Greece

[ERD50]

Everybody? some degree? from time-to-time?--What did you do with the real ERD50?
(And you did it all a single sentence).

Yes, I almost always ( ) stay away from absolutes, and I did pause over that 'everybody' as I typed it, but I figured that 'from time to time', and 'some degree' was enough softening.

But if it makes you feel better - ' Most people do that to some degree or from time-to-time, ' - feel better? Or did I miss the intent of your post?

-ERD50

 

[Winemaker]

I wouldn't believe any Krugman theory if it told me the sun would rise tomorrow. He is so "beside himself" and pompous in the way he reacts to people who give an opposing view.

 

[Nemo2]

I wouldn't believe any Krugman theory if it told me the sun would rise tomorrow. He is so "beside himself" and pompous in the way he reacts to people who give an opposing view.

+1

 

[redduck]

Yes, I almost always ( ) stay away from absolutes, and I did pause over that 'everybody' as I typed it, but I figured that 'from time to time', and 'some degree' was enough softening.

But if it makes you feel better - ' Most people do that to some degree or from time-to-time, ' - feel better? Or did I miss the intent of your post?

-ERD50

I was worried that perhaps an alien creature inhabited your soul before being fully prepped regarding your fetish for absolutes. Sounds like this might show up in Al's next novel.

To answer your question: Yes, I do feel better now. Thank you for asking.

 

[explanade]

It has been 5 years, two loan extensions, etc.. Greeks brought this on themselves and it's their problem to solve. What have they done to fight their way out of the situation? Not enough, apparently. Oh, yeah. They voted not to accept more belt tightening.

There are literally nations with people dying from hunger. I see Greeks on TV and I don't see the same despair or hunger. Not even close "to the US Great Depression" but they seem to be going there.

Greek austerity sparks sharp rise in suicides

 

[samclem]

Greek austerity sparks sharp rise in suicides

1) Did "austerity" prompt the suicides, or was it the poor economic situation? There are plenty of reasons for their present situation.
2) The reforms were not imposed on the Greek government. The Greek government chose to agree to implement them to get more aid. They could have walked away.
3) How many suicides would have occurred if the Greek society hadn't enjoyed about a decade of living above their means courtesy of their neighbors?

 

[explanade]

I didn't write the article, you can ask the writer those questions.

With 25% unemployment rate and a lot of people driven into poverty, you draw your own conclusions.

 

[samclem]

I didn't write the article, you can ask the writer those questions.

You posted what we call a "naked link," so there's really no telling what you think about it or why it is here.

Unemployment? The Greek Labor Force Participation rate has been between 50% and 53% for at least 20 years. Just not many people working there, even in the "good times." It's far below the world average, a function of a lot of things in Greece, structural things that started long before there was ever a euro or "austerity". To make it worse, a high percentage of those people are in make-work public sector jobs, not ones that improve the balance sheet of Greece. In the US, the labor force participation rate is 62.9%, which is close to the world average. If about 20% fewer of your people are actually working, and they in general do less productive things than average--it's not a recipe for prosperity.

 

[Fred123]

Regarding the phrase I put in bold in the quote above:

No - not exactly. This is a chart that shows *correlation*, not *causation*.

There's a big difference. Krugman blurs the distinction in the article, too, which I find disingenuous.

Certainly your argument (and Krugman's) is a very plausible explanation of the correlation, but there are other explanations, too.

For example, the chart could simply be showing that austerity arises after a combination of excessive debt financing combined with poor tax collecting (and the concomitant government corruption) which leads to unsustainable economic growth followed by contraction and sovereign debt default. So effectively, austerity could be a symptom of the irresponsible actions that caused the contraction, rather than the cause itself.

I haven't read enough to convince myself of one argument or the other, and in fact the likely explanation is a combination of factors, but in any case, the argument is not nearly as clear-cut in my mind as Krugman's article implies.

If you look at the earlier graph that I posted (about year-to-year changes in Greek GDP), you will see that the economy begin to improve after the immediate post-financial crisis, but then cratered after 2010 and 2012 when the two austerity packages were imposed by the EU.

But, hey, facts are facts. Much more fun to blame it all on the fiscal irresponsibility and moral turpitude of Greece. Sure glad that we never have that sort of irresponsibility in the US financial sector...

 

[NW-Bound]

What makes a country prosperous? One tends to think of the natural resources within its boundary, but it is not really that crucial. Look at Japan, which has to import much of the raw material it needs. And look at Africa, which is so rich in natural resources. And does the US really have that much natural resource compared to South America, for example?

What is absolutely needed and often trumps natural resources is human resources. One does not only work hard, he also must work smart. And hard and smart workers must be motivated with rewards. There is no other way to deploy human resources. "From each according to his abilities. To each according to his needs" will only lead to a population with lots of needs and no abilities; only fools would behave differently and volunteer to work harder than his neighbors.

 

[tmeeker]

The bank shutdown is supposed to last 6 days, with a withdrawal limit at atm's until the bank's re-open.

Could the Greek banks actually run out of paper currency if the run on the banks continue when they re-open ?

Does the European central bank supply all the paper currency , or do the countries print their own euro's ?

The Greek banks will run out of Euros, talking about going back to old currency if they leave the EU, not a smart move but their economy is horrible. 90% of each payment they make to the INF is for servicing their debt on the money they borrowed in the last 5 years. Greek banks will be closed, no one gets money right away, hope others have a heart and help Greece recover. EU wants huge austerity programs, no more early retirement, less pensions, etc. Either way Greece is screwed or more screwed of they go the worst way of going back to their old currency. No one will take their old money for debt payments, it's worthless right now.

 

[karluk]

EU president Donald Tusk is now tweeting his feelings on the Greek crisis in Latin. He definitely loses points for choosing Latin over Greek, but I'll give him a pass this time for doing his bit to revive the classics.

"Magnum vectigal est parsimonia" - Donald Tusk

 

[karluk]

Tsipras continues to outdo himself at every turn. The latest rumor (admittedly unconfirmed) is that he is now putting together an austerity package that is even tougher than the one rejected by Greek voters in Sunday's referendum. This guy is an absolutely bottomless fountain of endless amusement. I hope he remains on center stage for as long as I am following politics. Things will never be dull with him around.

Greece crisis: Greeks blink first with tough tax and pension reform on table - Independent.ie

Tsipras was huddled with advisers, pulling together a package of reforms that is expected to include much tougher measures than those included in a previous plan from creditors that was rejected by Greeks in a referendum on Sunday.
...
The Greek daily Kathimerini said the package was worth 12 billion euros, bigger than a previous 8 billion euro plan because the economy - battered by two weeks of capital controls - was now expected to shrink 3 percent instead of growing 0.5 percent this year.

 

[Texas Proud]

Tsipras continues to outdo himself at every turn. The latest rumor (admittedly unconfirmed) is that he is now putting together an austerity package that is even tougher than the one rejected by Greek voters in Sunday's referendum. This guy is an absolutely bottomless fountain of endless amusement. I hope he remains on center stage for as long as I am following politics. Things will never be dull with him around.

Greece crisis: Greeks blink first with tough tax and pension reform on table - Independent.ie

I think I was on my tablet when I read the story....

But it said that he was surprised that the NO vote won.... that he was hoping that it would be YES and it would mean that he was off the hook and it would pass in parliament....

 

[samclem]

What is absolutely needed and often trumps natural resources is human resources. One does not only work hard, he also must work smart. And hard and smart workers must be motivated with rewards. There is no other way to deploy human resources.

And what fosters development of that human capital? A system with a strong respect for/protection of private property rights. If people have assurances that they'll get to keep what they earn and that they won't be wasting their labor (because they could have been just as prosperous by depending on a handout), the rest will follow. People will find opportunities to work, businesses will identify needs and fill them, people will get the education/training they need (and businesses will make money providing the training), etc.

Greece has done more to diminish protection for individual property than any other country in Western Europe, and now we are seeing the results.

 

[CaliforniaMan]

Tsipras continues to outdo himself at every turn. The latest rumor (admittedly unconfirmed) is that he is now putting together an austerity package that is even tougher than the one rejected by Greek voters in Sunday's referendum. This guy is an absolutely bottomless fountain of endless amusement. I hope he remains on center stage for as long as I am following politics. Things will never be dull with him around.

Greece crisis: Greeks blink first with tough tax and pension reform on table - Independent.ie

+1
There are far more important stories in the news, and it is so sad for the Greek people, but I can't help it, I have to admit to being captivated by his soap opera. No Hollywood writer could come up with anything as entertaining as this.

 

[robnplunder]

Greek austerity sparks sharp rise in suicides

... and your point is? Suicides increases when businesses fail, bankruptcies happen. That does not change the fact that Greeks need to solve their own problem. My advice to Greek people is "get tough, and fight your way out of it." Nations in far worse situation came out of it by doing so much more than what Greeks are willing to do now - Germany & Japan after WWII, Korea after The Korean war & the IMF crisis, .... Perhaps, a total collapse will unite Greeks to turn things around.

 

[neihn]

"From each according to his abilities. To each according to his needs"

I heard that phrase often when I was young and in a communist country - by now we all should know that is crazy/miserably failed idea.

 

[38Chevy454]

... and your point is? Suicides increases when businesses fail, bankruptcies happen. That does not change the fact that Greeks need to solve their own problem. My advice to Greek people is "get tough, and fight your way out of it." Nations in far worse situation came out of it by doing so much more than what Greeks are willing to do now - Germany & Japan after WWII, Korea after The Korean war & the IMF crisis, .... Perhaps, a total collapse will unite Greeks to turn things around.

I agree with Rob, except that Greece has not bottomed out yet. Once bottomed out, they can work together. They will have no choice.

Margaret Thatcher had a couple good phrases that can apply to Greece:

"The problem with socialism is you eventually run out of other people's money"

and

"Good conservatives always pay their bills. Unlike socialists who just run up other people's bills"

 

[NW-Bound]

I heard that phrase often when I was young and in a communist country - by now we all should know that is crazy/miserably failed idea.

Indeed, it was the most famous slogan of the Communists.

From Wikipedia:

From each according to his ability, to each according to his need (French: De chacun selon ses facultés, à chacun selon ses besoins; German: Jeder nach seinen Fähigkeiten, jedem nach seinen Bedürfnissen) is a slogan first used by Louis Blanc in 1851 (although an earlier version of the saying appeared in Étienne-Gabriel Morelly's The Code of Nature) and popularised by Karl Marx in his 1875 Critique of the Gotha Program. The principle refers to free access and distribution of goods and services. In the Marxist view, such an arrangement will be made possible by the abundance of goods and services that a developed communist system will produce; the idea is that, with the full development of socialism and unfettered productive forces, there will be enough to satisfy everyone's needs.​

It is explained that Marx envisioned a utopia where an abundance of goods was produced, and people would enjoy their work so much that they would each work to the best of their abilities without extra rewards or being prodded.

Hah! It's human nature to be lazy, and people generally do not want to work. And a gentle society would motivate with carrots (the capitalist way), rather than coerce with sticks (the communist actual brutal way). And some people like to do non-productive work, or just want to ER. Also, not all works are equal. So, there has to be a system for remuneration.

The masses wanted to believe in Marx, because they were promised that their needs would be met, without them being required to have any abilities. The Communist leaders of course were not that dumb, but the slogan worked to get followers, so why not?

Marx never was able to provide for his family. His wife and their children lived and died in misery.

 

[MichaelB]

Getting back on topic, the FT reports Greece has submitted a new plan

According to officials briefed on Greek plans, which includes a 12-page list of specific reforms, the new submission was compiled with the assistance of the European Commission and the French government. These two are leading a small camp of delegations trying to overcome a growing tide of scepticism and mistrust among eurozone governments.

Bloomberg reports

The package of economic reforms and spending cuts, put together with help from France, was approved by a majority of Greece’s cabinet ministers. It was sent to creditors late Thursday and will be presented to the Greek Parliament Friday. The proposals are set to be discussed at a summit of European Union leaders Sunday to determine whether Greece will get a new bailout, or be forced to leave the single currency.

 

[Texas Proud]

Getting back on topic, the FT reports Greece has submitted a new plan

Bloomberg reports
​

From what I hear on TV, the plan is either 'worse' or 'much worse' than the one they rejected a week ago...


So much for their negotiation style...


But, it probably means more money coming in and better for Greece in the long run....

 

[NW-Bound]

A headline on Bloomberg says that Greece is asking for another 53.5B euros. Yet, they just missed a recent interest payment of 1.5B euros. So, how can they ever pay anything back? I guess the cutback must be very severe, or their economy has to rebound strongly.

Anyway, I found a site that says that interest payment of public debts cost Greece 11.5% of GDP in 2012. For the US, our interest payment was 13.5% of GDP in 2013. Italy's number is 13.4%, and France's is only 5.5%. Do these numbers really tell the indebtedness of the nations?

See: Worldbank.org: Interest payments (% of revenue).

 

[robnplunder]

A headline on Bloomberg says that Greece is asking for another 53.5B euros. Yet, they just missed a recent interest payment of 1.5B euros. So, how can they ever pay anything back? I guess the cutback must be very severe, or their economy has to rebound strongly.

I wonder, too, how they will payback the ever increasing debt. A year from now, the Greeks will be right back at where they are now (or even worse) unless they change their ways drastically.

 

[springnr]

The other side of the pond finally replied to the US helpful suggestions...

[FONT=&quot]Schäuble to Lew: I’ll trade you Greece for Puerto Rico

[/FONT] Who knew Wolfgang Schäuble, Germany’s prickly finance minister, had a sense of humor?
Schäuble to Lew: I’ll trade you Greece for Puerto Rico - MarketWatch