Pretty damn obvious if you look at the actual data. Most people wouldn’t. Unless it is reported in the media, or they experience living abroad, how are they going to find out?
The BBC interviewed a Greek woman who said that Greece should just cancel all foreign debt and start over. The BBC then noted that Argentina did the same thing in 2002 (or so) and interviewed an economist knowledgeable about the Argentinian economy and she said it was a disaster for Argentina.
It’d be interesting to know that economist’s definition of “disaster” and what he would have described pre-default Argentina as.
When your current budget is predicated on continuing to borrow, this is immensely stupid. By cancelling all previous debts, you guarantee that no one will loan you any new money. Since your budget requires more money than you have, you now have only ONE option. Cut spending. Not later, not gradually, not while you reform defective systems. Now.
Cutting spending isn’t going to help Greece much because they’re forecasting negative growth.
This is largely a function of adopting the euro. Greece had a bubble (what they did with the money is immaterial), wages got too high, now they need to make their wages competitive again, which they could have done had they still been using the drachma (by devaluing their currency relative to the rest of Europe) but are unable to do now. Germany isn’t totally blameless in this either, because it was the willingness of countries like Greece to take on debt that helped Germany’s exports. That’s why Germany’s government has come around to some kind of Greek bailout, even though there’s no popular support for it: they know their exports will take a hit as well as their banks with Greek exposure.
So the Greek citizens actually are being asked to bail out their banks (and German banks, and French banks…) by being subjected to these austerity measures, measures that won’t appreciably help them out of this mess in the short term (Ireland voluntarily engaged in their own austerity measures in 2008 and their economy contracted by 10%) and will lead to a lot of pain for the most vulnerable citizens. I know it’s fun to wag your fingers at the profligate Greeks and their banana republic ways and to insist that they all suck it up and tighten their belts, but the riots happening there are real. The three people dead are real. The anger is real, whether or not you believe it’s justified. I think what they see is that they’ll be forced to sacrifice, but it won’t matter because Greece will default anyway, so if they’re going to feel pain and have to make changes why not bring the thieving bankers down with them.
Isn’t it a cornerstone of free-market theory that everybody should be trying to maximize their results? When people criticize the lavish pay received by American CEOs, we’re told that they’re just negotiating to find what the market will bear. Blame the Greek government, maybe, for giving in to the demands; but it seems unfair to call the people who received the benefits “mental defectives”. Weren’t they just being greedy, like they’re supposed to be?
Fair enough, however individual firm negotiations are not the same thing as public trade unions, which also
But I don’t see any problem in observing that the “oh so innocent” working class shares blame, as one does have to be a mental defective not to see the disaster - of course the other side of that is wilful blindness, but that says that the “Working class” and union members actively made bad choices (yeah, with the scum sucking corrupt middle and upper classes in Greece) and thought that they’d magically be able to borrow forever without ever repaying.
The whole country bears responsibility. The elites merely reflected popular idiocy.
The typical Leftist “innocent Labour” argument doesn’t stand up to any scrutiny. But same time I am not (as a member of the managerial and ownership class) suggesting that those assholes in Greece are not also to blame, at least 50% - and since they are less numerous, their per capita blame is greater.
Yahoo News has a good article on this.
“Screaming in the streets, waving banners, and tossing homemade explosive devices at the police do absolutely nothing to address the very real problem your country faces. That problem is that your country is not as wealthy as you would like it to be. Nor is it as wealthy as your government led you (and others) to believe it was.
In short, your economic pie is too small to satisfy all of your demands. Railing madly against this reality, however, does nothing to increase that pie’s size. Resources and wealth are produced neither by angry sloganeering nor by simplistic denials of the facts. Quite the contrary.”
and
“No reasonable adult is shocked or angered when the bill for the lavish meal that he enjoyed last week arrives in his mailbox today. Paying that bill is never pleasant, but it must be done. The reasonable adult pays. He doesn’t scream in anger at the bank that loaned him the money to pay for the meal. He doesn’t blame others for his debt obligations. And he doesn’t demand that people who are in no way responsible for his decision to buy that expensive meal, and who didn’t share it with him, nevertheless help him to pay for it.”
The main thing that needs to be understood about the Greek situation is that both conservative and liberal Greek governments have been shooting themselves in the foot for years now as regards revenue from taxes. As has been noted throughout this thread, collecting corporate taxes is pretty much a joke - although the media seems more eager to point the finger at small businesses and individual entrepreneurs than at the larger corporations - but even if it weren’t, the corporate tax rate was nearly halved between 2001 and 2007 (see page 4 of this report from the EU Taxation and Customs Union). At the same time, the taxation rate for personal income from employment decreased, but nowhere near as sharply. In short, Greece has fashioned a revenue net that has the all-too-familiar property of snagging minnows by the ton while letting the whales slip through.
Raising corporate tax rates and enforcing collection, however, is unthinkable for PASOK (the liberal governing party) and anyone generally standing further to the right. Instead what they’ve done is pushed through wage cuts and freezes on pension contributions (a/k/a Social Security) - and not for the first time, either. Additionally the government has turned to borrowing through the issuance of bonds to raise the money needed. The economic situation, however, has driven up interest rates - I believe the 5 billion raised through bonds issued in January came with a 6.5% interest rate (8% when you figure in bankers’ commissions), which appears to be rather stiff for such a situation. Whatever the final amount paid by the Greek government on these bonds, it means that money that could be put to better use within the Greek economy is flowing out of it.
It is not difficult to understand the shock and anger these policies have produced in the Greek working class. And it is not surprising to see that shock and anger turn into a fight back. Greek workers are not at fault for the world economic crisis that brought about these measures, and the social system they enjoyed is not at fault for the dire state of the Greek economy. Had the government left the corporate tax rate alone and aggressively pursued corporate tax collection at all levels, they’d have had a lot more income from revenue with which to fund the social programs they claim they have to cut to get out of this mess.
To answer the OP’s title question, the unions’ and protesters’ solution is, at the moment, to stop the cuts and freezes. And they’ve taken to the streets to show they’re serious about it. It’s an inspiring thing to see.* And there are two important lessons both they and anyone on their side can draw: you can’t win if you don’t even try to fight, and a system that resolutely refuses to help you out when the chips are down needs to go.
*This isn’t to say, as an aside, that bombing the Marfin bank was the right thing to do. The tragedy of the deaths could have been avoided, however, if the employees - whose federation was out on strike - had been allowed to go home as they’d requested instead of being locked inside under threat of layoffs from the bank management. The bank would probably still have been attacked (Marfin’s a high-profile player in privatizing government enterprises and thus very unpopular) but those people wouldn’t have died needlessly because of it.
While this is correct
Not that Greek has had a liberal government, they’ve had socialist (centre left) governments.
Eh, PASOK is Panhellic Socialist party. They’re as far from being liberal as… well the French.
Regardless, they are making steps on enforcing collection - at least in word.
But the whole bit of wisdom about trusting Greeks then comes into play.
They fucking bankrupt there’s not any money in the economy. If they don’t float bonds, they got no money. Jaysus, this is the exact magical view of the protesters, somehow who think the Gov’t magically generates moola to pay for itself. If it ain’t coming in by taxes, you have to borrow it from others - and that’s others savings who quite rightly expect to be paid back.
Their social system **absolutely fucking is at fault **for the dire state of the economy. Why the fuck do you think their fucking economy is such shite? Had they undertaken the kinds of reforms that even the damned Spanish undertook, and done anything to copy German social reforms, they’d be a damned bit better off.
To answer the OP’s title question, the unions’ and protesters’ solution is, at the moment, to stop the cuts and freezes. And they’ve taken to the streets to show they’re serious about it. It’s an inspiring thing to see.* And there are two important lessons both they and anyone on their side can draw: you can’t win if you don’t even try to fight, and a system that resolutely refuses to help you out when the chips are down needs to go.
I see from your note you are to the far far Marxist left.
Yeah, but have you ever gone out to dinner with someone, and you order a salad and the other guy orders lobster, and then he wants to split the bill evenly?
Yeah, in fact that’s what the Greeks are sticking Europe with. They’re spent years flashing a fake wad of cash and ordering up lobster dinner social benefits, Germany, UK etc have raised retirement ages and been on salad diets.
Well, I have to give you credit for getting that one right, at least.
And the thing is, we all predicted this back when they assumed the Euro. At least, I know I did, it was an obvious consequence.
Well, yes. Since they’ve been living high on the hog on debt.
,
It is most certainly not immaterial, there is vast difference between spending that is on investment and helps potential future productivity and spending to finance current consumption (the welfare state). Borrowing to build ports, highways, other useful economic infrastructure may get you in trouble, but those are useful assets that can be leveradged for future growth.
Borrowing whole hog (and leaving a track record also of constant lies, fudges and violations of agreements) to spend on pensions and early retirement, not useful and puts you in a right bit of a spot when inevitably the debt stock gets to heavy to support.
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Well yes although past examples of unreformed economies devaluing again and again highlight this is not without cost to the devaluing nation.
Eh? Greek deficit spending has fuck all to do with German experts. Chinese factory building, that has something to do with German exports. Greek tax dodging and social spending…
That’s why Germany’s government has come around to some kind of Greek bailout, even though there’s no popular support for it: they know their exports will take a hit as well as their banks with Greek exposure.
Yeah, banks and retirement funds that bought Greek debt as safe investments based on Greek lies, and said buying on the account of grannies savings placements.
Thieving bankers have nothing to do with this at all. Yelling at the bankers for Greek government frauds is just idiocy.
I think there may be some confusion here - the Greek banks acted honourably and didn’t do anything that wrong (unlike the rest of the world).
This is a government problem.
The bulk of German exports are to its neighbors in Europe. If they’re not buying German goods, Germany’s economy suffers. If European banks poured money into places like Spain, Portugal, and Greece, and those nations increased their consumption, that helped Germany.
So if everyone in Greece ends up having to endure these austerity measures, but the banks get off scot-free, the citizens shouldn’t be angry?
And “thieving bankers” was hyperbole on my part, but it’s no more hyperbolic than blaming all of Greece’s woes on entitled workers demanding outrageous employment benefits. Spain’s government has largely spent responsibly and they’re still in trouble. My point was that the flashpoint for all this anger is the fact that many responsible parties won’t share equally in the pain.
First off, Greece has a very small economy. It is not a manufacturing power-its economy is mostly tourism, agriculture and food processing, and major industries like shipping lines, maritime services. The Greek government is a coalition, and the labor party is very strong. Because of this, there is no restraint on the public sector-it will spend all it can and more, because that is how governments work.
The way for Greece to overcome its problems is to work hard and excel in what it does best-but rioting is NOT the way to attract tourists to your country.
Frankly, what these people are doing is stupid-it will result in higher deficits and a worse economy.
Yes, and pray tell what percent of those exports are to Greece? And how Greek government was somehow forced into lying about its stats and running up debts because of German exports?
Really the logic of placing blame on the Germans does escape.
Numbers tell me that Germans exported Euro 8.3 billion to Greece and imported 2.8 billion. Neither side of the equation look to be important drivers of German economic interest.
I’d also say that German exports in Europe were not primarily to the PIIGS, so… again the logic of this argument of placing blame on the Germans for Greek debt does still escape.
European banks placing German, French etc savings (do recall that the banks are placing others monies, and Gov’t debt buys tend to be for “safe savers”) in Spain was a good thing - Spain at least for example largely invested in useful things - at least is not a catastrophically badly managed country that consistently lied in its own statistics.
What right do the Greeks have to be angry about the Greeks ripping off the Grannies and Grandpas putting their hard earned Euros into savings then invested in supposedly safe Euro Zone government debt is rather how I put it.
Or does bank monies grow on trees where you are from? Those deposits invested also belong to ordinary citizens as well.
Of course in the end the bond holders will have to take a cut of the pain, and that means retirement funds and the like - retirement savers monies entrusted to the banks. No way around it, but yelling about “banks” isn’t an argument, just says one is a fuzzy thinker about what monies are in those banks.
Bollocks.
I’ve got much sympathy for Spain, hell even Portugal - they are suffering from the Mediterranean contagion effect as investors get scared of default. Neither of those countries fabricated statistics to lie to get into Euro, lie about their debt-GDP ratios, lie about… well just about everything. The Greeks did.
I’d support rescuing the Iberians, they’ve shown themselves a damned bit more responsible than the good for nothing Greeks.
Why “banks” or bonds investors placed Grannies’ monies in supposedly safe Euro Bonds are “responsible” for Greek fraud escapes me.
This ain’t like the American fiasco - banks were to blame there. Nope, the Greeks are 100% to blame here.
Spain and Italy are two of Germany’s largest export markets.
“Supposedly safe” does not equal “guaranteed.” If these banks, who are supposed to be more sophisticated about this stuff, couldn’t do their due diligence and make a realistic assessment of Greece’s solvency (I seem to recall news stories from 3 or 4 years ago raising the question of whether Greece had cooked the books to gain entrance into the eurozone, so it’s not like this is all completely out of left field) then they should expect to lose on their investment. Instead, working class Greeks are going to be forced into years of stagnancy and pain just to protect foreign bank investments.
Just out of curiosity, did you have any accounts in an Icelandic bank?