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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

#221

Post by antman »

dandare wrote: post #39
cwyers wrote: post #23

Earlier quoted context omitted.

It doesn't seem like Tsipras is trying to get debt forgiveness paid for by the Germans, though. He wants to use the threat of default to force Greek's creditors to give them a haircut -- reduce principal or interest or both. That will reduce the amount of Greek debt repayment but it wouldn't increase the ability of Greece to incur more debtedness.

Are you sure? I thought the private creditors were already "haircutted", most of the Greek debts is to EU states and IMF.

Here is how the trick worked: Private creditors were haircutted and the CDS (credit default swaps) were activated for the largerst organizations that could afford having them in the first place.

Smaller creditors were stiffed. Foreign Goverment entities were exempt and foreign institutions (pension funds etc) could buy at 30-40% percent the defaulted bonds. Said foreign Governments had ofcourse the inside information that they would give the Greeks the money to repay in full price their debt. That was hidden from the other investors during the start of the program.

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

#222

Post by antman »

bibabo wrote: post #165
atmosx wrote: post #144

Earlier quoted context omitted.

Some counter-notes: 1. That's b*shit. It's Germany all way. The Fins and Dutch are easy to bend. 2. Germany has defaulted 3 times in the last 100 years. The Marshall plan was issued in 1948, otherwise now Germany would be worse than you date to imagine + wars damages to Greece were never paid. 3. Why don't you come live in Greece and find out. Try to deal with the state, then run a business WITHOUT tax-evading in thi…

1. The Baltic states, Poland, everyone except the southern countries (and I assume Spain with a thriving economy in 2014/2015 will join the club when unemployment drops) is on the same page. But as an excellent demagogue Tsipras knows he needs a simple enemy (Germany) to rally the mob. 2. Yes Germany defaulted, but did not make it it's modus operandi. Excellent that you've brought up the Marshall plan: The Marshall p…

The Marshall plan in Greece included a huge sum to buying weapons to fend off communism which were not useful and did not go to any Greek. There was no industrial development in Greece. That was not the case in Germany, it got the funds and more importantly the new technology for steel production that helped the Germany. Germans were needed as strong stopping force against the Communists. I dont know if at that early stages it benefited the German people.

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

#223

Post by nhaehnle »

mafribe wrote: post #217
nhaehnle wrote: post #200

Earlier quoted context omitted.

Competitiveness is a matter not just of value, but also of price, which is largely a matter of how much you pay your employees. Germany achieves its competitiveness by paying employees badly. That is a not a virtue, it's a vice. That's the key here, and again I encourage you to read and contemplate the post that I linked to, since it clarifies the issue.

Krugman's article like everything he writes is not insightful. Wages are no per-se too high or too low, but rather relative to wage levels of competitors and desirability of produced goods. Germany competes in a global market and in that global market Germany is a high-wage country. When it had higher averages wages, Germany lost its competitive edge. Here are more interesting questions: which are the average wages p…

Please, actually read the article. The numbers in the last diagram are relative unit labor costs. In other words, they are labor costs divided by the (market) value of the produced goods. This division incorporates everything you claim to be missing, which is why I feel confident in the claim that you either haven't read or haven't understood the article.

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

#224

Post by StavrosK »

jongraehl wrote: post #205
stavros wrote: post #190

Earlier quoted context omitted.

Everyone? Really? Because half of my friends are unemployed, and every single one has a university degree. And who starts building and then doesn't finish it because they don't want it to be taxed?

That's how it is in Mexico, too. They leave some unfinished faux-second-story attached to their building and never pay full property tax on the value of property-with-one-completed-story. Re: "who starts ..." why don't you search before you post?

Oh, is Mexico actually a rich country too, then?

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

#225

Post by marcamillion »

Can I say that it is quite refreshing to see a politician talking straight & frankly with the stakeholders publicly about what the issues are and the way forward no matter how bitter the medicine.

It is quite inspiring actually.

I feel like going to Greece to help.

I hope they follow through, and it works!

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

#226

Post by youngtaff »

bobcostas55 wrote: post #175
youngtaff wrote: post #28

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 was more about bailing out the German bankers who'd lent Greece more money than they should have. Considering the fact that private holders of Greek debt lost ~80% of their money in the default, I think this is a ridiculous thing to say.

Most of the bailout money has gone to Greece's external creditors:

"Since May 2010, Greece has been sent about $177 billion in European taxpayer money to keep the country afloat and ward off a bigger crisis that might threaten the entire currency union. Of that amount, a full two-thirds has gone to pay off bondholders and the troika."

http://www.nytimes.com/2012/05/30/business/global/athens-no-...

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

#227

Post by youngtaff »

cyphunk wrote: post #52
youngtaff wrote: post #28

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 -…

"Give the money to the people". The US did this in the form of tax credits for housing. Germany did something similar in the form of credits for car purchases. This form of giving goes directly toward an industry in need. I'm not sure how giving a blanket check helps. If the problem is consumer spending and IF this is an important driver for your economy it may have some impact but I think the problems the EU were fa…

But at the moment we end up subsidising the banks with our money so they can make more money at our expense

If you want to kickstart economies then expecting banks that are up shit creek due to their past lending and investment practices isn't the way to do it.

The way to do it is give people money to use as they wish and not pick favourite industries.

If people save the money it increases banks capital ratios, if they pay off debt it reduces the banks loan book, if they spend it it may increase inflation through consumer prices.

Some people might even use it as capital to create a new business.

Our current bank focused model of QE does none of these things.

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

#228

Post by NotableAlamode »

nhaehnle wrote: post #223
mafribe wrote: post #217

Earlier quoted context omitted.

Krugman's article like everything he writes is not insightful. Wages are no per-se too high or too low, but rather relative to wage levels of competitors and desirability of produced goods. Germany competes in a global market and in that global market Germany is a high-wage country. When it had higher averages wages, Germany lost its competitive edge. Here are more interesting questions: which are the average wages p…

Please, actually read the article. The numbers in the last diagram are relative unit labor costs. In other words, they are labor costs divided by the (market) value of the produced goods. This division incorporates everything you claim to be missing, which is why I feel confident in the claim that you either haven't read or haven't understood the article.

Krugman claims "Germany, [...] has had much too little wage growth" and offers no argument whatsoever to support this claim. It's pure stipulation!

Indeed, if he were to take his own figures seriously, he would have to argue that e.g. Portugal too does not have enough wage growth vis-a-vis Greece and Italy. But he keeps bashing Germany, as Krugman always does.

Anyway, why should relative unit labour cost be the only relevant measure? Other factors are also important, for example the cost of capital. The more advanced an economy is, the more important cost of capital. Since Greece does not produce capital intensive goods, it should have higher relative unit labor costs. Krugman should know these things ...

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

#229

Post by johnchristopher »

dbdr wrote: post #218
johnchristopher wrote: post #160

Earlier quoted context omitted.

Now that's interesting because the French newspapers didn't mention it at all. I wish we had a European press.

http://www.lemonde.fr/europe/article/2015/01/31/la-grece-se-...

Thank you, I stand corrected.

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

#230

Post by netcan »

panarky wrote: post #108
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…

Why do news reports keep saying that Greece got bailed out? Let's say you lend $100,000 to my startup. I have to pay you $10,000 a year until the loan is paid off. I hire a thief as a CEO who gives the $100,000 to his friends and family, and my startup has nothing to show for it. Now my startup is bankrupt. I'm working as a waiter in a restaurant to pay the rent. I can't make my annual payments to you, much less pay…

Analogies are tricky.

The fundamental difference in my opinion is that you can't shut down a government. So, this startup is still going and it's still borrowing to keep itself afloat. Makes it harder to say 'lets move on.'

I agree though, the EU should have a bankruptcy for states. The problem is that introducing that in crisis time raises borrowing costs. France, Italy, and other countries would suffer a lot of immediate pain.

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