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Author | Topic: Wither Greece? | |||||||||||||||||||||||||||||||||||||||||||||||
Percy Member Posts: 22392 From: New Hampshire Joined: Member Rating: 5.3
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It looks like today's Greek vote is moving toward rejection of the bailout deal, but whatever the outcome, what kind of insanity has taken over Greek's creditors? Don't they understand that their best shot at debt repayment is a healthy, vibrant Greek economy? The Eurozone cure for Greece is worse than the disease. They're like a slave owner who instead of treating his slaves well whips them into the hospital, benefiting no one.
The solution is to put Greece on the road to a robust recovery, and to restructure the debts in a way that makes this possible. Only when the Greek economy recovers can Greece afford to begin repaying the debts. Greek's creditors are being strict to the point of hurting their own self-interest. --Percy
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RAZD Member (Idle past 1405 days) Posts: 20714 From: the other end of the sidewalk Joined:
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An economy is based on the movement of money, thus anything that improves movement improves the economy.
The poorest elements in any economy spend money as fast as they get it, if nothing else to pay off debts. Feed the base and the economy will grow. This holds for countries as well as people. Austerity is nothing more than trickle-down under another name -- a failed concept. Enjoy.by our ability to understand Rebel☮American☆Zen☯Deist ... to learn ... to think ... to live ... to laugh ... to share. Join the effort to solve medical problems, AIDS/HIV, Cancer and more with Team EvC! (click)
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vimesey Member Posts: 1398 From: Birmingham, England Joined:
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I would agree with all of that (although I would add that Greece needs to get its house in order too, re tax avoidance/evasion and corruption (matters I can vouch for to some extent, knowing someone who recently lived in and ran a business in Greece for some 15 years)).
The problem is, Germany and the rest of the Northern Europeans are extremely worried that if they forgive as much of the Greek debt as they would need to, in order to allow a recovery, they'd have Portugal, Ireland, Italy and Spain knocking on the door, demanding similar treatment, with much bigger numbers. Edited by vimesey, : SpellingCould there be any greater conceit, than for someone to believe that the universe has to be simple enough for them to be able to understand it ?
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Tangle Member Posts: 9489 From: UK Joined: Member Rating: 4.9 |
Nobody actually knows what to do or what will happen next. There are no good outcomes.
The only way that Greece can recovery inside several generations is if the majority of the debt is written off. But as a large chunk of it already has been and if more is, then the poorer countries that have underwritten it - mostly Eastern European - will be made poorer and more dominos fall. The question I would like an answer to s how the money was loaned in the first place.Je suis Charlie. Je suis Ahmed. Je suis Juif. Life, don't talk to me about life - Marvin the Paranoid Android "Science adjusts it's views based on what's observed.Faith is the denial of observation so that Belief can be preserved." - Tim Minchin, in his beat poem, Storm.
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Jon Inactive Member
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An economy is based on the movement of money, That thinking has led to the last several decades of U.S. decline, the recent recession, and willful government ignorance of the greedy wheeling and dealing of Wall Street bankers. Oh, and the Greek economic crisis. Economies are based on the creation of actual things that provide actual utility. Illusions are based on the movement of money.Love your enemies!
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Phat Member Posts: 18262 From: Denver,Colorado USA Joined: Member Rating: 1.1 |
I have a high school friend whom I have known for 40 years,Chris. He married his Greek wife Zoe five years ago. They are planning to move back to Greece.
According to Zoe, the Greeks never liked Germany nor the austerity program from the very start. They see it as a deal with the devil. Greeks never planned on paying back any of what was owed....and I respect that sort of rebellion. If you cant pay it back you shouldn't kill yourself trying. There is no honor in working yourself into a grave simply to repay a debt.God created war so that Americans would learn geography. —Mark Twain "A lie can travel half way around the world while the truth is putting on its shoes." —Mark Twain
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Jon Inactive Member |
If you cant pay it back you shouldn't kill yourself trying. More than that, you shouldn't borrow it in the first place. Of course, sometimes that unavoidable. Edited by Jon, : No reason given.Love your enemies!
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anglagard Member (Idle past 837 days) Posts: 2339 From: Socorro, New Mexico USA Joined:
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Jon writes: Economies are based on the creation of actual things that provide actual utility. Illusions are based on the movement of money. Point of correction, Jon. People create actual things that provide actual utility expecting to be compensated so they can obtain other actual things providing other actual utility. Unless using the barter system, that means of exchange is called money. Are you familiar with the Monetarist Equation of exchange? MxV = PxQ where, for a given period, M, is the total nominal amount of money supply in circulation on average in an economy.V, is the velocity of money, that is the average frequency with which a unit of money is spent. P, is the price level. Q, is an index of real expenditures (on newly produced goods and services). Do you now see how the velocity of money is related to the production of new goods and services? You know, that production of new goods and services that means jobs and a vibrant economy? Using this formula, Paul Volker ended stagflation in 1982. Ignoring this formula Allen Greenspan screwed up the economy in 2003. This equation is why sending all the proceeds from improved productivity to the top 1% does not help the economy as much as sending it to the other 99%. It is because the other 99% spends it on goods and services rather than hoard it, thereby increasing the velocity of money. This is one of the reasons why forcing austerity on Greece will never work. If you force them to hoard money in anticipation of a worsening economy, they do not spend it on goods and services, thereby weakening the economic base needed to maintain any debt payments. If you or anyone else can point to a counterexample to the Equation of exchange invariably always working, please feel free to enlighten me via the thread Economics 101 - Evidence Based Decision Making, because I as yet know of not a single one. Edited by anglagard, : Provide balance to sentences. Edited by anglagard, : eliminate use of the root word 'example' twice in the same sentence.Read not to contradict and confute, not to believe and take for granted, not to find talk and discourse, but to weigh and consider. - Francis Bacon
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RAZD Member (Idle past 1405 days) Posts: 20714 From: the other end of the sidewalk Joined:
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to add to what anglagard said ...
Economies are based on the creation of actual things that provide actual utility. Which are useless if nobody can buy them.
That thinking has led to the last several decades of U.S. decline, the recent recession ... And yet the problem was not with manufacturing of product but with an absence of people buying the product ... because they did not have the money to buy them. Making products doesn't put money in buyers pockets, what puts money in buyers pockets is fair return on their investment in the production -- a proper compensation for work rather than starvation wages. That is why bailing out the rich did not result in recovery.
... That thinking has led to the last several decades of U.S. decline, the recent recession ... Giving money to the rich via tax cuts and bailouts has only made the economy worse by removing money from the pockets of the spenders to put it in the pockets of the hoarders.
... Oh, and the Greek economic crisis. The problem of Greece will not be solved by austerity and the imposition of big bank deals either, the problem of Greece can be solved by feeding the base of their economy. You can't make a horse run faster by starving it. Enjoyby our ability to understand Rebel☮American☆Zen☯Deist ... to learn ... to think ... to live ... to laugh ... to share. Join the effort to solve medical problems, AIDS/HIV, Cancer and more with Team EvC! (click)
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Jon Inactive Member
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I seem to have been unclear again
I wasn't arguing that money wasn't involved. I was trying to point out that simply moving money doesn't build an economy even though it shows up as increasing GDP (GDP just measures how much money exchanges hands). Money has to have something real to back it. In the case of people borrowing to cover a trade deficit, the money has nothing to back it and such a system will eventual collapseno matter who has the money.
This equation is why sending all the proceeds from improved productivity to the top 1% does not help the economy as much as sending it to the other 99%. It is because the other 99% spends it on goods and services rather than hoard it, thereby increasing the velocity of money. Exactlyit spurs the production of actual things with actual utility. Money is just a tool. Economic prosperity has to come from the production of actual things with actual utility. If it doesn't (as in the case of borrowing to cover a trade deficit or people getting rich in the 'financial sector') the 'prosperity' is an illusion. And it only takes one person to look behind the curtain, expose the con, and send the whole system tumbling down. Edited by Jon, : No reason given.Love your enemies!
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Percy Member Posts: 22392 From: New Hampshire Joined: Member Rating: 5.3 |
Yanis Varoufakis, the Greek finance minister, is detested by his European counterparts, but he seems to have gotten the core of the problem exactly right, having once said (paraphrasing), "This is like whipping a sick goat to get more milk." He resigned earlier today. For those other ministers who had emotional issues negotiating with him, maybe this will help.
For those who don't recall how Greek got into this mess or who were wondering how much responsibility the Greek's bear, the answer is complete responsibility. They apparently lied about the true state of their finances for years (basically about tax revenue and entitlement payments) until finally a day came around six years ago when they couldn't make a loan payment, after which the truth gradually emerged. This is all just from memory, if someone knows better or more accurate details please fill them in. But six years of punishing austerity that seem to stretch unendingly into the future is not the answer. Greece voted no to more austerity, and it should be obvious to even the most anal finance and prime ministers that once Greece is all but dead there won't be any more loan repayments. The same goes for Italy, Portugal and Ireland. Helping them back on their feet is the best way to insure loan repayments. The current approach has all the sense of debtor's prison. --Percy
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Phat Member Posts: 18262 From: Denver,Colorado USA Joined: Member Rating: 1.1
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And I never thought that Debtors Prison made much sense to begin with.
Iceland ended up paying back 7% of its debt after discovering that Great Britain was indirectly responsible for 93% of it. Why should an individual---or a nation---be responsible after being tricked by predatory lending?God created war so that Americans would learn geography. —Mark Twain "A lie can travel half way around the world while the truth is putting on its shoes." —Mark Twain
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1.61803 Member (Idle past 1504 days) Posts: 2928 From: Lone Star State USA Joined: |
Hi Phat, I am not economic major or business grad but from what I have seen in the media and on various documentaries on the subject Greece has been allowing the corporate banks to cook their books and they bought into the credit default swaps too. Now that the chickens are coming home to roost they are the ones left holding the bag.
Very complex problem that has been compounded by from what it seems like, greed and stupidity. Drachmas here we come. "You were not there for the beginning. You will not be there for the end. Your knowledge of what is going on can only be superficial and relative" William S. Burroughs
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jar Member (Idle past 394 days) Posts: 34026 From: Texas!! Joined: |
Phat writes: Why should an individual---or a nation---be responsible after being tricked by predatory lending? Why should willful ignorance be an excuse?Anyone so limited that they can only spell a word one way is severely handicapped!
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RAZD Member (Idle past 1405 days) Posts: 20714 From: the other end of the sidewalk Joined: |
... They apparently lied about the true state of their finances for years (basically about tax revenue and entitlement payments) until finally a day came around six years ago when they couldn't make a loan payment, after which the truth gradually emerged. ... And the current government did not participate in that, but have inherited the result -- it's like Obama having to pay for Bushes wars ^2 ... Greece should prosecute the lawmakers and banks\financial institutions as Iceland did. by our ability to understand Rebel☮American☆Zen☯Deist ... to learn ... to think ... to live ... to laugh ... to share. Join the effort to solve medical problems, AIDS/HIV, Cancer and more with Team EvC! (click)
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