Greece Debt Crisis - Après Oxi

Synode · 07-07-2015 04:56PM

Well I don't think taking on more debt is the problem here. It's the Greeks unwillingness to reform their institutions. And their electorate's belief in magic money trees

07-07-2015 05:00PM

Synode wrote: »

Well I don't think taking on more debt is the problem here. It's the Greeks unwillingness to reform their institutions.

Oh yes. It's one of the problems, absolutely.

But you're not going to evade this problem by pointing to the others.

I am talking about the major blunder in Greece of simultaneously cutting incomes, raising taxes, then increasing the debt in real terms, and claiming to be hoping to stoke demand.

What kind of crackpot economic policy is that?

[edit: oh before the inevtiable, "greece was always a crackpot, na na na na na", maybe someone might defend the policy I'm actually referencing]

Permabear · 07-07-2015 05:03PM

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Synode · 07-07-2015 05:06PM

A Tyrant Named Miltiades! wrote: »

I am talking about the major blunder in Greece of simultaneously cutting incomes, raising taxes, then increasing the debt in real terms, and claiming to be hoping to stoke demand.

Isn't the above exactly what was done in Ireland though. And it worked here, primarily because we're an open economy with a very good tax collection record.

I do agree debt is important, but it's not the most important.

Mad Benny · 07-07-2015 05:13PM

gandalf wrote: »

Couple that with the fact Enda will rock up and start whinging for a better deal for Ireland as well along with the Portuguese and the Italians.

Whinging???

We seem to have forgotten that debt write down is a cental characteristic of dealing with unsustainable debt.

07-07-2015 05:18PM

Permabear wrote: »

This post had been deleted.

Oh but isn't it?

What specific rules did the creative accounting of the government of Greece (and Italy, for that matter) breach?

I wasn't aware that off-balance-sheet, off-market cross currency swaps were illegal or, at that time, against Eurostat rules, so now I'm really interested in what you have to tell us.

NorthStars · 07-07-2015 05:19PM

Michael Noonan today claimed that Greece should follow Irelands example, including getting interest rate reductions on the loans.
Does Michael forget that the only reason Ireland got an interest rate reduction was because Greece had been given it in the first place?
The way Kenny & Noonan are 'playing politics' with the Greek situation is quite galling.
They must be terrified.

http://www.irishtimes.com/news/world/europe/noonan-says-ireland-favours-debt-restructuring-for-greece-1.2276279

07-07-2015 05:22PM

NorthStars wrote: »

Michael Noonan today claimed that Greece should follow Irelands example, including getting interest rate reductions on the loans.
Does Michael forget that the only reason Ireland got an interest rate reduction was because Greece had been given it in the first place?
The way Kenny & Noonan are 'playing politics' with the Greek situation is quite galling.
They must be terrified.

http://www.irishtimes.com/news/world/europe/noonan-says-ireland-favours-debt-restructuring-for-greece-1.2276279

They've been very quiet on the matter compared to many other Eurozone leaders - hell, even non EZ countries like the UK are sticking the boot in from time to time.

Of course, I doubt that'll stop people pretending that Kenny and Noonan are literally the only 2 people in Europe who have anything to say on the matter. It hasn't so far.

07-07-2015 05:23PM

Synode wrote: »

Isn't the above exactly what was done in Ireland though. And it worked here, primarily because we're an open economy...

Yes the Irish economy is not directly comparable with Greece. It did work in Ireland because Ireland had a greater productive capacity and potential growth, being a small, open economy with low corporation tax. Having said that, the Irish problems aren't over, only the problems that investors most care about are close to resolution.

Ireland's basic budgetary problem iseasier to solve, though. After bank recapitalisations, the deficit was mostly high current spending and megolomaniac capital projects. Ireland's economy was an overgrown rose bush. Greece's, a landfill.

Godge · 07-07-2015 05:25PM

A Tyrant Named Miltiades! wrote: »

My point is that austerity policies tend to increase the real burden of debt, not reduce it. The troika used to believe that austerity policies decrease the debt burden, although they now seem more divided on that.

So who should pay for their mistake? The party that followed the programmes, or the party that instituted the programmes?

Depends on the austerity policies.

If you switch taxation from earned income and earned profit to property and other broad-based charges such as USC and water charges, then you can increase the overall taxation burden while simultaneously stimulating the productive parts of the economy. (A particularly clever revenue-raising measure in the Irish context was the levy on private sector pension funds which are mostly invested abroad).

Similarly, switching the focus of social protection to job activation can also help (the abolition of lone parents allowance for under-7s and replacement with JSA is an example of this, as is JobBridge etc.).

What I am saying is that the correct austerity measures will work subject to the basic principle that you have a functioning tax collection system, something Greece clearly lacked.

Godge · 07-07-2015 05:28PM

NorthStars wrote: »

Michael Noonan today claimed that Greece should follow Irelands example, including getting interest rate reductions on the loans.
Does Michael forget that the only reason Ireland got an interest rate reduction was because Greece had been given it in the first place?
The way Kenny & Noonan are 'playing politics' with the Greek situation is quite galling.
They must be terrified.

http://www.irishtimes.com/news/world/europe/noonan-says-ireland-favours-debt-restructuring-for-greece-1.2276279

And he was absolutely right both to say it and in what he said. Compared to other Finance Ministers and EU leaders, ours have been particularly respectful to Greece - read what the Finns, Slovakians and Latvians have been saying.

What is really galling is the way that idiots like Murphy and Doherty have trotted out to Athens despite having no official executive position here and mindless supported the lemming-like behaviour of the Greeks.

Godge · 07-07-2015 05:37PM

NorthStars wrote: »

Michael Noonan today claimed that Greece should follow Irelands example, including getting interest rate reductions on the loans.
Does Michael forget that the only reason Ireland got an interest rate reduction was because Greece had been given it in the first place?
The way Kenny & Noonan are 'playing politics' with the Greek situation is quite galling.
They must be terrified.

http://www.irishtimes.com/news/world/europe/noonan-says-ireland-favours-debt-restructuring-for-greece-1.2276279

"“We need a deal here” declares Irish leader Enda Kenny as he arrives at tonight’s summit.

The time is now to bring some hope, certainty and stability to the people of Greece in the medium term, for they are now suffering.

I look forward “very much” to hear what prime minister Tsipras has to say, Kenny adds, before heading inside."

Which part of Kenny's statement above do you have a problem with?

NorthStars · 07-07-2015 05:50PM

Sergio Georgini wrote: »

They've been very quiet on the matter compared to many other Eurozone leaders - hell, even non EZ countries like the UK are sticking the boot in from time to time.

Of course, I doubt that'll stop people pretending that Kenny and Noonan are literally the only 2 people in Europe who have anything to say on the matter. It hasn't so far.

They represent our country.
That's why it's of interest to Irish people.

NorthStars · 07-07-2015 05:53PM

Godge wrote: »

"“We need a deal here” declares Irish leader Enda Kenny as he arrives at tonight’s summit.

The time is now to bring some hope, certainty and stability to the people of Greece in the medium term, for they are now suffering.

I look forward “very much” to hear what prime minister Tsipras has to say, Kenny adds, before heading inside."

Which part of Kenny's statement above do you have a problem with?

All of it.
He told bare faced lies last week to the world press about how Ireland didn't raise taxes etc.
I don't believe anything that comes from his mouth.
What happens to Greece is very relevant to Ireland as Kenny will be looking for any concessions Greece receive, and they will receive concessions, to claim as concessions he won.

Permabear · 07-07-2015 06:00PM

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Godge · 07-07-2015 06:04PM

NorthStars wrote: »

All of it.
He told bare faced lies last week to the world press about how Ireland didn't raise taxes etc.
I don't believe anything that comes from his mouth.
What happens to Greece is very relevant to Ireland as Kenny will be looking for any concessions Greece receive, and they will receive concessions, to claim as concessions he won.

Again compared to what Kenny said, here is the Belgian Prime Minister:

"The Belgian Prime Minister Charles Michel says that if "there is nothing on the table and there continues to be nothing on the table" and if Greek Prime Minister Tsipras is not able to honour the demand of the Greek people to stay in the euro zone, then Mr Tsipras "bears a heavy responsibility towards his own people".

"We can't do it with a gun to our head or a knife at our throats. A prime minister has to face up to his responsibilities," Mr Michel said."

It is absolutely clear now that the Irish leaders have been much more restrained than anyone else in public with regard to Greece. Patience is running out across the EU.

07-07-2015 06:17PM

Permabear wrote: »

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You said:

Permabear wrote: »

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and

Permabear wrote: »

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Now, either Greece abided by Eurostat and Maastricht rules to gain entry, or it did not.

What rules if any were breached?

Name them.

swampgas · 07-07-2015 06:29PM

Godge wrote: »

Again compared to what Kenny said, here is the Belgian Prime Minister:

"The Belgian Prime Minister Charles Michel says that if "there is nothing on the table and there continues to be nothing on the table" and if Greek Prime Minister Tsipras is not able to honour the demand of the Greek people to stay in the euro zone, then Mr Tsipras "bears a heavy responsibility towards his own people".

"We can't do it with a gun to our head or a knife at our throats. A prime minister has to face up to his responsibilities," Mr Michel said."

It is absolutely clear now that the Irish leaders have been much more restrained than anyone else in public with regard to Greece. Patience is running out across the EU.

It's almost as though Tsipras wants to create a permanent rupture as fast as possible with the EU, so that even if he's thrown out of office and replaced with a more cooperative Greek government there will be no way to change course.

After recent events I find it hard to believe that he's not doing this deliberately.

Permabear · 07-07-2015 06:32PM

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K-9 · 07-07-2015 06:37PM

Synode wrote: »

Isn't the above exactly what was done in Ireland though. And it worked here, primarily because we're an open economy with a very good tax collection record.

I do agree debt is important, but it's not the most important.

The multiplier effect here isn't as significant as Greece so the cuts in Govt. spending would affect them more.

There isn't a one size fits all solution, so pointing at Greece as is coommon in Ireland, and saying austerity doesn't work doesn't really help Greece. Because Ireland is an example of austerity actually working, but Greece has a different type of economy all together.

dlouth15 · 07-07-2015 07:26PM

Just listening to Noonan on the news. Obviously it is going to take time but he seemed optimistic that a deal could be reached involving debt relief in the form of interest rate adjustment and extension of maturities in return for reforms. This would be the equivalent in financial terms to a debt write-down but to the less sophisticated of the electorates in Germany and elswhere it won't seem that way so Merkel will probably be able to sell it.

For Reals · 07-07-2015 07:42PM

Permabear wrote: »

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I disagree. We are to believe Greece pulled the wool over all the financial experts in Europe? I can't buy into that. Add to that decades of operating under the eye of Europe....
As you brought in a comparison to our little gutter, I'll add, nobody was looking behind the curtain very hard.
So the Greeks are both financially incompetent and viciously shrewd all at the same time. Fascinating.

07-07-2015 07:48PM

Permabear wrote: »

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No, perhaps you're ignoring the date on that report, and the accounting standards to which it refers.

The Commission report related to ESA95 statistical treatment, which came into force in 2000, one year after Greece qualified for EMU.

The statistical rules in place at the time of Greece's qualification for EMU placed it within the deficit rules. This is confirmed on pg.47 of the 2005 OECD Economic Survey for Greece

So whilst it is certainly true to say that Greece broke many rules once it entered the Eurozone (as did most members), it is untrue to claim that Greece cheated its way into EA membership.

It certainly used creative accounting, but creative accounting revolves around sticking to the letter of the law, even pedantically.

For Reals · 07-07-2015 07:51PM

Synode wrote: »

No it's spending the money that was loaned to you in good faith without making any of the necessary adjustments to correct your budget deficits. We're now at the stage that nobody will loan money to Greece unless they make the changes i.e. they're being forced to. Which is completely understandable

I'm just pointing out that they set up and run the system. It obviously doesn't work, (how many countries beside Greece?) hence the supposed need for harsh austerity, which is just a short sighted money grab in my view.

Permabear · 07-07-2015 07:55PM

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Eugene Norman · 07-07-2015 08:04PM

Permabear wrote: »

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no mention of Goldman Sachs I see. Responsible not just for getting Greek into the euro by cooking the books, but partly responsible -- along with all criminal bankers -- with the 2008 recession, and in its role as government-banking nexus across the world in turning that recession into a depression in Greece

07-07-2015 08:10PM

Eugene Norman wrote: »

no mention of Goldman Sachs I see. Responsible not just for getting Greek into the euro

http://www.risk.net/risk-magazine/feature/1498135/revealed-goldman-sachs-mega-deal-greece

There is no doubt that Goldman Sachs’ deal with Greece was a completely legitimate transaction under Eurostat rules. Moreover, both Goldman Sachs and Greece’s public debt division are following a path well trodden by other European sovereigns and derivatives dealers.

Many of the same people who seem to give themselves high blood pressure over Greek 'cheating' are probably the same people who look at that awful Clery's affair and shrug, 'business is business'. Even if you dislike how the Greeks operated, you cannot reasonably claim they cheated the rules.

Phoebas · 07-07-2015 08:12PM

Eugene Norman wrote: »

no mention of Goldman Sachs I see. Responsible not just for getting Greek into the euro by cooking the books, but partly responsible -- along with all criminal bankers -- with the 2008 recession, and in its role as government-banking nexus across the world in turning that recession into a depression in Greece

Blame the henchmen and excuse the villian.

Jonblack · 07-07-2015 08:33PM

Sergio Georgini wrote: »

They've been very quiet on the matter compared to many other Eurozone leaders - hell, even non EZ countries like the UK are sticking the boot in from time to time.

Of course, I doubt that'll stop people pretending that Kenny and Noonan are literally the only 2 people in Europe who have anything to say on the matter. It hasn't so far.

Ireland forced the capital controls on greek banks the germans backed us up.

Inquitus · 07-07-2015 08:41PM

Jonblack wrote: »

Ireland forced the capital controls on greek banks the germans backed us up.

Would you perchance have a source for an allegation such as this that might actually lend a shred of credibility to it?

Greece Debt Crisis - Après Oxi

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