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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

#131

Post by atmosx »

john_b wrote: post #67
guelo wrote: post #50

Earlier quoted context omitted.

What I don't understand about this type of logic is the refusal to acknowledge the damage being done by the forced depression. It's like a 19th century leech therapy, keep sucking out blood until they get better. If Greece's economy is allowed to recover everybody will be better off, the banks, the politics, the people living in Greece and even the German taxpayer.

> "forced depression" Nothing about Greece's current situation was forced on them. Sure, lots of politicking went on and the current situation was definitely engineered to benefit others, but Greece was effectively bankrupt and in default prior to the bailout. You just can't tolerate the level of corruption [1], tax avoidance, and union greed that Greece tolerated for so long. A normal sovereign default would have be…

Greece elected Papandreou who is to be largely to blame for initiating this regime. However, I don't agree that was not forced upon Greece... Greece was exploited from day one[1].

[1] https://anestis.quora.com/Links-to-credible-sources-about-Gr...

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

#132

Post by nhaehnle »

mathattack wrote: post #120
nhaehnle wrote: post #91

Earlier quoted context omitted.

Not quite. If a bank is solvent but illiquid, they can get a loan from the central bank. This is the central bank's "lender of last resort" function. So no, a good bank cannot be put under by a bank run. We will probably never be able to say to which extent the big banks at the time of the financial crisis were still good banks. The problem there was that banks had a massive amount of assets that were indirect (i.e.…

In theory that's the central bank's job. 2 issues, though... 1 - It can be hard to tell the difference between solvency and liquidity. What's a derivative of an MBS really worth? Or a CDO that's made off of other CDOs that are trading at an undetermined liquidity discount? Or a unique plot of real estate? 2 - The bailout decisions are often political, as well as based on imperfect reads of fundamentals. Yes, the FDIC…

1 & 2 basically elaborates on what I said ;)

And no, FDIC protection intentionally protects deposits at bad banks. This is not an accident. Trying to put the burden of evaluating what a bad bank is onto regular people is not going to end well, so you guarantee deposits at all banks, full stop.

Besides: Deposit insurance for deposits at good banks is pretty pointless, don't you think? It would never be used by definition.

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

#133

Post by phkahler »

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…

>> That being said, Greece can afford to pay back its debts. The current debt to GDP of Greece is 175%.

Not relevant. The only way Greece can pay back the debt is to have a trade surplus - more money coming in than going out. End of story. GDP is an interesting number but money circulating within the Greek economy increases GDP without helping the debt in the slightest. OK, taxes on the circulating money can be used to pay the debt, but if they took 100 percent of the GDP they still could not repay the debt.

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

#134

Post by at-fates-hands »

tobias3 wrote: post #19
bagosm wrote: post #3

What isn't addressed in this letter and most people don't realize is that the Greek debt as an absolute number isn't that big. The real problem is that Greece needs more money to continue operation than it produces, and this fact hasn't changed nor will in the near future. Effectively this makes Greece a black hole for incoming money where incoming money have no actual benefit for anyone other than just keep a near-c…

Actually greece has a primary budget surplus, so at this point they are paying back the "loans", the problem is that they are miserable while doing so. If people are unemployed you are squandering resources.

As I understand it, they converted their currency to the Euro, which means unlike the US who can simply print more money to get out of a bad economic situation, the Greeks can't.

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

#135

Post by rwissmann »

bildung wrote: post #93
jacquesm wrote: post #63

Earlier quoted context omitted.

> while refusing to allow equivalent imports That very much is in citation needed territory, please give at least one example of how Germany is refusing intra-European imports in any category. Free trade is one of the cornerstones of the EU, Germany imposing a tariff or blockading goods produced elsewhere in Europe would make some pretty fat headlines.

> > while refusing to allow equivalent imports > That very much is in citation needed territory, please give at least one example of how Germany is refusing intra-European imports in any category. (Not GP.) You are of course right that Germany has not created import tariffs or other direct and illegal options. OTOH the German government has implemented numerous actions that indirectly had wage-suppressing effects (wh…

Germany had anemic economic growth about 15-20 years ago. After hard political fighting these sort of reforms were enacted.

Competition is global. Greece is not just not competitive with Germany, but also with China, the US, Japan, Australia, ... . That is the real problem.

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

#136

Post by mysticllama »

brianwawok wrote: post #107
mysticllama wrote: post #16

A CNN article from 2010 referenced 2008 government documents that said "6 in 10 Greeks don't pay income taxes" source: http://www.cnn.com/2010/WORLD/europe/12/31/greece.taxes/ I don't know what the rate of tax evasion is in other western countries, but I'm willing to wager the situation in Greece is dramatically worse. I remember reading a NYT article from the same year that provided further insight: Various studies,…

Here is something that maybe I am not understanding.. but saying that 6/10 greeks pay no income tax does not tell us how much tax evasion there is, right? From what I can google: http://www.taxpolicycenter.org/taxtopics/federal-taxes-house... 43% of Americans do not pay federal income tax (and some % of those get a net gain of federal income tax). Sure 60% is > 40%... but that could be due to a ratio of more people r…

saying that 6/10 greeks pay no income tax does not tell us how much tax evasion there is, right?

You're right, the 6 in 10 figure seems rather misleading. Those people shouldn't be characterized as tax evaders as I suggested. That said, it probably points to an issue of not enough tax contributors.

The numbers for America are interesting, I wouldn't have guessed the rates were that high.

Anyway, as far as tax evasion goes, I wonder how much a lack of enforcement allows well compensated workers to get away with claiming they're below the tax exempt mark.

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

#137

Post by atmosx »

bostich wrote: post #54

I am German and have had a very negative opinion of Tsipras. He makes some very good points in this letter and his view seems to be consistent. I can understand his position and my opinion of him has improved a bit after reading the letter. Nevertheless I see no solution, only 3 possible bad outcomes: 1. Europe loans more money to Greece and we can be pretty certain that they can't pay it back. 2. Europe gifts money…

As a German, how do you feel about 3 April 1948[1]?

[1] http://en.wikipedia.org/wiki/Marshall_Plan

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

#138

Post by nhaehnle »

notahacker wrote: post #99
jacquesm wrote: post #58

Earlier quoted context omitted.

Greece may have cooked the books but the rest of the EU is complicit in not doing their due-diligence in their haste to include Greece in their attempts to declare 'largest economy in the world'. It was a stupid pissing-match and the EU definitely carries a fair chunk of the blame here.

Absolutely. The project was doomed from the start, and the ECB and it's fondness for excessively tight monetary policy (given the situation) and utter refusal to consider the sort of debt-reduction-through-monetary-expansion any sane national government would consider even when faced with widespread deflation is a bigger deadweight on Euro area economic growth than Greece (which for all its staggering fiscal ineptitu…

To be fair, the ECB has largely come around. They're even going to do a form of quantitative easing now. Unfortunately, monetary policy cannot do very much when the interest rates are essentially zero. You'd really need fiscal policy, and so far, the German elite[0] is pretty closed-minded about that.

[0] There are other countries that tend in this direction, but Germany is the real problem due to its power.

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

#139

Post by throwaway800 »

pvaldes wrote: post #64
bostich wrote: post #54

I am German and have had a very negative opinion of Tsipras. He makes some very good points in this letter and his view seems to be consistent. I can understand his position and my opinion of him has improved a bit after reading the letter. Nevertheless I see no solution, only 3 possible bad outcomes: 1. Europe loans more money to Greece and we can be pretty certain that they can't pay it back. 2. Europe gifts money…

> only 3 possible bad outcomes 4. All south European people stop buying german products until the end of the actual bullying. This is a no-no win for all. The fact that the german people are not the same as the german government can not be ignored. Germans are suffering also this trap, carefully placed by a few. People at the South were increasedly thinging that a percentage of the debt is simply faked by banksters a…

4b. Northern Europeans stop visiting and spending money in Athens, Rome, Algarve, Canary Islands, and buying Mediterranean produce until the end of Northern-sponsored dolce vita.

This cuts both ways, and the ultimate end is economic war and possibly real war.

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

#140

Post by Eleutheria »

panarky wrote: post #108
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…

Why do news reports keep saying that Greece got bailed out? Let's say you lend $100,000 to my startup. I have to pay you $10,000 a year until the loan is paid off. I hire a thief as a CEO who gives the $100,000 to his friends and family, and my startup has nothing to show for it. Now my startup is bankrupt. I'm working as a waiter in a restaurant to pay the rent. I can't make my annual payments to you, much less pay…

Then you hire a new CEO who writes emotional letters to the creditors so he can steal more money from new credits.

While you keep working your ass off washing dishes and prostituting your children.

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