Is Greece going to set off the long feared next wave of the Great Recession?

@cicerone imposter,

cicerone imposter wrote:

I believe Greece is a basket case, and no amount of bailouts will save their economy. Germany alone can't save the Euro. It seems more bailouts to Greece will only exacerbate the Euro's inflation.

I don't care what you say. I'm just glad to see you back. A bunch of us have been worrying over you, young man.
Laughing

How's it going?.

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@cicerone imposter,

Agree 100%. What I can't imagine happening is sovereign nations (and leaders) with certain personal traits such as Germany and Greece giving/taking orders as to how austerity be carried out in order to back impossible debts. The whole EU was built on poor economic and political foundation. It's about to unravel and will do so over the next year or two. Wonder how Greece will get straightened out?

welcome back to A2K. Hope you're comfy and reasonably well.

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@cicerone imposter,

Hi, Tak, welcome back! I'm no economics guru. I didn't want europe to have one currency in the first place, but that may have been a dumb opinion. At this point, I'm just watching and reading.

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Quote:

The whole interview is worth a read. Piketty argues that all of Europe needs to hold a conference in order to restructure its debts in a sustainable way—not just Greece's, but the entire region's. Fanciful? Maybe. But it'd almost certainly be more productive than what it's doing right now.

http://www.slate.com/blogs/moneybox/2015/07/06/thomas_piketty_on_the_greek_crises_the_star_economist_explains_why_germany.html

Ya, that would be a second way, I say declare Greece a special case. A third way might be to spend 50-70 billion to get the Greeks established with their own currency. Whatever, the Europeans are too stupid and too immoral and too sanctimonious to make a good move here

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Both the IMF and the Euoppean Central Bank have affirmed today that Greece won't get any more money or bank credits from them. That likely means the current capital restrictions and bank closures in Greece will continue until something changes significantly. Greece now has, in effect, a cash economy. How much of that is actually circulating in economic transactions is hard to estimate.

Given the replacement of Finance Minister Varofakus, we can speculate that the Greeks may be drafting a new proposal for their EU creditors, but even that is not certain. Time does not appear to be on their side in this.

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@georgeob1,

What does this tell the southern Euro countries? Maybe that even though the current scheme puts them at a disadvantage to the rest they will not get any consideration of the inequities of the Euro zone or EU? That the alleged friends will never in a hundred years cut them a break if they get in trouble?

Merkel has it in her head that she is working to save the EU. What she might be doing is being the primary driver of its death.

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@hawkeye10,

What in addition does all this tell to the Baltic countries, Poland, Romania, Bulgaria and Slovenia, all of which endured far more severe austerity as they transitioned their economies first from socialism to capitalism, then to the EU financial standards, and now to fairly high growth and employment (even though percapita incomes are, in many cases, still lower than those of Greece)? How do the EU leaderrs explain to them that they must pay for Greek profligy and their recent refusal to pay the piper. Spain and (to a lesser extent) Portugual are on the road to recovery, though unemployment is still high (as it is throughout most of the western EU).

Spain, in particvular, faces serious political tension right now as the austerity wears on the people, and pressures for long overdue relaxation of restrictive labor market rules are beginning to take effect. A Greek bailout now may well being about a very similar government shift in Spain where the consequences on EU stability could be much greater than those attending Greece.

Greece got a fairly good deal and significant relief when all this started. They were well on their way to recovery when they gave up and demanded relief from their debts. How the Syriza leaders calculated they had a winning hand is something I'll never understand.

There are issues and risks on both sides of this divide and you are focused on just a part of the problem.

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@hawkeye10,

hawkeye10 wrote:

Quote:
When some children do not listen to parental authority, it could be "for spite." Psychologically, Greece could be acting to the EU like a recalcitrant child?
And what do we think of parents who beat and neglect their children in these situations?

Do you get the picture yet?

Some EU cultures might put a premium on "obedience."

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@Foofie,

Foofie wrote:

hawkeye10 wrote:

Quote:
When some children do not listen to parental authority, it could be "for spite." Psychologically, Greece could be acting to the EU like a recalcitrant child?
And what do we think of parents who beat and neglect their children in these situations?

Do you get the picture yet?

Some EU cultures might put a premium on "obedience."

Ya, and the Germans might want to consider the evils they have done in the name of obedience fairly recently when they are beating the **** out of Greece for disobedience. Tolerance for this behaviour both inside and outside of Europe is not likely to last long given their history.

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@hawkeye10,

hawkeye10 wrote:

Foofie wrote:

hawkeye10 wrote:

Quote:
When some children do not listen to parental authority, it could be "for spite." Psychologically, Greece could be acting to the EU like a recalcitrant child?
And what do we think of parents who beat and neglect their children in these situations?

Do you get the picture yet?

Some EU cultures might put a premium on "obedience."

Ya, and the Germans might want to consider the evils they have done in the name of obedience fairly recently when they are beating the **** out of Greece for disobedience. Tolerance for this behaviour both inside and outside of Europe is not likely to last long given their history.

Perhaps, too many EU countries came to the table with emotional baggage going back centuries? It might be too hard to pretend to be a sincere friend, when one is really a false friend?

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@Foofie,

Those trying to birth the EU need to be mindful of the mythos of the nations. I just read a piece that explains the Greece no vote by going back many generations into the nations collective experience. It a lot of whats the current Greece problem can be explained by the EU technocrats not knowing and not carring about the spiritual base of its members. That nations bring "emotional baggage " to the table must be managed, not whined about or ignored.

Those who run the Eu have been pretty stupid.

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@hawkeye10,

hawkeye10 wrote:

Those trying to birth the EU need to be mindful of the mythos of the nations. I just read a piece that explains the Greece no vote by going back many generations into the nations collective experience. It a lot of whats the current Greece problem can be explained by the EU technocrats not knowing and not carring about the spiritual base of its members. That nations bring "emotional baggage " to the table must be managed, not whined about or ignored.

Those who run the Eu have been pretty stupid.

Not stupidity, in my opinion. But, wanting all to march lock-step is just a habit that is hard to break. The genius of America is its diversity in Protestantism as the spiritual basis for the country early on, and not trying to ramrod everyone into the same set of beliefs. I do not think Europe really has much tolerance for dissent. The masquerade ball might be coming to an end.
Philosophically it might be equated to getting one's just desserts?

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@Foofie,

I'll agree that a fixation on obedience may be a plausible theory for the German position on this matter, but I believe it is very far from the most likely one.
(1) Germany's position is entirely consistent with its long-held positions on financial matters and the after effects of its own financial collapse in the late 1920s.
(2) Neither France nor Italy has voiced any strong opposition to Germany's views, and it is at least plausible that both agree and may be quite happy to stand in Germany's shadow right now.
(3) As I have pointed out separately most of the esastern European members oppose bailing out Greece - that makes for a fairly substantial majority view in the EU,
(4) The current political situastion in Spain makes a fall of the current government and its replacement with something like Syriza alomost inevitable if a Greek rescue occurs. While the EU can survive a Greek collapse and exit, it cannot survive one by Spain.

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@georgeob1,

georgeob1 wrote:

I'll agree that a fixation on obedience may be a plausible theory for the German position on this matter, but I believe it is very far from the most likely one.
(1) Germany's position is entirely consistent with its long-held positions on financial matters and the after effects of its own financial collapse in the late 1920s.
(2) Neither France nor Italy has voiced any strong opposition to Germany's views, and it is at least plausible that both agree and may be quite happy to stand in Germany's shadow right now.
(3) As I have pointed out separately most of the esastern European members oppose bailing out Greece - that makes for a fairly substantial majority view in the EU,
(4) The current political situastion in Spain makes a fall of the current government and its replacement with something like Syriza alomost inevitable if a Greek rescue occurs. While the EU can survive a Greek collapse and exit, it cannot survive one by Spain.

I only care about the U.S.A. I find the rest of the world dripping with national hubris, so pardon me if I only care about the U.S.

The chickens are coming home to roost, or some such bird. The nuclear age stopped the constant warfare in Europe; however, I find it hard to believe they can really cooperate sincerely. Nor, do I care!

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@Foofie,

Why do you write on a topic about Greece if you only care about the U.S.?

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@georgeob1,

Look, the Greek are in default for something like 340 billion Euro.

In comparison the 2008/2009 bank bailout cost the U.S. 4.6 trillion
and here we are still standing.

Tsipras has saved his face with this No vote, but he's no fool and he will
come to the table and work out a plan with the EU, EB and IMF that enables
them to function and repay their remaining debt (after a good portion of it will be forgiven).

Their only other option is to file bankruptcy and rebuild their financial
welfare from there. Argentina has done so and emerged from it successfully.

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@CalamityJane,

Unfortunately I don't buy that argument. I believe that had Syriza had never been elected, and had the Greek government stuck with its austerity measures (which had already delivered a primary budget surplus and significant (by EU standards) GDP growth, for another year or so, Greece would have been in a very good position to negotiate either a reduction in the principal or the average term of its debt.

Instead Sitiza pursued a policy almost perfectly designed to deny them that possibility. Now they have a fast dropping GDP, an economy in the grip of a worsening recession accompanied by a monetary crisis, and the EU appears convinced that they will never pay their debt, and never grow economically. Topping it all of, no one wants to buy their bonds: no one will lend them money precisely because there is no detectable prospect of real economic growth by them (that appears to be the central concern of both the ECB and the IMF). Hard to style that as a success in any terms.

I believe that saying Argentina has even begun to emerge from its decades long cycle of boom, bust and default is a bit ludicrous. To call it successful is something beyond that. There is also a profound difference between Argentina and Greece. Argentina is rich in natural resources and the capacity to produce what it needs to survive. Greece is not.

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If these guys are smart (and I think they are) they will round up a few brilliant and respected economists and go give them a lecture. They will point out how this situation has been fucked up by the IMF/EU, and that now after crashing for 5 years due to malpractice it is time to fix the problem

Debt relief of 40%

five year halt on any payments

low low low interest rates

And something that the minders want...something big, probably in the area of economic reform. I think maybe they should follow Ireland into trying to be an importer/exporter to the EU. Hell, they already have the shipping and China is the next superpower. Maybe they do some of the bureaucracy changes that the minders have been demanding.

BTW the smart ass EU bosses have practically dared the Greeks to do this. They keep thinking that the greeks are stupid. They might be wrong.

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@CalamityJane,

Listening to news summary and debate from Europe right now. Not a lot of support for further funds going to Greek.

Lots of discussion of how Kohl forced Germany into the Euro against the wishes of most Germans. He felt Germany owed it to Europe to aid in regaining postwar stability. Interesting debate.

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@ehBeth,

Quote:

. Not a lot of support for further funds going to Greek.

which is trumped by no choice but to do so. Somebody must.

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Is Greece going to set off the long feared next wave of the Great Recession?

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