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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

#161

Post by panarky »

macns wrote: post #154
Eleutheria wrote: post #140

Earlier quoted context omitted.

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.

But he already said he doesn't want more money. The latest, 7 billion euro loan was declined by Greece. It's all over the news

My point is that each of these "bailouts", like the latest $7 billion euro "loan", don't benefit any actual Greek people.

It's an ECB "loan" that goes from one ECB account directly to another ECB account as "payment" on debt. Exactly zero euros of these go to Greek people.

If I was Tsipras I'd decline these "loans" as well. They do nothing to help Greek people, and they just obscure who is really getting bailed out.

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

#162

Post by viccuad »

UweSchmidt wrote: post #105
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…

How about 4. Greece leaves the EU. There could still be favourable trade agreements and some currency stabilizing etc. so it's not the end of the world, but it would be a wakeup call for everyone to treat their finances a little more seriously. German yellow press also mentioned various social programs in Greece that can only be described as frivolous even by social state standards. It's harder to be sympathetic with…

> German yellow press also mentioned various social programs in Greece that can only be described as frivolous even by social state standards. It's harder to be sympathetic with the Greek cause if we're paying for higher welfare abroad than we enjoy ourselves.

You are free to move there.

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

#163

Post by tspareme »

notahacker wrote: post #146
tspareme wrote: post #106

Earlier quoted context omitted.

I guess you have to define what a solvent bank is. I don't think any bank can handle a sustained run given their liability duration mismatch. So I am not sure what do you mean that you can't create a panic. Its always possible to have runs just not very easily. The financial crisis showed that bank liabilities are really liabilities of the country that the bank incorporates in. So in case of Ireland, Greece, Iceland,…

I'd argue a solvent bank is one whose expected return on assets, adjusted for expected losses, is sufficient to ensure it can repay money lent to it at the discount window rate [for all plausible trajectories of the base interest rate over the lifetime of its outstanding assets] There's no logical reason why a central bank wouldn't lend to such a bank at the discount window even if some irrational hysteria caused its…

The issue is expected loss. No one knew what is the expected loss in a crisis. This is why some of the Lehman debt holders actually made money from the bankruptcy. This is why TARP actually made money. It is because there is a substantial difference in asset price while in crisis and not in crisis. The asset price is what is making the bank solvent.

Of course, the central bank (unless you are locked into a monetary union of course) can lend freely during a crisis. However, it must also be careful as to not trigger inflation or worse yet cause people to lose faith with your currency. There is also moral hazard as well but that's more of a soft issue.

The bigger issue is what happens if your bank liability is many times larger than your countries GDP. This was the case with Iceland or Britain. Then you can't print enough money to make your bank whole.

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

#164

Post by throwaway800 »

atmosx wrote: post #152
throwaway800 wrote: post #139

Earlier quoted context omitted.

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.

The Irish and the British are Northern Europeans? Because I'm not getting the feeling the majority in either of these countries would like to join the Germans (in any kind of game...).

Eurozone Northern Europeans

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

#165

Post by bibabo »

atmosx wrote: post #144
bibabo wrote: post #60

Some notes: 1. Greece is talking about Germany because it helps mobilize masses. Germany does not decide on it's on on this nor is the most agressive player. Most northern and eastern countries are more agressive in their opinion against Greece. But it helps to mobilize Greek masses with a simple enemy. 2. Greece has defaulted have a dozen times in modern times. This is the Greek way of doing things and will continue…

Some counter-notes: 1. That's b*shit. It's Germany all way. The Fins and Dutch are easy to bend. 2. Germany has defaulted 3 times in the last 100 years. The Marshall plan was issued in 1948, otherwise now Germany would be worse than you date to imagine + wars damages to Greece were never paid. 3. Why don't you come live in Greece and find out. Try to deal with the state, then run a business WITHOUT tax-evading in thi…

1. The Baltic states, Poland, everyone except the southern countries (and I assume Spain with a thriving economy in 2014/2015 will join the club when unemployment drops) is on the same page. But as an excellent demagogue Tsipras knows he needs a simple enemy (Germany) to rally the mob.

2. Yes Germany defaulted, but did not make it it's modus operandi.

Excellent that you've brought up the Marshall plan:

The Marshall plan was essentially the same as what the EU imposes on Greece: "The Marshall Plan required a lessening of interstate barriers, a dropping of many petty regulations constraining business, and encouraged increase productivity, labour union membership, and the adoption of modern business procedures." http://en.wikipedia.org/wiki/Marshall_Plan

Where it differed: Beside that the Marshall Plan required European countries (beside Germany e.g. France, Britain, essentially everyone else) to buy from US companies: "Much of the Marshall Plan aid would be used by the Europeans to buy manufactured goods and raw materials from the United States and Canada. [...] The Marshall Plan aid was mostly used for the purchase of goods from the United States" (Same source)

Last interesting tidbit from the Marshall plan "The first substantial aid went to Greece and Turkey in January 1947". (Same source)

Indeed Greece got nearly twice the money from the Marhsall plan per person compared to Germany.

(For comparision Germany got 1.5B, Greece 0.4B, UK 3.3B, France 2.3B)

2. On war damages: I agree they were not paid and I agree with you on moral grounds, but I'm not sure it is economically relevant. The billions from the EU and the (2015 Euro) Marshall plan did not help, so I would not assume paying war damages would put Greece in a different situation. Except perhaps this makes Germany (see 1) a nice enemy.

While we're at war damages, I don't think Greece has paid war damages for any of the wars it started over the last 2500 years. The invasion of Turkey, the baltic war or going back to the support of Alexander the Great - I wonder if Greece paid war damages to Iran for that. Or to Italy for the occupation and exploitation of Sicily (or the other colonies when Greece was an imperialistic colonial power house). So while I agree that Germany should have paid damages on moral grounds, this is a very slippery slope.

3. Tax cheaters always find moral explainations for their behaviour.

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

#167

Post by StavrosK »

dandare wrote: post #30
tobias3 wrote: post #19

Earlier quoted context omitted.

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.

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.

If by "luxury standard" you mean "being able to afford rent and have youth unemployment be less than 50%", then I agree.

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

#168

Post by notahacker »

nhaehnle wrote: post #138
notahacker wrote: post #99

Earlier quoted context omitted.

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.

Slowly coming around really isn't good enough; they really should have already started unusually aggressive forms of QE (like buying sovereign debt with a view to retiring it; and I'm not even suggesting specifically privileging the Greeks with this) rather than focusing on driving down corporate bond yields further and acting like they're worried about running out of Euros.

I'm not saying I'd expect an institution where economic puritanism is so pervasive they thought interest rate rises in 2011 were a good idea would rush to try that experiment. But I am saying that if ever there was a time to contemplate trying exceptional measures, it was probably last year...

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

#170

Post by bibabo »

dandare wrote: post #39
cwyers wrote: post #23

Earlier quoted context omitted.

It doesn't seem like Tsipras is trying to get debt forgiveness paid for by the Germans, though. He wants to use the threat of default to force Greek's creditors to give them a haircut -- reduce principal or interest or both. That will reduce the amount of Greek debt repayment but it wouldn't increase the ability of Greece to incur more debtedness.

Are you sure? I thought the private creditors were already "haircutted", most of the Greek debts is to EU states and IMF.

Greece got a debt cut around 140B already.
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