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

@Brandon9000,

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Most of the countries of the West are not in financial crisis because they haven't spent money like drunken sailors and do, indeed, have to make their way in the world without bailouts from neighbors

the entire global economic system is being swamped with debt, and the people who run it have no solution, which is how we know it is going to die.

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Why don't they just grow up?

A lot of us are asking why they dont bite the bullet and ditch the Euro and ditch their debts. It is hard to see the upside of going for bailout #3 which is doomed to fail.

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@hawkeye10,

hawkeye10 wrote:

Quote:
Most of the countries of the West are not in financial crisis because they haven't spent money like drunken sailors and do, indeed, have to make their way in the world without bailouts from neighbors

the entire global economic system is being swamped with debt, and the people who run it have no solution, which is how we know it is going to die.

Quote:
Why don't they just grow up?

A lot of us are asking why they dont bite the bullet and ditch the Euro and ditch their debts. It is hard to see the upside of going for bailout #3 which is doomed to fail.

Well, most of the countries of the West are in less debt compared to GDP. They probably don't ditch the Euro because their banks would run out of money in a couple of days.

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@hawkeye10,

hawkeye10 wrote:

the entire global economic system is being swamped with debt, and the people who run it have no solution, which is how we know it is going to die.

That's nonsense, and I doubt seriously that you can back up that sweeping assertion with any facts. Who the hell is the "we" who knows the global economy is going to die?

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A lot of us are asking why they dont bite the bullet and ditch the Euro and ditch their debts. It is hard to see the upside of going for bailout #3 which is doomed to fail.

It was an act of kindness and loyalty to the Greeks. If they maintain their previous behavior and policies it will surely fail. That's precisely why the EU demanded prompt action to reduce government spending, limit the growth in tax rates and reduce the corrupt regime of excessive regulation, cronyism and payoffs to get anything done. Who the hell are are the "us" asking the Greek people to ditch the Euro. It appears they don't agree.

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Quote:

So if Greece can't cut its way out of debt and it can't grow its way out of debt, its only option is to default its way out of debt. There are more and less painful ways of doing this. Least among them is for the two sides to work together, so both can keep getting at least some money from the other. That's a polite default, or a restructuring. And the IMF has suggested three ways that might work. Europe can either give Greece money every year; give Greece a pass on some of what it owes; or give Greece far more time to pay what it owes, with a 30-year grace period at the start. But in any case, Europe is effectively going to have to give—notice how that word keeps popping up—Greece money. It just depends on how they want to do it.

http://www.washingtonpost.com/blogs/wonkblog/wp/2015/07/15/europes-dirty-little-secret-is-greece-will-never-pay-back-its-debt/

Right, and as soon as Europe grows up and admits that this is what has to happen then maybe we will get somewhere.

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@hawkeye10,

The Greek debt is highly problematical and non-repayable. Something has to give.

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@gungasnake,

Even the so-called healthy economies have debt: it depends on the health of the economy that's able to sustain debt levels to GDP. Even consumer debt is part of the equation.

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IMF saying the same thing:

http://www.nytimes.com/2015/07/15/upshot/the-imf-is-telling-europe-the-euro-doesnt-work.html?_r=0&abt=0002&abg=0

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@gungasnake,

Not sure why the IMF's even weighing in on this. They said well ahead of time that they wanted no part of Greek's ongoing debt problem.

Listening to PRI last night - European economic panel - there was some laughter about the fact that Greek's independence debt of 1824 still hasn't been repaid.

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What kind of a union of partners treats one of its members like a recalcitrant colony, destroys its economy if it steps out of line, and dismisses its democracy as an impudent affront? In fact it’s one that has always ducked democratic accountability, embedded deregulation and privatisation in treaties, and preferred to fix policy – including the race-to-the-bottom Transatlantic Trade Investment Partnership – with corporate interests in secret.

It’s hardly surprising that hostility to the EU, which shows no signs of being open to deep-seated reform, is growing across the continent. Or that many progressive people in Britain, previously attracted to what seemed its cooperative internationalism, are moving towards voting no in the planned in-out referendum in the face of its brutal authoritarianism towards Greece. In their zeal to discipline the eurozone, the continent’s elites are killing their European project.

http://www.theguardian.com/commentisfree/2015/jul/16/crucifixion-greece-killing-european-project-debt-colony-breakup-eurozone

YEP

And better yet, what kind of power follows 5 years of failed policy with yet another round of the same policy but even more harshly? And what kind of power enacts a plan claiming to solve a problem when absolutely no one believes that the proclaimed solution (Bailout #3) can possibly work, even the parties negotiating the deal?

The level of incompetence and lying by power here is breathtaking.

What happens when kids realize that their parents are incompetent liars?

THe European project has taken a massive hit these lase few months.

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@hawkeye10,

I've long held concerns that the contradictions implicit in the incomplete (and deliberately ambiguous) nature of the political aspects of the European Union will eventually cause some serious problems. However, one can't deny the good intentions behind the union and even the remarkable successes it has enjoyed so far. There is the potential for some growing sclerosis in an increasingly complex administrative state, and the current tensions between the UK and the EU do indeed reflect some unresolved political/sovereignty ambiguities. However these problems and difficulties are hardly unique in the world, and I can think of no large nation that is entirely free of analogous or equivalent challenges.

We have a near perfect awareness of the side effects and difficulties attendant to the EU, but we can only imagine the difficulties that would face Europe and the world if it didn't exist, and few of us ever stop and take the time to think about it in those terms.

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@georgeob1,

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and even the remarkable successes it has enjoyed so far

I believe that if you look you will find that the alleged success is driven mostly by throwing resources into the economy, mostly financed by debt and to a lessor extent choosing to spend far less on defense and using those funds for other things. I believe that the political advances have been purchased by handing out candy not by winning arguments, and that the candy is financed financed with debt. To say that the Europe Project has been successful is much like saying that the American economy is successful, ya it looks good but only so long as you dont look far enough to see that the good looks have come at the price of a wrecked balance sheet. And so long as you dont think long enough to understand that the entire project is completely unsustainable because it is financed by ever growing debt, which is going to end in a crash at some point, 100% guaranteed.

Also as many have pointed out democracy in Europe is headed in reverse. I have a hard time proclaiming politics which results in a degrade of democracy a "success".

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@hawkeye10,

http://www.robert-schuman.eu/images/questions/qe-289-1-uk.jpg

The graph I really want to see is the total EU government debt/total GDP change over time, and then total EU debt/total EU GDP change over time, but I dont find these numbers (the euro area government debt/gdp line is a good start however) . If we were to see them I am confident that they would show that we should take all claims of EU Project success with a fist full of salt. Increasingly the "successful" EU Projects looks like the "asian miracle", that is to say an exercise of drawing false conclusions brought on by the experts lack of understanding of where reality laid. In the case of the asian miracle there was no miracle at all, their was only increased investment, much of it unwise and unsustainable, brought on by the global economy now having capital running around the globe looking for places to get rich fast not build something good.

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@hawkeye10,

It certainly depends on what you call "EU government" - there isn't one.

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@Walter Hinteler,

Walter Hinteler wrote:

It certainly depends on what you call "EU government" - there isn't one.

You clearly are out of the loop. European national sovereignty is being erased by EU government sovereignty ( and dont give me the BS that central banks are not part of the government, nobody actually believes that lie anymore) , and you Germans first and foremost need be be honest with yourselves about this. You cant navigate this ship if you are completely delusional about where the ship is. You guys have taken over the Bridge for fucks sake.... WAKE UP!

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@georgeob1,

georgeob1 wrote:

hawkeye10 wrote:
we know it is going to die.
Who the hell is the "we" who knows the global economy is going to die?

it's the infamous mouse in hawkeye's pocket

https://www.youtube.com/watch?v=orgarKxeWvc

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@hawkeye10,

Well, I bow to your superior knowledge, education and wisdom

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@ehBeth,

ehBeth wrote:

georgeob1 wrote:

hawkeye10 wrote:
we know it is going to die.
Who the hell is the "we" who knows the global economy is going to die?

it's the infamous mouse in hawkeye's pocket

https://www.youtube.com/watch?v=orgarKxeWvc

Look around, many many people are saying that Greece needs to leave the Euro, will leave the Euro. THe German Finance minister came pretty close to adding himself to the list today, he claiming that many Germans elite believe this to be the best way to go and himself not disagreeing.
http://nymag.com/daily/intelligencer/2015/07/german-official-to-greece-maybe-you-should-go.html

Stop acting ignorant, it does not suit you.

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Quote:

In a discussion at the Brookings Institute on Wednesday, Lew agreed with the International Monetary Fund (IMF) report, which found that the Greek debt is unsustainable, and urged Europeans to move forward with debt restructuring. - See more at: http://greece.greekreporter.com/2015/07/08/u-s-treasury-secretary-calls-greek-debt-unsustainable/#sthash.8tLPAMqE.dpuf

The number of people willing to stand up and say that Merkel is wrong is reaching the critical point. If Greece crashes and burns the Germans will be blamed by almost everybody.

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@hawkeye10,

How do you define success?? It's true that debt levels are very high in Europe right now, and you have correctly identified some of the causes. There are indeed a number of contradictions implicit in a highly regulated social welfare economy with advancing longevity; declining birth rates and slowly declining labor productivity. However, it's also true that the current debt spike is traceable to the 2007 economic crash from which they (and we) have only partly recovered. Moreover debt levels in general in Europe have peaked and started declining - that's a large achievement.

There are no permanent solutions in life. In the end we're all dead. While we live we try to make things better. Part of that effort is taming fanatics who assume they (alone) know what's good for everyone else.

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@georgeob1,

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However, it's also true that the current debt spike is traceable to the 2007 economic crash from which they (and we) have only partly recovered. Moreover debt levels in general in Europe have peaked and started declining - that's a large achievement.

Ya I think that view has merit, but you need to factor in that the recession is not the only problem, they now need to deal with all of the invading Africans they are taking in, and Europe is unraveling. The idea that debt, and maybe more importantly debt costs, are going to go back to where they were pre recession seems fanciful to me. Then we need to talk about what the brits are going to say when they vote, then we need to talk about whether Spain and Italy can ever pay their debts and what happens if they dont.

Trying to claim that Europe has been successful is very problematic. To me it looks like a poorly constructed barn with a lot of nice looking paint on it, with termites. Now the barn needs extensive work or it will fall, Europe must either agree to go much further to rub out national sovereignty or they need to at least end the Euro. Are the people going to go for taking much more of their orders from Brussels? I dont think they trust the EU capital enough to cede more power to it (the importance of trust being a subject that EU bosses have spoke extensively on these last weeks).

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

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