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Greece

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Re: Greece

#21

Post by fungi »

telepheron wrote: post #11
msabalau wrote: post #6

The entire thing is worth reading, but the key take away: "Regulatory mistakes and agency issues within banks encouraged poor credit decisions. Spanish banks lent into overpriced real estate, and German banks lent to a state they knew to be weak. Current account imbalances within the Eurozone — persistent and unlikely to reverse without policy attention — implied as a matter of arithmetic that there would be loan flo…

So we just ignore the fact that the Greek government misrepresented their economic state, failed to implement the necessary changes and then puts up a completely bogus referendum?

there are three pre-crisis article in the first paragraph that are cited as evidence that it was no secret. creditors were (apparently) not blind to the fact.

Re: Greece

#22

Post by giggzy »

telepheron wrote: post #11
msabalau wrote: post #6

The entire thing is worth reading, but the key take away: "Regulatory mistakes and agency issues within banks encouraged poor credit decisions. Spanish banks lent into overpriced real estate, and German banks lent to a state they knew to be weak. Current account imbalances within the Eurozone — persistent and unlikely to reverse without policy attention — implied as a matter of arithmetic that there would be loan flo…

So we just ignore the fact that the Greek government misrepresented their economic state, failed to implement the necessary changes and then puts up a completely bogus referendum?

The creditors ( banks ) are part of "moral" game here too. If the Euro cannot handle Greek ( and Spanish , Italian, Portuguese , Irish ) default then members of the Euro must share the imbalance.

As an american tax payer it hurt to watch bank bailouts here. In europe I keep hearing countries names, but this is a bank bailout fundamentally.

Sticking the debt on national governments while also forcing austerity ( defacto shrinking of GDP ) leads to a lose:lose.

Re: Greece

#24

Post by mike_hearn »

DangerousPie wrote: post #17
telepheron wrote: post #11

Earlier quoted context omitted.

So we just ignore the fact that the Greek government misrepresented their economic state, failed to implement the necessary changes and then puts up a completely bogus referendum?

Yes, pretty much. The author's argument is that everybody knew that their economic state was misrepresented, so the banks should have never lend them money in the first place. The mismanagement leading up to the financial crises was of course the fault of the Greek government. However, the reforms that the EU has proposed/enforced since then seem to have been more about punishing the Greeks than about actually buildi…

The reforms are the only long term solution. They're reforms like, maybe Greeks should retire at the same age that other people in Europe do. Maybe hairdressing should not be considered a 'dangerous profession', thus unlocking various benefits. Maybe Greek train drivers should not be paid $130,000 a year to drive near-empty trains. Maybe Greece should be able to grow its own food instead of importing more than half of it.

Greece is hosed because, as the article points out, it is an incredibly screwed up and corrupt country. The EU is desperately trying to make it a few percent less screwed up, and mostly getting nowhere. Greece absolutely isn't hosed because of those awful European creditors who deserve to be punished for their naive belief that maybe Greece would improve.

I mean, just go take a look at the garbage that has been pouring out of Greece and ordinary Greek people about German in recent times. Allusions to Hitler seem to fall from their mouths every single day. The idea that maybe Germans should not be paying for Greeks is not fascism, yet they routinely act as if it is.

Greece has no real alternative but to adopt severe reforms and that means severe "austerity", whereby "austerity" of course what people mean is shrinking the Greek state to a size more appropriate to the size of its economy.

Re: Greece

#25

Post by narrator »

DangerousPie wrote: post #17
telepheron wrote: post #11

Earlier quoted context omitted.

So we just ignore the fact that the Greek government misrepresented their economic state, failed to implement the necessary changes and then puts up a completely bogus referendum?

Yes, pretty much. The author's argument is that everybody knew that their economic state was misrepresented, so the banks should have never lend them money in the first place. The mismanagement leading up to the financial crises was of course the fault of the Greek government. However, the reforms that the EU has proposed/enforced since then seem to have been more about punishing the Greeks than about actually buildi…

The derivatives that underwrote the debt made it all ok though. Same thing happened with the mortgage bubble. It's an easy way to turn a bunch of garbage into a bunch of AAA prime credit stuff. When the whole thing collapses, all the bankers get 100 cents on the dollar courtesy of central bank printing and sticking it to the taxpayer.

Re: Greece

#26

Post by mike_hearn »

lhl wrote: post #15

This is an interesting take on things w/ a lot of merit, but I think Vox actually summed it up better here w/ a short video and a longer article: http://www.vox.com/2015/6/30/8867939/greece-economic-crisis Until/unless the rich European countries are willing to subsidize the poorer countries, as a financial union, the Euro is just a complete non-starter since the fiscal policies these states need are so far apart.

The notion that a country like Greece needs a different currency or fiscal policy to Germany isn't really true. Ultimately whether they print New Drachma and hyperinflate themselves into poverty or whether they accept massive pay cuts/import drops doesn't make much difference - they are two roads that lead to the same outcome.

Greece could become competitive without leaving the Euro. However, it means actually telling people they're going to receive large and frequent pay cuts. As nobody likes doing that, easier to ignore the problem until the whole thing comes crashing down. Then when salaries are redenominated in ND and suddenly ND becomes worthless, it's not the bosses fault see - the boss didn't cut anyone's pay. It's just the darn currencies fault.

Psychological tricks aren't what Greece needs right now though.

Re: Greece

#27

Post by twobits »

The basic idea:

BMW wants to sell more cars to greeks. Greeks don't have enough money so they can't buy. Deutsche Bank (DB) gives "free money" in loans. (And of course DB knows that greece isn't exactly "strong" economically.) We are talking about a greek population that never ever had a loan before, while the prime minister talks about the "powerful (economically) greece". They also thought that the world "stock markedt" was some kind of chinese recipe. Greeks, with "free money", buy BMWs. BMW is happy. Profits. Eventually, of course, TSHTF.

And then, would you expect that?

THE PRIVATE DEBTS BECOME PUBLIC.

That means the bad loans of DB become the burden of all the taxpayers of europe. Germans pay, greeks pay (decimated basically, with ~-20+% GDP, +5x taxation, etc), italians pay, french pay, etc. The TAXPAYERS.

To put it simply:

BWM: Happy. DB: Happy. Europe's taxpayers: F*cked.

The billions that greece "got" as "help", it never saw. They went ~98% back to foreign creditors.

Basically:

The politicians (cue, under the table payments for Mrs. Merkel, Mr. Schauble, Mr. who-was-PM-of-greece-then), took money from all european taxpayers, and gave profits to BMW and DB. (With their cut.) Now, they sell a nationalistic "those southern states are lazy".

PS: It was german and french private banks, and german and french industries. It's just that DB was the biggest, and BMW is big and symbolic.

Re: Greece

#28

Post by return0 »

DangerousPie wrote: post #17
telepheron wrote: post #11

Earlier quoted context omitted.

So we just ignore the fact that the Greek government misrepresented their economic state, failed to implement the necessary changes and then puts up a completely bogus referendum?

Yes, pretty much. The author's argument is that everybody knew that their economic state was misrepresented, so the banks should have never lend them money in the first place. The mismanagement leading up to the financial crises was of course the fault of the Greek government. However, the reforms that the EU has proposed/enforced since then seem to have been more about punishing the Greeks than about actually buildi…

The reforms were not "punishing", they just were never implemented in full due to resistance from the people. Even today, the majority prefers a clash and chaos to reforms.

Re: Greece

#29

Post by DangerousPie »

mike_hearn wrote: post #24
DangerousPie wrote: post #17

Earlier quoted context omitted.

Yes, pretty much. The author's argument is that everybody knew that their economic state was misrepresented, so the banks should have never lend them money in the first place. The mismanagement leading up to the financial crises was of course the fault of the Greek government. However, the reforms that the EU has proposed/enforced since then seem to have been more about punishing the Greeks than about actually buildi…

The reforms are the only long term solution. They're reforms like, maybe Greeks should retire at the same age that other people in Europe do. Maybe hairdressing should not be considered a 'dangerous profession', thus unlocking various benefits. Maybe Greek train drivers should not be paid $130,000 a year to drive near-empty trains. Maybe Greece should be able to grow its own food instead of importing more than half o…

Sure, some of the austerity measures make sense. Tax evasion and the bloated public sector are a huge issue and need to be fixed.

But it has to happen in a way that doesn't completely destroy the economy in the process.

Re: Greece

#30

Post by Jare »

skylan_q wrote: post #20
telepheron wrote: post #11

Earlier quoted context omitted.

So we just ignore the fact that the Greek government misrepresented their economic state, failed to implement the necessary changes and then puts up a completely bogus referendum?

Forgiving all the debt to Greece causes a worldwide financial collapse. Greece's debt was restructured to be drawn out into longer payment terms at a lower interest rate and at a reduced principal to be fair to them and to prevent a financial collapse. It's containment. It's been 5 years of containment now, and it's working to some extent as nations within the eurozone are much less exposed to the greek situation tha…

It's working for everyone but the Greek. Blame them all you want, but we need a solution that works for everyone.
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