Grexit

Discussion in 'West Mall' started by Mr. Deez, Jul 6, 2015.

  1. Mr. Deez

    Mr. Deez Beer Prophet

    I'm not sure how big of a story the Greek - Euro crisis and Greece's rejection (through a plebiscite) of the European Central Bank's bailout proposal (includes spending cuts as a condition of getting more bailout money), but it's a huge story here. As this article points out, there are no good solutions. If the Eurozone kicks Greece out, they basically take a bath on a few hundred billion in defaulted loans, lose Greece as an export market, and push them toward allying with Russia. However, if they give into Greece's demands, they'll prove that their threat to kick Greece out was a bluff with no resolve behind it. Furthermore, they'll teach the Greeks that their irresponsibility will be rewarded by being allowed to freeload off the rest of Europe at will and send other fiscally irresponsible nations (Italy, Portugal, and Spain) the message that if they elect hard line Leftists who put their countries into a massive debt, the fiscally responsible nations (basically Northern Europe) will bend over and bail them out with no negative consequences, which would eventually lead to the collapse of the Euro.

    It's just a huge "fustercluck" all the way around. If this doesn't discredit the idea of the common currency, I'm not sure what would.
     
  2. Sangre Naranjada

    Sangre Naranjada 10,000+ Posts

    What happens when the USA gets to Greece's position? A few hundred billion? That's chump change by comparison. We are headed in that direction, and apparently have chosen to accelerate our accumulation of debt rather than try a little austerity of our own.
     
  3. Mr. Deez

    Mr. Deez Beer Prophet

    A few hundred billion is a lot if your entire economy is only $242 billion, and it's a hell of a lot. Furthermore, even with a GDP in the $10T, it's still a lot for the Eurozone to just write off. It's going to piss people off, and it will piss them off enough to have political consequences. It'll ruin the credibility of advocates of European integration and lend credibility to the nationalistic and euroskeptic parties.

    As for the US, our debt is far too high, but our economy is large enough that it's still far more manageable than Greece's. They're at about 175 percent of GDP, have an economy that's contracting quickly, and their borrow costs are huge. That's a real mess. We're at about 101.5 percent, but our economy is is far better shape and growing (albeit slowly), and our borrowing costs are low. No, I'm not saying we're a model of fiscal responsibility, but we're miles away from being Greece.
     
  4. Crockett

    Crockett 5,000+ Posts

    It's hard to sympathize with the Greeks when they allow the influential to skirt taxation. They retire young on generous, unfunded pensions and treat inefficient government like a birthright.
     
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  5. Mr. Deez

    Mr. Deez Beer Prophet

    That's an odd paradox. They elected a far Left government, but they let they're wealthiest citizens get a pass on taxation.
     
  6. Seattle Husker

    Seattle Husker 10,000+ Posts

    I don't have any sympathy for the Greeks at this point. My biggest fear is that if the Greeks get concessions from the EU (debt wiped away?) then Spain/Portugal will follow suit. Has the Greek thing really been going on for 5 years? The Greek foreign minister stated that austerity measures have been in place that long.
     
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  7. Mr. Deez

    Mr. Deez Beer Prophet

    And if that happens, the Germans and French will realize that they're getting ripped off and pull the plug on the entire Eurozone. That will hurt their exports, but there only so much robbery their taxpayers will tolerate.
     
  8. Seattle Husker

    Seattle Husker 10,000+ Posts

    The EU is in a no-win situation. The Greeks are purposely cozying up to Putin for leverage against the EU. Knowing they are being watched by more formidable economies (like Spain) they have to hold strong. Of course, by doing so the Greeks walk away and Putin gets a closer ally in the heart of the EU.

    Could this be the beginning of the end of the EU?
     
  9. ProdigalHorn

    ProdigalHorn 10,000+ Posts

    My girlfriend's parents live in Greece so I tend to see both sides. Right now, her parents are having to manage on a pension that pays for something like a cup of coffee a day. As she rightly points out, there are a lot of factors that go into the issues that go well beyond the pension issue (which as with many others, I don't have a lot of sympathy for.) Ultimately, it's easy to say "they deserve what they get", but at the same time, you have individuals who may or may not have even asked for those massive pension benefits.

    Anyway, it's a good example of why the whole idea of bringing everyone under a single rule or currency depends on those individual groups having similar and consistent circumstances. Living in a Greek economy is clearly not the same as living in a German economy, and I think that assuming there could be a common currency between the two was a mistake.
     
  10. Seattle Husker

    Seattle Husker 10,000+ Posts

    I can only imagine what it's like to be in Germany right now as they look at the Greek revolt to reducing their generous pension plans to be closer to in line with the German pension plans. That must be galling to the Deutsch that their economy is subsidizing some Greek bus driver that can retire at age 58 and get 80% of his last salary in perpetuity while a German has to wait until 65 to get 70%.
     
  11. Musburger1

    Musburger1 2,500+ Posts

    Keep in mind perhaps no country defaulted on as much debt as Germany after WW1. In light of that, it's somewhat ironic that the Germans refuse to allow restructuring of Greece debt.

    Personally, I would like to see the break up or the Euro zone. As pointed out in the thread, it's not practical to have one currency with multiple laws/countries and those countries maintain sovereignty.

    In addition, the plutocrats who run things out of Brussels are both unelected and corrupt.

    Lastly, if NATO eventually disbands, the entire world will be better off.
     
  12. Seattle Husker

    Seattle Husker 10,000+ Posts

    Putin? Is that you? :p
     
  13. Mr. Deez

    Mr. Deez Beer Prophet

    I can tell you what it's like. They're friggin' pissed off. A few things keep them from getting too aggressive though. First, big businesses in Germany benefit from the Eurozone and don't want Greece kicked out. (I know no normal people in Germany who don't think things were better under the Deutsch Mark.) Second, the big political parties (including their center-Left party) are in the sack with the business community and generally support the Eurozone. Third, Germany's primary Euroskeptic parties (Alternative for Germany and the National Democratic Party) are a bit marginalized and get accused of neo-Nazism because their positions are nationalistic. (To be fair, that criticism against the National Democratic Party is probably a pretty fair one. They're kinda scary, but they're much less important than AfD.) Nevertheless, Germans never want to be seen as nationalistic or particularly assertive - lots of self-loathing still exists because of the Nazis. Greece is exploiting all of that.
     
  14. Mr. Deez

    Mr. Deez Beer Prophet

    To be fair, those were war reparations, not loans taken out by a democratically elected government. Furthermore, there were consequences for that. They got invaded by France. If Germany invaded Greece or took any kind of tangible action for failing to pay its bills, people would throw an absolute ****-fit.

    Still doesn't justify Greece giving the Eurozone the finger. Nobody forced them to take the money.

    You're one of the smartest guys on this board, and then you spout all this anti-West, pro-Russia junk. Someone of your intellect buying into Putin's rap would be like Stephen Hawking becoming a big believer in astrology. It's mind boggling. Nevertheless, every step Putin takes (either overtly or covertly) into Ukraine or decision to question the legality of the Russian recognition of the Baltic states makes the disbanding of NATO less likely.
     
  15. Musburger1

    Musburger1 2,500+ Posts

     
  16. Seattle Husker

    Seattle Husker 10,000+ Posts

    Musburger- I'm curious what the $5b you reference is for. A summary will be fine. I'm not discounting this fact but curious of the reference.
     
  17. Musburger1

    Musburger1 2,500+ Posts

    The story came about as a result of presentation made by Victoria Nuland. After the break up of the USSR, apparently the US pumped in some $5 billion via NGOs to influence the population and the government to come around to the neoconservative worldview. I'll post the video here. The $5 billion figure happens about 7:40 into the clip.

     
    Last edited: Jul 6, 2015
  18. Mr. Deez

    Mr. Deez Beer Prophet

    Effectively, we have, even if we didn't call it "reparations." We didn't just throw these people under the bus. Trillions have been redistributed to them directly by government or through racial and ethnic preferences, both of which have come at the expense of people who had nothing to do with the misdeeds and never benefited or benefited only to a nominal and attenuated extent.

    And the comparison is terrible. The Greeks have taken out loans through their own elected representatives, and a very large amount of that debt was incurred very recently by the same people who are now saying to screw off on repayment. That's a very different scenario from telling people in the United States to pay reparations for acts committed by an entirely different group of citizens 150 - 400 years ago.

    You're blurring the joining of the Eurozone with the issuing of the debt. Greece falsified its budget deficit and fiscal stance to hustle its way into the Eurozone. They were the bad apples on that issue. As for the loans, I'm sure the creditors knew they were making high-risk loans. However, that doesn't mean the debtor shouldn't be required to repay the debt. At the end of the day, a deal is a deal.

    And again, you're making a false comparison with the home loans. First, the home loans were made to very unsophisticated borrowers, most of whom didn't know the full extent of the ramifications of what they were getting into. The Greek government has always had an army of lawyers and accountants who knew damn well what the terms of the agreements were and what they required of the government. Second, even ignorant home buyers faced substantial consequences for making bad decisions. They were foreclosed upon and sometimes forced into bankruptcy court where assets can be liquidated and given to the creditors. The Germans and the EU aren't forcing anything remotely that severe on Greece.

    You really think the $5B (which is chump change in this sort of context) the US spent in the Ukraine was the "first step" into Ukraine and that the Russians were just minding their own business prior to that? Hostilities and tensions between the Ukraine and Russia go back a lot further than our $5B. That's not the source of the problem. And I think it's remarkable that you think there's a Western media (which has its problems but is relatively free and uncoordinated) conspiracy on this issue but that state-run and political Russian media are honest.

    I'd have an easier time taking your view on this seriously if what's happening in the Ukraine was an isolated example of Russian intimidation and aggression. It's not. Maybe if Russia was a better neighbor, the Baltic states and the Ukraine would be less inclined to look to the EU and NATO for defense and economic stability. And I'm sure you've got a theory on that. I'm sure you assume that Putin is just minding his own business and that NATO is sending troops to the Baltics just to piss him off.

    Every bad apple has his justifications to give the impression to his citizenry and those around the world that he's righteous. Hitler said ethnic Germans were getting terrorized in the Sudetenland and in Poland. There was probably a kernel of truth to that, but it didn't justify his actions. And $5B of US money doesn't justify invading the Ukraine or threatening the Baltic states.
     
  19. Monahorns

    Monahorns 5,000+ Posts

    I actually think Musberger is right on EU and Greece, and maybe even NATO. I don't know how you can't fault the EU for granting loans they knew would never be paid back. I they did. It doesn't make Greece innocent, but everyone involved is guilty not just one side. Because of that I think both sides need to make concessions, instead the EU keeps loaning money that will never be paid back because 1) they don't have a better idea and 2) hope to kick the can down the road and then hope the problem gets magically better.

    But let's leave the whole Ukraine/Russia issue out of this, it's unrelatedish. However, I can't agree with Musberger on this one. What I see is Putin justifying his actions to take preemptive action for national security reasons. He is using the same justification essentially that Czar Nicholas used to enter WW1. He is doing it for the same reason too, as least partly, in order to take domestic attention away from how crummy it is to live in Russia to gin up nationalistic pride at how powerful their military is.

    Part of the issue is that modern day Ukraine is made up of pieces of land that historically belonged to different states. The Eastern Part including Kiev at one point was Russia. It is where the Orthodox Church started and I think even some of the noble families were from. The Western part was part of the Austro-Hungarian empire and maybe even Prussia. It's culture is as much Polish as Russian. So I see why Russia considers Ukraine key to their national interest, but I don't agree with the pre-emptive action they have taken.

    Plus, what if we ask the question, what if it IS true that the US is trying to Westernize Ukraine actively? What if their fears are true? What would be the outcome? Does that mean the Ukraine will attack Russia? Does it mean that there will cease to be trade between the 2 countries? I don't think so. I think actually the opposite could be the case. As Ukraine gains prosperity and security of their own, it should have a positive impact on Russia. It should make their trade more prosperous. A strong Ukraine that takes care of itself is not a country that can be easily manipulated into threatening Russia on behalf of some other nation. I think Putin is foolish, and doesn't have any other ideas of how to run the country other than what he reads in Russia's history which is sad and destructive, to its own people.
     
  20. Mr. Deez

    Mr. Deez Beer Prophet

    The "they knew it couldn't be paid back" rationale is a ruse. That could be said of anyone who makes a high-risk loan. By loaning the Greeks money, the relevant parties were doing Greece a favor. They didn't wrong them by doing it. Remember, this isn't an 80 year old Spanish-speaking lady getting taken advantage of to sign a loan document from a big bank that gives her unconscionable terms. This is a democratic government with an army of lawyers and accountants at their disposal.

    Both sides will make concessions, but Greece is a country whose government spending is about 59 percent of GDP. They're not even trying, and the message of this election is that they aren't going to.

    What should happen is that the Greek government should be forced into bankruptcy like the City of Detroit. A trustee (who does not answer to the Greek citizenry) should be allowed to sell off government asset and make the budget cuts necessary to make reasonable payments on the loans. And obviously, they should be kicked out of the Eurozone.
     
    Last edited: Jul 7, 2015
  21. Seattle Husker

    Seattle Husker 10,000+ Posts

    I found the following podcast interesting. It's a interview with a Brown professor on the Greek crisis. It's definitely a leftist view but the following tidbits were new information to me.
    http://www.onthemedia.org/story/perceived-tragedy-greece/

    Bob Garfield is the interviewer and Blyth is the professor. Here is the text:
     
  22. Musburger1

    Musburger1 2,500+ Posts

  23. Musburger1

    Musburger1 2,500+ Posts

  24. Mr. Deez

    Mr. Deez Beer Prophet

    Everything that you both posted is thought-provoking and interesting. However, it primarily demonstrates what a goofy idea the Euro was in the first place, and I fully agree. The cultural, ethical, and financial habits of the various countries in Europe are far too great to make a common currency work. Hang out in Munich or Frankfurt for a day, and then hang out in Rome or the armpit of Europe, Naples, for a day. It'll take less than ten minutes to see the difference in the mentality of Germans versus the mentality of the Italians or Greeks.

    However, it's Greece's responsibility to have its fiscal house in order, not Germany's or anyone else's. That means that you spend what you make, and if you borrow money, you pay it back, and if you can't, you face the consequences that other debtors face. That means the leverage should be held by the creditor, not the debtor. Yes, bad things happen that put your country in the crapper, but if your government is spending 59 percent of its GDP and its tax collection rates are in the crapper, you're not even trying.

    Did the Euro put Greek businesses at a disadvantage to German manufacturers? Of course, but two things. First, nobody forced Greece into the Eurozone. They saw advantages to joining it (not sure what they were) and chose to do so. Surely they could see this issue coming up. Second, there's a little something called competition. If Germany can make products more efficiently than Greece can, then maybe the Greeks should adapt. Be more creative, and come up with ways to produce things more efficiently, and work a little harder. Germans aren't super men. It's possible to outwork them and out-think them.
     
  25. Seattle Husker

    Seattle Husker 10,000+ Posts

    I did experience Rome first hand in 2012. It seemed the only people working in Italy then were the gypsy street peddlers. Every piazza was loaded with cops standing around talking. A person could get mugged a block in any direction from a piazza and the cops wouldn't even be aware.

    Greece should be expected to pull themselves out of this mess. Leaving the EU may be the best thing for them longterm. Clearly they need a kick in the *** towards modernizing their economy and that may only come when things are at their most dire. The stat showing the average Greek worker to work over 2000hrs vs. the German at 1300hrs was interesting. I wish I could find a source for that.
     
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  26. Musburger1

    Musburger1 2,500+ Posts

    Agree with most of the above, but want to point out its not a simple, straight forward creditor/debtor relationship.

    At the time of the initial bailout, the large European banks held most of the debt. They were highly leveraged and a default very likely would have wiped them out. The bailouts not only kicked the can forward for Greece, but also allowed the banks a window for escape. Basically, Deautsch Bank and the other large banks with the most exposure unloaded most of the debt which now falls on the member EU states (i.e. the taxpayers in Germany, France, Spain, etc.). So now we are at the point where a Greece default probably would not cripple the banking system, but it would damage the balance sheets of the member states and cause bond yields to skyrocket in countries such as Spain, Italy, and Portugal.

    A default years ago probably would have been the best thing for Greece in the long run, but naturally the Greece government didn't want that as a default would have thrown the country into serious turmoil and most likely ended their political power. So they opted for a bailout (more loans) to keep up the status quo as much as possible. The EU, and particularly the banks, also pushed for the bailouts (additional loans) even as they knew they wouldn't be repaid. But in the process, the debt could be transferred to the public.

    In many ways, this is similar to the housing bubble and collapse in the US which popped in 2007/2008. The banks were rescued and eventually a large portion of the debt became the property of the Federal Reserve. The end result in the US is that savers get punished with zero percent interest now going on 8 years.
     
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  27. Mr. Deez

    Mr. Deez Beer Prophet

    Just to clarify, I don't sympathize with the banks. Like in the US (perhaps even more so), they are in the sack with government and get all kinds of protection from big losses, which means they get to make a lot of money without incurring much if any risk. My sympathy lies with the taxpayers who always seem to get the short end of the stick in these large financial arrangements.
     
  28. Mr. Deez

    Mr. Deez Beer Prophet

    If it wasn't obvious to everyone already, communists really suck. What a friggin' humiliation. Tspiras calls on his public to reject the creditors' deal, bluffs, and is now prepared to completely take it in the garage. His opening proposal is harsher than what his voters rejected. I guess the creditors weren't bluffing.

    I don't know how this guy has the audacity to show his face in public again.
     
  29. Musburger1

    Musburger1 2,500+ Posts

    I don't know how he escapes being lynched. Was he bought off or threatened? The current episode is one of the more bizarre political turnabouts I can recall.
     
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