What's most interesting to me in this entire crisis is the moral discourse surrounding debt. More often than not, you'll hear stuff like: "Of course Greece must pay its debt", "You mean to say you can just take money and not pay?", "Why should taxpayers bail Greece out?"...
All the while, there is absolute ZERO condemnation for banking entities making risky loans. There is not even a tacit nod towards acknowledging that if banks make loans that fail, it is their loss to eat. Not a whisper about how taxpayers have been surreptitiously bailing out banks, and not Greece.
Somehow, a creditor is deemed morally superior to the debtor. What repulsive rhetoric!
Fairplay to them, the whole point of the EU project was to make us all "Europeans" and to prevent constant disastrous fighting between states and people of the continent.
Sometime in the last 10 years many people and the media in the "core" countries got all smug and uppity towards those lazy "peripherals" and so on forgetting exactly why the project was started, overnight we stopped being "Europeans" and became "undustrious Germans", "smart and holier than thou Nordics", "lying Greeks", "lazy Spanish" and in case of my own little peripheral island country "reckless Irish".
The real problem is that banks lent to Greece without doing their due diligence evaluating risk. Instead the bankers collected their fat fees for making the loans. Usually when banks make bad loans they have to write them off but when in 2010 the Troika (Euro Community, IMF, ECB) took over the Greek debt they paid 100% instead of insisting on the banks taking a "haircut" of say 50%. In truth some of the smaller members of the IMF did ask that they banks take a hit but the larger members turned that down.
The problems with the Greek economy that lenders are complaining about now, about the lowest tax collection rate in Europe, the "overly generous" retirement plans all existed before banks made the loans and fixing these problems should have been made a condition of making the loans in the first place.
It will be impossible for Greece to pay off the debt and now instead of the bank management (and the shareholders who appointed them) taking the hit for their incompetence in making the loans the taxpayers will take the hit.
The German and other taxpayers should not have a problem with Greece, but rather that Merkel and other governments decided to pay off the banks 100% instead of insisting that they take a large "haircut."
Ideally, the banks should have been made to take a "haircut" on the loans and the shareholders should have fired the management. Instead Merkel and other leaders let the banks off the hook putting the burden on the taxpayers. Now the taxpayers should fire Merkel and the leadership of other countries that OK'd the 100% payout to the banks in the next elections.
I am astouned by all the comments, who say that "Greeks were getting a shitty deal" or that the bailout terms were somewhat "unfair".
Facts are:
Greece had a spending deficit for several decades now. This spending deficit accumulated to such a big dept, that no investors were willing to lend greece any more money.
18 european countries transferred billions of euros in the last couple of years to greece, to help the country and the people. In return they had an agreement that greece would cut their spending. Greece never lived up to the agreements it made.
In the last weeks 18 european countries offered greece another bailout, where greece would receive several bilions again. In return they asked greece to finally cut spendings.
Now greece voted against this bailout. There are a lot of people in europe (myself included, I am from Germany by the way) who are not willing to transfer further billions of euroes to greece, just so that a socialist party can fullfil its "promises" and increase their deficit.
Wow the amount of ignorance in this comment is staggering. Many countries have deficits for decades. Greece’s debt ballooned once we entered the Eurozone. From the hundreds of billions given as loans less than 20% went to our economy. Most were used to bailout EU banks, namely French and German ones. Greece never lived up to the agreement? Then how on earth did our GDP fall by 30% in five years? How come unemployment in young people reached 50% if we did nothing of what was agreed?
The reason we rejected the last bailout was because it didn’t include any terms of debt relief which is the only way for the economy to recover. That and Tsipra’s incompetence paired by an equal amount of incompetence and lies from EU officials. As the saying goes, it takes two to tango.
I’m not surprised that you are from Germany (I guess you read Bild a lot). Well I’m Greek and I have news for you. In 1954 we wrote off 50% of your debt to us. And we did it despite the fact that ten years ago you’ve invaded our country and wrecked havoc doing monstrosities like murdering whole villages including kids. We did out of solidarity to help your economy grow. It’s time now you do the same. It’s either that or we default and you can kiss your 70 bn loans goodbye. And then you can return to your miserable Mark because Euro will collapse sooner or later.
The reason you're "astounded" by all these comments may have to do with the fact that you seem to rather limited awareness of the basic history regarding Greece's current situation.
For example, there's no mention at all in your remarks about the well-known shenanigans that led to Greece joining the Eurozone (and camouflaging its debts) in the first place (with the connivance of certain large foreign banks). Or of the naked arrogance and condescending, hoof-in-mouth verbiage we've been treated to by certain foreign leaders (like Angela Merkel) in recent months.
Just simply: "look at those Greeks -- they're irresponsible, they're overspending, and now they're looking for another handout", basically.
It's like everybody all of the sudden will come to the conclusion that paying their mortgages is somehow a humiliating and oppressive endeavor.
Nobody is really familiar with what the "oppressive" terms really are, but everybody feels like the Greeks are totally undeserving of paying their debts.
How does everybody feel like to have their subway fares reduced to $0, the way the Greeks had them for the past decades? I think it is just fair that New Yorkers travel at the expense of the NY State, otherwise it is totally oppressive! /sarcasm
Lots of projections in all these opinions. But for somebody that actually had to go through austerity measures, I am not happy to see others asking for a handout, with the only justification being "just because, Greek history".
EDIT: and if you downvote, at least be New Yorker enough, and justify your action. Otherwise, I would say that you just want a handout.
Except that major spending cuts during a downturn are harmful, which is what Greece has been in pretty much since austerity. Greece has problems, I admit, but austerity during a downturn only makes that worse. Party comes along and says it wants to do invest in the economy because, clearly, austerity isn't working and we won't give them a chance.
There are reports from the IMF and many other leading figures that now say austerity has had more of a negative impact than once thought. Greece has been cutting its spending or else it wouldn't have been given more money, as per the terms of the bail out. The effects of those cuts have been mediocre and, in fairness, harmful.
For me, there are several reasons why the rest of the eurozone should help Greece get back on its feet, rather than only give it more loans:
1) Due to being in the monetary union, Greece is not able to print more money, devalue its currency or other monetary policies to help its economy. Greece is paying the price of being in a monetary union, and it should either get help from the other members of that union, or it is not really a union.
2) Also, take into account that Germany and other countries are benefitting from this monetary union by being able to use a currency that is devalued due to the poorer countries, and therefore is able to increase its export.
3) Much of the bailout went into the banks of other eurozone members therefore helping them as well.
4) Do not forget that Greece if not in the eurozone would be able to default on its debts, live on the primary surplus it is now generating and when it is considered a good debtor to get loans again. Instead of having to exit the eurozone (which would be a bad sign for the whole union) and default on its debts (which would mean other countries losing money) and THEN grow, it may be beneficial to everyone to do a debt restructuring.
5) Greece is paying an interest on the loan given to them to be able to pay the older debts to the ECB and others. They are not able to pay that interest on the subsequent loans and are asking to be able to use that for economic growth to pay the older loans! In a sense, you can see that as debt restructuring, which can also happen in other ways. This way creditors will also get their money back, altough restructured or payed later.
>18 european countries transferred billions of euros in the last couple of years to greece, to help the country and the people.
help them with what? One of the achievement of modern civilization is the recognition that bankruptcy is the preferable way than debtor prison to deal with non-ability to pay debts.
>Now greece voted against this bailout. There are a lot of people in europe (myself included, I am from Germany by the way) who are not willing to transfer further billions of euroes to greece, just so that a socialist party can fullfil its "promises" and increase their deficit.
The funniest part is that people believe any western country will repay their dept. Neither Germany/France/Italy/Spain etc. will ever repay and the day when interest is the #1 spending point in every countries budgets we will maybe wake up and see that the system only benefits they few.
The Eurozone needs a vision for its future especially on the dept problem. Piketty said it correctly what we need now is a dept conference to renegotiate the dept of all EU states.
With this its possible to change the contracts of Maastricht and create new ways of financing the eurozone and implement ways of enforcing them as well.
In a few months Spain and Portugal will elect left wing parties into their government because these countries suffer under the austerity programs as well. Do we want them to exit as well?
The main reason billions of euros “transferred” to Greece were to save German and French banks. This way our politicians (european citizens' politicians) turned a private debt to public debt that just keeps growing because everyone on the globe thinks that it is unserviceable, thus refuses to lent us.
At the same time they sold us a “bad europe” story and sold you a “bad greeks” story. Most of the facts circling around (e.g Greeks average retirement age) are myths. Germany's minimum wage is double the average greek pension. Our prices in common goods don't differ much. One of the terms of our previous bailout was that people under 25 should work for 511 euros per month —that is gross salary. Can you survive on 400 euros per month (salary after deductions) in Germany? Neither can you in Greece. Now they want us to work for 300 euros a month. Do you think this is fair?
We have a common currency. The currency's main purpose is to be used for the citizens' well being. But we can't manipulate our currency anymore because the rest of the EZ members (particularly Germany) have different plans. What can we do?
You don't speak for the people of Europe. The Eurozone deals will never help Greece recover...I just assume you didn't read the proposals. Anyway it's amazing that still some German naively believes that the problem is the "spending" of money.
It's easy to see the story from that side and I think it's not "wrong", but the geopolitical story is being missed.
Greece has in a way helped the ECB by distracting economic pundits from their various other failures in the recession and recovery process. The truth is that we're all so used to being mad at the ECB that liberals are now confounded by the least bad thing they've done in a while.
It's long since known and agreed that austerity policies were detrimental to the recovery. The thing is that Europe's failure to pursue expansionary monetary policyead to both diminished inflation (which means debts have larger real value) and diminished growth in the eurozone, both of which hindered Greece et al's ability to repay debts regardless of the terms they were given. That's added to the fact that inflation couldn't happen and internal devaluation wouldn't happen as chosen by the Greek people. And internal devaluation, what happened in Ireland, is a pretty ugly process, though Ireland would be okay right now if the ECB hadn't also blown the recovery in general, methinks.
Now the issue is whether Greece gets what everyone else got. It's fair, but it isn't exactly right. And the ECB has distracted everyone from their big failures.
This is also being tossed around as proof that currency unions don't work! That's kind of a strong conclusion. I think it could work if it were well managed and smaller and less diverse. A couple of economies in similar situations with proper economic management can probably keep things together with only a small chance of an Ireland-style devaluation (and no Greece events), and in the future the charter could predict these sort of things.
That it turned into a call for political fusion of Europe is scary. I get that nationalism is bad and all, but you want to redraw the map and the culture...
The transfers to greece of the last few years were to a large extent a way of transferring private debt of german and french banks to the general EU populace.
Overall, I agree - greece needs to get its house in order and that involves making tough decisions, cutting jobs, lowering benefits, etc. They don't have the revenue to support the quality of life that they want to provide.
> 18 european countries transferred billions of euros in the last couple of years to greece, to help the country and the people. In return they had an agreement that greece would cut their spending.
OK, but the eurozone control the finances of the eurozone in a way which actively harms Greece's finances and economy.
What will happen if Germany or France have an economic downturn? We already know the answer to this: the economies of small peripheral countries are thrown under the bus to protect the major ones.
It should not be this way. If a country in the Eurozone is in trouble, they should be protected by the other countries sufficiently that they might be able to protect other countries, in turn, when the situation is reversed.
Regardless of who's at fault here, and regardless of several wrong points you've made, what people need to realize is that when attempts have been made, when whatever asked has been materialized, and yet no solution is visible, then something needs to change.
There's just this something that I can't help but add. There isn't a single country that has received more debt relief in modern history than Germany, but for a reason people seem to forget that. It's possibly because of that that you are now present. If one were to continue this would turn into some sort of debate/argument of you-did-that so I do-this. No, this isn't (again) about who's at fault, it's about realizing what is actually doable and what isn't and acting based on that. It's about not repeating a paraphrased form of history as we know it, which we so happily seem to indeed be doing.
Because even the most amateur scholar of economics is able to understand that having Greece within the eurozone has helped Germany's exports by about 80-90 billion (can't get the source now). Right now, even the UK would rather have Greece on its own currency, so that the euro will be strenghened and UK will be in a position to ease its exports.
And btw, you cant't really believe that you have given money to Greek citizens, money that otherwise would be in the pockets of german citizens. There's a thing called "banks".
Since you are German, act like it, and do some research.
I don't think anybody sees Greece as innocent of creating the debt. But.
1. The ones bailed out have been private bankers, by public funds.
2. Austerity, demanded as the cure for deficit spending, has dragged Greece into a recession and achieved exactly none of its aims - spending is still high as a proportion of GDP, because GDP has crashed.
3. The creditors have stopped demanding austerity as a policy aimed at creating a viable economy, and switched to demanding it to punish the greeks for populist leftism, and to contain the anti-austerity parties in Europe, and because they have unprofessional snits against Tsipras.
4. The only sane answer is to write off a huge swathe of the debt, as patently irrecoverable, inject capital, give a decade long holiday from repayments, and let the Greek economy recover.
5. Only a NO vote could lead to this being on the table.
You forget that their are two Greeces, just like there are two Europes and increasingly, two Americas.
Your comments are entirely reasonable when it comes to the rent-seeking corrupt upper classes in Greece who have run the country aground over 3 decades, costing both the European taxpayer and the honest working class Greek (who have voted NO).
Your comments are unreasonable when taking into account the fact that the bailouts so far have overwhelmingly supported the existing wealthy (Greek and German) at the expense of the middle and lower classes (again, Greek and German (taxpayers)), who cannot be blamed for Greece's existing travails.
The underlying issue here is that all European (and most American) banks are bankrupt, and that in order to support them we cannot let any of their assets go bad. Thus we must bailout their debtors (transfer of bad assets at inflated prices from the rich to the taxpayer). Watch this space. There is much more of this to come, and not only in Greece. It's what QE is all about.
We're witnessing the weakest domino fall but there are many in the chain, and in all cases, pretending that people should "just pay their debts" is simplistic and ignorant of the unfair transfer of wealth happening before our eyes.
Terms for new loans should of course include measures for improving the economy, but austerity never will. The last few years have shown (again) that austerity will only ever contract an already stressed economy.
A reasonable deal should be a stimulating one. Not one with just spending cuts. A major haircut of existing debt, and enough new money flowing in to actually stimulate growth.
There are no good options here. It's not like Greece will return to the Drachma and become a picturesque olive exporting tourist attraction. What will happen is that the following decade of poor economy will see extremists and Putin run the country. From a democratic and security perspective it's likely the lesser evil to just support the Greek economy. Those of us in the rest of Europe (not least in Germany) have made good money from having an artificially low interest rate for years, at the expense of the PIIGS countries.
"Transfer further billions of euroes to Greece" is precisely what the troika wanted to do, in exchange for draconian austerity measures like those of the last few years, which caused a 25% drop in GDP and a rise of the debt/GDP ratio from 105% to 175% (http://www.tradingeconomics.com/greece/government-debt-to-gd...).
The IMF themselves have said that Greek debt is unsustainable and a significant haircut is needed (although their head Lagarde ignores their analysts). Keeping with the dysfunctional austerity plans would only make the debt ball, and the eventual inevitable default, larger and larger. So even from a purely egoistic point of view, you should support the OXI.
If you feel that "Greece" must be punished for fiscal irresponsibility with chaos and starvation, then while we're still bundling people into convenient country packages, why shouldn't "the USA" be bombed and occupied?
Oh, those wars and massacres weren't your decisions? Then, you think the average Greek took those Eurozone loans and bailouts themselves?
I understand your position, and the Greeks are truly in a hole that they have dug themselves, but do you think that this latest package would have helped them?
It seems to me, as an outsider, that the political problems and ESPECIALLY the tax collection problems need to be addressed for any permanent change. Perhaps rather than austerity measures, the EU should have targeted the Greek public directly and tied the bailout funds to the citizens willingness to fund their own government.
This is nothing to with fairness. Greece need debt relief or it will collapse, and the creditors will still lose out. You're no doubt familiar with the concept of drawing a line in the sand and making decisions for the future common good, as happened with Germany's debts after WW2.
The potential long term political and financial cost of abandoning Greece far outstrip the 70B it owes Germany. It will leave the European project in tatters, despite what Merkel assures us.
It's a bit more complex than the Greek's have spent too much money and expecting Germans to bail them out. This situation was an inevitability [1] given the Eurozone's make up and the political classes being in denial has worsened it.
At the risk of being a moralizing bore, may I remind everybody that "Germany", "Greece" etc. are not people, and that people are not countries? I am surprised by the national coloring, however faint, of some comments here and there https://news.ycombinator.com/item?id=9835433. "I am a German" or "Greek here" should have no relevance to the ideas put forth. "Your money" and "your banks" are not really "my money" and "my banks" once I have paid the tax and don't own the bank!
The theory of complex systems reminds us that aggregates can have properties that are not traceable to any individuals themselves. Game theory tells us that incentives and constraints can get so messed up that developments take on an eigendynamic which was nobody's intent nor interest.
Please, be civilized and don't let yourselves be infected by nationalistic passions.
I'm astounded at the fight here between pro and contra austerity. It's not about to save or not to save - it's about where to save. Greece could (have) bailed out itself with just a semi-decent stab against rampant corruption, without endangering the common people at all. Switzerland offered to collect billions of Euros of Greek tax offenders on Swiss accounts on their own. The List with the names "disappeared", and some years and dozens of questions later, reappeared with half the names removed. Switzerland's still waiting for Greece to make a move. While the last weeks were all about the 1.5 bil EUR rate, Greeks moved 3 bil EUR out of the country every fricking day. Greece infamously doesn't even have a register who owns which property and real estate.
Greece is still in the top 5 state: of military spending per capita, and the list goes on.
No matter how much money you pour into this banana republic, it's just going to evaporate on the way there.
Still, their best option is probably where they are going already: a proper default and return to a weaker currency, just as it helped iceland.
The Greeks were getting a shitty deal, and knew they were getting a shitty deal. Good for them for decisively telling the Germans to get stuffed (who conveniently forget about their WWII related debts being forgiven).
Iceland demonstrated that it's possible to say no to perpetual debt peonage and go on to do well. If Greece has to leave the Euro, so be it. The Euro made sense as the Deutschfranc, but that's about it.
A Greek friend once told me that, in Greece, "only idiots pay 100% of the taxes they owe". His perception of his fellow Greeks' attitude towards taxes wasn't wrong. In Greece, tax evasion is endemic.
It's hard to be surprised by the financial troubles of a government that is so utterly feckless when it comes to collecting taxes that members of it's own finance ministry are suspected of hiding their funds abroad. It is also hard to have sympathy for Greeks, most of whom apparently view tax evasion as a virtue.
Now that they've burned Germany and the EU, where is Greece going to get the money it can't collect from it's own citizens?
I have also had a Greek friend tell me, well before this crisis started, that tax avoidance was almost a national sport in Greece, and there was a social stigma to paying all your taxes. He said it with a mixture of pride and sadness.
OK let me say this as clear as I can after reading most of the comments. Yes we have a dysfunctional economy. We have a lot of red tape and corruption going on in the public sector. We spend a lot of money in pensions and salaries, more than any EU country. We have an inefficient to say the least tax collecting mechanism. And many other problems.
But. You expect us to change all that in just five years. This is fucking impossible guys. Please, get a grip of reality. Countries don’t just change in five years. And then you get disappointed and become nihilists arguing that we haven’t implemented any reforms. All the effort Greece has done in the last five years, moving from a 14% deficit to 1% surplus doesn’t get enough credit. All we get is been constantly hammered for our failures. No wonder the NO vote took 60%. People here are so fucking tired. Six years of recession and we have the Troika constantly down on our throats without cutting us any slack. If EU leaders had shown some flexibility things would have turned up a lot better for everyone. We could extend the maturity of some loans, achieve a sustainable surplus and start repaying. Instead we’re facing the nuclear option of defaulting on most of our debt. How does that help anyone?
And if you think Tsipras is radical wait until Le Pen wins the French presidency. She has an open agenda of exiting the euro. Then we can talk what compromises Germans are willing to do.
I have been collecting links for days now, here are a few. The picture is really not pretty and while you can place some blame on the Greeks, for the last five years at least it would seem they are not the one to blame.
I think one of the core problems in the whole euro zone disaster was the ability of previous governments with low credit ratings suddenly going from paying 8-10% on their bonds to 2-3%. Basically the lenders completely ignored historic risk, counting on the richer euro countries to bail out any country that abused the cheap credit.
I think we are seeing the effect of that policy. For the people who are demonizing the Greeks I would like to remind them that it takes two to party.
The drunk sailor who wastes all his money, and the fool who lends him more money, expecting to be repaid.
Either there is a full currency union with the transfers (meaning more and more federal like rule) or we will get some sort of collapse of the euro zone at some point in the future.
"Europe exemplifies a situation unfavourable to a common currency. It is composed of separate nations, speaking different languages, with different customs, and having citizens feeling far greater loyalty and attachment to their own country than to a common market or to the idea of Europe."
I know I will be treated as an extreme futurist, but we live in this little tiny spec called Earth and we're all in this together. The idea that there are laws about environmental protection in one country and none in others, calls to the idea that we should just have a single unifying country called "world" and keep the current separation only for cultural reasons.
The EU was a step in this direction but it seems that yet again centralization of power ended up making things worst. So from one end I'm happy that Greece gets to go its own way and escape centralization that forced it into a shitty situation. On the other hand though, this breaks the dream I had of building a system which would allow better collaboration between nations, and most of all, better understanding of the real issues that we're facing as a species (overpopulation, climate change, food scarcity, etc..).
Ahh, the nytimes. If there are two biases the NYT is guilty of, then its being stubbornly progressive and subconsciously anti-German.
Take this for example: "... financial carpet bombing. The European Central Bank severely limited financial assistance to Greek banks, ... making it hard for retirees ..."
Calling it "financial assistance" helps in framing it as an assault on a guaranteed right the Greek Banks have. Especially if it's something that was "severly limited" by that evil Frankfurters.
I know perspectives fluctuate quite heavily from country to country. It is actually the reason why I read as broad as possible (including NYT) to get to know a possible different viewpoint on pending issues.
But the american progressive view on the Greek-Bailout-topic is so much flawed that I might call it derailed. It is not simply flawed by ideology but that ideology also decides what details are to be amplified over the distance-caused resistance. And more importantly, that ideology decides what details are not to be amplified.
The ECB is still lending money, it is just not legally allowed to issue new credits (credits are what those "financial assistances" really were) to a benkrupt country. And the whole american-progressive story of Germany/Rich-Europe enslaving the poor Greeks is just as stupid as the european-progressive story of America enslaving the third world. The world is not that simple to just blame everything on the fat cats.
And actually those uninformed progressive world-views (wether it be european progressives judging american foreign policies toward third parties or vice-versa) bear something deeply anti-progressive in them: framing a whole nation evil, accepting illiberal leaderships as long as they are anti-<evilnation> and often calling for harsh intervention.
Or in the case of the Greferendum: Making it a progressive virtue, that nation A's tax €s utilization ought to be decided by nation B's voters.
I'm not a financial expert and can't speak to what's true or not, but here's [1] a short interview with Swedens former Tax Agency chief who was apparently part of a small task force to evaluate Greece's tax collection and aid in its improvement.
He claims that removing corruption is not the only problem, and that the rest of the EU are underestimating the lack of tax collection competence with regards to modern methods and processes, as well as the powerlessness and political isolation of the Greek tax chief, making his/her job impossible - e.g. by not even being allowed to pick his/her own employees.
Again, I don't know what's true or not, just providing the opinion of a former Tax Agency chief of a country that collects a lot of taxes and who apparently had the opportunity to take a closer look at Greece's tax collection.
Google Translate does a decent job with the article translation.
An analogy I used with my wife trying to explain / argue Greece. It struck a chord.
Fiscal Union:
Would you lend me 10 million dollars?
No
If I was Warren Buffets adopted son (!) would you lend it to me?
Maybe.
Well that's how the rest of the world's investors saw Greece. Despite all the protests that it was separate debt no one believed them. And Greece is about to prove them right.
Debt restructuring (ie fiscal Union "just this once")
If I am having to spend five months negotiating with the Bank Manager to get an overdraft that will let me pay him the next months mortgage payments with that overdraft, then we should stop talking about the cuts I need to afford the overdraft and look at how to deal with the mortgage.
I don't like the situation Europe is in - but it was clear in the 1970s where this was all going - just because it is not politically palatable right now, Euro zone countries are going to have to become responsible for each other's debts, and that means negotiating on fiscal policies across Europe.
Stuff TIPP - that's a serious agreement to hammer out. And don't do it in secret.
After 5 years of "rescuing" that did lead the country into ruins, no wonder!
It is a widespread knowledge (at least the US has it), that forceful saving in a crisis, will deepen the crisis.
As a German, I know that Germany got a dept-cut after the second World war, that the German nation could rise from misery. We should have allowed the Greek the same luxury.
Instead, the governments cared only for the banks.
Back in 2012 it was determined that Greek debt was unsustainable, and a large haircut was needed. But because the EU governments were unable/unwilling to accept any haircut on their holdings of Greek debt, that write down was borne entirely by private sector lenders.
> Instead, the governments cared only for the banks.
The banks lost 75%+ of their loans. The governments lost 0%. There's no way you can realistically spin that as a bail out of the banks.
[+] [-] littletimmy|10 years ago|reply
All the while, there is absolute ZERO condemnation for banking entities making risky loans. There is not even a tacit nod towards acknowledging that if banks make loans that fail, it is their loss to eat. Not a whisper about how taxpayers have been surreptitiously bailing out banks, and not Greece.
Somehow, a creditor is deemed morally superior to the debtor. What repulsive rhetoric!
[+] [-] yc1010|10 years ago|reply
Sometime in the last 10 years many people and the media in the "core" countries got all smug and uppity towards those lazy "peripherals" and so on forgetting exactly why the project was started, overnight we stopped being "Europeans" and became "undustrious Germans", "smart and holier than thou Nordics", "lying Greeks", "lazy Spanish" and in case of my own little peripheral island country "reckless Irish".
Yeh :(
[+] [-] davidf18|10 years ago|reply
The problems with the Greek economy that lenders are complaining about now, about the lowest tax collection rate in Europe, the "overly generous" retirement plans all existed before banks made the loans and fixing these problems should have been made a condition of making the loans in the first place.
It will be impossible for Greece to pay off the debt and now instead of the bank management (and the shareholders who appointed them) taking the hit for their incompetence in making the loans the taxpayers will take the hit.
The German and other taxpayers should not have a problem with Greece, but rather that Merkel and other governments decided to pay off the banks 100% instead of insisting that they take a large "haircut."
Ideally, the banks should have been made to take a "haircut" on the loans and the shareholders should have fired the management. Instead Merkel and other leaders let the banks off the hook putting the burden on the taxpayers. Now the taxpayers should fire Merkel and the leadership of other countries that OK'd the 100% payout to the banks in the next elections.
[+] [-] paskster|10 years ago|reply
Facts are: Greece had a spending deficit for several decades now. This spending deficit accumulated to such a big dept, that no investors were willing to lend greece any more money. 18 european countries transferred billions of euros in the last couple of years to greece, to help the country and the people. In return they had an agreement that greece would cut their spending. Greece never lived up to the agreements it made. In the last weeks 18 european countries offered greece another bailout, where greece would receive several bilions again. In return they asked greece to finally cut spendings.
Now greece voted against this bailout. There are a lot of people in europe (myself included, I am from Germany by the way) who are not willing to transfer further billions of euroes to greece, just so that a socialist party can fullfil its "promises" and increase their deficit.
[+] [-] atmosx|10 years ago|reply
Your money went mainly to your Banks, via Greece.
Concluding, I'd rather go back to the Drachma and blow the Euro project than die starving becuase it suits your country's political class.
ps. Even if Greece doesn't put the last nail on the coffin of the EU-project, I'm 100% sure that the UK will.
[+] [-] elorant|10 years ago|reply
The reason we rejected the last bailout was because it didn’t include any terms of debt relief which is the only way for the economy to recover. That and Tsipra’s incompetence paired by an equal amount of incompetence and lies from EU officials. As the saying goes, it takes two to tango.
I’m not surprised that you are from Germany (I guess you read Bild a lot). Well I’m Greek and I have news for you. In 1954 we wrote off 50% of your debt to us. And we did it despite the fact that ten years ago you’ve invaded our country and wrecked havoc doing monstrosities like murdering whole villages including kids. We did out of solidarity to help your economy grow. It’s time now you do the same. It’s either that or we default and you can kiss your 70 bn loans goodbye. And then you can return to your miserable Mark because Euro will collapse sooner or later.
[+] [-] liebknecht|10 years ago|reply
For example, there's no mention at all in your remarks about the well-known shenanigans that led to Greece joining the Eurozone (and camouflaging its debts) in the first place (with the connivance of certain large foreign banks). Or of the naked arrogance and condescending, hoof-in-mouth verbiage we've been treated to by certain foreign leaders (like Angela Merkel) in recent months.
Just simply: "look at those Greeks -- they're irresponsible, they're overspending, and now they're looking for another handout", basically.
[+] [-] mnglkhn2|10 years ago|reply
Lots of projections in all these opinions. But for somebody that actually had to go through austerity measures, I am not happy to see others asking for a handout, with the only justification being "just because, Greek history".
EDIT: and if you downvote, at least be New Yorker enough, and justify your action. Otherwise, I would say that you just want a handout.
[+] [-] jwdunne|10 years ago|reply
There are reports from the IMF and many other leading figures that now say austerity has had more of a negative impact than once thought. Greece has been cutting its spending or else it wouldn't have been given more money, as per the terms of the bail out. The effects of those cuts have been mediocre and, in fairness, harmful.
http://www.theguardian.com/business/2014/feb/26/imf-inequali... http://www.theguardian.com/business/2015/jun/15/focus-on-low... http://www.washingtonpost.com/blogs/wonkblog/wp/2012/10/12/i... http://www.washingtonpost.com/blogs/wonkblog/wp/2013/04/18/a... http://www.bbc.co.uk/news/magazine-22223190 http://www.bloomberg.com/bw/articles/2013-04-18/faq-reinhart...
[+] [-] abrezas|10 years ago|reply
1) Due to being in the monetary union, Greece is not able to print more money, devalue its currency or other monetary policies to help its economy. Greece is paying the price of being in a monetary union, and it should either get help from the other members of that union, or it is not really a union.
2) Also, take into account that Germany and other countries are benefitting from this monetary union by being able to use a currency that is devalued due to the poorer countries, and therefore is able to increase its export.
3) Much of the bailout went into the banks of other eurozone members therefore helping them as well.
4) Do not forget that Greece if not in the eurozone would be able to default on its debts, live on the primary surplus it is now generating and when it is considered a good debtor to get loans again. Instead of having to exit the eurozone (which would be a bad sign for the whole union) and default on its debts (which would mean other countries losing money) and THEN grow, it may be beneficial to everyone to do a debt restructuring.
5) Greece is paying an interest on the loan given to them to be able to pay the older debts to the ECB and others. They are not able to pay that interest on the subsequent loans and are asking to be able to use that for economic growth to pay the older loans! In a sense, you can see that as debt restructuring, which can also happen in other ways. This way creditors will also get their money back, altough restructured or payed later.
[+] [-] trhway|10 years ago|reply
help them with what? One of the achievement of modern civilization is the recognition that bankruptcy is the preferable way than debtor prison to deal with non-ability to pay debts.
>Now greece voted against this bailout. There are a lot of people in europe (myself included, I am from Germany by the way) who are not willing to transfer further billions of euroes to greece, just so that a socialist party can fullfil its "promises" and increase their deficit.
if you noticed, Greeks have just agreed with you.
[+] [-] natrius|10 years ago|reply
https://www.vox.com/2015/6/30/8870257/greek-crisis-myth-aust...
[+] [-] spdy|10 years ago|reply
The Eurozone needs a vision for its future especially on the dept problem. Piketty said it correctly what we need now is a dept conference to renegotiate the dept of all EU states.
With this its possible to change the contracts of Maastricht and create new ways of financing the eurozone and implement ways of enforcing them as well.
In a few months Spain and Portugal will elect left wing parties into their government because these countries suffer under the austerity programs as well. Do we want them to exit as well?
[+] [-] andmarios|10 years ago|reply
At the same time they sold us a “bad europe” story and sold you a “bad greeks” story. Most of the facts circling around (e.g Greeks average retirement age) are myths. Germany's minimum wage is double the average greek pension. Our prices in common goods don't differ much. One of the terms of our previous bailout was that people under 25 should work for 511 euros per month —that is gross salary. Can you survive on 400 euros per month (salary after deductions) in Germany? Neither can you in Greece. Now they want us to work for 300 euros a month. Do you think this is fair?
We have a common currency. The currency's main purpose is to be used for the citizens' well being. But we can't manipulate our currency anymore because the rest of the EZ members (particularly Germany) have different plans. What can we do?
[+] [-] rjurney|10 years ago|reply
[+] [-] agounaris|10 years ago|reply
[+] [-] scythe|10 years ago|reply
Greece has in a way helped the ECB by distracting economic pundits from their various other failures in the recession and recovery process. The truth is that we're all so used to being mad at the ECB that liberals are now confounded by the least bad thing they've done in a while.
It's long since known and agreed that austerity policies were detrimental to the recovery. The thing is that Europe's failure to pursue expansionary monetary policyead to both diminished inflation (which means debts have larger real value) and diminished growth in the eurozone, both of which hindered Greece et al's ability to repay debts regardless of the terms they were given. That's added to the fact that inflation couldn't happen and internal devaluation wouldn't happen as chosen by the Greek people. And internal devaluation, what happened in Ireland, is a pretty ugly process, though Ireland would be okay right now if the ECB hadn't also blown the recovery in general, methinks.
Now the issue is whether Greece gets what everyone else got. It's fair, but it isn't exactly right. And the ECB has distracted everyone from their big failures.
This is also being tossed around as proof that currency unions don't work! That's kind of a strong conclusion. I think it could work if it were well managed and smaller and less diverse. A couple of economies in similar situations with proper economic management can probably keep things together with only a small chance of an Ireland-style devaluation (and no Greece events), and in the future the charter could predict these sort of things.
That it turned into a call for political fusion of Europe is scary. I get that nationalism is bad and all, but you want to redraw the map and the culture...
...so you can keep the money.
[+] [-] dantheman|10 years ago|reply
Overall, I agree - greece needs to get its house in order and that involves making tough decisions, cutting jobs, lowering benefits, etc. They don't have the revenue to support the quality of life that they want to provide.
[+] [-] learnstats2|10 years ago|reply
OK, but the eurozone control the finances of the eurozone in a way which actively harms Greece's finances and economy.
What will happen if Germany or France have an economic downturn? We already know the answer to this: the economies of small peripheral countries are thrown under the bus to protect the major ones.
It should not be this way. If a country in the Eurozone is in trouble, they should be protected by the other countries sufficiently that they might be able to protect other countries, in turn, when the situation is reversed.
[+] [-] rmdi|10 years ago|reply
There's just this something that I can't help but add. There isn't a single country that has received more debt relief in modern history than Germany, but for a reason people seem to forget that. It's possibly because of that that you are now present. If one were to continue this would turn into some sort of debate/argument of you-did-that so I do-this. No, this isn't (again) about who's at fault, it's about realizing what is actually doable and what isn't and acting based on that. It's about not repeating a paraphrased form of history as we know it, which we so happily seem to indeed be doing.
Edit: Learning how to separate paragraphs.
[+] [-] seingen5|10 years ago|reply
You're not into the economy thing, are you?
Because even the most amateur scholar of economics is able to understand that having Greece within the eurozone has helped Germany's exports by about 80-90 billion (can't get the source now). Right now, even the UK would rather have Greece on its own currency, so that the euro will be strenghened and UK will be in a position to ease its exports.
And btw, you cant't really believe that you have given money to Greek citizens, money that otherwise would be in the pockets of german citizens. There's a thing called "banks".
Since you are German, act like it, and do some research.
[+] [-] JulianMorrison|10 years ago|reply
1. The ones bailed out have been private bankers, by public funds.
2. Austerity, demanded as the cure for deficit spending, has dragged Greece into a recession and achieved exactly none of its aims - spending is still high as a proportion of GDP, because GDP has crashed.
3. The creditors have stopped demanding austerity as a policy aimed at creating a viable economy, and switched to demanding it to punish the greeks for populist leftism, and to contain the anti-austerity parties in Europe, and because they have unprofessional snits against Tsipras.
4. The only sane answer is to write off a huge swathe of the debt, as patently irrecoverable, inject capital, give a decade long holiday from repayments, and let the Greek economy recover.
5. Only a NO vote could lead to this being on the table.
[+] [-] vegabook|10 years ago|reply
Your comments are entirely reasonable when it comes to the rent-seeking corrupt upper classes in Greece who have run the country aground over 3 decades, costing both the European taxpayer and the honest working class Greek (who have voted NO).
Your comments are unreasonable when taking into account the fact that the bailouts so far have overwhelmingly supported the existing wealthy (Greek and German) at the expense of the middle and lower classes (again, Greek and German (taxpayers)), who cannot be blamed for Greece's existing travails.
The underlying issue here is that all European (and most American) banks are bankrupt, and that in order to support them we cannot let any of their assets go bad. Thus we must bailout their debtors (transfer of bad assets at inflated prices from the rich to the taxpayer). Watch this space. There is much more of this to come, and not only in Greece. It's what QE is all about.
We're witnessing the weakest domino fall but there are many in the chain, and in all cases, pretending that people should "just pay their debts" is simplistic and ignorant of the unfair transfer of wealth happening before our eyes.
Back to Mesopotamia: http://www.axel-troost.de/serveDocument.php?id=1967&file=5/5...
[+] [-] alkonaut|10 years ago|reply
A reasonable deal should be a stimulating one. Not one with just spending cuts. A major haircut of existing debt, and enough new money flowing in to actually stimulate growth.
There are no good options here. It's not like Greece will return to the Drachma and become a picturesque olive exporting tourist attraction. What will happen is that the following decade of poor economy will see extremists and Putin run the country. From a democratic and security perspective it's likely the lesser evil to just support the Greek economy. Those of us in the rest of Europe (not least in Germany) have made good money from having an artificially low interest rate for years, at the expense of the PIIGS countries.
[+] [-] Al-Khwarizmi|10 years ago|reply
The IMF themselves have said that Greek debt is unsustainable and a significant haircut is needed (although their head Lagarde ignores their analysts). Keeping with the dysfunctional austerity plans would only make the debt ball, and the eventual inevitable default, larger and larger. So even from a purely egoistic point of view, you should support the OXI.
[+] [-] icebraining|10 years ago|reply
[+] [-] ghostunit|10 years ago|reply
Oh, those wars and massacres weren't your decisions? Then, you think the average Greek took those Eurozone loans and bailouts themselves?
[+] [-] Kapura|10 years ago|reply
It seems to me, as an outsider, that the political problems and ESPECIALLY the tax collection problems need to be addressed for any permanent change. Perhaps rather than austerity measures, the EU should have targeted the Greek public directly and tied the bailout funds to the citizens willingness to fund their own government.
[+] [-] MrScruff|10 years ago|reply
The potential long term political and financial cost of abandoning Greece far outstrip the 70B it owes Germany. It will leave the European project in tatters, despite what Merkel assures us.
[+] [-] mschuster91|10 years ago|reply
That's a legend. The money went to the banks and to various arms companies.
[+] [-] dia80|10 years ago|reply
[1] http://blog.mpettis.com/2015/02/syriza-and-the-french-indemn...
[+] [-] hal9000xp|10 years ago|reply
https://www.youtube.com/watch?v=C8xAXJx9WJ8
I kept this in my bookmarks more than a year.
Euro is failed project by its core because monetary policy without fiscal polity doesn't work.
[+] [-] HSO|10 years ago|reply
The theory of complex systems reminds us that aggregates can have properties that are not traceable to any individuals themselves. Game theory tells us that incentives and constraints can get so messed up that developments take on an eigendynamic which was nobody's intent nor interest.
Please, be civilized and don't let yourselves be infected by nationalistic passions.
Your moralizing nanny...
(No seriously, I am starting to get concerned.)
[+] [-] endymi0n|10 years ago|reply
Greece is still in the top 5 state: of military spending per capita, and the list goes on.
No matter how much money you pour into this banana republic, it's just going to evaporate on the way there.
Still, their best option is probably where they are going already: a proper default and return to a weaker currency, just as it helped iceland.
http://netrightdaily.com/2015/06/icelandic-default-could-sav...
Still won't help, if they don't tackle corruption as well.
[+] [-] brianmcconnell|10 years ago|reply
Iceland demonstrated that it's possible to say no to perpetual debt peonage and go on to do well. If Greece has to leave the Euro, so be it. The Euro made sense as the Deutschfranc, but that's about it.
[+] [-] beloch|10 years ago|reply
https://en.wikipedia.org/wiki/Tax_evasion_and_corruption_in_...
It's hard to be surprised by the financial troubles of a government that is so utterly feckless when it comes to collecting taxes that members of it's own finance ministry are suspected of hiding their funds abroad. It is also hard to have sympathy for Greeks, most of whom apparently view tax evasion as a virtue.
Now that they've burned Germany and the EU, where is Greece going to get the money it can't collect from it's own citizens?
[+] [-] vacri|10 years ago|reply
[+] [-] elorant|10 years ago|reply
But. You expect us to change all that in just five years. This is fucking impossible guys. Please, get a grip of reality. Countries don’t just change in five years. And then you get disappointed and become nihilists arguing that we haven’t implemented any reforms. All the effort Greece has done in the last five years, moving from a 14% deficit to 1% surplus doesn’t get enough credit. All we get is been constantly hammered for our failures. No wonder the NO vote took 60%. People here are so fucking tired. Six years of recession and we have the Troika constantly down on our throats without cutting us any slack. If EU leaders had shown some flexibility things would have turned up a lot better for everyone. We could extend the maturity of some loans, achieve a sustainable surplus and start repaying. Instead we’re facing the nuclear option of defaulting on most of our debt. How does that help anyone?
And if you think Tsipras is radical wait until Le Pen wins the French presidency. She has an open agenda of exiting the euro. Then we can talk what compromises Germans are willing to do.
[+] [-] chx|10 years ago|reply
if you want a very simplified slightly hilarious explanation, https://www.reddit.com/r/OutOfTheLoop/comments/3bhwij/what_i... this will do.
https://twitter.com/cstross/status/617775611642257408 http://faculty.chicagobooth.edu/anil.kashyap/research/papers... http://www.truth-out.org/news/item/26112-an-economic-hit-man... http://www.interfluidity.com/v2/5965.html https://twitter.com/AP/status/616622654234169344 http://www.irishtimes.com/opinion/who-will-dare-say-out-loud... http://www.forbes.com/sites/niallmccarthy/2015/03/13/contrar... http://www.theguardian.com/business/2015/jun/30/greek-debt-t... https://fsaraceno.wordpress.com/2015/06/27/its-the-politics-...
[+] [-] christkv|10 years ago|reply
I think we are seeing the effect of that policy. For the people who are demonizing the Greeks I would like to remind them that it takes two to party.
The drunk sailor who wastes all his money, and the fool who lends him more money, expecting to be repaid.
Either there is a full currency union with the transfers (meaning more and more federal like rule) or we will get some sort of collapse of the euro zone at some point in the future.
[+] [-] vmorgulis|10 years ago|reply
Milton Friedman, The Times, November 19, 1997
https://en.wikipedia.org/wiki/Optimum_currency_area
[+] [-] dageshi|10 years ago|reply
[+] [-] sktrdie|10 years ago|reply
The EU was a step in this direction but it seems that yet again centralization of power ended up making things worst. So from one end I'm happy that Greece gets to go its own way and escape centralization that forced it into a shitty situation. On the other hand though, this breaks the dream I had of building a system which would allow better collaboration between nations, and most of all, better understanding of the real issues that we're facing as a species (overpopulation, climate change, food scarcity, etc..).
[+] [-] woodpanel|10 years ago|reply
Take this for example: "... financial carpet bombing. The European Central Bank severely limited financial assistance to Greek banks, ... making it hard for retirees ..."
Calling it "financial assistance" helps in framing it as an assault on a guaranteed right the Greek Banks have. Especially if it's something that was "severly limited" by that evil Frankfurters.
I know perspectives fluctuate quite heavily from country to country. It is actually the reason why I read as broad as possible (including NYT) to get to know a possible different viewpoint on pending issues.
But the american progressive view on the Greek-Bailout-topic is so much flawed that I might call it derailed. It is not simply flawed by ideology but that ideology also decides what details are to be amplified over the distance-caused resistance. And more importantly, that ideology decides what details are not to be amplified.
The ECB is still lending money, it is just not legally allowed to issue new credits (credits are what those "financial assistances" really were) to a benkrupt country. And the whole american-progressive story of Germany/Rich-Europe enslaving the poor Greeks is just as stupid as the european-progressive story of America enslaving the third world. The world is not that simple to just blame everything on the fat cats.
And actually those uninformed progressive world-views (wether it be european progressives judging american foreign policies toward third parties or vice-versa) bear something deeply anti-progressive in them: framing a whole nation evil, accepting illiberal leaderships as long as they are anti-<evilnation> and often calling for harsh intervention.
Or in the case of the Greferendum: Making it a progressive virtue, that nation A's tax €s utilization ought to be decided by nation B's voters.
[+] [-] parley|10 years ago|reply
He claims that removing corruption is not the only problem, and that the rest of the EU are underestimating the lack of tax collection competence with regards to modern methods and processes, as well as the powerlessness and political isolation of the Greek tax chief, making his/her job impossible - e.g. by not even being allowed to pick his/her own employees.
Again, I don't know what's true or not, just providing the opinion of a former Tax Agency chief of a country that collects a lot of taxes and who apparently had the opportunity to take a closer look at Greece's tax collection.
Google Translate does a decent job with the article translation.
[1] https://translate.google.com/translate?sl=sv&tl=en&js=y&prev...
EDIT: Grammar.
[+] [-] lifeisstillgood|10 years ago|reply
Fiscal Union:
Well that's how the rest of the world's investors saw Greece. Despite all the protests that it was separate debt no one believed them. And Greece is about to prove them right.Debt restructuring (ie fiscal Union "just this once")
I don't like the situation Europe is in - but it was clear in the 1970s where this was all going - just because it is not politically palatable right now, Euro zone countries are going to have to become responsible for each other's debts, and that means negotiating on fiscal policies across Europe.Stuff TIPP - that's a serious agreement to hammer out. And don't do it in secret.
[+] [-] imaginenore|10 years ago|reply
[+] [-] PythonicAlpha|10 years ago|reply
It is a widespread knowledge (at least the US has it), that forceful saving in a crisis, will deepen the crisis.
As a German, I know that Germany got a dept-cut after the second World war, that the German nation could rise from misery. We should have allowed the Greek the same luxury.
Instead, the governments cared only for the banks.
[+] [-] Lazare|10 years ago|reply
Back in 2012 it was determined that Greek debt was unsustainable, and a large haircut was needed. But because the EU governments were unable/unwilling to accept any haircut on their holdings of Greek debt, that write down was borne entirely by private sector lenders.
> Instead, the governments cared only for the banks.
The banks lost 75%+ of their loans. The governments lost 0%. There's no way you can realistically spin that as a bail out of the banks.
[+] [-] peterfirefly|10 years ago|reply