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

 
 
hawkeye10
 
  -1  
Reply Sat 18 Jul, 2015 01:43 pm
@Brandon9000,
Brandon9000 wrote:

The particular terms offered to them may not be the right ones, but even the right deal would have involved considerable austerity. If I went $50,000 in debt, I would have to be very frugal for a long time to recover. That's just common sense. Also, people should repay what they borrow, if they want to be treated like adults.

That is what bankruptcy law is designed for, to make you deal with appropriate austerity while allowing you the chance to move on from your debt situation, so that your debts dont ruin the rest of your life. Usually there is a lot of forgiveness of debt to make this happen. What we are doing to the Greeks is more in line with debtors prisons....."pay your bills in full or else we will hurt you!"

Which approach represents civility?

I will point out that bankruptcy in America with enforced austerity runs 3-5 years, not 75 years as we are talking about stretching the Greece loans to. But then we already knew that at least we Americans have absolutely no quibbles about loading our kids and grandkids up with out debts, so it is no surprise that we would be willing to demand that the Greeks do it.
Brandon9000
 
  1  
Reply Sat 18 Jul, 2015 01:48 pm
@hawkeye10,
hawkeye10 wrote:

Brandon9000 wrote:

The particular terms offered to them may not be the right ones, but even the right deal would have involved considerable austerity. If I went $50,000 in debt, I would have to be very frugal for a long time to recover. That's just common sense. Also, people should repay what they borrow, if they want to be treated like adults.

That is what bankruptcy law is designed for, to make you deal with appropriate austerity while allowing you the chance to move on from your debt situation. Usually there is a lot of forgiveness of debt to make this happen. What we are doing to the Greeks is more in line with debtors prisons....."pay your bills in full or else we will hurt you!"

Which approach represents civility?

Is this a one time behavior by Greece or a repeated behavior? Asking people to behave who have misbehaved egregiously over and over is uncivil? The world just doesn't owe Greece a living.
hawkeye10
 
  -1  
Reply Sat 18 Jul, 2015 01:53 pm
@Brandon9000,
Quote:
The world just doesn't owe Greece a living.

We owe greece acknowledgment of their humanity, that they as we are not perfect, and there has to be limits to the amount of pain that we inflict upon others in the attempt to teach them a lesson.

There are multiple reports from Germany of a sense of glee that it looks like Greece is about to melt down, that humanitarian aid will soon need to be sent in order to keep the greeks alive to suffer the pain that they have brought upon themselves. That is barbaric. That is wrong. All decent people must object.
Brandon9000
 
  1  
Reply Sat 18 Jul, 2015 02:23 pm
@hawkeye10,
hawkeye10 wrote:
Quote:
The world just doesn't owe Greece a living.

We owe greece acknowledgment of their humanity, that they as we are not perfect, and there has to be limits to the amount of pain that we inflict upon others in the attempt to teach them a lesson.

There are multiple reports from Germany of a sense of glee that it looks like Greece is about to melt down, that humanitarian aid will soon need to be sent in order to keep the greeks alive to suffer the pain that they have brought upon themselves. That is barbaric. That is wrong. All decent people must object.

The argument would be easier to make if the problem hadn't been caused by bad behavior after bad behavior by Greece for years, and continuing essentially unchanged to this moment. Why didn't they fix any of the corruption, luxurious government giveaways, tax evasion, etc. on their own over the past few years?
0 Replies
 
roger
 
  1  
Reply Sat 18 Jul, 2015 02:55 pm
@Brandon9000,
Brandon9000 wrote:

Also, people should repay what they borrow, if they want to be treated like adults.


Aha! I just knew that was your attitude.
0 Replies
 
hawkeye10
 
  -1  
Reply Sun 19 Jul, 2015 06:03 pm
DSK has written on open letter to the Germans taking them to task for their pettiness, and saying that the Europe project is now at risk.
http://www.atlantico.fr/pepites/dsk-emeut-conditions-effrayantes-accord-avec-grece-et-appelle-nouvelle-europe-2243571.html

Quote:
Dont tell me you expect to save Europe simply by imposing rules of sound management. no one is more committed than I to respecting the equilibrium; it is what has always drawn us closer together. But you have to build this respect through democracy and dialog, through reason, and not by force.




hawkeye10
 
  -1  
Reply Sun 19 Jul, 2015 06:10 pm
@hawkeye10,
Krugman joins the list of those who have concluded that the current greek government has been amature hour. He as well as I are both shocked and disappointed that there never was the planing to put in a new currency if need be.

http://cnnpressroom.blogs.cnn.com/2015/07/19/paul-krugman-i-may-have-overestimated-the-competence-of-the-greek-government/?ref=yfp
hawkeye10
 
  -1  
Reply Mon 20 Jul, 2015 07:38 am
Krugman

Quote:
There’s a bit of a lull in the news from Europe, but the underlying situation is as terrible as ever. Greece is experiencing a slump worse than the Great Depression, and nothing happening now offers hope of recovery. Spain has been hailed as a success story, because its economy is finally growing — but it still has 22 percent unemployment. And there is an arc of stagnation across the continent’s top: Finland is experiencing a depression comparable to that in southern Europe, and Denmark and the Netherlands are also doing very badly.

How did things go so wrong? The answer is that this is what happens when self-indulgent politicians ignore arithmetic and the lessons of history. And no, I’m not talking about leftists in Greece or elsewhere; I’m talking about ultra-respectable men in Berlin, Paris, and Brussels, who have spent a quarter-century trying to run Europe on the basis of fantasy economics.

To someone who didn’t know much economics, or chose to ignore awkward questions, establishing a unified European currency sounded like a great idea. It would make doing business across national borders easier, while serving as a powerful symbol of unity. Who could have foreseen the huge problems the euro would eventually cause?

Actually, lots of people. In January 2010 two European economists published an article titled “It Can’t Happen, It’s a Bad Idea, It Won’t Last,” mocking American economists who had warned that the euro would cause big problems. As it turned out, the article was an accidental classic: at the very moment it was being written, all those dire warnings were in the process of being vindicated. And the article’s intended hall of shame — the long list of economists it cites for wrongheaded pessimism — has instead become a sort of honor roll, a who’s who of those who got it more or less right.

The only big mistake of the euroskeptics was underestimating just how much damage the single currency would do.

The point is that it wasn’t at all hard to see, right from the beginning, that currency union without political union was a very dubious project. So why did Europe go ahead with it?

Mainly, I’d say, because the idea of the euro sounded so good. That is, it sounded forward-looking, European-minded, exactly the kind of thing that appeals to the kind of people who give speeches at Davos. Such people didn’t want nerdy economists telling them that their glamorous vision was a bad idea.

Indeed, within Europe’s elite it quickly became very hard to raise objections to the currency project. I remember the atmosphere of the early 1990s very well: anyone who questioned the desirability of the euro was effectively shut out of the discussion. Furthermore, if you were an American expressing doubts you were invariably accused of ulterior motives — of being hostile to Europe, or wanting to preserve the dollar’s “exorbitant privilege.”

And the euro came. For a decade after its introduction a huge financial bubble masked its underlying problems. But now, as I said, all of the skeptics’ fears have been vindicated.


Furthermore, the story doesn’t end there. When the predicted and predictable strains on the euro began, Europe’s policy response was to impose draconian austerity on debtor nations — and to deny the simple logic and historical evidence indicating that such policies would inflict terrible economic damage while failing to achieve the promised debt reduction.

It’s astonishing even now how blithely top European officials dismissed warnings that slashing government spending and raising taxes would cause deep recessions, how they insisted that all would be well because fiscal discipline would inspire confidence. (It didn’t.) The truth is that trying to deal with large debts through austerity alone — in particular, while simultaneously pursuing a hard-money policy — has never worked. It didn’t work for Britain after World War I, despite immense sacrifices; why would anyone expect it to work for Greece?


What should Europe do now? There are no good answers — but the reason there are no good answers is because the euro has turned into a Roach Motel, a trap that’s hard to escape. If Greece still had its own currency, the case for devaluing that currency, improving Greek competitiveness and ending deflation, would be overwhelming.

The fact that Greece no longer has a currency, that it would have to create one from scratch, vastly raises the stakes. My guess is that euro exit will still prove necessary. And in any case it will be essential to write down much of Greece’s debt.

But we’re not having a clear discussion of these options, because European discourse is still dominated by ideas the continent’s elite would like to be true, but aren’t. And Europe is paying a terrible price for this monstrous self-indulgence.

http://www.nytimes.com/2015/07/20/opinion/paul-krugman-europes-impossible-dream.html?action=click&pgtype=Homepage&module=opinion-c-col-left-region&region=opinion-c-col-left-region&WT.nav=opinion-c-col-left-region&_r=0
0 Replies
 
georgeob1
 
  2  
Reply Mon 20 Jul, 2015 10:03 am
@hawkeye10,
hawkeye10 wrote:

Krugman joins the list of those who have concluded that the current greek government has been amature hour. He as well as I are both shocked and disappointed that there never was the planing to put in a new currency if need be.


Gosh ! The once esteemed Keynsean economist and our very own Hawkeye are together, shocked, shocked to learn the Marxist cowboys running Siriza hadn't either a plan or the physical ability to issue a new currency in the event of the failure of their plan to "outwit " the (also democratically elected) leaders of the EU nations. Their plan, of course was to force the EU to continue subsidizing the economic lassitude of the Greeks through Syriza's plan to govern the distribution of other peoples money to the Greek population (all in true Marxixt fashion).

In Krugman's case ithis is merely a transparent attempt to save face after his lofty and self-important predictions had been confounded by events, and his posturing and economic ineptitude revealed for what they are. In Hawkeye's it is something else, but I'm not sure just what that might be.

If Syriza wants to create an egalitarian paradise for the Greeks by governing the forced sharing of all they produce, that is OK with me, and I assume with their EU associates as well. The problems start when they want to control the distribution of what others produce as well.

The economic policy provisions being imposed on the Greeks (privatization of excess government owned enterprises; more flexible labor and investment markets; reducing government entitlement spending to levels it can sustain) are merely the things they must do to survive and grow economically, either in the EU or out of it. Characterizing them as a punishment imposed on Greece for bad behavior is a self-serving lie.

hawkeye10
 
  0  
Reply Mon 20 Jul, 2015 10:12 am
@georgeob1,
The Greeks went so far as to say that of course they did not make a plan to replace the currency, because that would be very hard to carry out. Actually getting the currency is not hard but they would have needed to plan many months out at least to get them produced. Many of us were hoping that they had contracted this out, that they had warehouses in Greece full of the stuff.

But no.
georgeob1
 
  2  
Reply Mon 20 Jul, 2015 10:54 am
@hawkeye10,
Who are the "many of us" for whom you presume to speak?

What was the evidentiary or logical basis on which you presumed the then recently elected Syriza party had already created and executed a plan for an immediately available replacement currency, should their amaterurish and obviously ill-conceived plan fail?

I think you are indulging in a bit of pretentious, self-serving bullshit here.
hawkeye10
 
  -1  
Reply Mon 20 Jul, 2015 11:13 am
@georgeob1,
Quote:
Who are the "many of us" for whom you presume to speak?


For sure those of us who believe that Greece needs to get off the Euro to ever have a chance, but also those who where hoping that the Greek government was working off of a well thought out plan.

Quote:
What was the evidentiary or logical basis on which you presumed the then recently elected Syriza party had already created and executed a plan for an immediately available replacement currency, should their amaterurish and obviously ill-conceived plan fail?

Pissing off your adversaries is sometimes a very good plan. Look how well Osama did with that plan on 9/11 for instance. But the point is to get the other side to do something stupid, which is usually over react. I said at several points that it looked like the Greek government was working to move the greeks to a point where they would agree to let the Euro go for their own good. That would have been a plan, maybe a good plan. But that is not what they were doing. Now it is not clear what they traded trust with the europeans and something like 50 billion euro bled during the bank run for. Trading it for moving the people in the direction that they needed to go, still need to go, might have been worth it. But what did they get?

Quote:
I think you are indulging in a bit of pretentious, self-serving bullshit here.

You suck at insults, so how about just sticking to the topics MKay?
georgeob1
 
  2  
Reply Mon 20 Jul, 2015 11:56 am
@hawkeye10,
hawkeye10 wrote:

Pissing off your adversaries is sometimes a very good plan. Look how well Osama did with that plan on 9/11 for instance. But the point is to get the other side to do something stupid, which is usually over react. I said at several points that it looked like the Greek government was working to move the greeks to a point where they would agree to let the Euro go for their own good. That would have been a plan, maybe a good plan. But that is not what they were doing. Now it is not clear what they traded trust with the europeans and something like 50 billion euro bled during the bank run for. Trading it for moving the people in the direction that they needed to go, still need to go, might have been worth it. But what did they get?
In the first place no one knows what might have been the outcome if Greece had abandoned the EURO. You appear to believe it would have done them some good, but the evidence indicates the majority of Greeks don't agree.

Moreover it is fairly obvious that the economic policies that have got the Greeks into their current mess within the Eurozone, would have also yielded more or less the same result without it. True the acute monetary crisis would have been smoothly relieved through a devaluation of the Drachma, but that would have yielded a propotionately reduced purchasing power for all Greeks - not a good outcome for a country that can't feed itself and doesn't produce much other countries wish to buy at any price. The economic appetite of Greeks far exceeds what they can support through tourism alone- and has done so for a long time.

You also appear to assume that Syriza had a well-thought out, coherent plan for this whole fiasco. In fact it increasingly appears they did not and are in very far over their heads.

Quote:
I think you are indulging in a bit of pretentious, self-serving bullshit here.

hawkeye10 wrote:
You suck at insults, so how about just sticking to the topics MKay?

This was no insult: merely my reaction to your post above - very much on topic.

What does "MKay" mean? That looks a bit pretentious as well.
hawkeye10
 
  -1  
Reply Mon 20 Jul, 2015 12:12 pm
@georgeob1,
Quote:
The economic appetite of Greeks far exceeds what they can support through tourism alone
You are overly pessimistic. Once they get the just bankruptcy and once they all buy into the idea that people need to pay taxes if everything is going to work then the greeks with their tourism and their shipping and their yogurt (AKA the GREEK brand) they will be fine. But "just bankruptcy" is half the plan, so lets "get u'r DONE!"
georgeob1
 
  1  
Reply Mon 20 Jul, 2015 12:26 pm
@hawkeye10,
I don't think that their creditors will give them anything like the "just bankrupcy" that you postulate untill the Greeks show some concrete evidence of having learned or truly accepted the idea "that people need to pay taxes if everything is going to work", and, in addition to that, limit their (excessive even by EU standards) entitlement payments; and losen up the innovation destroying restrictions in their labor laws and enterprise regulations - and the corruption that inevitably attends it.

Moreover, in view of the long history of these things in Greek governance and the profligate waste of the huge EU funds that flowed into Greece from the union over the past two decades, I believe ther Greek creditors have good reason to be skeptical.
hawkeye10
 
  -1  
Reply Mon 20 Jul, 2015 12:40 pm
@georgeob1,
So be sceptical. And demand some quid pro quo. THat is reasonable. And I think the greeks will act like the decadents of one of the most glorious civilizations in history,
0 Replies
 
ehBeth
 
  2  
Reply Mon 20 Jul, 2015 12:51 pm
@georgeob1,
http://www.newyorker.com/magazine/2015/07/27/how-can-greece-take-charge

Quote:
As Ioannides told me, “We know from looking at other countries that, for reform to work, the government and the public really need to own it.” Right now, no one in Greece really owns reform.

Still, Tsipras has considerable political capital. He could use that capital to spend the rest of his time in office inveighing against austerity. But Germany has made it painfully clear that that will have no effect.

Instead, Tsipras should forget about what Europe isn’t going to do, and focus on what Greece can do for itself.

He should make the case for why Greece needs to focus on exports; make it easier for young people to find jobs and start businesses; and even allow loaves of various weights and liberalized gyms. This isn’t the platform that Tsipras ran on. But it’s the platform that Greece needs him to govern on.
hawkeye10
 
  -1  
Reply Mon 20 Jul, 2015 12:59 pm
@ehBeth,
Quote:
He should make the case for why Greece needs to focus on exports; make it easier for young people to find jobs and start businesses; and even allow loaves of various weights and liberalized gyms. This isn’t the platform that Tsipras ran on. But it’s the platform that Greece needs him to govern on.

OK, I tend to be idealistic but at some point you just have to point out that some folks are three bricks short of a load. These governments dont generally have the support of the people, they lie to the people, they lie to us, they cook the books, they do stupid **** like this most recent government did, and if we can count on anything they will be gone soon just like all of the others.

At least make a half assed attempt to be reasonable, MKay? And maybe come up with some plan that has at least some chance of working..... maybe?? Pretty Please??
0 Replies
 
georgeob1
 
  2  
Reply Mon 20 Jul, 2015 04:18 pm
@ehBeth,
I suppose it is possible that Tsipras will rise to the challenge which the current situation presents, and to which Ioannides referred in your quote. I hope he will.

However everything I have read about his background, political involvement to date, and everything he has done in the prelude to the current crisis, save only his reluctant acquiesence to the (very reasonable and necessary) EU demand,s suggests to me that he will not do so. I think it is more likely he will precipitate another electoral crisis and take the lead in an opposition party, with the aim of retaking power in more favorable circumstances, if they arise.
hawkeye10
 
  1  
Reply Mon 20 Jul, 2015 04:29 pm
@georgeob1,
Quote:
save only his reluctant acquiesence to the (very reasonable and necessary) EU demand,s

considering all of the high powered economists who say "not" lets put a "maybe" in front of that....
0 Replies
 
 

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