121–130 of 249 posts
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,…
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…
The solvency problem is ongoing, even regardless of current debts.
Greece cannot raise more taxes. It's trying, but taxes are declining. A government system can't be reformed in a few years and achieve 40% savings without (a) causing mass unemployment and knock on effects, further reduction in tax base, etc and (b) massive reduction in government services, including those necessary for economic activity that is necessary in order to "put those resources to their highest value use" to borrow some vocabulary from the more free market side of the debate.
Think of the US' Detroit. Decline breeds decline. Once the Government cannot keep the roads or pay the cops people leave and tax declines further and on it goes.
I realize that Keynsian economics is unpopular here and I am pretty sympathetic to free market ideas myself. Greece is in a bing that we don't know how to solve. Unless creative destruction of Sovereign States is on the table (easy to say when you're far enough away) what real options other than inflation are there?
If Greece defaulted tomorrow, and all the banks and lenders took the loss without collapsing the financial system again, what then? Greece would not be able to pay salaries the following day without borrowing money.
I have the same reaction as I assume you do when I see Greeks demanding government jobs when that is what caused this. But, that doesn't mean "austerity" is working. We have seen pretty much no cases of countries rapidly slashing their spending and managing to stabilize their budgets. Inflation (AKA monetary easing, printing money..) is the way countries get out of these binds.
I genuinely like a lot of Austrian-inspired ideas for putting losses where they belong, and allowing market feedback to do its job. But nothing guarantees that a government will not run into insolvency at some point. At EU scale, its practically guaranteed once a decade (once every 300 years per country).
We still need to answer the question "What happens when a State is insolvent?" Printing money carries risks and costs, but it works. What else works?
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…
You should have gone with how we suck up the the US all the time; that would have been a way better put down. Given what went on in Greece over the last couple of years, I'd recommend you drop the nazi references for the time being.
The thing that seems to be often missed about the 'Greek bailout'is it wasn't about bailing out Greece, it was more about bailing out the German bankers who'd lent Greece more money than they should have. The Greek people were shafted by the EU, IMF etc. because they didn't want to see the German bankers take the pain. We see a similar problem with the current round of Quantitive Easing that the ECB are undertaking -…
It's perhaps prudent to distinguish between the German people and the German politicians. It's my feeling that the average German would have suggested NOT to extend large loans to Greece. It is the EU (and German, French, Italian and so on) politicians that believed that in the grand scheme of the Euro, it would be the best cause of action. The sad part is that the loans to Greece perhaps wasn't so much about Greece,…
Well you have to understand that what happened was an indirect financing of German-French private banks via Greece. Germany was never really interested into helping. They are just ripping a dead body with the permission of Greek corrupted political parties who ruled the country for ~40 years.
Earlier quoted context omitted.
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…
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…
The key here is that for everyone in the world, the trade surplus and deficit must sum to zero. So someone has to run a trade deficit if German/Japan/China wants to run a trade surplus. German now wants the entire eurozone to run a trade surplus which means someone else must run a even bigger trade deficit.
BTW, it is in theory possible for Greece to run a government budget surplus but a trade deficit. This would mean that the private sector is loading up on the debt. Even in this case, the private sector is really the banks which has to be backstopped by the government anyway. So bank debt is just another form of government debt.
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.
One of the first things he did was meet with officials from other EU countries, no? Concluding that he's not gonna do anything for the time being. Go figure.
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…
You (and many others) are doing again the same mistake: Everyone KNEW that the books were cooked. When Germany had to choose a pm for Greece after Papandreou's resignation, he choose the guy (Papademos) who acted as a bridge between Greece and Goldman Sachs in 2001. Do you that it is a coincidence? It's propaganda, politics to justify what was about to happen in Greece!
I'm not saying Greece had no fault. It sure as hell Greece has it's own false, but don't for a moment believe that at some point in time Germany (or other major EU partners) were deceived by a Greece.
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…
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.
The real problem with this argument is that they are too short-sighted. Germany cannot artificially reduce its competitiveness to appease other EU countries, because competition happens on a global stage and so the EU would simply lose out further to North America and Asia.
Your are correct that Germany should spend more on infrastructure.