World Politics

[python]

^^imo, the operative word is NOT 'stupidity' but ignorance

the very massive ignorance goes a long way explaining a myriad of our little planet's significant events that an 'average' western reader has no idea about. being uninformed or misinformed is NOT stupidity. rather, it is a natural extension of the western 'civilization opinion of itself.

it's superiority of values, standards and what not...

for instance, how many western (not all that stupid) people in the us or western europe know that at the very moment there is a huge gathering of the word leaders representing 50% of out planet's population ? that they discuss and implement new ways of making themselves INDEPENDENT of the west-dominated institutions in which they are consistently denied equal rights or share ?

i am going to climb down my white horse and let those interested read the link

Are the BRICS Building a Non-Western Concert of Powers?

http://nationalinterest.org/feature/are-the-brics-building-non-western-concert-powers-13280

 

[Amsterhammer]

Another excellent article.

Think about it this way. If 230 billion euro had been given to Greece, it would have amounted to just under 21,000 euros per person. Given such largess, it would have been impossible to generate a 25 percent unemployment rate among adults, over 50 percent unemployment among youth, a sharp increase in elderly poverty, and a near collapse of the banking system—even with the troika’s austerity package in place.
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To fix the problem, someone in core Europe is going to have to own up to all of the above and admit that their money wasn’t given to lazy Greeks but to already-bailed bankers who, despite a face-value haircut, ended up making a profit on the deal. Doing so would, however, also entail admitting that by shifting, quite deliberately, responsibility from reckless lenders to irresponsible (national) borrowers, Europe regenerated exactly the type of petty nationalism, in which moral Germans face off against corrupt Greeks, that the EU was designed to eliminate. And owning up to that, especially when mainstream parties’ vote shares are dwindling and parties such as Syriza are ascendant, simply isn’t going to happen. So what is?

Despite Germany being a serial defaulter that received debt relief four times in the twentieth century, Chancellor Angela Merkel is not about to cop to bailing out D-Bank and pinning it on the Greeks. Neither is French President Francois Hollande or anyone else. In short, the possibilities for a sensible solution are fading by the day, and the inevitability of Grexit looms large. It is telling that Tsipras and his colleagues repeatedly used the phrase “48 hours”—sometimes “72 hours”—as the deadline for getting a new deal with creditors once the vote was in. This number referred to how long Greek banks could probably stay solvent once the score went to 2-0.

At the time of writing, the ECB is not only violating its own statutes by limiting emergency liquidity assistance to Greek banks, but is also raising the haircuts on Greek collateral offered for new cash. In other words, the ECB, far from being an independent central bank, is acting as the eurogroup’s enforcer, despite the risk that doing so poses to the European project as a whole. We’ve never understood Greece because we have refused to see the crisis for what it was—a continuation of a series of bailouts for the financial sector that started in 2008 and that rumbles on today. It’s so much easier to blame the Greeks and then be surprised when they refuse to play along with the script.

https://www.foreignaffairs.com/articles/greece/2015-07-07/pain-athens

 

[rhubroma]

Here's another analysis by Slavoj Žižek:
http://www.newstatesman.com/politics/2015/07/Slavoj-Zizek-greece-chance-europe-awaken

 

[blutto]

Re:

Here's another analysis by Slavoj Žižek:
http://www.newstatesman.com/politics/2015/07/Slavoj-Zizek-greece-chance-europe-awaken

....great article...thanks for posting....

....two things stand out...

"An ideal is gradually emerging from the European establishment’s reaction to the Greek referendum, the ideal best rendered by the headline of a recent Gideon Rachman column in the Financial Times: “Eurozone’s weakest link is the voters”.

In this ideal world, Europe gets rid of this “weakest link” and experts gain the power to directly impose necessary economic measures – if elections take place at all, their function is just to confirm the consensus of experts. The problem is that this policy of experts is based on a fiction, the fiction of “extend and pretend” (extending the payback period, but pretending that all debts will eventually be paid)."

....and...

".... while the EU technocrats talk as if it is all a matter of detailed regulatory measures."

....the last statement is a little odd considering that a few of the people that I have read on this particular point state that a great deal of the problem is that this area has little or no regulatory measures or mechanisms in place to guide solutions...in fact they state that the present solutions sound like something pulled out of someone's butt and used only because it meets some ideological criterion ( because it most certainly doesn't have any economic justification...)..

Cheers

 

[rhubroma]

Re: Re:

Here's another analysis by Slavoj Žižek:
http://www.newstatesman.com/politics/2015/07/Slavoj-Zizek-greece-chance-europe-awaken

....great article...thanks for posting....

....two things stand out...

"An ideal is gradually emerging from the European establishment’s reaction to the Greek referendum, the ideal best rendered by the headline of a recent Gideon Rachman column in the Financial Times: “Eurozone’s weakest link is the voters”.

In this ideal world, Europe gets rid of this “weakest link” and experts gain the power to directly impose necessary economic measures – if elections take place at all, their function is just to confirm the consensus of experts. The problem is that this policy of experts is based on a fiction, the fiction of “extend and pretend” (extending the payback period, but pretending that all debts will eventually be paid)."

....and...

".... while the EU technocrats talk as if it is all a matter of detailed regulatory measures."

....the last statement is a little odd considering that a few of the people that I have read on this particular point state that a great deal of the problem is that this area has little or no regulatory measures or mechanisms in place to guide solutions...in fact they state that the present solutions sound like something pulled out of someone's butt and used only because it meets some ideological criterion ( because it most certainly doesn't have any economic justification...)..

Cheers

This is what I make of it, of course while leaving several salient points out.

The point he is making is that the technocrats have no intention of allowing conditions that, given the economic reality, will allow Greece to pay back its debt (principle and interest). Their policy line, therefore, is to protract payments ad infinitem to create a kind of vassal state, which today's financial capitalism has grown increasingly to rely upon, to guarantee a sustained return for the credit institutions' investments. This, of course, irrespective of the actual hardship this inflicts upon the debtor, which happens to be a nation. The system wants its pound of flesh no matter what, and this is what it expects to get. This though is masked by qualifying it all in terms of simply being a matter of detailed regulatory measures, when these themselves have been the fruit of the very ideological intentions it accuses Syriza of being motivated by. In the asymmetric relationship Zizek is arguing that the hegemonic capitalist system isn't acting out of concerns about actual financial issues at all, but over maintaining the necessary pressure to bear in bringing all those trapped in its clutches into total submission. Naturally, from the other end, this implies a "heretical" challenge on the part of Greece to the dogmas of its theology, but that this, in Zizek's viewpoint, may be just what's needed to save the religion.

 

[Alpe d'Huez]

I have to say I'm surprised by the deal being reportedly mentioned where the Greeks are willing to deal with even more austerity measures in exchange for a lesser debt. This sounds like more kicking the can down the road, putting a slightly larger band-aid on a severed limb.

Can anyone clarify? Tell me what I'm missing, if I'm wrong?

http://www.usatoday.com/story/money/2015/07/09/greece-economic-reform-proposal/29900177/

 

[Amsterhammer]

Re:

I have to say I'm surprised by the deal being reportedly mentioned where the Greeks are willing to deal with even more austerity measures in exchange for a lesser debt. This sounds like more kicking the can down the road, putting a slightly larger band-aid on a severed limb.

Can anyone clarify? Tell me what I'm missing, if I'm wrong?

http://www.usatoday.com/story/money/2015/07/09/greece-economic-reform-proposal/29900177/

Sadly, you're not wrong. The Guardian summed it up like this -

"The Greek government capitulated on Thursday to demands from its creditors for severe austerity measures in return for a modest debt write-off, raising hopes that a rescue deal could be signed at an emergency meeting of EU leaders on Sunday."

Neither Varoufakis, nor his successor, Tsakalotos, are economic dummies. They must know that the only hope for any salvation with dignity is a Grexit. Yet here, the Syriza government is apparently bending its knee and bowing its head to Brussels and Berlin. I agree that this is bizarre, given their strengthened hand after the referendum. My theory, fwiw, is this-

Buried deep in the proposals that the Greeks sent to Brussels this evening is a worm, something that Tsipras knows won't be swallowed by the troika, an ultimate sticking point. He will then be able to present Grexit to his party, to parliament, and to the Greek public, as a consequence forced on him by the unyielding Eurocrats. A significant section of Syriza, the 'hard left' if you like, will rebel against this sell-out, which Tsipras will manage to get through parliament with opposition support. The vast majority of Greeks do not want to lose the euro, because they fear that a Grexit would mean leaving the EU as well, which is nonsense. Hence, returning to their own, ancient currency has to be sold by Tsipras as being literally, the only way out.

 

[rhubroma]

The Greek heresy is fundamentally to challenge, or even place in question, a financial orthodoxy that considers the prerogatives of the creditors in heiratic terms, which becomes set against the primary needs of the profane debtor whose democratic attempts at resistance are unconditionally overridden by the supernatural authority.

This reality then apparently justifies the protracted asymmetrical relationship, which disguised as a moral cause has gained its legitimacy. It thus becomes not about a predatory and irrational credit policy, but an ethical concern in which the "hard working people of Europe" are being defrauded by "unrepentant free-loaders." I have, though, never bought into such gross oversimplifications.

 

[FoxxyBrown1111]

"In politics, nothing happens by accident. If it happens, you can bet it was planned that way."
Franklin D. Roosevelt

Under impression of this premise read the following "nugget" (depending on ones POV) I found...

http://www.pi-news.net/2015/07/muenchen-460-invasoren-am-tag/

Ouotes from the article (translated from german into english):
"The unrestrained mass asylum abuse goes on ceaselessly. Who would be surprised? The "land of milk and honey" (Germany), ruled by betrayers against the native people, eventually lets in everybody. The newly arrived immediately phone home, with their modern smart phones: Come forth all, there are enough idiots who actually jump in joy about the fact that more of us are coming. "The Süddeutsche" (German MSM newspaper) reports joyfully enforcement: On Wednesday 460 arrived in Munich, before that it was (up to) 400 per day in the first six months, for a total of 40.600. By comparison, the whole of last year, the figure was 32.000...."

"The asylum-abuse-tsunami brought Bavaria, this year alone, basically three new towns..."

"The bone-headed (fake) lefties, obviously Germany haters, of Pro-Asyl even demand unlimited admittance."

"Something like that Graf Stauffenberg and the members of the White-Rose must have felt: They had to watch helplessly as almost all Germans marched straightway, dutifully and obediently as mindless sheeps, into the abyss."

"A crime against our country's population."

My opinion? Speechless & stunned that this happens to a country built from ashes, and only 50 years later it´s going to be destroyed again, with the numbed masses watching and doing nothing against this insanity.

Now remember what Roosevelt said. The conclusion can only be: Europes (what happens in Munich, Bavaria, whole Germany, happens everywhere in Europe) societies (built with nothing than bare hands by our mothers & fathers) are intentionally destroyed. One of the biggest crimes of this young century.

 

[blutto]

Re:

The Greek heresy is fundamentally to challenge, or even place in question, a financial orthodoxy that considers the prerogatives of the creditors in heiratic terms, which becomes set against the primary needs of the profane debtor whose democratic attempts at resistance are unconditionally overridden by the supernatural authority.

This reality then apparently justifies the protracted asymmetrical relationship, which disguised as a moral cause has gained its legitimacy. It thus becomes not about a predatory and irrational credit policy, but an ethical concern in which the "hard working people of Europe" are being defrauded by "unrepentant free-loaders." I have, though, never bought into such gross oversimplifications.

....see below an article that addresses the way the "financial orthodoxy" you mentions looks at ( and has looked at ) the ways and means available to deal with intergovernmental (as opposed to business) debt....

"The major financial problem tearing economies apart over the past century has stemmed more from official inter-governmental debt than with private-sector debt. That is why the global economy today faces a similar breakdown to the Depression years of 1929-31, when it became apparent that the volume of official inter-government debts could not be paid"

....and...

"Legal procedures are well established to cope with corporate and personal bankruptcy. Courts write down personal and business debts either under “debtor in control” procedures or foreclosure, and creditors take a loss on loans that go bad. Personal bankruptcy permits individuals to make a fresh start with a Clean Slate."

....and but certainly not least...

"It is much harder to write down debts owed to or guaranteed by governments. U.S. student loan debt cannot be written off, but remains a lingering burden to prevent graduates from earning enough take-home pay (after debt service and FICA Social Security tax withholding is taken out of their paychecks) to get married, start families and buy homes of their own. Only the banks get bailed out, now that they have become in effect the economy’s central planners."

http://www.counterpunch.org/2015/07/08/71809/

Cheers

 

[Amsterhammer]

For those who can stomach it, here is the entire proposal - http://www.macrobusiness.com.au/2015/07/tsipras-has-just-destroyed-greece/?utm_medium=email

I agree with the conclusions here -

This makes absolutely no sense. The Tsipras Government has just:

- renegotiated itself into the same position it was in two months ago;
- set massively false expectations with the Greek public;
- destroyed the Greek banking system, and
- destroyed what was left of Greek political capital in EU.

If this deal gets through the Greek Parliament, and it could given everyone other than the ruling party and Golden Dawn are in favour of austerity, then Greece has just destroyed itself to no purpose.

Markets are drawing comfort from the roll over but how Tsipras can return home without being lynched by a mob is beyond me. And that raises the prospect of any deal being held immediately hostage to violence.

 

[movingtarget]

Re:

For those who can stomach it, here is the entire proposal - http://www.macrobusiness.com.au/2015/07/tsipras-has-just-destroyed-greece/?utm_medium=email

I agree with the conclusions here -

This makes absolutely no sense. The Tsipras Government has just:

- renegotiated itself into the same position it was in two months ago;
- set massively false expectations with the Greek public;
- destroyed the Greek banking system, and
- destroyed what was left of Greek political capital in EU.

If this deal gets through the Greek Parliament, and it could given everyone other than the ruling party and Golden Dawn are in favour of austerity, then Greece has just destroyed itself to no purpose.

Markets are drawing comfort from the roll over but how Tsipras can return home without being lynched by a mob is beyond me. And that raises the prospect of any deal being held immediately hostage to violence.

Negotiating from a position of weakness tends to do that. Tsipras should resign if he has a conscience. The referendum was just a waste of money and the rest of Europe acknowledged that. What the Greek people want was never the issue.

 

[meat puppet]

I have been somewhat displeased with Tsipras along the way, and the latest move does not look good either. It makes no sense after the referendum. However, this is a game of smoke and mirrors and he might be trying to demonstrate in practice that nothing but capitulation will be enough. I don't think this is the baseline scenario, but it is a possibility that needs to be taken into account. There will be no "deal" in any meaningful sense, ie. one that allows Greece to get back on its feet and actually pay its dues in the next 50 years. It is either bailout III with insane conditions or grexit.

So Tsipras might be playing poker here, counting on either the Troika or the Syriza Left Platform MPs to reject the proposal. In the (IMO unlikely) event that the proposal passes the parliament but becomes rejected by the Troika the move then might demonstrate to the Greek public that the Troika is demanding the impossible, plain and simple. This could be then spun into a chip favouring grexit.

That said, I would find anything resembling this kind of scenario both desperate and unlikely. Much more likely that Syriza is simply being overwhelmed.

 

[blutto]

....a post from another forum...

" Austerity Is About The Rich Hoarding Resources For Themselves.

The kind of austerity being inflicted on Greece and other European countries as well as the US called sequestration has more to do with hoarding resources. The rich are about saving and hoarding resources for themselves. They demand all the best in real estate, natural resources, food et al for themselves. The fact that others go wanting is irrelevant to the 1%. It is a new kind of feudalism. We do not have kings and titles but we do have entitlement of wealth. And we also have a sort of aristocracy that is above the law and above paying taxes.

All the distractions of racism, the Confederate flag, culture wars et al are just distractions while the super rich gather more wealth for themselves. Even living wages are too much for them because it costs them profit. In some ways the US looks a lot like France just before the French revolution. And this next election is about the billionaires getting candidates elected that will give complete political and economic supremacy.

Bernie Sanders is so right on the issues and it terrifies the monied class because he exposes their thievery. And the GOP is really the billionaires' party supported by an ignorant religious right.

Privatization of the public commons, gated communities, exclusive clubs etc are all symptoms of an oligarchic disease that inflicts the politics of the world. Globalization is the disease where the lowest common denominator can be exploited."

Cheers

 

[blutto]

....was jus' waltzing thru the internets and stumbled across some numbers which may or may not be significant but do at least warrant a look see...

...the first number is 91.96, which is the Greek Government Debt to GDP average percentage from 1980 until 2014...

...from... http://www.tradingeconomics.com/greece/government-debt-to-gdp

...the second number is 106.525, which is the United States of America equivalent in 2012...

....and Greece is in serious financial trouble?....colour me confused....

Cheers

 

[l.Harm]

Check Japan's debt/GDP

 

[Alpe d'Huez]

No, it's because debt like this is a big, scary number. It's being used to frighten people, along with guilt over manufactured "accountability" to rationalize austerity.

 

[blutto]

Re:

Check Japan's debt/GDP

....oh that ....just a flesh wound...carry on nothing to see there....and the Japanese are just so industrious and hard-working, and diligent, and assiduous, and conscientious, and steady, and painstaking, and sedulous, and persevering, and unflagging, and untiring, and tireless, and indefatigable,... ...

Cheers

 

[python]

when you you own the world reserve currency (and dominate the 4 institutions doling it out), sorry chaps, but the debt to gdp ratio is a meaningless stat...for the printing press owner

 

[meat puppet]

So the greek parliament gave in last night, giving green light to Tsipras.

http://www.ekathimerini.com/199326/article/ekathimerini/news/tsipras-wins-parliaments-support-for-proposals-but-also-suffers-losses

About govt debt, for countries that have floating exchange rates and issue their currency and accumulate their debts in the said currency, the debt to GDP ratio is not very important. Financial markets know that such countries can always service their liabilities denominated in the domestic currency in a keystroke. Same applies to other monetary sovereigns. The debt to GDP hysteria is a fad.

So are there no economic limits to gov't spending, then? Of course there are, but they are real things not abstract ratios elevated to demigods. Most importantly it is a question of how deficit spending affects inflation, exchange rate and availability of real resources.

In other news I am a bit worried about the China crash.

 

[rhubroma]

Re:

So the greek parliament gave in last night, giving green light to Tsipras.

http://www.ekathimerini.com/199326/article/ekathimerini/news/tsipras-wins-parliaments-support-for-proposals-but-also-suffers-losses

About govt debt, for countries that have floating exchange rates and issue their currency and accumulate their debts in the said currency, the debt to GDP ratio is not very important. Financial markets know that such countries can always service their liabilities denominated in the domestic currency in a keystroke. Same applies to other monetary sovereigns. The debt to GDP hysteria is a fad.

So are there no economic limits to gov't spending, then? Of course there are, but they are real things not abstract ratios elevated to demigods. Most importantly it is a question of how deficit spending affects inflation, exchange rate and availability of real resources.

In other news I am a bit worried about the China crash.

For the lay folks here, could you explain then specifically why Greece's debt/GNP ratio has come with such dire consequences, while that of the US does not?

Python from a technical and Alpe from a psychological perspective summed it up I think, but I'd be interested in hearing more on this topic.

Regardless of Greece's structural situation, or even the corruption that was at work (to which banks like Goldman Sacks were really just willing accomplices), the nature of the punative pedagogy to me has been sheer folly.

There is consequently another type of "socialistic" model at work, the moment that when Greece last paid (I believe 30 billion Euros) it was merely to subsidize the creditors and took nothing from its debt, which actually increased. On this note, here is were liberalism's ideology is most fervently at work in using its leverage to reduce a vulnerable "current socialistic system" into serfdom. While it does this simply because it sees itself as the only legitimate system. The fact though that only the banks get bailed out, now that they have become in effect the economy’s central planners, strikes me as consistent with the welfarism they so combat in principle. Perhaps, though, I'm just missing something.

Seems to me that a vulnerable "socialistic state" became the easy target of what financially is the equivilant of a punative pedagogy.

 

[Echoes]

viewtopic.php?p=1632019#p1632019

Syriza is a red herring. They've never wished exit the euro, even less the EU, they will not modify any article of the TFEU nor the TEU, they won't inflect any decision made by the Commission. The Greeks will be disillusioned very soon.

The only say to stop austerity is leaving the EU.

Only EPAM in Greece has a consistent stance on the EU.

Why am I always right? I almost believed them when they made their referendum but hell the FT knew on July 1 that Tsipras was prepared to accept all bailout conditions.

Syriza was just a big left-wing joke. Tsipras played on the legal impossibility to leave the Eurozone (which means the impossibility to be expelled from it). Hence he imposed his conditions. A politics of rug merchants. And now the other countries in difficulties in the zone (Portugal, Spain, Slovakia, etc.) are gonna say "why not us then?" Syriza's stance was not a sympathetic one at all.

The best Greek party at the moment is EPAM


On another note, now even the Guardian admits that ISIS was a US creation. I was again right from the start. ISIS is not Muslim, it's Western and was meant to destroy Islam: http://www.theguardian.com/commentisfree/2015/jun/03/us-isis-syria-iraq

 

[Bustedknuckle]

Re:

....a post from another forum...

" Austerity Is About The Rich Hoarding Resources For Themselves.

The kind of austerity being inflicted on Greece and other European countries as well as the US called sequestration has more to do with hoarding resources. The rich are about saving and hoarding resources for themselves. They demand all the best in real estate, natural resources, food et al for themselves. The fact that others go wanting is irrelevant to the 1%. It is a new kind of feudalism. We do not have kings and titles but we do have entitlement of wealth. And we also have a sort of aristocracy that is above the law and above paying taxes.

All the distractions of racism, the Confederate flag, culture wars et al are just distractions while the super rich gather more wealth for themselves. Even living wages are too much for them because it costs them profit. In some ways the US looks a lot like France just before the French revolution. And this next election is about the billionaires getting candidates elected that will give complete political and economic supremacy.

Bernie Sanders is so right on the issues and it terrifies the monied class because he exposes their thievery. And the GOP is really the billionaires' party supported by an ignorant religious right.

Privatization of the public commons, gated communities, exclusive clubs etc are all symptoms of an oligarchic disease that inflicts the politics of the world. Globalization is the disease where the lowest common denominator can be exploited."

Cheers

Hear hear!!

 

[l.Harm]

Re: Re:

So the greek parliament gave in last night, giving green light to Tsipras.

http://www.ekathimerini.com/199326/article/ekathimerini/news/tsipras-wins-parliaments-support-for-proposals-but-also-suffers-losses

About govt debt, for countries that have floating exchange rates and issue their currency and accumulate their debts in the said currency, the debt to GDP ratio is not very important. Financial markets know that such countries can always service their liabilities denominated in the domestic currency in a keystroke. Same applies to other monetary sovereigns. The debt to GDP hysteria is a fad.

So are there no economic limits to gov't spending, then? Of course there are, but they are real things not abstract ratios elevated to demigods. Most importantly it is a question of how deficit spending affects inflation, exchange rate and availability of real resources.

In other news I am a bit worried about the China crash.

For the lay folks here, could you explain then specifically why Greece's debt/GNP ratio has come with such dire consequences, while that of the US does not?

Python from a technical and Alpe from a psychological perspective summed it up I think, but I'd be interested in hearing more on this topic.

Regardless of Greece's structural situation, or even the corruption that was at work (to which banks like Goldman Sacks were really just willing accomplices), the nature of the punative pedagogy to me has been sheer folly.

There is consequently another type of "socialistic" model at work, the moment that when Greece last paid (I believe 30 billion Euros) it was merely to subsidize the creditors and took nothing from its debt, which actually increased. On this note, here is were liberalism's ideology is most fervently at work in using its leverage to reduce a vulnerable "current socialistic system" into serfdom. While it does this simply because it sees itself as the only legitimate system. The fact though that only the banks get bailed out, now that they have become in effect the economy’s central planners, strikes me as consistent with the welfarism they so combat in principle. Perhaps, though, I'm just missing something.

Seems to me that a vulnerable "socialistic state" became the easy target of what financially is the equivilant of a punative pedagogy.

Debt/GDP is part of the equation, not the complete picture.

It's about having the confidence of financial markets. Markets believe the US is able to repay its debts. Once markets lose their confidence, government bond yields rise and it becomes impossible for countries to finance their debt. This is what happened to Greece. Misreported data, no competitiveness (so the economy can not 'rebound' from a down trend), mistakes in Eurozone. Investors look at these facts and numbers as well. I don't believe the whole financial system is rigged to f*ck Greece when the government bond yields rose. It was the rational thing to do given the circumstances of the Greek economy.

One nuance about debt/GDP level. Pre-crisis level US was around 60%, while Greece already was at 100%. During the crisis debt/GDP of every country rose. Spain only had 40% pre-crisis! Just to emphasize debt/GDP is a number, not completely unimportant, but just one number does not completely represent the state of the economy. In the case of Spain it was a real estate bubble which caused them huge problems.


Yes, Greece had to bring down debt levels. However, within the Stability & Growth Pact there is an unhealthy one-sided emphasis on debt. Economists have been criticizing this from the very beginning. But well, Greece was the fastest growing economy in the Eurozone (if I'm correct). No politician is going to bring bad news in good times. Greek debt was too high, but not the only cause of their crisis.

 

[rhubroma]

Re: Re:

So the greek parliament gave in last night, giving green light to Tsipras.

http://www.ekathimerini.com/199326/article/ekathimerini/news/tsipras-wins-parliaments-support-for-proposals-but-also-suffers-losses

About govt debt, for countries that have floating exchange rates and issue their currency and accumulate their debts in the said currency, the debt to GDP ratio is not very important. Financial markets know that such countries can always service their liabilities denominated in the domestic currency in a keystroke. Same applies to other monetary sovereigns. The debt to GDP hysteria is a fad.

So are there no economic limits to gov't spending, then? Of course there are, but they are real things not abstract ratios elevated to demigods. Most importantly it is a question of how deficit spending affects inflation, exchange rate and availability of real resources.

In other news I am a bit worried about the China crash.

For the lay folks here, could you explain then specifically why Greece's debt/GNP ratio has come with such dire consequences, while that of the US does not?

Python from a technical and Alpe from a psychological perspective summed it up I think, but I'd be interested in hearing more on this topic.

Regardless of Greece's structural situation, or even the corruption that was at work (to which banks like Goldman Sacks were really just willing accomplices), the nature of the punative pedagogy to me has been sheer folly.

There is consequently another type of "socialistic" model at work, the moment that when Greece last paid (I believe 30 billion Euros) it was merely to subsidize the creditors and took nothing from its debt, which actually increased. On this note, here is were liberalism's ideology is most fervently at work in using its leverage to reduce a vulnerable "current socialistic system" into serfdom. While it does this simply because it sees itself as the only legitimate system. The fact though that only the banks get bailed out, now that they have become in effect the economy’s central planners, strikes me as consistent with the welfarism they so combat in principle. Perhaps, though, I'm just missing something.

Seems to me that a vulnerable "socialistic state" became the easy target of what financially is the equivilant of a punative pedagogy.

Debt/GDP is part of the equation, not the complete picture.

It's about having the confidence of financial markets. Markets believe the US is able to repay its debts. Once markets lose their confidence, government bond yields rise and it becomes impossible for countries to finance their debt. This is what happened to Greece. Misreported data, no competitiveness (so the economy can not 'rebound' from a down trend), mistakes in Eurozone. Investors look at these facts and numbers as well. I don't believe the whole financial system is rigged to f*ck Greece when the government bond yields rose. It was the rational thing to do given the circumstances of the Greek economy.

One nuance about debt/GDP level. Pre-crisis level US was around 60%, while Greece already was at 100%. During the crisis debt/GDP of every country rose. Spain only had 40% pre-crisis! Just to emphasize debt/GDP is a number, not completely unimportant, but just one number does not completely represent the state of the economy. In the case of Spain it was a real estate bubble which caused them huge problems.


Yes, Greece had to bring down debt levels. However, within the Stability & Growth Pact there is an unhealthy one-sided emphasis on debt. Economists have been criticizing this from the very beginning. But well, Greece was the fastest growing economy in the Eurozone (if I'm correct). No politician is going to bring bad news in good times. Greek debt was too high, but not the only cause of their crisis.

Thanks for that and thanks also for confirming my suspicion that so much of so-called economic science (which is apparently grounded in a purely objective analysis of data) really comes down to, however rationally based, interpretation; for which things like emotion and personal preferences play rather key (however unscientific) roles.

The markets rely on confidence to perform well, even when what motivates that confidence may not always be warranted from the perspective of so-called economic science, for which ideological considerations interfere with the same logic this presupposes.

Certainly Greece provided several objective reasons for the markets not to place their confidence in the country's ability to get out of a hole that was being excavated deeper as a result. However, I'm still inclined to think that the actual criticalness of the Greek debacle was, and not in an insignificant part, generated by the markets imposing for ideological reasons what I have called a punitive pedagogy. How else can it be regarded when debt is given such a ponderous weight in cases for the so-called "modern socialistic countries," but not when the country overspends militarily but is firmly and comfortably ensconced in the liberal capitalistic tradition?

Seems to me their isn't much that's really objective about it and, despite what may surely be taken as another blasphemy, that the economy is probably another fiction we are telling ourselves.