Greek Crisis continues

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sardia
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Re: Greek Crisis continues

Postby sardia » Thu Jul 09, 2015 12:55 am UTC

Tyndmyr wrote:Why does anyone HAVE to do that? Clearly, they don't.
Yes, it is obviously more desirable for the hurting country to get free money/written off debt. But there is no motivation to be the donor in an ongoing relationship of that sort.
And if you make it policy that you HAVE to do it, even when they keep getting spend happy repeatedly, what incentive do they have to fix their spending issues? I mean, free money to fund your spending programs is kind of awesome all round.
BattleMoose wrote:
So no, people don't understand how interest works. An interest rate of x% does not mean the loan will never default. If that was the case, interest should be 0%.

If people don't understand the basics of economics then they should not be managing a countries fiscal policies. No ifs or buts. And the latter half is just wrong on the face of it. Even Australian bonds have a positive interest rate, and yeah, no way they will default for the period of the bond. Just not in the realm of reality.

This. It's one thing to complain about predatory loans being marketted to very young folks or something, on the basis of taking advantage of lesser access to knowledge...but if the nation can't manage money, then what? What higher authority is there to default upward to for that decision? The buck HAS to stop somewhere, and it's hard to argue that Greece didn't have the ability to get such knowledge.
Just as there is no requirement that others bail out Greece, there is likewise no requirement that Germany bail out the lenders. If they think they can do so safely for a net gain, cheers, let them try. But they don't *have* to. Nobody is going to march in with troops and make them.

It's not exactly like Greece borrowed a bunch of money, and are now welfare queens who've run out of money. You skipped over the intermediate steps of
Suffer economic losses worse than the Great Depression.

Would you choose to borrow money and spend it unwisely if you knew the "easy way out" was to spend the next decade under crushing austerity and impoverishment? Then once you made yourself a huge loser for years, then maybe, just maybe the German guy down the hall decides to pay your bills...except the bill was owed to him. So now he's giving you money so you can give it back to him. The metaphor breaks down since countries aren't people. (Otherwise you'd just declare bankruptcy, but without all the moral soapboxing) Are you claiming that both Portugal and Spain would choose to go through all the steps that Greece took just for the chance at a haircut?

What incentive does Greece have to make themselves a functioning prosperous economy instead of a literal welfare state? I dunno, maybe the part where they're a welfare state(to other nations) suffering 25% unemployment(really should be closer to 50%, their government is too bloated IIRC).
I guess "have to" is causing a major hangup in your mind. How about, "It's unproductive and wasteful to throw money at Greece with the stipulation that the money be spent to pay back the loans, especially since the money you threw at them is also a loan. In addition, Germans are under the unrealistic fiction that if they keep loaning more money to Greece, Greeks will somehow* pay them back." The faster more efficient answer is to reduce the debtload. Now why would the Germans purposely throw their good money at Greece for loans, but refuse to use that money to pay off the debt? Mostly it's politically easier to call it a "loan" that will never be paid back instead of a debt reduction. Which sparks outrage, that you handily enough symbolize in your diatribe.

That said, it looks like the Germans are playing hardball. I wonder if this is like the US debt ceiling except neither side blinks and the EU breaks apart.

*The Germans based this calculation on Greece magically turning from the least productive state in the union to the most productive despite austerity, corruption, and the economy shrinking 25%.

PS Weren't the Germans the ones footing the bill for this Euro Project in the first place? I guess enthusiasm for a united expanding Europe has waned since the project first started.

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Re: Greek Crisis continues

Postby BattleMoose » Thu Jul 09, 2015 2:09 am UTC

sardia wrote:It's not exactly like Greece borrowed a bunch of money, and are now welfare queens who've run out of money.


Actually for the period of 1980-2007 that's pretty much how it was. Except, when they ran out of money they could just borrow more.

In addition, Germans are under the unrealistic fiction that if they keep loaning more money to Greece, Greeks will somehow* pay them back."


I don't think that's true at all. Even with the first bail out, I think everyone understood there was a real risk that Greece might default. And now, I don't think anyone thinks Greece has any capacity to pay back the current loans, let alone any new ones. Not the IMF, ESM, the ECB or anyone. Which is fundamentally the primary reason why Greece won't get a new loan now, except with very major strings attached.

I wonder if this is like the US debt ceiling except neither side blinks and the EU breaks apart.


For better or worse, the EU has taken steps in the preceding years to make sure it can suffer a Greece default and be buffered from it. If Greece defaults and quits the EU the only really loser will be Greece and the Greek people. Its not really brinkmanship when one side has so much more to lose than the other. Sure the EU loses face and some credibility but the EU will be fine economically, they made sure about that. And yes, the EU will take a financial hit if Greece defaults but, again, being responsible people they understood the risks they were taking.

Speculation
Its hard to know what will happen next. The Greek politicians have painted themselves into such a corner. Rejecting austerity by democratic referendum, when that is their only option. The EU I think have learnt their folly by continuously lending more money despite Greece undertaking the required reforms. The Greeks are finally promising "credible" tax and pension reforms but that as yet remains to be seen. And if such terms can even be agreed to, its hard to see the current Greek government surviving after accepting such terms, not after the mandate on which they were elected and the results of the referendum.

I think Alexis Tsipras has grossly overestimated his negotiating position.

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Re: Greek Crisis continues

Postby maybeagnostic » Thu Jul 09, 2015 6:12 am UTC

sardia wrote:It's not exactly like Greece borrowed a bunch of money, and are now welfare queens who've run out of money. You skipped over the intermediate steps of
Suffer economic losses worse than the Great Depression.
Actually, that's pretty much exactly how it is. Even after all these years of austerity measures and tanking economy, Greece is wealthier than it was projected to be without the Eurozone.

sardia wrote:Would you choose to borrow money and spend it unwisely if you knew the "easy way out" was to spend the next decade under crushing austerity and impoverishment?

Of course you would when that crushing debt and austerity measures is someone else's problem while you spent your time ruling the country with everyone loving you for all the money you were handing out and you also made a whole bunch of money that you have safely tucked away somewhere the austerity measures can't touch it.
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Re: Greek Crisis continues

Postby Tyndmyr » Thu Jul 09, 2015 2:53 pm UTC

Welp, my response has already been excellently summarized, so I'll just state agreement.

It's actually way better than most welfare queen arguments, as those frequently rely on shifty generalizations from individuals to groups, whereas there is precisely one greece, so...it's rather more honest.

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Re: Greek Crisis continues

Postby sardia » Fri Jul 10, 2015 1:30 am UTC

maybeagnostic wrote:Actually, that's pretty much exactly how it is. Even after all these years of austerity measures and tanking economy, Greece is wealthier than it was projected to be without the Eurozone.
Of course you would when that crushing debt and austerity measures is someone else's problem while you spent your time ruling the country with everyone loving you for all the money you were handing out and you also made a whole bunch of money that you have safely tucked away somewhere the austerity measures can't touch it.

You do realize that actually describes Germany more than Greece, but do go on about Greece's secret Swiss bank accounts and Nazi gold. I'm sure you'll get around to providing citations. Of course the Germans are for austerity, it's someone else's problem while you spent your time ruling the country with everyone loving you for all the money you were handing out and you also made a whole bunch of money that you have safely tucked away.

I'm pretty sure the Germans share the sentiments that Tyndmyr and maybeagnostic does of the poor. "They should have pulled themselves up by their bootstraps" "Totally their fault, and nothing we did was ever wrong" "Our strategy works, it's their fault for executing it poorly"

Update on the current positions of Greeks vs Germans
http://www.nytimes.com/2015/07/10/world ... ?ref=world
TLDR Greeks proposed austerity in exchange for debt reduction. France is guiding Greece on the details of the deal, while Germany has remained mostly unmoved save for that one, quickly rescinded, comment about Greece needing a haircut.
Spoiler:
As details of the new offer emerged, it appeared the Prime Minister Alexis Tsipras was capitulating to demands on harsh austerity terms that he urged his countrymen to reject in the referendum last Sunday, like tax increases and various measures to cut the costs of pensions.
Continue reading the main story
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But Mr. Tsipras sought a three-year bailout loan totaling 53.5 billion euros (about $59 billion) and asked creditors to commit to discussing restructuring the nation’s massive debt. The amount was more than it would have been without a nationwide banking shutdown that has pummeled the economy. If granted, it would come on top of 240 billion euros in bailout loans Greece has received since 2010. Mr. Tsipras seemed to have gained ground on debt relief, his one bedrock demand. Germany’s finance minister, Wolfgang Schäuble, finally gave a little on that Thursday, admitting that “debt sustainability is not feasible without a haircut,” or write-down of debt, even if he then appeared to backtrack.

But yea, how dare the Europeans try to salvage Greece by letting them reduce their debt. We should whip them, and put them in debtors prison instead. That'll teach em to make money quick. You're totally not projecting your emotions on a rational decision that deadbeats countries get to (at least ask) to wipe away debt, while you had to work your ass off to pay off your debts.

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Re: Greek Crisis continues

Postby Vahir » Fri Jul 10, 2015 1:42 am UTC

sardia wrote:You're totally not projecting your emotions on a rational decision that deadbeats countries get to (at least ask) to wipe away debt, while you had to work your ass off to pay off your debts.


Or maybe you're the emotional one, getting in the way of a rational discussion. Because you disagree with them. That's how it works, right?

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Re: Greek Crisis continues

Postby sardia » Fri Jul 10, 2015 3:21 am UTC

Vahir wrote:
sardia wrote:You're totally not projecting your emotions on a rational decision that deadbeats countries get to (at least ask) to wipe away debt, while you had to work your ass off to pay off your debts.


Or maybe you're the emotional one, getting in the way of a rational discussion. Because you disagree with them. That's how it works, right?

Are you saying my statement is untrue? If so, why?

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Re: Greek Crisis continues

Postby BattleMoose » Fri Jul 10, 2015 4:14 am UTC

sardia wrote:
Vahir wrote:
sardia wrote:You're totally not projecting your emotions on a rational decision that deadbeats countries get to (at least ask) to wipe away debt, while you had to work your ass off to pay off your debts.


Or maybe you're the emotional one, getting in the way of a rational discussion. Because you disagree with them. That's how it works, right?

Are you saying my statement is untrue? If so, why?


We should whip them, and put them in debtors prison instead. That'll teach em to make money quick.


Hehe. But yes, I know that part was sarcasm. But more to the point, between all the assertions, ubiquitous use of pronouns, cliches, projections, sarcasm and emotive language and rhetoric, I have utterly no idea what you were trying to communicate. Like, at all. No clue. Certainly have no idea what Greek nazi gold has to do with anything.

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Re: Greek Crisis continues

Postby maybeagnostic » Fri Jul 10, 2015 7:35 am UTC

sardia wrote:
Vahir wrote:
sardia wrote:You're totally not projecting your emotions on a rational decision that deadbeats countries get to (at least ask) to wipe away debt, while you had to work your ass off to pay off your debts.


Or maybe you're the emotional one, getting in the way of a rational discussion. Because you disagree with them. That's how it works, right?

Are you saying my statement is untrue? If so, why?

It is so obviously untrue that I am not even sure how to respond to this. Aside from the fact that you have absolutely no idea what I may or may not be projecting, I have never said that the Greek government should or even can pay off their whole debt. I have also never said anything about their government or their people being punished or getting their just deserves or anything of that sort. That's all you projecting... something.

sardia wrote:I'm pretty sure the Germans share the sentiments that Tyndmyr and maybeagnostic does of the poor.
Here you go, European countries sortable by GDP per capita and information by the IMF from 2014 puts Greek GDP per capita at at least an order of magnitude more than that of any other country in the region. The Greek people, as a whole, are not poor. The country is having a very hard time but is far from the poorest nation in the EU and no matter how bad the crisis gets is unlikely to become so any time soon.

sardia wrote:"They should have pulled themselves up by their bootstraps" "Totally their fault, and nothing we did was ever wrong" "Our strategy works, it's their fault for executing it poorly"
I have no idea who you are quoting here. Not only has no one said any of these but those phrases are meaningless on the scale we are talking about. Here is what I actually said on the topic of debt forigveness since you apparently missed it:
No one is saying further debt reduction in the future is out of the picture, in fact it would have been certainly guaranteed. All that is happening is that the Troika is trying to dictate Greek fiscal policy while they have the leverage to do so (i.e. while they hold the loans) and still it isn't working. If the debt is forgiven, Greece will continue to borrow as much money as possible and the rest of the Eurozone won't be in a position to make any demands on financial policy any longer which means.


sardia wrote:Update on the current positions of Greeks vs Germans

The new deal Tsipras is proposing concedes on most (but apparently not quite all) points from the offer two weeks ago. So a week after the referendum refusing these exact terms, he has to claim the referendum showed support for him to do what is necessary... such a mess. It is not at all clear whether the proposal would pass in the Greek Parliament as many people in his own party are against this.
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Re: Greek Crisis continues

Postby Tyndmyr » Fri Jul 10, 2015 3:11 pm UTC

sardia wrote:I'm pretty sure the Germans share the sentiments that Tyndmyr and maybeagnostic does of the poor. "They should have pulled themselves up by their bootstraps" "Totally their fault, and nothing we did was ever wrong" "Our strategy works, it's their fault for executing it poorly"


To what sentiments are you referring?

In any case, I have already clarified that, being a nation, the situation is slightly different for Greece than for masses of impoverished individuals. And I certainly didn't state those quotations you invented.
Last edited by Tyndmyr on Fri Jul 10, 2015 3:26 pm UTC, edited 1 time in total.

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Re: Greek Crisis continues

Postby Chen » Fri Jul 10, 2015 3:14 pm UTC

So wait, what exactly did that referendum accomplish besides waste time?

Also even if they EU agree to the deal, what actually forces the Greek government to go through with it? What happens when this government gets kicked out of power and the next government decides NOT to follow any of these stipulations?

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Re: Greek Crisis continues

Postby Vahir » Fri Jul 10, 2015 3:31 pm UTC

Chen wrote:So wait, what exactly did that referendum accomplish besides waste time?


Well, it did waste money. You can't ignore that.

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Re: Greek Crisis continues

Postby Dauric » Fri Jul 10, 2015 3:51 pm UTC

Vahir wrote:
Chen wrote:So wait, what exactly did that referendum accomplish besides waste time?


Well, it did waste money. You can't ignore that.


Apparently, from what I heard on NPR this morning, this new deal is actually -worse- than the one they were going to get before the referendum.
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Re: Greek Crisis continues

Postby Mutex » Fri Jul 10, 2015 6:30 pm UTC

Chen wrote:So wait, what exactly did that referendum accomplish besides waste time?


Well, it made it incredibly embarrassing for Tsipras when he had to capitulate and agree to the creditors demands anyway. Which anyone outside of Greece could see he would have to do eventually. It also distracted everyone with a straw man argument.

"Greece is a sovereign country! We have self-determination! We have democracy!"
"Err, yes, and? So does the rest of the EU. The ones you want money from."
"You have to respect the result of the referendum!"
"Actually YOU have to respect the result, it places no obligations on us. Not that you CAN respect it, you kinda have to agree to our reforms if you don't want your country to implode."

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Re: Greek Crisis continues

Postby Tyndmyr » Fri Jul 10, 2015 7:23 pm UTC

Mutex wrote:
Chen wrote:So wait, what exactly did that referendum accomplish besides waste time?


Well, it made it incredibly embarrassing for Tsipras when he had to capitulate and agree to the creditors demands anyway. Which anyone outside of Greece could see he would have to do eventually. It also distracted everyone with a straw man argument.

"Greece is a sovereign country! We have self-determination! We have democracy!"
"Err, yes, and? So does the rest of the EU. The ones you want money from."
"You have to respect the result of the referendum!"
"Actually YOU have to respect the result, it places no obligations on us. Not that you CAN respect it, you kinda have to agree to our reforms if you don't want your country to implode."


Wut...he thought they could sell it as "but we all voted for you to give us free money without restriction"?

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Re: Greek Crisis continues

Postby Mutex » Fri Jul 10, 2015 7:37 pm UTC

Tyndmyr wrote:Wut...he thought they could sell it as "but we all voted for you to give us free money without restriction"?


It does seem that way. I mean, I guess he just wanted to underline how he had the people's backing. But it's not like the creditors ever doubted he did. And the Greek people can reject deals all they want, but... so can the creditors.

Basically, Syriza thought they had way more leverage than they had. And managed to persuade the Greek people this. But in reality, the EU had a huge amount to lose from capitulating to a far-left radical party that wanted to keep spending high, and the fallout of Greece leaving the Eurozone or collapsing was comparatively low.

All Eurozone countries have to agree to a bailout, and virtually none of them would accept deals even vaguely like what Syriza was asking for. The North-West mostly agreed with Germany's no-budget-deficit approach, the South-West (excluding France) are mostly currently run by centre-right parties worried about Syriza-esque parties in their country getting encouraged and support by a Syriza win. And Eastern Europe are mostly ex-Communist countries who have gone through financial hell, then got their accounts in order, and are still much poorer than Greece. Their position can be summed up as "cry me a fucking river".

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Re: Greek Crisis continues

Postby BattleMoose » Sat Jul 11, 2015 3:32 am UTC

Maybe Tsipras wanted the result of the referendum to be "Yes" while pretending to want a no. So he would have a mandate to accept concessions.

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Re: Greek Crisis continues

Postby Mutex » Sat Jul 11, 2015 9:28 am UTC

I think it was an attempt at brinksmanship. He was playing chicken with the creditors thinking they'd have to offer a better deal if they realised he was serious about not accepting their terms, since they wouldn't want Greece to collapse and leave the euro. And having the country united behind him made his position more solid. And made it clear the people weren't about to dispose of Syriza.

But it turned out the creditors had less to lose by letting Greece default and leave the euro. While Greece had a lot to lose. So... the referendum didn't actually change the deal Greece had to accept in the end.

(EDIT: grammar)
Last edited by Mutex on Sat Jul 11, 2015 10:18 am UTC, edited 2 times in total.

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Re: Greek Crisis continues

Postby bentheimmigrant » Sat Jul 11, 2015 9:35 am UTC

I thought they were going to use the referendum to say that the Greek public would rather default than accept the terms (which was surely the only point of having a referendum - to get explicit permission to take things that far). Apparently they didn't get the memo.
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Re: Greek Crisis continues

Postby elasto » Sat Jul 11, 2015 10:20 am UTC

I have found it all quite confusing.

The only thing that makes sense to me is that the government did indeed want a yes result to get themselves off the hook.

I don't think it makes sense that they were planning to use the result to try to leverage negotiations - because why did they sack their chief negotiator right as the results were announced? They had already made the decision to relent...

But I think that democracy is the loser for all this.

Voter turnouts all around the world have dropped because people think, well, what's the point? Manifestos are discarded as soon as power is gained, and all the parties are in the pocket of big business.

While I do think that politicians aren't brave enough when it comes to doing the right thing for the long term, and I honestly don't know what is the best course here for Greece, moments like this must be demoralizing in the extreme; Not only did this party win the election on the back of promising to reduce austerity, it won a referendum on the exact issue they are now doing a u-turn on...

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Re: Greek Crisis continues

Postby Mambrino » Sun Jul 12, 2015 3:09 pm UTC

Reuters obtained draft of demands (for other recent developments, see your favourite news source)

The Eurogroup welcomes the assessment by the institutions that the list of policy commitments of the Greek authorities represents a basis to start the negotiations on a new program. The Eurogroup also agrees with the institutions that the package needs to be significantly strengthened and broadened in order to provide for appropriate conditionality for a possible three-year ESM program. The Eurogroup thus welcomes the additional following commitments of the Greek authorities on the basis of a clear timetable:

- fully comply with the medium-term primary surplus target of 3.5 percent of GDP by 2018, according to a yearly schedule to be agreed with the institutions;

- carry out ambitious pension reforms and specific policies to fully compensate for the fiscal impact of the Constitutional Court ruling on the 2012 pension reform and to implement the zero deficit clause;

- adopt more ambitious product market reforms with a clear timetable for implementation of all OECD toolkit I recommendations, including Sunday trade, sales periods, over-the-counter pharmaceutical products, pharmacy ownership, milk, bakeries. On the follow-up of the OECD toolkit II, manufacturing needs to be included in the prior action;

- on energy markets, the privatization of the electricity transmission network operator (ADMIE) must proceed, unless replacement measures can be found that have equivalent effect, as agreed by the institutions;

- on labor markets, undertake rigorous reviews of collective bargaining, industrial action and collective dismissals in line with the timetable and the approach suggested by the institutions. Any changes should be based on international and European best practices, and should not involve a return to past policy settings which are not compatible with the goals of promoting sustainable and inclusive growth;

- fully implement the relevant provisions of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union, in particular to make the Fiscal Council fully operational;

- adopt the necessary steps to strengthen the financial sector, including decisive action on non-performing loans, transposition of BRRD and measures to strengthen governance of the HFSF and the banks;

- develop a significantly scaled up privatization program with improved governance. A working group with the institutions shall provide proposals for better implementation mechanisms;

- amend or compensate for legislation adopted during 2015 which have not been agreed with the institutions and run counter to the program commitments;

- implement the key remaining elements from the December 2014 state of play of the fifth review of the second economic adjustment program."


In other words, if Greece wants to stay in euro, it has no other options in its internal policies than what the economical right-wing majority of other EU dictate. No news there.

An ignorant viewpoint from northernmost Eurozone country. [I don't know a shit about economics but maybe this will entertain someone.]

While I support all tax and pension reforms and such and I'm not really a financial expert, but the demand of 3.5 % of yearly growth sounds utter lunacy: the Finnish government has been trying to get out of recession for a couple of years with no luck. If I don't totally misremember things, our state and partisan research institutions have projected ~1.0% yearly growth for us in the best probable case for next ~3-5-ish years or so. If we ourselves have no imaginable way (except sheer luck) to obtain the kind of GDP growth percentages we demand from Greek government, how on Earth we can require that from Greece? (Well, at least our current government will at least try its own austerity medicine here, too.) Also, sounds like they demand privatizing lots of important, critical infrastructure. (Speaking of medicine, our pharmacy sector is very heavily regularized.) If some external force would make similar demands to us (despite totally different platform winning the latest elections), I would seriously consider usefulness of lawful representative democracy, too. (Interestingly enough, according to polls most us Finns support kicking Greece out of Euro, and that's currently about the only solution our government will support, but I doubt ~nobody knows the contents of Eurozone demands. Until I stumbled upon the Reuters list in international media, I have not seen that kind of lists in Finnish media.)

Of course, the other side of coin is that staying in the Eurozone isn't any innate right of Greece any more than of any other Eurozone member: if they don't or can't accept ultimatum made by other euro members, they can say "no thanks we like our public sector", default, and return to drakhma.
And even, I might be willing to bet that letting Greece out of euro might be good thing. Or not "good", because there are no good options, but maybe even a lesser evil*. (I suspect very much that if Greece 'accepts', we will be discussing yet another bailout yet again next year, and Greece will not have done enough, but it's public healthcare and other critical public services have deteriorated even more.) This experiment has now demonstrated that without other economical cohesion (transfer union etc), the euro area is suboptimal, and trying to keep it going on on the sheer force of will for the idealism and symbolism's sake or so doesn't do much good for the EU. (We start only to hate each other every time there's a crisis like this.)

*edit. My opinion was and still is that Germany, France and others should have just let Greece default in the first place and bailed out their banks. Because I very strongly suspect that was what the first Greek bailouts amounted to. Or maybe I'm just gullible; it makes no difference what I think, I merely rant about things in internet forums.

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Re: Greek Crisis continues

Postby BattleMoose » Sun Jul 12, 2015 3:50 pm UTC

While I support all tax and pension reforms and such and I'm not really a financial expert, but the demand of 3.5 % of yearly growth sounds utter lunacy:


Slight misunderstanding, but the target is that there should be a budget surplus of 3.5%, that income exceeds expenses but that amount.

My opinion was and still is that Germany, France and others should have just let Greece default in the first place and bailed out their banks. Because I very strongly suspect that was what the first Greek bailouts amounted to. Or maybe I'm just gullible; it makes no difference what I think, I merely rant about things in internet forums.


I guess everyone is still hoping for a happy ending. Clearly for Germany/France the ideal is if Greece can stay in and survive this crisis. And they get the money that is owed to them paid back. That's first prize, no idea how feasible. Also, a major bonus of the first bailout at least was to "readjust" the debt that Greek owes such that in an event of a default, the consequences would be mitigated.

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Re: Greek Crisis continues

Postby sardia » Sun Jul 12, 2015 3:58 pm UTC

The "optimistic" GDP projections are needed for the financial math to work. IIRC, that's how the world lenders justified bailing out Greece the last time with the expectation that Greece would be able to pay them back (if they got to 3.5% GDP). Most taxpayers won't agree to giving away money to Greece, so the financial fiction was needed as an excuse.
I believe you can also use it as a way to buy more time. Provide a deal that looks ok for now, and then revisit the issue when the projections don't pan out later.

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Re: Greek Crisis continues

Postby Zamfir » Mon Jul 13, 2015 6:00 am UTC

It's not a growth demand, but a primary surplus demand, I.e. the budget balance before interest payments.

3.5% primary surplus translates to a budget that's slightly in the black.

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Re: Greek Crisis continues

Postby maybeagnostic » Tue Jul 14, 2015 7:21 am UTC

I thought this interview with Varoufakis was an interesting read. Gives his perspective on the negotiations and while some things seemed very coloured by his own opinions, the whole descriptions of the negotiations does support the idea that the negotiations were not really about economics but about politics and control. This is the only first-hand account of the negotiations I am aware of, so at least his point about it being very secretive is quite clearly true.
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Re: Greek Crisis continues

Postby elasto » Wed Jul 15, 2015 2:27 am UTC

maybeagnostic wrote:I thought this interview with Varoufakis was an interesting read. Gives his perspective on the negotiations and while some things seemed very coloured by his own opinions, the whole descriptions of the negotiations does support the idea that the negotiations were not really about economics but about politics and control. This is the only first-hand account of the negotiations I am aware of, so at least his point about it being very secretive is quite clearly true.


That was really interesting, thankyou for that. It's so rare to have a first-hand, probably quite frank window into an ongoing political event, at the very highest level. Does seem like there was a game of chicken going on, Greece blinked first, and the EU absolutely hammered them for it.

Meanwhile, in another highly unusual turn of events, the IMF has roundly condemned the terms being forced on the Greeks:

Just when it looked as though there could be a pause in the eurozone's Greek crisis, the International Monetary Fund has launched a blistering attack on the bailout deal forced on Athens by Germany and other eurozone governments.

It estimates that Greek government debt will now reach a peak of close to 200% of GDP or national income over the next two years - which it regards as impossibly and unsustainably high. It says that Greece's debt can now only be made bearable through "debt relief measures that go far beyond what Europe has been willing to consider so far".

And it makes three other savage criticisms of the reforms forced on Greece by the rest of the eurozone, and whose main elements are being rushed through the Athens parliament today.

- It does not believe Greece will be able to achieve continuous budget surpluses of 3.5% of GDP or national income over several decades, as demanded by eurozone creditors.
- It regards forecast rates of growth for Greece as unrealistically high.
- And it believes that the governance of Greek banks is lamentable, at the heart of so many of Greece's economic woes, and not remotely being solved.

So why does this intervention by the IMF, in a statement issued tonight matter? Well for two very big reasons.

First is that it will make it much harder for the government of Alexis Tsipras to persuade the Athens parliament to back painful austerity measures in votes today demanded by eurozone creditors as the sine qua non of keeping Greece in the eurozone: Why on earth should Greek MPs vote for a painful economic reform package which the IMF - the supposed global arbiter of these things - does not believe will put the country back on the path to prosperity?

Second the eurozone creditors, and Germany in particular, forced Alexis Tsipras - against his strong preference - to accept IMF participation in the next formal bailout package to be negotiated if Greek MPs pass the initial reform measures tonight. They told him, in effect, he would be turfed out of the eurozone and into national ruin unless he took more of the IMF's money and fiscal bossiness. Which also looks tragically comic tonight - with the IMF saying that if it's all the same to Mrs Merkel, it would rather not touch Greece with a barge pole.

Or to be tediously literal, the IMF has made it clear that it does not wish to participate in any further Greek bailout, unless Germany and the rest drop their vehement opposition to big write-offs of Greek debt. Which should be music to the ears of Mr Tsipras, except that presumably he would quite like his creditors to agree among themselves, before presuming to tell him how to run his own shop.

PS: In case you've forgotten, the primary cause of the desperate worsening of Greece's economic and financial plight - that so worries the IMF - is the pernicious interaction between a chronically weakened banking system and an economy being plunged back into recession. It means both that $25bn will have to be found to strengthen banks, and that government finances will come under further pressure from weakening tax revenues.


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Re: Greek Crisis continues

Postby BattleMoose » Wed Jul 15, 2015 3:54 am UTC

I don't think it was a game of chicken at all. The EU knew Greece had to blink or, didn't really care. Generally I tend to agree with the IMFs analysis, only in that they don't have to deal with the political consequences of debt forgiveness.

- And it believes that the governance of Greek banks is lamentable, at the heart of so many of Greece's economic woes, and not remotely being solved.


I don't think this has much to do with the EU at all. And if it is known to be such a problem, why after 5 years of bailouts, has the Greek government not addressed this!

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Re: Greek Crisis continues

Postby elasto » Wed Jul 15, 2015 4:43 am UTC

BattleMoose wrote:I don't think it was a game of chicken at all. The EU knew Greece had to blink or, didn't really care.

Why do you say that? Many commentators have said that Greece's best chance of getting back on its feet inside two decades is to exit the Euro and default on its debts.

Generally I tend to agree with the IMFs analysis, only in that they don't have to deal with the political consequences of debt forgiveness.

Which is why economic union without political union makes no sense. The Euro is a doomed project in its current form.

I don't think this has much to do with the EU at all. And if it is known to be such a problem, why after 5 years of bailouts, has the Greek government not addressed this!

Has any country really reformed their banking system adequately? Seems to me that no country has put the steps in place to ensure something like 2008 can never happen again, let alone meting out any serious punishment.

Every country seems determined to have banking regulation be as lax and hands-off as can be got away with...

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Re: Greek Crisis continues

Postby BattleMoose » Wed Jul 15, 2015 4:55 am UTC

elasto wrote:
BattleMoose wrote:I don't think it was a game of chicken at all. The EU knew Greece had to blink or, didn't really care.

Why do you say that? Many commentators have said that Greece's best chance of getting back on its feet inside two decades is to exit the Euro.


And I think they might be right. And if Greece leaves the EU, that really doesn't seem so bad for the EU countries. They don't have to continuously bail out Greece with more and more billions. And they don't have to worry about paying special attention to Greece as compared to Italy, Spain and Portugal who would also very like some debt forgiveness. If Greece leaves, sure, they might lose the 300bn Euro thats owed to them but at the same time, it doesn't seem very likely that they will ever get that money back. But, they wouldn't have to risk an additinoal 80bn Euro now.

I wouldn't be surprised if some of the EU members actually want Greece to leave. Would explain the particularly harsh terms. What I find the most surprising is how badly Greece wants to stay in the eurozone!

Generally I tend to agree with the IMFs analysis, only in that they don't have to deal with the political consequences of debt forgiveness.

Which is why economic union without political union makes no sense. The Euro is a doomed project in its current form.


Only if you include countries which grossly mismanage their fiscal policies and are a lot poorer, basically, Greece.




I don't think this has much to do with the EU at all. And if it is known to be such a problem, why after 5 years of bailouts, has the Greek government not addressed this!

Has any country really reformed their banking system adequately? Seems to me that no country has put the steps in place to ensure something like 2008 can never happen again, let alone meting out any serious punishment. Every country seems determined to have banking regulation be as lax and hands-off as can be got away with...


Greece has going through a financial crisis. The IMF says, your banking system is screwed and needs to be fixed. And Greece doesn't want to fix it because all the other countries which are doing so much better financially than we are aren't fixing their so why should we fix ours?! Because you are going through a financial crisis!

Regardless, the state of the Greek banking system has nothing to do with the EU and everything to do with Greece. It stupid to blame the EU for the condition of the Greek banking system. Unless of course you believe the EU should take responsibility for running the Greek government...

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Re: Greek Crisis continues

Postby elasto » Wed Jul 15, 2015 5:05 am UTC

BattleMoose wrote:And I think they might be right. And if Greece leaves the EU, that really doesn't seem so bad for the EU countries. They don't have to continuously bail out Greece with more and more billions. And they don't have to worry about paying special attention to Greece as compared to Italy, Spain and Portugal who would also very like some debt forgiveness. If Greece leaves, sure, they might lose the 300bn Euro thats owed to them but at the same time, it doesn't seem very likely that they will ever get that money back. But, they wouldn't have to risk an additinoal 80bn Euro now.


So if it's win-win if Greece leaves, why did you say 'the EU knew Greece had to blink'? Why wasn't Greece refusing the terms of the agreement more of a possibility?

[Edit: Oh, you meant the EU didn't care if Greece left. I'm not so sure about that. Short term they'd do fine, economically. Medium term, the markets might turn predatory once there's a precedent for a country being better off leaving the Euro... And since the Euro is primarily an ideological project not an economic one, the damage there is incalculable...]

Only if you include countries which grossly mismanage their fiscal policies and are a lot poorer, basically, Greece.


Seriously? You really think countries like Spain and Italy are good fits fiscally with Germany?

Regardless, the state of the Greek banking system has nothing to do with the EU and everything to do with Greece. It stupid to blame the EU for the condition of the Greek banking system. Unless of course you believe the EU should take responsibility for running the Greek government...

Huh? Who here is blaming the EU for the state of the Greek banking system?

Personally I'm blaming every country for the state of their banking systems. eg. The UK government seems determined to have economic growth yet again fuelled by house price growth - because it worked out so well for us all the other times - and because it's so healthy to have a whole generation of people locked out of the housing ladder...

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Re: Greek Crisis continues

Postby BattleMoose » Wed Jul 15, 2015 5:40 am UTC

elasto wrote:
BattleMoose wrote:And I think they might be right. And if Greece leaves the EU, that really doesn't seem so bad for the EU countries. They don't have to continuously bail out Greece with more and more billions. And they don't have to worry about paying special attention to Greece as compared to Italy, Spain and Portugal who would also very like some debt forgiveness. If Greece leaves, sure, they might lose the 300bn Euro thats owed to them but at the same time, it doesn't seem very likely that they will ever get that money back. But, they wouldn't have to risk an additinoal 80bn Euro now.


So if it's win-win if Greece leaves, why did you say 'the EU knew Greece had to blink'? Why wasn't Greece refusing the terms of the agreement more of a possibility?

[Edit: Oh, you meant the EU didn't care if Greece left. I'm not so sure about that. Short term they'd do fine, economically. Medium term, the markets might turn predatory once there's a precedent for a country being better off leaving the Euro... And since the Euro is primarily an ideological project not an economic one, the damage there is incalculable...]


It seems to me that its bad if Greece stays and bad if Greece leaves. Its all bad. For both the EU and Greece. And that the way the deal was constructed, for the EU its almost, equally bad if Greece stays or leaves (of course in many different ways and metrics). So from the EU perspective, Greece is presented with the option of staying or leaving. And I see the EU basically saying, "pick". That's just not a game of chicken. In a game of chicken, the first to blink loses, or both don't blink and both lose. In this situation, Greece was presented with two bad options and gets to pick between the two.

Only if you include countries which grossly mismanage their fiscal policies and are a lot poorer, basically, Greece.


Seriously? You really think countries like Spain and Italy are good fits fiscally with Germany?


Its called the "Greek crisis". Sure they aren't doing so well but it seems to be manageable. Time will tell if it was a bad idea for them to join at the moment I am unconvinced.

Regardless, the state of the Greek banking system has nothing to do with the EU and everything to do with Greece. It stupid to blame the EU for the condition of the Greek banking system. Unless of course you believe the EU should take responsibility for running the Greek government...

Huh? Who here is blaming the EU for the state of the Greek banking system?


The IMF, as per the link you posted.

Personally I'm blaming every country for the state of their banking systems. eg. The UK government seems determined to have economic growth yet again fuelled by house price growth - because it worked out so well for us all the other times - and because it's so healthy to have a whole generation of people locked out of the housing ladder...


And that's fine. The distinction is that Greece is dependent on bailouts, and when you are dependent on other peoples money, there is a much greater level of obligation to make sure your finances are actually in order.

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Re: Greek Crisis continues

Postby elasto » Wed Jul 15, 2015 6:26 am UTC

BattleMoose wrote:It seems to me that its bad if Greece stays and bad if Greece leaves. Its all bad. For both the EU and Greece. And that the way the deal was constructed, for the EU its almost, equally bad if Greece stays or leaves (of course in many different ways and metrics). So from the EU perspective, Greece is presented with the option of staying or leaving. And I see the EU basically saying, "pick". That's just not a game of chicken. In a game of chicken, the first to blink loses, or both don't blink and both lose. In this situation, Greece was presented with two bad options and gets to pick between the two.

Yes, given your interpretation, it was not a game of chicken. My own interpretation is that the Euro is primarily a political project with a huge loss of face above and beyond mere economic consequences, and so it was a game of chicken, but obviously that's just an opinion.

Huh? Who here is blaming the EU for the state of the Greek banking system?


The IMF, as per the link you posted.

No, the IMF is saying that the proposed deal is bad because of the state of the Greek banking system. That's not at all the same as saying the EU is to blame for the state of the banking system.

It's like a doctor ordering an unfit patient with two broken legs to go jogging to get fitter. The doctor isn't to blame for the legs being broken, but he is to blame for his idiotic directive.

If there are multiple issues, trying to address them in the wrong order can be much worse than not addressing them at all.

And that's fine. The distinction is that Greece is dependent on bailouts, and when you are dependent on other peoples money, there is a much greater level of obligation to make sure your finances are actually in order.

Well, we both seem to be in agreement that Greece shouldn't be dependent on bailouts or other people's money - that they should default and become self-sufficient again, so there doesn't seem to be much to discuss there.

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Re: Greek Crisis continues

Postby BattleMoose » Wed Jul 15, 2015 6:42 am UTC

elasto wrote:
BattleMoose wrote:It seems to me that its bad if Greece stays and bad if Greece leaves. Its all bad. For both the EU and Greece. And that the way the deal was constructed, for the EU its almost, equally bad if Greece stays or leaves (of course in many different ways and metrics). So from the EU perspective, Greece is presented with the option of staying or leaving. And I see the EU basically saying, "pick". That's just not a game of chicken. In a game of chicken, the first to blink loses, or both don't blink and both lose. In this situation, Greece was presented with two bad options and gets to pick between the two.

Yes, given your interpretation, it's not a game of chicken. My own interpretation is that the Euro is primarily a political project with a huge loss of face above and beyond mere economic consequences, and so it was a game of chicken, but obviously that's just an opinion.


If it is primarily a political project then why is the EU imposing such harsh economic conditions on a country that is at risk of leaving the eurozone because of economic reasons?

If it was a political issue, the economics wouldn't be the major barrier to a resolution. The EU would just take the economic hit for the primarily important political reasons.

Instead, they are risking losing their primary objective for something of lesser importance.

I cannot agree to your narrative, it just doesn't fit what is happening.

Huh? Who here is blaming the EU for the state of the Greek banking system?


The IMF, as per the link you posted.

No, the IMF is saying that the proposed deal is bad because of the state of the Greek banking system. That's not at all the same as saying the EU is to blame for the state of the banking system.

It's like a doctor ordering an unfit patient with two broken legs to go jogging to get fitter. The doctor isn't to blame for the legs being broken, but he is to blame for his idiotic directive.


I hate analogies. They tend to never work or tend to fit what's happening. And are usually always skewed to benefit the position thats being put forward while ignoring the important parts of the dissenting view. But I'll play.

It's like a chef giving a recipe to someone on how to cook a cake. But they cannot cook a cake, because their dishes are dirty. The recipe may well be too ambitious that the person couldn't cook the cake or there were other fundamental issues with the recipe or ingredients, but the dirty dishes is something that the person should and can deal with all by themselves.

And that's fine. The distinction is that Greece is dependent on bailouts, and when you are dependent on other peoples money, there is a much greater level of obligation to make sure your finances are actually in order.

Well, we both seem to be in agreement that Greece shouldn't be dependent on bailouts or other people's money - that they should default and become self-sufficient again, so there doesn't seem to be much to discuss there.


I am very much on the fence as to what Greece should do. I just don't know.

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Re: Greek Crisis continues

Postby maybeagnostic » Wed Jul 15, 2015 6:52 am UTC

elasto wrote:Well, we both seem to be in agreement that Greece shouldn't be dependent on bailouts or other people's money - that they should default and become self-sufficient again, so there doesn't seem to be much to discuss there.

The problem is that the Greek people and government don't seem to share that belief or they would have defaulted and left the Eurozone some time ago.

On the topic of the need for a central European government capable of handling these crises and having control over foreign and fiscal policy in the member states there is this statement by the President of the European Parliament (in German) that says pretty much exactly that. Unfortunately, the whole Greek crisis seems to have pushed nearly all countries to nationalism and mutual mistrust rather than unity. Not even the Greek people, with this obvious proof that their government is incapable of managing their finances successfully, would currently consider handing over power to such an institution, let alone the wealthier and more stable countries that have a lot to lose by this. I imagine some support for such a move will only be found among the countries from the formal Eastern block where the idea of economic and foreign policy being decided by some outside central authority isn't unimaginable for the average citizen.

P.S. I couldn't find the quote in any English article and my German isn't very good but here's my attempt at a translation of the relevant bit:
Die zentralen, wichtigen europäischen Fragen dürfen nicht mehr von den nationalen Regierungschefs gelöst werden. Wir brauchen dafür Gemeinschaftsinstitutionen. Irgendwann brauchen wir eine europäische Regierung.
The central important European issues can no longer be solved by the leaders of the national governments. For this, we need a common institution. [At some point?] we need a European government.
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Re: Greek Crisis continues

Postby elasto » Wed Jul 15, 2015 7:18 am UTC

BattleMoose wrote:If it is primarily a political project then why is the EU imposing such harsh economic conditions on a country that is at risk of leaving the eurozone because of economic reasons?

If you want my personal opinion, I think it's naked political opportunism: I think they've discerned that the Greek leadership wish to stay in the Euro at any price, and that by forcing them to put these harsh terms to a vote, that Syriza will be destroyed as a political force - perhaps literally if they resign and install a government of national unity, which I could easily see occurring in the coming weeks.

Why do they see that as a good thing? I think it's partly fiscal - they wish for a more moderate or right-wing government to get in - and partly personal animosity - they hate how the Greek leadership called for a referendum on the bailout and trash-talked the EU and EU leaders in public.

If it was a political issue, the economics wouldn't be the major barrier to a resolution. The EU would just take the economic hit for the primarily important political reasons.

I said the Euro was primarily a political project; That doesn't mean the economics of it can be ignored. Being too generous would cause Spain, Italy and the others to seek more assistance, and that would be economically infeasible - but more important politically infeasible inside Germany.

It's like a chef giving a recipe to someone on how to cook a cake. But they cannot cook a cake, because their dishes are dirty.

No, that implies an equality in the relationship that just isn't there. If Greece refuses this offer, over the short term thousands will die. That doesn't happen with cake recipes, and is why the 'doctor' / 'sick patient' analogy works better.

At the moment, the patient is taking the judgement that it's better to take the doctor's advice on how to get better (running on broken legs), even though it publicly states it thinks it's stupid and the IMF agrees with them.

I think Syriza should have the courage of their convictions instead of abandoning them. Yes, we know it will be bad - very bad - over the short term, but we have the experience of other countries that have defaulted and come back strongly.

maybeagnostic wrote:The problem is that the Greek people and government don't seem to share that belief or they would have defaulted and left the Eurozone some time ago.

Yes, it's a very ordinary desire to put off the problem to another day - even if that likely makes things worse in the long run.

I don't blame the Greeks or the Greek government for such a commonplace human response.
Last edited by elasto on Wed Jul 15, 2015 7:28 am UTC, edited 1 time in total.

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Re: Greek Crisis continues

Postby BattleMoose » Wed Jul 15, 2015 7:27 am UTC

If Greece refuses this offer, over the short term thousands will die. That doesn't happen with cake recipes, and is why the 'doctor' / 'sick patient' analogy works better.


Thousands dieing in the short term doesn't happen with unfit people (not sick) running or not running on broken legs either... Cakes on the other hand, can feed starving people!

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Re: Greek Crisis continues

Postby elasto » Wed Jul 15, 2015 7:34 am UTC

Bah.

(Well, hopefully you got my point of view from my analogy; An analogy is not meant to be a perfect embodiment of a situation, it is meant to illuminate what a person thinks are the pertinent parts of it.

And if I'm equating a person to a country, then thousands dying equates to a person's flesh being ripped apart, which is what running on broken legs will do...)

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Re: Greek Crisis continues

Postby Quercus » Wed Jul 15, 2015 8:01 am UTC

BattleMoose wrote:Cakes on the other hand, can feed starving people!


Was the Rousseau/Marie Antoinette reference intended, or purely accidental?

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Re: Greek Crisis continues

Postby BattleMoose » Wed Jul 15, 2015 8:24 am UTC

elasto wrote:Bah.

(Well, hopefully you got my point of view from my analogy; An analogy is not meant to be a perfect embodiment of a situation, it is meant to illuminate what a person thinks are the pertinent parts of it.

And if I'm equating a person to a country, then thousands dying equates to a person's flesh being ripped apart, which is what running on broken legs will do...)


I really don't. It is up to the Greek government and only up to the Greek government to fix their banking system and they would be better off for it. If it is as the IMF suggest "at the heart of so many of Greece's economic woes" then any intervention would be stupid without addressing this. But there is no way that the EU can assume responsibility for fixing it. And I won't check but I would wager that fixing the banking system was a condition of the first few failouts. Greece should have already fixed its banking system. That it hasn't is on them. And I won't accept that other economic recommendations/conditions are useless/harmful because the Greek government didn't/won't fix their banking system.

Was the Rousseau/Marie Antoinette reference intended, or purely accidental?


Not initially but the universe aligned. :)

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Re: Greek Crisis continues

Postby maybeagnostic » Wed Jul 15, 2015 9:31 am UTC

BattleMoose wrote:It's like a chef giving a recipe to someone on how to cook a cake. But they cannot cook a cake, because their dishes are dirty. The recipe may well be too ambitious that the person couldn't cook the cake or there were other fundamental issues with the recipe or ingredients, but the dirty dishes is something that the person should and can deal with all by themselves.

I don't know if either of the analogies are particularly informative but I like this one better. We just need to add in that our theoretical amateur cook won't have anything to eat in case the cake cooking is unsuccessful and the chef hasn't made up his mind whether he'll help out if it turns out some of the listed ingredients are unavailable.

elasto wrote:Yes, it's a very ordinary desire to put off the problem to another day - even if that likely makes things worse in the long run.

I don't blame the Greeks or the Greek government for such a commonplace human response.

But you do seem to put some blame on the other countries in the Eurozone for the same thing.

elasto wrote:If Greece refuses this offer, over the short term thousands will die.
Woah, calm down. Greece is still far from people starving in the streets or dying for lack of medicine. Some countries (including my own which I found funny in a black humour sort of way) have already said they are ready to provide humanitarian aid if the situation actually gets that bad.
T: ... through an emergency induction port.
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T: Emerrrgency induction port.


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