Greece, what the fuck?

[untermensche]

That is what I said. The Greek people did not incur these debts. Their awful so-called representatives did. And these representatives did not represent the interests of the Greek people just as many so-called leaders once in office fail to do so.

But people certainly are salivating at the prospect of extreme hardship in Greece. That sadistic strain of ape that is common place, especially in the US on the right.



The referendum had nothing to do with reckless spending. The Greeks have done everything asked over the last few years and have watched their GDP decline by 25%. Can you fathom that number?

They voted to end the economic warfare being waged against their nation.

The Greeks most certainly have not done everything asked. They aren't fixing the fundamental flaws to their system at all.

They had some weaknesses that were exposed when the bankers threw the world into a huge recession, not fundamental flaws.

 

[Tom Sawyer]

The Greeks most certainly have not done everything asked. They aren't fixing the fundamental flaws to their system at all.

They had some weaknesses that were exposed when the bankers threw the world into a huge recession, not fundamental flaws.

I'd say that running an unsustainable deficit without having control of the monetary policy needed to manage that deficit counts as a fundamental flaw.

 

[dismal]

How does the other one result in less "austerity"?

The policy being rejected was a series of specific austerity measures designed to increase the net tax take of the Greek government, so more money would be available for repaying foreign creditors. In the event of a Greek default, those payments are no longer made (that's what a default means), which means Greece is left with the fiscal surplus they've been running for several years now, and can get their economy back on track.

Basically it's the same pattern as any other debt default - as the creditors are unable to make arrangements to delay or haircut their payments, the borrower does that for them.

First Greece does not have surpluses now and certainly will not after the disaster they have just perpetrated on themselves. Second, defaulting on the debt does not make it go away. It is subject to international courts and the Greeks cannot discharge it unilaterally. Third, without the ECB supplying liquidity to Greece its banks run out of cash in days. They are doing so as we speak. I'm sure the Keynsians here will be happy to tell you that when there is no cash circulating in the economy the results are not great. Fourth, actively giving the middle finger to your creditors does not tend to make other people more willing to give you money. None of the above seems to add up to less "austerity" that I can see.

 

[ksen]

They had some weaknesses that were exposed when the bankers threw the world into a huge recession, not fundamental flaws.

I'd say that running an unsustainable deficit

Their deficit was sustainable until the financial crisis.

without having control of the monetary policy needed to manage that deficit counts as a fundamental flaw.

This is the biggest weakness of the Eurozone.

 

[dismal]

Their deficit was sustainable until the financial crisis.

And if my aunt had a penis and was not a preoperative transsexual she'd be my uncle.

Greece was well above 100% debt-to-GDP and growing in the good times when I believe the Euro limit is 70%.

Some might even argue that to be "sustainable" you are supposed to run surpluses in the up times so you can borrow in the down times.

 

[Horatio Parker]

The referendum proved to Europe and the Troika that Syriza represented the will of the Greek people.

So-the-fuck what? The German leaders are there to represent the German people. The Lithuanian leaders are there to represent the Lithuanian people.

Because the Troika claimed that Syriza did not represent the Greek people, and needed to bring more dismal-like characters into the govt. The referendum has stopped that noise.

What is it about the fact that Greece is asking foreign countries for money that is so difficult to comprehend?

They're not going to get their money back, nor will foreign creditors shape Greek domestic policy. What's so difficult to comprehend about that?

 

[dismal]

So-the-fuck what? The German leaders are there to represent the German people. The Lithuanian leaders are there to represent the Lithuanian people.

Because the Troika claimed that Syriza did not represent the Greek people, and needed to bring more dismal-like characters into the govt. The referendum has stopped that noise.

What is it about the fact that Greece is asking foreign countries for money that is so difficult to comprehend?

They're not going to get their money back, nor will foreign creditors shape Greek domestic policy. What's so difficult to comprehend about that?

*sigh*

The foreign creditors can put whatever conditions they want on giving Greece money. Greece can refuse the conditions, but then it don't get the money.

As long as Greece is prepared to live without the money they can defy all of the conditions and remain sovereign as they wish. It does, however, look like living without the money is going to be a problem.

On the plus side, we may have just witnessed the all time fastest transition between joyful dancing in the streets at the ideological triumph of socialism to lining up before empty shelves (and ATMs) and panic buying of essential items.

 

[Nice Squirrel]

And of course that is the proper sentiment. One of gleeful schadenfreude.

 

[Tom Sawyer]

I'd say that running an unsustainable deficit

Their deficit was sustainable until the financial crisis.

So ... it's an unsustainable debt then. Otherwise, I don't see a how your comment is any different than saying "I could afford my car payments before my income got cut in half and therefore I can still afford my car payments".

without having control of the monetary policy needed to manage that deficit counts as a fundamental flaw.

This is the biggest weakness of the Eurozone.

Which Greece was a part of at the time, so it's an important consideration when considering the sustainability of its debt.

 

[Horatio Parker]

Because the Troika claimed that Syriza did not represent the Greek people, and needed to bring more dismal-like characters into the govt. The referendum has stopped that noise.

What is it about the fact that Greece is asking foreign countries for money that is so difficult to comprehend?

They're not going to get their money back, nor will foreign creditors shape Greek domestic policy. What's so difficult to comprehend about that?

*sigh*

The foreign creditors can put whatever conditions they want on giving Greece money. Greece can refuse the conditions, but then it don't get the money.

As long as Greece is prepared to live without the money they can defy all of the conditions and remain sovereign as they wish. It does, however, look like living without the money is going to be a problem.

On the plus side, we may have just witnessed the all time fastest transition between joyful dancing in the streets at the ideological triumph of socialism to lining up before empty shelves (and ATMs) and panic buying of essential items.

They've played it the Troika's way for five years, and they're worse off for it. The consequences may well turn out to be more severe than they realize, but they're done with the Troika's game. So if the EU doesn't like it, they can kick Greece out, and, judging from the news, thats where things are headed. And yes, failed state status or a military or RW coup are among the ugly possibilities. I don't know why you seem to think you're the only one who realizes this.

 

[ksen]

Their deficit was sustainable until the financial crisis.

So ... it's an unsustainable debt then.

Classifying debt as "sustainable" only if it is able the worst financial crisis in 80 years seems a little silly and unrealistic.

Otherwise, I don't see a how your comment is any different than saying "I could afford my car payments before my income got cut in half and therefore I can still afford my car payments".

You don't? Not even a little bit?

 

[Tom Sawyer]

So ... it's an unsustainable debt then.

Classifying debt as "sustainable" only if it is able the worst financial crisis in 80 years seems a little silly and unrealistic.

In early 2009, yes. By the time a couple of years go by, however, if they haven't adjusted their fiscal policy to take their new financial reality into account then the situation changes.

Otherwise, I don't see a how your comment is any different than saying "I could afford my car payments before my income got cut in half and therefore I can still afford my car payments".

You don't? Not even a little bit?

OK, you have a job where you make $50,000/year and your lifestyle and expenses are based on that level of income. Your hours then get cut and you're now only making $25,000/year. At what point do you assume that your sustainable level of expenses at the original salary are now unsustainable? Is it:

A) Immediately
B) Five years later
C) Never

 

[ksen]

Comparing government to a household is not very helpful.

 

[Tom Sawyer]

Comparing government to a household is not very helpful.

WTF?

Are you saying that Greece after the financial crisis is able to sustain the same level of debt that they were able to before the crisis?

I am saying that they have lower revenues after the crisis and therefore their ability to sustain a debt is similarly lowered. That means that what constituted a sustainable debt level in the past isn't relevant to what constitutes a sustainable debt level today. Why do you feel that's wrong?

 

[whichphilosophy]

Comparing government to a household is not very helpful.

The comparison does help.

 

[untermensche]

Because the Troika claimed that Syriza did not represent the Greek people, and needed to bring more dismal-like characters into the govt. The referendum has stopped that noise.

What is it about the fact that Greece is asking foreign countries for money that is so difficult to comprehend?

They're not going to get their money back, nor will foreign creditors shape Greek domestic policy. What's so difficult to comprehend about that?

*sigh*

The foreign creditors can put whatever conditions they want on giving Greece money. Greece can refuse the conditions, but then it don't get the money.

As long as Greece is prepared to live without the money they can defy all of the conditions and remain sovereign as they wish. It does, however, look like living without the money is going to be a problem.

On the plus side, we may have just witnessed the all time fastest transition between joyful dancing in the streets at the ideological triumph of socialism to lining up before empty shelves (and ATMs) and panic buying of essential items.

Yes, the Greeks are allowed to eat cake.

They are only Greeks after all, not Germans or the English after WWII.

 

[ksen]

Comparing government to a household is not very helpful.

WTF?

Are you saying that Greece after the financial crisis is able to sustain the same level of debt that they were able to before the crisis?

No, I never said it was sustainable after the financial crisis.

I said that it was sustainable before the crash and the only it became unsustainable was the crash followed by years of outside imposed austerity which caused their economy to shrink even more resulting in even less money for debt servicing.

I am saying that they have lower revenues after the crisis and therefore their ability to sustain a debt is similarly lowered. That means that what constituted a sustainable debt level in the past isn't relevant to what constitutes a sustainable debt level today. Why do you feel that's wrong?

I said it was sustainable until the crash. And for some reason you took exception with that.

 

[Tom Sawyer]

WTF?

Are you saying that Greece after the financial crisis is able to sustain the same level of debt that they were able to before the crisis?

No, I never said it was sustainable after the financial crisis.

I said that it was sustainable before the crash and the only it became unsustainable was the crash followed by years of outside imposed austerity which caused their economy to shrink even more resulting in even less money for debt servicing.

I am saying that they have lower revenues after the crisis and therefore their ability to sustain a debt is similarly lowered. That means that what constituted a sustainable debt level in the past isn't relevant to what constitutes a sustainable debt level today. Why do you feel that's wrong?

I said it was sustainable until the crash. And for some reason you took exception with that.

You said it as if it were a rebuttal to my statement that their debt was unsustainable. If it was actually unrelated to what I was saying, you shouldn't have quoted my post when you said it because that makes it look like a response.

 

[Jayjay]

Looks like Greece has more or less agreed to the austerity measures. Again.

Greece debt crisis: Athens accepts harsh austerity as bailout deal nears

The Greek government capitulated on Thursday to demands from its creditors for severe austerity measures in return for a modest debt write-off, raising hopes that a rescue deal could be signed at an emergency meeting of EU leaders on Sunday.

Athens is understood to have put forward a package of reforms and public spending cuts worth €13bn with the aim of securing a third bailout from creditors that would raise €53.5bn and allow it to stay inside the currency union.

A cabinet meeting signed off the reform package after ministers agreed that the dire state of the economy and the debilitating closure of the country’s banks meant it had no option but to agree to almost all the creditors terms.

I hope this sticks, and that eurogroup can meet Greece halfway despite the popular opposition to a third bailout package.

 

[bilby]

Comparing government to a household is not very helpful.

WTF?

Are you saying that Greece after the financial crisis is able to sustain the same level of debt that they were able to before the crisis?

I am saying that they have lower revenues after the crisis and therefore their ability to sustain a debt is similarly lowered. That means that what constituted a sustainable debt level in the past isn't relevant to what constitutes a sustainable debt level today. Why do you feel that's wrong?

When it comes to borrowing, governments and households are very different things. Nation states do not have to plan for eventual retirement or death; they are immortal entities whose long term income prospects (even for poor nations) are excellent - even poor countries tend to get wealthier over the long term.

The Greek situation has more in common with a bank run than it does with a household debt default. The banks don't have enough money to give all their depositors their money today. This is not a problem, as long as the depositors don't all simultaneously lose confidence in the bank's ability to ever give them their money.

In the event of a bank run, the solution is for the central bank, or other entities set up for the purpose, to lend lots of money (often on very generous terms) to prop up the bank until confidence returns.

The troika are the central bank in this analogy (and in the case of the ECB, quite literally). They can lend on generous terms (by which I mean long term loans at reasonable rates of interest, rather than the more usual - for nation states - short term loans at lower rates), and keep Greece afloat; or they can refuse to do so, and allow Greece to collapse, causing massive and needless hardship - which is basically what they have done.

This stupid and short sighted policy from the troika is basically the 'writ large' result of the cognitive error that sees national economies as sufficiently similar to household budgets as to be treated in the same way. It is a very, very stupid and harmful analogy - but it is very popular, because most people are morons, and have no understanding of economics beyond budgeting for their own households.

"I would understand this, if only it were far more simple than it really is", they cry. "So I shall pretend it's simple, and clamour for simple solutions, based on simple mindedness!"

If you can't see how that would lead to disaster, you are not alone.