Greece • Hacker News Board

Re: Greece

#81

Post by ubernostrum » Sun, Jul 05, 2015, 1:42 AM UTC

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?

"Hey, these austerity measures are tanking the Greek economy even harder, making it actually impossible for them to survive without more loans... you know what, I think we should force them to do even more of it in order to fix things!"

As the wise man says: doing the same thing over and over, and expecting a different result, is insanity.

Re: Greece

#82

Post by laurencerowe » Sun, Jul 05, 2015, 1:45 AM UTC

return0 wrote: post #52

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.

Actually there have always been subsidies all across europe, but these are discussed at the EU level and are not related to the euro.

These EU regional aid subsidies are too insubstantial to counteract the huge imbalance of payments between the core and periphery. The whole EU budget is only 1% of GDP and half of that goes on farm subsidies.

Re: Greece

#83

Post by icebraining » Sun, Jul 05, 2015, 1:46 AM UTC

telepheron wrote: post #48

rosser wrote: post #40

Earlier quoted context omitted.

If Greece's creditors lent money to the country while knowing of its government's misrepresentations, then whose fault is that again?

Who says the creditors were fully aware of the government's misrepresentations? Those misrepresentations were discovered when the Troika started to investigate Greece's financial state.

News articles from back in 2003 openly said that the dealing Greece had with Goldman-Sachs were a way of playing with the numbers to present an "acceptable" deficit. It wasn't hidden.

Also, from 2004, long before any Troka: "Greece admits fudging euro entry"

"Katinka Barysch, chief economist at the Centre for European Reform, said the announcement would not be a surprise for Brussels insiders.

"Quite a few member states did something similar because of the political imperative to join the euro as soon as possible. Greece has just gone a bit further," she said."

http://news.bbc.co.uk/2/hi/business/4012869.stm

The idea that Greece simply fooled everyone is nothing more than propaganda.

Re: Greece

#84

Post by tormeh » Sun, Jul 05, 2015, 1:49 AM UTC

rosser wrote: post #58

telepheron wrote: post #48

Earlier quoted context omitted.

Who says the creditors were fully aware of the government's misrepresentations? Those misrepresentations were discovered when the Troika started to investigate Greece's financial state.

When you're lending out billions of dollars , you don't take the debtor's statements at face value. You do very thorough due diligence, and employ very capable people to do it for you. There is no excuse for Deutsche Bank, et al , not to have known exactly how tenuous the strength and solvency of the Greek economy were. The notion that no-one knew the Greek government was lying about the state of their economy until…

Just a heads-up that the concept that the creditors must accept risk is a very anglo-saxon perspective. The German view is that debts are to be paid back, period. If you don't pay them back you're a morally deficient scoundrel. If you're ever bankrupt then the legal system will permanently brand you. German economics is a mix of Austrian school economics and strict morals.

It doesn't excuse the largely international banks a la Deutsche, but it does explain the Germanic outrage.

Re: Greece

#85

Post by zzleeper » Sun, Jul 05, 2015, 1:50 AM UTC

Jare wrote: post #30

skylan_q wrote: post #20

Earlier quoted context omitted.

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.

Why? They should have never been in the Euro. Any econ major knows that you can't have monetary union without either fiscal union or prudent governments.

Check this prescient article from 18 years ago by one of the best macro minds of recent years (Rudi Dornbusch):

https://www.foreignaffairs.com/articles/europe/1996-09-01/eu...

He talks about excluding Italy, Portugal, Greece, Spain, etc. So what happened? Standards got relaxed and they accepted e.g. Spain. And then other countries completely falsified their numbers and also got in due to that (Greece).

I don't even know why are they still thinking about keeping Greece in the Euro. They don't even have the internal political capital to make the deep reforms they need (labor mkt reforms, an IRS with bite, retirement at a much older age, etc). It would have been better for everyone on the first place to assume Greece will devalue, and to start planning for that.

They default, have maybe half a year of real pain, and then they get back on their feet albeit with financial autarky.

Re: Greece

#86

Post by fiatjaf » Sun, Jul 05, 2015, 1:51 AM UTC

For those not wanting to read, just look at this image (from the post): http://i.imgur.com/c7IYmaY.png

Re: Greece

#87

Post by icebraining » Sun, Jul 05, 2015, 1:53 AM UTC

reagency wrote: post #46

dnautics wrote: post #7

> "The world is full of unworthy and unscrupulous entities willing to take your money and call the transaction a “loan”. It always will be. That is why responsibility for, and the consequences of, extending credit badly must fall upon creditors, not debtors. There is one morality tale that says the debtor must repay, or she has sinned and must be punished. There is another morality tale that says the creditor must in…

That quote is silly, it completely justifies fraud. There has to be a balance.

The quote says "emphasize", not "ignore the other view". The balance is implicit.

Re: Greece

#88

Post by azernik » Sun, Jul 05, 2015, 1:59 AM UTC

narrator wrote: post #25

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 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.

The key difference here is that the banks have already been bailed out (when international institutions like the IMF and ECB took over the loans), and now those institutions are demanding that instead of the taxpayer picking up the bill, the Greek pensioner do so. Shame.

Re: Greece

#89

Post by elorant » Sun, Jul 05, 2015, 2:04 AM UTC

telepheron wrote: post #70

elorant wrote: post #62

Earlier quoted context omitted.

failed to implement the necessary changes Greek here. This is an understatement. While I’ve mentioned in other posts that our economy is faulty, arguing that we didn’t do anything to fix it is awfully wrong. We did a lot. We managed to move from a 14% deficit to a 1% surplus in just four years. Four. Fucking. Years. No other country in the developed world has done such a feat in such a short time. The effect of that…

That same report says that failure of the economy to recover is caused by the failure of the government to implement the necessary changes, worsened by the current government during the past 5 months.

That’s one way to put it. The other is that besides the government IMF fucked up too by setting unrealistic goals, like a 4% surplus by 2016 which led Tsipras denying continuation of the program to avoid further damage to the economy (those goals were eventually reduced but it now seems too little too late). Everyone is looking for a scapegoat. The government is blaming ECB and the Germans, EU is blaming the government, and IMF is blaming everyone including Lagarde who can’t seem to get her head out of her ass. Then there is US who see what a clustefuck this whole situation is but can’t do anything but nagging the Germans to become a bit more flexible and in order to put some pressure on them decided to make the report public just when Tsipras abandoned negotiations.

There is a Greek proverb saying that when too many roosters sign the dawn comes late.

Re: Greece

#90

Post by andmarios » Sun, Jul 05, 2015, 2:09 AM UTC

telepheron wrote: post #70

elorant wrote: post #62

Earlier quoted context omitted.

failed to implement the necessary changes Greek here. This is an understatement. While I’ve mentioned in other posts that our economy is faulty, arguing that we didn’t do anything to fix it is awfully wrong. We did a lot. We managed to move from a 14% deficit to a 1% surplus in just four years. Four. Fucking. Years. No other country in the developed world has done such a feat in such a short time. The effect of that…

That same report says that failure of the economy to recover is caused by the failure of the government to implement the necessary changes, worsened by the current government during the past 5 months.

Well, IMF has to explain why it threw billions of dollars to an unsustainable debt.

But there are deeper issues too. What the creditors really want is to micromanage Greece while they do not understand our economy and culture. They want to change everything in a couple of years. Change takes time, you can't turn a Greek into a German or an American in 3 or 5 years.

In order to do this and protect their interests, they support the previous, crooked goverments. These people acted like lapdogs, signing everything the creditors threw at them, whilst implementing only what didn't touch their rich friends.

The creditors did not only got binding agreements through them but also protection. Siemens for example, the German conglomerate that accounts for a large percentage of Germany's GDP has spent over 2 billion euros (!) in bribery to Greek politicians and public servants. If this case ever reached the court, both our politicians would face jail and Siemens wouldn't be able to work with the European public sector again (think from traffic lights, to trains, hospitals, energy, etc). Thus the creditors prefer a goverment that looks like an obedient and honest goverment, whilst it only applies austerity measures for the weak and protect themselves.

Our new goverment seems genuinely interested to make things better, but it asks for the freedom to implement their own ideas in order to reach the targets set by our creditors and also a debt restructure so that our debt becomes sustainable.