Why give Greece more cash?

Some feedback from a Greek friend

RE: http://www.david-avramidis.gr/chimarros-o-chatzinikolaou-apokalipti-to-schedio-ton-evropeon-ke-tous-xegimnoni-vinteo/

“it’s basically one of the few journalists in Greece going over the measures one by one and explaining that the measures given to us by the troika are going to completely destroy the economy for at least 200 years to come since they wanted us to increase taxes only on the indusries that Greecce has the opportunity to make money from

so that will mean that will never be able to pay them back no matter how hard we work

our primeminister has asked them countless times to let us increase the taxes of the rich people but they did not allow us that

they want us to increase the taxes on hotels and restaurants on our islands up to 23 percent

when at the same time Ibiza and and other vaccation destinations have under 3percent taxes

so they basically are destroying our tourism profits

on top of that they wanted us to increase taxes on our pharma industry and be forced to buy their pharma products

on top of that they wanted us to increase the age of retirement to the age of 67

and lower all the money that retired people get

i will tell you one thing

my father is 73

and he has worked for 50 years

he was supposed to get pension of 1000 euros per month

and he gets only 400

with the new measures if we accept them he will be getting 240

and that is not certain

they wanted us to lower the money we spend on defence

by 400 millions

while at the same time Turkey

is invading every day our air space

that in other words means that in 2 years we will not be able to have any money for defence

and many more measures like that

those are just the tip of the iceberg

the general climate in Greece right now is that the people will vote NO for those measures

apart from the people that already have money like media executives etc

but the rest of the people cant handle those measures

im sorry but right now the salaries in greece are under poverty levels

the max salary you get is 400 euros

max salary

we cannot live like that anymore

the only people that get more money like i said before are the people that own factories or media

the rest of the people are poor

there has also started an investigation

on the legitimacy of the money we owe

and as soon as the Greek goverment started the investigation the troika started giving us final warning s etc

there have been already imprisoned 2 politicians that stole money

and many more are to follow

on top of that siemens which is a German company

is implicated in many scandlas involving money paid towards politicians for them to sign the agreements to the troikas contracts

basically they dont want the truth to be heard

and the people that are involved to go to jail

because most of their goverment along with siemens are involved in those scandals

from the money they gave through the help pacakges to greece

only 11 percent reached the actual public sector that they were aimed for

the rest were stolen by politicians/banks to keep a broken bank system afloat

that’s it
“

This isn’t just balancing numbers on paper.

DP

Dear Mr 100%
You forgot to address that little point of your opinion and the facts not matching
Kindest regards

@ Dr J he is the gift that keeps on giving.

I really sympathise with the man on the street in Greece. They will be the ones who feel the squeeze the most.

The bottom line though, is that decades of corrupt/incompetent government is coming home to roost.

To me, it’s analogous to people using payday lenders to fund holidays/cigarettes/skytv/designer clothes. When the money is coming in it feels good. When the interest starts to add up, and the bailiff knocks on the door, the game is up.

I think an agreement will be reached before midnight. It’ll be an agreement that doesnt work, or suit Greece in anyway but it buys time.

If this happens riots will follow as the only certaintity ismore pain.

Greece needs out.

http://www.theguardian.com/world/2015/jun/29/where-did-the-greek-bailout-money-go

sounds about standard for our financial system, privatise profits, nationalise losses…

The bailouts have been for the European financial sector, while passing the debt from being owed to the private sector to the public sector

Post-all this. Any fallout felt across Europe leads to this:

Everyone blames Greece.

The Greeks blame the Germans.

No one will actually blame the Politicians and bankers.

No one will actually blame the Politicians and bankers.

I wouldn’t be so sure about that

This whole thing is testament to idealogically-driven political ineptitude, still totally in thrall to a busted and utterly discredited neo-liberal econonomic system, and daily proves how the interests of banks and corporates trumps by miles the needs of Europes citizens

sounds about standard for our financial system, privatise profits, nationalise losses…

What other option did they have, let the Greek banks fail in 2010 and then take down the German, French and any other exposed banks with the knock on effects spreading around the globe. To an extent the EZ policies at the time appear to have worked with certain countries like Ireland and at least if Greece goes now they have done their best to try and ring fence the damage. But ultimately the past has gone and the focus is and should be on getting the EZ back working.

Been quite busy as you can imagine, will try and keep up and make a few quality ( 😀 ) contributions and going to be mostly offline for 3 weeks.

the gift that keeps on giving.

That’s exactly how the Greeks think of the EU JY. Happy to help BTW

Topical article today in the Guardian. 20,000 died in the last European heatwave, article notes how the heat is dangerous to the elderly. I know it’s inconvenient for you it was posted today but please take the time to read it 😉

Guardian link

It would be more convincing if you actually had some logical analysis of what he has written, and not just empty ad hominem.

Why should I need to when there have been pages and pages of rebuttals of his nonsense published and the eurozone finance ministers refused to continue dealing with him. You yourself posted his speech full of wiffly waffly bollix, like the Colour Purple “show me the money” is what it’s all about. He’s a very intelligent man and knows full well the consequences of his actions but obscures them from the electorate amongst all his political nonsense. The latest being he’s going to sue the EU and our exit from the euro is non-negotiable, I nearly fell of my chair laughing. As I said his future is personally golden with guest lecture fees at $100,000 a clip I would guess.

@gofaster, that’s a long list. Harsh times indeed but a default and return to the Drachma is much worse which is why the Greek electorate even back in December made it clear they didn’t want a euro exit. It’s my understanding the Troika did NOT reject higher taxes on the rich, what they rejected was tax rises which are unlikely to deliver anything like the amount of money the Greek government is projecting being used as part of the budget calculations. If Syriza where serious about raising taxes on the rich and tackling tax evasion they would have got started in that 5 months ago. Greek pensions are 16% of GDP, I can’t see how that can be if pensions are really 400 euros a month. One of those two figures is wrong. Greek GDP is 179 billion euros, 11m population so if we assume 25% are pensioners that’s an average pension of 10,400 euros per anum. The IMF and eurozone wants Greece to stop early retirement, ie to enforce retirement at 67 immediately. Greek’s love to quote the basic pension but it’s all the top ups such as the 13th and 14th month which have to be included. Greece is a poor country which has been living like a rich country, spending everyone else’s money.

I am really surprised at the number of reports from Greece of people being unprepared for the bank closures. Whatever happens in the referendum I cannot see how Greek banks can open before the end of next week. I wonder if people really understand what an exit from the euro means. All their money inside Greek banks will be converted in Drachma, this will be done at an official rate which will soon be 20%-50% (your guess is as good as mine) lower than the open market rate they will be able to get. Everything imported will cost substantially more overnight, this includes food, petrol, medicines etc. Already reports of how cash businesses like taxis and restaurants in tourist areas are finding the visitors cannot pay. I can see tax evasion going through the roof and criminality picking up as people expect to find large bundles of cash hidden in apartments or being carried. No one is going to take a credit card if they can’t get the money out of the bank. All of this was know to Syriza but they persisted with this madness

GFS

Thanks for the post – an interesting list. Always good to get some local colour.

But as with most discussions, the fundmental points continue to be ignored. These include:

1. The euro zone does not fulfil the criteria for an optimum currency area, so the project was doomed from the start. That is the only given. The only question is/was when will it fail.

2. If I am wrong on (1) then you need full monetary AND fiscal union and there is bugger all political will for this to happen either among the population or the politicians (especially those who would be making fiscal transfers). So the project is still doomed. As you were.

3. From the start is was obvious that the Greek debt dynamics cannot work – hence the analogy of kicking a can down the road. Starting from the assumption that it was possible meant that Greece was doomed from the start. A theme emerging here….

4. Entering into a fixed exchange rate with uncompetitive labour forces means wage deflation/unemployment/significant improvements in productivity. The Euro elite have delivered the first two. No one had delivered three (between 1990 and 2009, Greece experienced a 35% decline in unit labour cost competitiveness) Who suffers? The young and the labour force – badly. They were doomed from the start.

5. Wages collapsed but prices didn’t – what does that do for consumption? Really?

6. Unlike many of the critics, Greece is currently a primary surplus – austerity anyone??? Note only that but it was paying creditors while running a primary surplus of 1.5% of GDP during a recession! But at exactly the wrong time, the creditors are arguing for a primary surplus of 2-3.5% of GDP. (In the grander scheme of things this is actually small change but hey ho)

So while debt has stablished, GDP had contracted by more than any advanced economy. And guess what happens to debt/GDP ratios!!!

A buggers’ muddle from the outset. A steroid/debt driven boom followed by a disaster without functioning escape valves.

That’s the EZ for you!

Post-all this. Any fallout felt across Europe leads to this:

Everyone blames Greece.

The Greeks blame the Germans.

No one will actually blame the Politicians and bankers.

The collapse of Greece’s corrupt political centre was marked earlier this year by the election of the left coalition, Syriza. Its success was built on the lie that it could deliver the same financial aid with fewer of the austere strings than its predecessors. Now that this lie has run it course, Syriza has abdicated responsibility for its own failure.

The result will be a referendum this Sunday with a crudely designed ballot in which the “no” box is given top billing and the question is framed in almost meaningless bureaucratic language. Greece’s prime minister, Alexis Tsipras, who has gone into full obfuscation mode, will push for a “no” vote without any discussion of what that would mean. In other words, the Greek government will now campaign to have its own failure at the negotiating table endorsed by the very people it will hurt the most. And there is every chance this deception will succeed.

The thing is that those Greek banks which were saved (in the same way UK banks were saved) were actually EZ banks rather than Greek banks. Yet despite it being an EZ problem, the burden of debt falls back only on Greece. The big beneficiaries of the EZ have never been prepared to stand up and take responsibility.

Not only that, but saving the Greek banks was a relatively small part of the current debt burden of Greece – as explained in what kimbers quoted, most of the money was used to avoid private institutions outside Greece from taking a hit.

Personally I still think that getting the EZ working (largely an ideological thing) should take second place behind preventing people in Greece from starving.

Personally I still think that getting the EZ working (largely an ideological thing) should take second place behind preventing people in Greece from starving.

More than that – the EZ in its present form needs to be abandoned. As THM has explained its totally unworkable. It always was. It needs fundamentally restructurinng to allow for the divergent economies within it. Or it’ll devastate all the southern economies. A slow motion Greece. Without that, then even if it survives the Greek collapse, then the next potential crisis is just down the road. Its just a question of who’s next. Portugal? Spain? My money is on Italy.

But the present EU leadership are incapable of seeing it for what it is. This is their grand project. it cannot fail

Except it already has.

Thank Gordon Brown (despite hie many faults) saw it for what it was, right from the off, and kept us well out of it. Blair, left to his own devices, would have taken us in!

vinnyeh – interesting technique …. Grimsby Town won the Champions League

No … didn’t work … ah well, back to reality

jamba>

“Why should I need to when there have been pages and pages of rebuttals of his nonsense published and the eurozone finance ministers refused to continue dealing with him.”

Failure to back up your claims noted. No surprise there, then.

The frustrating thing is that Europe in its original form is a great idea (I would vote yes of four pillars of free movement) but then morphed into an unworkable fudge – we are expected to have a referendum on the latter which is absurd. Why vote in something that by design cannot continue to exist. That is madness.

At the very least there needs to be a multi-tiered arrangement starting with four pillars and ending in the small groups for whom monetary, fiscal and political union makes sense. This could include different sub-groups. Until that point the can merely gets more beaten up.

Pensions. Couple of snippets from the OECD below

The effective age at which Greek workers exit the labour market is the fifth lowest in the OECD (61.9
for men and 60.3 for women against the OECD average of 64.2 for men and 63.1) Labour market
participation of older workers is also relatively low in Greece: less than 40% of those aged between 55 and
64 participate in the labour market

Greeks stop working sooner than almost everyone in the OECD. I would also wager that of the 60% who exit the labour market between 55 and 64 that a significant portion claim their pension and work cash in hand, no tax paid.

Prior top reforms enacted after 2010 Greek pensions where projected to reach 25% of GDP by 2050, they have manged to get that down to approx 18% 😯

Now, I’m no financial expert, but surely Greece cannot be allowed to have its debts written off? That would encourage every other struggling government to overspend, then throw their hands up in the air. To me, the future of the global financial system requires Greece to pay its way.

You’re not getting that this crisis is a product of the EZ rather than the Greek government then?

Possibly the future of the EZ in its current form depends on Greece paying its way…

The crisis is a product of both EZ and Greece. Blame lies with both.

It needs fundamentally restructurinng to allow for the divergent economies within it. Or it’ll devastate all the southern economies.

Agreed. How is anyone’s guess, probably best bet is for Germany to leave but they aren’t going to vote to make things worse for themselves.

That would encourage every other struggling government to overspend, then throw their hands up in the air.

Not really, given the pain that has been gone through to arrive at this situation.

depends on Greece paying its way

The point, grasped by the IMF but ignored by the EZ, is that this IS NOT POSSIBLE. Greece is currently in a vicious circle which it cannot get out of, even if they burn pensioners for fuel.

dantsw13 – Member
Now, I’m no financial expert, but surely Greece cannot be allowed to have its debts written off? That would encourage every other struggling government to overspend, then throw their hands up in the air. To me, the future of the global financial system requires Greece to pay its way.

In 1953, Germany faced high levels of debt, no access to capital markets and problems with creditors. The solution? Half of their outstanding debt was cancelled at the London Debt Agreement. Of course, the Germans prefer to tell you about their “economic miracle” and aptitude for hard work rather than including writing off half outstanding debt and restructuring the rest. And remember our (UK) war loans – what was the coupon?????

Not sure what the german is for “short memories”!!!

Odds on a compromise at the 19:00 meeting tonight following Tsipras’ change of plea!!!

Aracer – fuelled by the EZ, sure, but the undeliverable promises of Greek politicians surely has its part too. Nobody forced them to join the EZ – they did so because they judged they would benefit.

Odds on?..

But what about the 3.5bn due next month?

Why keep the slow drawn out death going? The people will suffer if there is a 2yr stay of execution afoot.

In the same way people judged they would benefit from self certified mortgages and sub-prime mortgages?

I don’t think anybody is suggesting Greek politicians are blameless. The question is why ordinary people should suffer in order to punish the politicians – and so that those who were arguably more culpable (because they had the experience and knowledge that they should have been expected to be far more careful) avoid excessive pain.

Nobody forced them to join the EZ

Denmark and the UK have negotiated opt-outs from joining the Euro in the immediate future, Greece like all other EU member states did not. All EU member states are expected to join the Euro at some point. You are mistaken if you think that EU member states were not/are not pressurized to join the EZ and that it’s all done on a purely voluntary basis.

Topical article today in the Guardian. 20,000 died in the last European heatwave, article notes how the heat is dangerous to the elderly. I know it’s inconvenient for you it was posted today but please take the time to read it

Guardian link
Firstly it would only be topical if it addressed the claim of whether the heat kills more than the cold. It does not do this
Secondly no one has disputed that heat can kill what has been disputed, by Lanclet for example, is YOUR claim that heat kills more than the cold
Are you not embarrassed that you posted a supportive link that does not even address the issue? 😯

[paxman to howard mode – answer the question]

DO YOU STILL MAINTAIN THAT HEAT KILLS MORE THEN THE COLD [DESPITE THE EVIDENCE THAT PROVES THIS TO NOT BE THE CASE?]
YES OR NO?
Its not hard to answer.
That fact you have sidestepped the issue again rather than just admit you were wrong is both a measure of the content of your character as well as a measure of your intellect.
TBH It was not even a big deal it just shows that you form views that are not based on facts and not reliant on them hence you are Mr 100%.

Risible as it is pitiable.

Like Sweden? 😉

You have a point about the pressure, pressure which was undoubtedly rather more than is being brought to bear on Sweden – though I don’t get the impression they had to be dragged kicking and screaming. The correct answer is that they should have been denied membership for not meeting the requirements. As pointed out upthread that would exclude most if not all members, but Greece was surely way further from meeting them than most other countries?

JY – you and jamba need to get a room, I don’t think anybody else cares much about whether heat or cold kills more. I’m sure one of you could provide useful contributions to the main topic if you weren’t otherwise distracted 😉

They are trying not to let the Swedes off, as I am sure that you are aware.

Ex UK and Denmark (and Sweden) all others have (foolishly) commits to join the € area as soon as they fulfil (seriously) the conditions for entry (cough)

I know no one cares as I am amongst them 😛
Its just a wee side bar of pigeon chess with my only point is he spouts off [ we all do to be fair] says something that is just plain factually wrong, ignores the evidence, tries to discuss something different and then insists he is right anyway by using “evidence” that does not even address his claim.
TBH i dont see the point in “debating” when you ignore evidence and just think you are right irrespective of it. I was just interested to see how far he would go and apparently its to infinity and beyond.

PS I think we are both equally flattered that you think we bring something to the debate on economic matters 😉

I presume you noted my precise wording, and pleased to see that is keeping both of you happy 😛

I thought Sweden had also committed to that? As discussed on the Scottish independence threads the latter provides the ultimate opt out for everybody. Of course ernie is also correct that political pressure transcends that sort of thing.

https://www.indiegogo.com/projects/greek-bailout-fund#/story

Sorry aracer. I was not quite precise enough! Sweden is required to join the euro (smell a fudge?) when it has passed changes to its central bank legislation and met the convergence criteria. D and UK are only ones with actual opt out.

ernie_lynch » Denmark and the UK have negotiated opt-outs from joining the Euro in the immediate future, Greece like all other EU member states did not.

Like Sweden?

Like Sweden what ? …… it’s like Denmark and the UK, or like Greece and all the other EU member state?

From the EU website :

“Sweden is not yet in the euro area, as it has not made the necessary changes to its central bank legislation and it does not meet the convergence criterion related to participation in the Exchange Rate Mechanism (ERM II). However, under the Treaty, Sweden is required to adopt the euro once it fulfils the necessary conditions.”

http://ec.europa.eu/economy_finance/euro/adoption/who_can_join/index_en.htm

So Sweden is just like all the other EU member states which unlike Denmark and the UK haven’t managed to negotiate a temporary opt-out from the Euro (temporary as in Denmark and the UK will be allowed to remain outside the EZ even if they meet the convergence criterion. For the time being anyway)

I presume you noted my precise wording,

😳
Nope I missed it

As for Sweden I think they have to agree to do it but there is no real pressure, possibly yet*, but there is expectation
I agree we did it on the Scottish thread and was there not a quote about how the EU would not force them ?

*ah Google helped

The EU has accepted that Sweden is staying outside the eurozone on its own decision. Olli Rehn, the EU commissioner for economic affairs has said that this is up to Swedish people to decide.

Also worth noting they have to join the ERM for two years to join and no one can force them to that

Given i contributed you must have meant me then 😛

I think you can argue it either way they have agreed to join if they meet the criteria but they have not agreed to take the steps to meet the criteria so it is still Swedens sovereign decision. You can argue it either way though

Nichola Sturgeon giving advice on the Greek Referendum. I would have thought the Greeks would do well not to listen to advice from a referendum loser unless it was “please avoid the mistakes we made, eg like not telling the people the truth, which of course they spotted in the end”. Not surprisingly she’s in favour of them getting more money, as many of posted in that other thread the “Greek model” would work for the SNP 😯

Guardian

Apologies for my part to those bored by JY and my off-topic exchanges, I don’t care and I’m pretty sure JY doesn’t much either. Touche JY touche 😀

Tsipras’s 2 year bailout request totals €29bn and as it’s to the ESM. Merkel has already said no Bundestag vote on that or anything else till after the referendum. Quite a bit of commentary that Tsipras has badly miscalculated with the referendum, no vote looks unlikely and a yes vote means he has to go sooner of later, eurozone negotiations will take time and banks will remain shut and Tsipras will be forced out of his own weak coalition even if he doesn’t resign immediately as he’s suggested. A no vote means long period of further negotiations with banks shut, with no money it’s hard to see how the government could survive.