the Euro things they are doomed to wallow in their current predicament indefinitely.
Germany lost the war, but won the peace. Of course if the US did not provide so much of European defense then Germany would have to provide more of their own defense and perhaps not have the ability to economically dominate Europe. But, then again we know where a strong German military could lead. Political dictatorship versus economic dictatorship, the difference is the form of the casualties. Let's see, 70 years at 7% interest for their share of the Marshall Plan; I wonder how much Germany would owe the US.
1
The Marshall Plan was a loan of 1.4 billion. Germany paid it back in time.
Somehow, society has lost sight of reality! Germany has not really imposed austerity on Europe's poorer nations. Melissa Eddy needs to have spent over a year of her life in most of the western Europe, like I have during the last over 44 years, and you might understand a few things about how culture, geography, and religion, have played a far greater role in countries like Greece, Italy, and Spain than anything else. Also, not only are United States taxpayers funding 25% of the drawing rights of the IMF(International Monetary Fund) which has been giving millions to all of the above countries, other countries like Holland, which have their own economic issues, mostly because they have social programs which are too lucrative, and which must cover 16 million people, they don't want their taxes raised to fix Greece. Adult behavior when it comes to reality in the financial arena seems to be in short supply in the thinking of the average social program recipients in Western Europe, and Germany is just trying to bring them all into the current reality, something we in the United States have yet to face.
4
Well, it is quite clear that there is no such thing as a European Union. The heads of Government cannot agree on much about keeping it intact.
But for once the Germans have it right. The Greeks will do best to leave the Euro after this cash infusion, leave the Euro, change it's currency, devalue it, and default on its debt. They will be better off, and the Germn lesson teachers will be taught a lesson.
To the rest of Europe....let's just face it. The Emperor has no clothes and the naked truth is that the Germans are not at all to be trust to lead....And never were. Shame on that nation
But for once the Germans have it right. The Greeks will do best to leave the Euro after this cash infusion, leave the Euro, change it's currency, devalue it, and default on its debt. They will be better off, and the Germn lesson teachers will be taught a lesson.
To the rest of Europe....let's just face it. The Emperor has no clothes and the naked truth is that the Germans are not at all to be trust to lead....And never were. Shame on that nation
3
Knowing the Greeks stiffed their creditors twice, the Germans had to be dumb--or quite greedy--to lend money to deadbeats like the Greeks.
2
---Three years ago, NYT's Paul Krugman (among other mainly left-leaning economists) were prophesying monthly that Germany's "austerity" prescription would result in chaos--and financial collapse-- for Ireland, Spain, Portugal & Greece....Surprise! Ireland, Spain & Portugal instituted austerity and followed the program fully---and their economies are doing much, much better. Krugman, et al were wrong.
---Only Greece refused to institute the reforms that were a requirement of "austerity" (opening closed professions, better tax collection, cleaning up the corrupt legal system, etc)...No surprise: Greece is (again) the only EU country whose economy didn't improve....Corruption is too deep, clientelism too entrenched in Greece. They simply are no where near being ready for EU membership and never should have been invited in the first place....
---Only Greece refused to institute the reforms that were a requirement of "austerity" (opening closed professions, better tax collection, cleaning up the corrupt legal system, etc)...No surprise: Greece is (again) the only EU country whose economy didn't improve....Corruption is too deep, clientelism too entrenched in Greece. They simply are no where near being ready for EU membership and never should have been invited in the first place....
4
The German position is actually correct, Greece does need to leave the euro zone, it would be much better off.
5
I laugh at the letters that are all about the hardworking Germans. Sure, but if the BMWs and Mercedes they manufacture were still priced in Deutsche Marks, most of their customers in the rest of Europe would not be able to afford them. The single currency works wonders for their export market. Only when Greeks are too destitute to consider buying anything expensive, from Germany or anywhere else, do the Germans lose interest in sharing the Euro with them. German banks made shady loans to the European periphery, or speculated in Spanish real estate, because returns available within their domestic economy were scanty.
The story here is not that the Germans woke up just in time as the tiny Greek economy was about to pull a fast one.
The story here is not that the Germans woke up just in time as the tiny Greek economy was about to pull a fast one.
3
The NYT Germanophobia is becoming a bit of a joke. Apparently, the Germans were the only nation in the Eurogroup pressing for a tough line on Greece whereas in fact this was the majority view and so why no articles on the "sharper tone" from Finland, Holland or the other members of this group. This isn't going to accord with the simplistic angry German storyline that the NYT and some of its most prominent columnists like Krugman are interested in peddling.
25
Germanophobia is not completely unfounded Europeans in general are not known historically to be fluffy soft bodies. But I think the primary reason you see so much hostility is that the USA is basically a giant Greece. It runs the worlds largest trade deficit and it is paid for by foreign creditors , Chinese but also European credit. So when they see Greece facing the consequences of decades of reckless borrowing they see their future self.
from the article: "Mr. Schäuble’s hard-line views on austerity and debt are not limited to him, or even to Germany. Much of Eastern Europe and a number of conservative northern countries share his view that Greece has been profligate and should get further aid only under the strictest conditions.
But more than anyone, Mr. Schäuble has come to embody the consensus that has helped shape European economic policy for years..."
Sometimes biases fog the glasses so one can't see the actual words written.
But more than anyone, Mr. Schäuble has come to embody the consensus that has helped shape European economic policy for years..."
Sometimes biases fog the glasses so one can't see the actual words written.
@ LT
This is just the NYT trying to have it both ways like Krugman saying in the same paragraph that the splenetic hate mail he receives from Germans is "not representative" and then adding but Germany does seem to have a deep sense of victimization. So which is it? The entire tenor of this piece is about demonizing the Germans in general and Schaeuble in particular who after all is (Strangelove like) a small bespectacled German in a wheelchair. Sometimes biases blind some so that they are unable to understand a fairly obvious subtext.
This is just the NYT trying to have it both ways like Krugman saying in the same paragraph that the splenetic hate mail he receives from Germans is "not representative" and then adding but Germany does seem to have a deep sense of victimization. So which is it? The entire tenor of this piece is about demonizing the Germans in general and Schaeuble in particular who after all is (Strangelove like) a small bespectacled German in a wheelchair. Sometimes biases blind some so that they are unable to understand a fairly obvious subtext.
Schaüble is the only one who is based in reality. There was far too much feel-good politics in allowing the Greeks to enter the Euro in the first place. After two previous abortive attempts to get the Greeks on track with reforms that others have made decades ago and huge amounts of money being shoveled in to no effect, he is telling it like it is. Granted, at this stage he may not be too diplomatic, but following refusals by the Greeks over years to make the necessary reforms and accept assistance to setup an efficient taxation system and other government mechanisms, he, and many others are tired of the games and double speak. In American parlance they're sick of being treated like chumps.
38
Fully agree! It's time that Greeks stop their corruption and pay taxes. Reforms rather than borrowing is the only chance for the future. The same goes for Italy and Spain!
It's interesting how generous people are with the money of others.
Is it truly charitable to suggest Germans donate more of their hard earned money to Greek charity while not donating a single penny of your own?
And when an individual borrow digs himself into a hole, we often demonize the lender as predatory on the basis of the borrowers neivety and ignorance. If the Greeks are the victims here, are we writing off their entire society as naive?
Is it truly charitable to suggest Germans donate more of their hard earned money to Greek charity while not donating a single penny of your own?
And when an individual borrow digs himself into a hole, we often demonize the lender as predatory on the basis of the borrowers neivety and ignorance. If the Greeks are the victims here, are we writing off their entire society as naive?
25
Great comment!
Who do the Germans want to buy their very expensive exports?
Obviously not the German public where there is no demand.
If German Banks lend recklessly let them suffer, don't have their government bailing out the borrowers to save their own institutions.
There is a lot wrong with the German economic model that never makes it way onto world media headlines.
An old population with very little demand for anything, fairly pathetic I would say.
Obviously not the German public where there is no demand.
If German Banks lend recklessly let them suffer, don't have their government bailing out the borrowers to save their own institutions.
There is a lot wrong with the German economic model that never makes it way onto world media headlines.
An old population with very little demand for anything, fairly pathetic I would say.
13
Please inform yourself before making a comment. German banks hardly ended more than US or UK banks. France had the biggest outstanding to Greece, EUR 40 bn. Germany EUR 13bn, UK EUR 9 bn, US EUR 7 bn.
However Germany is the one footing the bill for everybody else. You also should take into account that Germany is a net contributor to the EU coders with EUR80 bn/ year meanwhile Greece is a net receiver since it joined the EU. That's a continuous wealth transfer. What more do you expect ?
However Germany is the one footing the bill for everybody else. You also should take into account that Germany is a net contributor to the EU coders with EUR80 bn/ year meanwhile Greece is a net receiver since it joined the EU. That's a continuous wealth transfer. What more do you expect ?
1
German exports did just fine for decades when they had the DM, which was valued much higher than the currencies of southern Europe. And it wasn't just German banks that made loans --- banks throughout Europe made the same loans. As far as the recent "German" agreement, a large majority of the EZ countries supported it, and another large majority of non-EZ countries in the EU, e.g. Sweden, Poland, Czeck Rep., Hungary, and the UK --- would support it if asked.
Thus, this vitriolic focus on Germany, when most European countries agree with them, can only be based on rank bigotry.
Thus, this vitriolic focus on Germany, when most European countries agree with them, can only be based on rank bigotry.
And what about Italy, France and Spain? They are creditors too and sold a lot of goods to Greece. There banks are very close connected to Greece banks. What happend to this countries if Greece would get a haircut? It's easy for greece ( and others ) to blame Germany but it will not help to force a solution.
One word to the expensive exports. You know that german companies invested a lot in the states and that their american workers are satisfied to work there and that german workers are satisfied because they produce semi-finished parts for your - german based - companies.
Germany and the US have an economic model, Greece not. That's the problem.
One word to the expensive exports. You know that german companies invested a lot in the states and that their american workers are satisfied to work there and that german workers are satisfied because they produce semi-finished parts for your - german based - companies.
Germany and the US have an economic model, Greece not. That's the problem.
The Greek crisis highlights the realities of unchecked borrowing under terms of unfulfilled reform. Greece should have made reforms to modernize their economy and create fiscal responsibility. The Greek gov. and its lenders both failed because Greece's lenders and the EU did not keep the nation in check as its banks spiraled towards insolvency and the government failed its basic task of fiscal responsibility. Blinded by the deep pockets of lenders Greece should not have been nor be allowed to borrow and Greece's lenders blinded by large returns should not be allowed to lend with such irresponsibility. It is time for the EU to decided wether it can fulfill its modern role of uniting Europe via a system of keeping the various nations in check.
7
Greece has a new government which has only been in power for six months. All those who benefited from decades of a more right wing government have removed their money, leaving the poorest to suffer.
And for all those enthusiastically backing more of the same failed austerity, how will an economy with 50 % youth unemployment be able to recover?
The IMF has confirmed Varofakis" assessment on this.
And for all those enthusiastically backing more of the same failed austerity, how will an economy with 50 % youth unemployment be able to recover?
The IMF has confirmed Varofakis" assessment on this.
Modern form of colonialism. Big banks lending, while knowing that Greece cannot afford it; knowing Goldman Sachs was helping Papandreou, Mitsotaki and the other evil oligarchs cook the Greek books; quickly hiding oligarch money in Swiss bank accounts and running away for a bit. Let it all simmer and voila! Northern Europe come buy some land, beautiful coast line properties, mountains for solar power, there is oil in the Aegean (who cares about the environment.) Even Ms Mbakogianni is buying up a lot of property in Greece these days in various towns! Evil....
28
Greece could also have a continuity in the European Union, and be relieved of the EU's external tariffs and capital regulations; ie as if a free-port ,save for her unilateral tariff options for economic revival of her economy.
1
German hypocrisy knows no bounds. Happy to accept debt forgiveness and write-downs when they are the beneficiary, but never to offer the same.
Never mind the fact that the costs of German barbarism in the 20th century are incalculable. They have never atoned, never really apologized, and could never hope to settle their moral debts even if they had tried.
The civilized person must wish nothing but oblivion for this short-sighted nation of savages, who are surely merely biding time until their next atrocities.
Never mind the fact that the costs of German barbarism in the 20th century are incalculable. They have never atoned, never really apologized, and could never hope to settle their moral debts even if they had tried.
The civilized person must wish nothing but oblivion for this short-sighted nation of savages, who are surely merely biding time until their next atrocities.
21
They never really appologized ? that's completely unfounded.
About lack of Moral Highground, I know I would now refer to Abu Greibh or May Lai, or pointing out to Israeli settlement policy....but why should I ?
About lack of Moral Highground, I know I would now refer to Abu Greibh or May Lai, or pointing out to Israeli settlement policy....but why should I ?
Oh, my. Have you considered therapy?
Hey, Walter, if those savage Germans are so "short-sighted," why would they be "biding time" until their next atrocities? Maybe they're invading Poland as we speak!
So many comments ask for a Marshall Plan for Greece. The German part of the Marshall Plan was a loan of 1.4 billion, that is 28 $ per person in Germany. Greece already received 300 billions, that is 30,000 $ per person. Even adjusted for inflation that is quite a difference.
24
It is costing the Spaniards about 250 per person.
You better check your figures. Germany received a total of $1.448 billion and Greece received $376 million. Beyond that, Germany got a write-off of half their debts following WWII.
Inflation, anyone?
Greece: proving Mrs. Thatcher right...socialism works only until you run out of other people's money. The rest of Europe doesn't have to fund your stupidity any longer. Leave the EU and transition to the third world hellhole you rightfully should be. 10000 Drachmas to the dollar if you're lucky. Not to worry, the USA is Greece on steroids living off the bank of China and will be right behind you. 10000 dollars to the Yuan if we're lucky.
15
From your post: Greece: proving Mrs. Thatcher right...socialism works only until you run out of other people's money.
How about this for insight: Bank prosperity works only until they run out of other people's money.
So then, if the banks agree that Greece should have to toe the line with austerity, then the banks should have to do the same because it is absolutely shameful how the banks have acted in wasting other people's money. And the Germans are behind it all.
How about this for insight: Bank prosperity works only until they run out of other people's money.
So then, if the banks agree that Greece should have to toe the line with austerity, then the banks should have to do the same because it is absolutely shameful how the banks have acted in wasting other people's money. And the Germans are behind it all.
The Germans. It's their continent to run as they see fit, right?
16
unfortunately that is the case
There is an alternative solution.
France should share it's subsidies with Greece.
The last I looked it amounted to about 60B Euros.
This is an amount that could help the Greeks through their crisis and allow the French to walk their talk.
France should share it's subsidies with Greece.
The last I looked it amounted to about 60B Euros.
This is an amount that could help the Greeks through their crisis and allow the French to walk their talk.
13
Schauble is right: Greece would be better off with it's own currency. But his procedure for getting to saying so has been such "a dirty game" that he has discredited the promise of the EU. It was dishonest that he played along with a third bailout knowing it was impossible for Greece to ever get out of debt if it met his conditions. After Tsipras renounced all his stated goals except staying in the Eurozone and on the Euro at enormous cost to ordinary Greeks, Schauble is dangling the possibility of some debt relief on condition that they leave the Euro. "Heel Tsipras! Good boy! Now reverse yourself again! Then go raid a garbage can!" That's what it looks like from here. Why should Greece trust the man who says it's all about trust but demonstrates that it's all about power?
Schauble has shown how Euro loans can become Payday Loans and Germany is the paymaster. A bad debtor must do as they're told and those doing the telling will not have the debtor's interest in mind or care about the debtor's citizens: they'll be squeezed like a lemon, their best assets privatized.
Greece joined the EU dishonestly and has been unable to tax it's elites. One of it's worst mistakes was not embracing the tax experts Schauble offered them awhile back. The lenders didn't do due diligence and made bad loans. Not black & white.
Time for long term thinking about the EU and the euro and what more than economics unites them - and whether Greece could be safely left out,
Schauble has shown how Euro loans can become Payday Loans and Germany is the paymaster. A bad debtor must do as they're told and those doing the telling will not have the debtor's interest in mind or care about the debtor's citizens: they'll be squeezed like a lemon, their best assets privatized.
Greece joined the EU dishonestly and has been unable to tax it's elites. One of it's worst mistakes was not embracing the tax experts Schauble offered them awhile back. The lenders didn't do due diligence and made bad loans. Not black & white.
Time for long term thinking about the EU and the euro and what more than economics unites them - and whether Greece could be safely left out,
16
Payday loans carry interest of up to 800%. Greece is paying an effective rate after rebates (the EU refunds the interest Greece pays) of 2.4%, the lowest in the Eurozone.
Greeks want to make sovereign decisions with other nations money. No thanks!
18
There appears to be at least some difference of opinion within the German cabinet. Schäuble has said that many in the German government share his view. So the newspaper Süddeutsche Zeitung asked the ministries what they thought. Many gave the predictable answer, with various degrees of sniffiness, that it's confidential and not for the hoi polloi to know. But a few basically say outright they don't share this view. Schäuble seems a little like the bull in the china shop. Or the vampire squid in the china shop, if you prefer.
4
I think Germany would be better off if they repaid the US for all Marshall Plan funds and for the last 70 years of providing for their defence, so they could rebuild their infrastucture, talk big and smoke cigars while our bridges, roads and schhols deteriorate. But then, what do I know.
15
Germany has repaid the Marshall Plan funds! Germany pays the US about 1 billion per year for their bases in Germany. And Germany has strengthened the NATO with the fourth largest army in the world during the cold war. Every man was drafted for 15 month.
23
... And Germany contributed almost Euros 30 billion in 2014 and received benefits from Brussels worth around Euros 13 billion.
See http://www.telegraph.co.uk/finance/financialcrisis/11221427/EU-budget-wh...
I wonder if any state in the union has such an imbalance in its contributions/receipts to the US federal government.
But, I forgot, the Ministry of Truth has ordered Hate Germany week.
See http://www.telegraph.co.uk/finance/financialcrisis/11221427/EU-budget-wh...
I wonder if any state in the union has such an imbalance in its contributions/receipts to the US federal government.
But, I forgot, the Ministry of Truth has ordered Hate Germany week.
17
All this bigoted focus on Germany. They are completely supported in the current agreement by Netherlands, Finland, the Baltics, and numerous others. What irrelevant historical grievance can you come up with against those countries?
2
When are you Progs going to stop trying to dump blame on the Germans? Greece borrowed the money willingly to pay for public benefits that they couldn't afford. Had the IMF and Eurozone, aka Germany, hadn't lent them the money you'd would screamed. Now the bill is due and you want the German workers to eat it. Admit it, in the end, that's the only way socialism will work, debt write offs.
32
The left can't handle the fact that Greece proves, once again, that socialism always fails
From your post: Greece borrowed the money willingly to pay for public benefits that they couldn't afford.
And the banks willingly lent them other people's money without due diligence. Go figure.
That is what banks seem to be the best at and that is losing other peoples money without consequence and then trying to make it appear that they had no hand in it by blaming someone else for the loss.
And the banks willingly lent them other people's money without due diligence. Go figure.
That is what banks seem to be the best at and that is losing other peoples money without consequence and then trying to make it appear that they had no hand in it by blaming someone else for the loss.
Germans shouldnt worry too much about this nonsensical criticism. The hardcore left has been, and always will, have this sneering contempt of successful individuals, businesses or countries. Normal people support Germany in this matter.
37
I consider myself normal, thank you very much, and I do not support Germany's wrong headed austerity policies aimed at its less well off neighbors. Those policies serve only to further impoverish Greece and other EZ nations. It is in fact reprehensible that Germany is doing this . I think a normal person should be able to understand that.
33
Greece lied and cheated more than all other EZ countries combined.
They are not "impoverished." They are in fact richer than numerous countries in the EU who did not lie and cheat and aren't whining about being destitute. In fact those poorer countries strongly support the German position. Greece has higher wages and better pensions than numerous EU countries. What they are is dysfunctional, and it's not the EU's duty to keep pouring money in there when they have repeatedly refused to reform. You can send money if you're so concerned.
They are not "impoverished." They are in fact richer than numerous countries in the EU who did not lie and cheat and aren't whining about being destitute. In fact those poorer countries strongly support the German position. Greece has higher wages and better pensions than numerous EU countries. What they are is dysfunctional, and it's not the EU's duty to keep pouring money in there when they have repeatedly refused to reform. You can send money if you're so concerned.
Someone should remind Wolgang Schauble that Germany was never asked to pay back its World War II war debt to the United States. the Marshall Plan was a gift that enabled Germany to survive and thrive economically. In 1945 the United States accepted its moral obligation to assist in the resurrection of the European economy. Now Germany must respond with equal magnanimity. To whom much has been given, much is expected.
28
The US had plenty of self interest. Europe in ruins, no trading partners.
10
The Marshall Plan was a loan, not a gift. It has been repaid by Germany.
19
Are you suggesting that Germans should be given half of Greece? (as half of Germany was donated in '45).
There's still an issue with intellectual properties course the US could take them from Germany (worth USD 10 bn back then) but there's none in Greece.
There's still an issue with intellectual properties course the US could take them from Germany (worth USD 10 bn back then) but there's none in Greece.
1
Germans were happy about debt relief when it was their relief after World War II. And Greece, which Germany devastated, forgave their debt. But now the Germans are acting like the Allies at Versailles. They think they are more moral. But they are like children, to whom "it's not fair," means "I didn't get my way." They want to starve the ordinary Greek people because some politicians pulled a fast one with Goldman Sachs. But the people who did that are long gone with the money, while the Greek elderly are rummaging through trash cans for food. Do the Germans really think the Greek elite cares what happens to the man in the street, whom they are punishing?
33
You better ask the Dutch and Finns and Slovakians and Slovenians and Lithuanians, many of which are poorer than Greece, why they all support the evil Germans. Your focus on Germany is just bigotry.
2
The Greeks starved themselves by going so deep into debt. If you're so worried, give the Greeks your savings
It is quite acceptable to American pride to acknowledge that immigrants have contributed to their prosperity and greatness. It's a little harder to swallow that a good deal of our scientific lead and prosperity - despite the ever-increasing burdens of non-skilled illegal immigrants and unproductive home-growns - has come from simply seizing German patents and inventions after World War I [the most prominent war booty which Woodrow Wilson seized in 1917 was the patent on aspirin, that "miracle drug"] and far more so after World War II.
But most Americans know about German World War II rockets. A few even know that in addition to the car engine the Germans also invented the jet and perfected the superhighway or Autobahn (the three most important inventions binding this vast country. Virtually no one knows that in Wright-Patterson Field in Ohio, in the Library of Congress and in the Department of Commerce in Washington, a "mother lode" of 1,500 tons of German patents and research papers were being mined furiously after the war. One gloating Washington bureaucrat called it "the greatest single source of this type of material in the world, the first orderly exploitation of an entire country's brain power."
But most Americans know about German World War II rockets. A few even know that in addition to the car engine the Germans also invented the jet and perfected the superhighway or Autobahn (the three most important inventions binding this vast country. Virtually no one knows that in Wright-Patterson Field in Ohio, in the Library of Congress and in the Department of Commerce in Washington, a "mother lode" of 1,500 tons of German patents and research papers were being mined furiously after the war. One gloating Washington bureaucrat called it "the greatest single source of this type of material in the world, the first orderly exploitation of an entire country's brain power."
It's time for Greece to mature, and realize that they have dug a hole of their own making. Germany, like the parent of a drug addict, cannot continue to bail them out of their irresponsibility. Leaving the European Union would be the best thing to happen to Greece. They would be forced to deal with the consequences of spending money they do not have. Reality is painful for those who live in a fantasy world, but the pain is well worth the maturity and well-being that follows. Greece needs to struggle through an irresponsible puberty.
28
Germany is not the parent, but the drug pusher: easy money loaned out, knowing the reckless banks would be reimbursed for 90% of that money, not the Greek people when it all went sour.
Same with " liar loan" lending and bank bailouts during the US housing boom.
Yes, leaving the union would be better - and Germany is essentially forcing that result, despite Schauble's protests.
They've simply arranged it, so they appear to support EU solidarity, but make the terms abusively unbearable. That way, they can punish Greece, bankrupt it, seize it's assets, then denounce it and abandon it's people when it fails.
Far better morally to assist with a smooth Grexit, but that would set the stage for Germany to no longer be the economic dictator and chief beneficially of the EU.
There is more than one way to conquer and destroy a country.
Same with " liar loan" lending and bank bailouts during the US housing boom.
Yes, leaving the union would be better - and Germany is essentially forcing that result, despite Schauble's protests.
They've simply arranged it, so they appear to support EU solidarity, but make the terms abusively unbearable. That way, they can punish Greece, bankrupt it, seize it's assets, then denounce it and abandon it's people when it fails.
Far better morally to assist with a smooth Grexit, but that would set the stage for Germany to no longer be the economic dictator and chief beneficially of the EU.
There is more than one way to conquer and destroy a country.
20
Well the politicians have kicked the can down the road one more time. Greece will steadily contract as it's been doing and a new rescue will be needed in another two years. This will involve more debt and more austerity. The sooner that this game stops the better the Greeks will be. After the current debacle who on earth is going to keep money in a Greek bank? Who wants to be owed a debt in Euro even for a month or two while something is being shipped? The answers are respectively no one and no one. It will be sad to watch this play itself out. Now imagine the alternative - the Euro Powers absorb a 160 billion haircut once Greece delivers reforms, not reduces spending - collects taxes, sells off state assets and reforms the labor market. Then, guess what, the Greek economy grows again and pays off it's debts. Without relief there is no chance that Greece will ever be able to grow it's economy.
8
The European Union is no union at all. If one of our states went bankrupt we wouldnt jettison it, yet that is exactly what the EU is considering. This travesty shows the EU for what it is, a marriage of convenience and not of love or even respect. Time for the battered wife to seek a shelter. If the EU is going to admit a country into its monetary system it then and forever bears considerable responsibility for assuring that country's as well as the entire EU zone's success. Blaming Greece is simply shirking responsibility and should be a message to the rest of the EU as well as the world financial markets.
12
NYer:
When NYC went bankrupt in the seventies, an Emergency Financial Control Board took control of the city's finances away from NYC's mayor and city government.
''In a way,'' said [a former MYC Mayor Ed] Koch, who was a member of Congress when the control board was created, ''the city of New York was like an indentured servant. The city, in order to survive bankruptcy and to get Federal assistance, indentured itself..."
Why not the same treatment for Greece? They have shown themselves incapable of governing themselves.
And what would the feds do confronted by a similar situation? Well, Obama's White House recently gave you the answer. Here is the headline from the US News & World Report: "Puerto Rico Not Getting U.S. Help, White House Says
White House says no U.S. bailout for Puerto Rico, urges Congress to consider bankruptcy change."
When NYC went bankrupt in the seventies, an Emergency Financial Control Board took control of the city's finances away from NYC's mayor and city government.
''In a way,'' said [a former MYC Mayor Ed] Koch, who was a member of Congress when the control board was created, ''the city of New York was like an indentured servant. The city, in order to survive bankruptcy and to get Federal assistance, indentured itself..."
Why not the same treatment for Greece? They have shown themselves incapable of governing themselves.
And what would the feds do confronted by a similar situation? Well, Obama's White House recently gave you the answer. Here is the headline from the US News & World Report: "Puerto Rico Not Getting U.S. Help, White House Says
White House says no U.S. bailout for Puerto Rico, urges Congress to consider bankruptcy change."
It's hard to choose a side to root for. The Greeks, the Germans and the bankers all deserve to lose.
2
The EU was a bad idea. The EU is a bad idea. The EU will always be a bad Idea. The US must very quickly decide to end it mindless infatuation with Europe. Europe loathes the US. Europe hates the US. Europe despises the US. Europe will bring about the downfall of the US. Nah? No way? Crazy? You are not paying attention. You had better pay attention. Mene Mene Tekel Upharsin.
1
The EU wasn't a bad idea as long as it stuck to custom unions, trade, etc. It became bad when they decided it should be a nation.
4
On the contrary, the comments here illustrate that the US hates Europe. Europe is just a bit worried about all the hysteria in the US.
15
"It became bad when they decided it should be a nation."
The EU is a nation? Who decided that? A nation with 3 different alphabets, interesting...
The EU is a nation? Who decided that? A nation with 3 different alphabets, interesting...
3
The way the German Finance Minster handling Greek financial crisis is beyond irresponsible and unethical. If he remembers German financial crisis he should know that "Greece's finance minister at London Conference of 1953 signing a treaty agreeing to cancel 50% of Germany's debt." [suzanne moore ]
Is this the way German paid back to Greek?
http://www.theguardian.com/business/2015/jul/06/germany-1953-greece-2015...
Is this the way German paid back to Greek?
http://www.theguardian.com/business/2015/jul/06/germany-1953-greece-2015...
8
Were you aware that much of Greece's debt was also forgiven at the time? That raises this, by the way, to "fourth Greek bailout".
8
Why doesn't Mr. Schable mind his business as Germany's economics minister and discuss what Germany's choices are instead of Greece's. Probably Greeks will exit the Euro -- when it is convenient to them, at the time of their choosing.
Mr. Schable is better of setting direction to his BMW's navigation system -- he should mind his own steering wheel.
Mr. Schable is better of setting direction to his BMW's navigation system -- he should mind his own steering wheel.
7
He represents the German people who paid to keep Greece afloat for the last 5 year. He is entitled to an opinion.
@ ABO - Paris: Perhaps you could look for articles related to the sales of weaponry by France and Germany to Greece in 2010-2011 complete with loans to Greece by the seller countries. It appears that Greece was suckered in alright. Here is one ...
By Bruno Waterfield, Brussels8:00AM GMT 08 Mar 2012
New official figures show that bailouts and an EU austerity programme aimed at reducing Greek living standards by 30 per cent have not dented lucrative arms sales to Greece.
In 2010, as Greece was plunged into crisis and the EU began a scheduled £200 billion in aid payments, European countries continued to sell aircraft, tanks, artillery and submarines to the Greek military.
In the same year, France concluded a £662 million military aircraft deal with Greece, a lucrative deal for the French arms industry that will be underwritten by EU bail-out funds.
Official German trade figures showed that in 2010 Germany, which has demanded draconian cuts to Greek social welfare spending, sold weaponry, including a submarine, worth £336 million to the impoverished southern Mediterranean country.
In October 2011, as the EU negotiated a second bail-out for Greece, Angela Merkel, the German Chancellor and Nicolas Sarkozy, the French President told the Greek government that all existing arms contracts must be honoured.
By Bruno Waterfield, Brussels8:00AM GMT 08 Mar 2012
New official figures show that bailouts and an EU austerity programme aimed at reducing Greek living standards by 30 per cent have not dented lucrative arms sales to Greece.
In 2010, as Greece was plunged into crisis and the EU began a scheduled £200 billion in aid payments, European countries continued to sell aircraft, tanks, artillery and submarines to the Greek military.
In the same year, France concluded a £662 million military aircraft deal with Greece, a lucrative deal for the French arms industry that will be underwritten by EU bail-out funds.
Official German trade figures showed that in 2010 Germany, which has demanded draconian cuts to Greek social welfare spending, sold weaponry, including a submarine, worth £336 million to the impoverished southern Mediterranean country.
In October 2011, as the EU negotiated a second bail-out for Greece, Angela Merkel, the German Chancellor and Nicolas Sarkozy, the French President told the Greek government that all existing arms contracts must be honoured.
13
France and Germany did not sell anything. International private companies with headquarters in France and Germany sold this weapons. No European government can stop these companies from exporting to a NATO country.
1
Hey Germany, when you pay back the Marshall Plan cash, you can talk about debt responsibility. You might not remember everybody helping you get back on your feet after that war your past leader started Greece will be well quit of you guys if they take the Grexit option.
8
Hey Tom, Germany paid back the Marshall Plan a long time ago.
It HAS been paid back.
Excellent advise. First, as Paul Krugman points out, Greece can recover much more quickly outside the Euro. Secondly, they are not fiscally responsible to be in the euro, and being suggested to leave is a polite way of saying you really don't deserve the status that comes with being within the euro. Excellent "suggestion".
11
Of course, it also clearly demonstrates that Germany was never serious about negotiating with Greece - they merely wanted to make Greece choose to leave rather than have Germany be seen as focring them out. Now, Mr. Schåuble is showing his real position, Expect the Germans to change the rules again, and demand still further concessions from Greece.
7
Actually, Greece doesn't deserve to be a member of the failed state the is the EU.
The next round of European wars has started, with economic usurpation instead of armies, banks instead of tanks, and misery & poverty riding hard to afflict the cowering masses.
10
Good plan Herr Schäuble and great for Germany: how to loose 10 millions customers for German product. And, by the way, Italy is in the same situation as Greece in 2010 with a debt/GDP ratio above 130 per cent, no growth prospect, low inflation. Even running a primary surplus every year for 10 years, Italy won't be able to reduce its debt at a sustainable level. Then what? Loose other 50 millions customers?
8
Who can afford EUR 70 thud for BMW will also afford it afterwards. Just look around in Vienna. However I suppose you're not Austrian.
This is a dangerous man and has been anti Greek from the beginning. He has been on the wrong side this whole debate. Krugman did not say that it is better for Greece to go back to Euro. Krugman said that the austerity without understanding that growth must be supported is criminal for the potential relief and long term good of Greece. I just came back from 6 weeks in Thessaloniki and I can tell you this man is looking for what Yiannis Boutaris, the major of Greece means when he says, according to a great interview by journalist Lilah Raptopoulos for NPR today, ..."Germans and their friends think about a German Europe, and not a European Germany. It's evident. They want to be the conquerors, the ones who give the pace to Europe."
7
Germany Might Be Better Off Outside European Union.
9
There will be a tourism backlash against Geemany when people start flocking to the cheaper and more scenic Greece. German tourists already knew that.
1
Except for the riots, no ATMs, no food, empty stores- a socialist paradise!
A real Greek fear is Germany will make a further example of Greece, far worse than anything already suffered by the toxic austerity of the last five years. This would then dissuade other hopelessly indebted countries from leaving Germany's trade empire. Greece cannot be allowed to succeed. If it did, what purpose is the Euro for countries where it has caused such harm? Ireland, Italy, Spain and Portugal? (Things don't seem to be working that well for Finland, either.)
2
You seem to be working off data three or four years old. Most of those countries you mention are doing fine. Finland, in fact, is one of the strongest nations urging Greek responsibility for its debts.
Here from There, read Stearms74's comment above about Italy. Everything isn't just peachy there. And what is the unemployment rate in Spain currently? Still 20%. Their recovery has a long way to go. Another recession anytime soon could swamp two or three countries in further unsustainable debt, and they can't devalue their currency... They cut greece loose now, they will eventually lose southern europe.
1
Both the Germans and the Greeks have legitimate complaints. Why don't the Germans use this opportunity to make meaningful changes to the way the Eurozone is structured? In return for substantive changes and reform to the way the Eurozone currently operates, they restructure the Greek's debt. The Greeks would then have a viable path to recovery and the Germans not only can protect themselves better from future problems but also have an opportunity to restructure policies and procedures to better prevent these issues. This is an opportunity for Germany to step forward with a meaningful solution for Europe's future.
5
This is looking increasingly like a futile attempt to avoid the inevitable. From what I have read, there are a number of other countries that are close to Greek's situation. A number of Greek themselves have commented that Greece badly needs to reform its financial house, like collecting taxes, and cleaning up certain corruptions. Increasing playing beggar who can't help themselves and needs big, bad responsible Germany to loan even more money is just gamey, and not a solution. Perhaps it's time for Greece to exit and take the consequences of its financial plight and stand on its own feet. Many have stated that the adoption of a common currency was premature in the first place.
9
Maybe the British will let the Greeks put the Elgin marbles up for collateral?
Those were ruthlessly plundered along with countless other treasures while Greece was under occupation.
Those were ruthlessly plundered along with countless other treasures while Greece was under occupation.
11
Yes, but what if the Greeks had mismanaged their stewardship of the Elgin Marbles as poorly as they have managed their economy?
If Greece is indeed better off outside the eurozone (EZ) that is a view that economists can argue about. Not being an economist myself I see nothing in these official statements that would address some of the root causes: a renegade financial industry that only tries to pass its bad investments to the taxpayer (why not the high yield ones also?) and an ill-conceived euro that only serves a few in terms of economic growth. Greece cannot be blamed for an entire EZ's worth of problems and shouldn't have to face such cruelty.
Mr. Schauble is not the right person to be making these "suggestions". One reason is that he is not in exactly qualified to say what is good for another state that did not elect him. Another reason is that he may come across as arrogant and insensitive to a population living in a rapidly deteriorating economy who perhaps will feel further humiliated and insulted. Yet another one is that he may be seen as pushing for a grexit to counterbalance the political costs of a debt write-off that everyone but his country has been suggesting from the beginning.
He has no filters. He needs to refrain from making statements that show his lack of leadership skills required from the economy on the front seat in the EZ. If he and ms. Merkel really were true lenders they would have forced reforms in the banking sector first. Forcing bad bank investments to the EZ taxpayers will come back to haunt him.
Mr. Schauble is not the right person to be making these "suggestions". One reason is that he is not in exactly qualified to say what is good for another state that did not elect him. Another reason is that he may come across as arrogant and insensitive to a population living in a rapidly deteriorating economy who perhaps will feel further humiliated and insulted. Yet another one is that he may be seen as pushing for a grexit to counterbalance the political costs of a debt write-off that everyone but his country has been suggesting from the beginning.
He has no filters. He needs to refrain from making statements that show his lack of leadership skills required from the economy on the front seat in the EZ. If he and ms. Merkel really were true lenders they would have forced reforms in the banking sector first. Forcing bad bank investments to the EZ taxpayers will come back to haunt him.
16
Thank you for this exceptionally well considered comment.
Since the Germans/Northern Europeans appear to have only skin deep allegiance to the rest of Europe, I suggest we leave them to their own devices and borders with Putin.
6
Well, irony of ironies, Paul Krugman and Wolfgang Schäuble are on the same page!
True, before Krugman supported Grexit, he opposed it; and before he opposed it, he supported it. And that only goes back a few months.
Over at his blog, Krugman has whipped up his commenters into an anti-German frenzy. One of their favorite conspiracy theories is that the Germans derive some special advantage from the eurozone. I wonder how they account for Schäuble's eagerness to see his empire diminished by the Greek exit?
True, before Krugman supported Grexit, he opposed it; and before he opposed it, he supported it. And that only goes back a few months.
Over at his blog, Krugman has whipped up his commenters into an anti-German frenzy. One of their favorite conspiracy theories is that the Germans derive some special advantage from the eurozone. I wonder how they account for Schäuble's eagerness to see his empire diminished by the Greek exit?
13
Mr. Maitland, the special advantage that they derive stems from the fact that the Euro is essentially a Deutschmark under another name. Try thinking of it this way and see whether you can imagine what advantages might accrue to Germany (to its manufacturing, to its banking sector etc.) if many other nations are using its currency.
We here in the U.S. also have a currency union -- it's called the dollar zone -- only we routinely transfer wealth from the more productive blue states to the less educated red states. Germany wants a currency union with a currency that it controls yet with no obligation to act towards Greece as we in the blue states regularly act towards Mississippi and Alabama etc. I understand Herr Schauble, I feel about the southeastern red states precisely as he does about Greece.
We here in the U.S. also have a currency union -- it's called the dollar zone -- only we routinely transfer wealth from the more productive blue states to the less educated red states. Germany wants a currency union with a currency that it controls yet with no obligation to act towards Greece as we in the blue states regularly act towards Mississippi and Alabama etc. I understand Herr Schauble, I feel about the southeastern red states precisely as he does about Greece.
4
I appreciate your attempt to educate me, but I really can't "imagine what advantages ... accrue to Germany."
I have heard it said that the weakness of some European countries holds down the Euro and thereby makes German exports cheaper. But (a) a lower currency is not an unmixed blessing and (b) that trick can be accomplished by manipulating a national currency too.
Nor do I entirely follow your learned disquisition on the currency union. As I understand it, Germany (most of all) and, say, the UK, already routinely transfer lavish amounts of wealth to their poorer neighbors. I also believe that Germany (and particularly Schäuble?) initially opposed the eurozone without more fiscal integration. It lost that argument.
So long as countries retain fiscal sovereignty, it seems only reasonable that they retain the responsibility for managing their affairs. Indeed, I doubt that there is going to be a federal bailout of Puerto Rico without a real donnybrook. And when the feds bailed out NYC in the seventies, the city lost control of its budget to an Emergency Financial Control Board.
I have heard it said that the weakness of some European countries holds down the Euro and thereby makes German exports cheaper. But (a) a lower currency is not an unmixed blessing and (b) that trick can be accomplished by manipulating a national currency too.
Nor do I entirely follow your learned disquisition on the currency union. As I understand it, Germany (most of all) and, say, the UK, already routinely transfer lavish amounts of wealth to their poorer neighbors. I also believe that Germany (and particularly Schäuble?) initially opposed the eurozone without more fiscal integration. It lost that argument.
So long as countries retain fiscal sovereignty, it seems only reasonable that they retain the responsibility for managing their affairs. Indeed, I doubt that there is going to be a federal bailout of Puerto Rico without a real donnybrook. And when the feds bailed out NYC in the seventies, the city lost control of its budget to an Emergency Financial Control Board.
1
This is an instant replay of America bailing out the banksters in the 2008 housing collapse while letting homeowners drown in the debt foisted on them by the very same banksters. It's just writ large on a national scale. This is also the same evil practice perpetrated on developing world nations by the IMF and World Bank. First create an unsustainable debt, then take control of the nation's precious natural resources to keep the interest payments up to date but never pay down the principal, while simultaneously keeping the country mired in poverty.
11
Alex Jones of Austin Texas, is this you? I love conspiracies!
"Foisted"? Are American homeowners all small children, who cannot be trusted to figure out what's in their best interest and what's not? Do they need a benevolent overseer? Does Greece also need a nanny, telling it what it can and can't do?
I don't blame the germans a bit. How about if Americans shared our currency with Canada, Mexico, all of central America and some of south America and there was a deadbeat country which couldn't pay. There would be a taxpayer revolt!
17
Our "Greece" is Puerto Rico. Granted, it is an island economy with a permanent trade deficit, high permanent unemployment, etc. Trouble is we made them our Commonwealth to stabilize the Caribbean region, use the island as a Naval Bombing target, whatever. Very similar reasons the EU brought Greece into the euro zone against everyone's' better judgement. Now we have to see P.R. through - the EU has to do what's necessary for Greece. Or we will find Chinese or Russian naval and air bases right smack in the middle of NATO.
Maybe it's time to stop supporting "capitalism" (is there really a free-market anywhere?) and rethink economics and work in terms of a new world with new technologies that make many people obsolete (and have also led to the production of many items in China, India - far away places.)
I am sure many Greeks work hard... I am sure many Greek (and other) government (tax-payer supported) workers are overpaid. I am sure many absurdly wealthy Greeks do not pay sufficient taxes. Were the Greeks lend money at zero interest rates like the banks in industrialized nations? and if not why not... and why not "forgive" at least some of the debt. (I am sorry but national debt is NOT the same as household debt... and to compare it shows that well we probably don't need to worry about our educational system working because it's NOT working.)
I am sure many Greeks work hard... I am sure many Greek (and other) government (tax-payer supported) workers are overpaid. I am sure many absurdly wealthy Greeks do not pay sufficient taxes. Were the Greeks lend money at zero interest rates like the banks in industrialized nations? and if not why not... and why not "forgive" at least some of the debt. (I am sorry but national debt is NOT the same as household debt... and to compare it shows that well we probably don't need to worry about our educational system working because it's NOT working.)
8
Since you are obviously so much smarter than the rest of us maybe you could explain the differences between national debt and household debt. Heck, I thought that it was always about making smart financial decisions, but maybe I am wrong.
I am intrigued by the choice of words of Schauble. He says that debt relief cannot be provided via a "haircut" to a member of the Eurozone. Then in his next breath states that Greece should temporarily leave the Eurozone. Is he trying to say that if Greece leaves the Eurozone, even temporarily, he would support a massive debt-relief haircut on Eurozone (and German) debt? If so, he could immediately and abruptly change the intensely negative view many outside of Germany now have about him.
What would be most helpful for Greece would likely be an organized exit from the Euro in which the Eurozone creditors agreed to assist Greece in the transition, in exchange for Greece not simply defaulting on the debt. Greece cannot withstand a chaotic, disorganized exit, but may warm to the idea of an organized, orderly exit while respecting repayment of significant amounts of the debt.
Why hasn't such a proposal been put forth by rational minds?
What would be most helpful for Greece would likely be an organized exit from the Euro in which the Eurozone creditors agreed to assist Greece in the transition, in exchange for Greece not simply defaulting on the debt. Greece cannot withstand a chaotic, disorganized exit, but may warm to the idea of an organized, orderly exit while respecting repayment of significant amounts of the debt.
Why hasn't such a proposal been put forth by rational minds?
9
@ Concerned Citizen , Los Angeles
Another question might be: Why hasn't such a proposal been put forth by GREEK minds?
Surely they must know better than anyone else that it is unsustainable for Greece to remain in the Eurozone.
Another question might be: Why hasn't such a proposal been put forth by GREEK minds?
Surely they must know better than anyone else that it is unsustainable for Greece to remain in the Eurozone.
1
"Is he trying to say that if Greece leaves the Eurozone, even temporarily, he would support a massive debt-relief haircut on Eurozone (and German) debt?"
Yes, that is precisely what he is saying.
Yes, that is precisely what he is saying.
The Greeks have been brought to their knees.
They are a proud people and this has been horribly humiliating.
However, they have done everything, even more in this last case, than what was originally demanded of them.
And now this.
Well, Schauble is right.
They would do best to just leave the EU, go back to the drachma, take a few years to get their house in order and then, if so motivated, return.
But, of course, they are not in any mood these days to listen to any lectures from German bankers or finance ministers.
They are a proud people and this has been horribly humiliating.
However, they have done everything, even more in this last case, than what was originally demanded of them.
And now this.
Well, Schauble is right.
They would do best to just leave the EU, go back to the drachma, take a few years to get their house in order and then, if so motivated, return.
But, of course, they are not in any mood these days to listen to any lectures from German bankers or finance ministers.
5
Mostly wrong Simon.
The humiliation of Greece has been entirely self-inflicted. It is the result of their fecklessness and their tolerance of pervasive corruption in every walk of life. When they start paying their taxes, and when the government starts to collect taxes, then maybe I'll change my mind.
That is not to say that the Greeks didn't make any progress. After all, their economy recovered some in 2014 and there was a primary budget surplus. But even then the reforms were half-hearted. Look up the Economist on how the Greeks reformed their public pensions but then "grandfathered" most people.
But then Tsipras came to power and tore up all the promises previous governments had made. His party dug the deep hole the Greek economy is in now.
The humiliation of Greece has been entirely self-inflicted. It is the result of their fecklessness and their tolerance of pervasive corruption in every walk of life. When they start paying their taxes, and when the government starts to collect taxes, then maybe I'll change my mind.
That is not to say that the Greeks didn't make any progress. After all, their economy recovered some in 2014 and there was a primary budget surplus. But even then the reforms were half-hearted. Look up the Economist on how the Greeks reformed their public pensions but then "grandfathered" most people.
But then Tsipras came to power and tore up all the promises previous governments had made. His party dug the deep hole the Greek economy is in now.
5
@ Simon Sez , Maryland
They didn't listen even before it got this far.
They didn't listen even before it got this far.
1
“Unjustifiably humiliated Greece and its prime minister, Alexis Tsipras”?
Really?
Greece claims to have conquered its current account deficit now in “surplus”, except for its Euro-bailout debt service demands. But that doesn't admit the OTHER subsidies that Europe gives less-wealthy member countries. It remains that their economy produces too little to pay for their socialism and dysfunction. Their inability to grow their economy has more to do with the inability of its workforce to compete regionally under the euro and the bureaucracy and corruption that hobbles it as any inability to invest.
Short of a ground-up reengineering of Greek governance, we have before us a failed European state.
It may be that Schäuble is telling Greece that NOBODY believes that they wouldn’t borrow again beyond their means to repay once freed of debt but still under the euro, in order to fund a socialism they can’t afford but haven’t the will to diminish, They’d be precisely where they are now in a few years.
Outside the Eurozone, Greece could repudiate the debt; and the inability to borrow on their own reputation and currency at wearable rates would FORCE them to reform drastically, then grow their economy to afford what socialism they CAN. THAT’S the only way to regain any semblance of credibility as a viable state. Only THEN could they be readmitted.
That’s “humiliation”? To me it sounds like adult advice to go regain your self-respect and true viability, as painful as it must be.
Really?
Greece claims to have conquered its current account deficit now in “surplus”, except for its Euro-bailout debt service demands. But that doesn't admit the OTHER subsidies that Europe gives less-wealthy member countries. It remains that their economy produces too little to pay for their socialism and dysfunction. Their inability to grow their economy has more to do with the inability of its workforce to compete regionally under the euro and the bureaucracy and corruption that hobbles it as any inability to invest.
Short of a ground-up reengineering of Greek governance, we have before us a failed European state.
It may be that Schäuble is telling Greece that NOBODY believes that they wouldn’t borrow again beyond their means to repay once freed of debt but still under the euro, in order to fund a socialism they can’t afford but haven’t the will to diminish, They’d be precisely where they are now in a few years.
Outside the Eurozone, Greece could repudiate the debt; and the inability to borrow on their own reputation and currency at wearable rates would FORCE them to reform drastically, then grow their economy to afford what socialism they CAN. THAT’S the only way to regain any semblance of credibility as a viable state. Only THEN could they be readmitted.
That’s “humiliation”? To me it sounds like adult advice to go regain your self-respect and true viability, as painful as it must be.
17
One side argues about money and pounds on the rule book. The other side argues for humane treatment. The visuals from Greece get worse by the day, with riots and old people digging through garbage cans. Public opinion prefers unstrain'd mercy, unless it costs too much...the Germans lose this one eventually, and must allow for debt forgiveness eventually, much as their debts were (partially) forgiven. The quality of German mercy is apparently quite strained.
4
The Greeks could be better; the Germans could be meaner.
http://www.tradingeconomics.com/greece/government-spending-to-gdp Government spending in Greece was last recorded at 59.2 percent of GDP in 2013.
http://www.tradingeconomics.com/greece/government-spending-to-gdp
Government spending at the start of the 20th century was less than 7 percent of GDP. It vaulted to almost 30 percent of GDP by the end of World War I, and then settled down to 10 percent of GDP in the 1920s. In the 1930s spending doubled to 20 percent of GDP. Defense spending in World War II drove overall government spending over 50 percent of GDP before declining to 22 percent of GDP in the late 1940s. The 1950s began a steady spending increase to about 36 percent of GDP by 1982. In the 1990s and 2000s government spending stayed about constant at 33-35 percent of GDP, but in the aftermath of the Crash of 2008 spending jogged up to 40 percent of GDP.
Maybe a 50% reduction of each Greek Government paycheck each month is required until the government expenses are sufficiently less that the Greek government tax collections as required to make the Greek Government viable with sufficient funds to meet the Greek Government’s international financial obligations and then to maybe pay the Greek citizen's government handout paychecks with the remaining money!
Greek Government contractors will probably have to default when the Greek government defaults on their contract obligations and stop providing whatever they contracted with the Greek government in Euros to provide.
http://www.tradingeconomics.com/greece/government-spending-to-gdp
Government spending at the start of the 20th century was less than 7 percent of GDP. It vaulted to almost 30 percent of GDP by the end of World War I, and then settled down to 10 percent of GDP in the 1920s. In the 1930s spending doubled to 20 percent of GDP. Defense spending in World War II drove overall government spending over 50 percent of GDP before declining to 22 percent of GDP in the late 1940s. The 1950s began a steady spending increase to about 36 percent of GDP by 1982. In the 1990s and 2000s government spending stayed about constant at 33-35 percent of GDP, but in the aftermath of the Crash of 2008 spending jogged up to 40 percent of GDP.
Maybe a 50% reduction of each Greek Government paycheck each month is required until the government expenses are sufficiently less that the Greek government tax collections as required to make the Greek Government viable with sufficient funds to meet the Greek Government’s international financial obligations and then to maybe pay the Greek citizen's government handout paychecks with the remaining money!
Greek Government contractors will probably have to default when the Greek government defaults on their contract obligations and stop providing whatever they contracted with the Greek government in Euros to provide.
7
Schauble is acknowledging that Greece needs debt relief, but would allow it to happen only if he didn't have to vote on it. Having Greece drop out of the Eorozone, default on its debt, then gets its house in order to reapply for membership seems very convoluted. Why not an orderly restructuring of Greece's debt by its creditors in the Eurozone?
2
Because if they stay in the EZone everything would be the same in a few years. The Greeks always voted for the political party which promised the most (also last time). What's the guarantee that it won't happen again? If they would have their own currency they could blame only themselves.
For Greece, Russia, the USA, or any city, state, or nation (or any family) to support and sustain a Republic, Democracy, Theocracy, Capitalism, Communism, Socialism, Fascism, Dictatorship, Kingdom, Principality or any other form of government that they select and/or is imposed upon them, that nation still has to have their privately owned businesses continuously create sufficient new taxable national wealth (and jobs) in their nation so that there is enough available wealth in that nation for that nation's government to confiscate a portion of that new taxable national wealth and/or profit that was created by the private sector businesses plus additional amounts confiscated through income taxes, sales taxes, property taxes, tariffs, etc., and other taxes by the government tax collectors to pay for their wealth consuming government activities and government services.
This can only be accomplished by limiting government spending to less than the government collects in taxes!
This can only be accomplished by limiting government spending to less than the government collects in taxes!
2
Why can't everybody realize that the main cause of the Greek government's current economic and financial distress is the excessive Greek Government spending.
The main cause of Greece's current economic and financial distress is excessive Greek Government Spending.
There are real limits to how many wealth consuming people paid by the Greek government that the taxable wealth creating Greek people in Greece (or any other nation) can afford to support without bankrupting the Greek Government!
The Greek nation created a Socialist Worker's Paradise!
The Greeks have now exhausted the stream of borrowed money that the Greek Government relied upon to pay the Greek government employees and others that were living off of the Greek Government, so now that worker's paradise has evaporated!
The Greek government will soon not have enough Euros to pay their Greek Government employees, their Greek pensioners (like the US social security) and their Greek Government contracts.
The Greek government wants to borrow more money by selling some more freshly printed paper Sovereign Greek Government Treasury Bonds and use these (borrowed) Euros to continue to pay for continuing these wealth consuming Greek Government expenses.
Bond Buyers will not buy any more Sovereign Greek Government Treasury Bonds because the Greek Government is not expected to honor any new Greek Government Treasury Bonds any more than the Greek Government has honored the existing Greek Government Treasury Bonds.
The main cause of Greece's current economic and financial distress is excessive Greek Government Spending.
There are real limits to how many wealth consuming people paid by the Greek government that the taxable wealth creating Greek people in Greece (or any other nation) can afford to support without bankrupting the Greek Government!
The Greek nation created a Socialist Worker's Paradise!
The Greeks have now exhausted the stream of borrowed money that the Greek Government relied upon to pay the Greek government employees and others that were living off of the Greek Government, so now that worker's paradise has evaporated!
The Greek government will soon not have enough Euros to pay their Greek Government employees, their Greek pensioners (like the US social security) and their Greek Government contracts.
The Greek government wants to borrow more money by selling some more freshly printed paper Sovereign Greek Government Treasury Bonds and use these (borrowed) Euros to continue to pay for continuing these wealth consuming Greek Government expenses.
Bond Buyers will not buy any more Sovereign Greek Government Treasury Bonds because the Greek Government is not expected to honor any new Greek Government Treasury Bonds any more than the Greek Government has honored the existing Greek Government Treasury Bonds.
10
@ Gerald Houston, TX
Finally. A voice of reason in the wilderness. You have hit the nail on the head!....Thank you!
Finally. A voice of reason in the wilderness. You have hit the nail on the head!....Thank you!
The real question is why do the Greeks not want to leave? Schauble is offering them a reasonable deal: leave and be free of the debts to start again, what could be more reasonable than that? Most economic analysis says this would allow them to thrive (assuming they addressed their issues, which they would be free to do) after a few years.
But why isn't that enough for the Greeks and the writer of this opinion piece?
The only thing that could be better from the Greek's perspective, is to stay, and still be free of debts, but why would the creditors put up with that? They cancel the debts, get to put in more money, and they continue to have the responsibility for a country that can't reform and is uncompetitive. I am not sure where that would be going ...it makes no sense.
But why isn't that enough for the Greeks and the writer of this opinion piece?
The only thing that could be better from the Greek's perspective, is to stay, and still be free of debts, but why would the creditors put up with that? They cancel the debts, get to put in more money, and they continue to have the responsibility for a country that can't reform and is uncompetitive. I am not sure where that would be going ...it makes no sense.
11
If the Greeks wanted to be lead around by Wolfgang Vader they would have elected him, but the reality is no one elected Darth. He was appointed by Angela Lecter.
The Greeks have been compared to a rotten limb in need of amputation. But they are not an inanimate object. They are not something to be sawn off and disposed of. They are a people, they are human beings. They are hungry children begging in front of wealthy tourists, they are impoverished pensioners rummaging through trash bins, they are young people who have opened their veins after enduring the shame of years of fruitless job searching.
During the credit mania of the mid-2000s, Greek politicians borrowed far more than was responsible. Yet this money was lent to them with reckless abandon by lenders such as Deutsche Bank in search of high returns. While the German-dominated ECB effectively bailed out the private bankers in 2010, the Greeks received years of pious lectures about "moral hazard" worthy of the most Procrustean miser out of Dickens.
As Paul Krugman recently noted, for years "the Greeks have slashed spending and raised taxes. Government employment has fallen more than 25 percent, and pensions have been cut sharply." But it's never enough for Herr Schäuble, is it?
After World War II, the international community declined to repeat the folly of the interwar period, when a myopic insistence on austerity caused economic collapse and brought Hitler to power. In 1953, Germany's sovereign creditors slashed the country’s debts in half, and the German economy boomed. How short our memories are.
During the credit mania of the mid-2000s, Greek politicians borrowed far more than was responsible. Yet this money was lent to them with reckless abandon by lenders such as Deutsche Bank in search of high returns. While the German-dominated ECB effectively bailed out the private bankers in 2010, the Greeks received years of pious lectures about "moral hazard" worthy of the most Procrustean miser out of Dickens.
As Paul Krugman recently noted, for years "the Greeks have slashed spending and raised taxes. Government employment has fallen more than 25 percent, and pensions have been cut sharply." But it's never enough for Herr Schäuble, is it?
After World War II, the international community declined to repeat the folly of the interwar period, when a myopic insistence on austerity caused economic collapse and brought Hitler to power. In 1953, Germany's sovereign creditors slashed the country’s debts in half, and the German economy boomed. How short our memories are.
6
The idea that the Greeks were lent money by banks in search of high returns in the mid-2000's is fiction. The Greek government were lent money at yields virtually the same as Germany when the real risk underlying Greek borrowing was far higher than that reflected in the yields the lenders received.
Yes, Greeks are human beings but they are human beings who want a first world living standard without organizing themselves as a society to produce goods and services to justify such a living standard. They are content to allow their oligarchs to pillage their own society and then have the rest of the world make up the shortfall. It doesn't work.
I agree with Krugman that the Greeks should leave the Euro. Their debt should be restructured and they should receive humanitarian aid to ease their transition. The latest deal is simply a political and economic farce.
Yes, Greeks are human beings but they are human beings who want a first world living standard without organizing themselves as a society to produce goods and services to justify such a living standard. They are content to allow their oligarchs to pillage their own society and then have the rest of the world make up the shortfall. It doesn't work.
I agree with Krugman that the Greeks should leave the Euro. Their debt should be restructured and they should receive humanitarian aid to ease their transition. The latest deal is simply a political and economic farce.
7
I was wrong to say that private banks lent to Greece in search of “high returns.” That would have made more sense. Instead, they recklessly lent to Greece for paltry returns.
As the world knew perfectly well at the time, the Greek government only collected a fraction of the taxes it assessed on its citizens and businesses and dramatically overstated the amounts it collected. Its state sector was bloated and its private sector uncompetitive. Articles in The Economist and the Financial Times in the mid-2000s made this abundantly clear. The fact that private lenders, despite knowing this, pumped tens of billions of euros into Greek debt markets without being compensated for the greater risk they posed makes their actions even more reckless and irresponsible, not unlike the mortgage lenders in the U.S.
My point remains: after 2010, sovereign debt was substituted for private debt. The lenders were off the hook, but not Greece. Yet no one considers that “moral hazard.” What's to stop lenders from getting themselves in the same fix again, since they know they'll be rescued by the ECB? Perhaps some Teutonic moral indignation should be directed at the banks that recklessly lent the money in the first place.
As the world knew perfectly well at the time, the Greek government only collected a fraction of the taxes it assessed on its citizens and businesses and dramatically overstated the amounts it collected. Its state sector was bloated and its private sector uncompetitive. Articles in The Economist and the Financial Times in the mid-2000s made this abundantly clear. The fact that private lenders, despite knowing this, pumped tens of billions of euros into Greek debt markets without being compensated for the greater risk they posed makes their actions even more reckless and irresponsible, not unlike the mortgage lenders in the U.S.
My point remains: after 2010, sovereign debt was substituted for private debt. The lenders were off the hook, but not Greece. Yet no one considers that “moral hazard.” What's to stop lenders from getting themselves in the same fix again, since they know they'll be rescued by the ECB? Perhaps some Teutonic moral indignation should be directed at the banks that recklessly lent the money in the first place.
1
There are other countries in the Eurozone with similar difficulties and as each of those problems surface and threaten to the Euro, it will be interesting to see how all those who voted to hold Greece to draconian austerity measures react. Too much of a short-term view by Merkel who I guess is serving the people that voted her to power. She certainly ain't no stateswoman or visionary!
2
The Greeks should have insisted on Schäuble leaving his position in exchange for Yanis Varoufakis leaving his as Greek finance minister. Neither of them have a personality for diplomacy.
If seems like the personality conflicts are having an undue influence on these negotiations.
If seems like the personality conflicts are having an undue influence on these negotiations.
2
Perhaps the advice to exit the Eurozone is the best for the "sick child of Europe". But, what if Greece exits NATO as well, not being able to bear the financial burden of the membership, whatever it is? Then the seed of next war is planted in Europe: in the historically inimical triangle Greece-Turkey-Russia, Turkey may want to reoccupy the Aegean Islands and perhaps part of Greece; Greece turns to Russia for help and the latter revives its drive on Constantinople/Istanbul that failed in 1878. Of the further consequences it is better not to speculate ...
2
Whatever happens with Greece, the rest of the EU and those who would consider joining, take note. Greece's best bargaining chip is now apparently debt relief in exchange for just leaving the Euro. The Euro club can no longer be considered as anything but a convenient currency for those countries that can tow the line. And not your own line, but the line of the lenders. It boils down to paying your debts on time or being kicked out. Personally I think the European Union bears much responsibility for allowing Greece to join in the first place, then allowing their economy to essentially fail to the point of no return and in the end attempting to hold them hostage. The EU wants it both ways, Greece would be wise to leave and some others might be wise to consider doing so now before it is similarly forced upon them when it is too late. The Euro might have some benefits, but the dark side is calling, and Darth Vader speaks German.
76
It seems as though Schäuble is speaking of what would 'probably' be better for Greece—he does not seem to be speculating on much else. As stated in other comments, thinkers such as Paul Krugman have stated similar sentiments but have received more populous praise. It seems as though people closer to him see more problems in his speculation than those from afar.
2
The speculations (of Schäuble?) seem to have brought more (German) law makers (of CDU/CSU) on the side of Merkel. Tomorrow German parliament will decide on the question whether the German government shall have the order to negotiate with the Greek government (within Eurozone mechanisms) about a 3rd "help package". Few in Germany are expecting that the order will be rejected by the parliament (albeit I'm surprised that the German "Syriza"'s law makers seem to be unwilling to do so). The speculations (of Schäuble) only did make it more likely that less law makers of CDU/CSU will agree now on what Merkel has signed.
"It seems as though Schäuble is speaking of what would 'probably' be better for Greece—he does not seem to be speculating on much else."
Speculating? Schäuble? Perhaps to become next German Chancellor? Or what would be better for Greece after 3000 years (or more) of existence? That stocks of Apple will go down tomorrow?
No! I don't think so. He is old enough (+ physically handicapped enough). I guess he is doing not much more than simply doing his job without any speculation.
"It seems as though Schäuble is speaking of what would 'probably' be better for Greece—he does not seem to be speculating on much else."
Speculating? Schäuble? Perhaps to become next German Chancellor? Or what would be better for Greece after 3000 years (or more) of existence? That stocks of Apple will go down tomorrow?
No! I don't think so. He is old enough (+ physically handicapped enough). I guess he is doing not much more than simply doing his job without any speculation.
I begin to smell a very large rat here. The talk is "Germany", but let's remember the Euro financial sector isn't made up exclusively of Germans. It's very much multinational and interlocked. The lack of transparency of the lender side has been extraordinary for this level of debt. Let's also remember that money laundering and sharp practices aren't unknown in the EU, either. The strong emphasis on compliance doesn't quite ring true in the home of the Mafia and endless boutique banks. The sheer amount of debt is also extraordinary for such a small country. There hasn't even been a theoretical rationale for the original debt which caused the problem, but there's been a lot about how awful Greece is for having an early retirement age, among other irrelevant criticisms and off-target conditions are the only subjects mentioned. I see a scenario where serious mistakes, financial corruption, and cross-institutional debts are being covered up wholesale on the lender side. It's suddenly OK to default if Greece leaves the EU, after all this fuss, but not if it's an EU member? So all the others can leave too, and that'll be OK? Does any of that make sense? They must be hiding something, and whatever it is will be expensive and must have an upside for someone; definitely not the debtor nations. They protest so much then advocate the exact opposite? There has to be more than EU rules involved here.
8
When comparing FDR's policies to Greece, you need to be clear and state you are calling for the Greek government to end the dole and replace it with manual government jobs building productive capital assets for below market wages under army boot camp conditions: the Civilian Conservation Corp and similar programs.
Greek youth would not be paid to not work, but would be paid to work rebuilding Greece. At wages lower than union government and private sector workers, and paid for with higher taxes. While FDR was president, more people had to start paying taxes on their wages than ever - before FDR, only the rich paid taxes, but FDR taxed workers from first dollar earned to pay for Social Security.
Read FDR's state of the union speech in 1935 before using FDR as a basis for dealing with the Greek economic problems.
Greek youth would not be paid to not work, but would be paid to work rebuilding Greece. At wages lower than union government and private sector workers, and paid for with higher taxes. While FDR was president, more people had to start paying taxes on their wages than ever - before FDR, only the rich paid taxes, but FDR taxed workers from first dollar earned to pay for Social Security.
Read FDR's state of the union speech in 1935 before using FDR as a basis for dealing with the Greek economic problems.
5
Mr. Schäuble is indeed well-known as a hardliner who deares to deal with unpleasant matters, too. Speaking about one country leaving the euro zone is definitely an unpleasant topic, but Mr. Schäuble is not alone here. In many European countries - at least in Germany and in northern Europe - many prominent economists are suggesting the Grexit as the best long-term solution for the crisis, as is Paul Krugman in USA.
Both in european and american news media European Union and euro are quite often seen almost as synonyms. And considering the statements of many top politicians, including Frau Merkel, it is no wonder. But in my opinion, this has actually been one of the biggest mistakes of these politicians. Take, for example, my neighbouring country, Sweden. They have never been euro members, and their economy has been relatively strong, at least better off than my own country, Finland. Still Sweden is an active and valued member of the EU.
So this bond between EU and euro seems to be completely political. There is no economical or any other logical reason to tie these two, separete entities up too tightly. On the contrary, they should be loosely coupled, so that troubles with the euro won't drag the whole EU into abyss. Furthermore, we should create clear and unambigous political and administrative mechanisms for euro exits - not only for the Greece, but also for the future needs.
Both in european and american news media European Union and euro are quite often seen almost as synonyms. And considering the statements of many top politicians, including Frau Merkel, it is no wonder. But in my opinion, this has actually been one of the biggest mistakes of these politicians. Take, for example, my neighbouring country, Sweden. They have never been euro members, and their economy has been relatively strong, at least better off than my own country, Finland. Still Sweden is an active and valued member of the EU.
So this bond between EU and euro seems to be completely political. There is no economical or any other logical reason to tie these two, separete entities up too tightly. On the contrary, they should be loosely coupled, so that troubles with the euro won't drag the whole EU into abyss. Furthermore, we should create clear and unambigous political and administrative mechanisms for euro exits - not only for the Greece, but also for the future needs.
10
The advice comes from the wrong person. Finance Minister Schäuble remained inactive when troika botched it's job to perform the assistance program for Greece. Responsibles within troika failed to make proper controlling when aid budgets were flowing. Consequently, M. Schäuble's proposal smeks of cheap fishing for popular applause. It's a misleading, poor advice.
1
What's not being said enough is that debt forgiveness will not solve the problem.
The real problem is that Greece is a failed state. It's a Venezuela. It's a Zimbabwe. Except just on a different continent. You can forgive, but then they will end up back at the same place. "Hey, we're less indebted now (thanks, by the way), so what about you spot me another euro?" It's just the way Greece has operated throughout its modern history.
They say "teach a man to fish." But if the incompetent and lazy fisherman refuses to fish, and instead asks to be forgiven his debt of borrowed fish... and you know he will ask yet again to borrow more fish once he's run out. What do you do? You can understand why Germans feel it's not that helpful in the long run to forgive these spendthrifts.
The real problem is that Greece is a failed state. It's a Venezuela. It's a Zimbabwe. Except just on a different continent. You can forgive, but then they will end up back at the same place. "Hey, we're less indebted now (thanks, by the way), so what about you spot me another euro?" It's just the way Greece has operated throughout its modern history.
They say "teach a man to fish." But if the incompetent and lazy fisherman refuses to fish, and instead asks to be forgiven his debt of borrowed fish... and you know he will ask yet again to borrow more fish once he's run out. What do you do? You can understand why Germans feel it's not that helpful in the long run to forgive these spendthrifts.
18
Greece should take this opportune moment to extricate itself from the Euro currency.
Get out while you can, Greece. Don't wait until the newest proposed relief funds (that have not yet been delivered) run out. National Tensions will be much higher then all around.
Germany is being practical if it encourages a Grexit. Practical in a way that will ultimately allow Greece to regain its autonomy, which is what it seems the Greeks want.
Get out while you can, Greece. Don't wait until the newest proposed relief funds (that have not yet been delivered) run out. National Tensions will be much higher then all around.
Germany is being practical if it encourages a Grexit. Practical in a way that will ultimately allow Greece to regain its autonomy, which is what it seems the Greeks want.
6
Why doesn't Germany provide some leadership in helping the Greeks make the needed changes instead of merely standing back and looking down their noses as they castigate the Greek people? No country changes its bad habits without leadership, and if Greece doesn't seem to have anyone stepping up to lead it out of its critical shortcomings (too much pension and wealth misalignments; too little income tax paying in an off-the-books black economy), why doesn't Germany and the IMF thrust someone forward to help Greece get out of the grip of its greedy creditors and its own ineprtitude?
3
The answer to your question seems to be very simple to me:
"Why doesn't Germany provide some leadership in helping the Greeks ..."
Leader (without /-ship) translates into "Führer" (ger.). Do not know how leader is translated into modern Greek (1, or 2, or 3 of some Tsipras?) but in modern Latin (called Italian as well) it's called "Duce".
"Leader-" ship or Duce-ismo for Greece? Why not to recommend Napoleon-ship/-ismo for a tourist visit to Greece? There a further candidates such as the President of Russia, or Turkey (former Osmanic Empire).
Or, rather, the (US-) American Constitution?
And this will help Greece?
"Why doesn't Germany provide some leadership in helping the Greeks ..."
Leader (without /-ship) translates into "Führer" (ger.). Do not know how leader is translated into modern Greek (1, or 2, or 3 of some Tsipras?) but in modern Latin (called Italian as well) it's called "Duce".
"Leader-" ship or Duce-ismo for Greece? Why not to recommend Napoleon-ship/-ismo for a tourist visit to Greece? There a further candidates such as the President of Russia, or Turkey (former Osmanic Empire).
Or, rather, the (US-) American Constitution?
And this will help Greece?
Bill M:
Germany has granted your wish. Look at the deal that the EU and Tsipras reached and the Greek Parliament approved.
Germany has granted your wish. Look at the deal that the EU and Tsipras reached and the Greek Parliament approved.
Did in the past, Germany sent over experts on budget and taxes to assist the Greek government. They were sent back right away. No one in Greece would like a change in the socio-economic landscape. They would like to keep it as it is, just someone has to throw money on them.
Schauble is both correctly rational and generous in recommending that Greece leaves the eurozone. It is correctly rational that Greece cannot be allowed to have its debt reduced or the austerity measures demanded less forgiving. Doing so would invite other indebted countries to follow Greece's example throwing fiscal discipline to the wind and that would be the dissolution of the single currency. It is surprisingly generous because a Grexit would be very costly to the Germans and other European creditors since the debt would be reduced significantly in addition to financial and economic costs. This is a bitter pill for the Germans and northern Europeans but they are willing to accept it because Greece's debt is unsustainable and unpayable. The Germans are simply being realistic and generously recognizing that for Greece to regain its economic well being it must be unconstrained by the eurozone.
8
It might be better for Greece to leave the euro ... eventually. But it would be a long tough row to hoe.
Another option would be quicker, easier, and better for (almost) everybody -- that's for Germany to leave the euro. The euro would drop like a stone, boosting exports & inflation for everyone else in the zone, stimulating their economies and finally lifting the continent out of the economic mire. Secondly, it would leave the rest of the eurozone free to pursue realistic financial policies, including closer integration, and possibly even a reasonable re-cycling mechanism, without a relentless fantasy-based Nein putting the kibosh on anything resembling such things. Second-and-a-half, it would deprive the little Neiners, like Slovakia, Holland, Poland & Finland, of their Big Financial Brother, and possibly make them more susceptible to economic reason. And finally, it would condemn Germany to a much stronger currency like a Neue Mark, which would price its exports at a much higher & more fair price, and just possibly make the Germans realize that their latter-day "German miracle" owed a lot more to the behaviour of those frivolous southern and eastern Europeans than it ever did to sober Teutonic money management.
Another option would be quicker, easier, and better for (almost) everybody -- that's for Germany to leave the euro. The euro would drop like a stone, boosting exports & inflation for everyone else in the zone, stimulating their economies and finally lifting the continent out of the economic mire. Secondly, it would leave the rest of the eurozone free to pursue realistic financial policies, including closer integration, and possibly even a reasonable re-cycling mechanism, without a relentless fantasy-based Nein putting the kibosh on anything resembling such things. Second-and-a-half, it would deprive the little Neiners, like Slovakia, Holland, Poland & Finland, of their Big Financial Brother, and possibly make them more susceptible to economic reason. And finally, it would condemn Germany to a much stronger currency like a Neue Mark, which would price its exports at a much higher & more fair price, and just possibly make the Germans realize that their latter-day "German miracle" owed a lot more to the behaviour of those frivolous southern and eastern Europeans than it ever did to sober Teutonic money management.
7
Wow. What a unique idea, best comment here by far.
This situation is like an unhappy married couple staying together just for the sake of the kids, to their ongoing demise. Divorce is never pleasant, but can have positive results for all concerned when necessary. In this situation, Greece and the euro should face the music and call it quits.
3
Can anyone answer this question for me? I understand that Germany and the other creditor countries bought up Greece's debt from various European banks over the last several years. Buying up this debt rescued various banks (like Deutschebank). I've seen articles indicating that the bought up debt was purchased from the banks on average at 50% of the value of the loans. So my question, and perhaps this is all too simplistic, but are the creditor nations like Germany trying to collect the full value of the loans they purchased or just the amount that they paid for the loans? Does 300 billion euros represent the actual loans or the discounted amount?
8
The 300 billions represents the discounted amount.
Which means Greece already got a huge cut on their debt. They also got another cut, namely by being granted much lower interest rates and much longer payment timelines by the Troika.
The first cut was at the expense of the banks.
The second cut was at the expense of the European/Eurozone taxpayers. One of the many reasons why the latter now don't like to hear that they have to give *another* cut, on top of *another* payment of 80 billion (at least), all after Greece *still* hasn't carried out the reforms it promised so many times already, and all because Tsipras decided to go on a 6-months rampage just when the Greek economy was showing some very faint signs of stabilizing, in January.
Which means Greece already got a huge cut on their debt. They also got another cut, namely by being granted much lower interest rates and much longer payment timelines by the Troika.
The first cut was at the expense of the banks.
The second cut was at the expense of the European/Eurozone taxpayers. One of the many reasons why the latter now don't like to hear that they have to give *another* cut, on top of *another* payment of 80 billion (at least), all after Greece *still* hasn't carried out the reforms it promised so many times already, and all because Tsipras decided to go on a 6-months rampage just when the Greek economy was showing some very faint signs of stabilizing, in January.
Will he also be offering a reduction in Euro denominated debt, or at least a conversion to a drachma denomination if the Greeks were to leave? Didn't think so. Will Germany aid or impede the transition?
While the Greeks have a lot of responsibility, the greed and self interest of Germany and its northern European partners over the last five years is sickening. these so called prior bailouts never aimed to reduce debt levels or to solve the crisis, but to ensure Greek debt holders, namely French and German banks, were 100% protected at the cost of Greek lives. I will be joining the boycott of northern european companies along with pushing my elected representatives in the US to pressure these petty governments in every way possible. Greece needs true reform, true friends and a true bailout plan, none of which will ever come from this European abomination of a Union.
While the Greeks have a lot of responsibility, the greed and self interest of Germany and its northern European partners over the last five years is sickening. these so called prior bailouts never aimed to reduce debt levels or to solve the crisis, but to ensure Greek debt holders, namely French and German banks, were 100% protected at the cost of Greek lives. I will be joining the boycott of northern european companies along with pushing my elected representatives in the US to pressure these petty governments in every way possible. Greece needs true reform, true friends and a true bailout plan, none of which will ever come from this European abomination of a Union.
7
Some advice that is maybe helpful to you: Don't drive a car. You won't find any car without parts that are made in Germany.
Maybe your boycott will be effective and the German economy will collapse. I'm sure then Greece will bail out Germany with 300 billion, of course this time with no strings attached. Good luck!
Maybe your boycott will be effective and the German economy will collapse. I'm sure then Greece will bail out Germany with 300 billion, of course this time with no strings attached. Good luck!
3
The prime cause of Greek economic catastrophe was not to let French and German banks fail after their loans to Greeks turned out to be beyond the ability of Greece to repay. If Greece could not repay initial loans, why should Greece be able to repay subsequent loans? And why should policies that brought economic ruin to Greece enable it to repay subsequent loans? The architects of this ruinous logic have largely been Merkel and Schäuble. The Euro has failed to prevent the revival of German might, carried forward against Greece as an economic war. Outcome: Germany won, Europe lost.
8
Schauble has the right idea. When a limb is rotten the best option is amputation. Greeks have proved themselves incompetent. They organize a referendum, get a no, and they take harsher terms than those rejected. What a mess! Worse, in terms of negotiations they come with no alternatives (no supply of drachma ready to be used) to a fight with Merkel!!! Schauble has no other option than to think those guys are not competent and should get out of a club for serious people ... until they get their act together, which leaving the euro will force. Schauble is far from being idiot, he knows he won't win a popularity contest but he's willing to sacrifice his Name on the international scene just to do the right thing for Germany and Europe. Now that's real courage. That has nothing to do with WWII.
16
He made those remarks precisely because he is trying to win a popularity contest.
Namely the German, right wing, reactionary popularity contest.
It is not incompetence to call for a referendum. It is a democratic act, that the
vicious and immoral Troika sought to punish by making the terms more harsh.
The IMF and others are in complete disagreement with your view and their is going to be a tug of war soon enough over the brutality of German tactics.
\
Namely the German, right wing, reactionary popularity contest.
It is not incompetence to call for a referendum. It is a democratic act, that the
vicious and immoral Troika sought to punish by making the terms more harsh.
The IMF and others are in complete disagreement with your view and their is going to be a tug of war soon enough over the brutality of German tactics.
\
6
There are two viable options, and Germany won't like either.
1. The greeks leave the euro, pay the debt owed in Drachma valued at 1 for 1 with the euro. The next day they can devalue the drachma to where it might be sustainable - say 4 to 1 to the euro, leaving the Creditors (mostly german) with a pile of paper, and the greeks with no debt and a fresh start.
2. The Germans can pay the WWI and WWII debt that they never paid - with accrued interest - which would more than cover the total greek debt and give them a fresh start - with lots left over for other good deeds.
They are probably thinking of goose-stepping in to take the bread out of the mouths of children - but wait - they did that already in 1941
1. The greeks leave the euro, pay the debt owed in Drachma valued at 1 for 1 with the euro. The next day they can devalue the drachma to where it might be sustainable - say 4 to 1 to the euro, leaving the Creditors (mostly german) with a pile of paper, and the greeks with no debt and a fresh start.
2. The Germans can pay the WWI and WWII debt that they never paid - with accrued interest - which would more than cover the total greek debt and give them a fresh start - with lots left over for other good deeds.
They are probably thinking of goose-stepping in to take the bread out of the mouths of children - but wait - they did that already in 1941
6
So all of this German bashing and randomly saying Germany owes Greece money from WW2 made me finally check the facts.
No. Germany doesn't owe Greece any more money. They did pay them reparations in 1960. Yes, Greece has come back with open palms asking for more money at different times. Keeping in mind that Germany surrendered to the Allies and NOT to Greece, it seems Germany has already compensated Greece for the zero interest loan it forced Greece to make to them.
Enough! ...well, not enough for the Greedy Greeks it seems.
No. Germany doesn't owe Greece any more money. They did pay them reparations in 1960. Yes, Greece has come back with open palms asking for more money at different times. Keeping in mind that Germany surrendered to the Allies and NOT to Greece, it seems Germany has already compensated Greece for the zero interest loan it forced Greece to make to them.
Enough! ...well, not enough for the Greedy Greeks it seems.
6
@ Jack, Eastern PA
Really. These references to the World Wars and "goose-stepping" are just too played and cliché. And they detract from the real matter at hand.
Namely, Greece's ongoing inability to take responsibility for its own fiscal management.
Really. These references to the World Wars and "goose-stepping" are just too played and cliché. And they detract from the real matter at hand.
Namely, Greece's ongoing inability to take responsibility for its own fiscal management.
2
As long as the EU shares a common currency but not a common monetary policy the nations that act responsibly in terms of taxes, public sector debt, etc will continuously have to support those who do not.
6
As I said on another reply, the same analogy can be made with the US federal government being the EU and the various states as the members. There is serious disparity from those states that pay more per capita than there fair share, and those that pay less. Why should I keep paying people in Mississippi, year after year?
2
It has long been clear that the best solution is for Greece to abandon the Euro and to establish its own currency. But nobody wants to have their name associated with an abandonment. And nobody wants to have their name associated with an ejection. So for five years the citizens of Greece have been sacrificed because no Greece politician wants to own the decision to abandon the Euro and no other Eurozone member wants to own the decision to eject Greece from the Euro. The Ejectors are now willing to take ownership of a decision to eject. The Abandoners now need to take ownership of a simultaneous decision to abandon. Problem solved.
3
Europe had never been uniform historically. I wonder why did they took this common platform in the very first place. And yes earlier Greek attempt to make Chinese peasants to pay pension for their retired bankers has failed in 2009.
This just further crystallizes the fact that, as others have pointed out before, it is not enough to have a common currency. There is no common culture, common philosophy, common anything, not perhaps even common goals.
It's sad what is happening now, that this crisis brings out the gulf between these very diverse temperaments, the stern Germanic one and the Latin one. Paul Krugman may be suggesting an exit as well, as another commenter reminds us, but perhaps not for the same reasons. He has the Greeks' best interest at heart, and I suspect, Mr. Schauble has what he thinks is Germany's best interest.
Ultimately, it may be the case, as a Greek passerby suggested in an NPR segment the other day, that Greece wasn't ready to enter the EU. And they wouldn't have been able to had Goldman Sachs not stepped in to help Greece hide the fact that they weren't financially viable. And, as is usually the case, the bank got richer and Greece is standing there with egg on their face. Granted, they were reckless, but so was Goldman Sachs, and yet, nobody is trying to make THEM pay.
It's sad what is happening now, that this crisis brings out the gulf between these very diverse temperaments, the stern Germanic one and the Latin one. Paul Krugman may be suggesting an exit as well, as another commenter reminds us, but perhaps not for the same reasons. He has the Greeks' best interest at heart, and I suspect, Mr. Schauble has what he thinks is Germany's best interest.
Ultimately, it may be the case, as a Greek passerby suggested in an NPR segment the other day, that Greece wasn't ready to enter the EU. And they wouldn't have been able to had Goldman Sachs not stepped in to help Greece hide the fact that they weren't financially viable. And, as is usually the case, the bank got richer and Greece is standing there with egg on their face. Granted, they were reckless, but so was Goldman Sachs, and yet, nobody is trying to make THEM pay.
13
There is plenty of blame to go around in both this latest Greek debt/EU debacle, as well as the five years prior to the events of the past few weeks.
Mr. Schauble's insistence on rules avoids the reality that both the EU and Greece are at a cross roads where normal rules do not seem to provide a realistic path to solutions that provide both sides of this crisis with fiscally prudent outcomes and humane treatment toward Greece. He thinks only in an "either/or" manner and does not seem capable of options other than following the rules or getting kicked out of the EU. Is this the best that the EU leadership can do?
One has to also ask if full repayment of the Greek debt is an ethically defensible position when balanced against the abject misery of millions of people in Greece. Poverty and unemployment are not abstract concepts. They are a terrible, crushing reality already part of daily life for many in Greece as they were for Germany after WWII.
Mr. Schauble's insistence on rules avoids the reality that both the EU and Greece are at a cross roads where normal rules do not seem to provide a realistic path to solutions that provide both sides of this crisis with fiscally prudent outcomes and humane treatment toward Greece. He thinks only in an "either/or" manner and does not seem capable of options other than following the rules or getting kicked out of the EU. Is this the best that the EU leadership can do?
One has to also ask if full repayment of the Greek debt is an ethically defensible position when balanced against the abject misery of millions of people in Greece. Poverty and unemployment are not abstract concepts. They are a terrible, crushing reality already part of daily life for many in Greece as they were for Germany after WWII.
3
I know! Why doesn't Greece exit the Euro for say, two minutes, in order to restructure their debt, then re-enter. No precious rules broken!
3
As the Sueddeutsche Zeitung reports this afternoon, Schaeuble does not necessarily have support in the cabinet for his view. Reporters with many of the cabinet members involved in the internal discussions and none of them agreed with Schaeuble.
1
But the population in Germany support him.
1
It will be hard for some other EU countries, like France, Italy, Spain, Portugal and Ireland, to live up to the rigid standards of Germany. Greece is being used to send a stern message to these countries. Germany knows that these countries, who are barely above the water, may not follow the rules. If any further crisis hits EU from any of these countries, Germany is not leaving any room to wiggle around and this straight jacket for EU itself may turn out to be major cause of its un-raveling.
2
Rigid standards is right. Remember under all the civilized exterior this is the people that gave us the third reich. Never forget it they don't.
Many, if not most, would agree that Greece should not have been admitted to the Eurozone. Their government lied in order to gain admittance. So, why the brouhaha over whether they should stay or go. While there are obvious costs to both staying and exiting, the fact remains that Greece really isn't Eurozone material. And no one really expects them to become so in the near future.
13
Germany's finance minister is right. Greece should exit from the eorozone. Any agreement, any deal, any bailout package would be kicking the can down the road. It is very good advice and should be heeded. Remaining in the eurozone is a luxury they cannot afford. They may get 86 billion euros and and a few years longer to get their house in order and pay it back. But payback is an impossibility considering Greeks are incapable of doing anything under the severe austerity imposed on them. Mr. Schäuble's wise, most viable solution seems the only way for the Greeks to get out of this impasse. So Greeks, please listen.
15
What no one seems to be addressing is that the vast democratic majority of all Eurozone countries - i.e. their populations - agree with the German position. Greece votes "No". So what? Is Europe's eurozone (population c. 340 million) supposed to fall over when 4 million Greeks vote No to their proposal? The democratically elected governments of eurozone countries are under pressure from their electorates to strike a hard bargain with Greece. And everyone knows that the Greeks will not be left to hang to and dry by the eurozone. Forgiveness of debt will come - but first, some sign of reform and yes, contrition, is essential. So far, that has been conspicuously absent.
Defiance is no substitute for strategy and all of this points to one fact above all others…When it comes down to it, the Greeks have no confidence in their own ability to pull themselves out of this mess. They don't trust each other and their sense of national unity about setting about the debt extends no further than the collective and volatile hot air of defiance. This is why they are left with only poor choices. To remain in the euro is still their best bet since they stand no chance of pulling through on their own. And they know it.
Defiance is no substitute for strategy and all of this points to one fact above all others…When it comes down to it, the Greeks have no confidence in their own ability to pull themselves out of this mess. They don't trust each other and their sense of national unity about setting about the debt extends no further than the collective and volatile hot air of defiance. This is why they are left with only poor choices. To remain in the euro is still their best bet since they stand no chance of pulling through on their own. And they know it.
12
Where do you get your numbers? Germany is virtually alone, absent a couple of Scandinavians and Austrians...
1
Mr. Schäuble claims that “debt reduction is not allowed in the eurozone.”
Perhaps he should explain if a "temporary exit from the common currency" is allowed.
It would be enlightening to know the specific legal basis of both suggestions.
Perhaps he should explain if a "temporary exit from the common currency" is allowed.
It would be enlightening to know the specific legal basis of both suggestions.
3
It would make more sense for Germany to leave the Euro Zone. The euro then could find a value more appropriate to the remaining members.
11
It is not just Germany that likes the existing rules that ensure euro strength. It is also not just other well-developed countries like Finland and the Netherlands. A number of newcomers (the Baltic states, Slovakia, Slovenia, Malta), as well as countries that had to go through structural reforms and austerity were all in agreement what is expected of Greece. There were only three countries out of the EZ 18 (not counting Greece itself) that wanted to show more flexibility during the last stages of negotiations -- France, Italy and Cyprus. They did it for different reasons, but certainly not because they wanted to weaken the eurozone or its rules.
2
I may not understand all the complexities here, but I know this: If Germany is for it, I'm against it.
7
This is unfortunately no longer be beaten on political rudeness.Sometimes it's useful to make their own judgment. Although Europe seems to be very far away.
1
In Berlin,Germany the people finance minister is Wolfgang Schauble and he wants the people to live in an euro-zone. I read that He added, “Greece is in a very difficult situation.” He plans to move the people into a euro-zone because of its country's debt problems. The economy has been in disarray. People have been out of work for years. They are comparing these country's problems to the Great Depression of the United States.
1
Don't blame the Germans or anyone else but the Greeks in the Euro zone. They can't have their cake and eat it too. The Germans are holding their feet to the fire and the rest of the Eurozone has no problem with it. The government of Germany expects the Greeks to tighten their belts and get going with putting their house in order. 98.0% of taxes stilled owed to the Greek government. In Germany 2.3%. So I guess the Germans and others should be angry for being taken advantage of.
The Greeks conned Europe and figured they could get away with it. Well the chickens came home to roost. Time to fess up and be adults and run you country like Germany and others do. Greece is full of tax cheats and others gaming the system. Time for all the people of Greece to put their big boy and girl pants on and do what is necessary to get their economy in order. They are a resilient people. They have so much to offer the world and they need to step up and act it. Come on Greece! Stop being the anchor dragging the Euro down and be what you should be! A great country!
The Greeks conned Europe and figured they could get away with it. Well the chickens came home to roost. Time to fess up and be adults and run you country like Germany and others do. Greece is full of tax cheats and others gaming the system. Time for all the people of Greece to put their big boy and girl pants on and do what is necessary to get their economy in order. They are a resilient people. They have so much to offer the world and they need to step up and act it. Come on Greece! Stop being the anchor dragging the Euro down and be what you should be! A great country!
16
Greece should leave the Eurozone for one reason. The county will get back its democracy and self determination. I think all countries should leave the Eurozone and become that again their own country. Otherwise, these countries will have unaccountable bureaucrats telling them what to do. That alone is enough for Greece to take the hit and go back to being Greek. They can just pay their bills with an inflated currency, but get their country back.
2
The one thing Greece has is plenty of sunshine something Germany often lacks. Perhaps a trade could be worked out where some of the dour German economic experts could go spend some time with their brethren in Greece to share their expertise. In the meantime they could examine the Euro bylaws and see what can be done for the stronger economies to help their weaker neighbors revitalize their weaker systems. Who knows twenty years from now the Germans could be the ones down on their luck. Loosen those neckties a bit.
3
Thanks to the German Finance Minister for a blinding glimpse of the obvious. Although no country has exited the euro, dozens, at least, have redenominated or changed their national currencies. The methodology is pretty well known. Moreover, Greece, and all the other euro-zone countries, for that matter, had functioning economies before the euro. There is no reason that they cannot do so again. Rather than all the fear and hype, much of it driven by politics, what would be useful now is a serious scenario showing what an orderly exit would like including an evaluation of the effects on stakeholders. With that in hand, a rational decision may be possible, if the politics don't get in the way.
4
So many pundits and many readers' comments condemn Germany. The other day an USC professor wrote about the German attitude from the elites he encountered at a recent Munich symposium. He also informed us of the poor Greeks he saw during a visit to Athens. For some reason, these elitist commentators in the NYT seem to have all the answers.
I have been in Berlin for the past 3 months. I am shocked by how poorly maintained it is. I am shocked by the homelessness, the poor infrastructure, etc. Last night I saw an elderly German woman sorting through garbage at a Sbahn station looking for bottles so she could redeem the deposit fees. I speak with average Germans, those who are scraping by. They are upset that they have to pay up towards 300 Euros a month for health insurance premiums. The cost of the metro is more than $3 for a ride in a system which has seen better days.
Yes, Germans, Dutch, Finns --- everyone should be upset to be expected to send their tax euros to Greece when those same tax funds are sorely needed at home. To add insult to injury, the very same elites (and this includes foreign) demand Europeans to pay for services for the swarms of "refugees" flooding the continent. I am an immigrant...a legal one. I attend an immersion course and see just how these "migrants" (it is not PC to say immigrant) do not appreciate their host country. How they despise the norms and mores. They, like the Greeks, are only here to take and not give.
I have been in Berlin for the past 3 months. I am shocked by how poorly maintained it is. I am shocked by the homelessness, the poor infrastructure, etc. Last night I saw an elderly German woman sorting through garbage at a Sbahn station looking for bottles so she could redeem the deposit fees. I speak with average Germans, those who are scraping by. They are upset that they have to pay up towards 300 Euros a month for health insurance premiums. The cost of the metro is more than $3 for a ride in a system which has seen better days.
Yes, Germans, Dutch, Finns --- everyone should be upset to be expected to send their tax euros to Greece when those same tax funds are sorely needed at home. To add insult to injury, the very same elites (and this includes foreign) demand Europeans to pay for services for the swarms of "refugees" flooding the continent. I am an immigrant...a legal one. I attend an immersion course and see just how these "migrants" (it is not PC to say immigrant) do not appreciate their host country. How they despise the norms and mores. They, like the Greeks, are only here to take and not give.
24
Greece has a lower per capita GDP than West Virginia, yet it has marble in its subway stations. You can't have the economy of West Virginia and afford to live like they do in The Netherlands and in Germany!
11
Really? You should have told Sen Robert Byrd before he used tax receipts from the rich NE and "left coast" to build the incredible concrete highway system throughout West Virginia, especially the highest bridge in the East that crosses the New River. West Virginia's didn't earn that money but we are the United States.
Germany takes the black forest cake and eats it too. It plays victim and claims the moral high ground as it highlights concessions made in 2012, tied to vicious and doomed-to-failure austerity, and ignores the flip side of the coin: The tremendous economic benefit of having its export-led economy tethered to a falsely undervalued currency. The Greeks and Southern Europe and Ireland suffer and in so doing, Germany reaps the reward of exports turbocharged via an unnaturally weak currency. Absent this boost, how would the German economy, now growing at less than 1%, be doing? It would be shrinking! Southern Europe, in actuality, is propping up the German economy!
9
The only reason that Greece might be better off outside the Eurozone is because Germany and a few other countries refuse to countenance debt restructuring. Schauble is essentially saying that because Germany won't agree to a restructuring, Greece should unilaterally default. From Greece's perspective, this is logical. From Germany's, it is insane.
4
Euro - Zone Rules don´t allow debt forgiveness or debt restructuring, that´s why Schäuble assumed a Grexit + haircut + stimulus money. For the first time in 2012.
It´s not insane, it´s more or less the same proposal, that was floated by Prof. Krugmann in this Newspaper.
It´s not insane, it´s more or less the same proposal, that was floated by Prof. Krugmann in this Newspaper.
7
Some good ol' fashion CYA. Germany is trying to proclaim innocence whatever Greece decides, and whatever the outcome is.
Sure we made an ultimatum, but the consequence are not our fault, maybe it would be better if they said no, maybe better if they said yes, maybe better with the euro, maybe better without. Whatever it is, and whatever now happens, it's not our fault!
Sad.
Sure we made an ultimatum, but the consequence are not our fault, maybe it would be better if they said no, maybe better if they said yes, maybe better with the euro, maybe better without. Whatever it is, and whatever now happens, it's not our fault!
Sad.
7
Perhaps it would be best for Europe if Germany left the Euro.
18
That's my solution too!!
1
This would be not bad and a majority of people in Germany thinks the same.
The only problem is, that after Germany left the EZ, the other 17 countries would also leave, so Greece would be the last member of the "new eurozone". At least, Greece can rename the €, perhaps they can call it ....."drachme"?
The only problem is, that after Germany left the EZ, the other 17 countries would also leave, so Greece would be the last member of the "new eurozone". At least, Greece can rename the €, perhaps they can call it ....."drachme"?
1
You can't imagine how many Germans would love to do just that! Most were NOT in favour of the euro as a common currency, but they weren't asked if they approved. The EU will be the death of democracy on the European continent.
Why would Prime Minister Alexis Tsipras who is a leader/member of the Socialist party and was elected by the people of Greece based in large part because he is a socialist choose the capitalistic EU bailout, rather than leave the EU and probably get Greece back on track in much less time than it would take to pay off even 10% of what Greece would owe the EU in this bail out?
2
The Finance Minister is right. The setup of Euro does not allow for much flexibility and Greece definitely need to use moneytary instruments.
8
Sounds like he's saying: We'll give you your money but we don't want you here. What a guy!
3
Germans love to to to Greece, bask in the sun on its beautiful islands, eat fabulous food, stay at comfortable hotels, drink lots of alcohol, and pay very little for it. Time to raise the rates at Greek hotels and restaurants. And ferrry boats.
7
@ Hope, Cleveland
And time to go after the wealthy Greeks who own some of these beautiful islands to pay their property taxes.
And time to go after the wealthy Greeks who own some of these beautiful islands to pay their property taxes.
2
Wolfgang Schäuble would either destroy Greece’s economy in order to save it or show Greeks the door. It is inconceivable that Angela Merkel will not ultimately stop listening to her finance minister so possessed by binary thinking. Adopting either of these two extreme choices will not only fail to save Greece from economic collapse but will in addition seriously undermine the viability of the Eurozone and the European Union.
2
I haven't been sympathetic to Greece but its whipsawing by the EU in the past day or two is pushing me a bit to its side. The Greek gov't was instructed by the EU on what and how to vote regarding economic and structural reforms. They did so because they had no alternative. Now, having gotten its way, some in the EU are introducing other ideas (leave the eurozone). The Greek gov't capitulated to the EU. The EU won. Whatever happened to magnanimity in victory? Work with what's on the table now and end this national nightmare in Greece and pull out of this international economic morass.
1
One information is missing from the discussion here: There has never been a country in the history of humankind that got remotely as much financial help from outside as Greece got. About 30,000 $ per person! But the sad fact is, it was not spread fair. Most of that money went in pockets of rich Greeks. It was estimated that these people have several hundreds of billions in foreign accounts. That is the fault of the Greek government, not the European taxpayers.
10
A lot of the money went to other European countries (germany first) pay the interest on the
greek loans
greek loans
2
Greek people haven't seen a dime. All money lent was used to pay interest on debt and, nonetheless, debt is risen at 180 per cent because the economy -thanks to the advice of Schäuble- fell 25 per cent in 4 years.
1
In the cacophony of voices defending "poor little Greece", one important example of that country's ruthlessness from recent history is never mentioned. During the Yugoslav Wars of 1991-95, the Greek government and public opinion were firmly on the side of the aggressors - Serbia and Bosnian Serbs - mainly because they, like the Greeks, belong to the Orthodox church. The Greek public opinion hasn't changed much on the subject in spite of tens of thousands of Bosniak civilian deaths, rapes, displaced families and other casualties. The international community has recognized as genocide and culturecide the war activities started and performed by the aggressors. I do feel sorry for those minority Greeks that were not supporters of their government's misguided and inhumane policy. As the saying goes, "What goes around comes around."
6
I have been very impressed with Chancellor Merkel and the way she has been guiding German affairs. However I think it is time for her to pull a 'Harry Truman' on Minister Schäuble and fire him or have him resign.
1
Of course, he wants them out. If they stay, it will only prove the failure of austerity, and Wolfi just can't have that.
4
"In return, Greece must put in place a broad series of policy changes, including higher taxes, pension cuts and other steps intended to promote economic growth and to help the government meet its debt payments."
It's Bizzaro World! Anyone with even a rudimentary education in macroeconomics knows that 'higher taxes' and 'pension cuts' are public policy decisions that retard economic growth, not promote it. These are things done to slow down an inflationary economy, where lots of cash creates demand beyond the ability of the economy to supply goods and services to all that are willing to pay for them. In Greece right now, we have the opposite problem; there is no demand, because there is no money to spend. As for these public policies' impact on the gov't ability to repay its debt; if higher tax rates reduce growth, the net effect is lower tax revenue and more difficulty repaying debt.
The NYTimes would do it's reader a service to point out where the sanctimonious bleatings of the chronically delusional are at odds with noncontroversial macro economics.
It's Bizzaro World! Anyone with even a rudimentary education in macroeconomics knows that 'higher taxes' and 'pension cuts' are public policy decisions that retard economic growth, not promote it. These are things done to slow down an inflationary economy, where lots of cash creates demand beyond the ability of the economy to supply goods and services to all that are willing to pay for them. In Greece right now, we have the opposite problem; there is no demand, because there is no money to spend. As for these public policies' impact on the gov't ability to repay its debt; if higher tax rates reduce growth, the net effect is lower tax revenue and more difficulty repaying debt.
The NYTimes would do it's reader a service to point out where the sanctimonious bleatings of the chronically delusional are at odds with noncontroversial macro economics.
7
Schäuble is being disingenuous: there is no such thing as a "temporary exit" from the euro; one is either IN or OUT, and Greece's financial status should have excluded it from entry in the first place. Its balance sheets and books were "adjusted" to make its entrance feasible but the ECB, the IMF, and the EU knew from the get-go that Greece wasn't a sound member.
The EU itself is now about to use an emergency fund to float a loan to Greece that was set up in 2010 to assist nations like Ireland and Spain - but will float that loan over the strenuous objections of Britain, Denmark, and the Czech Republic, who are not Eurozone countries, despite an "opt-out" agreement the UK thought it had obtained on its taxpayer funds not being used to assist Eurozone countries (the UK and Denmark are not in the Eurozone). Now, Britain's Chancellor is trying to assure its taxpayers that the 850 million pounds (sterling) they have in the fund will be "ring-fenced" in the event of a default on the loan, through profits on Greek bonds held by the ECB. Who would believe that fairy-tale? Greek bonds? Worth what very soon?!
This entire fiasco has been a boon to Eurosceptics in the UK, Denmark, and France, among others, as it becomes clear that ordinary taxpayers have no control and no voice in EU affairs, that assurances from those in power mean absolutely nothing, and that Germany is running Europe.
Think of Greece as the canary in the mine.
The EU itself is now about to use an emergency fund to float a loan to Greece that was set up in 2010 to assist nations like Ireland and Spain - but will float that loan over the strenuous objections of Britain, Denmark, and the Czech Republic, who are not Eurozone countries, despite an "opt-out" agreement the UK thought it had obtained on its taxpayer funds not being used to assist Eurozone countries (the UK and Denmark are not in the Eurozone). Now, Britain's Chancellor is trying to assure its taxpayers that the 850 million pounds (sterling) they have in the fund will be "ring-fenced" in the event of a default on the loan, through profits on Greek bonds held by the ECB. Who would believe that fairy-tale? Greek bonds? Worth what very soon?!
This entire fiasco has been a boon to Eurosceptics in the UK, Denmark, and France, among others, as it becomes clear that ordinary taxpayers have no control and no voice in EU affairs, that assurances from those in power mean absolutely nothing, and that Germany is running Europe.
Think of Greece as the canary in the mine.
7
On the contrary, Mr. Schäuble is very ingenious.
Because by EU - Law, if you leave the Euro, you have to leave the EU, Schäuble comes up with a "temporary" exit, so that Greece can stay in the EU and benefit from EU grants.
By the way, Greek received more the thirtyfold (!) Marshall Plan money since entering the EU.
Because by EU - Law, if you leave the Euro, you have to leave the EU, Schäuble comes up with a "temporary" exit, so that Greece can stay in the EU and benefit from EU grants.
By the way, Greek received more the thirtyfold (!) Marshall Plan money since entering the EU.
4
I wish people can be more specific when they say “the Greeks retire at age 50”. What percentage of Greek people retire at that age? In the US we have people (policemen, for example) who can retire very young (under age 50) too if they fulfill certain criteria. If indeed an unusually high percentage of Greeks retire young, could it be because they simply do not have enough jobs for the older Greeks to hang around? Any data in this regard appreciated.
3
Maybe it would make more sense for Germany to exit the euro so that the fiscal policy of the other EU countries would not be dictated by Germany
6
Well, they would probably go bankrupt very fast since most of them are mostly subsidized by the wealthier Northern economies.
1
Wolfgang Schäuble is for many Greeks a hate figure, somebody responsible for the austerity measures imposed on Greece since 2010. They wouldn't have to deal with him, if Greece left the Eurozone. But it's going to be messy for the Greeks to re-introduce their Drachma.
It's not really about giving up the Euro, that is the problem! It's all about attitude and mentality. Are the Greeks willing to work more and longer? Will they be able to get people pay taxes?
By the way, BBC reported that some Greeks have plenty of cash stashed away at home, or somewhere. So they never bothered to queue and withdraw 60 Euro a day.
It's not really about giving up the Euro, that is the problem! It's all about attitude and mentality. Are the Greeks willing to work more and longer? Will they be able to get people pay taxes?
By the way, BBC reported that some Greeks have plenty of cash stashed away at home, or somewhere. So they never bothered to queue and withdraw 60 Euro a day.
5
I sometimes wonder what would happen if Greece just went back to the drachma. They would likely devalue (though from what I'm not sure), Greek vacations would become cheaper than ever and it would become a very hot destination, bringing in lots of tourist dollars, no? That wouldn't be enough to help them pay off their debts?
3
Aside from his very "Germanic" demeanor and his belated push for the Grexit Schauble is correct. Instead of having undertaken 5 months of negotiations leading up to an agreement no one thinks can be repaid they should have spent those months in organizing and supporting, in the very short term, a new Drachma. It is what must happen, likely will happen, in any event so why did they delay? There is no shame in the Grexit, if they (the Greeks) desire they can rejoin the Euro when/if their economy recovers. There really is no other rational option.
7
First, the Greek government complains about how Germany is trying to exercise too much control over the Greek government. Then, when Germany says that Greece might be better off leaving the eurozone, the Greek government complains that that's what Germany wanted all along.
The only logical option left would be where Greece stays in the eurozone and gets yet another bailout still without having to get its act together or to live up to its obligations. Dare to dream, Greek government officials.
The only logical option left would be where Greece stays in the eurozone and gets yet another bailout still without having to get its act together or to live up to its obligations. Dare to dream, Greek government officials.
7
Perhaps banishment from the so-called Eurozone might be the best for Greece, a nation of reckless fiscal irresponsibility. Cheers!
6
If the Germans have been guilty of anything in this mess, it is of these two things: Firstly, in being overly optimistic and inclusive by allowing Greece to enter the Euro Zone in the first place. They should have known that something was fishy, and should have curbed their ambition to bind all of Europe together. Secondly, for being stubborn when this crisis arose, and not booting the Greeks out two years ago when it was already apparent to everyone that Greece is a money pit for the rest of the Monetary Union.
People tend to forget that at one time Germany itself was in trouble due to having a string of budget deficits that violated the Stability Pact. Under the SPD-Green [Socialst for you Amerikans] party leadership, Germany enacted a series of draconian financial reforms, known as the Harz IV program, that brought the country back into compliance. Stupid Germans, for asking the Greeks to institute the same kinds of reforms that they themselves had successfully enacted.
I am still wondering when the US will own up to its own role in the Greek crisis, and insist that its investment banks, leading underminers of the Greek economy and enablers of the fraud that brought Greece into the EMU in the first place, take a haircut on all the loans they made to Greece. Could it be yet another example of American exceptionalism that this is never mentioned in the pages of the NYTimes?
People tend to forget that at one time Germany itself was in trouble due to having a string of budget deficits that violated the Stability Pact. Under the SPD-Green [Socialst for you Amerikans] party leadership, Germany enacted a series of draconian financial reforms, known as the Harz IV program, that brought the country back into compliance. Stupid Germans, for asking the Greeks to institute the same kinds of reforms that they themselves had successfully enacted.
I am still wondering when the US will own up to its own role in the Greek crisis, and insist that its investment banks, leading underminers of the Greek economy and enablers of the fraud that brought Greece into the EMU in the first place, take a haircut on all the loans they made to Greece. Could it be yet another example of American exceptionalism that this is never mentioned in the pages of the NYTimes?
10
No one in Germany, aside from rich capital holders, applaud german labour reforms (sorry for the truth, it is what it is).
Aside from crushing workers, Germany is guilty of far more in its public policy. Greece is simply tje canary in the coal mine of europe...
Aside from crushing workers, Germany is guilty of far more in its public policy. Greece is simply tje canary in the coal mine of europe...
2
The Euro was a noble goal, but it is seriously flawed. Europe -- like all continents -- has always been tribal in nature. There is no common culture, language, work week, work style, as well as no common building codes, corporate tax laws, etc. It's tough to make the Euro work considering these factors.
Greece needs to inflate itself out of this problem; that way its exports will become cheaper to buy, which will boost sales, and tourists will flock there for a good deal.
It will be painful in the short term for the Greek people but the longer they delay, the tougher a Grexit will be.
Greece needs to inflate itself out of this problem; that way its exports will become cheaper to buy, which will boost sales, and tourists will flock there for a good deal.
It will be painful in the short term for the Greek people but the longer they delay, the tougher a Grexit will be.
1
Celebrate diversity?
Why don't we allow Greece to get out of their NATO obligations. Germany never paid their war debts off completely. Germany was not allowed a military force until the late 1950s. The money saved, by not supporting a standing army, allowed Germany to build up its economy. Germany without the debt forgiveness would not be the country it is now. It's easy to pad yourself on the back claiming that you did it on your won but it just isn't so.
4
On the other hand, Germany was occupied and had to do what it was told.
Do you know that initially all political parties in post-war Germany were against capitalism? Even the CDU/CSU. The U.S. did not like this at all. Thus, they used their power to make sure that Adenauer will be elected as chancellor, because he was one of the few politicians who defended capitalism.
I can hardly imagine that the U.S: would have supported Germany the way they did if a Tsipras/Varoufakis style politician had ruled the country.
Do you know that initially all political parties in post-war Germany were against capitalism? Even the CDU/CSU. The U.S. did not like this at all. Thus, they used their power to make sure that Adenauer will be elected as chancellor, because he was one of the few politicians who defended capitalism.
I can hardly imagine that the U.S: would have supported Germany the way they did if a Tsipras/Varoufakis style politician had ruled the country.
3
Germany paid of it's war reperation . The Socialist Federal Republic of Yugoslavia received a value of US$ 36 billion, in industrial equipment from the dismantled German factories. West Germany also paid 8 million US$ as reparations for forced human experimentation on Yugoslav citizens. Germany paid Polish sufferers ca. 4.7 bln zł. There is an ongoing debate among Polish international law experts if Poland still has the right to demand war reparations, with some arguing that the 1954 declaration wasn't legal According to the Yalta Conference, no reparations to Allied countries would be paid in money. Instead, much of this value consisted of German industrial assets, as well as forced labour.
I'd say that we all owe Greece a big thank you for, let's see, Western Civilization as we know it. Cut Greece a break and give them the same deal that Germany received after War that they dragged the world into.
16
@ David, Portland
Then cut Greece from the Euro. This would be the biggest break that one could give them.
Besides, this is a question of Economics, not Civilization.
Then cut Greece from the Euro. This would be the biggest break that one could give them.
Besides, this is a question of Economics, not Civilization.
1
Why is this such a controversial, frightening observation? Greece needs to declare bankruptcy and be re-organized as a public entity because it does not work. In the U.S., Greece would have filed for insolvenctpy under Chapter 11 and an independent judge - not a creditor - would decide how much the entity is worth, who gets paid, who doesn't and appoints new managers.
What is the serious European alternative to this?
What is the serious European alternative to this?
4
Greece is a country, not a company. The continual analogies to what would happen to a bankrupt company, or a bankrupt person, are just inapt. They're utterly different scenarios. If a country just defaults on all its debts, and is unable to borrow from the market or from other sovereign nations, its economy seizes up, banks close, people lose their jobs, people cannot eat or buy medicine, and people die. If there were a rational, well-thought out plan for Greece to transition to the drachma, eliminate or greatly reduce its debt, and keeping its banks functioning at the same time, that would be a very different story. Yes, that may well be better for Greece in the long run. But neither Greece nor the EU has such a plan. So for Schauble to suggest it now, and potentially persuade the Bundestag to reject the deal that the EU leaders and Greece have agreed to, is the height of irresponsibility. If Greece had an unplanned, uncontrolled, unsupported exit from the Eurozone--caused by the collapse of its banks in the next couple of weeks--it would create an economic nightmare for Greece, profound disruptions in Europe (regardless of whatever "firewalls" the EU thinks it has created), and a humanitarian catastrophe for people in Greece.
5
You make salient and important points about the chaos that would of course accompany an unplanned euroexit. But my question still stands - why is there no mechanism for dealing with insolvent entities within the EU? Nobody thinks bankruptcy is a good thing but it's how a city, a corporation re-organizes and how debt gets re-scheduled. Why should a country be an exception? Did nobody within the EU ever think about this before?
2
What difference will it make for Greece? Greece will never cut all of the welfare and pension benefits its people have grown accustomed to. Greece will never raise all of the tax revenue it needs to pay those benefits. And Greece will never build enough plants and produce enough goods and services to generate sufficient revenue to pay for what Greeks want.
6
In a democratic, fair system of countries working together, no one country should have anything close to the power Germany has. What's worse, in this case, ONE MINISTER in Germany has most control. Other powerful players, such as France, are more reasonable, but are being silenced, virtually rolled over, as if their views don't matter.
In the US, no one STATE can do this to another... but Europe wants an EU and Eurozone where ONE COUNTRY can do this to another! There's a word for this: it's "War."
Let's not kid ourselves, for all their overblown rage, the vast amount of this effort is for Greece to pay it's debts, most of which are to Germany. So, all this bailout is not about Greece, it's about Germany skewing a process such that German money pays back German banks. *The primary and most important stakeholder is Germany and German Banks, following German rules to uphold German interests!*
Where does Greece cone in here? Where does aleiviating the punishment caused by years of Austerity, and the injury from weeks of brutality to the Greek people come in? It doesn't. All Greece gets from this is to have the banks turned on, so the common man can buy groceries again!
Look at the scolding Greece has endured in Parliment, as other nations joined the pile-on. What other nation would take that?
WWII was caused by doing this... to Germany. In the last century, *Germany caused the MOST DAMAGE to Europe, and had the MOST DEBT FORGIVEN.* How quickly they forget!
In the US, no one STATE can do this to another... but Europe wants an EU and Eurozone where ONE COUNTRY can do this to another! There's a word for this: it's "War."
Let's not kid ourselves, for all their overblown rage, the vast amount of this effort is for Greece to pay it's debts, most of which are to Germany. So, all this bailout is not about Greece, it's about Germany skewing a process such that German money pays back German banks. *The primary and most important stakeholder is Germany and German Banks, following German rules to uphold German interests!*
Where does Greece cone in here? Where does aleiviating the punishment caused by years of Austerity, and the injury from weeks of brutality to the Greek people come in? It doesn't. All Greece gets from this is to have the banks turned on, so the common man can buy groceries again!
Look at the scolding Greece has endured in Parliment, as other nations joined the pile-on. What other nation would take that?
WWII was caused by doing this... to Germany. In the last century, *Germany caused the MOST DAMAGE to Europe, and had the MOST DEBT FORGIVEN.* How quickly they forget!
8
I think it's plain propaganda to reduce Germanys stand in the Greece situation with history from 70 years ago. First of all your your statements regarding reparations as silly as historically incorrect. F.i. Germanys reparation-payments imposed on Germany after WW 1 ended in October 2010. The reparations after WW 2 are a bit more complex because they consisted of more than just cash namly demontage of industrial plants to allies (ended 1950), raw material such as coal, wood, etc, patents, trade-marks etc. all had to be surrendered to the allies.
2
"In a democratic, fair system of countries working together, no one country should have anything close to the power Germany has."
In the Euro - Zone every country has the same vote (1).
In the EU, voting power is based on population (not unfair?), but with an overproportional advantage for small (!) countries. GER, FRA, UK, I, have the same number of votes.
In the Euro - Zone every country has the same vote (1).
In the EU, voting power is based on population (not unfair?), but with an overproportional advantage for small (!) countries. GER, FRA, UK, I, have the same number of votes.
While the German Finance Minister is a a huge 'buzz kill' and probably will not be voted as 'statesmen of the year', the choices are stark between Greece and Germany:
Civic responsibility versus everyone out for themselves
Save today versus borrow today and the next
Be self sufficient versus be a ward of the state
Agree to anything to get want you want.
Civic responsibility versus everyone out for themselves
Save today versus borrow today and the next
Be self sufficient versus be a ward of the state
Agree to anything to get want you want.
5
Just what are these "public assets" that Greece is required to sell? This opaque reference keeps occurring in reporting, but I haven't seen anything more specific. Can anyone refer me to a source regarding this?
Greece suffers from a shortage of water, so agricultural efforts don't profit much. There's no oil in the ground. However, it is the home of Western civilization, and those artifacts are precious. Hmm.
A few years ago, an American friend of mine was having supper with his Greek friend in a small taverna on Crete; a few tables away, two Germans were talking loudly in German when suddenly everyone else grew quiet. The American (who did not understand German) asked his friend what was going on. Thinking no one around them would understand his language, one of the Germans had just said (loudly) to the other, "If we had won the war, this would be ours now." Apparently, the Greek diners did understand the language.
I fear a "take what you like and leave the rest" attitude among the German elite.
Greece suffers from a shortage of water, so agricultural efforts don't profit much. There's no oil in the ground. However, it is the home of Western civilization, and those artifacts are precious. Hmm.
A few years ago, an American friend of mine was having supper with his Greek friend in a small taverna on Crete; a few tables away, two Germans were talking loudly in German when suddenly everyone else grew quiet. The American (who did not understand German) asked his friend what was going on. Thinking no one around them would understand his language, one of the Germans had just said (loudly) to the other, "If we had won the war, this would be ours now." Apparently, the Greek diners did understand the language.
I fear a "take what you like and leave the rest" attitude among the German elite.
6
Whatever the intention, "higher taxes, pension cuts" do not promote economic growth. Economics 101 tells us that either or both fiscal tactics reduce spending power, expand poverty and exacerbate the nation's psychology of pessimism thereby short-circuiting economic activity. As the Greek economy tumbles further into dysfunction, its debt grows and its capacity to repay it is destroyed, "haircut" or not.
www.endthemadnessnow.org
www.endthemadnessnow.org
7
So, they will not forgive the debt or any portion or to restructure the deal in any significant way after Greece acceded to their demands for austerity. Then they recommend that Greece leave the Union, essentially defaulting on their loans. See the writing on the wall? So, the Euro is just a Deustchemark? There is no European Union, that is a fantasy.
4
I notice this week that the value of the Euro has been decreasing against the dollar (1 dollar is not .92 Euro). This is the best exchange rate for an American going to Europe in a long time. Do we need any better proof that Germany's inflexibility and threats are damaging the Eurozone? My read of the exchange rate is declining confidence in the Euro because of the intractable, anti-democratic behavior of its bankers/leaders.
It seems like the Eurozone can learn something from FDR's approach to the Great Depression: pump the money in, get the economy going (maybe don't go so far as to start a war), and there will be money to go around. Or, Greece should leave the Eurozone, devalue the drachma, and not look back. Make money off the natural beauty, its rich history, its desirability in terms of tourism and unique products. The future they are looking at now is no future at all.
On another note, I am sure that both Nietzsche and Heidegger would have bailed out the Greeks!!
It seems like the Eurozone can learn something from FDR's approach to the Great Depression: pump the money in, get the economy going (maybe don't go so far as to start a war), and there will be money to go around. Or, Greece should leave the Eurozone, devalue the drachma, and not look back. Make money off the natural beauty, its rich history, its desirability in terms of tourism and unique products. The future they are looking at now is no future at all.
On another note, I am sure that both Nietzsche and Heidegger would have bailed out the Greeks!!
3
I'm not buying any more Volkswagens, that's for sure.
I had bought two TDI's naively thinking the country had an idea of fairness.
Now, it's obvious that I was wrong and that the Germans make for the perfect "fair weather friend".
Greece represented no more than a business opportunity.
Without honest solidarity, the Eurozone is but a farce.
I had bought two TDI's naively thinking the country had an idea of fairness.
Now, it's obvious that I was wrong and that the Germans make for the perfect "fair weather friend".
Greece represented no more than a business opportunity.
Without honest solidarity, the Eurozone is but a farce.
14
I love BMW s and politicians who care about tax payers ( like Angela , unlike Hollande and obama)
A great defeat for the left
A great defeat for the left
3
Honesty requires you to come clean about your financial affairs and not to cook your numbers in order to enter a Union where you plan to mooch from for the rest of your life.
1
"A great defeat for the left"
At what price, DrT?
Could turn out that the German bankers just shot themselves, and the rest of Germany in the foot.
excerpt from a 2012 Guardian piece:
"Just under 15% of Germany's total arms exports are made to Greece, its biggest market in Europe,"
http://www.theguardian.com/world/2012/apr/19/greece-military-spending-de...
At what price, DrT?
Could turn out that the German bankers just shot themselves, and the rest of Germany in the foot.
excerpt from a 2012 Guardian piece:
"Just under 15% of Germany's total arms exports are made to Greece, its biggest market in Europe,"
http://www.theguardian.com/world/2012/apr/19/greece-military-spending-de...
2
And so, this endless problem continues. It is also time to reform the EU, so it is more than merely a fiscal union which allows laggard, and dishonest nations to borrow money they can never pay back, or in Greece's case, never had any intention of paying back. Is what Greece is getting a sort of stinging charity, or is it an honest loan, meant to help get them on their feet? It is stinging charity. Greece's creditor's should never expect to receive payment for these new loans, or the old ones, and so, because the contractual obligation terms are false on the face of what they ask for, they should be scrapped as dishonest documents. Either just give Greece the money, or kick them out of the EU, or, preferably, both.
"Here is your hat, Greece, with all the torn up IOUs inside it. Don't come back." This whole thing is a charade the entire world has to watch, over, and over, and over again. Europe, you are better than this. Reform the EU. Make it smaller, tighter and give yourselves some enforcement mechanisms besides finger-wagging and scolding.
2
Europe is decidely not a fscal union. Thanks to Germany. Where did that idea come from?
@Andy in Paris: don't be absurd. Of course it is. Just because you don't like what Germany is doing, it doesn't upend the fiscal structures in place in the EU.
1
Facually, the EU isnt a fiscal union. Period, end of story.
While he's sharing his personal thoughts, Mr. Schauble might consider recommending that Germany giving up the Euro currency. It's an idea that is within Germany's ability to implement and may bring the same outcome to the European integration plan.
6
With Germany being the biggest net payer into the EU (one keeps forgetting that the EU already is a transfer union and that Greece has been one of the largest recipients), the EU would be effectively finished if Germany went back to the Mark. All other countries would want to join Germany it the exodus then, they would be crazy not to, leaving Greece the only country holding the Euro.
I suppose that is also a solution to the problem.
I suppose that is also a solution to the problem.
1
If you think that Germany acts as a wrong-way driver in this affair, then you are wrong. Actually there are only four countries that like the idea of bail-outs within the eurozone. All the other 15 countries are afraid of bail-outs. If Germany left the eurozone, then many others would leave as well.
I find the entire comparison of Greece's situation with the post-WWII German debt reduction totally absurd. Germany was an economic and industrial backbone of Europe and its collapse would have caused more pain to an already war ravaged Europe. Greece by comparison is a tiny economy.
12
Again a comment which leaves some essential details away.
Schaeuble is right. The contracts of the Eurozone don't allow any cutting of debts. It maybe wrong, but that is a fact. So ignoring the contract is not possible. Otherwise anyone could address this case to the Europena council.
Therefore the only chance for Greece for a cut is to leave the Euro.
Tsipras knows this. But the Greeks clearly don't want to leave the Euro. They mainly want to keep the Euro. So they want to stay within the Euro and they want a cut. Again: This is not possible. Not because of the Germans, because of the contracts.
Still Tsipras knows this. Schaeuble only says what the options are.
If Greece wants to stay in the Euro, they need reforms they don't want. They expect the other countries to pay for them.
If Greece wants a cut of debts, they need to leave the Euro which will have huge impact on the living quality. The majority doesn't want this as well.
Anyone here with a perpetuum mobile!?
Otherwise a realistic Greek government would be a good start as well...
But still the Greeks want to the perpetuum mobile.
If
Schaeuble is right. The contracts of the Eurozone don't allow any cutting of debts. It maybe wrong, but that is a fact. So ignoring the contract is not possible. Otherwise anyone could address this case to the Europena council.
Therefore the only chance for Greece for a cut is to leave the Euro.
Tsipras knows this. But the Greeks clearly don't want to leave the Euro. They mainly want to keep the Euro. So they want to stay within the Euro and they want a cut. Again: This is not possible. Not because of the Germans, because of the contracts.
Still Tsipras knows this. Schaeuble only says what the options are.
If Greece wants to stay in the Euro, they need reforms they don't want. They expect the other countries to pay for them.
If Greece wants a cut of debts, they need to leave the Euro which will have huge impact on the living quality. The majority doesn't want this as well.
Anyone here with a perpetuum mobile!?
Otherwise a realistic Greek government would be a good start as well...
But still the Greeks want to the perpetuum mobile.
If
11
solving a problem sometimes is due to pure luck, sometimes by looking at the problem from another perspective. with that in mind, let's examine some alternates to Mr. Schäuble's argument—Greece might be better off if it left the Euro—that may at first seem nonsensical. Alternate 1: Greece might be better off if it stayed with the Euro. Alt. 2: Germany might be better off if Greece left the Euro. Alt. 3: Greece might be better off if Germany left the Euro. Alt. 4: Greece and Germany might be better off if both left the Euro. Alt. 5: Europe may be better off if it left the Euro.
Of these, alternate 3 has the most appeal to my mind. Without Germany, the Euro countries would be more balanced vis-a-vis their economic power. Also, Germans seem to not have the ability to grasp that helping a non-Germanic society may help that society and Germany itself.
Of these, alternate 3 has the most appeal to my mind. Without Germany, the Euro countries would be more balanced vis-a-vis their economic power. Also, Germans seem to not have the ability to grasp that helping a non-Germanic society may help that society and Germany itself.
4
The Euro crisis is a long way from being resolved. Age old European cultural differences are popping up everywhere now, adding further credence to the view that the Euro was ill-conceived from the outset.
3
Good Schäuble speaks up & plays the bad cop for the Eurozone and doesn’t care being demonized. Many Europeans are very concerned that even the third bailout won’t solve the core problem in Greece, and would trigger other cases of free lunches from Brussels, beyond Greece. So Schäuble does his job in voicing those concerns. Greece would indeed be better off to leave and get back on their feet- with a devalued currency. There’d be more sound, private foreign investment coming in. And a real debt write-off could happen. All Greeks I know are hardworking and smart; many Greek expats might come back to Greece and Greek offshore wealth will float back to give it a new chance. But not to a country under a communist style government and corrupt administration, with or without the Euro. Pick your self up, dust yourself off, and start all over again. Grexit, phenix !
11
If I were Chancellor Merkel and FM Schauble, I would tread very carefully....their short memories of all the post-war German debt that was forgiven is about to be served up back to them....the Greeks of course through their own corrupt practices and mismanagement have made their own beds....but Merkel and Schauble stand on the precipice...about to go from Hero to Zero. The economic contagion and geopolitical implications are very far reaching indeed.
4
For a while it appeared to me that Herr Schäuble was misguided and even mean-spirited in his public statements declaring his wishes to see Greece exit the Euro. But in retrospect I think he may have been on to something valid all along. In relation to the unfortunate austerity measures just imposed on the country (and approved, if marginally), there appears to be a growing consensus among economists that the only way out for Greece is out of the Euro. This play hasn't reached its final act.
5
Those "unfortunate austerity measures" were in large part the creation of the same Herr Schäuble. What better way to make suicide attractive than offering intolerable pain as the alternative.
Those Republicans who have a problem with paying taxes should learn something from Greece: the difference between advanced societies and the rest is that the former have taxpayers. Greeks live on cash and do most transactions under the table to avoid paying taxes. Now the state cannot rise enough revenue to pay its bills and the very people who thought paying taxes is for suckers are suffering.
5
In 1947, Germany was not a sovereign state; it was a country occupied by the allied militaries. Each Allied Power wielded government authority in its zone. Comparisons of the Greek situation with the Marshall Plan are disingenuous.
7
The Marshall plan was not confined to Germany. Suggesting it was is.... disingenuous.
People have been trying to vilify Schauble, but in his defence, his suggestion that they leave at least temporarily makes a lot of sense. The central problem with Greece is that they simply are not competitive in the euro. Debt relief does nothing to solve that problem. Greece needs major structural reforms and a big boost in productivity to viable in the euro zone in the long-term.
8
So the true German position is finally revealed publicly, sheepishly, and full of condescension. Maybe it would be better if Germany left the Eurozone and went back to using Marks...
6
And if Germany did, who would be left to pay for the fiscal irresponsibility of the Greeks?
5
Simple question: with Greece out of the EZ & back to its drachma, will Germany ever see any of its loan money returned? I venture to answer: highly unlikely. That's probably why, despite a few noises here & there, e.g., from Germany's WS, & apparently some preliminary EZ groundwork, a GRExit is not openly on the table.
1
They clearly aren't getting their money back if they keep lending it to Greece. In fact they're loosing more of it if they keep giving it to Greece.
The European Union is eventually going to break up sooner or later. The sooner the better before there are other countries that become a victim of the so called German dominance. In the Middle East and the muslim world anything that goes wrong is blamed on the USA and anything that goes wrong in Europe is blamed on Germany. Germany will dominate whether it is the Euro or the Deutschmark whichever is its currency. It is the nature of the beast.
4
Dear Wolfgang: Greece should have left the Euro as part of the original bailout but you wanted to save your precious German banks and saddle the debt first on the Greek people and also on the other Eurozone members. Is it not ironic that the then Conservative government of Greece, in power through much of Greece's time in the Euro, essentially bankrupted the country... leaving the short-lived rule of the Socialists to declare at once that Greece was penniless. Where did the money go? Much of it went to building the new Athens airport, purchasing naval vessels, swarms of tanks and more, all from German companies. You did not complain then even though it was obvious that eurobond issuances paid for the German suppliers and that the debt service was ridiculous.
So yes, Greece should have declared default when PASOK declared the country broke. It would not have suffered the tremendous depression that you and the IMF caused and it would have been able to repay its debts over time through the receipts of a growing and competitive economy, not collapsing one that you imposed.
Do you recall a popular book of the 1960's: The Ugly American? As to the title only you are The Ugly German. No more German cars and goods in our household Wolfgang.
So yes, Greece should have declared default when PASOK declared the country broke. It would not have suffered the tremendous depression that you and the IMF caused and it would have been able to repay its debts over time through the receipts of a growing and competitive economy, not collapsing one that you imposed.
Do you recall a popular book of the 1960's: The Ugly American? As to the title only you are The Ugly German. No more German cars and goods in our household Wolfgang.
13
"Much of it went to building the new Athens airport, purchasing naval vessels, swarms of tanks and more, all from German companies."
Most of the money went into the pockets of Onassis, Niarchos, Alafouzos, Vardinoyannis and other tycoon families controlling ship-building, construction and media. THIS is why the Greeks demonstrate against Germany but not their own people who have pocketed the money. The reasons for having the Olympic Games in Athens was exactly the same we had them in Russia.
The two other key constituencies are elite professionals, such as lawyers, doctors, and engineers, and unionized employees of utilities owned wholly or partially by the state, who are reaping enormous benefits for little work. These associations can set standard prices for basic services, a form of collusion that is illegal in all civilized economies but not in Greece. They are also permitted to self-regulate. The doctors’ pension fund benefited from a 6.5 percent charge on the value of all drugs prescribed. The pension fund for lawyers and judges has collected a stamp duty on all property transactions amounting to 1.3 percent of each sale price. Indirectly, all these goodies were financed by the EU. And now Greeks are squawking - they'd better look into the mirror.
Most of the money went into the pockets of Onassis, Niarchos, Alafouzos, Vardinoyannis and other tycoon families controlling ship-building, construction and media. THIS is why the Greeks demonstrate against Germany but not their own people who have pocketed the money. The reasons for having the Olympic Games in Athens was exactly the same we had them in Russia.
The two other key constituencies are elite professionals, such as lawyers, doctors, and engineers, and unionized employees of utilities owned wholly or partially by the state, who are reaping enormous benefits for little work. These associations can set standard prices for basic services, a form of collusion that is illegal in all civilized economies but not in Greece. They are also permitted to self-regulate. The doctors’ pension fund benefited from a 6.5 percent charge on the value of all drugs prescribed. The pension fund for lawyers and judges has collected a stamp duty on all property transactions amounting to 1.3 percent of each sale price. Indirectly, all these goodies were financed by the EU. And now Greeks are squawking - they'd better look into the mirror.
Again these ridiculous claims. You are wrong. Back in 2010, the main creditors of Greece were French and Swiss banks. Not German banks. But it is certainly true that Germany did not want to be responsible of causing another Lehman Brs. style event.
So you know what Deutsche Bank held in Greek debt? You might look into those endless CLO's and derivative trades that your Central Bank is gradually discovering. What about HSH Nordbank, holder of the world's largest portfolio of bad shipping loans?
Lehman Bros was a terrible mistake, as was the behavior of the Greenspan Fed prior to the US crash. Germany's, Europe's and the IMF behavior was likewise terrible. The difference between the to is that Germany looked solely for its own interests.
Lehman Bros was a terrible mistake, as was the behavior of the Greenspan Fed prior to the US crash. Germany's, Europe's and the IMF behavior was likewise terrible. The difference between the to is that Germany looked solely for its own interests.
The German finance minister was lying through his teeth for months. He is quoted numerous times saying there is no Plan B, that there will be no Grexit.
Now it is clear that all along he was intent on either having the left-leaning Greek government fall, or have Greece exit the Eurozone.
He is responsible for the Eurozone breaking apart. And this will be a major blow to the European Union with incalculable geopolitical consequences.
Germany built a miracle economy on American shoulders. With hundreds of billions of American dollars in debt forgiveness, defense support and in direct assistance, Germany is now forgetting its history. They are sad in repeating the mistakes of their fathers and bringing Europe to its knees.
Now it is clear that all along he was intent on either having the left-leaning Greek government fall, or have Greece exit the Eurozone.
He is responsible for the Eurozone breaking apart. And this will be a major blow to the European Union with incalculable geopolitical consequences.
Germany built a miracle economy on American shoulders. With hundreds of billions of American dollars in debt forgiveness, defense support and in direct assistance, Germany is now forgetting its history. They are sad in repeating the mistakes of their fathers and bringing Europe to its knees.
8
Quite right - a temporary exit,and a debt moratorium,is the only long term solution.Greece has to start all over again which is not possible with the Euro.
3
Evident all along that German finance minister sought to make an example of Greece not to solve a problem and that his plan included/required Grexit. He's scrambling now that Greece has agreed to his terms instead of leaving the EU.
2
@Jamie Baldwin Redding, Conn.
There is a difference between the "Eurozone" and the EU.
There is a difference between the "Eurozone" and the EU.
1
The Greek people have voted "No". 61%. No is No. They were told that No=Grexit. Why are we talking about Germany? Why don't we accept this vote? Nothing else matters in a Democracy.
5
euro zone is a non-sense. why even have different countries and governments when you cant even control your own money. they should abandon the whole idea.
3
Mr. Schauble should not have any future role in the EU because he is damaging the EU, damaging Greece and damaging Germany.
He was the power behind freezing Greek banks, obviously hoping that Greece would withdraw from the EU. When they would not, he tried to goad them further by insisting on draconian austerity and humiliating sale of their assets. Still they would not withdraw. Now he is pointedly suggesting that they should leave. Next, he will probably take stronger action to push them out.
His behavior is inconsistent with the mission of the EU and has probably already damaged trust in the EU, certainly by France and by the members with weaker economies.
His behavior has clearly damaged Greece by making the bad situation they created much worse.
And, his behavior damages Germany economically. If Greece, and especially if more of the weak economies pull out, the Euro will inflate and German exports will decline. Of all the countries in the world, Germany is the number 1 exporter to 15 EU countries and the number 2 exporter to another 9 EU countries. So, the EU is Germany's economic fiefdom. It's not wise to throw your customers under the bus.
As Finance Minister, Mr. Schauble must know something about economics. Although his policy of austerity has certainly be the wrong way to recover from recession. I can only assume that his Calvinistic moral outrage has gotten the best of him.
He was the power behind freezing Greek banks, obviously hoping that Greece would withdraw from the EU. When they would not, he tried to goad them further by insisting on draconian austerity and humiliating sale of their assets. Still they would not withdraw. Now he is pointedly suggesting that they should leave. Next, he will probably take stronger action to push them out.
His behavior is inconsistent with the mission of the EU and has probably already damaged trust in the EU, certainly by France and by the members with weaker economies.
His behavior has clearly damaged Greece by making the bad situation they created much worse.
And, his behavior damages Germany economically. If Greece, and especially if more of the weak economies pull out, the Euro will inflate and German exports will decline. Of all the countries in the world, Germany is the number 1 exporter to 15 EU countries and the number 2 exporter to another 9 EU countries. So, the EU is Germany's economic fiefdom. It's not wise to throw your customers under the bus.
As Finance Minister, Mr. Schauble must know something about economics. Although his policy of austerity has certainly be the wrong way to recover from recession. I can only assume that his Calvinistic moral outrage has gotten the best of him.
139
Please explain to us why the Euro would inflate if Greece were to leave the Euro.
Good analysis. Mr. Schauble (and Mrs. Merkel) should stop trying to "lead" (tell other countries what to do). Also important is the discussion previous to this letter as to the far reaching financial help of the US after WWII. They gave help without expecting but hoping for economic growth and without demanding austerity by damaged countries.
What IS the solution to allow Greece to recover and grow? A debt cut would spur the other PIIGS to demand the same. That debt cut would crash the ECB and set off (another) global banking crisis.
So, if a debt cut isn't it, how do the Greeks get to a point where revenue matches or exceeds payments?
They could, as Merkel suggests, extend maturities and/or lower interest payments. Why don't they just extend the maturity for 300 billion years, and cut interest to 0%? That would allow Greece to pay $1 per year in debt payments. Problem Solved! Except, as a bond holder, that is a severe haircut, no matter what you call it.
So, if a debt cut isn't it, how do the Greeks get to a point where revenue matches or exceeds payments?
They could, as Merkel suggests, extend maturities and/or lower interest payments. Why don't they just extend the maturity for 300 billion years, and cut interest to 0%? That would allow Greece to pay $1 per year in debt payments. Problem Solved! Except, as a bond holder, that is a severe haircut, no matter what you call it.
There is a saying that if you owed a lender a thousand dollars, then YOU HAVE A PROBLEM.
But if you owed the lender a BILLION DOLLARS, then the LENDER HAS A PROBLEM.
Ironically, in Greece's case, it owes billions of dollars to lenders and IT HAS A PROBLEM.
Go figure that one out.
But if you owed the lender a BILLION DOLLARS, then the LENDER HAS A PROBLEM.
Ironically, in Greece's case, it owes billions of dollars to lenders and IT HAS A PROBLEM.
Go figure that one out.
2
This is only true for a private lender, not for a public lender.
It is the main reason why they restructured the Greek debts from private lenders to public lenders. Back in 2010 what you say was true. Now it isn't anymore.
It is the main reason why they restructured the Greek debts from private lenders to public lenders. Back in 2010 what you say was true. Now it isn't anymore.
Kudos to Schauble. It isn't just Greece that is being harmed by being forced to remain in the Euro ... it is the Euro, and the EU.
The EU simply does not have the power to force a member country to not go bankrupt. Nor does it have any ability to acquire the political power required for it to simply rescue Greece, as if it were the USA rescuing a State.
The EU simply does not have the power to force a member country to not go bankrupt. Nor does it have any ability to acquire the political power required for it to simply rescue Greece, as if it were the USA rescuing a State.
7
Greece paid dearly the incompetent politicians for thirty years that's why we silently suffered for 5 years of catastrophic austerity..
But we know now..
Greece is fighting for humanity and culture against monsters for thousands years and we will continue doing it...
Greece is the spiritual godmother to Europe..
We can't give it to flesh eating dinosaurs not Again...not for third time...
And some insignificant satellites with no historical or European background would be wiser
To silence and be modest...
But we know now..
Greece is fighting for humanity and culture against monsters for thousands years and we will continue doing it...
Greece is the spiritual godmother to Europe..
We can't give it to flesh eating dinosaurs not Again...not for third time...
And some insignificant satellites with no historical or European background would be wiser
To silence and be modest...
6
Greeks, rightly, shiver at the thought of amputation from monetary union. Exiting a common currency is nothing like severing a peg, as Britain did in 1992, when Norman Lamont famously sang in the shower the morning sterling quit the European exchange rate mechanism (ERM). Alas, Greece does not have a currency whose peg with the euro can be cut. It has the euro – a foreign currency fully administered by a creditor inimical to restructuring our nation’s unsustainable debt.
To exit, we would have to create a new currency from scratch. In occupied Iraq, the introduction of new paper money took almost a year, 20 or so Boeing 747s, the mobilisation of the US military’s might, three printing firms and hundreds of trucks. In the absence of such support, Grexit would be the equivalent of announcing a large devaluation more than 18 months in advance: a recipe for liquidating all Greek capital stock and transferring it abroad by any means available.
[excerpted from the blog of Yanis Varoufakis]
To exit, we would have to create a new currency from scratch. In occupied Iraq, the introduction of new paper money took almost a year, 20 or so Boeing 747s, the mobilisation of the US military’s might, three printing firms and hundreds of trucks. In the absence of such support, Grexit would be the equivalent of announcing a large devaluation more than 18 months in advance: a recipe for liquidating all Greek capital stock and transferring it abroad by any means available.
[excerpted from the blog of Yanis Varoufakis]
1
It definitely would be better for Greece and many other countries to exit the Euro is Germany plans to continue behaving in the same manner.
2
After World War Two, Germany picked itself up from the ruins of that war, endured severe hardships, proceeded to rebuild its devastated country and propelled itself to the pinnacle of economic power in Europe.
It is within the context of that history and that rebuilding that the statement of Germany’s finance minister, suggesting that “Greece might be better off leaving the euro,” should be viewed.
As reflected in that statement, Germany and its public no doubt feel that if Germany and its people could struggle, endure hardships and rebuild their devastated country from the ashes of World War Two, Greece should be able to struggle, endure hardships and reduce its debt.
Greece will be wise to follow Germany’s example. It should heed the German minister’s advice that leaving the euro temporarily could give it “additional flexibility.”
This may be a harder path, but it is the more dignified, the more effective and ultimately the more enduring.
Greece must on its own “reduce its crippling debt load.” It must on its own rebuild its economy. And it must on its own rescue its impoverished people.
Chronically depending on outside help will only humiliate its people, will only sap the needed energy from its youth to do what they must for themselves and will render that youth eternally dependent on others to do for them what they must do for themselves and for their proud country.
It is within the context of that history and that rebuilding that the statement of Germany’s finance minister, suggesting that “Greece might be better off leaving the euro,” should be viewed.
As reflected in that statement, Germany and its public no doubt feel that if Germany and its people could struggle, endure hardships and rebuild their devastated country from the ashes of World War Two, Greece should be able to struggle, endure hardships and reduce its debt.
Greece will be wise to follow Germany’s example. It should heed the German minister’s advice that leaving the euro temporarily could give it “additional flexibility.”
This may be a harder path, but it is the more dignified, the more effective and ultimately the more enduring.
Greece must on its own “reduce its crippling debt load.” It must on its own rebuild its economy. And it must on its own rescue its impoverished people.
Chronically depending on outside help will only humiliate its people, will only sap the needed energy from its youth to do what they must for themselves and will render that youth eternally dependent on others to do for them what they must do for themselves and for their proud country.
12
Because Germans did it without debt forgiveness and the large part of the $100 billion of the Marshal l plan? (historical amount...$1 trillion today?)
1
Say what? Germany picked itself up? Germany received a huge amount of money from the US, and the forgiveness of debt by most of Europe (including Greece). And the debt was not merely in the form of reparations for war damage, but also for wholesale looting of the banks of conquered countries (including Greece). The Greeks would love to be offered the deal the Germans got.
1
Oh, so now "the two legs good" version of World War II is that Germany was a victim of the world's aggression? Don't forget we still have pictures of Auschwitz being freed dude.
Are the Germans ok to let Great Britain leave the EU .. they do not even use the Euro.
So they want the poorer nations leave .. that ok.. too
So they want the poorer nations leave .. that ok.. too
1
Like most of the readers, you labor under the misconception that the EU and the Euro Zone are the same. The UK is for the moment a member of the EU but never has been a member of the Euro Zone. There are a number of other EU nations, such as Denmark and Sweden, that do not belong to the European Monetary Union. With the exception of the British, who seem like Americans to view themselves as exceptionalists, the non-EMU members of the EU seem to get along just fine with their EMU members.
1
Greece needs to strategize on tackling debt and maintaining consistent revenue generation.
Can Greece negotiate a quarterly consolidated debt payment schedule? One payment per quarter. Very small payments within a one-year grace period and then quarterly payments to follow. Perhaps it would be helpful or easier to manage a simple financial schedule.
- Make small payments, keep Euro, GDP stats improve a small amount, quality of life is not great with austerity.
- Make medium payments, keep Euro, GDP stats improve somewhat, quality of life improves, negotiate less austerity measures.
- Make large payments, keep Euro, GDP stats improve, austerity ends.
- Rotate size of payments for the next 4 years, keep Euro, GDP numbers improve, negotiate less austerity measures.
Greece pays debt completely, pays off debts early--austerity ends, the Euro currency is more valuable!
Can Greece negotiate a quarterly consolidated debt payment schedule? One payment per quarter. Very small payments within a one-year grace period and then quarterly payments to follow. Perhaps it would be helpful or easier to manage a simple financial schedule.
- Make small payments, keep Euro, GDP stats improve a small amount, quality of life is not great with austerity.
- Make medium payments, keep Euro, GDP stats improve somewhat, quality of life improves, negotiate less austerity measures.
- Make large payments, keep Euro, GDP stats improve, austerity ends.
- Rotate size of payments for the next 4 years, keep Euro, GDP numbers improve, negotiate less austerity measures.
Greece pays debt completely, pays off debts early--austerity ends, the Euro currency is more valuable!
Timeline:
‘2 May 2010 Eurozone finance ministers agree to rescue Greece with €110bn (£92bn) in loans over three years. A week later ministers announce a €500bn eurozone rescue fund.
31 October 2011 Papandreou stuns markets and eurozone leaders by calling for a referendum on the EU/IMF rescue plan agreed only days earlier. The plan calls for private creditors to take a 50% writedown and allows for €130bn of fresh bailout loans.
21 February 2012 After more than 12 hours of talks, eurozone countries reach agreement to hand Greece €130bn, needed in time for the country to refinance €14bn of loans on 20 March. The deal is expected to bring Greece's debt down to 120% of GDP by 2020, around the maximum that the IMF and eurozone consider sustainable.
9 March 2012 Bailouts, austerity, riots and bond swaps - key events in the run-up to Friday's news that investors in Greece have agreed to write off 75% of their loans’
I believe the Eurozone has done more than its share to help its weaker economies. We now have countries like Ireland and Portugal, slowly but consistently recovering – with new structures that are stronger and more stable than before.
The real question is if Greece is willing to help itself.
BTW - @MVT2216 - I am so unsurprised the NYT picked a left-wing response to my comment!
‘2 May 2010 Eurozone finance ministers agree to rescue Greece with €110bn (£92bn) in loans over three years. A week later ministers announce a €500bn eurozone rescue fund.
31 October 2011 Papandreou stuns markets and eurozone leaders by calling for a referendum on the EU/IMF rescue plan agreed only days earlier. The plan calls for private creditors to take a 50% writedown and allows for €130bn of fresh bailout loans.
21 February 2012 After more than 12 hours of talks, eurozone countries reach agreement to hand Greece €130bn, needed in time for the country to refinance €14bn of loans on 20 March. The deal is expected to bring Greece's debt down to 120% of GDP by 2020, around the maximum that the IMF and eurozone consider sustainable.
9 March 2012 Bailouts, austerity, riots and bond swaps - key events in the run-up to Friday's news that investors in Greece have agreed to write off 75% of their loans’
I believe the Eurozone has done more than its share to help its weaker economies. We now have countries like Ireland and Portugal, slowly but consistently recovering – with new structures that are stronger and more stable than before.
The real question is if Greece is willing to help itself.
BTW - @MVT2216 - I am so unsurprised the NYT picked a left-wing response to my comment!
5
The EU saved its own banks on the taxpayers' dime!
1
While the advice might be realistic, and Greece needs some serious pension and tax compliance reform, Mr. Schauble's advice is ultimately that of the 1% trying to avoid sharing with others. Absolutely, debt forgiveness is possible in the Eurozone, and it has already been done with Greece, in 2012. Ultimately any society will have its richer and poorer citizens and geographic areas, and money should in conscience flow in response to need. For the Germans in particular to oppose this is especially irritating, though, given the way Europe forgave it and subsidized it after the devastation of WWII.
2
First, we always knew it, but recent events have made clear: It's not a Euro, it's a Deutsche Mark. Other than the elites, the French hate it. France should leave the Euro and drive a stake in the heart of the EMU.
Second, yes, the Greeks have been profligate since at least as far back as when Pliny told Scipio Africanus that they not like Romans, but there is another serious issue here: German bankers. The problem with German bankers is that are not good bankers. German bankers have the mentality of beamte. They make terrible investments. (The US banks make more poor investments too.) The German Landesbanks make terrible loans, and buy whatever bad financial product NY offers them. Since Merkel has decided to turn to the Bundeskanzlerai into a debt collection agency for her private banks, the fact that German banks are bad at banking becomes an EU agenda item. Sure, force structural reforms on the Greeks, but if the bankers are not reformed they will just find some other risky borrower to give money.
Second, yes, the Greeks have been profligate since at least as far back as when Pliny told Scipio Africanus that they not like Romans, but there is another serious issue here: German bankers. The problem with German bankers is that are not good bankers. German bankers have the mentality of beamte. They make terrible investments. (The US banks make more poor investments too.) The German Landesbanks make terrible loans, and buy whatever bad financial product NY offers them. Since Merkel has decided to turn to the Bundeskanzlerai into a debt collection agency for her private banks, the fact that German banks are bad at banking becomes an EU agenda item. Sure, force structural reforms on the Greeks, but if the bankers are not reformed they will just find some other risky borrower to give money.
5
I don't believe your opinion is shared by most people in France. France had a huge inflation before it adopted the Euro. Unlikely that many people want a time back where they watched their savings melt like ice in the sun.
That is not quite true. Currently there are only four countries that like the idea of bail-outs within the eurozone. These countries are Greece, Cyprus, France and Italy. All the other countries stick to the initial agreement that there should be no bail-outs within the eurozone.
@max there have been positive results for some. But european solidarity isn't part of the package.
1
In 1953, under the London agreement, Germany received relief from all of its external debt; half forgiven outright and the payment terms of the rest extended to 30 years. And now, asked to take similar action when it finds itself in a leadership role, Germany says no, all the debt must be paid, even when everyone knows that to be impossible.
7
I agree with Schauble, and so do many prominent economists (yes, I am counting you, too, Prof. Krugman!) The sooner Greece ditches Euro, the better it is for everyone concerned.
8
@ Donriver, Toronto
Agreed. The sooner the better. The ditch is only getting deeper the longer Greece stays in.
Agreed. The sooner the better. The ditch is only getting deeper the longer Greece stays in.
Three cheers for honesty! At least one public official is willing to tell the truth - a corrupt, bankrupt Greece is better placed outside the Eurozone.
10
Schauble put another nail in the coffin of the Euro Zone. It seems that he was negotiating in bad faith because what he really wanted was for Greece to "sink into the Mediterranean" as a recent poll indicates is the desire of many Germans.
If Germany wishes to appear like a decent society and not merely a money obsessed curmudgeonly state it should imitate US actions after WWII and establish a new version of the Marshall Plan to help Greece get back on its financial feet. Wishing that a country goes away or sinks in the sea is hardly an evolved or ethical stance. I am really quite shocked at Schauble's undiplomatic behavior and Germany's animosity towards its sister states. This is an attitude that had not served Germany well in the past and one which they should abandon lest history repeat itself.
If Germany wishes to appear like a decent society and not merely a money obsessed curmudgeonly state it should imitate US actions after WWII and establish a new version of the Marshall Plan to help Greece get back on its financial feet. Wishing that a country goes away or sinks in the sea is hardly an evolved or ethical stance. I am really quite shocked at Schauble's undiplomatic behavior and Germany's animosity towards its sister states. This is an attitude that had not served Germany well in the past and one which they should abandon lest history repeat itself.
3
I will never be able to fathom the depths of German callousness.
60 years ago it was fine for other countries to forgive part of Germany's debt to allow its economy to recover. Now, the concept of partial debt forgiveness is simply unthinkable? Very handy selective memory/double standard, there.
60 years ago it was fine for other countries to forgive part of Germany's debt to allow its economy to recover. Now, the concept of partial debt forgiveness is simply unthinkable? Very handy selective memory/double standard, there.
7
They've been shoveling money into Greece. It will never end. The Germans work hard, pay their taXes, and obey the law. What do the Greeks do? Retire early or get fake disability, avoid paying their taXes and are generally scofflaws. I wouldn't give them another penny, or whatever version of the penny in Euro.
1
It is already impossible to devalue a currency within the eurozone. If forgiving public debt is also "not compatible with membership in the eurozone", then it is becoming clear that the idea of fiscal union without political union is unworkable.
It seems to me that the Germans, with their self-righteous presumption of moral superiority, are more to blame than the Greeks - who have been exploited by both their wealthy tax-evading countrymen and by banksters - but no matter where the blame is placed, it's time to declare the euro a monumental failure and attempt to move on.
I agree that Greece should exit the eurozone. So should Italy, Spain, Portugal and Ireland. And maybe France.
It seems to me that the Germans, with their self-righteous presumption of moral superiority, are more to blame than the Greeks - who have been exploited by both their wealthy tax-evading countrymen and by banksters - but no matter where the blame is placed, it's time to declare the euro a monumental failure and attempt to move on.
I agree that Greece should exit the eurozone. So should Italy, Spain, Portugal and Ireland. And maybe France.
1
@Glassyeyed: If we were to accept the claim that the EU is congenitally unable to manage serious debt problems, then the conclusions about things falling apart would probably be right. But the claim is probably not correct and is instead just political posturing for Germany's internal consumption. Professionals probably have a solution, given that changing the timing and interest rate on debt repayment can be equivalent to a change in principal amount. Germany might be able to veto the solution, but that doesn't mean that the solution doesn't exist within the EU's rules.
It is time for Schauble to go. Just like Yanis Varoufakis was not useful in getting a working relationship between the EU and Greece, and was forced to resign, it seems that Schauble is in the same position now.
2
Simply put, Greece has acute short term cash-flow problems arising from annual deficits its tax revenues have failed to cover in the past. Given these annual deficits, Greece has borrowed heavily until its sovereign debt is currently about 1.75 times its GDP of approximately $200 billion. Since Greece must meet principal repayments of this debt plus interest payments on this debt, it is critical that Greece's GDP is sufficiently robust to support these payments via taxation. The metric to measure Greece's ability to meet these payments would be: the number of times its (taxing revenue minus essential expenditures) equals these debt repayments. [ No. of times = (Cash flows from tax revenues - expenditures)/(Principal + Interest Payments due)]. If a corporation cannot fund its debt payments when due, going-concern problems arise for it. To increase cash flows, Greece can:
1) Sell off assets as It has been advised to do, at the cost of future ROIs from these assets. 2) Greece has also been advised to raise value-added taxes in certain of its economic sectors, such as on products from the many islands in its tourism sector that wield lower VAT taxes to enhance their competitiveness. 3) Public and private sector pensions funded by the public face reduced payouts and increased periods of service for payouts. 4) Greater efficiencies must be introduced into its economy via less "crony capitalism" appointments. All intended to drive GDP and tax revenues higher. [7/16/15 Th 1:30p]
1) Sell off assets as It has been advised to do, at the cost of future ROIs from these assets. 2) Greece has also been advised to raise value-added taxes in certain of its economic sectors, such as on products from the many islands in its tourism sector that wield lower VAT taxes to enhance their competitiveness. 3) Public and private sector pensions funded by the public face reduced payouts and increased periods of service for payouts. 4) Greater efficiencies must be introduced into its economy via less "crony capitalism" appointments. All intended to drive GDP and tax revenues higher. [7/16/15 Th 1:30p]
3
Show me again where the austerity already required of Greece has helped turn around their economy?
Or how about showing me where insisting on austerity, penury and payment of crushing debt helped Germany after World War I? Or how the relief of those conditions damaged it after World War II, which was largely sparked by popular resentment of the terms imposed by France after WWI?
Schauble should be ashamed and removed from the negotiating table.
Or how about showing me where insisting on austerity, penury and payment of crushing debt helped Germany after World War I? Or how the relief of those conditions damaged it after World War II, which was largely sparked by popular resentment of the terms imposed by France after WWI?
Schauble should be ashamed and removed from the negotiating table.
4
Who needs a Panzer Division when you can just bully another nation with your economic might? Germany has rediscovered its hubris, and it's not a pretty sight.
7
It's true, it would be better for Greece to exit..and do what Island did. Let ALL debtors hold the bag, and go on with building up a healthier situation.
Of course it would also be better for the Eurozone, because it was never meant to be a United States of Europe i.e. a transfer union based on the same language and economic culture.
Of course it would also be better for the Eurozone, because it was never meant to be a United States of Europe i.e. a transfer union based on the same language and economic culture.
3
As much as I think the Germans are the real idiots in this debacle -- since it was they who insisted on overlending to a nation they knew only exported olives and olive oil -- the Finance Minister's recommendation is spot on: Greece simply is not at a place to be a full-fledged member of the EU. Everyone knew they had an economy as backward as it is corrupt. So why bother with the farce of including Greece in the EU? Let THIS be the message to others who are also on the bubble, like Portugal and those in the Baltic areas. Shape up or ship out. Economic pruning indeed.
2
"the Germans are the real idiots in this debacle -- since it was they who insisted on overlending to a nation they knew only exported olives and olive oil"
It is downright amusing how the narrative in the comments here spins further and further from reality. Nobody insisted on overlending. Greece insisted on overspending.
It is downright amusing how the narrative in the comments here spins further and further from reality. Nobody insisted on overlending. Greece insisted on overspending.
1
I hate to say it but this is the original sin of the Euro area coming home to roost. A decision was made some 20 years ago that the stability and growth pact would be read loosely and be flexible. On its face, the pact would have forbidden France from joining the Euro, much less Italy, Spain or Greece. This was because the Euro was seen to be more a political project than an economic one.
2
The EU is also at a choice point about what the word union means. They agreed to let Greece join. Now that they have a family member who can't meet their obligations they appear to want to disown them through forced secession. That may be good for creditors in the short tun, but undermines the stability and commitment needed to sustain a real union over time. Germany has seen how the fortunes of politics and economics can change in the past 100 years, and should be wary of its short sighted political protection of creditors. Greece's debt won't take down the EU, but these kinds of short-sighted policies might.
3
Yet another outrage against Greece from Schauble. Tsipras is fiscally waterboarded over the past weekend and is forced to accept untenable terms. He then goes home to sell an unworkable deal to his Parliament and after another night of purgatory where he secures the vote - while losing key members of his team- Schauble comes out with this little gem today. It is really too much for people of conscience to witness what amounts to a slow motion crucifixion. The damage that Germany and its close northern European allies are doing to the European experiment is potentially fatal.
3
Last sunday - Italy's Renzi: "Italy does not want Greece to exit the euro and to Germany I say: enough is enough..." From the beginning of the crisis Mr. Schäuble played with open cards (that's something I can't say about the greek government).
1
I recently worked for a German company, and the CEO (from Germany) spoke at the company's conference in the spring. He referenced the Greek crisis, calling their view ridiculous, and making fun of them. I thought it was pretty heartless and arrogant. Is this the popular viewpoint in Germany? Isn't great to be so superior to all other European countries when your economy is doing so well because it is all you have to worry about. Because the U.S. and the U.K. will take care of any military threats: Ukraine, ISIS, Putin for you. It is time for them to give leadership of Continental Europe to France. They at least are trying to solve the Eurozone crisis. Germany doesn't want the leadership role because they only care about Germans.
8
Henry - The UK and the US are not "taking care" of military threats for Germany.
Germany's constitution imposed on them by allied Forces after WWII forbids deployment of German Armed Forces outside of Germany's borders(NATO is an exception) and limits the number of Armed Forces Germany can have.
Why do you think Germany has such well trained Police and Border police? Even Red Cross workers are better trained than American soldiers.
And as an aside, most German commenters are better able to comment because they have at least a basic understanding of the subjects they are commenting on and do not just spout uninformed venom, hatred and misinformation.
Germany's constitution imposed on them by allied Forces after WWII forbids deployment of German Armed Forces outside of Germany's borders(NATO is an exception) and limits the number of Armed Forces Germany can have.
Why do you think Germany has such well trained Police and Border police? Even Red Cross workers are better trained than American soldiers.
And as an aside, most German commenters are better able to comment because they have at least a basic understanding of the subjects they are commenting on and do not just spout uninformed venom, hatred and misinformation.
1
"It is time for them to give leadership of Continental Europe to France."
That is quite astonishing comment. The US is not in a position to give the European leadership to a country. The European Union is a democracy. It doesn't need "leaders".
That is quite astonishing comment. The US is not in a position to give the European leadership to a country. The European Union is a democracy. It doesn't need "leaders".
1
I wish our politicians cared about us. What a funny thought, to actually help the people you represent.
1
Seems to me Schable is the only one dealing with reality whereas the Franco side is more concerned with image and Euro unity. Greece is broke and can never pay all its debt. If you write off their debt, it is in default. All Schauble is saying is that being a deadbeat and in the euro are incompatible. Makes sense to me.
The aid should have gone to supporting a new Greek currency instead of kicking the can down the road for the 3rd time in 5 years.
The aid should have gone to supporting a new Greek currency instead of kicking the can down the road for the 3rd time in 5 years.
4
There are many industries in Greece that are exempt from paying taxes BY LAW. The huge shipping industry is exempt ie Onassis etc. Greece created all these problems as a result of their culture, full of corruption. WAKE UP
6
Timeline:
'2 May 2010 Eurozone finance ministers agree to rescue Greece with €110bn (£92bn) in loans over three years. A week later ministers announce a €500bn eurozone rescue fund.
31 October 2011 Papandreou stuns markets and eurozone leaders by calling for a referendum on the EU/IMF rescue plan agreed only days earlier. The plan calls for private creditors to take a 50% writedown and allows for €130bn of fresh bailout loans.
21 February 2012 After more than 12 hours of talks, eurozone countries reach agreement to hand Greece €130bn, needed in time for the country to refinance €14bn of loans on 20 March. The deal is expected to bring Greece's debt down to 120% of GDP by 2020, around the maximum that the IMF and eurozone consider sustainable.
9 March 2012 Bailouts, austerity, riots and bond swaps - key events in the run-up to Friday's news that investors in Greece have agreed to write off 75% of their loans'
I believe the Eurozone has done more than enough to helper its weaker economies. We now see countries like Ireland and Portugal (slowly but consistently) recovering, and with a new structure that is fiscally stronger and more stable than what they had before.
The real question is if Greece really wants to help itself.
'2 May 2010 Eurozone finance ministers agree to rescue Greece with €110bn (£92bn) in loans over three years. A week later ministers announce a €500bn eurozone rescue fund.
31 October 2011 Papandreou stuns markets and eurozone leaders by calling for a referendum on the EU/IMF rescue plan agreed only days earlier. The plan calls for private creditors to take a 50% writedown and allows for €130bn of fresh bailout loans.
21 February 2012 After more than 12 hours of talks, eurozone countries reach agreement to hand Greece €130bn, needed in time for the country to refinance €14bn of loans on 20 March. The deal is expected to bring Greece's debt down to 120% of GDP by 2020, around the maximum that the IMF and eurozone consider sustainable.
9 March 2012 Bailouts, austerity, riots and bond swaps - key events in the run-up to Friday's news that investors in Greece have agreed to write off 75% of their loans'
I believe the Eurozone has done more than enough to helper its weaker economies. We now see countries like Ireland and Portugal (slowly but consistently) recovering, and with a new structure that is fiscally stronger and more stable than what they had before.
The real question is if Greece really wants to help itself.
2
"Germany’s finance minister, Wolfgang Schäuble, suggested on Thursday that Greece might be better off leaving the euro, saying that a temporary exit from the common currency could give the country additional flexibility to reduce its crippling debt load."
I have not hitherto been a fan of Mr. Schäuble, but I'm willing to admit that I may have been quite mistaken about him in the heat of the crisis. Maybe his idea should be considered dispassionately on its merits. I am willing to assume that Mr.Schäuble is making a genuine effort to be constructive and that he has Greece's best interests at heart.
But I have three questions: (1) once Greece exited the Euro, temporarily, what would its new currency be? Probably the drachma. (2) A more important question by far is by what would Greece's new currency be backed, as, e.g., the US dollar is backed, not by the gold in Fort Knox, but by the full faith and credit of the United States? (3) What would be the precise steps (or requirements) by which Greece could re-enter the Eurozone?
I would like to hear Mr. Schäuble's response to these questions, more particularly, his response to the second and third questions.
I have not hitherto been a fan of Mr. Schäuble, but I'm willing to admit that I may have been quite mistaken about him in the heat of the crisis. Maybe his idea should be considered dispassionately on its merits. I am willing to assume that Mr.Schäuble is making a genuine effort to be constructive and that he has Greece's best interests at heart.
But I have three questions: (1) once Greece exited the Euro, temporarily, what would its new currency be? Probably the drachma. (2) A more important question by far is by what would Greece's new currency be backed, as, e.g., the US dollar is backed, not by the gold in Fort Knox, but by the full faith and credit of the United States? (3) What would be the precise steps (or requirements) by which Greece could re-enter the Eurozone?
I would like to hear Mr. Schäuble's response to these questions, more particularly, his response to the second and third questions.
34
1) I don't think it matters what you name it. We could call it SMS's or Nevis' and it wouldn't matter :-) But yes the Drachma is the obvious choice. 2) Well we live in a fiat monetary world, so probably nothing. But actually, Greece needs a significatly cheaper currency to become competitive, so it's probably not a big deal if they don't have a bank full of gold. Note that the gold in Fort Knox couldn't cover even the smallest sliver of US debt, it has little bearing on the US Dollar. 3) I'm no expert on EU law, but they went through the euro application process before, so they must know what qualifications are needed. The point this time would be at actually meeting those benchmarks this time rather than lying about it (and not hiring Goldman Sach as their auditor again would probably go a long way).
If orchestrated well, a Grexit might only be moderately painful. While a new currency is produced, the EU should give temporary liquidity to Greek banks, give fuel and food to the people and perhaps even help stabilize the new currency while it's being introduced.
If orchestrated well, a Grexit might only be moderately painful. While a new currency is produced, the EU should give temporary liquidity to Greek banks, give fuel and food to the people and perhaps even help stabilize the new currency while it's being introduced.
Greece doesn't need to be on the euro currency. I think we're conflating the "club" of the eurozone with the "club" of joining the euro currency. Greece doesn't need the Euro. It just wants to stay in the eurozone club.
Backed by the full faith and credit of Greece, which is nil.
You have hit the nail on the head with the problem of creating a currency out of thin air, and expect anyone, even Greeks, to accept it.
You have hit the nail on the head with the problem of creating a currency out of thin air, and expect anyone, even Greeks, to accept it.
Greece might be better off with its own currency but the only reason for this is that it could default on its debt. The devaluation aspect is overstated, Greece doesn't export much. There's only so much yogurt and tourism the world demands. And it imports far more important things like much of its food, oil and medicines. So net net Greece would be worse off with a cheaper currency.
I'd also like to point out that Spain is currently reporting robust growth of 4%. So this is not even a Mediterranean problem, this is a Greek problem.
I'd also like to point out that Spain is currently reporting robust growth of 4%. So this is not even a Mediterranean problem, this is a Greek problem.
2
It's apparent that the Greeks have somehow managed to bring in to power a totally incompetent Prime Minister Alexis Tsipras. Calling on Greeks to vote no on Euro bail out terms seemed to be a strategic move as a prelude to Greece's exit from the Euro. He then gets the Greek people to vote his recommended "no," and then agrees to even more onerous bail out requirements to stay with the Euro. Little wonder that both the Greek people and the Euro members are befuddled and confused as to where to go next.
3
In defense of Germany as a nation; Think of Ms. Merkel as Germany's G.W. Bush, not the most diplomatic person but elected by a majority (in Merkel's case) and what they have to work with until there is another election. The decisions regarding Greece that are attributed to her were in fact decisions by all the members states of the Euro Zone. Merkel is just the spokesperson who comes across as the mother superior who enjoys beating your knuckles until a few digits fall of. This too shall pass and Germany might have a softer gentler chancellor that does not make Americans get the tanks and bombers out of the moths balls while delivering a message from all Euro Zone members..
You knew she was not a diplomatic leader when she denied Candidate Obama the Reichstag venue on his first visit to Germany and banished him in to the Schrebergaerten of Berlin. He has been listening to her phone calls ever since.
You knew she was not a diplomatic leader when she denied Candidate Obama the Reichstag venue on his first visit to Germany and banished him in to the Schrebergaerten of Berlin. He has been listening to her phone calls ever since.
1
@ Karin Byars
With all due respect, your comparison between Chancellor Merkel and G.W. Bush couldn't be more incorrect. And your commentary is lacking any depth of fact, as it is solely based only on opinion.
While the Chancellor may not appeal to your personal liking, that hardly reason to disparage her leadership. You may remember that Germany did not invade another country for non-existent WMDs, nor is it massively in debt, like Greece.
Another thing. The activities of the NSA were in existence long before Mr. Obama's visit to Berlin. And he was denied a venue at the BRANDENBURG GATE (not the Reichstag), because at that point, he was still a candidate -- NOT an elected President.
With all due respect, your comparison between Chancellor Merkel and G.W. Bush couldn't be more incorrect. And your commentary is lacking any depth of fact, as it is solely based only on opinion.
While the Chancellor may not appeal to your personal liking, that hardly reason to disparage her leadership. You may remember that Germany did not invade another country for non-existent WMDs, nor is it massively in debt, like Greece.
Another thing. The activities of the NSA were in existence long before Mr. Obama's visit to Berlin. And he was denied a venue at the BRANDENBURG GATE (not the Reichstag), because at that point, he was still a candidate -- NOT an elected President.
N. Smith
You are correct on all points. My comment was off the cuff unresearched and frivolous since I let my personal political preferences guide me.
Having said that, Mr. Schaeuble's comments that have generated such a lively discussion here are also politically motivated since he is trying to get under the skin of his coalition partners and and all his blustering does not mean a thing in the big picture because he is just one voice out of many in the Euro Zone and what he says is just wishful thinking.
Barring my mistake about the venue and your assertion about the NSA, my last paragraph is pretty funny, right?
You are correct on all points. My comment was off the cuff unresearched and frivolous since I let my personal political preferences guide me.
Having said that, Mr. Schaeuble's comments that have generated such a lively discussion here are also politically motivated since he is trying to get under the skin of his coalition partners and and all his blustering does not mean a thing in the big picture because he is just one voice out of many in the Euro Zone and what he says is just wishful thinking.
Barring my mistake about the venue and your assertion about the NSA, my last paragraph is pretty funny, right?
It's unfortunate that a reprehensible individual like Schauble has been the face and voice of Germany in this whole debacle.
By the way, is there any more information, NYT, on the private organization that's charged with selling off Greek public assets (one report says Schauble serves on its board), particularly what the fees will be for their "service"?
By the way, is there any more information, NYT, on the private organization that's charged with selling off Greek public assets (one report says Schauble serves on its board), particularly what the fees will be for their "service"?
The Germans understand the realities and the people who are going to lose money are amongst the most politically influential in Germany. Realistically, Greece needed funds to compensate for revenues it needed to operate day to day but could not generate because it's economy is not as robust as the countries of the North. No amount of investment nor loans will create that kind of economic expansion in Greece. It's potential for growth is limited by constraints that money cannot overcome. The Greeks are not lazy but their productivity is far less than those of the Germans because they cannot achieve the same level of wealth creation by any means available to them.
3
If Herr Schäuble thinks this (and it's not an unreasonable thought), then why have he and the German government made no provision for a new Greek currency? And if Mr. Tsipras wanted to escape the strictures his Euro partners have placed on his country, why has he made no provision for the drachma? Christine Lagarde should also offer this alternative and a way to help support an orderly transition.
At this point I'm forced to conclude that the Germans and their allies, the IMF, and the Greek government have made a mess of the whole business. They need to get down to the work of straightening it out and offering concrete solutions that ameliorate the immense suffering of the Greek people in Euro zone or out of it.
At this point I'm forced to conclude that the Germans and their allies, the IMF, and the Greek government have made a mess of the whole business. They need to get down to the work of straightening it out and offering concrete solutions that ameliorate the immense suffering of the Greek people in Euro zone or out of it.
61
In an interview with Mr. Varoufakis, the former finance minister, he said that they did have plans for an alternative currency, but at the point where the plans begin to be executed, the number of employees grows and it is impossible to keep this Plan B under wraps. Once it becomes known that the plan is being executed, it can cause financial panic. That aspect has to be planned for. So, at the moment, the plan is in a file drawer.
In another interview with Mr. Tsipras, he said that in order to change to a different currency, the Greek banks would need to be recapitalized first.
Therefore, I would guess that this plan might still be available, but there has to be serious transitional planning that would not upset people and cause panic.
In another interview with Mr. Tsipras, he said that in order to change to a different currency, the Greek banks would need to be recapitalized first.
Therefore, I would guess that this plan might still be available, but there has to be serious transitional planning that would not upset people and cause panic.
folks-"implications" worldwide-and right here in states, IF "austerity" is overthrown, do not bear well for Wall $treet continued scapegoating of VICTIMS of their economic disaster. Pressures are worldwide in world financial system to impose "austerity". as world heads inexorably towards TTP-TTIP-TISA; people need inform themselves:
"Wikileaks Exposes How TISA Will Gut Financial Regulations Worldwide":
TiSA is arguably the most important – yet least well-known – of the new generation of global trade agreements. According to WikiLeaks, it “is the largest component of the United States’ strategic ‘trade’ treaty triumvirate,” which also includes the Trans Pacific Partnership (TPP) and the TransAtlantic Trade and Investment Pact (TTIP).
“Together, the three treaties form not only a new legal order shaped for transnational corporations, but a new economic ‘grand enclosure,’ which excludes China and all other BRICS countries” declared WikiLeaks publisher Julian Assange in a press statement. If allowed to take universal effect, this new enclosure system will impose on all our governments a rigid framework of international corporate law designed to exclusively protect the interests of corporations, relieving them of financial risk, and social and environmental responsibility."
http://www.nakedcapitalism.com/2015/07/don-quijones-wikileaks-exposes-ho...
"Wikileaks Exposes How TISA Will Gut Financial Regulations Worldwide":
TiSA is arguably the most important – yet least well-known – of the new generation of global trade agreements. According to WikiLeaks, it “is the largest component of the United States’ strategic ‘trade’ treaty triumvirate,” which also includes the Trans Pacific Partnership (TPP) and the TransAtlantic Trade and Investment Pact (TTIP).
“Together, the three treaties form not only a new legal order shaped for transnational corporations, but a new economic ‘grand enclosure,’ which excludes China and all other BRICS countries” declared WikiLeaks publisher Julian Assange in a press statement. If allowed to take universal effect, this new enclosure system will impose on all our governments a rigid framework of international corporate law designed to exclusively protect the interests of corporations, relieving them of financial risk, and social and environmental responsibility."
http://www.nakedcapitalism.com/2015/07/don-quijones-wikileaks-exposes-ho...
These plans exist...not made by Germany but by the EU and ECB.
If the Greek debt crisis has activated the EU faultlines as to be seen in the lack of effective consensus on the bailout deal, it has also caused serious ruptures in the Greek political establishment on the issue of Greece continuing with the Eurozone. As such Greece might prove to be a test case for judging the resilience of the EU project.
I fully agree with him. The reasons are: 1) The is the last bailout (if at all there will be one); 2) Greece will never be able to pay back the debt; 3) If Greece is given a chance to make a Grexit with some soft loans to rebuild their country that would be best not only for Greece but also for the entire EU and possibly for the world; 4) Let´s say India ( or BRICS): social values, financial routines are not as in the EU/USA but they are prospering. I see no reason why can´t Greece be like an India or a Brazil in the shorter term by being away from the EU monetary union.
I really no chances if Greece in enchained by the debt by repeated bail out programs to cripple her body and soul for eternity. The EU will do a great disservice to Greece if it let Greece float only with the nostril above the water. It will be a terrible crime. So please let Greece be free to choose her own destiny as a NATO member. White House: are you listning?
I really no chances if Greece in enchained by the debt by repeated bail out programs to cripple her body and soul for eternity. The EU will do a great disservice to Greece if it let Greece float only with the nostril above the water. It will be a terrible crime. So please let Greece be free to choose her own destiny as a NATO member. White House: are you listning?
3
Since Greece broke away from the Ottomans a few decades before the mid-19th century, the state of its finances has been a perpetual source of worrry. Apparently, the country went virtually bankrupt at least a half-dozen times. And in the pre-Euro days, various forms of international administrative commissions essentially oversaw virtually all the major features of Greece's financial & fiscal system - from 1898 to the end of the 1930s! Will something similar soon need to be put in place & aren't iEZ/EU not already taking the first steps?
2
Schauble tells Greece, now that we've utterly humiliated you, made you agree to things that only a desperate country would do, "PSYCH!! Get out anyway. Thanks for the fun. It's been over 50 years we've been able to bully a country like this."
It's deeply ingrained in the culture, I think.
It's deeply ingrained in the culture, I think.
7
Greece is fighting again for Europe and humanity..
As always does..
If we have to deal austerity for another 5 years but at the end the prize should be to reveal the monsters....
OK...I accept it
As always does..
If we have to deal austerity for another 5 years but at the end the prize should be to reveal the monsters....
OK...I accept it
Mr. Schäuble sees the problem but he is clueless all the same. The Eurozone is and was folly. Here is why. When an country with it's own currency, economy and government has a province, territory, or state that cannot keep up with the more productive provinces, territories, or states that one is bailed out every year by means of wealth redistribution through taxes collected and spent on a national basis. The Eurozone cannot do this and it makes for an unstable arrangement where countries like Germany feel like they are supporting everyone else and countries like Greece are at the mercy of countries like Germany every time their economy contracts. It would be far better to eliminate the Euro until the European states are willing to federalize for real.
2
This is not complicated - of course Greece has to leave the Euro. If it doesn't happen now, it will happen during the next crisis, whenever that is. Not unlike a personal bankruptcy - the debtor is relieved of obligations it can never possibly pay, but gets a black mark that lasts for some period of time, and gets excluded from many "clubs."
And this has nothing to do with who is good or bad, or right or wrong. This is a fairly common circumstance - a lender made a bad lending decision, and a borrower badly mismanaged its finances. Both have some responsibility, and both will suffer. To keep trying to refinance this thing, and pretend that everything is going to be OK, is foolish.
And this has nothing to do with who is good or bad, or right or wrong. This is a fairly common circumstance - a lender made a bad lending decision, and a borrower badly mismanaged its finances. Both have some responsibility, and both will suffer. To keep trying to refinance this thing, and pretend that everything is going to be OK, is foolish.
6
it is time for the Germans to step up and take responsibility for their role in this. They were like loansharks lending money to a gambling addict.It is time of them to act like a great power and eat some of their losses, and show the same courage shown by American leaders after World War II who got a reluctant nation to help a country who had done things more horrible than the Greeks ever did to get back on its feet in the interest of world peace and greater prosperity.
When will these ridiculous claims ever stop? Back in 2010, French and Swiss banks were the biggest creditors of Greece. Not German banks.
Because the Germans helped pay back the banks, and now its the German people who are owed the money. You should have made the banks take the haircut. Now your taxpayers have to do it. You only have yourselves to blame.
I have to chuckle at 'temporarily leave the Euro zone', meaning when we put pressure on the Greek people in the next election, they will vote out the Socialist government.
1
What Mr. Schäuble is about to say: It is only possible to make a Greece haircut if they first exit the Euro temporarely due to legal issues. Also if someone remembers ISLM or the Mundell-Fleming model: You need rates of exchange to put some tiger in the tank for Greece in the first place. And I am saying this although I'm German and a Neo-Keynesian. Mr. Schäuble has a point.
1
German Finance Minister Wolfgang Schauble is the modern embodiment of Dickens' Scrooge, or perhaps to be culturally consistent, Wagner's Alberich who seeks to possess "das Rheingold" in the opera by that name. No matter what Greece does, he has the same response, "Bah, humbug!" Unfortunately, this is not fiction, but a tragedy of immense importance. Greece has been humiliated by having to grovel with increased austerity, but even that is not enough for Herr Schauble who insists on showing them the door or, as it's called, the "Grexit." The hard-line German position against any debt reduction for Greece, despite the reality of the I.M.F., a major member of the financial "troika" controlling Greek finances, insisting on it bodes ill for Greece and the European Union (E.U.) as well. Unless Herr Schauble has his own encounter with the ghosts of Germany's past (aka the Marshall Plan, and the 1953 London bailout providing debt reduction), we are more likely to revisit the tragedy of the Gotterdammerung and the end of the E.U.
2
Why not bring back Ms Tatcher to life and have her govern Greece for a while.
Why what was initially bitter for the Britons, but in the end saved them, could not be applied to the Hellens
Why what was initially bitter for the Britons, but in the end saved them, could not be applied to the Hellens
1
I guess owing money is a lot like blowing a whistle - it depends on which side of it you are on. I just want to remind everyone that Germany never paid their debts for world war 1 or 2...
1
Up to this point the German Finance Minister sounded as if he really hates Greeks, now he is making sense. His motive, get Greece out before we give them any more money. On the other hand, the one advantage that Iceland had, in climbing out of its predicament, was their own currency. So the Finance Minister is talking cold hard facts, regardless of motive. Greece really never qualified for EU membership, if anyone remembers, yet they made it in and incurred debt. almost immediately. To understand the present situation one needs to look at who/what gained from Greeces' entry into the EU. On this subject, who will gain from the sales to the 50 billion of Greek asset sales besides the obvious monetary gain, who/what will be "buying" them.
3
Schauble wants a temporary exit. A permanent exit would mean German banks would have to finally write off their bad debts.
Can't have your cake and eat it too.
Can't have your cake and eat it too.
2
It appears this self-righteous technocrat has forgotten that all German debt (run up by Hitler and the Third Reich to commit genocide and demolish other countries) was forgiven in 1948. And that West Germany forgave $2,000,000,000,000 (yes, 2 Trillion dollars) in East German debt in 1990. Oh, those hardworking Germans are so supercilious. Perhaps as many in France are saying, to the ire of the Germans, Germany wants to achieve economic dominance over all of Europe because its attempt at military dominance in WW II failed. This does not sound inflammatory; it sounds like fact.
2
@ Ace, NYC
Perhaps best to stay in this decade. The whole " Third Reich" argument grows tiresome. Germany's economic power lies in the fact that they have learned from times of austerity, and know how to balance their books. Which by the way, is the reason why they were able to loan several billion Euros to Greece in the first place.
Your obvious anti-German sentiments overshadow any valid point you might be trying to make.
Perhaps best to stay in this decade. The whole " Third Reich" argument grows tiresome. Germany's economic power lies in the fact that they have learned from times of austerity, and know how to balance their books. Which by the way, is the reason why they were able to loan several billion Euros to Greece in the first place.
Your obvious anti-German sentiments overshadow any valid point you might be trying to make.
Schauble is not being malicious. He simply calls it as he sees it.
He - and many others - do not trust the Greek capacity for fulfilling pledges that they sign. And the disastrously incompetent Greek negotiating strategy did not help.
He - and many others - do not trust the Greek capacity for fulfilling pledges that they sign. And the disastrously incompetent Greek negotiating strategy did not help.
7
They should have had Iranians negotiating for them:-)
1
I have not yet seen a good explanation of why Greece must exit the eurozone. I understand that having its own currency would give Greece more "flexibility," but surely that will come at some costs.
In the United States, we have had many municipal bankruptcies, and no one ever suggested that Detroit or the others quit the dollar.
I know our federal system is more tolerant and supportive than the eurozone is, but I still do not see how Greece's debt situation makes imperative an exit from the euro. (And whatever happened to the Maastricht criteria etched in stone?)
In the United States, we have had many municipal bankruptcies, and no one ever suggested that Detroit or the others quit the dollar.
I know our federal system is more tolerant and supportive than the eurozone is, but I still do not see how Greece's debt situation makes imperative an exit from the euro. (And whatever happened to the Maastricht criteria etched in stone?)
2
It is tragic to say, but these last days might prove Mr. Schauble's dictum right.
Once the ECB lifelines were stopped and the euro currency became scarce in Greece, its banks had to close. But, for the sake of its economy, the Greeks had to create an alternate scrip system for commerce to continue and for money in some form to allow for the economy to proceed.
However, Mr. Tsipras' government has failed to enact any sort of measures that could ameliorate this complete cash crunch probably never seen in a modern economy ever. The damage to the economy after three weeks has been immeasurable in terms of trust in the banking system and tremendous in terms of lost production, missed taxes, vanishing household income, etc. --requiring an additional 30B in aid, and this was two weeks ago, as calculated by the IMF.
By now, even more weeks later, the damage is so extreme that it is difficult to believe that any feasible bailout amounts could stanch the wound. Grexit might now be actually the only option --without even considering the political ramifications that are certain to make it impossible for any strong government to arise and carry reforms.
Once the ECB lifelines were stopped and the euro currency became scarce in Greece, its banks had to close. But, for the sake of its economy, the Greeks had to create an alternate scrip system for commerce to continue and for money in some form to allow for the economy to proceed.
However, Mr. Tsipras' government has failed to enact any sort of measures that could ameliorate this complete cash crunch probably never seen in a modern economy ever. The damage to the economy after three weeks has been immeasurable in terms of trust in the banking system and tremendous in terms of lost production, missed taxes, vanishing household income, etc. --requiring an additional 30B in aid, and this was two weeks ago, as calculated by the IMF.
By now, even more weeks later, the damage is so extreme that it is difficult to believe that any feasible bailout amounts could stanch the wound. Grexit might now be actually the only option --without even considering the political ramifications that are certain to make it impossible for any strong government to arise and carry reforms.
3
What Herr Schauble is pointing out about Greece, that it will struggle without some type of debt forgiveness, is in reality a critique of the Eurozone and its structure.
There will always be situations where certain governmental entities run into debt troubles where they cannot pay their debts without some form of debt forgiveness. To expect otherwise is to be engaging in fantasy. Yet apparently the Eurozone is engaging in fantasy because they do not allow such measures to be taken. For somebody as hidebound as Schauble, the rules can never be broken. Of course the better path to take when the rules do not align with reality is to revise the rules in some way. Without such revision, the rules will lead to a weakening of the Eurozone and perhaps its dissolution in the future.
And wasn't this part of the initial campaign of Syriza? That the structure of the Eurozone was flawed and they were pressing for changes that would make the union stronger?
There will always be situations where certain governmental entities run into debt troubles where they cannot pay their debts without some form of debt forgiveness. To expect otherwise is to be engaging in fantasy. Yet apparently the Eurozone is engaging in fantasy because they do not allow such measures to be taken. For somebody as hidebound as Schauble, the rules can never be broken. Of course the better path to take when the rules do not align with reality is to revise the rules in some way. Without such revision, the rules will lead to a weakening of the Eurozone and perhaps its dissolution in the future.
And wasn't this part of the initial campaign of Syriza? That the structure of the Eurozone was flawed and they were pressing for changes that would make the union stronger?
2
Schäuble's comment is correct, but is it helpful? It seems pretty clear that Greece would be better off out of the Euro and (the two come together) defaulting on his debt. Most Greeks knows it. The problem is the transition: Greece has no ready currency to replace the Euro with. Prepare one could take months. Meanwhile, if the intention of Greece to leave the Euro is made public, there will be a huge bank run, leading to the total collapse of the greek banking system. Trying to prevent it by keeping banks closed for months would be very damaging to the Greek economy.
In the transition, the rest of the Eurozone could help a lot, in many ways. Helping physically (and secretly) print the new bills, furnishing enough liquidity to the Greek banks, and above all, keeping secrecy of the plans, essential to avoid a bank run.
So, when a German official publicly announces that he wishes a Grexit, I wonder if his real intentions are not the opposite of what he says: preventing all possibility of Greece leaving the Euro, to keep it a subservient state forever.
In the transition, the rest of the Eurozone could help a lot, in many ways. Helping physically (and secretly) print the new bills, furnishing enough liquidity to the Greek banks, and above all, keeping secrecy of the plans, essential to avoid a bank run.
So, when a German official publicly announces that he wishes a Grexit, I wonder if his real intentions are not the opposite of what he says: preventing all possibility of Greece leaving the Euro, to keep it a subservient state forever.
1
I think this is Mr. Schauble's way of saying, "Enough already." Go to it in your own way, be accountable to your own citizens, and leave us alone.
2
It would be better that we, as Europeans, say to each other (face to face) that "it might be better to finish with the Eurozone and (why not) with the European Union". This "killing softly" a unique historical project is worse because it leads to a cyclical humiliations. It is clear that no cultural change for the construction of a common European identity, occurred along these decades. This economic crisis lead to a eruption of the idea of nation and, also, to oppositions (creditors against debitors; greeks against germans; southern europeans against northern europeans). Given this, instead of passing long weekends with no ending discussions about loans to Greece and new forms of austerity, European leaders would be more efficient if they would go right to the point: how do we end with the euro coin and go back in a peaceful and ordered way to our own coins. European Union implies a cultural change where the idea of nation co-exists with an idea of construction of common project. Presently this is an utopia...so let's stop hypocrisies and suffer causing to the people of one country...and end with this.
122
What I witness in Europe is very different. Greece has united the countries of the European Union - against Greece. That is one of the ironies of this crisis.
I don't agree. Not for tyhe Euro, not for Europe. Despite the obvious failures (including hsndling Greece) These projects have been undeniably successful, on too many fronts, to absndin outright. The alternatives are much less convincing.
A return to the European Common Market, perhaps with some updates?
1
Contrary to popular opinion,Germany was never that keen on the euro. They had a stable currency the Deutschmark, which did not prevent them from being a major export power. And Quantitative Easing and devaluation of the euro by the European Central Bank to prop up southern economies is deeply unpopular in Germany because it hurts the German savers due to low interest rates. And they still get bad PR for not doing enough for Greece when
1)They have already given Greece $100 billion debt relief in 2012 (funny this is mentioned so rarely in times articles) and forced German banks to take a 70% loss(rarely mentioned again).
2)Given a $85 billion loan in extremely low rates, well below the rate Greece can get in the market.
3)Continuing negotiations after being called 'terrorists'.
4)Offered expertise in Tax collection which was rejected.
5)Employing hundreds of thousands of Greeks who send valuable euros back home
I am not European and have no skin in this game. But I feel Germany is unfairly labelled a villain here when Greece is refusing to look inward and reform itself.
1)They have already given Greece $100 billion debt relief in 2012 (funny this is mentioned so rarely in times articles) and forced German banks to take a 70% loss(rarely mentioned again).
2)Given a $85 billion loan in extremely low rates, well below the rate Greece can get in the market.
3)Continuing negotiations after being called 'terrorists'.
4)Offered expertise in Tax collection which was rejected.
5)Employing hundreds of thousands of Greeks who send valuable euros back home
I am not European and have no skin in this game. But I feel Germany is unfairly labelled a villain here when Greece is refusing to look inward and reform itself.
29
The measures were approved by over 220 members of Greece's 300-member parliament and included most of the opposition parties. This is hardly "reluctant" approval.
5
Oh please. I would approve anything at the point of a gun just to buy time.
I sometimes read the comments sections to expose myself to different viewpoints or to get more information. On this "Grexit" topic this is mostly fruitless. I rarely find a well-reasoned argument or data - just polemics and borderline hysteria. Now we have people attacking the NYT by suggesting that they don't favor capitalism! The German view is pretty clear and also that they are at odds with the IMF and other major European powers.
Regarding the triumph of "capitalism" though - you might just as well insert "reformation protestantism" according to Max Weber. This dubious (I would say, harmful) protestant ethic underlies modern capitalism in ways most are completely unaware of simply because it is an intrinsic part western culture. This idea is that more production, wealth, economic "success" are proofs of our worthiness to ourselves, to others, (to God?). I read a comment by "Michael Moore" the other day that we need less this, less that, etc. Precisely right. We are trending toward a destruction of the planet by the mindless use and production of goods. What are we so afraid of?
Marx was completely right that pure capitalism is non-sustainable and is also unethical. That is why there is no state today without enormous and necessary government power to check capitalism and unbridled greed. The 2007-2008 capitalism-run-amok collapse is what triggered the current Greek crisis to begin with.
We need the Greeks and their historical gifts to the world now more than ever.
Regarding the triumph of "capitalism" though - you might just as well insert "reformation protestantism" according to Max Weber. This dubious (I would say, harmful) protestant ethic underlies modern capitalism in ways most are completely unaware of simply because it is an intrinsic part western culture. This idea is that more production, wealth, economic "success" are proofs of our worthiness to ourselves, to others, (to God?). I read a comment by "Michael Moore" the other day that we need less this, less that, etc. Precisely right. We are trending toward a destruction of the planet by the mindless use and production of goods. What are we so afraid of?
Marx was completely right that pure capitalism is non-sustainable and is also unethical. That is why there is no state today without enormous and necessary government power to check capitalism and unbridled greed. The 2007-2008 capitalism-run-amok collapse is what triggered the current Greek crisis to begin with.
We need the Greeks and their historical gifts to the world now more than ever.
7
I love the Greek "historical gifts to the world" as much as the next guy, but what has that have to do with the fact that the Greek government has long spent far more than it took in?
Haha ---- quoting Michael Moore that we need less. Have you seen any photos of the man lately. Yes, he could use less of many things - food being one. And, anything close to approximating what is capitalism is doesn't exist in today's world.
'The German view is pretty clear and also that they are at odds with the IMF and other major European powers.'
I believe only four 'European powers' supported the bailout. The great majority of the EU countries are actually very well aligned in their position. Germany is only one of them.
Perhaps you should read more data before reading the comments sections to expose yourself to different viewpoints.
I believe only four 'European powers' supported the bailout. The great majority of the EU countries are actually very well aligned in their position. Germany is only one of them.
Perhaps you should read more data before reading the comments sections to expose yourself to different viewpoints.
The German finance minister, employing reverse psychology, has just ensured Greece goes on spending Euros it can't afford into the foreseeable future. Win, win.
2
The euro -- A burning building with no exits ... (not my quote, but I wish it was)
2
Greece cooked up wealth it did not have and cooked its books to show modest levels of deficit when the actual deficit percentage was 7 times worse in order to become eligible for membership in EZ and to be eligible to receive those loans to begin with.
That was Enron-style accounting. Enron was put out of its misery, with its honchos serving time for fraud. Greece is getting away with 'murder' here, folks.
Who in his or her right-thinking mind would want a charlatan as a member of their group? Now that the tax rates are going up, Greece is sure to face flight of capital from its shores, and will be stuck with residents who depend on public assistance and social programs to carry on living. Greece cannot live by the rules that Germany and France have set for themselves and others.
So, the painful truth is that Greece has kicked the problem can down the road with this vote yesterday but will be back to square one very soon. Sooner or later, Grexit is the inevitable reality. There is no pretending that it will not happen.
That was Enron-style accounting. Enron was put out of its misery, with its honchos serving time for fraud. Greece is getting away with 'murder' here, folks.
Who in his or her right-thinking mind would want a charlatan as a member of their group? Now that the tax rates are going up, Greece is sure to face flight of capital from its shores, and will be stuck with residents who depend on public assistance and social programs to carry on living. Greece cannot live by the rules that Germany and France have set for themselves and others.
So, the painful truth is that Greece has kicked the problem can down the road with this vote yesterday but will be back to square one very soon. Sooner or later, Grexit is the inevitable reality. There is no pretending that it will not happen.
23
"Who in his or her right-thinking mind would want a charlatan as a member of their group?"
So, what should be done about Goldman Sachs' part in this disaster, seeing as how they are the ones who approached Greece with a scheme that would allow them to hide their borrowing from the EC and IMF and borrow more than they could afford. And... GS walked away with a $600 million fee for their "services." German banks also made out like bandits with similar ponzi schemes.
So, shouldn't we shun GS? Make them pay a fine? Do some kind of repair? They could start by refunding their fees.
So, what should be done about Goldman Sachs' part in this disaster, seeing as how they are the ones who approached Greece with a scheme that would allow them to hide their borrowing from the EC and IMF and borrow more than they could afford. And... GS walked away with a $600 million fee for their "services." German banks also made out like bandits with similar ponzi schemes.
So, shouldn't we shun GS? Make them pay a fine? Do some kind of repair? They could start by refunding their fees.
3
Greece wasn't alone in fraud. Ahem, Germany...? It helps to observe actions, not words.
1
Are you purposely ignoring the fact that Germany, and the rest of the EU, knew, accepted, and assisted with Greece's cooked books in order to have Greece in the EU, or are you simply unaware?
Yup, the Greeks should exit. No idea if they can workout their political issues (like generous pension benefits), but how else can they devalue their currency?
5
Schauble is a consistent advocate for a stronger and more deeply integrated eurozone--which seems to be foundational for long-term success for the euro. Deeper integration always means giving up aspects of national sovereignty to conform to the standards of the larger group. Greece through Syriza rejects this concept.
Accordingly, Schauble has been skeptical that Greece can conform to the demands of deeper integration--that it can meet the requirements of successful future membership. All of the actions--and the rhetoric--of Syriza since coming to power in January 2015 confirm this.
Sometimes it is helpful when a statesman clearly states the choices and alternatives in a public debate.
Accordingly, Schauble has been skeptical that Greece can conform to the demands of deeper integration--that it can meet the requirements of successful future membership. All of the actions--and the rhetoric--of Syriza since coming to power in January 2015 confirm this.
Sometimes it is helpful when a statesman clearly states the choices and alternatives in a public debate.
131
Well spoken! And right on target.
2
You are, in fact, mistaken about Schauble and Germany's intent. But you are forgiven, since listening to wotds and not observing action is a human foible.
1
While that may sound good, how is the EU going to accomplish this when they have member states that are so disparate? If he means that Germany can force all of the members to go along with the German way, which is austerity and no inflation, regardless of the consequences, it won't work.
2
Germany to Greece:
Grow up finally and move out of our basement.
Grow up finally and move out of our basement.
6
Europe to Getmany: grow up snd join the union or get out!
The Germans make me grit my teeth. They desperately wanted the Euro because the mark was getting too strong, impacting their export economy. The Euro -- and poor member-countries' ability to borrow in Euros where they never could have borrowed as freely in their own currencies -- fueled the German economy for over twenty years, while the borrowing went wild. Yes, Greece was cheating on its debt-reporting, but no one was looking too carefully (reminding the careful observer of our own Wall Street crisis brought on by "If you've got a pulse, we'll lend you money" policies at American banks).
Now, the chickens have come home to roost, just as they did here with Lehman and AIG -- and Germany doesn't want to deal with the consequences. Like our banks, they want to privatize the profits and let the rest of the world, foreign banks, the IMF (that's you and me, baby!) pick up the tab.
Now, the chickens have come home to roost, just as they did here with Lehman and AIG -- and Germany doesn't want to deal with the consequences. Like our banks, they want to privatize the profits and let the rest of the world, foreign banks, the IMF (that's you and me, baby!) pick up the tab.
29
Can you please present evidence for your claim that the Germans "desperately wanted the Euro"? Because as far as I remember, the majority of the Germans was extremely skeptical with respect to the currency union.
It isn't true that Germany wanted the Euro so badly. They had to accept it to be allowed to unify.
Oh my goodness, please stop spreading lies. "The Germans" never wanted the Euro, not even the politicians. Germany was doing more than fine with the Deutschmark, being a worldclass exporter despite its strong currency. It was already the dominant economic power. Shortly before German reunification, a senior official in the office of the French president was quoted as saying: "We may have the nuclear bomb, but the Germans have the deutsche mark." The euro was supposed to break Germany's economic dominance, but it has had the opposite effect. The Euro was pushed through mainly by France as a price for reunification.
This is what they should've done in the first place.
3
Of course, Greeks would be better off: There is NOTHING in the bail-out plan that actually helps Greece.
Greece should also DEFINITELY withdraw from NATO, become neutral, and let Germany take up the slack since Greece is not threatened by radical Islamists, Russia or China.
Greece should also DEFINITELY withdraw from NATO, become neutral, and let Germany take up the slack since Greece is not threatened by radical Islamists, Russia or China.
7
It's time the other eurozone countries asked Germany to leave. The economic, not to mention political damage of its continuing membership has and will continue to be a drag on the vast majority of euro countries, to Germany's quasi sole benefit. Germany , but especially most every other euro country, needs Germany to have an economy priced in its own currency. The drag on other european countries is an order of magnitude higher than Greece's current "debt crisis". I am simply aghast that journalists and politicians everywhere don't point to this basic fact. But then again, paradoxically every other euro country appears more politically committed to the euro than.
9
Great point. The only public statement I've heard about Germany leaving the Euro was George Soros in the NYRB a year or so ago.
Who will foot the bill if Germany has left? I don't see France is willing to replace Germany in that respect.
Be careful what you wish for! Everyday, more Germans would like to do just that.
However, you might be surprised by the outcome. My bet is that most other EU countries would want to follow Germany into their new currency, leaving only Greece with....
the Euro....
However, you might be surprised by the outcome. My bet is that most other EU countries would want to follow Germany into their new currency, leaving only Greece with....
the Euro....
"Mr. Schäuble emphasized that no one was trying to push Greece in one direction or another..."
That's a bit disingenuous. Germany was set on overthrowing the Greek government, and when that failed, decided to push Greece out of the euro.
A "temporary exit?" Germany is behaving as if "euro" is just another word for "deutschmark," and that's giving some prospective euro members second thoughts about joining. Greece was foolish to join the euro under false pretenses, and the eurozone was foolish to accept it when it knew Greece was cooking the books. But Greece would be even more foolish to re-join a eurozone run by the likes of Germany the Perfect.
Germany's hubris will come back to bite it sometime. Despite its overweening self-regard, an historically unfortunate national trait, its current economic success is largely based on its huge balance-of-trade surplus. This isn't due to German rectitude but to German banks flooding export markets with loans to buy German products. When other countries begin exporting more, as they eventually will, Germany will find itself with fewer customers. The result will be increased fiscal deficits and national debt.
Yes, Germany also has a national debt, about 75% of GDP, which is pretty good for a large industrial economy. But economic dominance is always temporary, and at some time Germany could find itself asking its eurozone colleagues for loans.
Pride goeth before a fall. Germany is not immune.
That's a bit disingenuous. Germany was set on overthrowing the Greek government, and when that failed, decided to push Greece out of the euro.
A "temporary exit?" Germany is behaving as if "euro" is just another word for "deutschmark," and that's giving some prospective euro members second thoughts about joining. Greece was foolish to join the euro under false pretenses, and the eurozone was foolish to accept it when it knew Greece was cooking the books. But Greece would be even more foolish to re-join a eurozone run by the likes of Germany the Perfect.
Germany's hubris will come back to bite it sometime. Despite its overweening self-regard, an historically unfortunate national trait, its current economic success is largely based on its huge balance-of-trade surplus. This isn't due to German rectitude but to German banks flooding export markets with loans to buy German products. When other countries begin exporting more, as they eventually will, Germany will find itself with fewer customers. The result will be increased fiscal deficits and national debt.
Yes, Germany also has a national debt, about 75% of GDP, which is pretty good for a large industrial economy. But economic dominance is always temporary, and at some time Germany could find itself asking its eurozone colleagues for loans.
Pride goeth before a fall. Germany is not immune.
8
Please consider the following:
There are at least two very large economies that will certainly be asking its eurozone colleagues for loans before Germany will do so: France and Italy. Depending on the outcome of the elections, Spain might go ahead of them.
What do you think will happen, if Spain, France and Italy ask their eurozone colleagues for loans? Simple answer: The Euro will be dead.
There are at least two very large economies that will certainly be asking its eurozone colleagues for loans before Germany will do so: France and Italy. Depending on the outcome of the elections, Spain might go ahead of them.
What do you think will happen, if Spain, France and Italy ask their eurozone colleagues for loans? Simple answer: The Euro will be dead.
1
Why do say that Greece joined the euro under false prentenses? There is a no bail-out clause in the Maastricht treaty, isn't there? So when there is this very plain and obvious clause, what are you referring to as "false pretenses"?
The Guardian has been interviewing ordinary Greek citizens and publishing the interviews online. One of the Greeks said that he follows the German media, and the message there is pretty much uniform — thrifty, hardworking Germans vs. lazy, spendthrift Greeks. Makes sense that the German media would toe that line, just as the American media (present company included) supported our stupid invasion of Iraq. Media tends to be owned by the wealthy, and work for them.
So the German attitude might be softened if the people has a better grasp of the realities. I wonder if the Times and the Guardian have German editions.
So the German attitude might be softened if the people has a better grasp of the realities. I wonder if the Times and the Guardian have German editions.
7
NY Times has a Chinese edition, or so I've heard.
Certainly, quitting the euro will give Greece more degrees of freedom. They can deflate their currency to make their tourist industry more competitive. However, given that Greece exports little and imports anything from foodstuffs to autos to industrial products, the initial result will be high inflation, devaluation of property and savings (including pensions), and sharply deteriorating standards of living. The Greek PM Tsipras admitted looking last week into this option and got horrified by the potential outcome enough to capitulate on July 13 to all eurozone demands.
Then there is a eurozone rule that prevents government defaults. When the European Monetary Mechanism was formed the national governments decided to retain significant fiscal autonomy. Simply, European states (e.g., Greece, France) have been spending a larger portion of their GDP than any U.S. state. To compensate for that, individual eurozone governments had to pledge never to default on their debt. That EMU architecture allowed Greece to borrow on near-German terms after the euro was introduced. This rule will eventually be replaced with something else, but that will take a long time since it since all euro members will be greatly affected.
Mathematically, extending the maturity and reducing the interest rate enough can reduce the debt payments just as face debt value reduction. However, many insist the latter has greater value (even if it is just psychological value for the Greek people).
Then there is a eurozone rule that prevents government defaults. When the European Monetary Mechanism was formed the national governments decided to retain significant fiscal autonomy. Simply, European states (e.g., Greece, France) have been spending a larger portion of their GDP than any U.S. state. To compensate for that, individual eurozone governments had to pledge never to default on their debt. That EMU architecture allowed Greece to borrow on near-German terms after the euro was introduced. This rule will eventually be replaced with something else, but that will take a long time since it since all euro members will be greatly affected.
Mathematically, extending the maturity and reducing the interest rate enough can reduce the debt payments just as face debt value reduction. However, many insist the latter has greater value (even if it is just psychological value for the Greek people).
6
The elephant in the room is that the failure of the Greek economy is the failure of Socialism. Retiring at 50 with full benefits? It can't be sustained. Same thing in Spain and Portugal yet Bernie Sanders keeps slinging it here in America.
6
Have you ever looked up the retirement benefits for U.S. military, state and local police, and U.S. congresspersons? People who live in glass houses ....
Also, you need to read about "socialism." You have no idea at all what the word means.
Also, you need to read about "socialism." You have no idea at all what the word means.
5
All governments are socialist, all that differs is the amount of socialism. All governments distribute resources. Some governments only distribute resources to the military, maybe some roads and bridges, and the police. Other governments distribute money to a much larger range of projects that they consider to be "for the common good". This redistribution of wealth is one the the main reasons to have a government, without this you have a failed state (Somalia, etc).
We have a problem when a government redistributing money it doesn't have. Greece isn't so much an example of a failure of socialism as it is a failure to balance budgets. Greece was spending borrowed money, not tax revenue, and that can only go on so long. Outside of the EU Greece could simply print more money (and repay loans in inflated currency) but in the EU they must generate enough tax revenue to repay all loans.
We have a problem when a government redistributing money it doesn't have. Greece isn't so much an example of a failure of socialism as it is a failure to balance budgets. Greece was spending borrowed money, not tax revenue, and that can only go on so long. Outside of the EU Greece could simply print more money (and repay loans in inflated currency) but in the EU they must generate enough tax revenue to repay all loans.
I don't think Saunders is "slinging socialism". The Greek government/ society is not an example of socialism where as those of the Scandanavian countries Holland, England and most of the rest of Europe are "socialistic" where medical/health care and education are concerned. The people who retired with full benefits at a young age worked for their governments. Non government employees worked their 35/40 years to retire.This doesn't happen any more. Even in the >U>S government workers have special retirement benefits, special medical care benefits, better vacations.
Actually we would be better off without the continuing dictats of Merkel and Schauble. Mr. Schauble has been against Greece from the start. Agreed that Greece should have made these changes 5 years ago or even earlier when they were permitted to enter the EU. However the current government was not at the head of Greece until January.
Maybe Germany should leave the European Union.
Actually we would be better off without the continuing dictats of Merkel and Schauble. Mr. Schauble has been against Greece from the start. Agreed that Greece should have made these changes 5 years ago or even earlier when they were permitted to enter the EU. However the current government was not at the head of Greece until January.
Maybe Germany should leave the European Union.
Most commentators are under-reporting the personal dynamics of these discussions. The new Greek government went to the table with a bombastic Finance Minister at the head, calling Germans all kinds of names in private and in public. They went to the talks with a gun to their head.
The visit Putin's Russia was the last straw.
Bottomline, the Greeks messed up. They took European money repeatedly and squandered it with no fundamental reforms. Tax evasion is more common than Spanikopita. And the Greeks don't want to reform that?
Don't blame this on the Germans. If Greek pride is at stake, walk out of the union. Take charge of your own destiny.
Those who gripe about the Germans lack of empathy, are harkening back to their own prejudices based on Germany's World War history.
That is unfair.
The visit Putin's Russia was the last straw.
Bottomline, the Greeks messed up. They took European money repeatedly and squandered it with no fundamental reforms. Tax evasion is more common than Spanikopita. And the Greeks don't want to reform that?
Don't blame this on the Germans. If Greek pride is at stake, walk out of the union. Take charge of your own destiny.
Those who gripe about the Germans lack of empathy, are harkening back to their own prejudices based on Germany's World War history.
That is unfair.
22
Unfair seems a bit much in this context. Lest you forget that Germany was given BILLIONS UPON BILLIONS (no real strings attached) to build their modern export economy and infrastructure after it was decimated by THEIR OWN abhorrent actions during their WWII history. Comparing the stance of the U.S. after WWII toward Germany (the U.S. had far more reason to be vindictive and seek retribution) to the overriding argument defending the German stance on Greece i.e. "The Greeeks have no one to blame but themselves, it is only a consequence of their own actions." leaves the Germans looking quite like they are throwing boulders from their finely, German engineered glass mansion.
1
Schaube is correct. The eurozone is not built to allow a State to slip below a certain standard. Unless they change the design, which might take decades, the practical solution is for Greece to leave, with all sides agreeing they can return if they come up to snuff. TThis involves trust on all sides, but it is possible, unlike the present course (possible meaning Greece survives as a sovereign nation.)
As before, I bring up the dollarzone solution as an alternative. It is also not perfect, but keeps States intact while the currency remains relatively stable:
A Central Government tax is collected and then redistributed to low productivity States, not merely as cash, but in the form of the investment in military bases; agricultural supports; highway construction; etc Cash is often givenas a share of the cost of some project. More comes in the form of aid to the elderly (Social Security, medicare.) These redistributions are by now so common that most don't even recognize what is being accomplished, namely the giving of money to low producing States, rather than lending it.
We've taken a long time to work this all out, and it's far from perfect, but we don't have to worry about some State defaulting on paying back the billions they would owe under the Eurozone system.
I don't see wealthy European States agreeing to it anyway, so the next best is to improvise "this one time" and ignore that it will happen again.
As before, I bring up the dollarzone solution as an alternative. It is also not perfect, but keeps States intact while the currency remains relatively stable:
A Central Government tax is collected and then redistributed to low productivity States, not merely as cash, but in the form of the investment in military bases; agricultural supports; highway construction; etc Cash is often givenas a share of the cost of some project. More comes in the form of aid to the elderly (Social Security, medicare.) These redistributions are by now so common that most don't even recognize what is being accomplished, namely the giving of money to low producing States, rather than lending it.
We've taken a long time to work this all out, and it's far from perfect, but we don't have to worry about some State defaulting on paying back the billions they would owe under the Eurozone system.
I don't see wealthy European States agreeing to it anyway, so the next best is to improvise "this one time" and ignore that it will happen again.
9
Thanks for the adivse Brian, but in fact the EU already has something like this. It is called structural aids, and Greece was one of the main recipient of these structural aids from the time when they joined until the eastern European extension of the EU in 2004. It works exactly as you described: Cash is given as as share of the cost of infrastructure projects. However, one of the problems is that with eastern European extension, countries joined the EU which are actually much poorer than Greece. Thus, Greece is no longer the main recipient. One aspect that makes this crisis complicated is the fact that it does not affect the poorest countries of the EU/eurozone, but rather those that increased their price levels more than others.
If Greece changes to the Drachma and borrows Euros, and the Drachma is devalued, they will be in worse shape.
Germany just wants the Euro to rise against the dollar and other currencies, with the removal of Greece from the EU.
Germany just wants the Euro to rise against the dollar and other currencies, with the removal of Greece from the EU.
Right, because there is just NO OTHER WAY "to reduce its crippling debt load" ... said the chief spokesman of the banks to whom Greece owes the debt.
This is such a pitiful charade. Even the IMF is recommending debt relief now, as has occurred for every other similar crisis in modern history: Argentina, Britain, and hey, guess who -- Germany. Twice.
This is such a pitiful charade. Even the IMF is recommending debt relief now, as has occurred for every other similar crisis in modern history: Argentina, Britain, and hey, guess who -- Germany. Twice.
16
This may be a tactic to make the Greeks all the more determined to stay. On the other hand, it may be flaming up ugly political attitudes and emotions (us/them) instead of rational thinking on whether it is actually better to leave or stay. In fact, a more economically viable Grexit may be impossible because of the fascist forces it may unleash in Greece (and elsewhere in Europe). The best solution is to take the bull by its horns, once and for all, and redesign the mechanisms to deal with this type of continuous unsustainable crises in Greece and elsewhere in the Eurozone. More of them to come. How will they be dealt with if the mechanisms in place cannot adequately handle them? Ugly scenarios for sparking up antagonism and war (heaven forbid).
3
The Greek government (that is, Tsipras et al) doesn't want to leave the EZ, not because they like Germany with its supercilious attitude toward the rest of Europe, but for their own ideological reasons. It has to do with redistribution of wealth.
A new currency that would be adopted upon exiting the EZ would be promptly devalued relative to the euro and other major currencies. The cost of almost everything essential would increase rapidly. That would devastate the many retirees who live solely on a small pension. t would also enrich the wealthier Greeks, who moved their assets to foreign banks. They would be able to buy most of Greece when they brought their money back into the country.
Mr. Tsipras, who has fought so hard for the vulnerable and needy, would not want to see that. (Neither would Paul Krugman.)
A new currency that would be adopted upon exiting the EZ would be promptly devalued relative to the euro and other major currencies. The cost of almost everything essential would increase rapidly. That would devastate the many retirees who live solely on a small pension. t would also enrich the wealthier Greeks, who moved their assets to foreign banks. They would be able to buy most of Greece when they brought their money back into the country.
Mr. Tsipras, who has fought so hard for the vulnerable and needy, would not want to see that. (Neither would Paul Krugman.)
8
Perhaps many no longer remember that in 1975 New York City needed a federal bail-out. The infamous Daily News headline (Ford to City: Drop Dead) may have been a misquote, but Ford did give a speech denying federal assistance. Two months later he signed federal legislation providing federal loans. Oh, well!
--SFB
--SFB
1
This is an acknowledgement of Merkel's failed efforts to punish Greece into oblivion. Obviously Greece's creditors are going to have to take a big hair cut. Greece should leave the EURO and devalue its currency as well as get loans to help it get back to solvency.
1
The Greeks are mad that the Germans no longer want to pay their bills.
Fine. . Let them pay with their own taxes, not taxes leveled on others.
From the Greek Web Site a former Deputy Prime Minister Pagalos:
Recent survey by GPO, conducted for the National Confederation of Greek Commerce.
"Based on experiences in their daily transactions, Greeks award the medal for tax evasion to medical doctors at a rate 88.6%, followed artisans (eg electricians, plumbers) 85.4%, then law firms - notaries (75.2%), restaurants and taverns 57.9%. The list of those who evade taxes, according to the survey , even including gas stations (44.1%), small shops (37.6%) and supermarkets (17.7%)."
http://mazi-ta-fagame.gr/v1/?p=2621, (translated from Greece):
Fine. . Let them pay with their own taxes, not taxes leveled on others.
From the Greek Web Site a former Deputy Prime Minister Pagalos:
Recent survey by GPO, conducted for the National Confederation of Greek Commerce.
"Based on experiences in their daily transactions, Greeks award the medal for tax evasion to medical doctors at a rate 88.6%, followed artisans (eg electricians, plumbers) 85.4%, then law firms - notaries (75.2%), restaurants and taverns 57.9%. The list of those who evade taxes, according to the survey , even including gas stations (44.1%), small shops (37.6%) and supermarkets (17.7%)."
http://mazi-ta-fagame.gr/v1/?p=2621, (translated from Greece):
14
Higher taxes and pension cuts are economic stimulus?
2
Yes they are. Pension cut in Greece means that you are not allowed to retire with 55 and that many people have to start paying taxes at all.
This is truly a textbook case of "be careful what you wish for." It is a near-certainty that if Greece exits the Eurozone, it will not be the only one. Mark my (and others') words: it may take a decade (though I believe it will be sooner), but Greece's exist will mark the end of the Eurozone experiment.
2
It turns out that there are exactly four countries who support bail-outs within the eurozone and 15 that do not. The four countries that support bail-outs are: Greece, France, Italy and Cyprus.
It should be very evident why exactly these countries do support bail-outs.
It should be very evident why exactly these countries do support bail-outs.
11
It's time the other eurozone countries asked Germany to leave. The economic, not to mention political damage of its continuing membership has and will continue to be a drag on the vast majority of euro countries, to Germany's quasi sole benefit. Germany , but especially most every other euro country, needs Germany to have an economy priced in its own currency. The drag on other european countries is an order of magnitude higher than Greece's current "debt crisis". I am simply aghast that journalists and politicians everywhere don't point to this basic fact. But then again, paradoxically every other euro country appears more politically committed to the euro than Germany.
This proves that Yanni was right; nothing Greece could ever do would be good enough for Germany because at the end of the day they are still Southern Europeans. The basis of racism is the prejudice against 'lazy' Southerners vs industrious Northerners. Of course Northerners are uptight enough they want to go to more relaxed southern climes to relax, but the usefulness of this is overlooked. Germany is too large and Europe made a mistake allowing them to re-unify
3
Sitting around the table with a bunch of Europeans, we all agreed that Greece should be focusing on making a much stronger tourist market. They don't have a lot of what floats other countries' economies and should capitalize on the great things they have: stellar boating, great cuisine, wonderful islands, and fabulous destinations. It is absolutely a crime that more of us are not going to sit by the sea in Greece!
5
So would Portugal, Spain and Italy be better off without the Euro. Ireland is a special kind of PIIGS because it enjoys competitive advantage due to its location between the EU and the US, its language, and now the imminent British exit from the EU, so it very well could prosper as a German vassal state. But when I hear the bankers use other Mediterranean countries as examples that Greece should have followed, it makes me sick. Those countries may have saved their banks, but they did so by destroying the future of a whole generation of kids who will never find jobs at home and instead are roaming the cities of Northern Europe looking for work, hoping to find profitable life-long occupations before their parents die off and they can no longer help support them with their 'bloated pensions' that the bankers hate so much.
4
Yes. Italy and probably Spain and Portugal would be better off without the euro now that we have seen where the dictats of Germany with Merkel and Schauble have taken us. True that many changes in low age government pensions, in particular, had to be made, corruption is still rampant, tax evasion also. The government employees in particular senators and deputies should have their pay and benefits lowered.
But the rigid rules of the EU have ruined the Milk industry, for example. They are trying to regulate top quality food into oblivian.
What holds Italy back is the financial outcome of return to another currency and the fact that the normal middleclass will lose an enormous amount of their money, investments.
But the rigid rules of the EU have ruined the Milk industry, for example. They are trying to regulate top quality food into oblivian.
What holds Italy back is the financial outcome of return to another currency and the fact that the normal middleclass will lose an enormous amount of their money, investments.
It is amazing to me that a country can be essentially destroyed financially by the likes of Goldmann Sachs and then booted out of the EU. To be sure, Greece shares responsibility. But the degree of debt came at the hands of Goldman through their derivitive shenanigans. The responsibility for dealing with this morass is then left to the Greeks and others. The Greeks do not have to leave the EU. In fact, the Greeks should just print Euros (which they can) and be done with the kvetching. It’s all one big Ponzi scheme anyway.
11
Printing money unfortunately works only in the US. In Europe the money has to be paid for by taxpayers.
In fact, many of the member countries of the EU might be better off leaving the Eurozone.
This sounds like a great opportunity for Greece, if only Schäuble could be counted on to get the other countries to agree to this. Even more so if debt forgiveness could become part of the deal, once Greece escapes from the clutches of the Eurozone.
This sounds like a great opportunity for Greece, if only Schäuble could be counted on to get the other countries to agree to this. Even more so if debt forgiveness could become part of the deal, once Greece escapes from the clutches of the Eurozone.
4
It is a great opportunity for Greece only if the Greek people can break loose from the power of the plutocrats who rule Greece.
Now that Tsirpas has revealed himself to be a minion of the bankers, there does not seem to be much hope for Greek democracy.
Now that Tsirpas has revealed himself to be a minion of the bankers, there does not seem to be much hope for Greek democracy.
Schauble may well be correct. However, it is not correct for him to be negotiating deals with Greece to stay in the Eurozone if he is not committed to this cause. His agenda and actions are in conflict with the mission of the Eurozone, and he should recuse himself. He blames the Greeks for not changing their ways yet he is the stuck in a world of outdated and flawed rules.
175
He's not blaming them. He just is giving his opinion of how Greece can deal with the reality as it exists today. From the article, it does not matter how Greece got in this situation or who is to blame but rather how best can Greece get out of the situation.
Is it correct for the Greeks to agree to packages in Brussels and to return home and proclaim that they don't believe in them?
I agree. Schauble is arrogant and self centered and has a very short memory . In 1953 the United States & the UK forgave 50 % of Germany s debt . Schauble would do well to remember this.
The narrative that wants to defend the German-led financial putsch of sovereign states has to make two assumptions:
First, that the financial sectors of the powerful European economies are and have always been honest brokers in this ongoing fiasco, and that what we are dealing with here are bad borrowers, not bad lenders. That a US reader could think this after witnessing the massive socializing of risk our financial sector unloaded on the US taxpayer in 2008, astounds me.
And second, this defense of the financial powers requires one to think it acceptable to speak about Greece as if one was speaking about a child.
So: astounding naivete and paternalism. Those are not attractive traits, and they are going to make for one heck of a political trainwreck for Europe if such foolish hubris continues much longer.
For the Greeks are not children, and the lenders are not without blame.
First, that the financial sectors of the powerful European economies are and have always been honest brokers in this ongoing fiasco, and that what we are dealing with here are bad borrowers, not bad lenders. That a US reader could think this after witnessing the massive socializing of risk our financial sector unloaded on the US taxpayer in 2008, astounds me.
And second, this defense of the financial powers requires one to think it acceptable to speak about Greece as if one was speaking about a child.
So: astounding naivete and paternalism. Those are not attractive traits, and they are going to make for one heck of a political trainwreck for Europe if such foolish hubris continues much longer.
For the Greeks are not children, and the lenders are not without blame.
506
Europeans are starting, only now, to realise the extent to which Germany has engineered the euro to its sole benefit.
It's time the other eurozone countries asked Germany to leave. The economic, not to mention political damage of its continuing membership has and will continue to be a drag on the vast majority of euro countries, to Germany's quasi sole benefit. Germany , but especially most every other euro country, needs Germany to have an economy priced in its own currency. The drag on other european countries is an order of magnitude higher than Greece's current "debt crisis". I am simply aghast that journalists and politicians everywhere don't point to this basic fact. But then again, paradoxically every other euro country appears more politically committed to the euro than.
It's time the other eurozone countries asked Germany to leave. The economic, not to mention political damage of its continuing membership has and will continue to be a drag on the vast majority of euro countries, to Germany's quasi sole benefit. Germany , but especially most every other euro country, needs Germany to have an economy priced in its own currency. The drag on other european countries is an order of magnitude higher than Greece's current "debt crisis". I am simply aghast that journalists and politicians everywhere don't point to this basic fact. But then again, paradoxically every other euro country appears more politically committed to the euro than.
2
"For the Greeks are not children, and the lenders are not without blame."
That's absolutely right! Greece has to stand up for itself and deliver and the lenders, including the EU taxpayers, will pay for their mistake by having to absorb the Greek debt after Greek drops out of the Eurozone and declares bankruptcy.
What else is new? That is the reality and it will play itself out. The sole question is: Now, or AFTER the next 100 billion have been pumped into that bottomless pit.
That's absolutely right! Greece has to stand up for itself and deliver and the lenders, including the EU taxpayers, will pay for their mistake by having to absorb the Greek debt after Greek drops out of the Eurozone and declares bankruptcy.
What else is new? That is the reality and it will play itself out. The sole question is: Now, or AFTER the next 100 billion have been pumped into that bottomless pit.
2
pjc, thank you for sharing your point of view, but I disagree it.
First, I don't think the comparison to the US financial fiasco is fair. While the US mortgage lenders may have been acting irresponsibly, it was the federal government that authorized them to do so. Dodd-Frank guaranteed the sub-prime loans, therefore there was no downside. If the feds had not created the risk free loan environment the subprime crisis would have never happened.
Secondly, the Greeks have been behaving like children. Tsiprias puts out a referendum and then tells the Greeks to vote no? The finance minister resigns after the people vote according to his wishes? Where is the logic and reason in that? It is like they are a child having a temper tantrum. Regardless, of how Greece came upon its circumstance it is in a bad state of affairs and needs to do its part to rectify the problem. Throwing Molotov cocktails and rioting against the choices its faced with is a form of recalcitrant denial that a teenager would exhibit.
The lenders may not be without blame, but they have given enough in the first two bailouts. The Greeks are not children, but they are not behaving in a manner which demonstrates an understanding of their responsibilities in a first world economy.
Just my opinion. Thank you for sharing yours.
First, I don't think the comparison to the US financial fiasco is fair. While the US mortgage lenders may have been acting irresponsibly, it was the federal government that authorized them to do so. Dodd-Frank guaranteed the sub-prime loans, therefore there was no downside. If the feds had not created the risk free loan environment the subprime crisis would have never happened.
Secondly, the Greeks have been behaving like children. Tsiprias puts out a referendum and then tells the Greeks to vote no? The finance minister resigns after the people vote according to his wishes? Where is the logic and reason in that? It is like they are a child having a temper tantrum. Regardless, of how Greece came upon its circumstance it is in a bad state of affairs and needs to do its part to rectify the problem. Throwing Molotov cocktails and rioting against the choices its faced with is a form of recalcitrant denial that a teenager would exhibit.
The lenders may not be without blame, but they have given enough in the first two bailouts. The Greeks are not children, but they are not behaving in a manner which demonstrates an understanding of their responsibilities in a first world economy.
Just my opinion. Thank you for sharing yours.
1
The Greeks should load up on whatever money they can get in Euros from this crowd, then declare that they are exiting the EU, print Drachmas and pay the EU back in Drachmas and get on with their lives. Sure many Greeks will feel less "European" (= less "White", let's be honest, a lot of these things comes to visceral, irrational feelings and we are all human) bcos of this, but such is life. They need to get their economy back in action and having an expensive currency like the Euro is not going to let that ever happen.
Having a cheap drachma will bring the tourists back to Greece, will make Greek exports more competitive, and this can be used as an impetus to reform their economy.
Or they can wait it out till the inevitable day when the EU kicks them out since their economy is totally trashed, while the every talking head makes lousy comments about the "Greek Tragedy".
Having a cheap drachma will bring the tourists back to Greece, will make Greek exports more competitive, and this can be used as an impetus to reform their economy.
Or they can wait it out till the inevitable day when the EU kicks them out since their economy is totally trashed, while the every talking head makes lousy comments about the "Greek Tragedy".
3
The problem is Greece exports almost nothing and imports everything from cars to food. Even olive oil is imported from Italy. And even if Greece adopt the drachma their debt would still be in euros. A default will freeze them from capital markets forever. Tsipras knows this, which is why he reluctantly agreed to implement reforms.
Germany cannot haircut greece depts while Greece is being in the Euro system. Greek would just restart "printing" new Euros and the dept spiral would restart at the same time, because printing Euros would not lead into a devaluation of the currency. Greek prices would stay too high. In 5 years we probably would be in the same situation, again. If Greece leaves the Euro currency for some time, there will be a haircut immediately, because Greece could print their own money to pay for its citizens. Value of their currency would be low, but every decision is just an internal one. The EU could help out with medicine, energy and logistic help to get Greece back up on its feet. Within the Euro there is just the one possibility to drop prices to compensate a drop of a Greek Currency
2
Mr. Schauble's comments aren't new, another article disucces a meeting between Mr. Schauble and the Treasury Secertary Tim Geithner during which the German finance minister said precisely the same thing. At yhst time Mr. Geithner couldn't understand why Germany would choose private debt holders over the EU and the people of Greece.
Another battle is brewing in the EU between the IMF and the central banks of Germany and Finland over whether private loans should held superior to sovereignty. The truth is the vaunted Mr. Schauble and the German people wouldn't have go make this choice if the German Central Bank had applied the same standard to its private banks and debt holders who made loans to Greece initially and not bailed these private entities out of their "mistakes" 100%.
Mr. Schauble and the German Central Bank didn't hesitate a moment in providing a 100% relief package to german banks and other private debt holders eho were holding Greece's loans. Hypocrtical statements of moral hazard weren't made at that time. So why make them now?
I detect a faint whiff of the same imperial attitudes and hubris in Chancellor Merkel's and Mr. Schauble comments which led Germany into making not one but two tragic mistakes which plunged Europe into the horrors of wholesale death and distruction on a continental scale.
Another battle is brewing in the EU between the IMF and the central banks of Germany and Finland over whether private loans should held superior to sovereignty. The truth is the vaunted Mr. Schauble and the German people wouldn't have go make this choice if the German Central Bank had applied the same standard to its private banks and debt holders who made loans to Greece initially and not bailed these private entities out of their "mistakes" 100%.
Mr. Schauble and the German Central Bank didn't hesitate a moment in providing a 100% relief package to german banks and other private debt holders eho were holding Greece's loans. Hypocrtical statements of moral hazard weren't made at that time. So why make them now?
I detect a faint whiff of the same imperial attitudes and hubris in Chancellor Merkel's and Mr. Schauble comments which led Germany into making not one but two tragic mistakes which plunged Europe into the horrors of wholesale death and distruction on a continental scale.
2
I understand that this focus on the Serious/Evil Germans makes for sensational journalism (and certainly brings out lots of exciting historical analogies), but let's not forget that Germany only covers 30% of Greece's loans, that 13 other Euro countries agreed on the same terms for Greece (some of which poorer than Greece) and that they all contributed to the Greek bailouts in accordance with the size of their economy. For instance, the Belgian cabinet calculated that every Belgian has contributed about 1,200 euros to Greece in this crisis so far (money they will likely never see back).
5
Greece should be happy that creditors are even willing to consider yet another helping hand.
Will austerity be difficult? Yes; but it is time that the Greek nation, which just last week touted it's democracy after a vote of no more austerity, understand that it is up to them to work hard and lift themselves back to prosperity rather than constant dependency on bailout funding that is evidently not used in a responsible manner.
Grow up, accept the hard times ahead and hopefully you will not destroy the country with more riotous temper tantrums.
Otherwise, maybe Schauble has a good point.
Will austerity be difficult? Yes; but it is time that the Greek nation, which just last week touted it's democracy after a vote of no more austerity, understand that it is up to them to work hard and lift themselves back to prosperity rather than constant dependency on bailout funding that is evidently not used in a responsible manner.
Grow up, accept the hard times ahead and hopefully you will not destroy the country with more riotous temper tantrums.
Otherwise, maybe Schauble has a good point.
4
It is hard to see how a Greek exit from the Euro zone would help Germany and the other creditors cause. What would Greece make any theoretical payments with? A devalued drachma? But a drachma based on what exactly? – Even if Greek exports are more competitive once out of the Eurozone they need to sell a whole lot of feta, retsina and olive oil to even make interest payments on 330 billion euros.
2
The Greek saga is still playing out in many chapters.
As the saying goes on opera: “It ain't over till the fat lady sings.” And in this Greek soap-opera there are many “fat ladies” waiting to sing !!!
In many ways Greece is like the reluctant child being pushed outside of the house on his first day of school or like the reluctant adult-child who after acquiring a job is being pushed outside of the house after living and freeloading at home to the frustration of his parents for many years.
Greece must face the reality that after its many years of malfeasance and mismanagement of its finances while living and freeloading under the very generous support of its parents … err creditors ... Greece can no longer be trusted that it will mend its ways.
It will be best for Greece to grow up and leave home … err the Euro Zone … and learn how to live and function in the world reality of financial discipline.
As the saying goes on opera: “It ain't over till the fat lady sings.” And in this Greek soap-opera there are many “fat ladies” waiting to sing !!!
In many ways Greece is like the reluctant child being pushed outside of the house on his first day of school or like the reluctant adult-child who after acquiring a job is being pushed outside of the house after living and freeloading at home to the frustration of his parents for many years.
Greece must face the reality that after its many years of malfeasance and mismanagement of its finances while living and freeloading under the very generous support of its parents … err creditors ... Greece can no longer be trusted that it will mend its ways.
It will be best for Greece to grow up and leave home … err the Euro Zone … and learn how to live and function in the world reality of financial discipline.
4
This is not news. Mr. Schäuble raised this suggestion in 2011! (Business Insider). It questions his good faith in negotiations for the last five months with the Greeks.
The bigger question is who else does Mr. Schäuble think should be kicked out of the Euro.
We in Ireland are in about the same debt trouble as Greece, but we were good little boys and did what we were told. We are proving a nice little profit to our masters with our €8 billion interest repayments.
What about Portugal, Spain or Italy all have unsustainable debt.
Mr. Schäuble wants nice little passive countries who pay their debts on time and don't give any back chat to their Masters.
The real answer is for the few supposedly strong countries to move to the a new Deutschmark . They can pursue their economic authoritarianism.
This will not happen because they would quickly become uncompetitive.
Germany devastated Europe twice in the last century.
Didn't take them long to start a new devastation in the 21st.
The bigger question is who else does Mr. Schäuble think should be kicked out of the Euro.
We in Ireland are in about the same debt trouble as Greece, but we were good little boys and did what we were told. We are proving a nice little profit to our masters with our €8 billion interest repayments.
What about Portugal, Spain or Italy all have unsustainable debt.
Mr. Schäuble wants nice little passive countries who pay their debts on time and don't give any back chat to their Masters.
The real answer is for the few supposedly strong countries to move to the a new Deutschmark . They can pursue their economic authoritarianism.
This will not happen because they would quickly become uncompetitive.
Germany devastated Europe twice in the last century.
Didn't take them long to start a new devastation in the 21st.
20
Ireland, Portugal, Spain, Italy Greece and France should break out of Germany's economic stranglehold of the euro countries, and leave all at once, form a common currency, and let Wolfgang Vader and Angela Lecter try to save their "by the Calvinist book" German miracle, a gift from the taxpayers of the US after two world wars started by the ever arrogant Germans, without any outside help or trade. Then we will see who is eating garbage and doing without healthcare.
That's the unvarnished truth. Whether you like it or not, however, may depend on the messenger, Schauble or Krugman.
Big, bold ideas, by their nature, are likely to be two steps forward, one step backward. It's only the unbelievers, doubters, ideologues, and fear mongers who seize upon a setback to blow it way out of proportion into a "fatal" event.
Big, bold ideas, by their nature, are likely to be two steps forward, one step backward. It's only the unbelievers, doubters, ideologues, and fear mongers who seize upon a setback to blow it way out of proportion into a "fatal" event.
1
The original reasoning that the EU was formed was to make an economic unit that would compete with America. In fact the originators were saying that the size of the EU would have made it larger than the US and that it would benefit all member nations of the EU to be in a better, more competitive position in relation to America.
Well, that was the original reason. In my memory I would say that period of rosy expectations lasted for very little time. The formation of the EU has only amplified the differences between the countries in the EU and now that money is tight all the ills and none of the benefits of that poorly thought out plan are present.
A fine Gordian Knot that the strong members of the EU have created. Mostly Germany has created a gargantuan mess that none of them have any idea how to unwind. Strong countries like Germany hardly want a union at this point. They only want economic domination, and for that the EU will fail. And for that the Schaubles of the world are to blame.
Well, that was the original reason. In my memory I would say that period of rosy expectations lasted for very little time. The formation of the EU has only amplified the differences between the countries in the EU and now that money is tight all the ills and none of the benefits of that poorly thought out plan are present.
A fine Gordian Knot that the strong members of the EU have created. Mostly Germany has created a gargantuan mess that none of them have any idea how to unwind. Strong countries like Germany hardly want a union at this point. They only want economic domination, and for that the EU will fail. And for that the Schaubles of the world are to blame.
4
I think it is clear from the last negotiations that Greece needs to be out of the Eurozone and needs to have their own currency. Closing the banks was a very big mistake and cost Greece the trust of the EU. What the EU couldn't do was allow a Grexit with a gun to their head. Once Greece stabilizes, the EU should execute an artful exit for Greece from the Euro and not with a deadline staring them in the face. With a devalued currency Greece would be more attractive to tourists. At current price, Greece is not competitive and with a VAT of 23 % it is even less so. Greece has failed to collect taxes and reign in its spending. The rest of the EU should not have to pay for Greece's failed government and if anything proved it was a failed government the last round of negotiations show that Syriza is not grown up and does not belong at the adult table. Let them go and figure out how to run a government, as anyone in Greece will tell you, they invented democracy, now let them learn how to govern.
3
The location of Greece is important to consider. Putin would love Grexit. First stop The Cremea, next stop the Acropolis. I sympathize with Greece- it is very tough to be sent to German reform school, but they sort of made their own decision making that cause that fate. An article (NYT or Guardian) showed the ruins that were 2004 Olympic sites. I was quite horrified. So, I don't think Germans deserve all the blame. Mostly Germany is the messenger/nanny/banker. My suspicion is that if they see progress, debt forgiveness wil be more palatable. Look at Puerto Rico, do you see us bailing them out? So, look at the whole picture, please temper criticism of Germany. No one is a winner here. Just hope that their next steps keep Putin at bay.
12
While I believe Schäuble is being sincere in his analysis, the sheer arrogance of the German position is also a big part of this tragedy. Schäuble seems totally oblivious to the fact that a Grexit, or any member state exit, will be a fatal blow to the integrity of the eurozone and will result in enormous costs for Germany, much greater than the direct bailout of Greece, which has only increased in magnitude under Schäuble's guidance. The best course of action would have been to annul Greece's debts in 2009. The lack of fiscal transfers in the eurozone will be its undoing. The smugness with which the Germans believe they are doing the right thing, while leading the EU into dissolution and major economic upheaval, is astonishing.
5
Mr. Schauble should now turn to undoing the failed experiment with the euro. The people of the United Kingdom, Denmark, and other EU countries which kept their currencies must be grateful for the foresight of their past leaders in not joining a currency union that does not include a fiscal union, like that of the U.S. states or Canadian provinces. Germans would be better off returning to the Deutschmark; French would be better off returning to the franc; Italians would be better off returning to the lira; and so on.
Whether the European Union is a failed project has yet to be decided. But it's clear now that the Eurozone has been an utter failure that will only make everyone who lives within its borders miserable.
Whether the European Union is a failed project has yet to be decided. But it's clear now that the Eurozone has been an utter failure that will only make everyone who lives within its borders miserable.
5
The Euro is not a "failed experiment". Greece would have been in trouble even if it had not joint the currency union.
While the entire Greek debt is way more complicated then pointing the finger at just one side, yet alone bringing personal ideology into it. I can't help but think of the line in the song by Little Feat, "keeping up with the Jones is killing me!"
2
Sorry, and sadly, common sense will not fly in Greece. Best Greece leave the euro, now. No one thinks that any part of the Greek debt, past, present and future will ever be repaid. Best that the past debt be written off, and let Greece go on their merry way to being a third world country, populated by corrupt, dishonest politicians. And yes, the time will come for Americans to understand they are in the same boat, that being thinking our grandchildren will pay off our debt. Think about it, current projections is that it will be about 30 trillion by 2025. The Greeks too thought such.
8
Joining the EU was a mistake for Greece in the first place. They conflated their ability to operate in a fiscally responsible manner and now the EU in addition to Greece itself is paying the high price.
Large pensions, tax evasion, mismanagement, corruption and other factors have all brought Greece to this point of crippling debt. Providing relief will only kick the can down the proverbial road. Perhaps having Greece exit the EU would indeed make sense for all parties involved. The markets already appear ready to compensate.
Large pensions, tax evasion, mismanagement, corruption and other factors have all brought Greece to this point of crippling debt. Providing relief will only kick the can down the proverbial road. Perhaps having Greece exit the EU would indeed make sense for all parties involved. The markets already appear ready to compensate.
8
Well that's just great. The Germans push Greece into a do or die agreement to continue austerity, extending their never ending Depression for a life line loan. Now they say it would be best to do exactly what the Greek people voted for : end the madness, no more Euro support deals and regain control of their own destiny via their own currency.
Greeks had the right idea. Send the German Banksters packing, take the sharp downturn now, and emerge from their Depression in 18 months with a devalued currency.
Greeks had the right idea. Send the German Banksters packing, take the sharp downturn now, and emerge from their Depression in 18 months with a devalued currency.
4
Krugman is talking about that all the time. After all Greece entered the Euro-zone only because its past politicians forged the numbers with help of Goldman Sachs. I am surprised that Syriza revolutionaries did not do that already. George Soros talks about this for 5 years already, and since nobody listens to him, he is probably content making millions by short selling Greek euro bonds, lol. http://www.npr.org/sections/money/2012/06/04/154282337/the-crisis-in-eur...
12
There is a precedent for a country to be a member of the European Union but have its own currency -- Britain!
Greece should start printing drachmas to repay loans in its own currency! If the country is going under one way or another, whether in the EU or out, what's it got to lose. Let the Germans gag on a few trillion drachmas!
Greece should start printing drachmas to repay loans in its own currency! If the country is going under one way or another, whether in the EU or out, what's it got to lose. Let the Germans gag on a few trillion drachmas!
4
The real problem is, Greece dont want to put foot back..Greece dont want to accept that they are poor and going to be a third world again..neither they have any money, nor infrastructure to attract any foreign investment..all they can do is keep asking the money and keep importing..a small tourism and shipping business is not enough for survival or feed a rich european style life...talented youth is migrated in EU/or will migrate to EU, and all they have left is useless youths and pensioners..All they can do is accept asian or african style of poor life for few years to save money and start as a developing country again..thats what happens when you sit with your rich friends..no surprise..
5
I'm no economist, but I have believed all along, from a purely political standpoint, that Greece should dump the Eurozone and go it alone rather than succumb to the severe, authoritarian disciplinary actions of a hegemonic Germany. Merkel's approach brings to mind the pre-WWI Kaiserzeit.
5
Interestingly, most Greeks prefer the security of the euro to the freedom of their own currency (which will likely come with high inflation, devaluation of their property and savings, and lower standards of living).
"he said that Greece’s debt is too high, and that the eurozone’s rules of membership would not permit debt forgiveness of the sort that many economists say Greece needs"
Nonsense. If everyone including Schauble agrees that debt relief is necessary then it should be possible to change the rules.
Nonsense. If everyone including Schauble agrees that debt relief is necessary then it should be possible to change the rules.
3
It is not as easy as you think. Please keep in mind that neither the EU nor the eurozone is a federal state. They are groups of sovereign states each of them having their own budgetary sovereignity guaranteed by their individual constitution.
Of course, you can argue that the EU and/or the eurozone *should* be transformed into a federal state, but this would require constitutional changes are even a new constitution in many of the member states. And for a new constitution you need a referendum which is exactly the reason why they postponed this step again and again. And this is also the reason why they chose to create a currency union without establishing a federal state in advance.
Of course, you can argue that the EU and/or the eurozone *should* be transformed into a federal state, but this would require constitutional changes are even a new constitution in many of the member states. And for a new constitution you need a referendum which is exactly the reason why they postponed this step again and again. And this is also the reason why they chose to create a currency union without establishing a federal state in advance.
Does anyone have the courage to make public what Greece's "creditors" - aka BIG investment banks - are demanding in the way of interest and/or privatization of Greece's social infrastructure? This is nothing more than a hostile economic takeover of a country, as the greediest "investors" do with corporations when there is no regulation. There should be international regulation that severely limits the amount of interest that can be charged and forbids takeover "loans" to governments by other governments and/or "investors". BIG "investors" are destroying democracy and competition around the world and WE average people must stop it.
7
The European taxpayers are the creditors of Greece. No investment bank would give Greece a loan. The interest rates are very low. But of course Greece can't pay back the money. In reality it is a grant.
It's my understanding that the bank loans to Greece have been taken over by nations. As a result of the Great Recession, several big banks in the EU needed to be rescued from failure because of the risky loans they had made to Greece and in other southern European countries. This was done in a sly manner (i.e. lending Greece bailout money, which in turn was used to pay off the bank loans) so that voters in the various EU nations didn't realize that their leadership was actually bailing out the banksters. At least in the US it was done in a forthright manner.
1
This is exactly the deal that Greece was proposed over the week-end: Grexit, with a big debt restructuring, and the ability to run their own affairs; or staying in the euro, with a much smaller restructuring, and imposition of certain measures by the rest of Europe. Greece chose the latter, which seems to be its right, but then cried about it as "a knife in the neck." It wasn't. European rules don't allow large debt restructuring for eurozone nations, so to get it, Greece has to go out of the euro. This may sound like a silly rule - actually it makes eminent sense - but there it is (You can compare this to Puerto Rico, which needs to declare bankruptcy. But Congress won't let it declare bankruptcy. Yet another silly rule.)
Unfortunately in this world you have to make some hard choices. While Greece has a perfect right to make the choice it has, it's unfair to criticize the other nations of the eurozone, and Germany in particular, for the choice that Greece itself has made.
Unfortunately in this world you have to make some hard choices. While Greece has a perfect right to make the choice it has, it's unfair to criticize the other nations of the eurozone, and Germany in particular, for the choice that Greece itself has made.
33
Unless they knew that Greece would never be able to pay back that money. If you remember Greece hid its debt, with the help of Goldman Sachs, as to allow them entry into the EU. Everyone knew they were fudging the books, but they all wanted Greece in the EU. The lender has responsibilities as well in any transaction, it seems America has forgotten that fact, so accustomed are we to just locking up the little guy.
The German version of the grasshopper and the ant, ignores the benefits to Germany of sucking Greece into the euro. Nobody would have leant money to Greece, but that is exactly what Germany did - and German banks helped them fudge the books to qualify. As a eurozone country loans to Greece were denominated risk free under EU banking regulations. Greek paper made fortunes for German bankers and cheap money supercharged Germany exports to Greece. The euro was designed to bind Germany to Europe, instead it bound Greece and other weaker economies to Germany.
Beware the German sense of victimhood. Victimhood was the prevailing mood in Germany between the world wars and that did not end too well. The utter lack of empathy with the misery imposed on ordinary Greek people because of the self-defeating and economically stupid austerity measures pushed by Germany does not bode well for the future of the EU
Beware the German sense of victimhood. Victimhood was the prevailing mood in Germany between the world wars and that did not end too well. The utter lack of empathy with the misery imposed on ordinary Greek people because of the self-defeating and economically stupid austerity measures pushed by Germany does not bode well for the future of the EU
240
"sucking Greece into the euro"
Sir, you are ignorant. The German government *did not want* Greece in the euro. Even the French government *did not want* Greece in the euro. Unfortunately, the rules which had been sent up for euro membership left it up to the applicant state to supply the evidence it was up to the euro standard, without real verification by any outside party. So Greece, which desperately wanted to be in the euro, forged the numbers, sometimes with outside help (such as that shining beacon of American capitalism, Goldman Sachs).
Sir, you are ignorant. The German government *did not want* Greece in the euro. Even the French government *did not want* Greece in the euro. Unfortunately, the rules which had been sent up for euro membership left it up to the applicant state to supply the evidence it was up to the euro standard, without real verification by any outside party. So Greece, which desperately wanted to be in the euro, forged the numbers, sometimes with outside help (such as that shining beacon of American capitalism, Goldman Sachs).
141
Wrong. To get in, the books were fudged by Goldman Sachs.
Once in, Greek reported false figures on its economy, to get the money flowing .
In 2009, it confessed that its deficit was TWICE what it had reported.
Once in, Greek reported false figures on its economy, to get the money flowing .
In 2009, it confessed that its deficit was TWICE what it had reported.
28
"German banks helped them fudge the books to qualify"
That was Goldman Sachs, not European banks.
That was Goldman Sachs, not European banks.
5
If Greece were to leave the Euro and set up it's own currency, it would need a few years to accomplish it and a grace period so that it could get back on it's feet. In order for a Grexit to work, importers would need to accept the drachma as payment and that might be difficult.
9
Isn't that better than 30 years of going through what they are going through just to end up where they are at now? It took us about 8 years to get back to where we were.
Greek politicians knew their lessons of course the tuition's was near 11billion $
But from now on..
We will be ready...
A plan Nemesis must be designed from scratch and I would advise our stupid politicians starting today...
But from now on..
We will be ready...
A plan Nemesis must be designed from scratch and I would advise our stupid politicians starting today...
1
A Grexit probably is better in the short run but there are a lot of difficulties when it comes to changing currencies. They'd need time to print and mint a new currency for starters and the biggest hurdle is paying for imported goods which Greece is very dependent on. Will importers except the Drachma? Will the Dollar or Euro be a kind of underground currency?
My very simplistic notion of economics would suggest that Greece needs to produce something in return for receiving money....as the cliche' goes "you can't export tomatoes and import BMWs" for long. A serious question to me is just what does Greece have that no other country can compete with? The only (economic) answer I can come up with is tourism. No one is booking a summer week on cruising German (or French etc) islands, and you can't visit Athens, Delphi, among many other treasures without visiting Greece.
Perhaps Greece should leave the Eurozone and charge an entry fee as a significant portion of their tax base. I don't think it is likely that Greece will ever make a car to compete with BMW or a smartphone to compete with Apple etc. But if every tourist had to pay 100 Drachmas (or whatever) to get through passport control could that work? Of course, that would have European Unity fallout, but at this point aren't things that desperate?
Perhaps Greece should leave the Eurozone and charge an entry fee as a significant portion of their tax base. I don't think it is likely that Greece will ever make a car to compete with BMW or a smartphone to compete with Apple etc. But if every tourist had to pay 100 Drachmas (or whatever) to get through passport control could that work? Of course, that would have European Unity fallout, but at this point aren't things that desperate?
11
"No one is booking a summer week on cruising German (or French etc) islands"
France is worldwide the country with largest number of tourists visiting, Germany is number 7. Greece is not in the top 10.
France is worldwide the country with largest number of tourists visiting, Germany is number 7. Greece is not in the top 10.
1
"...and you can't visit Athens, Delphi, among many other treasures without visiting Greece."
Ha. If the Germans have their way, all the monuments in Athens will be in the Greeceland amusement park in Berlin in a couple of years.
Ha. If the Germans have their way, all the monuments in Athens will be in the Greeceland amusement park in Berlin in a couple of years.
2
Winter tourism, Greece is now competing with Dubai and Abu Dhabi for European vacation dollars.
Let everyone have their own currency. Greeks , the drachma, Germans, the duetchmark and so on. Without political unity, the EU was a mistake. All it did was benefit the wealthy countries - Germany- and penalize the poorer ones - Greece. Germany will probably lose out if everyone leaves the EU. But they will still be a powerhouse.
33
Until the EU was formed, there was a war involving German hegemony every 10 to 20 years for the last several centuries. If nothing else, the formation of the EU has prevented WWIII. That fact alone makes the EU the biggest success story in European history.
3
I agree. The flaw in the EU is that it consists of several countries of varying sizes and degrees of economic activity and strength. Like Greece, when one of the members suffers an economic downturn, there is really no mechanism to supply some sort of equalization to see them through that period. Without a country having its own currency that can be manipulated or freely move up and down, economic control is out of their hands and decisions as to what to do are made elsewhere.
85
There are several countries smaller and poorer than Greece in the euro zone, which were happy to join (Estonia, Latvia, Lithuania, Slovakia, etc.). They simply follow the rules and are careful when borrowing. The main downside for them has been the need to bailout the richer Greece.
4
Greece might be better off with all-German cabinet and prime minister. Tsipras and his motley crew of bizarre ministers need to go. If Greeks do not figure out how to make money instead of just spending money - in eurozone or outside of eurozone - they will continue to descend into chaos.
51
Greeks know how to make money -- its their corrupt government, arcane government regulations, profligate spending, tax evasion, early pensions, blaming outsiders for their problems, resting on their laurels from 2,400 from the 'Golden Age' of the Greece and not doing much since then, and Goldman-Sachs cooking their very bad books, that have left the Greeks in this very horrible state.
So now the cat slips out of the bag and Germans are advocating for Germans to run Greece? That is what it has looked like all along like back in the 1940s.
Greece has no business being in the EU since it's people like the standard of living afforded by an artificially inflated currency but none of the accountability expected from 'club" membership.Like any addict,they need to hit rock bottom before buying into significant change.A few years with a worthless Drachma will help it's citizens appreciate the price of club membership an decide whether they are wiling to change.That means open markets,taxation,labor reform and no systemic corruption.Such changes will take years.
28
Like any addict you're keep drinking the Kool-Aid of the AP, Reuters and AFP: Germany good, Greece bad. You sound like a Teabeggar blaming poor blacks for the 2008 financial crisis.
Of course, given the current situation, leaving the euro might be a better solution, but was there any attempt by the EU and the Germans to make it possible for Greece to succeed within the euro ?
Offering an awful deal with the only option to "take it or leave it", with the hope that the other party will actually not take the deal, is not the way any adult diplomacy should be conducted.
Sure the Greeks need to make all kinds of reforms, but couldn't they have done these under close supervision by the EU while being offered the kind of real help to rebuild its economy ? Why this German rage ?
Offering an awful deal with the only option to "take it or leave it", with the hope that the other party will actually not take the deal, is not the way any adult diplomacy should be conducted.
Sure the Greeks need to make all kinds of reforms, but couldn't they have done these under close supervision by the EU while being offered the kind of real help to rebuild its economy ? Why this German rage ?
38
Did you hear about the previous bailouts? Hello???
1
Greece was already provided with two bailouts over the past 5 years and technical assistance (aka adult supervision). The Greek governments still found it politically difficult to institute the required structural reforms (e.g., allowing stores to be open on Sundays and selling over-the-counter drugs in supermarkets, as well as strongly discouraging early retirement). The presence in Athens of experts from the IMF, ECB and EC was considered an infringement on Greek sovereignty. Still, the Greek economy was bottoming out at the end of 2014 and was about to produce a primary budget surplus. However, in January the Greek voters chose to vote into office extreme left populists, who promised to renegotiate the prior agreements by being tough with their creditors. Essentially, much of the new agreement just reiterates the previous agreements -- in return for a new bailout.
2
You call all the debt relief already given Greece no "any attempt"?
You call Schaeuble's opinion a "rant"?
Who's ranting here?
You call Schaeuble's opinion a "rant"?
Who's ranting here?
1
Seeing how this loudmouth is spouting off, I wonder if a GERxit will come before a GRExit.
More realistically, I am predicting a Schaublexit before too long.
More realistically, I am predicting a Schaublexit before too long.
12
He is a very intelligent and thoughtful person who doesn't need to spend any of his time considering what is best for Greece....but I am confident Greece highly regards his ideas and opinions. It sounds like you think a guy like Schauble is like America's Republicans just saying dopey things. Maybe better to focus on Republicans and let thoughtful Europeans help each other with creative thinking.
He is 75 and will probably retire soon.
1
That is, sadly sadly, not realistic at all.
"He underlined that forgiving some of Greece’s public debt of more than 300 billion euros, or about $330 billion, is not compatible with membership in the eurozone. "
But having the central bank bail out your banks for their lending practices and throwing the blame entirely on the debtor -- along with sundry remarks about debtor responsibility -- that's the EU way?
I have not hope for Mr. Schauble or his ilk. I hope that when the Eurozone, and perhaps the EU itself, begins to fall apart under leadership like this, not too many are hurt.
I have to ask: was "leadership like this" what the EU was really all about?
But having the central bank bail out your banks for their lending practices and throwing the blame entirely on the debtor -- along with sundry remarks about debtor responsibility -- that's the EU way?
I have not hope for Mr. Schauble or his ilk. I hope that when the Eurozone, and perhaps the EU itself, begins to fall apart under leadership like this, not too many are hurt.
I have to ask: was "leadership like this" what the EU was really all about?
72
The fact is Germany IS the EU.
Are Greece's creditors 'predatory lenders'? I don't think so, for the following reasons:
a) The term 'predatory lender' implies someone purposely trying to convince the debtor to take on debt obligations, the discharge of which will involve great expense on the debtor's part, hence profit on the lender's part; and which may moreover be well in excess of what would be required by other lenders. In the case of sovereign debt, it is the debtor actively seeking out creditors. The high interest rate is more a cause of doubt on the lender's side as to whether the debt will be repaid.
b) The term 'predatory lender' suggests at least obfuscation if not outright prevarication on the part of the lender as to the terms of the loan. Surely the government in Greece understood the terms of the debt they were incurring.
To put it another way -- someone tricked by a predatory lender could either (a) have obtained cheaper credit elsewhere or (b) been better off without incurring debt in the first place. (a) does not obtain here; as for (b): would Greece have been better off if no one had been willing to loan it money? Wouldn't that have accelerated the financial collapse?
I would say though that interest reduction is something which should be considered seriously, if sufficient reforms are enacted on the Greek side to reduce the risk of a default.
a) The term 'predatory lender' implies someone purposely trying to convince the debtor to take on debt obligations, the discharge of which will involve great expense on the debtor's part, hence profit on the lender's part; and which may moreover be well in excess of what would be required by other lenders. In the case of sovereign debt, it is the debtor actively seeking out creditors. The high interest rate is more a cause of doubt on the lender's side as to whether the debt will be repaid.
b) The term 'predatory lender' suggests at least obfuscation if not outright prevarication on the part of the lender as to the terms of the loan. Surely the government in Greece understood the terms of the debt they were incurring.
To put it another way -- someone tricked by a predatory lender could either (a) have obtained cheaper credit elsewhere or (b) been better off without incurring debt in the first place. (a) does not obtain here; as for (b): would Greece have been better off if no one had been willing to loan it money? Wouldn't that have accelerated the financial collapse?
I would say though that interest reduction is something which should be considered seriously, if sufficient reforms are enacted on the Greek side to reduce the risk of a default.
Not that I support the German attitude here but regarding bailing out the banks and forgetting the Little folks read Warren 'A fighting chance' or Sanders: 'A historic filibuster on corporate greed', in particular the part that goes beyond TARP.
1
It seems the Germans want to have the control over Greek spending which would result from a genuine fiscal union, but don't want to see the flows from richer to poorer areas which we have, for example, in the US.
In a true fiscal union Germany would have to accept that they were subsidizing the South, much as we do in the US, where richer blue states subsidize poorer red ones (for the most part.)
In a true fiscal union Germany would have to accept that they were subsidizing the South, much as we do in the US, where richer blue states subsidize poorer red ones (for the most part.)
74
Germany already is the highest net contributor into the European Union. They already subsidize the poorer countries. This has nothing to do with the situation Greece is in. You need to learn the facts before you make your statement.
1
"Germany would have to accept that they were subsidizing the South, much as we do in the US"
Exactly the same is happening in the European Union. Greece is getting billions every year (in recent years 4 to 5 billions) from the richer countries since 1981.
Exactly the same is happening in the European Union. Greece is getting billions every year (in recent years 4 to 5 billions) from the richer countries since 1981.
1
The analogy of richer states subsidizing the poorer ones in the US is not completely applicable. It would be more accurate if, for instance, the rich in Alabama refused to pay federal taxes and New Yorkers would have to pay extra taxes to subsidize the difference.
Other EU countries are in fact poorer than Greece, yet don't get the same wealth transfer (since their citizens pay their taxes).
Other EU countries are in fact poorer than Greece, yet don't get the same wealth transfer (since their citizens pay their taxes).
The truth is the truth. Greece will never reform. Its working class has gotten too used to government benefits, early retirement at three quarter pay, and borrowing to spend without worrying about the consequences. More loans to this socialist nation will simply be throwing more European taxpayer money away. Cut Greece loose and stop the bleeding. If socialism is so great, it can exist without loans from the rest of Europe to prop it up.
30
And where did you get the divine insight into the Truth and into the essential nature of the Greek people? Greece is no more socialist than many Scandinavian countries.
2
Greece is not socialist. Germany, Scandinavian countries and Netherlands are socialist.
Greece has no welfare state and one third of its citizens have no health care. Germany and the other countries have a welfare state and all their citizens have health care sponsored by the government.
If anything, Greece was the most capitalist, with almost no taxes being paid and no welfare state, very high small business ownership (the highest in the E.U) and the highest military budget.
Greece has no welfare state and one third of its citizens have no health care. Germany and the other countries have a welfare state and all their citizens have health care sponsored by the government.
If anything, Greece was the most capitalist, with almost no taxes being paid and no welfare state, very high small business ownership (the highest in the E.U) and the highest military budget.
Mr. Schäuble might be right or wrong, only time will tell. The time might have come though, at least for a while, to hold back the media horses, lest Mr. Schäuble be seen as a self-opinionated elderly gentleman that has trouble in passing on the torch to a younger generation. Furthermore Germany as a Nation should reflect, whether always right or maybe wrong, how they want to appear in the eyes of the rest of the World. History was not kind to Germany nor Germany was kind to History and, like it or not, the national mind-sets in Europe, still very much present after many decades, have become an emotional factor, (would you believe it, also in Germany), that are certainly not helpful in solving this crisis. As a counterpoint to Mr. Schäuble's public appearances, one cannot but compare him to Mr. Draghi, who continues to deliver a highly polished, professional, respectful and compelling message as the one at today's ECB Press Conference.
7
Well said. Hr. Schaeuble is not helpful. An older man unable to escape the mind-set that has been so destructive. Certainly appears that way from the American perspective and it's disappointing that Germans may not understand that.
"Mr. Draghi, who continues to deliver a highly polished, professional, respectful and compelling message"
In other words, exactly what you would expect from a banker who is gambling with other people's money and who was intimately involved in getting Greece into the mess it is in now when he was at Goldman Sachs, the bank that put Greece on its path to ruin in the first place!
No, thank you, I rather listen to Schäuble now!
In other words, exactly what you would expect from a banker who is gambling with other people's money and who was intimately involved in getting Greece into the mess it is in now when he was at Goldman Sachs, the bank that put Greece on its path to ruin in the first place!
No, thank you, I rather listen to Schäuble now!
It sounds like good advice, as other have noted much like Paul Krugman has been suggesting in the NYT.
But Greece's higher standard of living with the Euro really came from cheap loans at the time - the same bad loans of German and French banks mostly taken over by creditor governments in 2012 with a small haircut.
In the end it's a question of how transparently with regard to their taxpayers the German and French governments want to recognize that Greece will never pay back these debts.
So meanwhile, there's not much point in just squeezing the Greeks as part of a non-solution.
But Greece's higher standard of living with the Euro really came from cheap loans at the time - the same bad loans of German and French banks mostly taken over by creditor governments in 2012 with a small haircut.
In the end it's a question of how transparently with regard to their taxpayers the German and French governments want to recognize that Greece will never pay back these debts.
So meanwhile, there's not much point in just squeezing the Greeks as part of a non-solution.
7
I find it outrageous that not one person thinks this is a good deal, including and especially the people that it's being forced on, and that not one organization thinks this loan will get paid back...and yet we're all voting for it. What am I missing here?
1
Fear and denial, especially for the people that it's being forced on.
One thing you are missing is that "we" don't have a vote on this. Also, not sure how you have been able to reach everybody so that you could say that you are outraged because your effort did not find a single person who thought it is a good deal.
Perhaps if you instead adopted the position of the Greek government who actually did have vote they would have told you that compared to pandemonium, chaos, bankruptcy, collapse and other stuff....that this is a pretty good deal. They might be wrong, but that is what they were thinking.
Perhaps if you instead adopted the position of the Greek government who actually did have vote they would have told you that compared to pandemonium, chaos, bankruptcy, collapse and other stuff....that this is a pretty good deal. They might be wrong, but that is what they were thinking.
It is not a case of "fear and denial". It is about taking fiscal responsibility, which Greece has yet to prove it is capable of doing. There comes a point where 'other people's money', and time runs out.
"... the Greek Parliament reluctantly approved a package of economic policy changes, ..."
Yes, they approved the policy changes but, the question remains, will they actually implement those changes. If the past is any indication, the answer is an obvious "No." The European countries continue to give Greece money and the Greek government continues its "humble act" and then laughs all the way to the bank. They will never repay any of that money and everyone know that.
Yes, they approved the policy changes but, the question remains, will they actually implement those changes. If the past is any indication, the answer is an obvious "No." The European countries continue to give Greece money and the Greek government continues its "humble act" and then laughs all the way to the bank. They will never repay any of that money and everyone know that.
17
The debt payments of Greece are not sustainable, unless the EU agrees to take a stiff haircut, reducing the face value of the debts by at least 50%
The obstacle to this sensible solution is Germany, which sees the Greek situation as a morality play. Germany considers debt a sin, and Germany feels that it will commit a mortal sin, if it forgives part of the Greek dept.
The question is which members of the EU will win in this struggle between a view of Greek debt based upon common sense and a view of Greek debt based upon morality.
The obstacle to this sensible solution is Germany, which sees the Greek situation as a morality play. Germany considers debt a sin, and Germany feels that it will commit a mortal sin, if it forgives part of the Greek dept.
The question is which members of the EU will win in this struggle between a view of Greek debt based upon common sense and a view of Greek debt based upon morality.
22
The problem is not Greece, Greece is so small as a percent of the EU that's it's not significant. The problem is that if Greece's debt is forgiven, what's to stop the people of Italy, Spain and Portugal, and perhaps even France, asking for the same deal? That's the German problem.
1
Actually Mike, I don't the issue is morality as a sin alone - it is the legal and moral condemnation of imposing a debt on a people who did not accumulate that debt.
It is the legality of a person trying to pass on their mortgage obligation to you just because you earn more than he/she does.
Do you have a moral or legal obligation to pay for debt you have not accumulated?
The American media puts so much heat on Germany , but forgets to mention that the great majority of EU nations voted against the bailout as well. The nations are aligned. Their taxpayers do not deserve to (morally) or are no liable to (legally) cover the expenses and lifestyles that the Greek taxpayer cannot afford.
It is the legality of a person trying to pass on their mortgage obligation to you just because you earn more than he/she does.
Do you have a moral or legal obligation to pay for debt you have not accumulated?
The American media puts so much heat on Germany , but forgets to mention that the great majority of EU nations voted against the bailout as well. The nations are aligned. Their taxpayers do not deserve to (morally) or are no liable to (legally) cover the expenses and lifestyles that the Greek taxpayer cannot afford.
2
No--only that Eurozone members don't get haircuts, because of moral hazard to other countries. Greece could leave the euro and Schauble indicates that he'd be fine giving a reduction in debt.
Though I may agree with him on exit, Merkel should fire Schäuble to cool things down.
14
With GREXIT and their own currency, there is a good chance Greece's economy, once it rights itself, will start doing better. This might cause Italy, Spain, Portugal and maybe Ireland to question the straight jacket they are in, and seek an out. How do you say $2 Euro in German?
6
Euro was a utopian idea propagated by Germany and France, based on political reasons. Now that the experiment is going horribly wrong, Germany wants poor and weak Greece and others to pay for this experiment - first by putting harsh conditions and now by trying to throw it out of Euro.
21
From the very beginning, Germany and France did not want Greece in the Eurozone.
1
And now, you know why.
1
"What the European creditors might be willing to accept?"
If Goldman Sachs took a 100% 'haircut' for its fraudulent so-called bailout of Greece, there would be no current chaos. That shifty deal should go to the International Court.
So just how does Greece get back to the drachma without the whole nation collapsing? If there is a way for the mechanics of that to work out, it would surely be in Greece's best interests.
If Goldman Sachs took a 100% 'haircut' for its fraudulent so-called bailout of Greece, there would be no current chaos. That shifty deal should go to the International Court.
So just how does Greece get back to the drachma without the whole nation collapsing? If there is a way for the mechanics of that to work out, it would surely be in Greece's best interests.
19
Jim, you are right. Grexit is a lot easier to spell than to actually perform.
Good advice, the Euro has been a disaster for Greece.
9
No, it hasn't. Up till recently, they have enjoyed a higher standard of living on someone else's largesse.
3
Bait and switch interested. Or more like a baited hook and now they're caught and being reeled in by the central banks. If that's your idea of good lending practices and good banking then you must have just loved our bank bailout in the US.
Although I hate the way the Germans have (again) treated the Greeks, Schauble is right. But the Greeks shouldn't pay back a cent to the creditors.
20
Yes, and that would teach the creditors not to lend to unworthy borrowers.
1
"Yes, and that would teach the creditors not to lend to unworthy borrowers"
...like greece.
...like greece.
1
The creditors are the German taxpayers (56.5 b. euros), the French taxpayers (42.4 b. euros), the Italian taxpayers (37.6 b. euros), the Spanish taxpayers (24.7 b. euros)....
1
For the euro to work for any of the countries there needs to be more flexibility in the "rules", and a strict maintenance of at least 3% inflation to allow for some slippage. German insistence on no inflation is like trying to operate a machine at tolerances that are tighter that those for which it is built. One solution would be to get Germany back to it's marks so that France, Spain, and Italy would be able to operate the zone properly.
11
Incredible audacity! The German bullies just exacted their harshest terms yet and now they're taunting their prey.
It's not unreasonable to say that Germany is creeping back to the levels of arrogance it experienced a century ago.
It's not unreasonable to say that Germany is creeping back to the levels of arrogance it experienced a century ago.
107
Not far as creepy as invading other countries to teach them freedom and democracy, when in fact just wanting their spouters, and killing nearly 100.000 during the process.
125
Maybe (Nobel) Paul Krugman is German too, as he recommended exactly what Schäuble is proposing now. Your Germany bashing is out of line.
39
Perhaps he is not taunting. Perhaps he reads Krugman.
18
They should have never been part of the Euro Zone and only managed to be included because of their smoke and mirror financial portrait provided by Goldman-Sachs.
236
I knew that someone would eventually blame Wall Street for Greece's economic woes.
2
That, and the idea of a united Europe without Greece, where Western Civilization began, is a bit silly. Unfortunately, the Greece of today is a far cry from the Athens of Pericles. There's no good solution, but I fear and worry that the Germans (and Northern Europeans I general) might be right.
1
This was widely known at the time in Brussels and Frankfurt. Germany and the EU chose to turn a blind eye because for political reasons they favored Greek inclusion. Now they blanche at paying the price.
2
Greece needs two things to recover its economy: devalue its currency and reduce its level of debt. Yes, that means leave the eurozone. In the long run this also might be the best move for Italy, Spain, Portugal and even Ireland. There is no place for second class nations in Germany's EU.
49
I hope you mean second class economies, not second class nations.
1
@Philip W. Wenz. I don't think they are second class nations. But by saying "Germany's EU," I'm suggesting that there are people, even leaders, in Germany that consider them so. Is there any talk from Germany about the hardships being experienced by the Greek people? No, it's all about getting money back. And of course, it's the borrowers who are totally at fault, not the bankers that made the original risky loans.
1
What was said to Germany and its "crippling debt" in 1953? What should have been said?
--SFB
--SFB
88
Obviously Germany was a better bet then, than Greece is now or ever was.
14
Completely different situation, no parallels to the current Greek situation at all.
2
Three big differences: (1) Germany was still recovering from having the "you know what" kicked out of it; (2) Germany was en route to creating a more diverse and disciplined economic state than Greece; (3) Germany was thought as being very important (probably much more important than Greece) in our cold war with the Soviets.
8
Schäuble reiterates what many - remember (Nobel) Paul Krugman - have said all along: Greece is/might be better off with its own currency (to become more competitive again). But it makes a difference when a (bad) German (in Greece caricatured as a Hitler-figure) states the obvious or an American who has been bashing the intransigent, unforgiving, no debt relief considering/providing Germans. Remember Varioufakis? Leather jacket, motorbiker, Professor, penthouse owner, loudmouthed basher of Schäuble and the creditors as "terrorists" whose "hatred" he welcomed: well, V voted against the new package in parliament, created a stir. He wants total debt forgiveness and continuation of the EURO for Greece (with the EU paying alimony). A Greixit is probably better for Greece, though most Greek still like the standard of living that the Euro provided for many years until the inevitable crises came about. Will Greece on her own modernize and truly realize what they insist upon: their dignirty?
75
Perhaps a less corrupt politician should be representing the German high morality play: http://www.wsj.com/articles/SB950707698867734676
1
This may be the first (or second) time Schauble has mentioned the possibility of Greece abandoning the Euro, but it's been mentioned roughly 50,000 times by others, and I have no doubt everyone involved in these negotiations has thought about it at great length. It's unreasonable for Greece to ask for BOTH debt relief AND all the perks of membership in the Euro club. Time for Greece to make a choice here, and the best choice for Greece seems obvious.
99
You raise the point, though perhaps without meaning to, that the negotiations might never have been serious on the Central Powers side, and that they actually _planned_ to drive out Greece.
It's like feeding an addict. Greece has to hit rock bottom and make some hard lifestyle decisions.
76
This is a quote from Arnulf Baring, who offered dire predictions in his 1997 book Scheitert Deutschland? Here's an English translation (from Bloomberg):
‘They will say that we are subsidizing scroungers, lounging in cafés on the Mediterranean beaches. Monetary union, in the end, will result in a gigantic blackmailing operation. When we Germans demand monetary discipline, other countries will blame their financial woes on that same discipline, and by extension, on us. More, they will perceive us as a kind of economic policeman. We risk once again becoming the most hated in Europe.’
I find it amazing that populists love to hate the very people who subsidize them. Why are we complaining about a culture that sticks to economic stability, fiscal responsibility and hard work?
Is the NYT editorial team so angry that capitalism succeeds so obviously over its beloved failed populist ideology?
The cause for Greece's distress is its own culture and structure of (decades of ) tax evasion, political corruption, financial mismanagement, heavy pensions, overspending and an electorate who votes for other people to subsidize a way of life they do not want to work (harder and longer) for.
You can erase the debt completely and they will get to the same problem over and over again, as they have done, unless they make some serious structural changes to their economy and fiscal policies.
Schauble is right. It is probably best, for all parties, for Greece to leave.
‘They will say that we are subsidizing scroungers, lounging in cafés on the Mediterranean beaches. Monetary union, in the end, will result in a gigantic blackmailing operation. When we Germans demand monetary discipline, other countries will blame their financial woes on that same discipline, and by extension, on us. More, they will perceive us as a kind of economic policeman. We risk once again becoming the most hated in Europe.’
I find it amazing that populists love to hate the very people who subsidize them. Why are we complaining about a culture that sticks to economic stability, fiscal responsibility and hard work?
Is the NYT editorial team so angry that capitalism succeeds so obviously over its beloved failed populist ideology?
The cause for Greece's distress is its own culture and structure of (decades of ) tax evasion, political corruption, financial mismanagement, heavy pensions, overspending and an electorate who votes for other people to subsidize a way of life they do not want to work (harder and longer) for.
You can erase the debt completely and they will get to the same problem over and over again, as they have done, unless they make some serious structural changes to their economy and fiscal policies.
Schauble is right. It is probably best, for all parties, for Greece to leave.
285
Capitalism? Is bailing out the banks that made the irresponsible loans to Greece by German tax payers capitalism?
24
And how about macroeconomics, or is it only hard work and saving which matter? Germany's surpluses came from the southern periphery. Germany's disinclination to reflate makes it impossible to pay back the debt which just keeps growing. Austerity does depress GDP and worsen the debt/GDP ratio. No country has had quick results from structural reforms. German and French bankers made bad loans to finance Greek consumption. Why should they get paid back?
14
"Why are we complaining about a culture that sticks to economic stability, fiscal responsibility and hard work?"
********
Because they are narrow minded and short-sighted! Let me give you an historical analogy. In 1947, when George Marshall proposed that the U.S. provide economic assistance to Europe to allow it to rebuild (what became the Economic Recovery Act of 1948), the U.S. was essentially committing itself to investing in Europe with no immediate possibility for repayment. If they had, instead, demanded that the European countries cut back on all kinds of expenditures in order to pay back the U.S., the effect of that policy would have been very limited if not extending economic depression ad infinitum.
Instead, the U.S. took a long-term view that rebuilding the European economies would help cement the peace, create conditions whereby conflicts would be much more contained and that, in addition, the U.S. would eventually be repaid.
Germany, in particular, is not thinking like that. They are committed to creating a European economic union, but without a fiscal union. Further, they don't have a long-term financial perspective on it. If they want this to occur, they need to support investment in the weaker countries of the EZ (like Greece, Spain, Portugal) and take a long view (a very long view) of this process.
********
Because they are narrow minded and short-sighted! Let me give you an historical analogy. In 1947, when George Marshall proposed that the U.S. provide economic assistance to Europe to allow it to rebuild (what became the Economic Recovery Act of 1948), the U.S. was essentially committing itself to investing in Europe with no immediate possibility for repayment. If they had, instead, demanded that the European countries cut back on all kinds of expenditures in order to pay back the U.S., the effect of that policy would have been very limited if not extending economic depression ad infinitum.
Instead, the U.S. took a long-term view that rebuilding the European economies would help cement the peace, create conditions whereby conflicts would be much more contained and that, in addition, the U.S. would eventually be repaid.
Germany, in particular, is not thinking like that. They are committed to creating a European economic union, but without a fiscal union. Further, they don't have a long-term financial perspective on it. If they want this to occur, they need to support investment in the weaker countries of the EZ (like Greece, Spain, Portugal) and take a long view (a very long view) of this process.
686
If I am not mistaken, this is also what Paul Krugman has been advocating all along. Greece would be better off outside the Eurozone, and in control of its own currency.
Both paths, with or without the Euro, will be extremely painful for Greece. Especially now with the unnecessary additional debt load and wholesale financial disaster that have piled up over the last 6 months while Tsipras was in denial about the state of the country he so desperately wanted to lead.
Both paths, with or without the Euro, will be extremely painful for Greece. Especially now with the unnecessary additional debt load and wholesale financial disaster that have piled up over the last 6 months while Tsipras was in denial about the state of the country he so desperately wanted to lead.
138
As if other countries have not had to bail out Germany and rebuild it in the past. As if Germany proclivities have never caused trouble.
248
The difference is Germany repaid its debt after WWII through hard work, discipline and organization. Greece is nowhere near being able to repay the 300 some billion euro it owes.
11
This dis-invitation from the folks who launched World War II, were bailed out by the Marshall Plan, and received significant assistance when they brought the former East Germany back into their original country--is an offer
Greece should accept.
Greece should accept.
2
That was then, this is now. The EU is not as strong of an organization as the USA, so asking a member to leave is not as fraught.
1
The Greek people are going through hell, maybe they should go back to their own currency, get their economy and social programs in order and then go back. At least they will be in charge of their future.
122
They have been charge of their fate for the last 3000 years
2
I think the Germans are being more fair by working through negotiations and trying to help the wrong of both sides. As negative as some people will interpret this, I think it helps defuse the crisis for everyone by saying. Work with in the frame work, pay down your bills, and become a responsible adult government society and you will work out of this mess -or- if you desire loan "haircuts" leave and we will work on having you re-apply once your house is in order in the way you want to do it. Simple and clean cut; however, their are consequences in every action ... but ... the size of the debt just doesn't arrive overnight and with one or two simple decisions. This is a multi-generational blame situation for Greece, which will take the equivalent time in generations to resolve. We are lucky to be living in slightly more civilized times, when in the past, the country would have been invaded and enslaved due to their weakness ... words and pens are better then soliders and arms ....
44
Very good comment, insightful.
Is it common in Germany for cabinet ministers to disagree with their PM? That is, in public?
3
No it isn't, however Schäuble is a highly respected authority inside Merkel's party and government.
In everyday politics, Merkel is not superior to Schäuble, they are rather 'coexisting' in the cabinet.
Merkel also gave Schäuble a free hand in the 3rd bailout.
I wish she hadn't, cause she's way more moderate about Greece than him.
The world news would have reported about the East European countries refusing to give Greece a breath instead of Germany, then.
In everyday politics, Merkel is not superior to Schäuble, they are rather 'coexisting' in the cabinet.
Merkel also gave Schäuble a free hand in the 3rd bailout.
I wish she hadn't, cause she's way more moderate about Greece than him.
The world news would have reported about the East European countries refusing to give Greece a breath instead of Germany, then.
2
No. But these are not common times. And Schäuble is a real relic. He's in the cabinet since the eighties (with interruption, when social democrates where ruling). Nobody else has a seat in the parliament (Bundestag) as long as him. And of course he's Merkels bad cop in the whole game.
4
whats wrong with this. We are living in a Democracy. What he is saying is simply true and everybody in Europe knows it.
2
Before starting to condemn Schäuble, reconsider, Paul Krugman is basically saying the same. The greeks can more easely rearrange their debts outside of the euro straightjacket.
This might be an unpleasant proposal, but it's wrong to pursue some wrong policies just for the sake of claiming that there is an irreversible european union.
And it wouldn't be the first time that greece had left a currency union for debt restructering, it happend 1906 in the Latin Currency union. Greece was readmitted in 1908 after meeting the criterias.
This might be an unpleasant proposal, but it's wrong to pursue some wrong policies just for the sake of claiming that there is an irreversible european union.
And it wouldn't be the first time that greece had left a currency union for debt restructering, it happend 1906 in the Latin Currency union. Greece was readmitted in 1908 after meeting the criterias.
325
Well, if the markets accept that, it might work out. But it might also be a fatal blow to the eurozone and the European project due to lack of confidence that will lead market speculators to rip the remaining members apart. Good luck with that!
2
Mr. Schauble could have helped this situation if months ago he had expressed what he knew (then as well as now) that these imposed austerity measures wouldn't work. If only he'd been MORE like Dr. Krugman by saying this forthrightly. The negotiations could have been how to arrange an orderly exit that did not have to crash the banks and wreak the economy in the process.
3
So very false. Dr. Krugman is saying, and has said for years as Germans played kick the can, that debt relief is an essential part of solving this quagmire that is really about German and French governments buying up the bad loans made by their criminal banks without saying so aloud. They committed international crime with their racketeering around LIBOR plus money laundering drug kingpins' money. We should have revoked the Deutsch Bank's license to operate in civilized countries. Keep your Calvinistic mythically-based rules for prudes to yourselves please, as US prefers to follow the science of economics instead of the scolds of EU, Sinister Schauble and Miserly Merkel. And we fund the IMF so we have a seat at the table where Wolfgang has been riding roughshod like an SS soldier on steroids, pretending to have real power.
4
"Though small, Greece is a superpower in the maritime world, with many shipping lines and a disproportionate number of the wealthiest shipowners. Nearly half of the best known shipping families hail from Chios, a tiny Greek island five miles off the coast of Turkey that was long prized by successive empires and nations.
Proud of its nautical pedigree, Chios claims as native sons (not without dispute) two great men of the sea — Homer and Christopher Columbus. It is also home to George Kallimasias, whose family has been in shipping for three generations. By most accounts, he runs Commercial S.A., which operated the Dona Liberta and a fleet of about two dozen similar ships.
Even in a struggling economy, Greece’s shipping magnates benefit from favorable government treatment, including an exemption for shipping firms from certain taxes. Shipowners control most of the country’s major oil companies, soccer teams and television stations, and played a major role in bailing out its banks in recent years.
The nation’s major shipping families also have a reputation for noblesse oblige — many of the island’s soccer fields, schools and hospitals bear plaques with their names. Mr. Kallimasias, though, is decidedly invisible.
Maybe someone in the Times' office needs to put the two together.