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

@Francis,

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Unfounded opinion, neither is gonna happen...

The IMF is not going to have what it takes, the markets are only going to do it at ruinous interest rates....what is your way out of the mess without the French and the Germans yet again footing the EU's bills??

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@spendius,

Spendius,
I am surprised and disappointed to find that you, who are so often the target of perjorative and superficial characterizations, would indulge in the same churlish tactics yourself, particularly with one who has never indulged in that with you. I will revise my expectations.

I don't doubt Britain's adaptability. You have demonstrated it many times. It was a long way from Winston Churchill to Clement Atlee, as it was from Harold Wilson (with a few intermissions) to Margaret Thatcher. The different social and political outlooks of Europe and the United States are understandable in their very different respective historical trajectories. You look to perfect the workings of society through enlightened government; we look to limit government and permit individuals to do that for themselves. Both positions are overstated and there are many counter indications on both sides, however the essential difference is accurately stated.

Since WWII, and then often for compelling reasons, Europe has looked to a permanent political class to rebuild and reorganize life for its people and to create a new order in a European community. The effort has led to some notable and spectacular successes. However, a static and so far inflexible staisis has resulted to varying degrees in different countries in which a more or less permanent political class retains its power by sustaining the " European Model" of social welfare and protections - now increasingly in the face of economic and demographic facts that promise to make its continuation impossible. The effort is sometimes raationalized by comparing it, often contemptuously, with the so-called "American Model" of greater competition & inequality, and more individual responsibility & opportunity.

My point was that the inherent contradictions are becoming ever more evident in Europe; that a political crisis is probably going to be required to break the stalemate; and that such a crisis may be developing now. I also expressed regret that, just as these failures are becoming evident in Europe, our current, misguided, government is trying to move us in the same unnfortunate direction - something even more incompatible with our circumstances due to our tradition of relatively open immigration.

It is a serious issue and a serious argument. It merited more than the childish defensiveness and hypocrisy that you offered.

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@georgeob1,

Well- I'm sorry George. I had hoped my post was taken in the manner I intended.

I was short of time and my blunt expression is the likely result. I think I stand by the main gist of it.

It seems to me, although I expect you will dispute it, that your argument is circular. The position you take derives from the position you take on the value of the "American Model" of greater competition & inequality, and more individual responsibility & opportunity.

Even assuming that we can define those terms satisfactorily, which I doubt, it would be a long way from providing evidence that they are qualities suitable for the modern world however useful they might have been in previous periods. I think Europe has been through phases characterised by them. I hardly think the "model" is specifically American. One might argue that they are at full blow in the world Darwin attempted to describe. Possibly, within certain limits, within the palace of Goldman Sachs, and now being questioned by decent and upstanding gentlepersons with a steady eye on their supporters.

Praising them has its risks. One might find oneself making the Darwinian case better than those silly sods on the evolution threads dare try. The phrases are not to be taken as high-sounding and gradiose euphemisms. I hope.

Without getting up upon any moral high horses one might say that welfare spending is a way of dealing with the surplus human energies set loose by the process of industrialisation which has arrived in a situation in which about 5% of the population can produce not only all the necessities but an increasingly large amount of other goods which is getting exhausting to deal with. Not so long ago it took 95% of the population to produce the food and then not always in the quantities needed.

What would you do with the surplus human energies we now have available to us? It takes a very advanced education to become relaxed staring into space 24/7/365 as a settled way of life. I hope you don't want more consumer goods or the ladies being rendered even more beautiful than they already are or more school board discussions about whether to teach evolution, or Marxism or any other thing on which the chattering classes can expend themselves in the many and various ways they have found suitable to the purpose.

A moral person would think that Welfare has a greater call on the surplus of human energy than all those things put together.

Perhaps the welfare involved in occupational pensions is in collison with the welfare of those without them.

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@spendius,

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Perhaps the welfare involved in occupational pensions is in collison with the welfare of those without them.

Money is a token for human life. People mine, harvest, build, design and operate for survival money. The better the economy, the more fat money the exceptional person can accumulate. At its heart, money is control over people's lives. How much control do the richest people in the world have ? How much do they need ?

Averaging at $30,000 per year in a modern economy, for 50 yrs, we have a human life's earning value at 1.5 million dollars. If you have 1.5 billion dollars you own 1,000 people's lives. How much is too much ?? Whilst people beside you can die from treatable illness, the rich can trade people's life's in a bidding war for art collections, which if no-one wants are worth some hemp and oil.

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@Ionus,

Yes and the people of Greece will be able to sustain their "moral" welfare programs only to the extent other people and nations volunteer to pay for it. Then Portugal and Spain get in line. What is the end of it?

If the lifeboat sinks everyone gets wet.

The Soviets did a fairly good job of distributing wealth and services among ordinary folks. They were a bit rough with dissenters, but that seemed necessary to keep everyone in line. They delivered a fairly uniform degree of drab poverty, and all it cost its beneficiaries was their freedom. (At its fall though we did observe that a small number of the former slaves had come to love their chains.)

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Money is a token for human lives.

What the hell does this trite little epithet really mean? Are you suggesting there is nothing in your life that cannot be purchased or traded away with or for money? If so, you live a rather sad and limited existence - or, more likely, don't recognize or rhetorically for the moment accept, far more important things.

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@georgeob1,

The time to decide if Greece (3% of the EU) is a bad risk to the EU is before they join, not after.

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all it cost its beneficiaries was their freedom.

Cant you just see the flag billowing behind you when you come up with this glorification of the rich ?

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a small number of the former slaves had come to love their chains.

If you mean they liked the way the elderly and the sick were taken care of, then I guess you could call a government pension and a hospital a chain but only if you were a sadistic blood sucking lover of money.

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Money is a token for human lives.
What the hell does this trite little epithet really mean?

If you select only one phrase then you can make it seem however you want. Perhaps you should read the rest of the post and not be so hasty to condemn what you dont understand.

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If the lifeboat sinks everyone gets wet.

What the hell does this trite little epithet really mean? Are you suggesting there is nothing in your life that would make you help someone into the life boat if it meant giving away your precious money? If so, you live a rather sad and limited existence - or, more likely, don't recognize or rhetorically for the moment accept, far more important things.

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Are you suggesting there is nothing in your life that cannot be purchased or traded away with or for money? If so, you live a rather sad and limited existence - or, more likely, don't recognize or rhetorically for the moment accept, far more important things.

You mean like YOUR money. Think back to when you worked for a living. You spent time and were given money. You liked money because it improved you sexual attraction. You spent it on a sad and limited existence . With money you could be seen as a good provider. Without money what do you have ? If money was such a taint on your soul why didnt you become a hobo ? Live like a hippy and devote your life to far more important things.

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@Ionus,

Ionus wrote:

The time to decide if Greece (3% of the EU) is a bad risk to the EU is before they join, not after....

20/20 vision is hindsight - it wasn't done then, this is now. I agree with your earlier post that what's at issue is saving the banks, not the profligate Greeks - they've been going bankrupt since Pericles built the Acropolis, so that's not news. This is a chart showing in $ billions bank loans owed by the Greek government to overseas banks: they total $ 300 billion - almost half of the total lost in mortgage CDOs in the US debacle - all of which would instantly be placed in technical default if they miss any single interest payment. On top of that there's the concern about the euro, which (combined with the systemic risk to the banks, and the separate risk of contagion to Portugal, Spain, Italy) is what convinced Chancellor Merkel to agree to bail Greece out.

http://www.spiegel.de/images/image-57832-galleryV9-gxwr.jpg

http://www.spiegel.de/politik/deutschland/bild-691783-57832.html
PS sorry my source is in German but the country names are the same, the currency as I said is $ billions. "Andere" is "others", "Gesamt" is "total".

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@hawkeye10,

hawkeye10 wrote:

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I don't think that either of us would claim to actually know - as hawkeye does - what information passed between the banks and the Greek government on this matter, or that the U.S. (and European) banks in question were complicit in the conspiracy to deceive the EU
It does not matter what words were spoken, when someone comes to you and asks for help in misrepresenting debt you know there can be no above board reason for the request. ...

Since you have proof positive that (i) unlawful accounting techniques were used in these transactions, and (ii) material information was withheld from lenders to the Greek government, why don't YOU contact either the Federal Reserve, or the SEC, or the EU commission in Brussels? All three are conducting investigations.

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@High Seas,

What the hell did they spend all that money on ? As a precentage of GNP it is the same debt the USA had after WWII. What do they have to show for the money and who was stupid enough to lend such large sums without first working out their chances of it being repaid ?

The rest of the west has no extra cash. Some countries will be paying back the "stimulus" money for a decade. If we have another economic catastrophe we will need to execute the rich and confiscate their fortunes like Spendi suggested. Very Happy

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@Ionus,

Ionus wrote:

You mean like YOUR money. Think back to when you worked for a living. You spent time and were given money. You liked money because it improved you sexual attraction. You spent it on a sad and limited existence . With money you could be seen as a good provider. Without money what do you have ? If money was such a taint on your soul why didnt you become a hobo ? Live like a hippy and devote your life to far more important things.

We had a phrase in Naval Aviation(or more precisely an acronym) for stuff like this and those who spew it out. It was "WEFT", or 'wrong every ******* time'. You are WEFT.

I still work, and it constitutes much more than just "spending time" and being "given money". What sexual attraction I have enjoyed has very little to do with money, and my first career was one that didn't promise (or provide) wealth at all - rather adventure, excitement and a real sense of purpose, flying combat aircraft in the Navy - something I did for 25 years before entering business. Money is neither a "taint" nor a benefit to my soul. However, constructive activity, accepting and meeting personal challenges and taking care of myself and the people for whom I am responsible, both in my family and in my business certainly is a meaningful part of my life. Indeed it is one of, but not the only one of the "more important things" in my existence.

Your essay projects a very sad and limited view of the possibilities in life, and I sincerely hope that you have risen above the alternatives you described.

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@Ionus,

Ionus wrote:

What the hell did they spend all that money on ?

The ECB (European Central Bank) has the answer to your question on page 22, table 3, of this report:
http://www.ecb.int/pub/pdf/scpwps/ecbwp242.pdf
Greece has the absolutely rock-bottom rating in public sector output efficiency in this international comparison: it's number 23 out of 23. Next up from the bottom is Italy at # 22 and Portugal at # 21. Translation: they wasted it.

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@High Seas,

Fixing this problem will involve much more than mere financial arrangements to keep the Greek government going. The people and organizations (political parties, unions, bureaucracies, etc.) that created and benefitted from this corrupt system will have to lose power or otherwise be removed from the scene, and the Greek public will have to accept the dire situation they face to be motivated to really fix the underlying causes. That will involve much more than a loan.

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Ionus, addressing George, wrote:

You liked money because it improved you sexual attraction.

George wrote:

What sexual attraction I have enjoyed has very little to do with money, and my first career was one that didn't promise (or provide) wealth at all - rather adventure, excitement and a real sense of purpose, flying combat aircraft in the Navy - something I did for 25 years before entering business.

Ionus seems to have a problem with sexual achievements of other men.

A few weeks ago it was me he was addressing with this same stuff...

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@georgeob1,

True - and that's why I believe Greece will ultimately have to restructure its debt (to lengthen maturities and bring down effective interest costs) as the current bailout won't suffice. To check alternatives, I've taken to following radical Marxist websites; they advocate violent action, but since not even the local communist party supports that course I figure it's unlikely:

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The Greek Communist Party (KKE) is also being affected... PAME [the KKE’s faction within the general private sector union, the GSEE] called a strike on its own. ....... it was a complete failure.
http://www.marxist.com/greece-radical-turn-is-being-prepared.htm

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I think that their prostitutes have a bit above themselves in recent years.

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@High Seas,

PS The "father of the euro" - speaking about Greek debt on Bloomberg yesterday:

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Mundell said there must be conditions attached to the financing package for Greece with a year-by-year target to reduce the country's debt and cut its deficit "well below 3 percent" of gross domestic product, from almost 14 percent.

"It could be handled if the Greeks would be able to demonstrate to Germany and the other countries that they will keep their line and do this," Mundell said. "There has to be that transformation, otherwise the alternative is a big restructuring of the Greek debt."

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2010/04/27/bloomberg1376-L1LFCX1A74E9-1.DTL#ixzz0mVL8j5uH

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@High Seas,

PPS more on the contagion fears:

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The fear of a monumental banking crisis is triggering calls for an EU-led bailout that goes beyond Greece. "It is perhaps time to think of policy options of the last resort," says David Mackie, chief European economist at JPMorgan Chase (JPM) in London. "It may now be time for the euro area to do something much more dramatic."

What Mackie has in mind is akin to the Troubled Asset Relief Program that supplied hundreds of billions in assistance to the top U.S. banks, while in Europe's case governments would be the beneficiaries. Mackie calculates that in a worst-case contagion, supporting Spain, Portugal, Ireland, and Greece may cost 8% of the euro zone's GDP. That's equivalent to about $792 billion. "This is a big number, but the region has the fiscal capacity to backstop both banks and these countries," says Mackie. The alternative"an unplanned series of sovereign defaults and an implosion of the banking system"could be far worse.

http://www.businessweek.com/magazine/content/10_19/b4177011719842.htm?campaign_id=rss_topStories

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@Francis,

This isn't really about your post, Francis, but I wondered about sentiment in France concerning the Greek bailout package - I did read Sarkozy's statement from China, but US observers are for the most part turning pessimistic:

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While the rescue package for Greece may stave off a reorganization of the debt, Harvard University Professor Martin Feldstein said the Mediterranean country will eventually default on its bonds and other euro-area nations may follow, most probably Portugal.

“Greece is going to default despite all the talk, despite the liquidity package,” Feldstein, who warned almost two decades ago that the euro would prove an “economic liability,” said in an interview with Tom Keene on Bloomberg Radio today.
[.....]
Greece is “just the tip of the iceberg,” Nouriel Roubini, the New York University professor who forecast the U.S. recession more than a year before it began, said at a panel discussion yesterday in Beverly Hills, California. Increasing tax revenue won’t be enough to “save the day.”
[......]
Greece should consider restructuring its debt to pay 25 cents to 50 cents for every dollar owed, cutting its borrowing to a more sustainable level, said Mobius, who oversees about $34 billion in emerging-market assets as executive chairman of Templeton Asset. Lending aid to Greece may drag down the European Union as other indebted nations seek a bailout in turn, he said.

http://www.bloomberg.com/apps/news?pid=20601085&sid=aex2eT.OQS2E

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@High Seas,

It would not be going against European tradition for the movers and shakers to buy Greek bonds paying 15.5% and then bail them out with taxpayer's money and, when the dust settles and the bonds return to 3 or 4%, cash in a 300% profit and stick it in a Swiss bank.

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HighSeas wrote:

This isn't really about your post, Francis, but I wondered about sentiment in France concerning the Greek bailout package - I did read Sarkozy's statement from China, but US observers are for the most part turning pessimistic:

Well, even though I'm currently outside France, my perception is that the French are upset too, as are the Germans, with bailing out Greece.

However, and that's why I try to avoid these questions, people only reason on a basic level.

They let their guts and feelings like national pride take place of sound reasoning.

There's something people rarely take into account and it's called "real-politics".

There's an absolute necessity for the EU to stay together and act collectively.

As so, this crisis will be resolved shortly, whatever means it requires.

Obviously, the prophets of doomsday will be again looking for the next episode....

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

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