General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsThe stupidity of the Greek bailout
The deal with the devil that has been arranged between the Greek government and the EU is actually beyond stupid. It is going to consign the Greek people to a society that will not recover, much less prosper, for years, possibly decades to come.
The Greek government just agreed to huge cuts in government programs, throwing tens of thousands of public employees out of work. Social services are going to be slashed, and with there being no money for infrastructure, well, that will crumble as well. Furthermore, private sector wages are also going to be cut, and unemployment, already running quite high, will go even higher.
Nor will these measures bring about debt relief. With decreased income, and thus decreased consumption, tax revenue in Greece will also be in short supply. Which means that Greece is entering a vicious cycle of bailout, austerity, increased debt, leading back to bailout, austerity and more debt.
Let's take a look at what is in store for Greece, through the eyes of the "good" EU debtor nation, Portugal.
"The eurozone crisis has focused attention on debt-burdened Greece spiraling into decline. Meanwhile, Portugal is seen as the international creditors' poster-child for obediently slashing spending and welfare benefits.
Nevertheless, the Portuguese national debt continues to grow, and the country is mired in recession and soaring unemployment."
http://www.npr.org/2012/02/20/147158633/portugal-plays-by-the-rules-but-economy-slumps
Is this what's in store for the rest of Europe, or possibly even the US? Yes, debt is a bad thing for any country, but you don't wreck your country trying to repay that debt. Yet it looks like Portugal, and now Greece are going to be thrown on that sacrificial pyre. Sadly, we are heading in that direction, slowly but surely.
= new reply since forum marked as read
Highlight:
NoneDon't highlight anything
5 newestHighlight 5 most recent replies
Richardo
(38,391 posts)Tax collection is lax and tax evasion is a national pastime.
Scootaloo
(25,699 posts)This is punishing the poor for the crimes of the rich. Plain and simple.
CAPHAVOC
(1,138 posts)This is a bailout of the big Wall Street banks. Like Goldman. It is to avoid the triggering of unfunded CDS insurance. A32 trillion dollar scheme. Amazing how they pulled it off.
Scootaloo
(25,699 posts)MadHound
(34,179 posts)Restructure your tax laws, or go after the tax evaders, that's great. But then again, that means that the government would have to go after the elite, instead of taking the debt burden out of the ordinary peoples' hides.
TBF
(36,671 posts)The top 20% of Greece controls 40% of it's wealth - so if anyone is evading taxes it is the rich folk. Just want to be clear about WHO is evading the taxes - it's not the workers 'cuz they don't have money.
http://www.indexmundi.com/blog/index.php/2012/02/13/income-inequality-in-greece/
CAPHAVOC
(1,138 posts)TBF
(36,671 posts)who can do absolutely nothing about it. Well, they are doing something about it - they are resisting. And I wish them well in all respects and in all that entails.
CAPHAVOC
(1,138 posts)It may be time to vote for whomever can keep the scheme going the longest. It is like we are in a boat with 10 holes and one cork.
unblock
(56,198 posts)i don't disagree overall because one could certainly argue that 100 million euro is simply not enough and that the plan doesn't adequately deal with the remaining debt, and that certainly is the intent of the article.
but this is quite a write-off to just gloss over....
Javaman
(65,714 posts)Their economy will be permanently depressed.
They now will effectively become the workhouse of Europe.
They will make Europes cheap gewgaws as a way to "pay back" their "bailout".
This whole thing is a just a tragic comedy.
Europe borrows from Paul to Pay Peter. When Peter, borrowed from Paul earlier that same day.
They didn't just rearrange the deck chairs, they put them all in Greece, hoping no one will see.
hobbit709
(41,694 posts)working their asses off to stay permamently in debt to the company store.
TBF
(36,671 posts)edhopper
(37,370 posts)they know it won't work
http://edition.cnn.com/2012/02/20/business/greece-debt-report/?hpt=hp_t1
The 10-page debt sustainability analysis, distributed to eurozone officials last week but obtained by the Financial Times on Monday night, found that even under the most optimistic scenario, the austerity measures being imposed on Athens risk a recession so deep that Greece will not be able to climb out of the debt hole over the course of a new three-year, €170bn bail-out.
It warned that two of the new bail-out's main principles might be self-defeating. Forcing austerity on Greece could cause debt levels to rise by severely weakening the economy while its €200bn debt restructuring could prevent Greece from ever returning to the financial markets by scaring off future private investors.
Owlet
(1,248 posts)In any event, this is not a 'bailout' of Greece. As I understand it only something like 19% of whatever amount is finally set in place goes directly to the Greek government. This 'deal' is basically a debt destruction, which, if it did work (which it probably will not) would be a good thing. Below are the reasons it won't.
"The IMF has not yet stated what its contribution will be to Greece and will not, they tell us, until the middle of March so that we will not know until then the real size of the bailout. The much promoted $176Bn bailout may not be accurate if the IMF pulls back on their allocation.
The projections for the growth of Greece, even in the leaked document provided by Reuters, utilize assumptions that will not be met, which has been the case every time, each time, for the last two years so that fuzzy math is being touted once again and the new/new projections will, in my opinion, come nowhere close to the truth.
The IIF agreed to further cuts last night for private investors, which no one but they have agreed to, so that shortly we will see how many institutions go along with the scheme and how many will sue as a result of the forced haircut that cuts about 74% from Net Present Value. We will also see law suits in London concerning the $18Bn of Greek debt that is governed under British law which may have quite interesting results. The Troika’s projections rest upon a 95% participation by private investors and I think they are living in a dream state if this is their expectation. In a Reuter’s article this morning they report: "The 32 members of the IIF's larger creditors' committee had a least 44 billion in euros in residual holdings.” If this is correct then the IIF is only representing 12.2% of the Greek bondholders."
http://www.zerohedge.com/news/greece-tomorrow-has-arrived?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29
CAPHAVOC
(1,138 posts)If so then they may be allowed to default next month.
nolabels
(13,133 posts)Stock market soaring to new heights and bank-sters issuing more paper on unworkable loan deals. Wasn't that the same thing that happened in the U.S. back in 20's ?
Odin2005
(53,521 posts)If Greece defaults the Banksters will lose a lot of money.