# Greek default seems to be inevitable...what's the fallout? **URL:** \ **Category:** Great Debates\ **Created:** [June 29, 2015, 8:24pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811 "2015-06-29T20:24:18Z")\ **Posts on this page:** 11\ **Page:** 28
**Author:** ![up\_the\_junction](https://avatars.discourse-cdn.com/v4/letter/u/f1d935/32.png) [@up\_the\_junction](https://boards.straightdope.com/u/up_the_junction)\ **Post date:** [July 17, 2015, 7:54am UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/541 "2015-07-17T07:54:53Z")
If it was a quote it would be fun. What? ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [July 17, 2015, 1:47pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/542 "2015-07-17T13:47:15Z")
> [@foolsguinea](#): > > [Simon Wren-Lewis](http://mainlymacro.blogspot.com/) has made some interesting observations of late: > > [Imagine if the USA had responded to the subprime mortgage crisis the way Europe has responded to the Eurozone crisis:](http://mainlymacro.blogspot.com/2015/07/the-great-recession-and-eurozone-crisis.html) > [Here he denounces ECB’s behavior:](http://mainlymacro.blogspot.com/2015/07/the-non-independent-ecb.html) TARP was repaid; the Greek loans weren’t. That is not a minor distinction. Regards, Shodan ---
**Author:** ![Dr.Drake](https://avatars.discourse-cdn.com/v4/letter/d/ad7895/32.png) [@Dr.Drake](https://boards.straightdope.com/u/Dr.Drake)\ **Post date:** [July 17, 2015, 2:45pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/543 "2015-07-17T14:45:20Z")
> [@Lord\_Feldon](#): > > The unemployment rate is “a lie” because it doesn’t count people who are employed? What? It doesn’t count people who are unemployed for longer than a month or so; that does suggest deliberate obfuscation. ---
**Author:** ![Diceman](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Diceman](https://boards.straightdope.com/u/Diceman)\ **Post date:** [July 17, 2015, 4:38pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/544 "2015-07-17T16:38:04Z")
> [@Dr.Drake](#): > > It doesn’t count people who are unemployed for longer than a month or so; that does suggest deliberate obfuscation. Exactly. They’re called “discouraged workers.” Ostensably, the category was created under the theory that these people have dropped out of the workforce. It’s mainly a statistical gimmick to keep the unemployment rate low. The case of “underemployed” people is more complicated. These are people who work part-time because they cannot find full-time work. (Many restaurants, for example, will _never_ let their employees work 40 hours a week, specifically so they can be considered part-time help). This also counts a guy who, for example, cannot find a job in his field, and ends up working part-time at Wal-Mart just so he can pay the rent. They’re employed, kinda. ---
**Author:** ![Hellestal](https://avatars.discourse-cdn.com/v4/letter/h/3ab097/32.png) [@Hellestal](https://boards.straightdope.com/u/Hellestal)\ **Post date:** [July 17, 2015, 6:31pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/545 "2015-07-17T18:31:18Z")
> [@Dr.Drake](#): > > It doesn’t count people who are unemployed for longer than a month or so; Completely untrue. You can be unemployed for twenty years, and you will be counted as unemployed for twenty years. No one gets excluded for length of joblessness. > [@](#): > > that does suggest deliberate obfuscation. Since the people who are complaining about unemployment figures can’t even manage to describe them correctly, what are the chances of that? ---
**Author:** ![Dr.Drake](https://avatars.discourse-cdn.com/v4/letter/d/ad7895/32.png) [@Dr.Drake](https://boards.straightdope.com/u/Dr.Drake)\ **Post date:** [July 17, 2015, 6:40pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/546 "2015-07-17T18:40:41Z")
> [@Hellestal](#): > > Completely untrue. Looking into it, the [BLS](http://www.bls.gov/cps/lfcharacteristics.htm#unemp) specifies “Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work. Persons who were not working and were waiting to be recalled to a job from which they had been temporarily laid off are also included as unemployed.” I’ve had no luck finding a cite for how they measure “have actively looked for work in the prior 4 weeks,” though. Edit: the bit on “discouraged workers” is [here](http://www.bls.gov/cps/lfcharacteristics.htm#discouraged), which does genuinely seem to be people who are unemployed but not counted as unemployed for their 5.3% rate. ---
**Author:** ![Hellestal](https://avatars.discourse-cdn.com/v4/letter/h/3ab097/32.png) [@Hellestal](https://boards.straightdope.com/u/Hellestal)\ **Post date:** [July 17, 2015, 6:47pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/547 "2015-07-17T18:47:37Z")
> [@Dr.Drake](#): > > Looking into it, the [BLS](http://www.bls.gov/cps/lfcharacteristics.htm#unemp) specifies “Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work. Persons who were not working and were waiting to be recalled to a job from which they had been temporarily laid off are also included as unemployed.” > > I’ve had no luck finding a cite for how they measure “have actively looked for work in the prior 4 weeks,” though. They ask people. They do a survey. That’s how data is gathered. They go out and they ask whether those without jobs have been looking for work. People who have not been _looking_ for work aren’t counted. If you are actually looking for work and can’t find a job, you’ll be counted forever. > [@](#): > > Edit: the bit on “discouraged workers” is [here](http://www.bls.gov/cps/lfcharacteristics.htm#discouraged), which does genuinely seem to be people who are unemployed but not counted as unemployed for their 5.3% rate. Discouraged workers tell the data-gatherers that they would like a job but are not presently looking for a job. Moreover, they claim the reason that they are not looking is economic in nature. If they were looking, they would be counted, no matter how long they’d been out of work. ---
**Author:** ![foolsguinea](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/foolsguinea/32/14751_2.png) [@foolsguinea](https://boards.straightdope.com/u/foolsguinea)\ **Post date:** [July 17, 2015, 7:22pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/548 "2015-07-17T19:22:06Z")
> [@Shodan](#): > > TARP was repaid; the Greek loans weren’t. That is not a minor distinction. > > Regards, > Shodan As Paul De Grauwe argues [here,](http://www.voxeu.org/article/greece-solvent-illiquid-policy-implications) Greece’s previous debt restructuring left them solvent but illiquid. They already had a deal that got their interest payments down to a manageable level. If ECB had acted like a central bank normally does, it could have backed them up with loans; but ECB chose not to do that, and thus failed to provide them with more liquidity while they kept paying things off. If you look at Varoufakis’s account of working with Eurogroup, it looks like most of the European finance ministers are stuck following some kind of right-wing pro-austerity politics and/or Germany. So you have a situation where Tsipras and Varoufakis went to negotiate a less contractionary and destructive deal with the rest of Europe, and found a bunch of ministers in no position to negotiate. Meanwhile ECB decided to turn off the tap. The upshot of all this, if we take De Grauwe and Wren-Lewis’s analysis as close to accurate; is that Greece doesn’t necessarily have to leave the Euro for structural economic reasons, and Greece doesn’t want to leave the Euro; but other Europeans are continuing to create a situation where Greece’s best option will be to exit the Eurozone and start printing drachmas. As Dani Rodrik said on July 7: > [@](#): > > More fundamentally, economic integration could have been accompanied by the expansion of a European political space. Compensating for reduced national autonomy by creating room for democratic action at the European level really would have been a victory for democracy. > It is too late to debate whether the culprit was the unwillingness of the European public to embark on the path toward political union or the timidity of its national politicians to exercise leadership. The consequence is that in today’s Europe, democracy can be reaffirmed only by asserting national sovereignty. And that is what the Greek electorate has done. > The referendum is deeply important, but mostly as an act of political symbolism. What remains to be seen is whether the Greek public also has the stomach for the economic actions – in particular, an exit from the eurozone and the introduction of a national currency – that real sovereignty would entail. After all, the terms on offer from the country’s creditors are unlikely to change much. If the Greeks voted “no” based on unrealistic expectations that other eurozone democracies would be forced to bend to their wishes, they may be in for another deep disappointment – and their own lesson in democracy. > > Read more at [Greece’s Vote for Sovereignty by Dani Rodrik - Project Syndicate](http://www.project-syndicate.org/commentary/greece-referendum-nationalism-democracy-by-dani-rodrik-2015-07#BpBGcguUhZLx9vYo.99) ---
**Author:** ![foolsguinea](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/foolsguinea/32/14751_2.png) [@foolsguinea](https://boards.straightdope.com/u/foolsguinea)\ **Post date:** [July 17, 2015, 7:31pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/549 "2015-07-17T19:31:17Z")
And note that TARP was repaid because 1) the banks that would repay it were still allowed to operate in the very core of the USA economy, and 2) the Federal Reserve in the meantime funded the banks who eventually repaid it. It was not clear at the time that TARP ever would be repaid, and it was partly repaid by the Fed creating money and giving it to those banks, which the Fed didn’t strictly have to do. So, yeah, it seems clear that the behavior of the central bank is a key difference. ---
**Author:** ![Measure\_for\_Measure](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/measure_for_measure/32/557_2.png) [@Measure\_for\_Measure](https://boards.straightdope.com/u/Measure_for_Measure)\ **Post date:** [July 17, 2015, 9:06pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/550 "2015-07-17T21:06:25Z")
> [@Hellestal](#): > > Discouraged workers tell the data-gatherers that they would like a job but are not presently looking for a job. Moreover, they claim the reason that they are not looking is economic in nature. > > If they were looking, they would be counted, no matter how long they’d been out of work. Also, anybody who wants to roll their own unemployment rate (and track it over time) is welcome to. The data on discouraged workers is available. ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [July 20, 2015, 4:14pm UTC](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811/551 "2015-07-20T16:14:54Z")
> [@up\_the\_junction](#): > > [It’s a lie](http://www.gallup.com/opinion/chairman/181469/big-lie-unemployment.aspx) The BLS number is the one that’s most widely used, and is virtually always the number reported in the news. I totally understand if you think the headline number is problematic or misleading: but it’s not a “lie”. It is a measure of unemployment using explicitly stated definitions. Either way, if you want to use different definitions (counting people who are under-employed, for example) I’m fine with that, so long as you say that’s what you’re doing. What you’ll find, though, is that regardless of the definitions, unemployment has been falling in the U.S. for the past 6+ years or so. And, that it’s been falling at the same time we’ve recorded historically large deficits **and** had an unprecedentedly huge central bank expansionary policy. That is the recipe for economic recovery. What’s being imposed on Greece is the exact opposite of what is necessary. They’re saying they want their money back, while simultaneously imposing policies that will prevent Greece from making the money they need to repay the debt. They’re using the logic of debtor’s prison, which is stupid, or deceptive (meaning their real goals are not their stated ones.) [Previous page](https://boards.straightdope.com/t/greek-default-seems-to-be-inevitable-whats-the-fallout/723811.md?page=27)