Question about Greece and its financial problems

Mods, I hope this is the right forum.

I’ve been hearing news reports about Greece, its financial problems, austerity measures, bail out, and so on.

Now I’ve heard a lot of reason for Greece’s problems, but the Greek people seem to be blaming all, or most of, their financial problems on foreign banks.

So my question is, what are the allegations against the banks?

They want their loans repaid is the short answer

Would you mind giving the long answer?

Theeeeey waaaaant theeeeiiiir looooooaaaans repaaaaaid iiiiiiiiis the shooooooort answeeeeeeeerrrr…

The banks only loaned Greece the money for high interest rates, because the odds of Greece defaulting on those loans was factored in. So, fair is fair, Greek citizens seem to be saying, let’s default on some of those loans.

Dang, missed the edit window. According to this Greece got loans at close to the same rates as Germany and France. So I guess the argument then is that the banks were guilty of gross negligence for expecting to be paid back considering the massive amount of debt that Greece already had on its books.

It’s easy to blame the borrower when a bank asks for a loan repayment, but it’s also over-facile. If a drug dealer sells you heroin cheaply and raises the price after you’re addicted, does he share blame?

“A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain.”

I don’t want to over-simplify Greece’s crisis, but anyone who denies that systemic flaws in world financial markets are partly to blame is out-of-touch with reality.

Thanks for the link. It was pretty informative.

Don’t forget banks have been giving the Greeks cheap loans because Greece has been systematically lying about its economic / budget situation. When this came out, interest rates went up and it became difficult to cover these higher interest costs (they still neede to borrow money to repay the earlier loans). I have no sympathy for Greece at all.

Let’s separate the People of Greece (POG) Vs. the Government of Greece (GOG). The first one is a victim.

From what I know (not much), and our country having gone through something similar, the GOG lied to the banks, borrowed too much to give the POG all kinds of allowances that GOG could not afford, in an effort to keep themselves in power thus making the POG feel like they were in a buoyant situation. The GOG would rather do that than face the political consequences of being the ones to tell the POG that they were much poorer than they thought, and so GOG didn’t have to crack down on non-tax payers and do all kinds of unpopular things.

Result=the POG are now asked to seriously downgrade their lifestyle (I am not talking about going from Lexus to Toyota, more like from Toyota to a bike). They are understandably pissed off and frustrated.

I don’t know what the solution is, but I fear that whether they default, or decide to repay these loans they are FUBAR for years to come. I know from experience. Our country has gone through that so many times that at some point (a couple of hundred years ago) we tried to repay the US with a chunk of our country. The US declined, they would rather have money. I wonder if Greece can try that. Maybe the Dopers can pitch in and buy our own island. :slight_smile:

Not absolutely.

From what I understand, tax evasion is widespread in Greece, which complicates the issue of actually collecting government revenues. And, like a lot of countries (the USA not excepted) they want a lot of spending on pensions and so forth but do not want to pay the taxes to cover this.

It is easy but not completely accurate to blame the mess solely on the government. Certainly Greek government is nothing to brag about, but neither are the Greek people the injured innocents here.


True. The Diane Rehm Show had a long piece on the Greek crisis this morning. One of the panelists related what has apparently become the “famous swimming pool story”. 324 residents of the affluent suburbs of Athens admitted on their tax forms that they owned pools. This seemed low, so an aerial surveillance was done. The actual number counted: 16,974.

To add insult to injury, after the results were released, a cottage industry sprang up overnight selling camouflage pool tarps.

Let’s split in the middle. The people that will be hit the hardest (non-wealthy, company employees) have no way of evading taxes.

The independently wealthy, business owners and independent professionals do it all day long (from what i have read). I doubt these are the people on the streets.

I think I would lie too if I was being taxed extra for having a swimming pool, and it was a self-reporting situation that no one cared about previously.

Seriously, a swimming pool tax?

What country would that be?

To quote Charles Portis, they took all of mine! :slight_smile:

True, if you work for a company, you’re going to have your taxes withheld, same as here in the U.S. But one article I read in Vanity Fair about this crisis said that a large percentage of people in Greece are self-employed or get paid under the table and a great many of those workers underreport their earnings, if they bother to report at all.

It’s probably not a swimming pool tax, per se. Rather, I would imagine, it’s the sort of situation where if you have a swimming pool, it’s going to increase the valuation of your property and drive up your taxes as a result.

In some ways it is a lot like the U.S. Mortgage crisis. Were there predatory lending practices at play and are the banks to blame? - absolutely. Were there people using the rising value of their house and cheap mortgages to turn their homes into ATMs? - you bet.

Or no different that the path we are on. “We” don’t want to pay taxes - or pay the smallest we can get buy with…and “we” (granted - often OTHER wes than the first group, but there is some overlap) also want subsidized college education, good elementary education, good transportation systems, a good Medicare program, insurance for the uninsured, a strong military, a national park system, pensions for public employees, clean water, safe food, etc. etc… There is no way “we” can be made happy.

All quite true.

Hopefully when it comes to the crunch we will react differently, or better, than the Greeks are doing.

I have a feeling we are going to test the truth of this over the next couple of years.


Or at the very least, the truth of who wrote it…