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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

#111

Post by leoc »

matt4077 wrote: post #72
beamatronic wrote: post #33

Earlier quoted context omitted.

> "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.

It's worse than simply "no obligations". EU and ECB bailouts of EU member states were specifically forbidden under the Treaty of Lisbon http://euwiki.org/TFEU#Article_123 http://euwiki.org/TFEU#Article_125 . Instead, not only did both the EU and the ECB prop up Greece's borrowing, they moved to block Greece's access to a normal IMF program, which would have involved losses for non-IMF creditors.

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

#112

Post by jklowden »

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'…

> if he actually believes he can control the fate of his country even so slightly, I'm afraid he's delusional

He's the elected leader of sovereign nation. If you don't think repudiating the debt is an option (good or bad), I'm afraid he's not the delusional one. If that's not "control" of the fate of the country, I don't know what is.

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

#113

Post by smacktoward »

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. We will do almost anything to keep it that way.

If the only practical effect of European union will be to enrich Germany at the expense of its neighbors, European union will fail, and rightly so.

> I appreciate that he needs to sell his own agency to his people, but if he actually believes he can control the fate of his country even so slightly, I'm afraid he's delusional.

Just a suggestion: before Germans start telling other people to get over the idea of having any control over their own affairs, it would probably be wise to reflect on how well that message went over the last two times they tried it.

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

#114

Post by jacquesm »

seszett wrote: post #87
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.

I'm really not sure how the accession of Greece in 1981 has anything to do with being the "largest economy in the world", and "the EU" today has little to do with the EEC at the time (especially since about 2/3 of the EU countries today were not part of the EEC then). Greece was among the first countries to join the EU (the fourth one if I count correctly) and at the time, the EU (actually, the EEC) was still rather…

Greece did not become part of the Euro zone in 1981 because at the time the Euro was a distant dream in the heads of some politicians and bankers.

Please refer to the introduction of the Euro, not Greece joining the EU, those two have absolutely nothing to do with each other. You can be part of the EU but not part of the Euro zone just fine.

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

#115

Post by Onoshobi »

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…

I spent a year living in Greece, and the impression that I got was similar to what you are saying.

Greeks felt abandoned by the Eurozone -- they expected a 2 way street, and felt cut loose when they needed a hand.

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

#116

Post by bildung »

seizethecheese wrote: post #110
yxhuvud wrote: post #89

Earlier quoted context omitted.

No, Germans are not more frugal than other people. The main issue behind lacklustre German consumption is that neither their wages nor their investment in infrastructure has kept pace with their productivity growth.

What's your source, your intuition? Germany is one of the highest savers in the Euro area; much higher than Greece. http://data.worldbank.org/indicator/NY.GNS.ICTR.ZS

If I understood GP right you both say the same: Being frugal means consuming less (= saving instead).

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

#117

Post by hga »

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…

Nit: in 2008 the US had both insolvency and liquidity problems. The former from the real estate bust, the latter from things like securitizing loans collateralized by said real estate, with the holders of and potential buyers for those securities just not being able to determine what they might actually be worth at the time.

So e.g. TARP was explicitly sold as program to buy up those securities, wait for the dust to settle, and then sell them for what they turned out to be worth (that that sales job was a lie is another matter).

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

#118

Post by JamesBarney »

bagosm wrote: post #29
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.

That's actually not true, you are referring to a very bad "cooking" that Samaras presented to Merkel at the fall of '14 which was proved to be too stupid to talk about ever again...

Actually that is true. He was referring to Greece having a budget surplus, not a plan. They missed their target surplus but still had a budget surplus for 2014 of near 2 billion euros.

http://www.wsj.com/articles/greece-misses-target-on-budget-s...

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

#119

Post by jahewson »

yxhuvud wrote: post #89
jahewson wrote: post #78

Earlier quoted context omitted.

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…

No, Germans are not more frugal than other people. The main issue behind lacklustre German consumption is that neither their wages nor their investment in infrastructure has kept pace with their productivity growth.

Wages and infrastructure are key factors, but they're not the complete story. Other countries have lower wages, yet import more per-capita.

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

#120

Post by mathattack »

nhaehnle wrote: post #91
mathattack wrote: post #42

Earlier quoted context omitted.

I agree with everything you say up to “panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works” In todays fractional banking system where banks only hold a fraction of liquid assets to cover their liabilities, a run on a good bank could still put it under. (Lehman, Bear and others were both illiquid and insolvent, but ru…

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 provides run protection from both bad banks and good. Protecting bad is the price of protecting the good.

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