Greek myths

[mantra]

Violence has no place in a democracy, mouths Greece’s unelected PM, while inflicting violence on his people to please his foreign masters. Germany has calculated what they are doing to Greece is a deterrent to other members of the PIIGS to break away from the EZ. Calculations can go wrong—there could well be civil war in Greece which could spread to other EZ states, eventually resulting in some N-S war.

There wouldn't be a civil war - but anarchy will escalate, not that it will do them any good in the long term. They will be subdued by poverty eventually.

[Jovial Monk]

Default now look a bit more likely:

Eurozone leaders 'call off Greece crisis talks'

Gavin Hewitt: "EU officials are playing it tough... For the moment this second bailout is on hold"

The head of the eurozone countries has downgraded a eurozone finance ministers meeting on Wednesday, saying Greece has not yet given the necessary assurances about its austerity plan.

Ministers, who had demanded Greece find an extra 325m euros of savings, had been set to meet in Brussels.

But Eurogroup President Jean-Claude Juncker said the talks would be replaced by a conference call.
a
He said technical work with Greece was still needed "in a number of areas".

Finance ministers had not received assurances from leaders of Greek political parties on a programme of proposed cuts, Mr Juncker was quoted as saying by Reuters news agency.

He said that "against this background, I have decided to convene ministers to a conference call tomorrow in order to discuss the outstanding issues".

As well as 17 ministers from nations that use the euro, the president of the European Central Bank Mario Draghi and the Commissioner for Economic and Monetary Affairs, Olli Rehn, had also been due to attend the meeting.

Mark Lowen, the BBC's Athens correspondent, says the Greek Prime Minister's office confirmed that the face-to-face meeting had been called off.

'Harsh'
The latest 130bn-euro bailout ($169.5bn, £108.7bn) was agreed in principle by EU leaders in October, conditional on Greece adopting further measures to cut its deficit and restructure its economy.

It's now a question of who will blink first.

Greece - which has to receive this second multi-billion Euro bailout if it's not to default and, it's assumed, therefore leave the euro.

Or the EU - which is demanding that Greece comply with every aspect of the bailout agreement before the money is handed over - but which is also publicly desperate to avoid the chaos it's believed would follow a Greek exit from the single currency.

Bearing in mind the difficulties of selling more austerity to a nation already on its knees, it is by no means certain that the bailout will be granted.

If it is not, Greece will not be able to meet its debt repayments, and the economic uncertainty for the eurozone, Europe and indeed the world will intensify.

On Sunday, Greek MPs approved extra cutbacks, but parties had to expel more than 40 deputies for failing to back the bill.

Thousands protested in Athens, where there were widespread clashes and buildings were set on fire. Violent protests were reported in cities across the country.

"As time has gone on more and more people believe that austerity measures can't be met because the economy is doing too badly and that they are far too harsh especially for the working and middle classes in the private sector." said Nick Malkoutzis, Deputy Editor, of Kathimerini English Edition.[My emphasis]

"The feeling is they are being made to pay for failure to reform the public sector." he said.

There is pressure on Greece to make progress, as the country will not be able to pay debts due on 20 March unless it can qualify for more bailout funds by satisfying its European partners.

By that date Greece needs to repay 14.5bn euros to lenders.

When and if eurozone ministers are convinced Greece is making progress on cuts, and if the German parliament agrees to the bailout (as it must under national law), then any new bailout could be signed off in early March.

But there have been warnings that politicians in Germany, Europe's biggest economy, may be losing patience.

Thousands protested against the latest round of Greek austerity measures
"Given the increasing hard line we have seen out of German policymakers over the past few days, you would wonder if Germany is trying to push Greece out [of the euro]," Michael Hewison of CMC Markets told the BBC.

http://www.bbc.co.uk/news/business-17034677

It looks like Greece cannot make the extra cuts. It is one of the poorer nations in the EU and has stuff–all fat to cut. There are things that can be done to reform their PS, slash the mountain of red tape which just builds in both corruption and a reluctance to invest be it in a business or a dwelling. The widescale tax avoidance means tax receipts are way lower than they should be so the govt cannot provide proper services (like infrastructure that facilitates business like roads. Because the govt can’t provide these services people avoid paying their tax.

Greece should never have joined the EZ. The conservative govt at the time wanted to join and employed Goldman Sachs to cook the books. Well, the disappearing working and middle classes are paying a heavy price for that.

If Germany kicks Greece out the EZ the Greek govt can go back to its own fiat currency, the drachma. By inflating it can pay back its loans at a very favorable (to it) exchange rate. May mean some french banks go bust.

Stay tuned! The probability of a new Long Depression just inched higher!

[Neferti]

Stay tuned! The probability of a new Long Depression just inched higher!

Really? Are you planning on moving to Greece? Bon Voyage if so.

[Jovial Monk]

A death sentence for Greece:

http://www.counterpunch.org/2012/02/13/ ... or-greece/

Read this!

A death sentence for Greece the MoU might be, it is also the Versailles Treaty equivalent that will inevitably lead to civil war in Europe.

[Jovial Monk]

A couple of posts on my board by Leftwinger who was deemed unfit to vote here! I hope that won’t happen in September! The amount and quality of Political posts on my board shits on that here.

___________________________________________________________________________

An article written by someone who obviously has some basic grasp of accounting identities at the national and international level....

Greece's economic crisis is a gift from heaven for the German government. The country is the ideal conservative dystopia of an irresponsible government financing a supposedly overblown welfare state by ever increasing debt, where workers enter retirement in their mid-50s, the dead continue receiving pension payments and public employees earn bonuses for arriving punctually at work. Never mind that, exceptions aside, public expenditure as a proportion of GDP is lower in Greece than Germany and the average Greek works longer hours and retires only half a year earlier than the average German. That did not stop those stories from being widely reported by the German media. It strengthened the moral tale of the hard-working Germans being abused by lazy southerners. The tale is convenient because it diverts attention from Germany's responsibility for the eurozone's current economic woes.

The tale goes like this: while Greeks wasted their time on the beach drinking Ouzo, Germans implemented painful economic reforms. Indeed, in the 2000s Germany deregulated its labour markets, reduced real wages to increase competitiveness, shrunk the public sector, cut pension entitlements and implemented a debt break into the constitution. After almost a decade of dismal economic growth and heavy belt-tightening, Germany has negotiated the 2008 global economic crisis successfully almost without employment losses, has since grown strongly and now registers the lowest unemployment rate since 1991. If southerners would have just followed the German model, the whole crisis could have been avoided.

Actually, Germany's good performance in the 2008 global economic crisis and after is hardly due to belt-tightening but to the adoption of a large fiscal expansion package in the crisis and generous government subsidies for companies to safeguard employment.

Heavily influenced by the German finance ministry, the solution of the troika (the EU Commission, the IMF and the ECB) to austerity's failure is even more austerity. Together with the EU Commission and the ECB, German finance minister Wolfgang Schäuble still strongly believes in the confidence-creating power of fiscal austerity, although they have been proved wrong. Those beliefs underlay all of the troika's growth forecasts upon which the goals for deficit reduction were based. Since there was no upswing in confidence, growth fell precipitously and the government systematically missed the agreed goals.

However, both the tale of the successful German reforms and their prescription to the rest of the eurozone are based on a fallacy: the fallacy that every country can export more than it imports. A closer look at Germany's economic experience for most of its eurozone membership reveals that only trade surpluses were keeping Germany from economic collapse. Half of Germany's dismal economic growth of just 1.7% on average between 1999 and 2007 – the second lowest in the eurozone – was driven by trade surpluses. Those are, by definition, the deficits of someone else.

Far from being a growth engine, the reforms of the 2000s depressed German internal demand and thus imports, much the same as they do in Greece nowadays. They also depressed German loan demand and squeezed bank profits. At the time, the southern economies were the perfect solution for Germany's self-inflicted economic problems. German banks could expand their business by lending them the money to purchase the goods that Germans could no longer afford themselves. Manufacturers and banks were happy. Germany's beggar-thy-neighbour policies only worked because others pursued the exact opposite policies.

This is why the eurozone-wide adoption of austerity cannot work. Greek demand for German goods is small, but Spanish, Italian, French, Portuguese and Irish imports amounts to a large share of German exports. Germany's flawed policies for the eurozone are bound to backfire. Europe is in dire need of new lazy spendthrifts. Unfortunately, today nobody is willing to play that part.

http://m.guardian.co.uk/commentisfree/2 ... pe=article

________________________________________________________________________

An article written by someone who obviously has some basic grasp of accounting identities at the national and international level....

Greece's economic crisis is a gift from heaven for the German government. The country is the ideal conservative dystopia of an irresponsible government financing a supposedly overblown welfare state by ever increasing debt, where workers enter retirement in their mid-50s, the dead continue receiving pension payments and public employees earn bonuses for arriving punctually at work. Never mind that, exceptions aside, public expenditure as a proportion of GDP is lower in Greece than Germany and the average Greek works longer hours and retires only half a year earlier than the average German. That did not stop those stories from being widely reported by the German media. It strengthened the moral tale of the hard-working Germans being abused by lazy southerners. The tale is convenient because it diverts attention from Germany's responsibility for the eurozone's current economic woes.

The tale goes like this: while Greeks wasted their time on the beach drinking Ouzo, Germans implemented painful economic reforms. Indeed, in the 2000s Germany deregulated its labour markets, reduced real wages to increase competitiveness, shrunk the public sector, cut pension entitlements and implemented a debt break into the constitution. After almost a decade of dismal economic growth and heavy belt-tightening, Germany has negotiated the 2008 global economic crisis successfully almost without employment losses, has since grown strongly and now registers the lowest unemployment rate since 1991. If southerners would have just followed the German model, the whole crisis could have been avoided.

Actually, Germany's good performance in the 2008 global economic crisis and after is hardly due to belt-tightening but to the adoption of a large fiscal expansion package in the crisis and generous government subsidies for companies to safeguard employment.

Heavily influenced by the German finance ministry, the solution of the troika (the EU Commission, the IMF and the ECB) to austerity's failure is even more austerity. Together with the EU Commission and the ECB, German finance minister Wolfgang Schäuble still strongly believes in the confidence-creating power of fiscal austerity, although they have been proved wrong. Those beliefs underlay all of the troika's growth forecasts upon which the goals for deficit reduction were based. Since there was no upswing in confidence, growth fell precipitously and the government systematically missed the agreed goals.

However, both the tale of the successful German reforms and their prescription to the rest of the eurozone are based on a fallacy: the fallacy that every country can export more than it imports. A closer look at Germany's economic experience for most of its eurozone membership reveals that only trade surpluses were keeping Germany from economic collapse. Half of Germany's dismal economic growth of just 1.7% on average between 1999 and 2007 – the second lowest in the eurozone – was driven by trade surpluses. Those are, by definition, the deficits of someone else.

Far from being a growth engine, the reforms of the 2000s depressed German internal demand and thus imports, much the same as they do in Greece nowadays. They also depressed German loan demand and squeezed bank profits. At the time, the southern economies were the perfect solution for Germany's self-inflicted economic problems. German banks could expand their business by lending them the money to purchase the goods that Germans could no longer afford themselves. Manufacturers and banks were happy. Germany's beggar-thy-neighbour policies only worked because others pursued the exact opposite policies.

This is why the eurozone-wide adoption of austerity cannot work. Greek demand for German goods is small, but Spanish, Italian, French, Portuguese and Irish imports amounts to a large share of German exports. Germany's flawed policies for the eurozone are bound to backfire. Europe is in dire need of new lazy spendthrifts. Unfortunately, today nobody is willing to play that part.

Greece does need to implement reforms - expecially in the area of taxation - but I wonder more and more to what extent is what we have heard about "lazy, profligate Greeks" exaggerated to some extent.

http://m.guardian.co.uk/commentisfree/2 ... pe=article

I won’t post a link, seems that is frowned upon tho it would help raise the profile and Google rankings of both PA boards. Time some sense was displayed here instead of the constant “It was good enough in my Daddy’s day. . .” crap.

[Leftwinger]

I was deemed unfit to vote here? That's harsh.

[boxy]

Monk, whining about inter-forum politics in his own politics thread... nothing new to see here, just the same old annoying prat.

[boxy]

The article seems to imply that some countries (Greece, in this case) need to have a constant trade deficit in order for others to have a surplus... and that they should just keep borrowing more and more monies to fund their net consumption.

Sounds like the ultimate pyramid scheme, to me.

[Leftwinger]

You're implying that it's possible for every nation to sell more to every other nation than they get from them?

[boxy]

No I'm not.

Constant economic growth, on a global scale, is a myth. It will end sometime.

Waving the majic "free money" wand wont stop it.