Germans warns Greece: no cuts, no aid

[hack89]

Source: Reuters

Leading German politicians warned Greece on Tuesday that the country would not receive a cent more aid unless it fulfills all the conditions of its international bailout.

As Europe's largest economy, Germany has contributed the biggest share of the financial guarantees under Greece's bailout, which is paid out in installments on the condition that Athens meets specific savings goals.

Greece must push a new round of spending cuts through parliament next month to qualify for an 11.5 billion euros aid installment that it needs to avoid bankruptcy. The post-election deadlock has raised questions about whether that timeline can be met.

Read more: http://www.reuters.com/article/2012/05/08/us-europe-elections-germany-idUSBRE8470QQ20120508

---

I accept Greece's right to do what they think is in their best interest. I also understand the German taxpayers desire to put conditions on any money they give Greece.

This is going to be a bumpy ride for the next month or so.

[WingDinger]

1. When less western countries refuse austerity measures, they are on the fast trackto invasion/assault

[hack89]

3. Just who is going to assault them? nt

[WingDinger]

11. As in South America, sluffing off the IMF strictures gets you branded commies, or terrists.

Seeing room for profits in tamping down upstarts, the Bushes have land there in the region. We have military camps there. The talk is that the terrists are congregating in the region. Venezuela, honduras, Columbia etc. WE have not heard much about the S American spring. And yet, they went so far as to form a bank, to replace the IMF and their ghouls.

[closeupready]

15. The IMF, it has long been asserted, is a neo-colonialist

institution that has the (intended or otherwise) effect of keeping 'developing' countries from actually developing. It's an argument which is hard to argue against, in some respects.

[BlueCaliDem]

6. Whut? eom

[4th law of robotics]

14. Invasion by whom?

Collapse of their credit ratings sure.

But who is going to invade Europe?

[octothorpe]

171. Germany has a track record of doing that. :P

Although, I suspect times are a bit different now.

[marmar]

2. It's time for Greece to pull an Argentina.

nt

[hack89]

4. Invade the Falklands? nt

[marmar]

38. Well, that's one way to rid yourself of colonial parasites.

nt

[dmallind]

44. and replace them with slightly earlier parasaites

Or is Fernandez a native Argentinian name, let alone a Falklands one?

[octothorpe]

172. lol. <3

[TBF]

5. or an Iceland ...

[hack89]

9. Implement IMF austerity measures and raises taxes in exchange for billions of dollars? nt

[TBF]

12. Maybe read this interview with Iceland president Ólafur Ragnar -

Do you look at Greece and wonder if they should be learning from the Icelandic model?

I have been very hesitant and reluctant to pass judgment on what other countries should do. I saw many misleading judgments made by people in other countries with respect to Iceland in recent years that I don’t think it is wise or fair for me to tell other countries what they should do.

But I think it is our obligation in Iceland to give an open and honest description of our own experience, of the lessons we have leaned, and other people can draw their own conclusions. I have already mentioned that if you want to deal with this economic crisis, you must treat it not only as an economic challenge but also as a fundamental social, political, and even a judicial challenge.

On the judicial side, we appointed a special commission headed by a Supreme Court judge that issued a report in 9 volumes, we appointed the office of special prosecutors, we have enacted various legislation and laws that relate to the judicial and legal system.

A second lesson, interestingly enough, is in terms of our economic policies. We have, to some extent, gone against the prevailing economic orthodoxies of the American, European, and IMF model in the last 30 years. This has even been recognized by the IMF leadership.

As you know, the IMF program finished last year, and we organized a celebratory conference in October, where we said goodbye to the IMF program, and it was attended by Paul Krugman, and other prominent economists, as well as some of the leading officials of the IMF. And it was very interesting to hear them acknowledge that the IMF had probably learned more from this experience with Iceland than Iceland had learned from the IMF. It has made the IMF reconsider some of their orthodox stances on what should be the proper economic and financial response to a crisis on this nature.

Thirdly, we have, in our economic measures, tried to protect the lowest income sectors, we have to try and protect some of the elementary social and health services, and done more of that nature than has traditionally been done in dealing with such a crisis.

Read more: http://articles.businessinsider.com/2012-04-15/news/31335359_1_icelandic-financial-crisis-financial-challenge#ixzz1uIOfSesv

[4th law of robotics]

16. Greece =/= Iceland

Iceland was hit with a one time catastrophe.

Greece is finally suffering the effects of a decade long structural problem that they refuse to address: their desire to live like a high tax nation without paying high taxes.

If someone's house burns down as a result of a lightning strike the most sensible thing is to get them a new house and not make a bunch of conditions for them (other than perhaps installing a lightning rod).

If it collapses from rot because they haven't been taking care of it for decades it makes sense to get them a new home . . . with conditions that demand they change the way they take care of it.

Structural v. temporary. That's why you can't compare Iceland to Greece.

[TBF]

19. Right ...

Probably can't compare the US to Greece either ... "whose desire" indeed.

[4th law of robotics]

20. No, you can't compare the US to Greece either

not on this, not accurately.

For one we can print our own currency. For another we have a much healthier economy, even now, that is showing some growth. Theirs has been stagnant for a while.

[hack89]

22. So? He says they needed billions of dollars from the IMF and Europe and ...

they let their domestic banks collapse instead of a government rescue. They also had to implement austerity measures.

What does this have to do with Greece? Their problem is completely different - they have too much debt and are on the verge of bankruptcy. Iceland never had a sovereign debt problem - their debt ratio was much lower and they had enough funds on hand to service their debt. And Iceland implemented

So what lessons can Greece get from Iceland that helps them in their particular problem. Do they implement austerity measures like Iceland? Do they raise taxes like Iceland? Cut pension benefits like Iceland? Cut people's pay like Iceland?

Iceland did a great job handling the crisis and setting things straight. But the people suffered and still suffer to this day.

And another key difference is that the Icelandic government moved swiftly and openly to deal with the issue. Greece doesn't even have a government now - it is not certain the election winners have enough partners to form a government. Greek government is going to be weak and fragmented for a long time so where is the firm leadership going to come from?

[Thrill]

7. Germany running Europe Again

What was the point of creating EU again?

[closeupready]

23. This is a good point. If Germany wasn't prepared

to deal with tax scofflaw practices in Greece, then they shouldn't have voted to admit Greece into the EU before they fixed those essential problems, or else perhaps Germany should have never joined the EU in the first place.

But since they did join/helped found the EU, Greece IS their problem, the EU is a democracy, and Germany is going to have to find a way to work this out - fairly and democratically.

[Odin2005]

37. The EU is the German Empire without the Kaiser.

[tabasco]

66. Germany isn't running Europe, but it's funding Europe

and many German taxpayers have had enough.

[snappyturtle]

8. All I can say is it looks like the Germans needed to find

out the opinion of the Greek people before they offerred
monetary aid as should have TPTB in Greece. What a mess!

[hack89]

10. I suspect the Greek people wanted a lot of money with no conditions

which is hard to imagine ever happening.

[TBF]

13. Blame the workers ... nice

[4th law of robotics]

21. Workers? No. Voters? Absolutely

you get the government you vote for. They voted poorly.

You'd think they'd have more practice with the whole democracy thing.

[TBF]

24. Crazy talk ... nt

[4th law of robotics]

26. Deep stuff there

voters in a democracy are not responsible for their government or the greek government hasn't done a poor job? Which are you arguing against?

[TBF]

27. I'm arguing against your premise of supporting

authoritarian status-quo austerity positions which only benefit the rich in the country. I support PAME and KKE in Greece.

[4th law of robotics]

30. Which is it: status quo or austerity measures?

You can't have it both ways. The status quo is what got them in to this mess. Austerity would be a significant change, hence not status quo.

And how is it authoritarian to tell someone that they don't get any more of your money unless they start acting responsibly with it?

[TBF]

33. I will use simpler terms so you can understand -

No, the workers do not want to live under austerity conditions. No, they do not want to be slaves to a few rich folks. I think they made that very clear in their vote. You may not like it but that's what they've done.

[4th law of robotics]

39. "No, the workers do not want to live under austerity conditions."

No doubt.

But as the song goes "you can't always get what you want. . . "

I don't want to pay my rent or utility bills. I have to though if I want a home and electricity.

"No, they do not want to be slaves to a few rich folks."

Slaves being defined as people receiving money they haven't earned but being expected to not waste it.

"You may not like it but that's what they've done. "

I think it's stupid but that's their problem. When the whole situation collapses, meh those voters and workers will suffer for it. Not me.


What do you believe the solution is? Continue spending more money than they take in indefinitely?

They really have to crack down on tax cheats, raise taxes across the board and set retirement benefits that are more in line with the rest of Europe.

[TBF]

42. Solution - break away from EU and IMF

and I'm not just talking about Greece. Worldwide workers need to band together and let the several hundred folks who control most of the money that they are not going to take it anymore. Is is insidious, in my view, that so many live in poverty while the few at the top live in extreme luxury. Capitalism needs to go.

[hack89]

43. The solution is to build a new global economic system in a couple of months? OK. nt

[TBF]

45. Did I say a couple of months? Whatever. I think

we are both quite clear in our positions and of course they are from opposite ends of the spectrum.

[hack89]

49. So how do the Greeks get through the next year or so?

what ideas do you have that would keep them from bankruptcy and allow the workers to keep all their benefits?

[4th law of robotics]

46. So break away from the EU and IMF, but still recieve money from the EU and IMF

which is what they want.

[TBF]

48. More crazy talk - that's just dishonest.

At least own your pro-ownership views. The people of Greece have not said any such thing and in fact have rejected that premise with this election.

[hack89]

50. What exactly do the Greeks want? nt

[TBF]

51. The election results speak for themselves. nt

[hack89]

54. Did they vote in favor of specific policies

or was it a vote to punish the old government?

What platform did the winning party run on?

[TBF]

55. You can google as well as I can -

my opinion is that they went middle of the road with the social democrats. Still looking for a solution, basically, and hope these new parties can find a way to tax the wealthy and clean this up. That's my opinion just looking at the results. Do I think it's the best solution? Probably not for the workers - I would've preferred a victory for KKE because anything less than that is going to mean austerity for the folks who are already suffering.

[hack89]

57. Good luck to them - they will need it. nt

[muriel_volestrangler]

90. The most popular party was the centre-right pro-austerity New Democracy

2nd was Syriza, whom I guess you care calling the social democrats; 3rd was Pasok, the Greek member of your avatar's group, Socialist International - and also pro-austerity.

[4th law of robotics]

61. The election results say: we want our cake and to be able to eat it too

[TBF]

73. What can I say to that kind of right-wing

nonsense?

[4th law of robotics]

86. Neither right nor left; just math

you spend more than you have that will necessarily create a deficit.

You cannot do this forever.

[TBF]

91. But who pays for it? The leaders making those calls

or do we put it on the backs of the working class?

[4th law of robotics]

101. Who voted for those leaders?

You can't just label someone a "worker" and give them license to do whatever they want.

[TBF]

106. When folks don't have any real choices I can -

being able to vote doesn't always mean you have any real choice.

[4th law of robotics]

117. So the ruling elites didn't provide the "workers" with a suitable candidate

are you aware of how democracies function?

[TBF]

118. I'm aware of how capitalists function

and you are doing very nicely for your bosses.

[4th law of robotics]

119. Weak

[4th law of robotics]

87. Look, can I point something out for you that may help?

I've noticed on this thread you're long on accusations and rhetoric but short on facts and reason.


Maybe if you explained your position better rather than just labeling those with a better understanding of the situation "right wing" or "crazy" you'd have better luck.

[TBF]

92. What is it that you don't understand?

I know which side I'm on. And it's quite clear which side you're on. They aren't the same. If you think anything you say is going to convince me to make apologies for owners you've got another thing coming.

[4th law of robotics]

100. Being clear which side you are on is not the same as being clear why you are making an argument

facts would be helpful.

Like where is this money going to come from?

[TBF]

107. What money? I could care less about the predatory banks and their money. nt

[4th law of robotics]

116. Ah yes, default then?

Well that is a solution. Comes with consequences and I don't imagine the rest of the eurozone will be too happy.

[4th law of robotics]

63. A revision of the principles of basic mathematics

that clearly discriminate against the Greek people!

[4th law of robotics]

60. You're talking about breaking from the EU

they (the voters) want the bailout. Just not the conditions.

[TBF]

93. Where is your cite for that nonsense? nt

[4th law of robotics]

99. That they want free money with no consequences?

The last election how about.

[TBF]

108. That's your interpretation - not mine. nt

[4th law of robotics]

115. And what is your interpretation?

They don't want to pay off their debts themselves. Fine. They don't want the conditions for the emergency bailouts. Fine. What's the solution then?

[TBF]

121. I agree with the KKE in Greece -

the working folks need to continue to resist capitalism/imperialism and form their own socialist government. That is a long-term answer and probably not what you're looking for. My best guess is that the interim government, which will be largely social democrat in nature, will find some way to come to terms with Germany and they will try to impose some sort of continued austerity to pay back some of the money.

The question long-term is whether the people who most suffer under that model go towards KKE (communism) or towards Golden Dawn (fascism). Your guess is as good as mine on that.

[tama]

130. National socialism

Both parties you mention are anachronistic nationalist parties, Syriza is a coalition of more international tendencies of the radical left - from trotters to eco-socialists etc. dreaming of socialist EU.

Meanwhile Greek people are moving to countryside, making gardens and getting chickens etc, and anarchists are busy building community gardens, neighbourhood committees and basic social services, taking care of each other and kissing the state goodbuy.

[TBF]

133. I know -

And we'll see how it works out. My heart is with the community gardens, but we saw how well that worked with the Paris Commune. I hope they have a good security plan because I seriously doubt they are going to be left in peace. I'd love to be wrong.

[tama]

135. Necessity is the mother of invention

Greece is dependent from imported oil - for which it would need internationally accepted currency, but the Greek people still maintain relatively strong links to their agrarian roots - people in Athens visit their home villages regularly and as said, many are allready moving out from Athens. I've lived in Greece and know many Greeks, and the state has allready stopped functioning to great extent and Greek people are generally not very "statist" or "legalistic" but anarchists of heart - anarchism of theory and ideology is of secundary importance. Large extended families are still the most basic form of social cohesion.

As for comparisons with Paris Commune, Peak Oil etc. limits of growth make the crucial difference - and we are all in the same boat. What is happening is Greece is the beginning of the process of adaptation to post-growth and post-capitalism, and of course it's often painfull. Greeks get an early start for what will happen everywhere.

[TBF]

136. Do you have any suggestions for reading about what is happening there?

I have been looking at KKE's website but I think I know a total of one person who is Greek and that is just a "friend of a friend" who lives here in the states.

[tama]

137. No good suggestions, sorry nt

[JDPriestly]

68. Have you ever been to Greece?

I assure you that if Greece wants to make money it can. All it has to do is make tourism more expensive. That is what will happen. The Germans love to take vacations in Southern Europe especially in Greece. It's a fantastically beautiful country. I wouldn't worry about Greece. They might do better without EU membership.

[TBF]

76. That is how I see it as well -

but I don't think anyone from the Rush Limbaugh show is talking to Greece citizens or care at all about how they see their future. All they care about is their bankster friends. Typical 1% behavior ...

[tralala]

138. Who wants to have a tourism-dependent economy?

What an awful fate for a country. BLechh!

[The2ndWheel]

53. Secession

[cstanleytech]

98. You mean from the EU? Sure I suppose they could try it

but they need to be prepared for some of the potential consequences such as probably being unable to borrow any money for anything that they may need for a good 30 years or more at a guess not to mention the impact it may have on the prices for anything they have to import.

[aquart]

132. How about aggressively going after wealthy tax evaders?

Who get away with murder in Greece?

[sendero]

154. Aww...

... the same old song from the defenders of the banksters.

Tell you what, the Greek people DO have a choice - they can repudiate the debt and everyone that owes them can do what they are supposed to to - lick their wounds for loaning money when they should not have. And Greece can begin to rebuild, something they cannot do under the thumb of their creditors.

Or, they can play "austerity" and have a guaranteed DEPRESSION for at least a decade and easily more.

Sure, it is not an easy situation, neither choice is good. But all things considered I'd tell the BANKSTERS to go to hell and that is exactly what I think they are going to do.

[JDPriestly]

65. The austerity was imposed from without.

http://www.nytimes.com/2011/10/29/world/europe/greeks-direct-anger-at-germany-and-european-union.html?_r=1&pagewanted=all

It takes two to make debt happen: a lender and a borrower.

They are equally responsible for insuring that the loan can be repaid.

When you loan money, you should think about whether the borrower is going to be able to pay it back. If they can't you should consider it a gift because that is what it will be and that is what it really is.

There is no loan without a lender. The lender should consider carefully whether to lend just as the borrower should consider carefully whether to borrow.

Whoever lent the money to Greece did not realistically analyze the business plan that Greece prepared (or should have been required to prepare) in order to obtain the loan.

[4th law of robotics]

70. No, austerity hasn't been imposed on anyone

it is a condition for an outside bailout.

They're free to turn it down and find the money somewhere else.

[hack89]

25. So what conditions did the Greek people say they were willing to accept?

not a question of blame - if I were them, I would not want another country having too much influence over my country. But how choosy can beggars be?

[snappyturtle]

29. I never understood the "people" were formally

in the settlement process. And I agree with your influence remark.
Like I said, it's a mess.

What get's me is that the people being held up for repayment are
not necessarily the ones responsible for the mess.

[TBF]

31. Why should the people accept any "conditions"

from the EU? They have given you their answer - they have voted the bastards out. Now they are attempting to re-take their country. So sorry they are not willing to be slaves. I know how that sucks for management.

[hack89]

34. Why should the countries of the EU give them any money?

Greece needs money. Where are they going to get it from?

[TBF]

40. It remains to be seen

exactly what kind of government is going to rise in Greece as there is likely to be another election in a month. But I agree with KKE that they've got to break ties with the EU and IMF.

From KKE -

The CC calls on the members of the party, KNE, the friends and supporters of the party, the people who work alongside the party who have fought proudly in the struggles and the electoral battle, to be beside the working people and defend their rights and just cause consistently. The role and the responsibilities of the party increase. IT IS THE IRREPLACEABLE AND DECISIVE FORCE FOR THE PEOPLES MOVEMENT THAT WILL STRUGGLE, COUNTERATTACK AND HAVE THE PROSPECT of the conquest of the workers’ and people’s power and economy, for the disengagement from the EU and the unilateral cancellation of the debt, the socialization of the means of production, the productive cooperatives of the people , the nationwide planning for the utilization of the development potential of the country with workers’ and people’s control from the bottom up.

http://inter.kke.gr/News/news2012/2012-05-08-cc-statement

[4th law of robotics]

32. It seems like they agreed to continue doing things exactly as they had

but this time it would work out. Somehow.

[TBF]

56. That I sort of agree with -

for all practical purposes I think that is how it will work with the parties they've given a majority to. I don't think they went far enough. I guess we'll see what happens in the next month.

[4th law of robotics]

17. How rude of the Germans to offer all this money without first

getting permission from the Greeks.

Major faux paus. I know when that if I went to the bank seeking out an emergency loan I would be furious if they asked what it was for, why I needed it, will it ever be paid back, etc. I would demand they cease talking and just give me the money without conditions.

[JackRiddler]

79. Germans are offering no money to Greece.

The German payments bail out bondholders.

Greece is merely a transit point for a net transfer of money from German taxpayers to bondholders, meaning (in large part) German banks. The net payment will be from Greece and from German taxpayers to bondholders.

Furthermore, your metaphors of personal finances bear no relation whatsoever to national economies. First fallacy that needs to go out the window.

[4th law of robotics]

88. Germans are offering up money to pay off the debts Greece eagerly acquired

over many years.

So yeah, that's going to Greece.

And simply waving your hand and saying "irrelevant" doesn't make it so.

[magic59]

18. Greece will simply nationalize their banks

This should be done all over the world, take the future of its citizens out of the banksters hands and back to national control, like State owned banks in the US. Take greed and corruption out of the equation and you have a stable economy that doesn't need to be bailed out every 10/20 years. Greece will also say bye bye to the Euro and the Euro banksters.

[hack89]

28. "Take greed and corruption out of the equation" by putting politicians in charge? In Greece?

in any case, the Greek banking system is so dependent on transfusions of government money that for all practical purposes they are nationalized.

[muriel_volestrangler]

35. Saying "bye bye to the Euro" is the tricky stage

It means setting up a currency from scratch, so fast that people and corporations cannot move their money out of the country, in Euros. It would mean closing both physical and electronic borders to flows of Euros; and huge amounts of regulations on what can and can't be done with the old currency in terms of paying people, trading with non-Greek parties, and so on.

[hack89]

41. Way too late for that

the currency outflow from Greek banks is massive and accelerating.

The year is not over yet, and already Greece's banks have lost €36.7 billion of their deposit base in 2011, and a whopping €64.6 billion since the beginning of 2010, which is down from €233 billion to €173 billion in under two years. In October another €3.5 billion was withdrawn from Greek banks and likely either redeposited somewhere deep in the heart of Switzerland, or converted to various inert metals and buried somewhere in the back yard. The good news: the outflow is just over half of October's record €6.8 billion. The bad news: at this rate of outflows, Greek banks will have zero deposits in around 4 years.

http://www.zerohedge.com/news/greece-bank-run-shows-no-sign-stopping-deposit-outflows-continue-november

He means that the outflow of funds from Greek bank accounts has been accelerating rapidly. At the start of 2010, savings and time deposits held by private households in Greece totalled €237.7 billion -- by the end of 2011, they had fallen by €49 billion. Since then, the decline has been gaining momentum. Savings fell by a further €5.4 billion in September and by an estimated €8.5 billion in October -- the biggest monthly outflow of funds since the start of the debt crisis in late 2009.

http://www.spiegel.de/international/europe/0,1518,802051,00.html

[Art_from_Ark]

155. They don't need to set up a currency from scratch

Modern Greece had a currency for 170 years called the "drachma", which had also been used in ancient times. And Greece is the where the world's first coinage originated. They might have to work out the details about converting from euros back into the old drachmas, but they wouldn't have to start from scratch.

[muriel_volestrangler]

156. *Had*. It's no longer legal currency there.

It's not a question of whether they can find a suitable name; they'll have to get all electronic currency handling to switch over (when they went from drachmas to euros, they had many months notice to allow them to prepare, and test software before the switch). They'll have to print and mint all the new currency for circulation - unless the Greek government has been secretly storing the old coins just in case (given that the metal in them has a value, I highly doubt they have done that). "The details" are the problem:

European treaties label the euro ‘‘irrevocable’’ and provide no legal procedure for a country to leave or be thrown out. A December 2009 study by the ECB’s legal department deemed an ouster or departure ‘‘so challenging, conceptually, legally and practically, that its likelihood is close to zero.’’

http://www.bloomberg.com/news/2012-05-09/greek-euro-exit-talk-seeps-into-public-as-officials-air-doubts.html

They'll have to write all the laws about currency import and export, cross-border ownership, and so on. The nearest equivalent I can think of is the break-up of the Soviet Union, but I think the Greeks want to have a better-functioning economy than the ex-Soviet states did at the end of the break-up.

[Art_from_Ark]

157. The thing is, Greece had a viable currency before the euro

It's not like the former Soviet republics that actually did have to start from scratch. Or the former states of Yugoslavia, for that matter. Greece had a viable currency, and no doubt the country made contingency plans in case the euro did not work out.

[muriel_volestrangler]

158. Again, *had*.

That's gone now. They need to create a new one, and I don't think that's ever been done with an economy as advanced as Greece's is now. Sure, they can look up the old laws they had, and ways of running their own independent central bank, but that wasn't designed for a currency which they want to dramatically devalue against the euro. And there was no system for converting the country to the drachma. The drachma basically came in with independence from Turkey, when the economy was far different.

The old drachma was a stable currency when they converted. The new one will be unstable, and everyone in Greece, or dealing with Greece, will be looking for ways to not use it until the amount it's going to be devalued becomes clear. If the euro crashes too (rather as the Russian rouble crashed in the Soviet break-up), then it could make that part simpler, though that would mean an even worse devaluation against the dollar - and thus things like the price of oil. But in either case, it'll be far harder to arrange than joining the euro was.

There are no "contingency plans in case the euro did not work out". That's what the ECB was saying in the report. It says "a Member State’s exit from EMU, without a parallel withdrawal from the EU, would be legally inconceivable". That means they'd have to rewrite the EU treaties to do it in a controlled fashion - and EU treaty changes are next to impossible to negotiate, on much less weighty matters, let alone something as fundamental as this.

Or Greece could do it in an uncontrolled fashion - effectively cancelling the current government control of the economy, and trying to build a new one up from scratch, outside the EU.

[Odin2005]

36. The Germans are inciting some long-standing anti-German resentment in Greece...

Last edited Tue May 8, 2012, 07:48 PM - Edit history (1)

...dating back to WW2.

Edit, sorry, I didn't know "kraut" was considered a slur...

[4th law of robotics]

47. That resentment didn't bubble up until the Germans threatened to stop cutting checks

I think it has everything to do with the "no more free money" stance than anything about WWII. Frankly that was over 60 years ago. Let it go.

If we kept demanding money from the Japanese people would laugh if we brought up Pearl Harbor when they said "no".

[byeya]

52. I think Germany is running a mercantile scheme on the smaller economies and

need to be called down on it.

[4th law of robotics]

58. The germans got together and said:

let's force the Greeks not to pay taxes or work that hard for generations so that eventually we'll be lucky enough to use all that money we've been saving up via hard work and high taxes to bail them out?

Insidious Teutons!

[Zalatix]

96. Uhhh, that is a racist term. I'm sad your post got 3-3 to LEAVE IT when someone alerted you

but calling someone the K word is no different than the N word. Except the target is white.

[Codeine]

102. Krauts?

You're better than that.

[SidDithers]

104. Hey Odin, how 'bout editing out the ethnic slur?...nt

Sid

[Odin2005]

111. Edited, I didn't know it was considered a slur.

I thought it was a jokey name . My bad!

[SidDithers]

112. Awesome. Thanks!!...

Sid

[Odin2005]

113. I feel so embarassed!

[Nye Bevan]

59. Perhaps it will take Greece literally running out of money for the voters to realize

that they screwed up. Apparently in June, the money will literally run out. So anyone in the public sector will simply not be paid. If new elections were held at that point, hopefully the voters would see the light. The alternative, which I guess would be dropping out of the Euro, firing up the printing presses and rolling out reams of devalued Drachma to pay the salaries and bills, would seem to be difficult to accomplish in a month or so.

[4th law of robotics]

62. Yeah the time to bail out of the EU was a while back

before things came to a head.

That would have been the less painful route (as in losing an arm rather than both arms and legs).

[Kelvin Mace]

64. So, you want to guarantee Greece dumps the euro?

Because that is what your ultimatum is going to do. And it seems to me Germany stands to get hurt a LOT worse if that happens, since Ireland, Spain, Italy and Portugal will have lots of incentive to follow suit.

[hack89]

69. Hard to say what the impact of dumping the EURO would be.

Here is a good analysis that lays out some of the issues and complexity.


http://www.cnbc.com/id/47338942

[Nye Bevan]

71. Part of me actually wants Greece to exit the Euro.

It would be fascinating to see how the process played out. None of the experts really seem to know for sure. If it worked out well for them (which is highly doubtful) then other countries might want to follow suit.

[hack89]

72. Right now all Greece needs is some adult leadership

that can make cool headed decisions. Bad leaders got them in this mess. Lets hope that they chose wisely.

[DallasNE]

67. Missing From This Debate

Is the long-standing issue of corruption in Greece. Because both major parties have been deeply involved in the corruption the Sunday elections may now shift the focus to where this issue finally gets addressed in a serious way. And they should be able to leverage this for concessions on the pace of other changes. Greece is currently in a depression and no amount of austerity can reverse that so Germany needs to get real because Greece needs growth as the path forward and the sooner they come to realize this the better off all will be. One thing that would be helpful right now is for the European Central Bank to implement a quantitative easing program. The "Merkozy" plan has been a failure and Merkel doubling down will only make matters worse.

[grantcart]

74. Absolutely correct

and it starts with the Greek constitution which gives shipping magnates a no tax status.

Accountants, dentists, doctors and everyone else that is self employed thinks if they don't have to pay a dime then I won't pay either.

That is why the fairness issue is so important in raising the taxes on the rich here. The amount of money raised is not relevent, having a fair system is.

There are several hundred local tax officials that are known to have cheated the system (they collect no taxes and live in palatial houses) and nothing is done.

If Greece wants help they need to clean up their cesspool and giving their billionaires a no tax status.

[TBF]

78. Agree -

and we frankly need to do the same with our richest 1% and biggest corporations.

[JackRiddler]

75. Translation from German: Kill yourselves, or we won't do you the favor of killing you.

Now hear this:

GERMANY IS NOT GIVING ANY MONEY TO GREECE.

None of the bailout money is being "given" to Greece. It is going toward paying an odious debt, much of which was scammed on to Greece via accounting fraud by Goldman Sachs, JPM and other international criminal organizations of that ilk.

The only thing German taxpayers are financing is a bailout for bondholders. Greece is merely a transit point for transferring wealth from German taxpayers to bondholders - in large part German banks. This is a German problem. German taxpayers need to figure out who is really ripping them off.

[TBF]

77. Very similar to what we went through here in a way -

when our taxpayers had to bailout the banks (after Bush and his cronies looted the country - not to mention other countries). I understand why President Obama worked hard to fix that mess and keep the economy purring along, but I would've loved to have seen him nationalize Bank of America, Wells Fargo, Chase, etc... Why shouldn't the tax payers officially own them - we were the ones who kept them afloat.

[hack89]

80. So the Greek government bears no responsiblity? None at all?

they were not corrupt politicians that conspired with the banks to hide Greece's astronomical debt from the voters and the EU? Just simple rubes not up to the task of running a modern state and easy to con by those evil bankers?

In early 2010, it was revealed that successive Greek governments had been found to have consistently and deliberately misreported the country's official economic statistics to keep within the monetary union guidelines.[68][69] This had enabled Greek governments to spend beyond their means, while hiding the actual deficit from the EU overseers.[70]

http://en.wikipedia.org/wiki/Economy_of_Greece#2010.E2.80.93present_government_debt_crisis

[JackRiddler]

82. So you're for slicing up little kittens, are you? Really?!

Your attack question bears no relation to my post, and merely changes the subject.

I said: The German government is not offering any money to Greece, as you are claiming here. The net flow will be from German taxpayers to German (among other) bondholders. Greece is merely a transit point for this flow. None of the German taxpayers' money will stay in Greece. The net flow from Greece as well will be to the bondholders.

You avoided addressing this correction of your false terms and false characterization of the situation ("Germany" "giving" to "Greece&quot by switching to an unrelated talking point.

Now to handle that, an odious debt usually takes two to accumulate. The corrupt Greek government -- officials of which received many bribes and favors from German corporations, as well as others -- conspired with the bankers to create much of this debt, yes. They haven't been able to plunder the world, but they have helped plunder their own people. This is why the grand-racket parties of ND and PASOK are now collapsing.

Otherwise, Greece should have never ceded its sovereignty to the European Central Bank, which is the main cause of the crisis.

[hack89]

84. The banks have accepted a 70% loss on their loans.

they took a massive haircut in the bailout.

So what is your solution?

[JackRiddler]

122. You are again changing the subject to evade acknowledging your false statement.

In the OP, you propagated a falsehood.

"Germany" (the taxpayers of that country) is not giving money to "Greece" (the people thereof), unless by "giving" we mean the theater of pretending that the money goes to the Greek government before it goes to the bondholders.

Germany is not bailing out Greece. None of the bailout plans have bailed out Greece. All "bailout" funds have gone to bondholders who would have otherwise received nothing (because Greece without the "bailouts" would have been forced to do what anyone who does not have the money to pay necessarily does: default.)

Germany is bailing out bondholders.

Therefore your OP statement is false. Not only it is false, it is systematically so: it reflects the pro-bailout propaganda, which is seeking to disguise the plunder of Greece as "aid" to Greece.

I have corrected you twice now. Both times you failed to acknowledge this point. Both times you changed the subject and asked diversionary questions.

This time I won't give you a chance by commenting on anything other than your propagation of falsehood.

You are propagating falsehood. You cannot be trusted as a speaker on this issue. You are discrediting yourself, and confirming that you should be discredited by ignoring that you have been called on falsehood.

This is nothing new for you.

[hack89]

124. The bailout is designed to fund all Greek government expenses until 2014

The cash is for the Greek government to stay solvent.

It is not all going to the bond holders.

And why do you refuse to acknowledge that the bond holders agreed to a massive haircut?

[tama]

131. Bald

100% haircut to banks. From neck above. Decapitation of banks . including central banks - and the whole capitalist ponzi scheme. We can't afford it. We the 99%.

[hack89]

139. Then Greece will never be able to borrow again

which means they can never run a deficit again. The spending cuts to pull that off would be devastating.

[tama]

141. Yup

Imagine, if everybody refused to pay their debts to banksters and other "financial investors!, and couldn't borrow again from them, the spending cuts for banksters would be, indeed, devastating. They would starve trying to eat their money, the only thing they can create...

[hack89]

143. But the people would starve too

you can't run a modern country or economy without credit. It would be worst than the worse depression. Is that worth it to punish the bankers? Millions must suffer to punish the thousands?

[tama]

146. Tae this to heart

Modern industrial agriculture dependent from oli and natural gas and mining of nutrients and mining and poisoning the top soil and depleting potable water - and artificial scarcity created by money system and debt slavery - cannot keep on feeding people.

This IS a failed and self-destructive system. There is still more than enough productive land (being destroyed) and food (of which half is wasted) and revolution of gardeners etc. is gaining pace, but the financial system and blind monetary profit making is the biggest obstacle against socio-cultural adaptation to sustainable and balanced nature relation. Billions are suffering now, worse and worse from year to year.

You can't run a modern country of growth economy without credit and increasing debt to future generations. And we need to stop.

[inna]

114. .

you're one *Awesome* poster, JR

[hack89]

81. European banks have already taken up to a 70% loss on Greek debt as part of the bailout

they wrote off tens of billions of dollars of debt.

A group of banks and other investors in Greek government debt have agreed to exchange their debt for new bonds that are worth much less and pay a modest rate of interest. Including the reduced interest rate, the losses to the banking industry are more than 70%.

Many foreign banks have already accepted that their investments in Greece are now worth just a fraction of their original value, irrespective of the latest deal.

In its most recent set of results, France's BNP Paribas, the biggest owner of Greek debt outside Greece, said that it had written down the value of its Greek debt by 75% on its balance sheet.

And lets not forget that Greek banks are the biggest holder of Greek debt.

According to Barclays Capital, the top two holders of Greek debt are National Bank of Greece, with 13.2bn euros ($17.5bn), and Eurobank EFG, which holds 7.3bn euros ($9.7bn).

Once the bond exchange is completed, those holdings will be worth less than half their current value, and if you include future interest payments, worth 70% less.

http://www.bbc.co.uk/news/business-17110355

You should be happy - those evil bankers have taken a massive haircut.

[Alhena]

83. So are you Greece supporters buying Greek bonds?

Everyone on this board cheers when some Greek (or any other indebted nation's) politician says something to the effect of "you can take that debt and shove it!"

But here's the part you're overlooking:

Those countries always follow that up with "oh, and by the way- can I borrow some more money?"

They don't just want to not repay their current creditors. They want to go to those same creditors and have them loan them some more money.

Is is truly your position that wealthy nations and bond-purchasers are not only required to accept their debts not being repaid, but ALSO are expected to loan them even MORE money?

That's just silly. If that's your position, then you'd be hypocritical by not buying Greek bonds yourself. I'm sure they'd appreciate your money. Why don't you give it to them?

[JackRiddler]

85. My, so clever. Such generalizations.

You: "Everyone on this board cheers"

Obviously not.

"or any other indebted nation's"

Merely expresses your own non-specific view of generic deadbeat nations.

"Those countries always follow that up..."

Those damn countries! Welfare queens! (Which countries?)

"They don't just want to not repay their current creditors. They want to go to those same creditors and have them loan them some more money."

Examples. Links. Evidence.

"Is is truly your position that wealthy nations and bond-purchasers are not only required to accept their debts not being repaid, but ALSO are expected to loan them even MORE money?"

No, this is a caricature that you prefer to argue with in your head, so that you can feel you won.

"Why don't you give it to them?"

Oh, we are slain! You're such a winner!!!

[Alhena]

89. Generalizations are appropriate here ...

Generalizations are appropriate because what I described is ALWAYS the reaction on this board to any government, anywhere, deciding to not repay a debt, to nationalize a company or industry, etc. Not universal reaction, mind you, but it's always a strong majority.

And it just goes against common sense and human nature - for there to be a debtor there has to be a lender. And for a lender to loan his money he's going to need assurances that he will be repaid.

It's possible to be a progressive and still live in the real world. And in the real world the actions of Greece are not sustainable or laudable, so excuse me if I don't join in the chorus of cheers for their actions. In the real world, if you bilk your lenders you need to be prepared to live without getting more loans from them.

[TBF]

94. Why would that be someone's position?

Do you have any cite indicating that the greek people "want to go to those same creditors and have them loan them some more money"?

I see that talking point plastered all over here and no one has a cite for it.

[Alhena]

95. Those are the terms of the agreement they reached ...

that's what the article is talking about. Greece reached an agreement to have a lot of their debts forgiven and to have ADDITIONAL infusions of capital on a regular basis, but in exchange for they they agreed to implement austerity measures.

So now with the new elections it appears that the inclination is to renege on those austerity agreements. And Germany is saying, in response, if you do that then the additional capital we promised to give you will not be provided.

And my position is that Germany has every right to take that position- it's not their responsibility to just give their taxpayers' money away willy nillly.

[TBF]

97. That's up to the lawyers to figure out

I would think Germany can take whatever position it wants, as can the Greek people.

[hack89]

103. But the Greeks have a lot to lose. The Germans not so much.

this is not a fight between equals.

[TBF]

105. The greek workers have nothing to lose but their chains. nt

[hack89]

109. And their jobs, pensions and future. nt

[JackRiddler]

123. Disgusting statement, given that you support robbing them of their jobs, pensions and future.

[hack89]

125. I am agnostic on the matter. I don't care what choice the Greeks make.

it has no impact on me.

My point is simply that if the Greeks make the wrong choice they can loose everything. There is no simple solution. Greece cannot withdraw from the world economy and pay for what they want.

[JackRiddler]

126. This is not crisis of Greece. It is the crisis of capitalism.

Hack89: You claim you don't care, "it has no impact on" you, but you're always pushing anti-Greek propaganda and supremacist condescension. This is the dozenth thread or more you've started, and you always blame the Greek people and suggest they are childish and irresponsible.

This is not a Greek crisis. It has been happening everywhere, with outbreaks in many countries, and many yet to come.

This is not a debate about Greece. It is about how to understand the crisis and where to place the blame.

The crisis is an international one of the kind that capitalism always generates.

The proximate cause was the enormous criminal fraud perpetrated on the world by the Wall Street banks, ratings agencies and regulators, who were playing entirely by the rules they themselves wrote. As a result of the fraud, their system crashed in September 2008, and they would have and should have ceased to exist. However, this world-destroying beast was revived by way of a US bailout.

Ever since, the banksters and the right wing (of all countries) have taken to retroactively blaming the crisis on public sector spending. They wasted no time in confusing the issue and resuming their class war. The crisis became an opportunity to continue implementing neoliberal aims; although these neoliberal aims had caused the crisis in the first place - it didn't matter. No matter what, they always know to apply shock doctrine.

Since then, the world has been in depression. Ireland, which played by all the neoliberal rules and had a deregulated economy, constrained wages and balanced budgets, was devastated. Ireland has not become the poster child for capitalist propaganda against the public sector, because it doesn't tell the right story: even when you play by their rules, the banks will fuck you as soon as they see a percentage in it. No, Greece was chosen for that role, because enough things are wrong in Greece (from a neoliberal perspective) that it can be blamed for a crisis that it did not cause.

And I think this is the appeal to you for your constant propagation of the anti-Greek propaganda.

[hack89]

127. Bye. nt

[JackRiddler]

128. Capitulation accepted, but unfortunately you don't mean it.

The next time there's a propaganda campaign against Greece (or Chavez), you'll be running to front it first here and give your added spin.

[hack89]

129. Capitulation my ass.

Just tired of your refusal to discuss the matter in a honest fashion. All you have is screeching hyperbole and personal insults. I don't have time for BS like that.

[JackRiddler]

134. But you do always have time to defame the Greek people as childish and irresponsible.

Busy busy man, but you'll be there the next chance there is to push the corporate news propaganda line about Greece.

[hack89]

140. So you tell me what the solution is

give me a non-pie in the sky solution that can fix things in the next month or two - before Greece runs out of money.

What would you do?

[JackRiddler]

142. There is no alternative to years of hardship, but there is a choice.

Greece faces years of hardship. The question is whether these will be a few years as a sovereign free people in a hard struggle, or generations as impoverished debt slaves and vassals to an unaccountable, unelected euro bureaucracy that serves no one other than the banksters. Neither Europeans nor Greeks have the right to enslave unborn generations with decades of debt repayments and no alternative path to development. A sovereign nation needs the ability to issue and also to devalue its currency, that is how countries get out of these messes. The interests of Franco-German corporations cannot trump those of the nation's own people. Greece needs to suspend all debt payments, introduce its own sovereign currency with capital controls (as was the case in living memory, back in the 1960s and 1970s), nationalize the key industries starting with banking (not agriculture), and institute a crash jobs program to get people back into the villages and achieve food self-sufficiency. Greece needs to start using the sun for energy. Greece should also agitate along with the rest of the EU periphery for EU reform and an end to the regime of banksterism and austerity. They should leave the euro, not the EU. Greece and the other nations targeted in the EU debt war can become leaders to a different path, real internationalists, not globalists. They can break with neoliberalism. The people need to be ready to organize themselves, as was the case in Argentina for years. There will be upheavals and inflation, and then growth. And if they do this, the next few years will see the biggest tourist influx in history. Nowadays, with Argentina offering growth again, it has also seen the return of foreign investment.

[hack89]

144. The answer is for Greece to withdraw from the global economy

and become a semi-agrarian nation? Really?

What if the Greeks don't want that? What if all they want is to resume the lifestyle they have lived for the past 40 years?

[JackRiddler]

145. Your characterization is typically wrong. I provided an answer.

Readers can read it again here:
http://www.democraticunderground.com/?com=view_post&forum=1014&pid=117754

The rhetoric with which you caricature and misrepresent my answer is as irrelevant as your ideological bent is obvious.

Yes, the answer is for Greece to regain sovereignty and independence and move on to a path of development that puts ecological and human realities above maximizing the number of electronic gadgets in circulation.

As opposed to the tech worship and eternal-growth globalist bullshit that you seem to support, although you know it is an illusion since you also support the austerity and debt slavery that make this idea of "lifestyle" impossible for the vast majority in the long run. (Not to mention the wasteful war and empire that you have also supported on this board in other posts.)

You're right about one thing - like almost all nations, Greece is in a childlike state, believing in the bullshit that the (impossible) universalization of the "American dream" is the best that life can offer. Greece can be among the first nations to finally awaken from that lie and grow up.

[tama]

147. It's a painfull wake-up

facing our fears and getting rid of unnecessary loads of consumerist emotional dependencies and learning responsibility. But after the worst is over and basic realities accepted.., WOW! The wonders of this world, the possibilities...

[hack89]

150. Do you have a solution grounded in reality? One that the Greeks want and will support?

they don't want what you are peddling - they want to turn the clock back ten years and live the comfortable lives they had before.

They don't want to be farmers, shepherds and fishermen.

[JackRiddler]

151. Once again, you are misrepresenting what I clearly wrote.

Greeks are the best-educated national group in the world.

Greece has resources.

Greece can become sovereign and independent.

Sovereignty begins with control over the issuance and also the devaluation if necessary of the currency. Countries in Greece's dilemma have often been able to deal with the crisis by way of devaluation. That option must be returned to Greece.

One aspect of achieving sovereignty is the importance of immediately becoming food self-sufficient - something that Greece no longer has, but can still restore. This will involve repopulating the many underpopulated villages and the many farmlands that have lain fallow for years.

You're the one who interprets this one aspect of what I said, meaning the revival of this vital sector, as meaning all Greeks must become shepherds and fishermen. (The latter is unlikely, given the global disaster of the fisheries which is most acute in the Mediterranean.)

Yours is a typical metropolitan, consumerist, globalist attitude.

Insofar as many Greeks share it, that's too bad for them.

Because right now the choices are between hardship under conditions of vassalage and generations of debt slavery, which your incredible ideology characterizes as a solution (for whom? your friends at Goldman Sachs and Deutsche Bank?) and hardship as a sovereign nation that can remake itself.

Greeks voted against your austerity plan, sorry, fail.

Your condescending pretense that Greeks are childish and longing for the days of 10 years ago is wearing thin, and highly insulting to the Greek people. As the vote shows, Greeks are voting against the bogus "American Dream" system, and this trend will continue as they awaken to the new realities -- and make the choice between vassalage to the European Illusion version of American Dream, or sovereignty. Easy choices are done.

[JackRiddler]

152. PS - Do you have a solution grounded in reality?

You do, actually, but the only "reality" in it seems to be what's best for the banks.

Greeks are beginning to choose what's best for the Greek nation. The inevitable election rematch is very likely to make that even more clear.

Your "solution" is debt slavery and loss of sovereignty, with a German-appointed bankster writing the Greek budget. Some solution.

[hack89]

153. I do not endorse any solution - I have no problem leaving it to the Greeks

There are no good solutions for the Greeks, especially if they want to retain their present standard of living.

Self imposed austerity is better than austerity from the outside - they can make their own choices.

The notion that the next election will solve anything is nonsense - any resulting government will be fragmented and weak. The people made it clear who they blamed. They did not make it clear what solution they wanted.

[tralala]

169. The responsible solution that is grounded in reality:

Free* money

The irresponsible solution that is not grounded in reality: Declining the free* money, asserting national sovereignty, making sacrifices for the sake of future generations...

Oh the times! oh the customs!

[JackRiddler]

173. Ironic, I presume?

[Prometheus Bound]

148. The transfers to Greece are for European banks.

Greece is just a pass-through vehicle.

It's a bank bailout, pure and simple. Greece is allowed only a tiny fraction of the amount to allow its negative equity banks to hold on.

By now, maybe Germany has more at stake than Greece, backing the trillions the ECB has lent.

One funny thing is that the bulk of the next 5 Billion that the ECB is to transfer to Greece is intended to service ECB debt!

So I think we can be sure it will go through.

[hack89]

149. It also goes to salaries, pensions, health care and other governement services

Last edited Thu May 10, 2012, 11:44 AM - Edit history (1)

the banks have forgiven 75% of the Greek debt. The money is to fund the Greek government - some will go to debt payment but it also goes to salaries, pensions, health care and other government services.

The bailout deal says that in return for writing off most of the Greek debt and funding the Greek government for two years, the Greeks will implement austerity measure to reduce deficit spending.

The markets have adjusted to Greece on the assumption that the debt will not be paid off. They have already written off 75% so that last 25% will not be the end of the world for them. And don't forget that after the ECB, Greek banks are the largest holders of Greek debt.

[muriel_volestrangler]

110. Eurozone crisis: EU moves to loosen grip of austerity

In Brussels, Herman Van Rompuy, the European council's president, called a special summit to be held in a fortnight at which the French president-elect, François Hollande, will be able to unveil his proposals for tackling the euro crisis. The European commission supported Hollande's demands for pan-European investment to generate growth and create jobs.

"We are seizing the moment to advance our proposals in the new political climate," said Olli Rehn, the commissioner tasked with dealing with the euro crisis, as he accepted that the weekend's elections in France and Greece had changed the face of European politics.

Rehn and José Manuel Barroso, the commission's president, said it was likely that EU leaders would agree next month to increase the capital of the European Investment Bank by €10bn, which could be used as collateral to inaugurate large infrastructure "pilot projects" on a pan-European scale this year. Hollande campaigned on a similar platform.

The commission also says that there is €82bn in unused structural funds from the EU's medium-term budget which could be tapped to promote growth and jobs. That amounts to a quarter of the EU budget. Its use in this way is likely to run into stiff opposition from national governments.

http://www.guardian.co.uk/world/2012/may/08/eurozone-crisis-austerity-greece-alexis-tsipras

Interesting. The commission and council president can't force things through without country leaders, but this may indicate a bit of a shift as a result of the French as Greek elections.

[DeSwiss]

120. And so it begins......

- K&R

[ChangoLoa]

159. No fiscal reform can be efficient without growth

Any mesure that would keep hindering growth in Greece would be counter-productive. Fiscal reform's purpose is to help putting the economy in a more sustainable track... without killing it! The Greek don't need a therapy of shock which will end up inevitably as a shock without therapy. They need a deep, effective, long-term change of structure, which can only be obtained though gradual reform. This problem can't be solved in a year or two.

The Germans are reacting - not responding - to this problematic. What they're asking the Greek to do is NOT feasible. Highly restrictive budgetary and restrictive monetary policies are way too pro-cyclical to be applied the way the German govt is demanding. If the rest of Europe would have behaved the same way with Germany in 1989, they would have been forced to integrate East Germany in a 10-15 year period, and not immediately as they did. A credit line of 11.5 billion euros is NOTHING for the EU.

Moreover, the German are incredibly quick to forget that a very substantial part of their export-related growth is obtained thanks to the traditional fiscal-stimulus structure of its southern neighbors. If austerity was applied as they wish in those countries, their growth will strongly be affected.

In any case, it is now too late and pointless to look for responsibilities in this financial whirlpool. The important thing to do is to apply the best possible cooperative strategy - as a real country would do. Certainly, the fiscal reform must be applied in Greece (starting by the higher patrimonial class, economic conglomerates and the Church, which need to PAY taxes!), but the burden of this reform should be spread over a much longer period. Otherwise, it will merely be supported by consummers and public servants (the only tax payers in Greece), and will consequently be inefficient. In the meanwhile, European countries should support Greece as if it was a region of their own country.

[hack89]

160. Structural deficits are bad for growth.

There is a place for borrowing and deficits in a healthy economy. But you have to account for debt service - if your debt payments get too large then they will suck up all revenue produced by any economic expansion.

The Germans and the French have written off most of Greece's loans - a 75% haircut is part of the bailout. What Greece is asking for is additional loans to fund government operations for 2 years. Without Greek reform the cycle will simply repeat - they don't generate enough revenue to pay for their policies.

[ChangoLoa]

161. An austerity shock will take growth even deeper into negative figures

Hence even less revenue to pay for their policies. They'll end up with the same deficits and less activity.

At the end, you're losing more on one end what you're gaining on the other. Ideally, if Greece had its own currency, it could ease that fiscal pressure though devaluation. Not in this case though.

What the Greek are asking is for the austerity plan to be applied more smoothly. You cannot ask a country to restructure its economy during a full austerity/ zero growth phase. Restructuring an economy implies credit availability to modernize production schemes/ process, a not sinking internal demand for the producers to find outlets (additional external outlets are simply closed because of the impossibility of devaluation).

As you say, without Greek reform the cycle will simply repeat. But the reform has to be effective. With an excessive shock, the Greek economy will plunge into a low level long run equilibrium... and the reform will reveal itself to be useless since the Greek will still generate insufficient revenue to pay for their policies.

[hack89]

162. Is it even clear that the Greek people are willing to accept any austerity?

the elections tell us who they blamed for the mess. It says nothing about what solutions they are willing to accept.

[ChangoLoa]

163. Many measures have been already applied and they know they'll have to accept more

After up to 30% cuts in the public servants' wages, the retirement benefits have been reduced by 20% (for pensions > 1,200 euros/month), the 0-tax threshold has been lowered from 12,000 to 5,000 euros/year of revenue, they have already fired or "put in reserve" tens of thousands of public servants, sold an important share of their portuary infrastructure, etc.

If we don't call it austerity, I really don't know which word we should use.

The Germans are treating Greece as if it were a company in bankruptcy and have effectively managed to radicalize the Greeks against a political class who has no voice in this process.

But don't get me wrong, a very deep reform is obviously necessary. The Greek are more conscious than anyone on this level. What I'm trying to point out is the incompatibility of a drastic structural reform and draconian macro adjustment policies when both are applied simultaneously. The Washington "Consensus" didn't work anywhere. In fact, it was 10 times more destructive than any of the structural problems that development economies had in those days. You can't ask a country to adapt its economy while you push ultra restrictive policies.

Once again, the capacity to adapt of an economy is conditioned by many factors which are antinomic to the kind of austerity the Germans are asking the Greek to apply. At the economical level, credits are needed to modernize private activity and public investment to create activities in sectors that are too big/long term for private investors alone to initiate themselves. A non-constantly shrinking market is also needed to create internal outlets. Last but not least, at the political level, the Greek need real consensus. Without it, no structural reform can be supported by a society.

The Germans should know. You can't ask a country to liquidate itself. If the Treaty of Versailles was wrong for asking the Germans to pay for what they had destroyed while invading France, hanging high and dry the Greek for living wastefully in the last decades is even worse.

[hack89]

164. So the Germans and the EU step back and wash their hands of the entire matter.

Where does Greece get the funds they need to run the government? The bailout calls for new debt to fund the government through 2014. They still need to borrow.

[ChangoLoa]

165. You mean the EU amputates itself from one of its members?

[hack89]

166. So the Greeks can violate EU monetary policy with impunity

and the EU member states are still obligated to bail them out on Greek terms? Do you see how this might not go over too well with the taxpayers of those countries?

[Harmony Blue]

167. It is in the interest long term for EU members that Greece remains a member for a variety of reasons

So, to answer your question, they will pretty much tolerate almost anything if it means keeping EU intact. A hard line stance with Greece ensures that austerity cripples them, and then the rest of the dominoes fall.

[hack89]

168. I'm not so sure.

75% of the Greek debt has been written off without the end of.the world. It is hard to believe that last 25% represents some kind of tipping point.

It all appears moot at the moment - the Greeks can't even decide who will lead them much less decide on how to handle this fiscal crisis.

[Harmony Blue]

170. Well, a hair cut is tolerated to a certain extent

but when the hair cut becomes a decapitation that is where all hell breaks loose. I agree that it is moot given they can't decide on a government to move forward. But while in public EU is taking a hard line stance, behind close doors I suspect that they are far more flexible and sympathetic to the Greeks concerns.

German taxpayers may not be happy with Greece's situation, but since Germany hasn't officially repaid any war reparations to Greece it causes resentment among Greek citizens.