Greece

[Texas Proud]

Sorry, here's the correct link: http://krugman.blogs.nytimes.com//2013/02/23/austerity-europe-2/

The x axis is the level of austerity. The further to the right you go, the more austerity. The y axis shows how much growth there was from 2009-2012. Greece is so far from the rest of the group because the EU imposed extremely severe austerity as a precondition to the 2010 and 2012 bailouts. But, as the graph shows, this was a self-defeating proposition for EU bureaucrats, since the austerity made it even more unlikely that Greece would be able to make good with its creditors. This is something that many mainstream economists agree with, BTW.

Had to look for it, but found it....

Your argument is that it is horrible, but I say that you are looking at the red line....

I say it was due to unsustainable spending when they joined the Euro, with is the yellow line...

The problem is there was no way for them to keep at a false high level... the major decline is not due to austerity per se, but due to the heady levels they went up to with their unsustainable spending...


They have now adjusted back to their mean level.... and if the current gvmt had not insisted on keeping on keeping on they would have been growing.... I could be wrong, but I think that prior to Jan the Greek economy was growing again... now it will decline much further no matter what happens... with or without a bailout the Greek people are going to be worse off going forward than they would have if this gvmt never came to power...

Oh... and by the way, it was the Greek people who voted them in.... and also the Greek people who voted NO to the help...

 

[samclem]

Get 'em while they are hot! Three year Greek government bonds are now yielding 52.7%. Backed by the full faith and credit of a sovereign government, nothing to fear there. This model denominated in frumpy old euros, reportedly a new model is in the works denominated in something more exciting.

All those carping on about the fiscal discipline of the Greek government, here's your chance to do well by doing good.

 

[pb4uski]

If Greece just improved tax compliance .....

The first, uncollected tax receipts, shows that Germany has had almost no problem when it comes to taxpayers paying their bills due to the government, while Greece has had an unparalleled challenge. Germany has fewer outstanding tax debts than any other country in Europe, while Greece has more than any other. That difference not only helps Germany enjoy a far more fiscally sound position than Greece, but it offers a stark contrast between a disciplined government and one that historically has been hardly disciplined.

 

[JoeWras]

Meanwhile, it is going deeper to hell.

While Tsipras and his cronies play games, confidence is lost everywhere.

Would you want to take a trip to Greece this summer?

Would you want to open a remote office location?

Etc. Stop playing games. The crater is just getting deeper.

 

[imoldernu]

Per person dollars of Government Debt.
From Bloomberg...2014 numbers.

United States $58,604
Greece $38,444

Most Government Debt per Person: Countries - Bloomberg Best (and Worst)

 

[mpeirce]

Per person dollars of Government Debt.
From Bloomberg...2014 numbers.

United States $58,604
Greece $38,444

Ah statistics. Gotta love'em.

More stats:

General government gross debt as a percentage of GDP in 2014 (same source)

United States: 107%
Greece: 174%

Not that I like the current US debt situation or believe that it's sustainable. But it's a different kettle of fish than Greece.

 

[Fermion]

Per person dollars of Government Debt.
From Bloomberg...2014 numbers.

United States $58,604
Greece $38,444

Most Government Debt per Person: Countries - Bloomberg Best (and Worst)

You can't compare United States to Greece.

How many aircraft carriers does Greece have?

 

[samclem]

Ah statistics. Gotta love'em.

More stats:

General government gross debt as a percentage of GDP in 2014 (same source)

United States: 107%
Greece: 174%

Not that I like the current US debt situation or believe that it's sustainable. But it's a different kettle of fish than Greece.

+1. And, in a pinch, the US can print money to make those debt payments (Lenders: Surprise! You're getting paid in slightly diminished dollars.). Greece, while in the eurozone, doesn't have that option. Soon they may have that option again, at least for debts denominated in "new drachmas". They'll have to offer a heck of an interest rate.

 

[Texas Proud]

I was listening to TV this morning and they were talking about the China meltdown...

Someone mentioned Greece and the talking head said that the Chinese economy is growing at a rate of a 'new Greece' every 6 weeks...

Kinda shows how insignificant Greece is in the world economy....

 

[MichaelB]

Hot off the press http://www.ft.com/intl/cms/s/0/d4e3...s/rss/home_europe/feed//product#axzz3fFE1bBTG

Greece formally requested a new three-year bailout from the eurozone’s rescue fund and promised to implement pension and tax reforms as early as next week as it sought to convince creditors it was serious about a deal.

The Greek communication is here http://blogs.ft.com/brusselsblog/files/2015/07/ESM-loan-request-letter-8-July-2015.pdf

​

 

[marko]

Kinda shows how insignificant Greece is in the world economy....

Frustrating to have an economy the size of Rhode Island [-]hurt so many[/-] create buying opportunities for retirement funds.

 

[DEC-1982]

Kinda shows how insignificant Greece is in the world economy....

Yes, but sometimes the significance is out of proportion to money or GDP.

1. It would be the first country to drop out of the Euro. This would disprove the original Euro architect thinking that "you can join but you can never leave"

2. It could give ports or bases to Russia or China. Russia is not interested in loans to Greece but has said it is interested in getting access to their ports. And China is also interested in picking up on-sale Greek strategic assets.

 

[redduck]

...How many aircraft carriers does Greece have?

As many as it needs?

 

[NW-Bound]

Hot off the press http://www.ft.com/intl/cms/s/0/d4e3...s/rss/home_europe/feed//product#axzz3fFE1bBTG
The Greek communication is here http://blogs.ft.com/brusselsblog/files/2015/07/ESM-loan-request-letter-8-July-2015.pdf

​

Tsipras was mobilizing his citizens to vote "No" on the referendum, claiming that it would give him more say in the negotiation. I do not see how.

Perhaps it is like an estranged person holding a gun to his own head, saying "back off or I will pull the trigger".

 

[samclem]

And from Reuters today:

The aim is for Eurogroup ministers meeting on Saturday to be in a position to recommend a loan, and some emergency bridging finance, which a full summit of the 28 EU leaders would approve on Sunday if they are satisfied with Greek reform commitments.
That is a big 'if', both due to Athens' chequered record and because many of the liberalization measures required run counter to the leftist ideology of Tsipras' Syriza party.
The prime minister promised to deliver detailed reform plans on Thursday and avoided the angry rhetoric that has alienated many European partners. He did however criticize attempts to "terrorize" Greeks into voting for "never-ending austerity".

The world will know that Tsipras is serious if he finally shows up to one of these meetings of world leaders wearing a tie.

And about those Greek reform plans: I don't know why the idea brought to mind a recent article in the Onion: Frogs Unveil 5 Million Year Plan to Move Up Food Chain

EARTH—Declaring that they had occupied a low-level rung in the global ecosystem for far too long, the world’s frogs revealed Thursday an ambitious 5-million-year plan to move up the food chain.
According to frogs, the long-term, multipronged strategy will include a series of dietary, cognitive, behavioral, and morphological adaptations designed to help them as they evolve to inhabit a higher place in the biosphere’s order of predation. Provided they adhere to the developmental benchmarks they set out and run into few obstacles, frogs said they ultimately envision themselves at a tier of the food chain on par with hawks and ocelots.
. . . .
“Right now, we prey on flies, moths, crickets, and maybe a worm here or there, but mostly just assorted bugs. We no longer consider this acceptable. Under our new plan, we see ourselves regularly consuming rodents, lizards, rabbits, and, if everything goes as anticipated, bats. We recognize that such a diet will require pointed teeth as well as powerful jaws, and it is our intention to evolve these attributes on the fixed schedule we’ve laid out,” the frog continued. “As you can see on our timetable, we’ll start in on growing incisors in the near future.”

Obviously, I'm not comparing any humans to amphibians. But having a plan isn't the same as making progress.

 

[Fermion]

As many as it needs?

My point was making comparisons between debt per capita for two totally different countries is folly. One is a world power with its own currency and vast resources. The other drinks ouzo.

 

[Running_Man]

I was listening to TV this morning and they were talking about the China meltdown...

Someone mentioned Greece and the talking head said that the Chinese economy is growing at a rate of a 'new Greece' every 6 weeks...

Kinda shows how insignificant Greece is in the world economy....

Greece is not insignificant because the world since 2008 has embarked on a policy of lifting financial stock markets and there was a set of assumptions that everything would work out in the end so massive borrowing by governments to relieve banks and poor countries in the end would work out. Governments and IMF are unsure of what actually will occur if Greece goes under, that is why IMF is warning US not to raise rates because they fear world economy could go back into deep recession. So it will be months till we find out if it is something or nothing.

 

[ulrichw]

[...]

Don't believe me? Here's some data (a bit dated, from 2009-2012) that shows the effect of austerity on growth (from Paul Krugman via the IMF; x-axis is a measure of austerity, y-axis is growth, more details at http://krugman.blogs.nytimes.com/2013/02/23/austerity-europe-2/):

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.

 

[ERD50]

... Don't believe me? Here's some data (a bit dated, from 2009-2012) that shows the effect of austerity on growth (from Paul Krugman via the IMF; x-axis is a measure of austerity, y-axis is growth, more details at ...

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. ....

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.

+1

Krugman is obviously a smart guy, but I find he tends to explain things in a way that fits his predetermined viewpoint. Everybody does that to some degree or from time-to-time, but you really need to watch for it in Krugman's comments.

-ERD50

 

[Nemo2]

Tsipras was mobilizing his citizens to vote "No" on the referendum, claiming that it would give him more say in the negotiation. I do not see how.

Perhaps it is like an estranged person holding a gun to his own head, saying "back off or I will pull the trigger".

The trouble with a bluff is that you're screwed when it's called.

 

[NW-Bound]

My point was making comparisons between debt per capita for two totally different countries is folly. One is a world power with its own currency and vast resources. The other drinks ouzo.

Hey, what kind of disparaging remark is that?

I occasionally drink French pastis, a similar aperitif, mixed in with cold water. In the heat of summer, a glass of pastis cools one down very well. And sipping a glass while watching out over the blue Mediterranean Sea, man, how life can be any better? When people have been doing something for thousands of years, you've got to say perhaps they've got something right.

 

[robnplunder]

I think that 25% unemployment along with a 25% GDP drop (pretty close to the US Great Depression) is a pretty tight belt for the Greeks. They're hardly living the high life these days.

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.

 

[clifp]

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.

I feel pretty much feel the same way. To be fair much of the misery has been brought on by the political class in Greece (although they were voted in by the average Greek citizen).

I see the anger Greek citizen without job, and they look way better off than millions of Syrian,Iraqi, Sudanese,Libyan, Nigerian.... flleeing ISIL, Boko Horum, and the Assad government, and life of rape, beheading, crucifixions, and if you are lucky just mere hunger.

I will say that Greeks have been good about accepting, feeding and sheltering refuges from the horror in the Middle East and Northern Africa.
These refugees are European problem not just a Greek so I hope Europe helps Greece absorb the cost of providing this assistance.

 

[CaliforniaMan]

No, that's what you do if you're an individual, not what you do as a country. If you're a country and you're in a deflationary spiral then 1) your amount of debt increases with deflation and 2) the more the government cuts back on spending confidence falls, people slow down spending, and deflation increases. It really is different, and that's just textbook macroeconomics.

Don't believe me? Here's some data (a bit dated, from 2009-2012) that shows the effect of austerity on growth (from Paul Krugman via the IMF; x-axis is a measure of austerity, y-axis is growth, more details at http://krugman.blogs.nytimes.com/2013/02/23/austerity-europe-2/):

I don't think too much can be made of this chart. It shows a weak relationship at best and one extreme outlier. Throw that out and I suspect that strong r-squared would be greatly diminished. In addition look at the countries in lower right quadrant. I would bet that austerity was not handed out at random, but rather in higher doses to the countries most requiring it. So it would be no surprise that countries given the greatest austerity would do worse, likely they were the worst. So it could be that all this chart shows is that austerity was metered out to the countries that needed it the most. And that Greece among all the countries, chose not to participate in its own recovery.

 

[redduck]

+1

Krugman is obviously a smart guy, but I find he tends to explain things in a way that fits his predetermined viewpoint. Everybody does that to some degree or from time-to-time, but you really need to watch for it in Krugman's comments.

-ERD50

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