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Time to burn Greece?

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  • Closed Accounts Posts: 1,554 ✭✭✭steve9859


    later10 wrote: »
    Some startling words from the Greek commissioner this evening

    http://www.google.com/hostednews/afp/article/ALeqM5gFXM2pOcTbmhMUFgmtW8iS-m_zbA?docId=CNG.81374c16cfc013e475cf3f610e431f1a.251


    The euro has hit a record low against the Swiss Franc, a crisis haven currency.

    It is all coming to a head I think. Over the summer we will find out what the end game will be. Germany will be forced to make the big decision they have been avoiding until now: either the support of a central european bond (a big move toward european federalism) or else letting go of peripheral countries (probably a step toward the ending of the Euro project). That quote misses one other issue, that being the ability of the Greek authorities to implement the agreed austerity without the country descending into chaos.


  • Registered Users Posts: 23,283 ✭✭✭✭Scofflaw


    steve9859 wrote: »
    It is all coming to a head I think. Over the summer we will find out what the end game will be. Germany will be forced to make the big decision they have been avoiding until now: either the support of a central european bond (a big move toward european federalism) or else letting go of peripheral countries (probably a step toward the ending of the Euro project). That quote misses one other issue, that being the ability of the Greek authorities to implement the agreed austerity without the country descending into chaos.

    I agree that a lot of the tension building up here seems to be based on the unwillingness of Germany in particular to accept either an federalist solution like eurobonds, where the peripheral countries essentially get to trade on Germany's solid economy, or a more nationalist solution like cutting out some of the gangrene.

    To be fair, German voters were promised that nothing like the former would happen when they accepted the creation of the euro, while the latter does go against the principles of the EU. Still, as beeftotheheels says, the Greeks do have the unenviable distinction of having lied their way into the euro in the first place.

    cordially,
    Scofflaw


  • Closed Accounts Posts: 10,012 ✭✭✭✭thebman


    Well the Greeks area also unwilling to sell state assets I fear which is pushing this movement in the country.

    The problem with this is obviously how will they fund themselves if they leave the Euro.

    Don't they have one of the highest military expenditures in the Euro zone?

    They don't seem to have thought this through TBH. Neither has Germany though IMO. Germany still seems to be in denial though I imagine Merkyl is hoping to struggle through to election time.


  • Registered Users Posts: 12,435 ✭✭✭✭Sand


    Theres three points to consider here when you evaluate the possibility of Germany suddenly deciding to jump in and save the day by flashing the cash.

    1 - Is there any support in Germany for Germany saving the day by flashing the cash?

    No.

    2 - Even if the Germans could be persuaded to pay, could the rest of the EU countries be persuaded to accept the level of control over budgets, spending and ultimately political sovereignty that the Germans would demand? Would Irish, Greeks, Portugeuse accept a deal whereby they could elect politicians to maintain the pretence of sovereignty but all major spending decisions would have to be approved by the German parliment where the Irish, Greek and Portuguese would have no representation?

    No.

    3 - Even if the Germans could be persuaded to pay, and the Irish persuaded to accept permament loss of sovereignty, would the Germans accept being in the position where they were made scapegoats and demonised for opposing stupidly unaffordable spending plans by various peripheral states?

    No.


    @Beeftoheels
    So a transaction which Greece entered into in 2009 (eight years after they joined the euro) allowed them to keep some debt off their balance sheet. As Goldman's were the counter-party to this transaction we can accuse them of exporting accounting fraud to Greece???

    I wonder what they would make of NAMA which was setup as a SPV with the exact same objective of hiding government debt off balance sheet. Apparently the NTMA came up with that wheeze by themselves, though theyve been spitting mad ever since as everyone still counts NAMA debt as government debt.


  • Registered Users Posts: 3,872 ✭✭✭View


    Sand wrote: »
    2 - Even if the Germans could be persuaded to pay, could the rest of the EU countries be persuaded to accept the level of control over budgets, spending and ultimately political sovereignty that the Germans would demand? Would Irish, Greeks, Portugeuse accept a deal whereby they could elect politicians to maintain the pretence of sovereignty but all major spending decisions would have to be approved by the German parliment where the Irish, Greek and Portuguese would have no representation?

    Nobody is proposing this, so I have no idea where you are getting it from. Germany is a Federal Republic. The idea you are suggesting goes against every tenet of Federalism - there is zero chance of the Bundesverfassungsgericht approving any EU Treaty that contains even the suggestion of what you are talking about.


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  • Registered Users Posts: 558 ✭✭✭clear thinking


    Sand wrote: »
    I wonder what they would make of NAMA which was setup as a SPV with the exact same objective of hiding government debt off balance sheet. Apparently the NTMA came up with that wheeze by themselves, though theyve been spitting mad ever since as everyone still counts NAMA debt as government debt.

    Dont forget the extra €50.0bn liquidity from the Irish central bank into our banking sector, basically unsecured 2 week money that is effectively off balance sheet & has not yet been copped on to by the mob.


  • Moderators, Business & Finance Moderators, Science, Health & Environment Moderators, Social & Fun Moderators, Society & Culture Moderators Posts: 51,687 Mod ✭✭✭✭Stheno


    Greek Austerity Talks fail

    The Greek Pm looks to be struggling, looking for "any proposal and cooperation"
    Greek prime minister George Papandreou failed today to get opposition party leaders to back austerity measures and vowed to do whatever it takes to exit a debt crisis even without their consent.

    The EU warned Greece was running out of time but Mr Papandreou said not all hope was lost in getting political backing for debt-cutting measures, the kind of consensus achieved in Portugal and required by Euro zone policymakers before handing Athens more cash to stay afloat.

    "I am open to any proposal and cooperation," Mr Papandreou said in a televised address to the nation after political leaders turned down his call for unity. "We must end all talk and disastrous scenarios about our country leaving the euro zone."

    Today's 5-hour meeting, chaired by the Greek president, was the latest effort by Mr Papandreou to get his opponents on board after inconclusive one-on-one talks earlier this week. After leaders from across the political spectrum rejected his call, it was not yet clear whether fresh meetings would be sought.

    The European Commission's top economics official said time was running out for Greece to back a €110-billion bailout deal that rescued it from bankruptcy last year.

    "We expect that the efforts towards a cross-party agreement to support the EU-IMF programme will continue. An agreement has to be found soon. Time is running out," EU Economic and Monetary Affairs Commissioner Olli Rehn said in an emailed statement.

    Jean-Claude Juncker, head of the euro zone finance ministers' group, alarmed investors yesterday by saying the International Monetary Fund may withhold its next slice of aid to Greece if conditions are not met.

    The European Union is trying to reconcile conflicting demands and hopes the IMF can show "pragmatic flexibility" in disbursing the June tranche of emergency loans, a senior euro zone official said today.

    Opposition parties reject Mr Papandreou's latest austerity package on the grounds that the belt-tightening agreed is choking the life out of the economy.

    "We don't agree with a policy that kills the economy and destroys society," conservative opposition leader Antonis Samaras said after the party leaders' emergency meeting.

    The Athens stock exchange reversed gains on the failure to get a deal, closing 1.7 per cent lower on the day, with banks down 2.3 per cent.

    Athens kick-started a stalled privatisation programme on Monday and promised tougher austerity measures and tax hikes to meet EU/IMF conditions for the next loan tranche.

    Analysts said early elections could be on the cards after the attempt to reach consensus on the measures failed.

    "After failing to secure consensus, Papandreou will go ahead and implement reforms on his own as rapidly as required. But if there are violent reactions, if we get burning cars on the streets, then he will call elections the next day," said Dimitris Mavros, head of pollsters MRB Hellas.

    Mr Papandreou, who has a comfortable majority in parliament but has seen his party's popularity decline, said he was determined to tackle the task without wider support if he had to and ruled out snap elections before they are due in 2013.

    Thousands of protesters gathered in central Athens for the third day today, prompted by a Facebook campaign and chanting before parliament "Thieves! Thieves!", mirroring anti-austerity rallies in Spain.

    Mr Samaras, whose party voted against the bailout deal struck last year, said he asked for tax cuts but Mr Papandreou, whose government has increased VAT from 19 to 23 per cent last year and hiked income taxes, rejected his proposal.

    Mr Papandreou said he had suggested to other parties that they jointly negotiate tax policy with creditors, signalling some flexibility on the issue.

    Mr Samaras' conservatives have 86 seats in the 300-seat parliament, where the ruling socialists have 156 MPs.

    Also participating in the meeting were the leaders of the communist KKE party, which often boycotts such events, the far-right LAOS party and the Coalition of the Left. Their leaders said they would not be "blackmailed" into accepting the government's austerity measures.

    In Athens, EU and IMF inspectors are examining new Greek measures before granting the next €12 billion tranche of the bailout.

    Without it, Greece will be unable to cover pressing funding needs of €13.4 billion and will go bust.

    Greek government officials have said that Athens has enough cash to cover its needs until mid-July.


  • Registered Users Posts: 1,053 ✭✭✭Cannibal Ox


    European leaders are negotiating a deal that would lead to unprecedented outside intervention in the Greek economy, including international involvement in tax collection and privatization of state assets, in exchange for new bail-out loans for Athens.

    Full piece

    Based on rumours. Would love to know more about international involvement in tax collection. I also presume any settlement reached would have knock on effects, in terms of setting a precedent, for Ireland if we do go looking for another deal?

    Either way, even if they get the opposition involved, I think the Greek people will still have a very loud say in what happens. I can't see them sitting by quietly if these rumours are true and they've proved over the last two years that they're more then willing to get out and make their opinions known.


  • Registered Users Posts: 24,135 ✭✭✭✭Sleepy


    How?

    Surely Greece's first response to being kicked out of the Euro would be a default on all debt it owes to Europe. Since that's a *HEFTY* amount of euros, wouldn't we just be giving them a strong platform for the New Drachma?


  • Closed Accounts Posts: 11,299 ✭✭✭✭later12


    There would be a default, but certainly not a repudiation a la Cuba. The debt would still stand, in the event of a hard restructuring it would be more akin to Argentine, Mexican and Russian debt in the past 30 years.

    People seem to think default means debt wipeout, it cannot realistically be taken to mean that,


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  • Registered Users Posts: 292 ✭✭Owldshtok


    later10 wrote: »
    I haven't read the Lex yet but the first question I would ask is who this plan would really help. It is, on the face of it, a fine idea. A fine idea, that is, if one's aim is to bring about a strong and stable Europe impenetrable to, and safe from, the scallywags... but what if we are one of the scallywags? And are we not?

    The question arises whether the markets would look on Ireland, Portugal, Spain, and maybe Italy, as a risk of being the next out in their tails, and stay firmly away, creating yet another self fulfilling prophecy cycle with negative feedback loops to sovereigns funding themselves. It could end up in a progressive cleaning up and clearing out of the periphery, leaving only the healthy core, which doesn't need saving to begin with.

    I think this would be an option if contagion were to start to infiltrate the financial health of the core, but as yet there is no real question of that happening, and I don't think this would be a particularly helpful move to us in the periphery.

    Of course, that doesn't mean that it wouldn't be wise or clever, from an objective market standpoint it sounds like it might be both.

    Even tho they're not without financial problems and have raked up huge debt I doubt Italy are as vunerable as the other peripherals going on the fact that they are the fourth largest economy in Europe after Germany France & UK,and a member of the G8.At the moment they are tipping along somewhere in the middle,not booming and not technically in recession.


  • Registered Users Posts: 1,675 ✭✭✭beeftotheheels


    Full piece

    Based on rumours. Would love to know more about international involvement in tax collection. I also presume any settlement reached would have knock on effects, in terms of setting a precedent, for Ireland if we do go looking for another deal?

    Either way, even if they get the opposition involved, I think the Greek people will still have a very loud say in what happens. I can't see them sitting by quietly if these rumours are true and they've proved over the last two years that they're more then willing to get out and make their opinions known.

    The Greek people are a lot of the problem here. Tax evasion is endemic (hence the suggestion of taking tax collection out of the control of the Greeks) and civil unrest/ political instability is a big part of the issue.

    The Greek people, like the Irish to some extent, think that there is an easy solution so are reacting badly to austerity when the reality is that there is no easy solution. If Greece were to default and chaos were to ensue it would at least make the point to the peoples of the other States that there is no easy solution here, and austerity is not the worst case scenario - default is.


  • Closed Accounts Posts: 9,376 ✭✭✭ei.sdraob


    Colm McCarthy has yet another excellent piece exposing the ECB for the fudge that it is.

    Some might go and blame the Greek people like the guy above (Or Irish people etc) but the real elephant in the room is the unprofessional and disorganised organisation that the ECB is. They are the ones ran/run the monetary union like a bunch of school kids, and they are the ones who continue to constantly put the euro and the EU at risk

    Btw I am disgusted by the rhetoric above from @beefoftheheel to reduce a whole nation to a bunch of stereotypes is lazy,
    then again the Germans from whom most of this commentary is coming from, do also have a history of painting whole sections of people to be somehow "flawed" before doing away with them :rolleyes:

    I am rather sick of this whole nationalist mumbo jumbo that is being played out, and threatens to reduce europe to a bunch of bickering nations that the continent once was, or to quote Colm
    It is Ireland's misfortune to have left itself reliant on political leadership from a Franco-German European 'engine' which is running on empty


  • Registered Users Posts: 292 ✭✭Owldshtok


    'It is Ireland's misfortune to have left itself reliant on political leadership from a Franco-German European 'engine' which is running on empty'

    There hasn't been great leadership from within Ireland in the first place.


  • Closed Accounts Posts: 9,376 ✭✭✭ei.sdraob


    Owldshtok wrote: »
    'It is Ireland's misfortune to have left itself reliant on political leadership from a Franco-German European 'engine' which is running on empty'

    There hasn't been great leadership from within Ireland in the first place.

    No there has not, but the leadership from Europe is even more lacking and less accountable (not the local lot can be held to much account either).

    Instead of getting together and coming up with a solution once and for all to this crisis, europe continues to limp month to month as the problem is kicked down the road for someone else to deal, all while things get worse.


  • Registered Users Posts: 1,053 ✭✭✭Cannibal Ox


    The Greek people, like the Irish to some extent, think that there is an easy solution so are reacting badly to austerity when the reality is that there is no easy solution. If Greece were to default and chaos were to ensue it would at least make the point to the peoples of the other States that there is no easy solution here, and austerity is not the worst case scenario - default is.

    I don't really see the incentive for the Greek people in this. It's all stick and no carrot, so why would they consent to it? They don't have to, and they've shown in the past that they'll make their dissent very public if they want to.

    You're saying that austerity is better then default. The scenario being presented to the Greek people is one where they loose control over tax and policy, they'll have their assets stripped from them to pay foreign creditors, and they'll be left with a program of austerity that, arguably, won't improve employment rates or the life prospects of young people in the short or long term.

    So where's the incentive? Why accept it? Default is worse then austerity, sure, but when austerity looks like your country being stripped, chained and led around the EU as an example of what not to do, why go for austerity?


  • Closed Accounts Posts: 10,012 ✭✭✭✭thebman


    The Greek people are a lot of the problem here. Tax evasion is endemic (hence the suggestion of taking tax collection out of the control of the Greeks) and civil unrest/ political instability is a big part of the issue.

    The Greek people, like the Irish to some extent, think that there is an easy solution so are reacting badly to austerity when the reality is that there is no easy solution. If Greece were to default and chaos were to ensue it would at least make the point to the peoples of the other States that there is no easy solution here, and austerity is not the worst case scenario - default is.

    The Irish don't think there is an easy alternative to austerity. On this board and elsewhere everyone accepts there needs to be massive cut backs. Even the most hardcore anti-cuts politicians admit we need cutbacks and tax increases unlike Greece. Where our politicians and people differ is where proportion of cuts to tax increases we need.

    People are angry, there is a difference. People are angry because politicians have yet to reform the system that allowed us to get into this mess and want it resolved in such a way that it doesn't happen again and politicians seem to not want to resolve their system since that could mean them not getting elected again under a new system.

    People saying default have given up on the government and the EU forming a solution to the problem and know we can't pay back our debts without something happening so this seems like the most likely option to them and they just want to move on from this mess as soon as possible IMO. Either that or they are a political party that lacks a policy and has admitted they are an opposition party and will not have to make the decisions so can spout whatever populace nonsense they like.


  • Registered Users Posts: 1,675 ✭✭✭beeftotheheels


    ei.sdraob wrote: »
    Colm McCarthy has yet another excellent piece exposing the ECB for the fudge that it is.

    If Colm cannot tell the difference between the ECB and other EU institutions then he should just stop talking about it. The ECB has been entirely consistent on restructuring and I challenge you to find one public utterance from an ECB (as distinct from say Juncker who does not speak for that institution) official on this which has done other than toe the party line. Even former ECB board members have toed the party line.

    We heard from Papademos

    http://online.wsj.com/article/BT-CO-20110528-701521.html

    Noyer

    http://www.bloomberg.com/news/2011-05-24/ecb-s-noyer-rejects-greek-restructuring-as-horror-transcript.html

    Stark

    http://www.reuters.com/article/2011/05/19/us-ecb-stark-collateral-idUSTRE74I1RQ20110519

    Bini Smaghi

    http://www.ft.com/cms/s/0/8e4a75d2-8a18-11e0-beff-00144feab49a.html?ftcamp=rss

    ...and of course Trichet

    http://uk.reuters.com/article/2011/05/05/uk-ecb-bailouts-idUKTRE7443V120110505

    I cannot see the inconsistency that Colm has noted and indeed I have trawled through google looking for ECB and Greek restructuring and all I find are the above, or more of the above, nothing suggesting that the ECB is conflicted on this.


  • Registered Users Posts: 1,675 ✭✭✭beeftotheheels


    Why not cut off your nose to spite your face?

    I don't know. When you put it like that it sounds like a brilliant idea.

    There are worse options i.e. default, and there are no better options.

    Greece does not have a birthday, nor will it make its communion or confirmation so a card in the post with a few bills from Great Uncle Germany is not going to happen.

    By refusing austerity they increase their chances of default, which is cutting off their nose to spite their face.

    There is not always a carrot, sometimes there is just a stick and a bigger stick.


  • Closed Accounts Posts: 10,012 ✭✭✭✭thebman


    I don't know. When you put it like that it sounds like a brilliant idea.

    There are worse options i.e. default, and there are no better options.

    Greece does not have a birthday, nor will it make its communion or confirmation so a card in the post with a few bills from Great Uncle Germany is not going to happen.

    By refusing austerity they increase their chances of default, which is cutting off their nose to spite their face.

    There is not always a carrot, sometimes there is just a stick and a bigger stick.

    To be fair though, the opposition is refusing tax increases, they want to reduce the size of the public sector.
    But Antonis Samaras, head of the main opposition conservative party who earlier this month called for a renegotiation of the bailout deal, argued the government’s overall direction was wrong — although he said he did back certain aspects, such as privatisations.

    http://businessetc.thejournal.ie/greek-opposition-party-rejects-new-austerity-plan-142802-May2011/

    So they aren't against austerity really, just tax increases as they fear it will prevent an economic recovery when you read through the rest of the world crying, Greeks worst country in world, garbage journalism.

    The party in government is socialist and wants to increase taxes and not sell off state assets so they are in a conflicting position while the government looks for cross party support which they probably knew they weren't going to get anyway.

    It is, to be fair, a very similar position to where we were before our election. FG promised cuts not taxes and FF weren't making cuts and were increasing taxes and looking for FG's support on it but FG smelt blood/power and denied them that to force an election to get power.

    So it looks like Greece is where Ireland was 2-3 months ago which is itself a bad sign.


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  • Closed Accounts Posts: 53 ✭✭Prakari


    Both genetically and culturally, the Greeks will be a difficult population to occupy. Quite a good population to have on the frontline.


  • Registered Users Posts: 24,135 ✭✭✭✭Sleepy


    later10 wrote: »
    There would be a default, but certainly not a repudiation a la Cuba. The debt would still stand, in the event of a hard restructuring it would be more akin to Argentine, Mexican and Russian debt in the past 30 years.

    People seem to think default means debt wipeout, it cannot realistically be taken to mean that,
    Why wouldn't there?

    In the position of a Greek Finance Minister whose country had just been unceremoniously been booted out of the euro, I know I'd call for a total repudiation of the debt as it had been agreed to in different circumstances.


  • Registered Users Posts: 1,209 ✭✭✭ixtlan



    So where's the incentive? Why accept it? Default is worse then austerity, sure, but when austerity looks like your country being stripped, chained and led around the EU as an example of what not to do, why go for austerity?

    Because, as you just wrote, however bad austerity is, default is probably worse. However the issue is that austerity is happening and it's effects can be seen, whereas default is a theoretical abstract, until that is some Euro state goes through it.

    IMHO the problem here is one of trust. Yes, the Germans and French know that an unstructured default would be a disaster for the Euro and by attachment them, but at the some time they want to be convinced that the Greeks, and Ireland and Portugal are willing to try to sort out their finances. In our case the trust issue is based on the deficit. If the deficit were reduced to manageable proportions, then I think they would be more willing to consider a restructuring of the total debt. What they are afraid of is that if they make things too easy, then we will not take the hard decisions which the debt crisis is demanding.

    Unfortunately we have a chicken and egg scenario. A doctor/teacher/politican/public servant earns more than in Germany. Why? Because the cost of living is higher here. Why? Because people are paid more. Why? Because the cost of living is higher... Unravelling that into a soft landing is going to be extremely difficult, but if at all possible that's what must be done. A hard landing is not to be desired, despite the calls for such by many people who cannot possibly understand what it would mean. They point to getting out of the hole quicker via such a default. That might be true but if you look at what happened in Argentina and Russia you might question whether such an outcome is better.

    Ix.


  • Registered Users Posts: 1,675 ✭✭✭beeftotheheels


    thebman wrote: »
    To be fair though, the opposition is refusing tax increases, they want to reduce the size of the public sector.



    http://businessetc.thejournal.ie/greek-opposition-party-rejects-new-austerity-plan-142802-May2011/

    So they aren't against austerity really, just tax increases as they fear it will prevent an economic recovery when you read through the rest of the world crying, Greeks worst country in world, garbage journalism.

    The party in government is socialist and wants to increase taxes and not sell off state assets so they are in a conflicting position while the government looks for cross party support which they probably knew they weren't going to get anyway.

    It is, to be fair, a very similar position to where we were before our election. FG promised cuts not taxes and FF weren't making cuts and were increasing taxes and looking for FG's support on it but FG smelt blood/power and denied them that to force an election to get power.

    So it looks like Greece is where Ireland was 2-3 months ago which is itself a bad sign.

    If it were that simple then I would agree with you but I really don't think that it is. A huge problem is the inability to deal with tax evasion

    http://www.nytimes.com/2011/02/21/world/europe/21greece.html

    And that is one of the major reasons why they have fallen behind on the terms of their bailout.

    If the issue was as simple as the Irish issue (we need to grow to get out of this while adjusting our imbalance) then I would agree with the need to consider some of their arguments including the opposition's proposal to reduce corporate income tax. But drawing a line in the sand on tax cuts when they cannot even collect the taxes they currently levy is daft, at least link the two.

    http://uk.reuters.com/article/2011/05/30/uk-greece-idUKTRE74S2NS20110530

    But while a huge part of the problem remains institutional corruption then it is perfectly fair for their lenders to suggest that they take over dealing with the area that is suffering from that corruption i.e. take responsibility for the oversight of tax collection.

    When they are dependent on huge amounts of foreign debt is is fair for their lenders to request asset sales to repay that debt, and indeed fair for those lenders to behave like private institutions and appoint a receiver (which is what is being proposed).

    A creditor won't always put their debtor into receivership if they believe that the debtor can trade their way back into the black and this is where Ireland is at the moment.

    Greece is failing to do so and their creditors are looking at appointing receivers to kick start things. Once Greece start moving in the right direction then they should be given help and support, but I really can't see arguments against appointing receivers right now if the alternative is bankruptcy.

    If the Greek people want to retain their democratic right to bankrupt themselves then sobeit, I personally think a receiver is a less severe alternative.


  • Registered Users Posts: 1,053 ✭✭✭Cannibal Ox


    By refusing austerity they increase their chances of default, which is cutting off their nose to spite their face.

    If I were a young, unemployed, educated Greek person, I'm not particularly sure how I would see default as being worse then austerity in regards to my own short and long term situation, particularly in regards to how austerity is being portrayed.

    In which case, I wouldn't so much see it as cutting off my nose to spite my face, as cutting off my nose to spite someone else's face.

    I'm not arguing for default, I'm just saying that the way this is being done, how Greece is being treated, and how its future is being portrayed, could be handled an awful lot better by those who are running the show.


  • Registered Users Posts: 1,675 ✭✭✭beeftotheheels


    If I were a young, unemployed, educated Greek person, I'm not particularly sure how I would see default as being worse then austerity in regards to my own short and long term situation, particularly in regards to how austerity is being portrayed.

    In which case, I wouldn't so much see it as cutting off my nose to spite my face, as cutting off my nose to spite someone else's face.

    I'm not arguing for default, I'm just saying that the way this is being done, how Greece is being treated, and how its future is being portrayed, could be handled an awful lot better by those who are running the show.

    And this is a problem with democracy because the average voter doesn't actually have to understand the consequences of doing something like defaulting which as Ix pointed out is something vague in the future, whereas austerity is real and now.

    The problem with the handling of it comes back to the same point. If the ECB could educate each Greek man woman and child on the effects of default, then I am sure that they would do so. The Greeks could then take to the streets in anger against political corruption, carrying placards saying "end political corruption now - but don't default so we'll accept the austerity for now".

    But the ECB cannot do this.

    If the ECB said nothing, and the Greek government does as is necessary to avoid default (the consequences of which the Greek government probably knows) the Greek people would blame their own government entirely for the austerity and this could lead to a revolution. At least by speaking out the Greek government can point to the ECB as being the reason for the austerity which gives them some cover at home for doing that which they have to do anyway to avoid default.


  • Registered Users Posts: 1,053 ✭✭✭Cannibal Ox


    You don't have to explain the ins and outs of austerity versus default. You need a carrot. You need to give them some sense of security, some sense of hope for the future. You can't just use a stick. If you don't give some incentive, you're not going to win them over to your side no matter how many economists you have educating the public.

    If nobody is telling you, it'll be alright, this is what we're going to do to guarantee a prosperous for you and your family, our young Greek is hardly going to consent to their actions. Why would he? There's absolutely no incentive for him to accept austerity, particularly when it is such a very grim known and default is such an unknown.

    Badly handled, badly led, badly it will end.


  • Registered Users Posts: 547 ✭✭✭yosemite_sam


    Prakari wrote: »
    The Greeks imported accounting fraud from Goldman Sachs, an expert in this area.
    I would take that down if I were you


  • Registered Users Posts: 1,675 ✭✭✭beeftotheheels


    You don't have to explain the ins and outs of austerity versus default. You need a carrot. You need to give them some sense of security, some sense of hope for the future. You can't just use a stick. If you don't give some incentive, you're not going to win them over to your side no matter how many economists you have educating the public.

    If nobody is telling you, it'll be alright, this is what we're going to do to guarantee a prosperous for you and your family, our young Greek is hardly going to consent to their actions. Why would he? There's absolutely no incentive for him to accept austerity, particularly when it is such a very grim known and default is such an unknown.

    Badly handled, badly led, badly it will end.

    What carrot?

    That the ECB will allow burden sharing which could bring down the entire eurozone banking system and throw all of Europe into a depression?

    That the German taxpayer will give them a gift?

    Right now the eurozone crisis is impacting on the entire world economy, the Americans are worried, the German growth is being pared back, the markets are living on their nerves.

    For there to be a carrot someone has to a) have money, and b) see a benefit whereas right now what we actually have is

    a) very little money, and
    b) huge risks

    The ECB is not lecturing austerity to make the Greek people pay for some perceived wrong, that argument generally comes from the heads of state, not the ECB. The ECB is simply arguing that to allow Greece default would have catastrophic consequences for everyone which greatly outweigh the benefits that any default could generate for Greece.

    Italy and Spain are the ones lecturing on austerity apparently http://www.athenswire.com/spain-and-italy-turn-against-greece-over-reform-efforts/
    because they want to stop the contagion bringing them down.


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  • Registered Users Posts: 1,675 ✭✭✭beeftotheheels


    ei.sdraob wrote: »
    Btw I am disgusted by the rhetoric above from @beefoftheheel to reduce a whole nation to a bunch of stereotypes is lazy,

    What stereotypes?

    Tax evasion is endemic - fact, I've already posted links to articles on this thread from reasonably reputable sources like the NY Times
    Greek people taking to the streets/ striking is causing additional political instability in Greece which is causing consternation in the markets and which is making matters worse.

    Explain how this is stereotyping?


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