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Greeks Reject Bailout Terms

nytimes.com

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Re: Greeks Reject Bailout Terms

#21

Post by fennecfoxen »

brianmcconnell wrote: post #6

The Greeks were getting a shitty deal, and knew they were getting a shitty deal. Good for them for decisively telling the Germans to get stuffed (who conveniently forget about their WWII related debts being forgiven). Iceland demonstrated that it's possible to say no to perpetual debt peonage and go on to do well. If Greece has to leave the Euro, so be it. The Euro made sense as the Deutschfranc, but that's about it.

The problem with Greece is that you can't just forgive its debts. Its deficit is still like 9-10% of GDP. Who's going to lend them money after a sovereign default? It's not lending anymore, it's donating. Heck, all they've been loaned so far is basically donations so that Europe could say to Eurozone members, "well don't anyone say we didn't try".

What Greece needs is a mix of debt forgiveness, market reform (labor market and otherwise) to unfreeze a sclerotic economy which is more about bribing the bureaucracy than actual competitiveness, and a measure of austerity (starting with a later retirement age, and going from there). They were starting to go down that road! They made real progress with economic growth during the recovery! But the reforms were unpopular and might be impossible to do with their internal politics, leading us to the current crisis.

So instead they're going to do the alternate version of hard-and-mean austerity by replacing euros with worthless drachmas and making everyone poorer (hope you don't owe money in Euros). Then they'll either rot for a while in stagnation before gradually getting their act together after all, or they'll turn to Vladimir Putin for bailouts from the great petro-state as long as they last (with all the relevant geopolitical consequences and "screw you Europe" strings attached).

Re: Greeks Reject Bailout Terms

#22

Post by skwirl »

dageshi wrote: post #4

Effectively a vote of confidence in the greek government. If they do decide to leave the euro then they now have the political cover for it.

Didn't the Greek government promise that voting "no" was the only way to STAY on the Euro? From what I have seen both sides were promising the same outcome, so the vote was all about who you believed more.

Re: Greeks Reject Bailout Terms

#23

Post by paskster »

I am astouned by all the comments, who say that "Greeks were getting a shitty deal" or that the bailout terms were somewhat "unfair".

Facts are: Greece had a spending deficit for several decades now. This spending deficit accumulated to such a big dept, that no investors were willing to lend greece any more money. 18 european countries transferred billions of euros in the last couple of years to greece, to help the country and the people. In return they had an agreement that greece would cut their spending. Greece never lived up to the agreements it made. In the last weeks 18 european countries offered greece another bailout, where greece would receive several bilions again. In return they asked greece to finally cut spendings.

Now greece voted against this bailout. There are a lot of people in europe (myself included, I am from Germany by the way) who are not willing to transfer further billions of euroes to greece, just so that a socialist party can fullfil its "promises" and increase their deficit.

Re: Greeks Reject Bailout Terms

#24

Post by tptacek »

spiralpolitik wrote: post #20
brianmcconnell wrote: post #6

The Greeks were getting a shitty deal, and knew they were getting a shitty deal. Good for them for decisively telling the Germans to get stuffed (who conveniently forget about their WWII related debts being forgiven). Iceland demonstrated that it's possible to say no to perpetual debt peonage and go on to do well. If Greece has to leave the Euro, so be it. The Euro made sense as the Deutschfranc, but that's about it.

By leaving the Euro Greece will have the opportunity to put their country back together without 20 years of crippling austerity. They still need to fix their broken tax system and keep spending with their means but they have a much better chance of doing this on their own terms rather than under the cosh of the Troika. If only other countries could be so brave.

What is the difference between "crippling austerity" and "keeping spending within their means"? Isn't the biggest financial problem in Greece the relative enormity of the public sector? Wouldn't fiscal reform basically amount to slashing entitlements and public sector employment?

Re: Greeks Reject Bailout Terms

#25

Post by quonn »

nailer wrote: post #13
tosseraccount wrote: post #8

Earlier quoted context omitted.

The uncollected tax receipts graphic is shocking: 89%. No wonder they can't afford their spending.

Greece needs to get their house in order: the stats on tax avoidance are huge. There was a greek restauranteur on the BBC earlier complaining that due to the ATM shutdown he couldn't pay his suppliers, even though he had the money, since they preferred cash. In the UK you wouldn't dare say that about your business on TV. However that's a generational change: Greece can't and won't be fast enough to do this and will n…

True, but let's keep in mind that they managed a primary surplus despite this huge tax avoidance. This actually should make everyone bullish on Greece: These are not insurmountable problems. I still think that ΣΥΡΙΖΑ is the first party ever that would be fully willing to implement the right reforms (e.g. collecting taxes, etc.) if - and only if - the EU gives Greece a future by restructuring debt. It makes me sad to observe that the so-called institutions let this opportunity pass for stupid reasons (As far as I can tell, the fear of the German/French parties of their electorate and the fear of the established parties in the 'periphery' of newcomers like Podemos). It was the best shot we had to make real progress in Greece, imho.

Re: Greeks Reject Bailout Terms

#26

Post by sktrdie »

I know I will be treated as an extreme futurist, but we live in this little tiny spec called Earth and we're all in this together. The idea that there are laws about environmental protection in one country and none in others, calls to the idea that we should just have a single unifying country called "world" and keep the current separation only for cultural reasons.

The EU was a step in this direction but it seems that yet again centralization of power ended up making things worst. So from one end I'm happy that Greece gets to go its own way and escape centralization that forced it into a shitty situation. On the other hand though, this breaks the dream I had of building a system which would allow better collaboration between nations, and most of all, better understanding of the real issues that we're facing as a species (overpopulation, climate change, food scarcity, etc..).

Re: Greeks Reject Bailout Terms

#27

Post by [deleted] »

brianmcconnell wrote: post #6

The Greeks were getting a shitty deal, and knew they were getting a shitty deal. Good for them for decisively telling the Germans to get stuffed (who conveniently forget about their WWII related debts being forgiven). Iceland demonstrated that it's possible to say no to perpetual debt peonage and go on to do well. If Greece has to leave the Euro, so be it. The Euro made sense as the Deutschfranc, but that's about it.

[deleted]

Re: Greeks Reject Bailout Terms

#28

Post by imaginenore »

tomp wrote: post #17
imaginenore wrote: post #5

I really hope EU doesn't propose any more bailouts / help to them until they sober up and go through the withdrawal and all the grief stages.

Greece doesn't actually need any more bailouts (at least, it didn't until last week). They run a primary budget surplus, so all they need from the EU & IMF is some kind of debt restructuring so they can stop all debt payments for a few years while they pass the necessary reforms and their economy recovers. They also need a guarantee that the banks are safe by the ECB to restore confidence, but that doesn't cost any m…

"They run a primary budget surplus" if you don't count the payments on all the loans.

Sorry, but if I borrow a million dollars, build some business that generates profits which are less than the payments on the loan, it's not a surplus. It's called default.

Re: Greeks Reject Bailout Terms

#29

Post by rjurney »

paskster wrote: post #23

I am astouned by all the comments, who say that "Greeks were getting a shitty deal" or that the bailout terms were somewhat "unfair". Facts are: Greece had a spending deficit for several decades now. This spending deficit accumulated to such a big dept, that no investors were willing to lend greece any more money. 18 european countries transferred billions of euros in the last couple of years to greece, to help the c…

Had their economy grown, they could have afforded the payments. This is the real problem, and the bailout doesn't fix it.

Re: Greeks Reject Bailout Terms

#30

Post by natrius »

fennecfoxen wrote: post #21
brianmcconnell wrote: post #6

The Greeks were getting a shitty deal, and knew they were getting a shitty deal. Good for them for decisively telling the Germans to get stuffed (who conveniently forget about their WWII related debts being forgiven). Iceland demonstrated that it's possible to say no to perpetual debt peonage and go on to do well. If Greece has to leave the Euro, so be it. The Euro made sense as the Deutschfranc, but that's about it.

The problem with Greece is that you can't just forgive its debts. Its deficit is still like 9-10% of GDP. Who's going to lend them money after a sovereign default? It's not lending anymore, it's donating. Heck, all they've been loaned so far is basically donations so that Europe could say to Eurozone members, "well don't anyone say we didn't try". What Greece needs is a mix of debt forgiveness, market reform (labor m…

"Its deficit is still like 9-10% of GDP."

This is very wrong. Greece has run primary surpluses in recent years. They will probably miss that goal this year, but not by 9-10% of GDP. Forgiving Greek debts would solve the problem.

http://mainlymacro.blogspot.com/2015/02/greece-and-primary-s...

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