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Open letter to German readers: What you were never told about Greece

syriza.net.gr

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Re: Open letter to German readers: What you were never told about Greece

#71

Post by junto »

If Greece was to finally capitulate to the markets and declare bankruptcy, how different is that to the 2001 Argentina default?

It seems crazy to me that banks are allowed to deal with corrupt inept politicians who accept debts that are not repayable on the behalf of a country's people. Countries should be allowed to declare themselves bankrupt and after should follow a period of distrust not unlike personal bankruptcy. As a result banks would think twice before lending to poor debtors. Or is this a completely niavie viewpoint? I'm not in any way an economist so I'm genuinely interested to hear people's thoughts

Re: Open letter to German readers: What you were never told about Greece

#72

Post by matt4077 »

beamatronic wrote: post #33
vijayboyapati wrote: post #20

This one sentence sums up what I think is the fundamental problem: "An insolvency problem was thus dealt with as if it were a case of illiquidity." That is, the problem isn't some ephemeral panic where people are temporarily unwilling to lend. The problem is there are massive capital losses that have yet to be acknowledged. The problem is that Euro politicians believe that by continuing to bankroll Greece they will s…

> "continuing to bankroll Greece" What are the EU treaty obligations in this regard? Is this still undecided? Is it a "corner case" that was never really spelled out how to handle it?

There are no obligations, just necessities. Without the bailout, Greece would have defaulted and (it was feared) the French/German/Spanish banks that had financed the Greek debt would have fallen as well.

Re: Open letter to German readers: What you were never told about Greece

#73

Post by teamhappy »

jacquesm wrote: post #61
teamhappy wrote: post #59

Most of you, dear Handesblatt readers, will have formed a preconception of what this article is about before you actually read it. [...] Prejudice was never a good guide, [...] How does he not hear himself? Also, "Handelsblatt" is missing a letter. Anyway ... I reject the premise of his letter. He seems to think the purpose of the money was to help the greek people, and offers a more productive way of doing so. That'…

> That's all fine, but I'm pretty sure the sole purpose of the money was to save the Euro. It actually hurt the Euro. What it did do is save/prop up some very large French and German banks. Nothing like gambling with other people's money to see if you can come out ahead and ask for a hand-out if your plan fails. http://www.bloomberg.com/news/articles/2011-06-05/german-ban... The cynic in me says that no single politi…

What I was trying to say is that most politicians at the time (this applies to the US as well, I guess) were willing do to almost anything to stop the collapse, even if that meant hurting the Euro in the long term. The (somewhat hypothetical) alternative could have been a lot worse.

Re: Open letter to German readers: What you were never told about Greece

#74

Post by sfk »

tomp wrote: post #65
teamhappy wrote: post #59

Most of you, dear Handesblatt readers, will have formed a preconception of what this article is about before you actually read it. [...] Prejudice was never a good guide, [...] How does he not hear himself? Also, "Handelsblatt" is missing a letter. Anyway ... I reject the premise of his letter. He seems to think the purpose of the money was to help the greek people, and offers a more productive way of doing so. That'…

> Germany is one of the riches countries on this planet. A lot of that riches comes from the fact that EUR is a common currency both of economically successful countries like Germany and of economically weak countries like Greece. That makes the currency artificially undervalued, which boosts German exports and hurts Greek imports, making Germany more competitive and Greece less competitive (longer comment: https://n…

This is utterly ridiculous. West Germany was FAR better off economically when the D-Mark was strong.

Re: Open letter to German readers: What you were never told about Greece

#75

Post by 3pt14159 »

quonn wrote: post #57
3pt14159 wrote: post #8

Sure. I agree that (morally) the EU shouldn't have bailed out Greece. Greece cooked its books and Greek debt holders at the time of the bail out were suffering the consequences of lending to a fiscally irresponsible state. That being said, the world was uncertain as to how much economic damage had yet to be done, and by shoring up Greece it assuaged investor confidence across the western world. Personally I think tha…

> populist clowns Calling a dissenting party clowns is not helpful. It's also wrong, since they argue their points well and their economics are backed by such people as Paul Krugman. Now you might disagree with him, but would you call him a clown, too?

Paul Krugman is overrated, and you're drastically simplifying to say he's backing their economics. I'm mostly calling them clowns for the disservice they do their own cause by calling debt repayment economic waterboarding.

Re: Open letter to German readers: What you were never told about Greece

#76

Post by jcfrei »

Tsirpas article is as shallow as it is boring. His statement "Greece's debt is currently unsustainable and will never be serviced" is a typical, bold, populist statement, twisting reality. Greece's debt would indeed be sustainable, if it wasn't for Tsipras' recent claims that they would rehire some recently laid of government workers and stop the privatization process. The debt is serviceable, it just isn't repayable. But that's no problem since the ECB can always take over these bad loans, once the Greece government has fulfilled all the requirements for reform. When he says in his last paragraph:

I understand that, behind your 'demand' that our government fulfills all of its 'contractual obligations' hides the fear that, if you let us Greeks some breathing space, we shall return to our bad, old ways.

Then this is exactly the reason why the debt needs to be retained. Tsipras has already proven with his recent actions that he's very tempted to return to the "bad, old ways" of Greece government spending. European solidarity means helping out equal partners in the union, it does not mean funding dysfunctional governments at the expense of others.

Re: Open letter to German readers: What you were never told about Greece

#77

Post by dpark »

cyphunk wrote: post #52
youngtaff wrote: post #28

The thing that seems to be often missed about the 'Greek bailout'is it wasn't about bailing out Greece, it was more about bailing out the German bankers who'd lent Greece more money than they should have. The Greek people were shafted by the EU, IMF etc. because they didn't want to see the German bankers take the pain. We see a similar problem with the current round of Quantitive Easing that the ECB are undertaking -…

"Give the money to the people". The US did this in the form of tax credits for housing. Germany did something similar in the form of credits for car purchases. This form of giving goes directly toward an industry in need. I'm not sure how giving a blanket check helps. If the problem is consumer spending and IF this is an important driver for your economy it may have some impact but I think the problems the EU were fa…

> I'm not sure how giving a blanket check helps.

It doesn't help at all. We did that in the US with George Bush's 2008 tax rebates. Getting a check was nice, but I'm pretty sure the economic boost was smaller than the cost to the government.

Re: Open letter to German readers: What you were never told about Greece

#78

Post by jahewson »

TheOtherHobbes wrote: post #47
vijayboyapati wrote: post #20

This one sentence sums up what I think is the fundamental problem: "An insolvency problem was thus dealt with as if it were a case of illiquidity." That is, the problem isn't some ephemeral panic where people are temporarily unwilling to lend. The problem is there are massive capital losses that have yet to be acknowledged. The problem is that Euro politicians believe that by continuing to bankroll Greece they will s…

Well, no. The fundamental problem is that Germany has been treating the rest of the EU as an expedient export market while refusing to allow equivalent imports, and at the same time aggressively insisting that countries in the EU should somehow magically not need debt... to continue buying from Germany. There's also the minor point that this is yet another excuse to indulge the usual neoliberal hatred of social spend…

Your statement about Germnay refusing to allow imports is manifestly false. The EU is a free trade area and its member states are not permitted to engage in such activities. The EU has its own courts to enforce such rules.

It's certainly true that Germany is a net exporter: this is because of their ability and competitiveness in engineering and technology, combined with the fact that Germans are not big consumers and prefer to save their money. It would be good for Europe as a whole if Germans spent more money on imports - but the idea that they are deliberately blocking imports is bogus.

Europe doesn't really have neoliberals, so I'm not sure what your point is there. If anything, Europe leans to the left.

If you want to find a country with a long history of ignoring debt, then look no further than Greece, which has defaulted over 20 times. It is a country in deep need of structural reforms in order to have a viable economy. Yet the reforms haven't happened, due to corruption, cronyism and general foot-dragging. This is the real problem and debt-reduction isn't going to solve it.

Re: Open letter to German readers: What you were never told about Greece

#79

Post by repsilat »

guelo wrote: post #35
dandare wrote: post #30

Earlier quoted context omitted.

While being miserable they are better of than let's say Slovaks who paid 660 mil Euro to bail out Greece. Think about it, they are not really living in poverty, they just lost the luxury standard they were used to.

Greece's GDP per capita has dropped below Slovenia's.

Slovaks are from Slovakia. (Greece also has a lower GDP/PPP per capita than Slovakia, though Greece's GDP is much higher in nominal terms.)

Re: Open letter to German readers: What you were never told about Greece

#80

Post by MrDosu »

mhd wrote: post #53
seliopou wrote: post #7

Earlier quoted context omitted.

No politician ever writes their own Op-Eds, for any publication. That's what their staff, freelance ghostwriters, and political think tanks are there for.

I doubt that every country works on the same political scale as the US…

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