World Politics

[Bustedknuckle]

Re:

Better to 'give in' than to destroy the country.

Greek Economy about the size of Louisiana, smaller than Los Angeles yet the US stock market goes down 350 points. ??

 

[Amsterhammer]

Thanks for the excellent links, guys!

Harm, can you provide a 'as simple as possible' explanation of MMT? I'm trying to wrap my non-economist head around it.

 

[rhubroma]

Re:

Better to 'give in' than to destroy the country.

He's not destroying his country, but an irresponsible financial capitalism that egged on and abetted a corrupt political class under the monolithic paradigm of "eternal growth" that creditors and the markets have foisted upon humanity.

Sure, just to be clear, Greece has behaved egregiously in many regards, however, so has Germany in the past and with far greater devastation. Yet after both World Wars, Germany's debt was cut and its post war economic boom would not have been possible otherwise. Germany's ferocious refusal to do the same for Greece today, therefore, at the very least smacks of hypocrisy, at worst cruelty.

However this winds up, the impression that the economy has assumed in our public life an abnormal role only comes out reinforced. Nobody is so ingenuous not to realize that the economy has a structural role in society. The everyday expenses of anyone, as well as the work opportunities or the lack there of, is enough to remind us this is so given all the rest. But a considerable "rest" in one's personal life exists beyond our economic condition and frequently exists in spite of it. The "rest" factors in heavily: it influences our mood and our relationship with others and society. And I don't know anyone, literally anybody, who evaluates their own behavior and that of others exclusively in economic terms.

In politics today, to the contrary, it is as if the "rest" has disappeared, as if nothing can be measured accept in economic terms. Politics, which in its golden era at least gave the impression of governing the economy, is today totally governed by it. For all that he is ruffled, for all that he is heterodox, Tsipras has struck Europe's public opinion, irrespective of political orientation (and thus both in the approving and the disapproving sense), because his effort contains a true heresy in this age of homo economicus: the accounts aren't everything.

Now given that it's a poor country doing it this naturally leaves a suspicion: namely that it's the debtor and not the creditor that stands to benefit from the resizing of debt (as it once was with Germany). Now we must wait for a rich country to come out and say that everything isn't about cash. That would be unsuspicious.

At any rate, I maintain that to have pushed Greece to this point on the part of the governments and financial institutions has been an enormous folly. The ulterior devastation this has rought the Greek economy, irrespective of what got Greece there originally, risks destroing Europe (while it has undeniably fomented a recrudescence of right-wing national extremism). For this reason I can't blame the Greek prime minister for having placed the question of default or acceptance of the rigorous austerity measures imposed by the Troika in the hands of the people.

 

[blutto]

Re: Re:

Better to 'give in' than to destroy the country.

Greek Economy about the size of Louisiana, smaller than Los Angeles yet the US stock market goes down 350 points. ??

....therein may lay the real story behind this mess....could it be just a function of a herd mentality that exists on the trading floor....or is the system so rickety that it is vulnerable to collapse from just about any small tremor...

Cheers

 

[blutto]

Re:

I also like this blog: http://mainlymacro.blogspot.nl/

Clarified some things for me, even for an economics student I will put a few links here about the Eurozone, he wrote pieces about years ago.

Why Germany is doing well during this crisis (piece from 2011).
http://mainlymacro.blogspot.co.uk/2011/12/is-there-competitiveness-problem-within.html

About the budget fundamentalism.
http://mainlymacro.blogspot.nl/2014/08/balanced-budget-fundamentalism.html

Why it is even more ridiculous the Netherlands did so much austerity (which not only have a bad effect on the Dutch economy, but also on the European economy, although the Dutch are just a minor player in terms of size).
http://mainlymacro.blogspot.nl/2012/05/budget-madness-in-netherlands.html

There are a lot more, but can't find everything immediately.

....as with the Mitchell blog some very interesting reading there, thanks...

Cheers

 

[l.Harm]

Re:

Thanks for the excellent links, guys!

Harm, can you provide a 'as simple as possible' explanation of MMT? I'm trying to wrap my non-economist head around it.

I just googled it, like every economics study in most Western countries, the studies is very biased towards certain points of view. It's why there are several (ex-)students who criticize this and think economics at universities need a lot of rethinking (http://www.rethinkeconomics.org/).

But what's the reason you want to know about this? If we apply it to the euro-crisis, it seems every country needs its own exchange-rate to make it work. But I only had a quick look at it, I have to admit.


Ah, now I see this Bill Mitchell is a proponent of it. I will read into his work.

 

[Amsterhammer]

Re: Re:

Thanks for the excellent links, guys!

Harm, can you provide a 'as simple as possible' explanation of MMT? I'm trying to wrap my non-economist head around it.

I just googled it, like every economics study in most Western countries, the studies is very biased towards certain points of view. It's why there are several (ex-)students who criticize this and think economics at universities need a lot of rethinking (http://www.rethinkeconomics.org/).

But what's the reason you want to know about this? If we apply it to the euro-crisis, it seems every country needs its own exchange-rate to make it work. But I only had a quick look at it, I have to admit.


Ah, now I see this Bill Mitchell is a proponent of it. I will read into his work.

Thanks, will investigate further.

 

[blutto]

....from an interview with Bill Black and Michael Hudson....

-----------------------------------------------------------------------------
"HUDSON: Today’s problem with the debts really stem back from 2010 and 2011 when Greece obviously couldn’t pay. When Greece joined the Eurozone, it falsified its debt figures. The head of its central bank worked with Goldman Sachs to make complicated derivatives to hide it all, and that was Lucas Papademos.

In 2010 right after the PASOK party came to power in Greece, they revealed the fact that their figures had been fudged all along, and that the debt was so large that Greece couldn’t pay. So the International Monetary Fund, which hadn’t been making loans–almost had no customers in the world, had its European staff calculate. And the staff unanimously said, Greece can’t pay these debts. These are fraudulent debts that are all way beyond the ability to pay. They’ve got to be written down. And the board of directors agreed.

But Dominique Strauss-Kahn, who was the head of the IMF when he wasn’t going to the sex parties, wanted to run for president of France. And he talked to Sarkozy, and Sarkozy said, wait a minute, French banks are the largest holders of Greek debt. If Greece doesn’t pay and writes them down, the French banks will go under. And German banks are the second largest. But then at the G8 blackbankmeetings in 2011, President Obama went over along with Tim Geithner and said, our big campaign contributors are on Wall Street, and they’ve made huge bets that Greece can pay. If Greece doesn’t pay, then all these gamblers and derivative players are going to lose their bets. You’ve got to sacrifice Greece and you’ve got to drive it into poverty, and lend the Greek government the money to pay the bond holders so that our Wall Street banks won’t lose money"

...and...

"There’s an incredibly insipid article in the New York Times recently about Bulgaria that says, Bulgarians have no sympathy for the Greeks. But it turns out this is a hard-right government that has welcomed austerity and produced the usual problems. And, of course, their government would fail within 24 hours, as would the Spanish government, if they ever admitted that Austerity was economically illiterate. The equivalent of bleeding a patient to make them better.

So all of these nations and the Troika are locked into this position and they can never admit the truth."

....and...

"DESVARIEUX: Michael, I know you’re going to be headed to Brussels, you’re giving a speech to the Euro parliament on Thursday on the Greek situation and the IMF. Can you just quickly lay out for us, what are you going to be advocating for?

HUDSON: WFirst of all, for treating the debt claims of the IMF and the European Central Bank as odious debts. This means they shouldn’t have been put in place to begin with, and the debts, the money that was lent to Greece went right through Greece to pay the French banks and the German banks, and to enable the American Wall Street banks to make a killing.

The Wall Street banks made whole reputations of buying bonds at 30 cents on the dollar and suddenly they went up to 100 cents on the dollar. The market basically said Greece couldn’t pay in 2010. The market priced its bonds very low. Right now Greece bonds are yielding 33 percent. So the market says Greece can’t pay.

And so when Europe is saying, we want to impose a market economy, everything the European Central Bank and IMF is doing is against the market. They’re not recognizing what any real market analyst realizes, that the debts can’t be paid. We want to create a real market economy by getting rid by getting rid of the exploitation, by writing off the bad debts, by reforming the tax system."

...and...

"A few years ago the IMF’s Christine Lagarde provided a list to Greece of Greek tax evaders that had 50 billion Euros in Switzerland. This 50 billion Euros was enough to pay all of Greece’s debts. And the technocratic leader that the financial interests installed, Lucas Papademos, the very man who falsified all of the Greek payments and debt statements in 2001, didn’t do anything at all with the list. He refused to move against the oligarchs.

So what you have is, is really a combination of treason and criminal behavior. Now that there is a crisis in Greece this enables Syriza to get the support of the people to throw the bad guys in jail. I’d like to say to throw the lawbreakers in jail, but they don’t have any laws against that kind of crime taking place. So they have to draw up a whole new set of laws to make Greece a fair economy, instead of the unfair system that the IMF and the European Central Banks have turned it into."


...from... http://www.counterpunch.org/2015/07/01/wall-street-and-the-greek-financial-crisis/

....so to summarize...you have high treason and massive amounts of criminal activity which creates a huge mess...and then there is a cleanup instituted that is economically illiterate....yup that makes a whole pile of sense...

...and left wondering if Obama "collected a commission" on the killing that Wall St made on Greek bonds thru a deal he directly helped engineer...or was that debt used as financial blackmail and Obama was forced to intervene to save the derivatives market from imploding...

Cheers

 

[blutto]

....huh ?...

"IMF says Greece needs extra €60bn in funds and debt relief

Source: The Guardian

The International Monetary Fund has electrified the referendum debate in Greece after it conceded that the crisis-ridden country needs up to €60bn (£42bn) of extra funds over the next three years and large-scale debt relief to create “a breathing space” and stabilise the economy.

With days to go before Sunday’s knife-edge referendum that the country’s creditors have cast as a vote on whether it wants to keep the euro, the IMF revealed a deep split with Europe as it warned that Greece’s debts were “unsustainable”.

Fund officials said they would not be prepared to put a proposal for a third Greek bailout to the Washington-based organisation’s board unless it included both a commitment to economic reform and debt relief.

According to the IMF, Greece should have a 20-year grace period before making any debt repayments and final payments should not take place until 2055. It would need €10bn to get through the next few months and a further €50bn after that.

Read more: http://www.theguardian.com/business/2015/jul/02/imf-greece-needs-extra-50bn-euros "

Cheers

 

[clippittee]

Greece should have a 20-year grace period

That's just too much but, oh well.

 

[Amsterhammer]

Interestingly, the Greek communists held a rally in Athens, despite the party having declined to express a preference for the referendum.

Another factor that is usually overlooked, is that the Greek birth rate has been unsustainably low for at least 35 years now. The percentage of older people drawing pensions grows ever larger, while there are fewer young people to pay for it all. Corruption is endemic and institutional. Not surprisingly, many young Greeks choose to emigrate. These are problems that can only be addressed on some sort of Scandinavian model. No deal with Europe can address the many Greek internal crises.

Everything you need to know about the Greek crisis, clearly and lucidly articulated from the Syriza point of view.

The citizens of Greece face a referendum Sunday that could decide the survival of their elected government and the fate of the country in the Eurozone and Europe. Narrowly, they’re voting on whether to accept or reject the terms dictated by their creditors last week. But what’s really at stake? The answers aren’t what you’d think.

I have had a close view of the process, both from the US and Athens, after working for the past four years with Yanis Varoufakis, now the Greek finance minister. I’ve come to realize that there are many myths in circulation about this crisis; here are nine that Americans should see through.

1. The referendum is about the Euro. As soon as Greek Prime Minister Alexis Tsipras announced the referendum, François Hollande, David Cameron, Matteo Renzi, and the German Deputy Chancellor Sigmar Gabriel told the Greeks that a “no” vote would amount to Greece leaving the Euro. Jean-Claude Juncker, President of the European Commission, went further: he said “no” means leaving the European Union. In fact the Greek government has stated many times that – yes or no – it is irrevocably committed to the Union and the Euro. And legally, according to the treaties, Greece cannot be expelled from either.

2. The IMF has been flexible. IMF Managing Director Christine Lagarde claims that her institution has shown “flexibility” in negotiations with the Greeks. In fact, the IMF has conceded almost nothing over four months: not on taxes, pensions, wages, collective bargaining or the amount of Greece’s debt. Greek chief negotiator Euclid Tsakalatos circulated a briefing on the breakdown that gives details, and concludes: “So what does the Greek government think of the proposed flexibility of the Institutions? It would be a great idea.”

3. The creditors have been generous. Angela Merkel has called the terms offered by the creditors “very generous” to Greece. But in fact the creditors have continued to insist on a crushing austerity program, predicated on a target for a budget surplus that Greece cannot possibly meet, and on the continuation of draconian policies that have already cost the Greeks more than a quarter of their income and plunged the country into depression. Debt restructuring, which is obviously necessary, has also been refused.

4. The European Central Bank has protected Greek financial stability. A central bank is supposed to protect the financial stability of solvent banks. But from early February, the ECB cut off direct financing of Greek banks, instead drip-feeding them expensive liquidity on special “emergency” terms. This promoted a slow run on the banks and paralyzed economic activity. When the negotiations broke down, the ECB capped the assistance, prompting a fast bank run and giving them an excuse to impose capital controls and effectively shut them down.

5. The Greek government is imperiling its American alliance. This is a particular worry of some US conservatives, who see a leftist government in power and assume it is pro-Russian and anti-NATO. It is true that the Greek Left has historic complaints against the US, notably for CIA support of the military junta that ruled from 1967 to 1974. But in fact, attitudes on the Greek Left have changed, thanks partly to experience with the Germans. This government is pro-American and firmly a member of NATO.

6. Alexis Tsipras called the IMF a “criminal” organization. That was, charitably, an overheated headline slapped by Bloomberg onto a very moderate parliamentary speech, which correctly pointed out that the IMF’s economic and debt projections for Greece back when austerity was first imposed in 2010 were catastrophically optimistic. In fact, every letter from Tsipras to the creditors has been couched in formal and respectful language.

7. The Greek government is playing games. Because Finance Minister Varoufakis knows the economic field of game theory, lazy pundits have for months opined that he is playing “chicken” or “poker” or some other game. In Heraklion two weeks ago, Varoufakis denied this as he has done many times: “We’re not bluffing. We’re not even meta-bluffing.” Indeed there are no hidden cards. The Greek red lines – the points of principle on which this government refuses to budge – on labor rights, against cuts in poverty-level pensions and fire-sale privatizations – have been in plain view from day one.

8. A “Yes” vote will save Europe. “Yes” would mean more austerity and social destruction, and the government that implements it cannot last long. The one that follows will not be led by Alexis Tsipras and Yanis Varoufakis – the last leaders, perhaps anywhere in Europe, of an authentic pro- European left. If they fall, the anti-Europeans will come next, possibly including ultra-right elements such as the Greek Nazi party, Golden Dawn. And the anti-European fire will spread, to France, the UK and Spain, among other countries.

9. A “No” vote will destroy Europe. In fact, only the “No” can save Greece – and by saving Greece, save Europe. A “No” means that the Greek people will not bend, that their government will not fall, and that the creditors need, finally, to come to terms with the failures of European policy so far. Negotiations can then resume – or more correctly, proper negotiations can then start. This is vital, if Europe is to be saved. If there ever was a moment when the United States should speak for decency and democratic values – as well as our national interest – it is right now.

http://yanisvaroufakis.eu/2015/07/03/nine-myths-about-the-greek-crisis-by-james-k-galbraith/

 

[Bustedknuckle]

Re: Re:

Better to 'give in' than to destroy the country.

Greek Economy about the size of Louisiana, smaller than Los Angeles yet the US stock market goes down 350 points. ??

....therein may lay the real story behind this mess....could it be just a function of a herd mentality that exists on the trading floor....or is the system so rickety that it is vulnerable to collapse from just about any small tremor...

Cheers

Who knows, the 3 'measurements(DOW/NASDAQ/S&P)' are just a slice of the total stocks. DOW 'almost' all the way back already..drama more than anything.

 

[frenchfry]

Re: Re:

The Governing Council of the European Central Bank today welcomed the commitment by ministers from euro area Member States to take all necessary measures to further improve the resilience of euro area economies and to stand ready to take decisive steps to strengthen Economic and Monetary Union.

Following the decision by the Greek authorities to hold a referendum and the non-prolongation of the EU adjustment programme for Greece, the Governing Council declared it will work closely with the Bank of Greece to maintain financial stability.

Given the current circumstances, the Governing Council decided to maintain the ceiling to the provision of emergency liquidity assistance (ELA) to Greek banks at the level decided on Friday (26 June 2015).

This apparently means that Greek banks may not open tomorrow due to a lack of cash.

Should this be seen as some sort of apocalyptic first step on the road to the collapse of the Euro, and the subsequent possible crumbling of the EU?

The Euro technocrats are saying, no, the Euro isn't in danger, while Germany will be popping champagne corks if, when Greece leaves the EU. Of course, everything is uncertain.

The only thing that the Greek crisis demonstrates is that the European Union is without a political soul. It merely has an economic and financial one that is in simbiosis with the US driven IMF, as the case of Greece and, for example, Hungary demonstrates.

The technocrates of the EU central bank, with full support from the EU parliament, can thus be ruthless with poverty, though are willing to cut more than enough slack to the fascist Hungarian regime. Hence to be poor is criminal, or at any rate economically insolvent, but to be fascist remains within the scope of what's tolerable.

I am exagerating a bit, but how would you like it if you were asked to give money to a neighbor that had been spending like a drunken sailor for years.

When the French economy blows up after decades of 20% deficits, about twice the necessary number of civil servants, a huge number of priviliged (politicians at the head) and everyone clamoring for even more government handouts we will only have ourselves to blame - not the EU, not Germany, not the IMF.

 

[blutto]

....and this comment on the IMF latest....which makes this whole even more silly and mysterioso....
---------------------------------------------------------------------------------------
"The Troika Turns Europe Into A Warzone

So now they do it. Now the IMF comes out with a report that says Greece needs hefty debt restructuring.

It’s even been clear for many years to the IMF that debt restructuring for Greece is badly needed, but Lagarde and her troops have come to the Athens talks with an agenda, and stonewalled their own researchers.

Why go through 5 months of ‘negotiations’ with Greece in which you refuse any and all restructuring, only to come up with a paper that says they desperately need restructuring, mere days after they explicitly say they won’t sign any deal that doesn’t include debt restructuring?

For five whole months the troika refuses to talk debt relief, and mere days after the talks break off they come with this? What then was their intention going into the talks? Certainly not to negotiate, that much is clear, or the IMF would have spoken up a long time ago.

At the very least, all Troika negotiators had access to this IMF document prior to submitting the last proposal, which did not include any debt restructuring, and which caused Syriza to say it was unacceptable for that very reason.

Meanwhile, things are getting out of hand here. It’s not just the grandmas who can’t get to their pensions anymore, rumor has it that within days all cash will be gone from banks. And then what? Oh, that’s right, then there’s a referendum. Which will now effectively be held in a warzone.

It’s insane to see even Greeks claim that this is Alexis Tsipras’ fault, but given the unrelenting anti-Syriza ‘reporting’ in western media as well as the utterly corrupted Greek press, we shouldn’t be surprised."

Cheers

 

[python]

if i was a greek citizen, i'd vote 'no' with both hands...this is after starting out opinion-less, just attempting to learn from both sides...

it blows my mind, why the supposedly well educated, smart people running the financial institutions are oblivious to a simple fact that the austerity model cant work and wont work in/under certain conditions.

can the model be imposed, which is basically being forced down the throat of a weak nation ?

of course, it can? . just as would typically happen between the strong and weak...but since there is nothing but a trail of the model's failures, it is safe to bet that another imposition on greece will fail too.

i dont know the solution. but it seems the eu institutions, perhaps even the entire west-dominated financial structures have arrived at the dead end...

 

[frenchfry]

Re:

if i was a greek citizen, i'd vote 'no' with both hands...this is after starting out opinion-less, just attempting to learn from both sides...

it blows my mind, why the supposedly well educated, smart people running the financial institutions are oblivious to a simple fact that the austerity model cant work and wont work in/under certain conditions.

can the model be imposed, which is basically being forced down the throat of a weak nation ?

of course, it can? . just as would typically happen between the strong and weak...but since there is nothing but a trail of the model's failures, it is safe to bet that another imposition on greece will fail too.

i dont know the solution. but it seems the eu institutions, perhaps even the entire west-dominated financial structures have arrived at the dead end...

It depends what your definition of austerity is. In France, government spending increases 5-6% each year despite almost 0% inflation and 20% deficits, yet many decry that we are subjected to austerity. If austerity means not spending more than your revenue, I don't understand what is so bad about that.

Many say that austerity hasn't worked, yet it seems to me that certain countries like Greece have reduced their deficits significantly in only a few years thanks to "austerity". Deficit spending has been practiced for decades by many countries and look at the mess it has got us in. If overspending was the answer we should be sitting pretty right now - but we aren't.

I am not saying that nothing should be done to help Greece, but they have to realise that if they don't get their budget balanced nobody will want to help them. Would you lend them money knowing that they would flush it down the toilet and never pay you back?

 

[ScienceIsCool]

Re:

if i was a greek citizen, i'd vote 'no' with both hands...this is after starting out opinion-less, just attempting to learn from both sides...

it blows my mind, why the supposedly well educated, smart people running the financial institutions are oblivious to a simple fact that the austerity model cant work and wont work in/under certain conditions.

can the model be imposed, which is basically being forced down the throat of a weak nation ?

of course, it can? . just as would typically happen between the strong and weak...but since there is nothing but a trail of the model's failures, it is safe to bet that another imposition on greece will fail too.

i dont know the solution. but it seems the eu institutions, perhaps even the entire west-dominated financial structures have arrived at the dead end...

But austerity does work. Not to stabilize a country, no. It's designed to crush labor and suppress wages so that BMW can put a factory in Athens and pay a quarter of what they pay in Bavaria. It's designed to create conditions so desperate that the government has to sell of its resources; ports, highways, water, parks, etc to exploitive rentiers.

Yes, austerity works very, very well. And the Troika is doing *everything* they can to implement it.

John Swanson

 

[ScienceIsCool]

Re: Re:

if i was a greek citizen, i'd vote 'no' with both hands...this is after starting out opinion-less, just attempting to learn from both sides...

it blows my mind, why the supposedly well educated, smart people running the financial institutions are oblivious to a simple fact that the austerity model cant work and wont work in/under certain conditions.

can the model be imposed, which is basically being forced down the throat of a weak nation ?

of course, it can? . just as would typically happen between the strong and weak...but since there is nothing but a trail of the model's failures, it is safe to bet that another imposition on greece will fail too.

i dont know the solution. but it seems the eu institutions, perhaps even the entire west-dominated financial structures have arrived at the dead end...

It depends what your definition of austerity is. In France, government spending increases 5-6% each year despite almost 0% inflation and 20% deficits, yet many decry that we are subjected to austerity. If austerity means not spending more than your revenue, I don't understand what is so bad about that.

Many say that austerity hasn't worked, yet it seems to me that certain countries like Greece have reduced their deficits significantly in only a few years thanks to "austerity". Deficit spending has been practiced for decades by many countries and look at the mess it has got us in. If overspending was the answer we should be sitting pretty right now - but we aren't.

I am not saying that nothing should be done to help Greece, but they have to realise that if they don't get their budget balanced nobody will want to help them. Would you lend them money knowing that they would flush it down the toilet and never pay you back?

Let's say a bank offers you a mortgage that is borderline what you can afford. Don't worry they say. You'll be fine. Here's the keys to your new house. Oh, and here's a bit extra for some furniture. You know it's a bit beyond your means, but it's very tempting. The bank seems enthusiastic so... Okay.

Some years later you're struggling so you go to the bank Maybe you can work something out. We can't help you they say. In fact, we want our money. All of it. There's a government program to help owners like you - here's their number. You ring them up and after some disappointed noises they agree to pay off your mortgage. Now you owe them instead. But they're raising the interest rates on the loan and increasing your income taxes. You also have to spend 30% less on food each month and 50% less on heating in the winter as part of the conditions. No new clothes for three years either.

They have a lot of other "austerity" measures too. That should help get you back on your feet, right? Five years later and your kids are malnourished. You owe many times more than the original mortgage and the government has already taken all your retirement savings. Once a week a government employee drops by to assess the value of your furniture and family jewelry. The guy offers you and your kids a part time job working for less than minimum wage at his cousin's shop. You know, to help you out.

What would you do? I'm thinking the original debt was "odious" and it was a setup from the beginning. The banks got their money and the government gets everything you've ever owned plus your labor. That's what has happened to Greece and they would be very, very correct in voting "no".

John Swanson

 

[python]

Re: Re:

if i was a greek citizen, i'd vote 'no' with both hands...this is after starting out opinion-less, just attempting to learn from both sides...

it blows my mind, why the supposedly well educated, smart people running the financial institutions are oblivious to a simple fact that the austerity model cant work and wont work in/under certain conditions.

can the model be imposed, which is basically being forced down the throat of a weak nation ?

of course, it can? . just as would typically happen between the strong and weak...but since there is nothing but a trail of the model's failures, it is safe to bet that another imposition on greece will fail too.

i dont know the solution. but it seems the eu institutions, perhaps even the entire west-dominated financial structures have arrived at the dead end...

It depends what your definition of austerity is. In France, government spending increases 5-6% each year despite almost 0% inflation and 20% deficits, yet many decry that we are subjected to austerity. If austerity means not spending more than your revenue, I don't understand what is so bad about that.

Many say that austerity hasn't worked, yet it seems to me that certain countries like Greece have reduced their deficits significantly in only a few years thanks to "austerity". Deficit spending has been practiced for decades by many countries and look at the mess it has got us in. If overspending was the answer we should be sitting pretty right now - but we aren't.

I am not saying that nothing should be done to help Greece, but they have to realise that if they don't get their budget balanced nobody will want to help them. Would you lend them money knowing that they would flush it down the toilet and never pay you back?

i may add some more thought to your question later (though i think it's a wrong question here), but no, i would not lend in the situation you described....

i am not an economist, but i do know some basics about balancing a budget and living in accordance with ones means...i also believe that some, if not most, do not.

countries are like people (a complex separate subject)...some are good at savings and building wealth, others aren't....when the media talks austerity for greece they usually stress the cuts for their public sector spending IGNORING the other side of the coin -a realistic, workable stimulus for growth and thus increased budget income.

this is the cornerstone - austerity vs the economy stimulus, their proper balancing SIMULTANEOUSLY.

i know for a fact that many in france resent the german approach to austerity.

my point is simply that in the case of greece, though it's a very difficult problem, there is a solution that would take into account both the cultural/traditional inefficiencies of their way of doing business AND stimulating their strong economic sides like tourism, textiles etc..of course, a fundamental overhaul would be needed too but a slow one, very slow given the reality.

during the entire crisis we head only of the overspending etc.

i am reckoning, but perhaps the entire idea of the huge eu and its eurozone contains too many incompatible elements with too many divergent (culturally, mentally, emotionally) views on business and economy.

in one word, both the eu and greece IMO would gain from grexit and perhaps from some others going their own way.

in stead, we hear the animalistic fear of the eu trimming. imo it would be nothing but healthy...but course, germany would then lose its grip on the 'peaceful' dominance of europe. others, remembering the 'other' ways of the german dominance cowardly play along. france imo is one of them.

 

[blutto]

Re: Re:

The Governing Council of the European Central Bank today welcomed the commitment by ministers from euro area Member States to take all necessary measures to further improve the resilience of euro area economies and to stand ready to take decisive steps to strengthen Economic and Monetary Union.

Following the decision by the Greek authorities to hold a referendum and the non-prolongation of the EU adjustment programme for Greece, the Governing Council declared it will work closely with the Bank of Greece to maintain financial stability.

Given the current circumstances, the Governing Council decided to maintain the ceiling to the provision of emergency liquidity assistance (ELA) to Greek banks at the level decided on Friday (26 June 2015).

This apparently means that Greek banks may not open tomorrow due to a lack of cash.

Should this be seen as some sort of apocalyptic first step on the road to the collapse of the Euro, and the subsequent possible crumbling of the EU?

The Euro technocrats are saying, no, the Euro isn't in danger, while Germany will be popping champagne corks if, when Greece leaves the EU. Of course, everything is uncertain.

The only thing that the Greek crisis demonstrates is that the European Union is without a political soul. It merely has an economic and financial one that is in simbiosis with the US driven IMF, as the case of Greece and, for example, Hungary demonstrates.

The technocrates of the EU central bank, with full support from the EU parliament, can thus be ruthless with poverty, though are willing to cut more than enough slack to the fascist Hungarian regime. Hence to be poor is criminal, or at any rate economically insolvent, but to be fascist remains within the scope of what's tolerable.

I am exagerating a bit, but how would you like it if you were asked to give money to a neighbor that had been spending like a drunken sailor for years.

When the French economy blows up after decades of 20% deficits, about twice the necessary number of civil servants, a huge number of priviliged (politicians at the head) and everyone clamoring for even more government handouts we will only have ourselves to blame - not the EU, not Germany, not the IMF.

....that would be a bit of an exaggeration if the story included treason criminal conspiracy and massive amounts of fraud but your story doesn't....the story you have laid out is a brazen simplification of a fairy tale floated by the EU and dutifully spread by the MSM's to help mask a very complicated heist and subsequent coverup...

Cheers

 

[blutto]

Re: Re:

if i was a greek citizen, i'd vote 'no' with both hands...this is after starting out opinion-less, just attempting to learn from both sides...

it blows my mind, why the supposedly well educated, smart people running the financial institutions are oblivious to a simple fact that the austerity model cant work and wont work in/under certain conditions.

can the model be imposed, which is basically being forced down the throat of a weak nation ?

of course, it can? . just as would typically happen between the strong and weak...but since there is nothing but a trail of the model's failures, it is safe to bet that another imposition on greece will fail too.

i dont know the solution. but it seems the eu institutions, perhaps even the entire west-dominated financial structures have arrived at the dead end...

But austerity does work. Not to stabilize a country, no. It's designed to crush labor and suppress wages so that BMW can put a factory in Athens and pay a quarter of what they pay in Bavaria. It's designed to create conditions so desperate that the government has to sell of its resources; ports, highways, water, parks, etc to exploitive rentiers.

Yes, austerity works very, very well. And the Troika is doing *everything* they can to implement it.

John Swanson

....bingo! we have a winner!...

Cheers

 

[blutto]

Re: Re:

if i was a greek citizen, i'd vote 'no' with both hands...this is after starting out opinion-less, just attempting to learn from both sides...

it blows my mind, why the supposedly well educated, smart people running the financial institutions are oblivious to a simple fact that the austerity model cant work and wont work in/under certain conditions.

can the model be imposed, which is basically being forced down the throat of a weak nation ?

of course, it can? . just as would typically happen between the strong and weak...but since there is nothing but a trail of the model's failures, it is safe to bet that another imposition on greece will fail too.

i dont know the solution. but it seems the eu institutions, perhaps even the entire west-dominated financial structures have arrived at the dead end...

It depends what your definition of austerity is. In France, government spending increases 5-6% each year despite almost 0% inflation and 20% deficits, yet many decry that we are subjected to austerity. If austerity means not spending more than your revenue, I don't understand what is so bad about that.

Many say that austerity hasn't worked, yet it seems to me that certain countries like Greece have reduced their deficits significantly in only a few years thanks to "austerity". Deficit spending has been practiced for decades by many countries and look at the mess it has got us in. If overspending was the answer we should be sitting pretty right now - but we aren't.

I am not saying that nothing should be done to help Greece, but they have to realise that if they don't get their budget balanced nobody will want to help them. Would you lend them money knowing that they would flush it down the toilet and never pay you back?

"Would you lend them money knowing that they would flush it down the toilet and never pay you back?"

....well that was more or less the plan from the get go....which a huge part of the story here...it leads folks like our very own Mr Swenson to correctly call this an odious debt....

"In international law, odious debt, also known as illegitimate debt, is a legal theory that holds that the national debt incurred by a regime for purposes that do not serve the best interests of the nation, should not be enforceable"

....and...

"DEFINITION of 'Odious Debt'

Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious debt when government leaders use borrowed funds in ways that don't benefit or even oppress citizens. Some legal scholars argue that successor governments should not be held accountable for odious debt incurred by earlier regimes, but there is no consensus on how odious debt should actually be treated. In practice, countries often end up repaying it to uphold their ability to borrow at favorable interest rates.

INVESTOPEDIA EXPLAINS 'Odious Debt'

Legal scholars have identified regimes associated with odious debt in Nicaragua, the Philippines, Haiti, South Africa, Congo, Niger, Croatia and other countries whose rulers have looted national funds for their personal accounts or used the money to restrict liberties and inflict violence on their own citizens. In the European debt crisis of the early 2010s, some critics called Greek's debt odious."

...do remember the lending community helped cook the books so the lending could occur....

Cheers

 

[blutto]

.....a fine read....

"The European debt crisis goes back to the end of the roaring ‘90s when the banks were flush with money and looking for ways to raise their bottom lines. One major strategy was to pour money into real estate, which had the effect of creating bubbles, particularly in Spain and Ireland. In the latter, from 1999 to 2007, bank loans for Irish real estate jumped 1,730 percent, from 5 million Euros to 96.2 million Euros, or more than half the GDP of the Republic. Housing prices increased 500 percent. “It was not the public sector but the private sector that went haywire in Ireland,” concludes Financial Times analyst Martin Wolf.

Spain, which had a budget surplus and a low debt ratio, went through much the same process, and saw an identical jump in housing prices: 500 percent.

In both countries there was corruption, but it wasn’t the penny ante variety of tax evasion or profit skimming. Politicians—eager for a piece of the action and generous “donations”—waved zoning rules, environmental regulations, and cut sweetheart tax deals. Hundreds of thousands of housing projects went up, many of them never to be occupied.

Then the American banking crisis hit in 2008, and the bottom fell out. Suddenly, the ants were in trouble. But not really, because the ants have a trick: they gamble and the grasshoppers pay.

The “trick,” as Joseph Stiglitz, Nobel Laureate in economics, points out, is that Europe (and the U.S.) have moved those debts “from the private sector to the public sector—a well-established pattern over the past half-century.”

....from... http://www.counterpunch.org/2015/03/02/europes-debt-lies-myths/

....and this little bit which in some folks eyes is an update on the slavery and stuff...just to put things into perspective...

"“Debt, n. An ingenious substitute for the chain and whip of the slave driver”

Ambrose Bierce, Journalist & writer"

 

[Amsterhammer]

Rutrow, more trouble....Varoufakis has said that a better deal can be signed 'the day after the referendum', as the Troika offered a better deal as soon as the referendum was announced. Dijsselbloem said this evening that this was pure fantasy, not a word was true, there was no 'new deal' on offer.

 

[rhubroma]

Re: Re:

The Governing Council of the European Central Bank today welcomed the commitment by ministers from euro area Member States to take all necessary measures to further improve the resilience of euro area economies and to stand ready to take decisive steps to strengthen Economic and Monetary Union.

Following the decision by the Greek authorities to hold a referendum and the non-prolongation of the EU adjustment programme for Greece, the Governing Council declared it will work closely with the Bank of Greece to maintain financial stability.

Given the current circumstances, the Governing Council decided to maintain the ceiling to the provision of emergency liquidity assistance (ELA) to Greek banks at the level decided on Friday (26 June 2015).

This apparently means that Greek banks may not open tomorrow due to a lack of cash.

Should this be seen as some sort of apocalyptic first step on the road to the collapse of the Euro, and the subsequent possible crumbling of the EU?

The Euro technocrats are saying, no, the Euro isn't in danger, while Germany will be popping champagne corks if, when Greece leaves the EU. Of course, everything is uncertain.

The only thing that the Greek crisis demonstrates is that the European Union is without a political soul. It merely has an economic and financial one that is in simbiosis with the US driven IMF, as the case of Greece and, for example, Hungary demonstrates.

The technocrates of the EU central bank, with full support from the EU parliament, can thus be ruthless with poverty, though are willing to cut more than enough slack to the fascist Hungarian regime. Hence to be poor is criminal, or at any rate economically insolvent, but to be fascist remains within the scope of what's tolerable.

I am exagerating a bit, but how would you like it if you were asked to give money to a neighbor that had been spending like a drunken sailor for years.

When the French economy blows up after decades of 20% deficits, about twice the necessary number of civil servants, a huge number of priviliged (politicians at the head) and everyone clamoring for even more government handouts we will only have ourselves to blame - not the EU, not Germany, not the IMF.

Well how would you like it if you were asked to give money to a neighbor that invaded you, as was the case with Germany? Look, you see, it's all a fiction and I mean that. How much economic growth in France came from a ruthless exploitation of the colonies? Think about it.

When I think about the crisis in Europe I am inevitably draw into a much bigger global crisis.

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