Greece

[samclem]

Sounds like many would prefer to work, to generate more income. But it's not an option, given high unemployment, brought about by these austerity policies.

Which are the result of . . . profligate spending of borrowed money. Is there an aversion to mentioning the root cause of all this misery?

 

[ERD50]

... They can't simply will big private sector employers to appear out of thin air. ...

True. Big private sector employers need good reasons to set up shop somewhere. Natural resources, good infrastructure, a work force that will work hard and produce quality output for competitive compensation - a few others or combos of the above.

I suspect the work force is a big hold-up. I also suspect they will need to get very hungry before they get motivated.

-ERD50

 

[ERD50]

...
Sounds like many would prefer to work, to generate more income. But it's not an option, given high unemployment, brought about by these austerity policies.
...

Which are the result of . . . profligate spending of borrowed money. Is there an aversion to mentioning the root cause of all this misery?

Root causes are hard!

There was a lot of 'stuff' leading up to the austerity cuts. Inconvenient?

-ERD50

 

[robnplunder]

I also suspect they will need to get very hungry before they get motivated.

-ERD50

I truly think Greek needs to be much more desperate before they are properly motivated to get out of the situation by themselves. OTOH, they may reach the bottom and never recover. Based on what I saw so far, the latter seems to be the case if EU does not bail them out again.

 

[JoeWras]

Would love to read the FT but it's paywalled.

The article is a good short read that outlines the difficulty of staying or exiting.

To see it, just google: The difficult choices facing the Greeks

 

[ronin]

A Primer On the Greek Crisis

This summary from Anil Kashyap from the University of Chicago is a nice summary. It was posted on Bogleheads earlier by Larry Swedroe.

 

[explanade]

A Primer On the Greek Crisis

This summary from Anil Kashyap from the University of Chicago is a nice summary. It was posted on Bogleheads earlier by Larry Swedroe.

Interesting, so it's not about Greece itself:

1. In 2010, the "bailout" was mainly to protect the French and German banks, not save Greece.

2. The EU won't cave into Greece because it may set a precedent for Spain and Italy.

 

[ERD50]

Interesting, so it's not about Greece itself:

1. In 2010, the "bailout" was mainly to protect the French and German banks, not save Greece.

2. The EU won't cave into Greece because it may set a precedent for Spain and Italy.

What the heck do you think the French and German banks had to be protected from? Greece's exemplary fiscal policies and superb productivity?


Right, it's not about Greece. Pay no attention to that Country behind the curtain!

Amazing.

-ERD50

 

[explanade]

They had to be protected from making bad loans.

You probably blame the subprime crisis only on the borrowers, not the lenders, who were bailed out anyways.

 

[robnplunder]

Interesting, so it's not about Greece itself:

1. In 2010, the "bailout" was mainly to protect the French and German banks, not save Greece.

That goes without saying. They are not trying to save Greek for humanitarian reasons. For bigger picture of things, if one country (Greece) gets away with their (German, France) banking system, another and even bigger country can do & expect the same.

Bottom line, however hard it is for Greeks, they need to find their way out of it, be it the hard way. At least, that's my hope.

 

[ERD50]

They had to be protected from making bad loans.

You probably blame the subprime crisis only on the borrowers, not the lenders, who were bailed out anyways.

Well, if a borrower takes out a highly leveraged/risky loan, then the borrower has to accept responsibility if/when they run into trouble.

All through life, people will offer you deals that are not good for you - you need to learn to say 'no'. If you want to blame the people making the offers, you are trying to push a rope, and it will likely end badly. Hmmm, sounds like Greece right now?

There were other 'players' in the subprime crisis that deserve a lot of the blame, but I won't go there, or this thread will get shut down. We're probably dancing on the edge now.

-ERD50

 

[NW-Bound]

Greece problem stems from generous government spending and benefits. By the time they could not hide the problem from lenders, it was already too late, and the problem avalanched.

Before we exhibit too much schadenfreude, we should remember that we already have pension problems here at home in the US. But it is so far only at the town or city level. In a decade or two, we will see if the bigger problem will surface at the state level, as we have been warned about.

At the federal level, the solution would be inflation to devalue the debt. Inflation is extremely efficient and handy to erase the debt, while protecting workers whose income would more or less keep up. You would not have the cash crunch that paralyzes Greece right now.

At the state level where no money printing is allowed, like Greece now, the problem becomes more "interesting".

PS. Forgot that Puerto Rico is in trouble now. Can we consider it equivalent to a state?

 

[NW-Bound]

I forgot to add that Puerto Rico debt is $72B for 3.6M people. That works out to a "mere" $20K/person. But Puerto Ricans are leaving the island, and are not sticking around.

Again, as I mentioned in an ealier post, Greece debt is about US$32K/person.

And the US national debt is US$72K/person. We still need to add to that various state debts.

It's a good thing our debts are all in US dollars.

 

[eytonxav]

Well some of the early retirees are those who lose jobs and have no prospects, being middle aged and in a job market with 26% unemployment.

So they go for early pension if they can and typically these are well under 1000 Euro a month.

Chicken or egg argument. I would say retirement at 50 yo was one of the reasons their economy imploded and led to such high unemployment, so should they continue down that path?

 

[Winemaker]

It is the same reason the employment participation rate is so low here in the states.

 

[Nemo2]

I presume its known to many except the politicians. The biggest one is spend $s within or below your means. We know that one pretty well on this forum.

Yes, the pols were the ones I was wondering about.

 

[haha]

Well, if a borrower takes out a highly leveraged/risky loan, then the borrower has to accept responsibility if/when they run into trouble.

All through life, people will offer you deals that are not good for you - you need to learn to say 'no'. If you want to blame the people making the offers, you are trying to push a rope, and it will likely end badly. Hmmm, sounds like Greece right now?

There were other 'players' in the subprime crisis that deserve a lot of the blame, but I won't go there, or this thread will get shut down. We're probably dancing on the edge now.

-ERD50

You cannot make this work in a democracy. Wherever the moral righteousness lies doesn't matter unless you are willing to quell riots Tiananmen style. Which also means that you must accept a dictatorship. Everyone and every group or nation that is today getting payments for whatever, they are actually getting payments to refrain from fomenting social chaos that would likely require brutal repression to put down.

Ha

 

[Lsbcal]

I have yet to see a plan for what would be done if Greece leaves the EU (votes "no" on July 5). Without a plan why would anyone vote "no"?

Where is the plan for Greek survival if not backstopped by the EU? Won't pensioners starve whereas now they are getting some Euros?

There is this from Wikipedia with no mention of the costs or who pays:
Plan Z during 2012

"Plan Z" is the name given to a 2012 plan to enable Greece to withdraw from the eurozone in the event of Greek bank collapse.[20] It was drawn up in absolute secrecy by small teams totalling approximately two dozen officials at the European Commission (Brussels), the European Central Bank (Frankfurt) and the IMF (Washington).[20] Those officials were headed by Jörg Asmussen (ECB), Thomas Wieser (Euro working group), Poul Thomsen (IMF) and Marco Buti (European Commission).[20] To prevent premature disclosure no single document was created, no emails were exchanged, and no Greek officials were informed.[20] The plan was based on the 2003 introduction of new dinars into Iraq by the Americans[20] and would have required rebuilding the Greek economy and banking system ab initio, including isolating Greek banks by disconnecting them from the TARGET2 system, closing ATMs, and imposing capital and currency controls.[20]

https://en.wikipedia.org/wiki/Greek_withdrawal_from_the_eurozone

 

[pb4uski]

Failing to do the right thing in a timely manner is the issue.

Like the U.S. Congress and Social Security. Tick, tock, tick, tock ....

 

[pb4uski]

....For some letting go of Greece would be similar to remove California or Texas from the USA.

Tough choice.... I pick....

 

[aja8888]

Tough choice.... I pick....

Now if it was New Jersey or Illinois....

 

[samclem]

A point raised by a commentator on NPR today was that the imposition of currency controls by the Greek government today already did a lot of damage. Once you deny people access to their own money, reestablishing faith in the banking system takes a very long time. I'd agree with that--if I lived there, I'd make it a point to withdraw everything I could as soon as I could.

 

[pb4uski]

Now if it was New Jersey or Illinois....

it would be an easier decision.

 

[Fermion]

I forgot to add that Puerto Rico debt is $72B for 3.6M people. That works out to a "mere" $20K/person. But Puerto Ricans are leaving the island, and are not sticking around.

Again, as I mentioned in an ealier post, Greece debt is about US$32K/person.

And the US national debt is US$72K/person. We still need to add to that various state debts.

It's a good thing our debts are all in US dollars.

Population density of Greece is 221 per square mile

Population density of USA is 83 per square mile

Debt of Greece is $7 million per square mile

Debt of USA is $6 million per square mile

Winner USA (but not by much)

 

[pb4uski]

Per square mile seems an odd way to measure such things. Why not per mile of coastline?