I’m not disagreeing with that, but I wouldn’t say the banks were “punished”. Risk is the cost of doing business, and they knew that going in. Did they forfeit their origination fees? Weren’t they mostly bailed out already by EU governments?
A lot of the loans Greece got prior to their melt down and prior to the EU giving them bailouts with a lot of strings attached were gotten under false pretenses, so to speak. Since then, as well as certain strings being attached they are paying a lot more interest on their loans due to the risky nature of loaning them money…and they are getting those loans mostly because of their willingness to at least nominally go along with the restructuring the EU is pushing on them. So, it sort of IS ‘sound banking strategy’, unless of course they end up leaving the EU/EZ and the Euro and going to their own currency.
I am familiar with all that. And who helped them cook the books, too. They never should have been accepted by EU/EZ in the first place. But here we are. Will they stay? Should they stay? (to get back to the questions in the OP)
Politically Tsipras is walking a very fine line. The sum total of his campaign promises make staying in the Eurozone (and possibly by extension the EU) impossible. However, if those are just a strong bargaining position and he’s willing to agree to keeping Greece’s spending under some level of Eurozone standard (right now Greece is doing good at this, but Tsipras’ proposed economic policies would change that very quickly), and to improve tax collections in exchange for a repudiation of debt I think that’d be a good deal for the Eurozone to take. Or my expected outcome: a further restructuring to make the debt-servicing payments even less. Greece actually pays less as a % of GDP on debt servicing now (with debt at 170% of GDP) than it did with debt at 100% of GDP, so the restructuring has already been generous–but if it were even more generous then the practical difference between restructuring and debt forgiveness is minor and I think that’d be a good deal for Greece to take.
With hindsight being 20/20, it’s absolutely true that Greece should not have been brought into the Eurozone, and frankly except for fraud they didn’t meet the criteria the Eurozone was supposed to be using when it assessed potential new members. But that ship has sailed, I think as long as the Greeks can budge from “repudiate debts and let us spend away as much as we want”, then compromise can be found.
For Tsipras personally, some 3/4ths of his electorate wants to stay in the Eurozone, so politically I think it would be a significant gamble for him to recklessly refuse to negotiate but instead try to bargain from an absolutist position. Right now we really don’t know what he will do, but we’ll find out quickly I suspect.
FWIW I cannot blame the Greeks for voting for Syriza. Their choices were between Stalinists, Nazis, and two parties that were hopelessly corrupt, and newcomer Syriza. Even for someone with widely different economic positions than Syriza I would’ve had a hard time voting for any of the other major parties as well.
Isn’t the problem with this though that if Greece receives greater financial assistance then Portugal, Spain etc will look for the same sort of deal. If voters in Spain and Portugal see Greece vote in an anti austerity party that successfully plays hardball and “wins” against the EU then these countries will be tempted to do the same. It’s why I don’t see Merkel playing tough with Greece just for the hell of it(these accusations were made earlier in this thread). She’s playing hardball for very practical political reasons. If only the financial “crisis” were limited to Greece then this whole thing would be a lot easier to solve.
Austerity as Merkel pushes it really doesn’t make a lot of sense for most Eurozone countries, for one, and countries like Spain and Portugal can afford to to spend more without it being a real problem. Greece is really the only country like Greece atm in the Eurozone, Portugal/Italy/Spain are all much more robust.
I’ve been trying to go on holiday to Greece (from England) for the past couple of years and it’s always been ridicuously expensive compared to the rest of the Med, and the explanation I was given was the Euro. Does anyone know if that’s true?
That article mentions some organisations that fund school lunches in some areas of Greece.
So wouldn’t it help Greece to give some similar specific stimuli? Free school lunches across the whole country, extra access to an EU fund for adult training for skilled jobs (mechanics, etc), with basic living grants as well as paying the fees, money paid to Greece but only for education, same for healthcare. Basically, grants, but targetted, to enable the country to keep some of its essential people in jobs, and train more people, targetted on jobs which are annually payrolled so can’t avoid tax.
A lot of the Greek economy is self-employed, hence the tax evasion, but if you can at least make sure that the actual taxpayers are earning money (and paying tax) then they will spend money at some of those self-employed businesses.
A tax refund to all those who paid, perhaps, what was he was thinking of? Granted, lots of Greeks didn’t. They will lose out from this, which is fine. They will benefit indirectly.
And again - if increased spending will fix the Greek economy, then so far they have receive a half trillion or so to spend. It does not seem to have fixed it, and that includes about half the debt being written off instead of repaid. What is the evidence that more of the same will work better?
You know, I’ve changed my mind here. The Greek debt should be completely forgiven - accompanied by an absolute moratorium on any EU country lending Greece another fucking dime that is backstopped by the EU. Let’s see how that works out for Greece. It’ll be a good object lesson. ECON101 students will have material for decades.
“Liberal” in the British sense, not the American one. The bedrock of the EU is free movement of goods, capital and labour. It’s essentially a mechanism for removing trade barriers.
Further, the failure of the EZ is not the same as failure of the EU. The EZ may fall apart, but the EU will continue to exist.
Do you have any evidence that the KKE were ‘Stalinist’? They seem like the most principled of all the parties on the Greek scene to me, and I’m hard pressed to see anything Stalinist about them.
Not really. Lenders are typically far more cautious than borrowers. Thus we don’t see the failure rate among lenders that we see among, home-owners, to use an example.
Certainly when they know they’re “too big to fail” and can count on a bailout they get reckless, why not? Privatized profit and socialized risk is a wonderful thing if you’re the potential profiteer.
When one side says, “Keep the bread and circuses going,” and the other says, “Sorry, party’s over, time to tighten the belt,” it’s not surprising which side the voters choose.
They took office almost immediately and the new finance minister has been shuttling around European capitals all week. He was in London on Monday. The big meeting, with the ECB is set down for Wednesday.
Varoufakis also seems to be backing off talks of a debt writedown, instead suggesting a rejigging of payment schedules to be linked to growth rates.