Imagine you are broke and your mate offers to lend some cash to keep the mortgage and car etc etc – but says he won’t fund your holidays, house redecoration or landscaping your garden. Fair enough right? Then you invite him round for dinner one night and your family all sit down and start slagging him off and calling him a tosser etc…is that fair?

Seem way off the mark for me that the Greeks are protesting that Angela Merkel is visiting them today, or am I missing something? Please enlighten me.

But hasn’t she had the audacity to suggest that maybe they should all start paying some tax, and stop retiring when they’re 24

am I missing something?

Quite a bit I would say. There is no caparison between the situation which a sovereign nation is in, and lending some cash from a mate. Nice story though.

Some of the blame lies with previous Greek government and the people (for avoiding taxes), but the concept of a single currency for such a vast and diverse economic area was never going to work as sold to everyone. Europe should have helped Greece exit gracefully from the Euro and devalue to grow rather than insisting they stay and systematically destroying their economy through austerity – how anyone thinks you can grow by slashing expenditure is beyond me.

I feel quite sorry for the Greek people, they’ve been completely and utterly shafted.

You open the door and it’s a (German speaking) debt collector with a dog and a big stick wanting payment for the debts incurred by your ex-wife who bought a big Mercedes. And an Aston Martin. She is still living in a mansion, but you are in a council flat. Nevertheless, the debt collector is demanding your last 20p. And every penny you or your kids will ever earn.

Merkel’s visit to Greece is as offensive to the Greek people as Thatcher visiting The North would be to the residents.

“But hasn’t she had the audacity to suggest that maybe they should all start paying some tax, and stop retiring when they’re 24”

Ordinary people are paying tax till they bleed – for example they RETROACTIVELY increased property taxes so you have to pay for the extra from 2009.An old guy who does some odd jobs for us for a few Euros an hour got a bill for “solidarity tax” of Eur 900, just out of the blue. The ones not paying their fair share are (as usual) the lawyers, doctors etc. i.e. the same people who are in parliament.

Isn’t the whole thing just a ridiculous charade anyway? Doesn’t every single economist (who famously agree on pretty much nothing) all acknowledge that Greece has to drop out of the Euro. Its just a case of how much money Germany pours into it before the inevitable?

DrJ I was joking. I remember listening to a program on Radio 4 about it. Saying that the Lawyers, Surgeons etc were all submitting tax assessments saying they’d only actually earned £2.33 last year. And no-one was questioning any of them, just signing them off

“The euro is dead, everyone is just bickering about who’s going to pay for the funeral”

Devaluing your currency is all well and good, but if the loans that you need to pay off are still in Euros then the more EU cash they take the worse the final exit is going to be.

Aren’t the Germans essentially just bailing out their own banks really though? Without saying that’s what they’re actually doing.

Wasn’t it German Banks fueling a crazy property bubble in Southern Europe, which has now burst like a huge puss-filled boil on a particularly greasy adolescents chin?

And now the German government is just giving the Greeks money, which is then in their metaphorical current account for about 0.5 of a second, before being payed back immediately to German Banks?

Yes, and just like the US and UK QEs and bank bail-outs it’ll work really well…

binners – Member
Aren’t the Germans essentially just bailing out their own banks really though?

Not really – the bulk of banks’ exposures to Greece and other S European states has been transferred to the balance sheets of the ECB and other central banks. Bank risk has been replaced by sovereign/CB risk as a result and therefore to guess who….?

The French have recently also concluded their bank sales with CA selling Emporiki to Alpha for 1 Euro in the last few days. So the scene is set for break-up. Or course, the main problem is the fact that focus has shifted from Greece to Spain and the scale of this on-coming train crash truly terrifies the European elite – and so it should. Greece has now (shamefully) become a side show.

The Germans need a bit of collateral, what about Crete,they were keen enough on it a few years ago. The Greeks could easily sell a few islands they got hundreds of them.

“the bulk of banks’ exposures to Greece and other S European states has been transferred to the balance sheets of the ECB and other central banks. Bank risk has been replaced by sovereign/CB risk as a result and therefore to guess who….? “

Of course – the whole thing is a mechanism to transfer money from the pockets of taxpayers – Greek or otherwise – to the banks.

In a rational world we’d be setting up guillotines on street corners. Instead we shut our mouths and open our wallets.

Devaluing your currency is all well and good, but if the loans that you need to pay off are still in Euros then the more EU cash they take the worse the final exit is going to be.

The debt holders will have to take a large hit on their loans, but it will all recover quicker rather than this protracted slow death as right now anyone with Greek bonds chance has huge uncertainty (and probably won’t get their money back).

I wonder if in 20 years time you will still all be saying the Euro is dead?

IMHO it depends on whether they have enough political will and enough desire. If they have then they can stick with it whatever anyone else thinks

Will they?
I am not sure but most of those objecting and saying it will fail have been hoping for this day since its inception. I dont take their views very seriously tbh.

To be fair, those ‘objecting and saying it will fail’ have been pointing out exactly why it would fail. And they appear to have been, to a large extent, vindicated.

To be fair, those ‘objecting and saying it will fail’ have been pointing out exactly why it would fail. And they appear to have been, to a large extent, vindicated.

Who was predicting the banking system needing to be refinanced by sovereign debt 10 years ago?

Afternoon JY!

Junkyard – Member
I wonder if in 20 years time you will still all be saying the Euro is dead?

More likely – “do you remember the Euro?”

(Look in Ch 11 (joke) after Gold Standard, Bretton Woods, EMU etc…)

IMHO it depends on whether they have enough political will and enough desire.

Political will plus desire (the blue corner) vs economic reality plus social unrest (the red corner).

I know where I am placing my bets. Politicians who underestimate social unrest tend to shorten their political careers.

I am not sure but most of those objecting and saying it will fail have been hoping for this day since its inception. I dont take their views very seriously tbh.

As binners says – there are plenty of sane people who have long recognised that Europe fails to satisfy the basic criteria for a common currency area and it has been wise to take their views very seriously indeed.

MSP – Member
Who was predicting the banking system needing to be refinanced by sovereign debt 10 years ago?

Depressingly quite a few people in the Bank of England were warning of potential crises (albeit not quite 10 years ago and not with the exact outcome). The red flags were being raised within the BoE but were ignored by Steady Eddie, the FSA and the government.

Meanwhile, Greek society is collapsing …

http://www.guardian.co.uk/world/2012/oct/09/greek-antifascist-protesters-torture-police

Afternoon THM
TBH it is an issue where i am largely ambivalent – this is pretty much my attitude to Europe – I dont really care from how far away my governement ignores me tbh

As you note it is a fight or a struggle who knows who will win
I suspect the price of exit is also sufficiently high to cause social unrest etc
Still fence sitting tbh but many more would love to see it fail than see it succeed

However the fact remains if they [all the EU] are willing to pay the price then the Euro will stay.

Well JY please help me – why the ambivalence of the left-wing community to the forced 25-30% decline in workers’ wages? Or the alternative result – mass youth unemployment? It is a catastrophe of breathtaking proportions and still the political elite lie to us all. Staggering!

Meanwhile, across the Atlantic, Argentina approaches another economic cliff-edge although I am sure there will be some happy to come along soon to re-iterate how Kirchner’s policies make such sound economic sense!!!

Are those demonstrating about Angela Merkel abit thick? If she stopped the hand outs then they REALLY would be in shit. Idiots.

Maybe they should. Give the handouts to those companies/investors elsewhere in the EU who would loose investments and let Greece rebalance itself for a period of isolation…

However

There are people who have actually bid/invested in products that rely on this outcome which will pay them massively when it happens. Sad really.

hora – Member
Are those demonstrating about Angela Merkel abit thick?

No they are not – they are desperate. They also know that neither Merkel nor the Troika can provide the answers to their plight. They have been let down by their own politicians, their own society, TUs, the EU, the IMF and the world’s investment banks/investment community.

Have a read of “Greece’s Odious Debt” by Jason Manolopoulos for an interesting background.

why the ambivalence of the left-wing community to the forced 25-30% decline in workers’ wages? Or the alternative result – mass youth unemployment?

I think we have been telling you for some time capitalism has failed and will continue to do so/ When it does have its inevitable bust cycle the resulting problems affect the [very]poor more than the [very]rich.

I think the mentality of the Greece public right now is not one of an ashamed debtor, but probably that they have paid the price for the follies of the corrupt western financial system, and that if they’re going to go down (correction: they already have), then they sure as hell want to take everyone else down with them.

And who could blame them?

C’mon JY – that’s a little bit too much of a side-swerve!! 😉

It was a serious question. Leave aside the capitalism has the seeds of its own destruction debate for one moment, I do find it odd that (in general) those of a left-wing persuasion can support an economic/political construct that condemns workers to such an appalling outcome. But it is a funny world we live in, just not in the ha, ha sense!

those of a left-wing persuasion can support an economic/political construct that condemns workers to such an appalling outcome.

I think most people of a left wing persuasion would happily accept lower wages for a guaranteed reduction in poverty and suffering. What they’re not going to accept though, is a reduction in wages to bailout corrupt banks, financiers, the tax-evading super-rich and others who seem to think they live outside the norms of society which everyone else has to accept.

Ok – dazh (and JY) I am not explaining myself very well. I am referring specifically to the Euro and the concept of a fixed-exchange rate mechanism. Given the obvious, negative impact that this is having on workers, I would imagine more of a LW reaction to such structures. Hence my question to JY originally as he seemed to be implying that he was in favour of the Euro (although I may have misread that).

Well as far as I know, most leftwingers are against the euro, but for very different reasons than rightwingers. Which might explain their reticence in voicing their opposition, for fear of being associated with the Nigel Farage’s and Nigel Lawson’s of this world.

As for the euro/EU condemning workers to appalling outcomes. I think the point is more that it’s not the European project as it once was that has caused the horrors we’re now seeing in Greece, but the neo-liberal elites who have corrupted and co-erced Europe/the euro toward their own ends.

My Greek mate travels there a lot and from what he says, the locals are still flush but are really angry that their skint government wants them all to actually pay tax.

I’d rather trust his opinion to those of a left wing brit with a massive hang up over “failed capitalism”.

Well yes of course, if some people in Greece are lucky enough to still be able to put food in their mouths and keep a roof over their head, then it’s obviously their fault for wanting to maintain a basic standard of living.

Instead of blaming people at the bottom for wanting to be like the people at the top, maybe we should be looking at the people at the top who could be just a tiny bit more like the people at at the bottom?

My Greek mate travels there a lot and from what he says, the locals are still flush but are really angry that their skint government wants them all to actually pay tax

.

I wonder when your Greek mate was last there, and what circles he moves in. My Greek family are getting an endless stream of tax demands, often mistaken, and threats of bailiffs if they don’t pay up regardless. Meanwhile the fat cats stay fat. There is a limit to how long this can go on – up to now people have been mostly paying up where they can, but that can’t go on for ever without signs of the pain being shared, or signs of potential improvement.

I do find it odd that (in general) those of a left-wing persuasion can support an economic/political construct that condemns workers to such an appalling outcome

It appeals to or brotherhood of humanity?? That is a moderately serious answer as was the one before

I dont know tbh like I say I am fairly ambivalent to the whole thing so I am not the person to answer or ask
In the UK perhaps because we view the EU as more left wing [ social contract] than the UK eg human rights, time directives.

I suspect it could also be because the right wing press is not reporting what the left are saying as we have [ not as bad as the US] broadly pro capitalist with slightly different social justice flavours thrown in as our political party – is anyone actually really socialist in anything but name?

perhaps the collapse would be worse in the short run for the poor and the needy?
We like large states that plan stuff?

No idea really – do you? [ not that i expect to agree with your insight*]

* not meant to sound shitty at all though it reads like it

Junkyard – Member
perhaps the collapse would be worse in the short run for the poor and the needy?

The crux – yes it will. So a lose-lose situation.

No idea really – do you? [ not that i expect to agree with your insight*]

Yes, but difficult to summarise and I have a report to write now. But bottom line is a very bearish outcome that seems difficult to ignore. More to follow perhaps…

Watched Newsnight on Greece, then read latest IMF World Economic Outlook chapter on 100 years of dealing with debt overhangs and the short summary in today’s FT.

http://www.imf.org/external/pubs/ft/weo/2012/02/pdf/c3.pdf

http://www.ft.com/cms/s/0/e26e46ae-1138-11e2-8d5f-00144feabdc0.html#axzz28o8Pd6WR

It’s hard not to remain pretty downbeat after all that. I think that Greek society is very close to a tipping point and there is a danger of a breakdown of the democratic process (ironic for this to be in Greece).

So leaving the € is a relatively easy option in terms of addressing uncompetitiveness but creates more problems in Greece (and other PIGS) due to the low level of industrialisation and low price elasticity of exports. The rise in import prices would outweigh the improvement in export volumes – the lesser of two evils?

If they stay in the € then the only short term option is very high UN and a further depression in wages – exactly what is happening in Greece but according to the FT not yet in Spain. In the LT, structural reforms can improve competitiveness but they are hardly a panacea. Merkel focused on the LT issues in Athens yesterday but conveniently missed the ST requirements – for this to work there has to be a massive ST fiscal transfer from Germany and others to S Europe but she knows she cant sell this to he domestic audience. Stalemate.

The IMF is (finally) admitting this week that it doesn’t have the policy tools to address the current crisis. In the chapter quoted above, they present lots of very interesting case studies on what happens in past debt crises and what not to do. But there is no manual for how to deal with the current crises. The economic policy making elite are impotent and the political elite are misguided. The only lesson that we have learned is that fiscal consolidation needs very supportive monetary policies (ok-that box is ticked) and growth (the empty box). Monetary policy has a tick but only a little one because the banking system is still not functioning correctly, but growth is absent as there is/can be no rise in demand while every major economic player (gov, banks, corporates, households) is in the process of deleveraging.

So the IMF is now watering down its emphasis on austerity and politicians will stand up and make speeches. But it will hardly make a scrap of difference. This downturn has a long way still to run. At least in the UK, we have some policy flexibility. In Greece and the rest of Europe, this is not the case so hard to escape Martin Wolf’s FT conclusion that..

“…fiscal austerity and efforts to lower wages in countries suffering from monetary strangulation could break societies, governments and even states.”

Sadly, Greece is at the centre stage of this particular tragedy.

More violence in Greece again today..

Things are looking very dire over there..

link

Them ‘flagpoles’ look a bit hefty 😯

some good photos on the link- cantona at it again 😉

If they stay in the € then the only short term option is very high UN and a further depression in wages – exactly what is happening in Greece but according to the FT not yet in Spain

25% unemployment and wage freezes or cuts for the last 4 years, certainly in my sector (IT) offered wages are lower than they used to be… Certainly seems to be happening already in Spain.

Anger is currently directed at the banks and the politicians (of all hues), the EU isn’t a target.