Reemul
1561
That’s a load of old tripe. Greece needs help and support not being screwed over, just like Germany got after fucking a large part of europe over after WW2, people didn’t say screw you and left them to rot, which to be fair, would have been understandable.
The issue should not be lets screw them, it should be lets help them, help them fix it, make sure it doesn’t happen again and impose a deal or solution that will work.
A lot of these Greeks have done very little wrong, their culture, government and the stupidity of the EU to let them in knowing it was a mess are as more to blame and now chickens have come home to roost.
Reemul
1562
Again that’s rubbish, it’s relevant in the scheme of support given and needed without screwing the country. They could have been left to rot but were not, the people were supported and the country helped to rebuild after WW2 and most of it was self inflicted wasn’t it.
Greece needs the same sort of support not a get lost which really they are getting now, a solution that won’t work, can’t work and further down the line will make things even worse for them, it could be 10 or more years of devastation for them.
Germany needs to take it’s head out of it’s arse and have a small piece of compassion when it’s needed like has been freely given to them over the last 50 odd years or is that not reasonable?
Dude, Greece has been occupied for god knows how much time. Moreover, they went through a military dictatorship in the 1970s. And then they were on the receiving end of economic predation due to their economy being extremely weak within the EU. Yet you ignore all the past and present issues related to how Greece got into that debt except the extreme simplification that they chose to take on the debt (they didn’t “choose” in the way many high level economic decisions are not choices, but paths that countries find themselves having to go into due to not having the resources -economic, political, circumstancial) to do anything else.
It’s not shaming of Germany, it’s negating the shaming of Greece through blatant demagogy and simplification of circumstances and facts, since they didn’t do anything very special except being at the receiving end of a crisis at the wrong time, when their finances were a joke. As the finances of every other country have been at some point. Yet, historically, the solution for these situations has been a default, in name of in spirit (more common the more powerful the country), but suddenly, in the present case of Greece that’s really inmoral and should be avoided and it’s better to put several million of people through incredible hardship? Why? Fuck that.
When German politicians say Greece is irresponsible fiscally, they need to look at themselves, and how (on a lesser scale) they broke the rules of stability in the EU they themselves set up, and made it so they wouldn’t even be reprimanded.
Gorath
1564
I have no idea what kind of German “default” in 1990 you’re talking about. All I could find was that some old debt “to be paid after reunifucation” was reactivated and paid including interest over the years.
The Federal Republik of Germany was founded in May 1949. Everything before then is a complex topic. The contracts made under Allied guidance lead to the BRD taking over all foreign debt accumulated by the Reich before the war. But not the credits pressed out of the occupied countries. This was handled some other way decades ago, I’m not aware of the details.
The problem with Greece is that they’ve been living beyond their own capabilities for decades now thanks to EU subsidies. Every new government promised more and delivered more to certain groups of stakeholders (civil servants (-> more than 10% of the population!) got raise after raise, as got retired people (-> can receive more than one pension)). This money was actually consumed, so it’s gone. This system collapsed at some point.
Now Greece simply has to do what Spain, Ireland and the Baltics did: do reforms and scale down. This is going to be very painful, but there is no alternative.
I’m not even saying that the reforms the EU demands are good. I can understand that the Greek feel humiliated. But isn’t it the EU’s good right to insist on a clear understanding between both parties what will happen to their money? Isn’t it right to demand reforms to make sure a 4th package won’t be necessary? Nobody wants to feed a member country forever.
Even Mr Schäuble told Mr Tsypras that he could very well make reforms without prior agreement with the EU. He explicitly told him to “Just do it.” This would have created positive facts.
Greece would indeed have the alternative to declare bankruptcy and go back to the drachma. I find it a bit short-minded that most politicians declare this a non-option, not even worth thinking about. The situation at the moment looks similar to delayed filing of insolvency because Greece will never be able to pay back their debt.
MikeJ
1565
I’m not seeing the bright moral line between forgiveness of war reparations and forgiveness of bond debt.
Scenario 1: Germany’s government decides to make a play for continental hegemony through war. In order to maintain their sovereignty, other nations in Europe suffer horrendous casualties and incur huge costs and later use their occupying armies to demand that Germans pay compensation. Much of this war debt is later forgiven, because it is better to have an economically successful Germany than a forever-indebted, failed state.
Scenario 2: Greece’s government decides to fund a too-generous welfare state and banks in the rest of Europe freely buy their bonds. However, Greece borrows too much, and the governments in the rest of Europe incur huge costs to bailout their banks and take over the loans. They use their control of the European central bank to demand that Greeks pay compensation. This bond debt can never be forgiven, even if it results in a forever-indebted failed state because to do so would be the equivalent of rewarding bad behavior.
Did you read the article linked, the interview to an economic historian??
Which is average in the EU (and by the way, it’s not >10%, it’s 9%):
mixuk
1567
Not giving out billions of euros for free is now considered being an asshole? Really? And they did exactly that once, and it didn’t quite work out. And the truth is that Greece’s track record of managing their economy is not stellar. What’s the guarantee that it will even help? It didn’t the last time.
It won’t without debt haircut/reestructuring, which is what negotiations are really all about.
Gorath
1569
Well, first reforms, then some success, then a small haircut, repeat. The haircut is the reward for successful reforms.
Which leads again to the topic of “trust”. It has to be this way. If you cannot trust Greece anymore, you make them proof their efforts.
Again, they can always walk out the door. Then they’ll still get all the humanitarian help they need from the EU. Completely different beast.
mixuk
1570
I think the mentality is that Greece needs to demonstrate willingness and ability to deal with this, before it is appropriate to discuss debt restructing. Asking debts to be forgiven without proving that they can succeed with additional funding, is frankly asinine.
I don’t think the issue is whether there is money to give, but whether it will deal with the actual crisis.
Gorath
1571
Interesting article by a Greek author @Huffington Post:
If you’ve ever driven a car in my gorgeous birth country, you may have observed a truly fascinating phenomenon as you prepare to make a left turn: While you patiently wait in line for the left-turn light to turn green, those who arrive immediately after you at that same intersection don’t actually line up behind you. Instead, they pass you on the right, cut in front of the entire queue of cars and proudly gain a few seconds at your expense. It doesn’t matter that they cheated and trampled on your rights a tiny little bit – that’s standard practice in the busy streets of Athens, part of everyone’s daily quest to get ahead. Literally.
That tiny little daily violation of each other’s rights is perfectly symbolic of the prevailing national culture in Greece: My freedom does not end where yours begins; it extends indefinitely, unless I’m caught or stopped. It is considered perfectly normal to jump ahead of you at the traffic lights, to smoke where I’m not supposed to smoke, to cheat on my taxes, to cook the nation’s books in order to qualify for a currency union, to renege on every single election promise. Those who insist on respecting the rules are considered a little less smart, a little less “Greek” – and they’re often told they are the losers.
That’s exactly the country that became financially insolvent recently. My beautiful birth country continues to be the Eurozone’s most adolescent, rebellious, blindly self-defeating society. Greece didn’t get into all this trouble because its European partners took advantage of it. It went bankrupt because, after more than a generation as a member of a rules-driven, respect-based tight economic community, it never figured out how to play fair, how to fit in and how to build real value. It enjoyed the spoils of membership without ever trying to live up to its end of the bargain; it cheated, squandered, abused, begged for more and the cycle continued until the financial crisis suddenly brought the entire country to the brink of bankruptcy. And even then, on the strength of charm and an endless stream of fake reform promises over the past half dozen years, the money kept flowing in from its badly tricked Euro partners in the form of bailouts. And nobody was even humiliated or angry about that. Until now, of course.[…]
Exactly.
You ever been to Athens? You ever been to NYC? Compare.
Soma
1573
Re: moral issue on repaying debt
I don’t see why it is all the debtor’s fault, especially in a debt market, not your mates owing you $10. In the debt market, some people say they are paying above the market rate to get a loan, that is saying their loan is riskier. So people who CHOOSE to fund that loan are prepared to take that risk (hence demanded higher return). Like funding a startup. Angel investors demand an arm and a leg for funding startups, becauae these Angels know most of the time their investments are really money down the drain, so in the off chance a startup wins, they want to win big.
Now on specific case of Greece. The information about Greece finance is out there, they are known to be unreliable. So when the Greeks are paying above market ratw for a loan, so the institutional investors MUST have or SHOULD have known the Greeks are fritting away money. Nonetheless some debtors choose to fund the Greeks. So THEY should take some responsibility when the loan goes sour, becauae they did it (or should have done it) with eyes wide open and they are too greedy for higher returns.
What normally happens in the debt market is you do everything in your power to claw back your loans eg liquidating the debtor’s asset, reschedule debt and interest payment, and if norhing works, write off the loans.
Back to Greece. The privatisations and austerity are basically liquidation of Greek assets. Market reforms are supposed to create a stronger Greek economy so Greeks can find the money to pay back the loans. The last option is to write off the loan. Just like in a normal debt market.
Now here comes the morality play: what should the creditors do when the debtors have enormous trouble with paying back the loans? Do they say “fuck you I don’t care I want my fucking money back?” That is essentially what the Eurogroup is saying. The moral thing is to do anything BUT that.
Let’s not even talk about the moral issues involved in suggesting that a Eurozone country facing a sovereign debt crisis should just leave the Eurozone, introduce it’s own currency, devalue that currency to get rid of the debt and then rejoin the Eurozone. Of course, in real life there’s little chance of such a country rejoining the Eurozone within the 5 years suggested.
The entire “Germany did it first!” line of thought is inconsequential. At the end of the day, the entire thing is about people not wanting to pay for other countries debts.
Doesn’t matter if that’s what’s actually happening. Doesn’t matter if that’s what makes sense. What matters is that in a democracy, you can’t be seen to “waste” tax payers money on people who aren’t your tax payers, and Greece is the easiest country in the world to paint as wasting your money. Blah, blah, fixing it, blah, the politicians aren’t trying to fix it. Maybe a few, but really, they want it to go away, blow up some other time, get stuff back to “normal”. Normal means Greece looking like a modern country to Greeks, and not wasting their money on Greece to non-Greeks, not exactly compatible.
Even if it’s not a democracy, wasting your money on the wrong people can have pretty dire consequences, as the French nobles discovered.
That’s a great analogy, I just don’t think it’s in the direction you imply. If the first bailout had included debt relief and proper help to the Greek economy (the real economy, incentives to Greek companies), instead of being focused on bailing out German and French companies that held Greek assets and the rest of Greece’s creditors, we would be seeing different images from Sintagma now.
Greece has been doing austerity cuts for 5 years now, and the result has been an economic depression and a worsening of the debt crisis. The IMF acknowledged years ago that the 2010 bailout was unsustainable and just a few days ago issued a report saying that major debt relief - not “a small haircut” - is necessary for the debt to be sustainable.
The two main things that Greece hasn’t managed to do in the past 5 years is reforming it’s tax collection and reducing corruption. One of the major reasons for this is that previous governments were involved in both, so political drive for change was very limited. I think the ideal party to enact reforms like these is Syriza, since it’s an outsider and doesn’t have a history within the established political system. It would have been nice if the Eurogroup and Syriza could have agreed earlier this year to work together on that, but it’s looking more and more like a lost opportunity. Of course, even with political will these are areas that are difficult to reform and results are not likely to come soon.
In any case, regardless of the necessary level of debt relief, Germany (and Finland, the Baltic states and so on) are not willing or able to make any write-off’s, and I doubt they’re willing to entertain the IMF’s other suggestions at the scale required. In fact, I read somewhere that Germany actually needs Greece to repay to not miss it’s own SGP targets.
So, yeah, this recent deal is just yet another non-solution, designed to make it look like Greece was given yet another chance.
That’s a way to look at it. Another way to look at it is that if the Greeks had done more, German politicians could tell their people they weren’t wasting their money in Greece, so now they would desserve more help (that’s Portugal’s government tactic btw, dunno if it’s gonna work).
I’m pretty sure German politicians can sleep well at night, Sintagma is not exactly around the corner for them, if the people trying to kill the French nobles had been several countries away I’m sure the French revolution would’ve been pretty hard. :D
This. I believe the attacks and pressure against Syriza from the get go actually hampered any real possibility of reform in Greece. The Greek situation re: corruption and tax evasion is not that dissimilar to that of Spain, and I believe only a moderate outlier can do that sort of reforms. All that’s left for Greece is either life-line survival or (sadly) revolution (as opposed to reform) through the really radical parties that are winning votes as we keep discussing this.
Imagine I am an employee in Greece working however many hours, paying my taxes, and only able to withdraw €60 per day from my bank. What else can I do to repay my country’s debt?
