Actually, AFAIR, around 1980 the official rate was 1 ruble to 4 dollars, while the black market rate was 4 rubles to 1 dollar.
Good link, and a really great video in there as well. I thought this was especially pertinent:
It’s particularly significant since:
In other words, a bunch of rich financial institutions did a really terrible job of what they’re supposed to do: asses the risk of a loan before making it.
But then, instead of taking the hit for their own incompetence, they shifted the burden to their respective governments.
Which, when you think about, means maybe they weren’t so incompetent after all. If you can depend on the government to bail you out (when you’re a big bank) there’s really no incentive not to make bad loans in the first place.
Barter is an easy method of tax evasion. I suspect it’s been more prevalent than acknowledged for some time.
I don’t know. I visited the USSR in the summer of 89, and when I left the hotel kids were literally stuffing my pockets with rubles, in exchange for dollars. (The kids were about the same age as I was. I was 18.)
Turns out it didn’t really matter much. There was literally nothing to buy with rubles.
The stores that did have stuff (tourist stores) only accepted dollars.
No. In a country with its own currency, the central bank determines the interest rate, just like it does in the US.
. Absolutely. Bite the hand that’s literally feeding you. Sounds like a solid financial plan going forward. I would note however that there are not a lot of calories in pride so there might be a few details to hammer out.
It’s not a nitpick, and thank you for clarifying. I think I was confusing country codes and printing codes.
But I checked again and see that even though most countries do have printing facilities, they also commission Euros printed from facilities in other countries.
According to this site, the Greek printing facilities (in country) are nationalized.
The central bank of Greece sets the money rates (1 year or less, say). Long term and medium term rates are set by the market. Though via the term structure of interest rate theory, the central bank can affect the long term rate somewhat.
But does the central bank determine the shape and position of the entire yield curve? No. Although it might be interesting to see them try.
Vox: How Greece leaving the euro would actually work
I had wondered about that.
No worries. I wouldn’t put European banks near the top of the list of 11 either if I had to order them.
As I see it, the underlying problem is that financial institutions understand diversification, but they don’t spend too much time thinking about correlated risks or once-every-five-year events. And why should they? If everybody gets egg on their face at the same time, it’s a who-coulda-known situation. Evading risks that turn sour once or twice a decade could imply below market returns during most years. That’s not a good career move even if it enhances returns over 5-15 year periods of time. A similar argument implies to those who assume Gaussian returns when they know that financial instruments don’t perform like that. One writer (Taleb) referred to this as ignoring black swans, but hell if they appear every 5-10 years you may as well call them white.
I figured the Greek people were folded into their political parties, but I suppose you could expand the list to 12. I will say though that unlike the other 11, the Greek people have actually paid a serious price for failure to build a more functional civil society. I’d cut them at least that much slack.
The Germans are offended that Greek public transport has air conditioning, which, as northern Europeans, they see as a ridiculous frivolity. This is the actual reason given by a German minister.
The problem, of course, is that Greece is not in northern Europe.
As perviously mentioned, it is being presented to the German people in almost racist terms - the problem with ‘the Greeks’ is they are not more like us, they don’t have our values, they don’t work hard … their institutions, their culture, their ethics.
Germany is actually doing Greece a oby sorting the country out, making it fit for purpose.
Well, the referendum showed what working class and poor ‘Greeks’ thought of that.
Spite is a powerful, powerful motive.
Do you have a cite for that?
As conspiracy theories go, this one’s pretty credible. Most if not all of what he describes actually happened, whether part of a fiendish master plan or not. It’s a lot closer to reality than the nonsense about ‘Greeks not collecting any taxes and begging for money from poor Latvians’ that I keep seeing, including on this very board.
I do!
And I was wrong, it was an unnamed pol but not a minister:
This strikes me as like someone from Maine complaining about air-conditioned buses in Phoenix, and deserves that sort of scorn if not that level. (Obviously Greece is not actually as fatally hot as Arizona.)
Now, the pol does go on:
Um, OK, but the Telegraph has a helpful chart right next to this. At purchasing power parity, the ratio of the minimum wages of France:Germany:Greece:Slovakia is about 16:14:9:6.
(And why base your judgments on minimum wage? Why not median income, or even mean, considering the high rate of unemployment? What kind of economic education do Christian Democrat pols in Germany have that they think this is key?)
And most of the debt is held by Germany and France. This is a disingenuous argument. Even the Telegraph ain’t exactly buying it, son, and they’re Tories.
But hey, CDU pol saw an air-conditioned bus with a single passenger once, so that entire spendthrift people must be punished. This is the level of the thinking?
Personally, I’m in complete agreement with the Marxist wing of Syriza:
Greeks should have total control about how they run their country and leave the eurozone. Germany should accept the fact that its share of the bailout money (about 90 billion Euros so far) is lost.
The trouble is this stuff falls between the realpolitik and good old fashioned propaganda - it’s ideological indulgence.
Syriza have to sell their position to the people. Totally. They have to be seen to e forced into doing whatever they do.
That’s what most of this manoeuvring is about. So far, so good -almost 2/3 of those voting support either the political approach or the representation of the political approach.
Talking of which isn’t this Armageddon day for those pusing the capitalist/moral narrative - Greek banks run out of liquidity, the economy grinds to a standstill - cue persioners crying outsde locked banks …
One or two air conditioned buses?
The whole transport system more like. A trains that was famously quoted by a Greek minister as employing so many people on such comfortable salaries that it would have been cheaper to send every passenger by taxi.
The country behaved like a teenager running amok with its parents credit card. Then throwing a tantrum when faced with the consequences of all the huge debts.
It is easy to conclude that an appropriate outcome would be for Greece to exit the Euro and return to the Drachma. Then probably spend the next few decades scratching a living from tourism and selling fruit and veg. I think the Greeks are all too well aware of this.
But can the EU afford to have a restive and unstable country on its southern border? It could have implications for the NATO and the balance of powers in the Mediterranean. Greece is also the most developed economy next to the Balkans. What effect will this have on Bulgaria, Romania and other countries in the region?
Why did the EU countries and private banks lend so much money anyway? The creative accounting that justified Greece becoming part of the Euro was not a surprise. Any deep investigation would have revealed ‘inconsistencies’.
My conclusion is that this was not about money. The Greek economy is not that big. But the political benefits of having Greece in the EU took precedent. I am sure that the aspiration was that Greece would eventually settle down and develop its institutions to encourage long term stability.
This realpolitick has characterised a lot of EU expansion. Southern Eastern Europe from Greece going north the states are underdeveloped, with porous borders and politicians with the tendency towards kleptomania.
Then there is, of course, Mr Putin in Russia, who sees the EU as a threat and would be quite keen to encourage instability if it is in Russias interest.
There is a big geopolitical picture here. The Euro is a central part of the EU project to bind nations together economically, so their interests coincide.
I don’t think the EU can afford to let Greece leave the Euro.
On the other hand negotiating with the current crop of Greek politicians, who behave like a bunch of irresponsible university students, has not been productive.
Germany has been ‘bad cop’. It may be time for the French to play the ‘good cop’, I think.
I am sure there is a deal on the way.
Wow, it’s like the Reagan “Welfare Queen” lie. That is impressively stupid.
What nonsense? Greek tax collection is a disaster and both Latvia, Lithuania and Slovakia are poorer than Greece and have had to pay to Greek debt programs. Those are facts.