The fall and fall of Greece
May 18th, 2012 at 1:00 pm by David FarrarMy Herald column is on Greece, after I asked on Twitter and Facebook what was the biggest issue of the week (as domestically nothing too major happened). An extract:
Currently there is no Government in Greece, as they head off to the polls for the second time in as many months. The Acting Prime Minister is Judge Panagiotis Pikrammenos. Ironically one of his more famous judgements in Greece was that it is illegal to imprison people for debt. The entire country is facing debtor prison.
And what may happen:
There are three possibilities for the next election. The first is that SYRIZA gains even more support and forms a Government that will then default on its debt. The second is that ND and PASOK gain enough support to clearly govern and continue the austerity programme. The third is another hung Parliament and a third set of elections.
No matter what happens, there is a reasonable chance that Greece will end in default (technically it has been already). Some, such as the new executive director of the NZ Initiative Dr Oliver Hartwich, say it is a matter of when, not if. The Bank of England has already started contingency plans for Greece departing the Euro and possibly the EU.
And what could this mean for Greece:
The Euro is likely to decline in value as Greece, and possible Portugal and Ireland, revert to their old currencies. This means that exports to Europe from New Zealand are likely to decline. In Greece it will be even worse. Their new/old currency of the drachma will probably be worth half a Euro, which means high inflation and a big drop in the standard of living. One expert predicts interest rates for home owners and businesses will double, and a lack of credit may lead to shortages in basic commodities like oil, medicine and food.
I don’t think one can even rule out a military coup if this happens, and you get widespread rioting. I hope I am wrong, but time will tell.
Related posts:
- Let Greece leave the Euro
- The situation in Greece
- Editorials 26 February 2010
- Europe not getting better anytime soon
May 18th, 2012 at 1:04 pm
You fail to mention that with Greece very cheap for tourism there will be a boom in tourists though I guess it will be all those cheapskate backpackers who spend nothing.
Vote:May 18th, 2012 at 1:12 pm
And Spain is increasingly concerning – their 4th largest bank, Bankia, is having a run on funds, and they are close to 25% unemployment. Things in NZ are positively rosy!
Vote:May 18th, 2012 at 1:17 pm
I’m not sure i accept that the value of the Euro will fall as the club med nations leave. A euro based on the northern Germanic core, shed of debt and the Latin instability, will strengthen not weaken.
Vote:May 18th, 2012 at 1:18 pm
It looks like the Greeks are finding the OPM habit very hard to kick. It would appear they’re going to have to do it cold turkey. That’ll be no picnic in the Elysian fields.
cheers
David Prosser
Vote:May 18th, 2012 at 1:21 pm
Greece is an entitlement society – worse than USA, UK, the rest of Europe and New Zealand. The stat that showed Greece had four times the ratio of teachers to pupils that Finland (top performing OECD education nation) quoted yesterday is indicative of the malaise. So is the extravagent retirement regime.
Notwithstanding the fact that no one has found a way out of the Keynesian morass, without austerity measures (well, zero increase budgets if there is rising Government (taxpayer) income) and economic pain involving a drastic reduction in entitlements, the red-melons, Labour, Peters et al, continue to call for more and more State spending of our money.
They complain about a comparatively minor NZ tax realignment, but ignore the fact that already those earning $120,000 or more pay 97 % of the tax paid.
Moreover, the top 10% of New Zealand earners pay 71% of all tax (Source: Markhams, Chartered Accountants).
One lives in hope that the NZ media will one day realise that their salaries depend upon a stable NZ economy. Keynesian policies will never produce one – long term.
Vote:May 18th, 2012 at 1:25 pm
“I don’t think one can even rule out a military coup if this happens, and you get widespread rioting. I hope I am wrong, but time will tell.”
You’re wrong. Not gonna happen. Not that things can’t potentially get bad, but they won’t get bad in that fashion.
Vote:May 18th, 2012 at 1:31 pm
Having done Economics and studying Politics at the moment, life is so interesting. My business cycle theorem which I created a few years back suggests a larger downturn around the corner. Seeing what is happening around the world (money markets, political etc), particularly in Europe and more specifically Greece, it brings many comparisons of the interwar period of the 1920s and 30s to my mind and gives more credit to my business cycle. Although the context behind then and now is different, there are many startling similarities, which for me suggests possible war within Europe (even a small one or civil war) if this shit is not sorted soon. My prediction is if it is not sorted within 10 years, there is definite war within Europe in the next 10 years.
I won’t start on any other place around the world on this thread.
Damn, if there’s war, I’ll be conscripted to fight, as I reckon compulsory conscription can’t be ruled out in the future. Whoops broken leg
Vote:May 18th, 2012 at 1:34 pm
The fall of Greece may be to the detriment of the greek people who will face a debt crisis and a run on banking institutions but may be of benefit to non EU exporting nations such as New Zealand.
Vote:Any chink in the armour of Fortress Europe Union with it’s agricultural susidies and high tariff’s is an opportunity for New Zealand.
Although New Zealand does enjoy access to this market, tariff’s act as a spear in New Zealand’s side thereby restricting access of our dairy products to the consumer who has to pay more for our butter and lamb, and more recently wine and technological products. A reduction in those tariff’s would boost demand at the retail level for our products which enjoy an excellent reputation in Europe.
In addition to that the European Union has to learn that protecting their markets results in the situation Greece, Spain, Portugal, and France are facing today. This protection creates phony markets that are heavily subsidised and in the long term unsustainable.
May 18th, 2012 at 1:34 pm
Daigotsu, you got this key information from whom? Your keyboard?
No one can tell at this stage. Friends of mine in Athens are getting out now, heading for London, having pulled all of their savings this week. I read somewhere that in the last week savings deposits held in Greek accounts had dropped by a quarter – in less than a week.
No one has any idea where the bottom is yet for Greece.
Vote:May 18th, 2012 at 1:34 pm
The deadly cocktail of Keynesism and socialism will always lead to bloodshed. Having a strongly production-based economy will slow this process. Having a lazy economy (like Greece) will accelerate it. As I’ve been saying for ages, New Zealand needs to watch and learn.
Vote:May 18th, 2012 at 1:36 pm
The Greek election system is mad; The party that finishes first gets an 50 seats as a bonus, in excess of their vote share.
ND got 108 seats with 18% of the vote, Syriza got in second place only got 52 with just under 17%. Doesn’t take much of a swing to change those numbers round, esp if the voters that supported minor left wing parties last month who missed the 3% threshold, vote in a sensible matter and go for Syriza
Vote:May 18th, 2012 at 1:40 pm
I once read a story about the 1929 Crash, that described a bedraggled parrot being found near Wall Street some days after the crash. At the time, one of the things that caused the downfall was ability to buy company stock for pennies on the dollar – “margin” as it was called.
The parrot must have belonged to some godforsaken stock-broker, probably sitting in his office, because the only words it could utter was More Margin! More Margin!.
Paul Krugman and others remind me of that bird: More Stimulus. More Borrowing.
P.S. DPF – after my occasional whinges about your recent spate of thread subjects – thanks. Let’s see how many comments this gets. Sadly I’m betting less than 50.
Vote:May 18th, 2012 at 1:40 pm
It’s looking like it’s too late even for cunners to save them with a big spend up. If only they’d involved him at the outset.
Vote:May 18th, 2012 at 1:44 pm
I’m not sure i accept that the value of the Euro will fall as the club med nations leave. A euro based on the northern Germanic core, shed of debt and the Latin instability, will strengthen not weaken.
It depends on what time frame you are talking – most economic articles discussing the fall of the Euro are talking the immediate future, ie: Greece going under with the rest treading water. In this instance you’ll still have the uncertainty of Portugal/Spain/Greece/Italy/Ireland? and possibly France dragging the euro down. Then there is also the likely hood that if those countries (except France) are all turfed from the euro then immediately afterwards the currency will be much weaker – although from there it should recover off the back of a strong German economy. This is where your scenario comes into play.
Although, then you’ve got to ask yourself – how exposed is Germany? If they have lent vast sums of money to these failing economies and they default then that’s a lot of money lost to the German economy.
Vote:May 18th, 2012 at 1:44 pm
Will someone start watching Max Keiser. He’s been saying this for several years. AS soon as he let out Iceland was a banker free dominated zone, the bankers zoomed in. Him and his guests, top financial analysts know exactly what’s going on.
You’ll read it on Kiwiblog five years later and you’ll never be told the reasons.
Vote:May 18th, 2012 at 1:49 pm
They will likely have to leave the Eurozone first before a default. If they did it the other way around they would be stuck in a situation whewre they required urgent need of Euro’s but no ability to get at it. At least if the leave the Eurozone they could print their own currency and devalue to their heart’s content to try and inflate their way out of the problem.
Vote:May 18th, 2012 at 1:53 pm
Max Keiser is a bit of a buffoon. That is probably why noone here takes him that seriously. What does this statement mean anyway “AS soon as he let out Iceland was a banker free dominated zone, the bankers zoomed in.”?
Vote:May 18th, 2012 at 1:55 pm
My understanding is that Germany doesn’t have a vast exposure to Greek debt, French banks on the other hand is massively exposed
Vote:May 18th, 2012 at 2:09 pm
Greece puts paid to the leftist idea that the economic problems in Europe are as a result of neo-liberalism, (although that doesn’t stop many of them from continuing to do so). The big bad Investment Banks from the US and UK tended to stay away from Greece yet banks from more regulated economies such as France and Germany had no such quarms about lending to successive dodgy Greek governments.
Vote:May 18th, 2012 at 2:10 pm
I am a huge fan DPF but, honestly, invest in someone to proofread your columns for style and construction.
Vote:May 18th, 2012 at 2:21 pm
Apologies in advance for being a bore, but on May 7 I blogged here on Greece , Europe the Euro and the forthcoming demise of the EU and the Euro (?).
Some extracts……
” …..Half a world away, there is the implausibility of the notion underpinning the EU. There were, and still are, too many economic, linguistic and customary differences among the countries involved, at the very least. Then there is the question of sovereignty, which the British are at last starting to fret about, and who will likely suffer most from its loss. They’ve almost left it too late, and the model of public servants (in Brussels) taking on the role of governors while not entirely new, sits very uncomfortably with the British sense of nationhood. The British have, after all, fought many wars to protect their sovereignty and freedom!
” ….The idea of a united Europe which would no longer go to war has been around for a long time. Even Adolf Hitler espoused it, though there were, of course, the issues of his governance model and its associated policies. However, the contest for the leadership of Europe has not evaporated with the advent of the EU. On the contrary, the rivalry between France and Germany is alive and well, with Germany seeming to have the upper hand. But of greatest concern is the apparent imminent implosion of Europe.
“: …..There have been and still are nations within wider Europe that rely on cross-nation subsidies to maintain their flawed economies. But to attempt to successfully weld together so many nations with different cultures, political systems, and varying approaches to Government expenditure/deficits was always likely to fail.
” …. The defining issue, however, may be the EURO – a manufactured currency that makes business transactions simple in Europe. Its great defect is that it binds members of the euro zone into a single currency exchange rate, no matter what the nature and condition of each country’s economy Thus, one of the most effective levers of economic change is denied to euro zone members. That’s OK for Germany, but not OK for Greece.
” …. (The debate over the political-economic problems of the Euro brings into sharp focus the adverse consequences that would flow from a joint Australian- New Zealand currency. The damage to the New Zealand primary sector would be catastrophic and New Zealand would be a backwater – behind even Tasmania.)”
It seems that the House of Cards is starting crumble..
The source of the quotations: “Demolishing New Zealand’s Political Comfort Zone” . Outside The Wellington Beltway Group, January 15, 2012.
Vote:May 18th, 2012 at 2:35 pm
Boring, I know, but indicative of the marvellous standard of New Zealand media reporting and analysis of economic/political issues.
In a November 26, 2011 post election TV interview, John Key referred to the deterioration of world economic conditions. He illustrated the problems looming by noting that in the past few days a bond issue by the German Government had closed with only 60 % being subscribed.
Moreover, in his (retiring) commentary the CBA’s CEO, Sir Ralph Norris, described the failure of the German bond issue as “a danger signal for the whole world – and a world from which New Zealand and Australia could not escape”.
The Key/Norris oiberservations went almost unnoticed by the New Zealand MSM (just a brief report in greenFax of Norris’ comments). There was no follow-up or analysis in any New Zealand media, which preferred to focus on esoteric election issues.
Vote:May 18th, 2012 at 2:40 pm
What will be really interesting when things just spiral downhill more and more is how the Labour party, Greens etc will react. Will they continue with their idea of piling on more debt (lets face it, that is what will happen) or will they try and change tack? Will they hammer National even more on raising taxes? How will the public react towards Labour’s policies if this thing really hits the can? Labour must be quite nervous about the situation over there. All they know how to do is blow shitloads of OTM!
Vote:May 18th, 2012 at 2:55 pm
Sure – but look to this quote from the last thread on Greece.
That’s the readership they’re aiming for. Which leads to:
That’s correct – except that they’ll cover up the whole spending binge with all the language cribbed from the business world: “investment”, “infrastructure”, etc. They’ve become so obsessed with not cutting government spending (and relentlessly increasing it) that they don’t even understand the reasoning of the guy they constantly quote in support of their desires – Keynes. Take a look at that quote I linked to and work back from it’s conclusion
One of his key points was that governments should not worry about deficits during a recession, because the traditional approach of balancing the budget sucked money out of the economy at the same time the private sector was shrinking. Naturally, every big-spending left-wing politician uses this to argue that government spending cannot possibly be cut, and should even be increased during a recession.
But of course spending is just one of two components to a deficit. The other is revenue, and Keynes argument also applies to that – tax increases take money out of the economy at precisely the wrong time. Which is what Hoover(R) did when he jacked income taxes up (to 70% for the wealthiest), followed by FDR (D) pushing them even higher – actually increasing the death spiral into the Great Depression.
And in light of that, look at an earlier part of the same comment
FFS. The reason you should not do that is answered by the same theory used to argue against spending cuts. That’s the level of understanding and it led to the next suggestion:
Shovel ready jobs! Yay.
For the sake of argument, let’s imagine that real infrastructure would result from this: new hydro-dams, highways, nuclear power-plants, and so forth. Sounds good, but you have to accept that the government knows better than hundreds or thousands of individuals with money to invest (e.g. surplus to consumption) about what they should invest into. And that’s precisely the problem: the government is convinced that they know better and so build things they think should be built. In the case of Obama and the Europeans that’s turned out to be huge sinkholes like alternative energy companies and plants, with further plans for things like high-speed rail (which is seriously cool in Europe – except they mostly lose money and have to be propped up by governments).
And of course that’s accepting the argument that something would actually get built in the first place. Out in reality-world the money simply bleeds away like ice-cream into sand, swallowed up by endless amounts of bureaucratic bullshit before a bit of it finally reaches a few workers, probably doing little more than maintenance ahead of schedule. True trickle-down economics.
It’s the reason that even a dimbulb like Obama finally accepted that shovel ready was a mirage – after $787 billion (plus interest) had been dribbled away. A country like Greece is jam-packed with such things, all eagerly swallowing up extra cash but not actually building wealth – which is what real investment is all about.
But if Krugman – the foremost proponent of Keynes in the modern era – had had his way, $2 trillion would have turned the trick.
The funny thing is that when this sort of reality arrives we end up with the promoters using Keynes’s other big point as an excuse – that the “infrastructure” did not really matter; it was simply a means to an end. If it meant digging a hole in the ground and filling it with money that was then dug up again, that would be just fine. Who cares if the hole in the ground (hydro-dam/synth-fuel plant/high-speed rail/…..) can’t actually produce any real wealth (e.g. a revenue stream that covers the cost of investment and then some) it does not matter. Via the workers of all the construction companies the money was put into circulation in the economy: spending leading to spending leading to – somewhere down the line it is assumed – some actual investment for production. The magical multiplier of Keynesian stimulation, which is now running at about $2.50 of extra spending for every extra $1 of GDP generated in the US (and probably a lot worse in Europe).
And since increased taxes aren’t a good idea with Keynes either, the only other alternative for getting that money to spend is to borrow it or create it. Greece can no longer do the latter but they were able to do the former. Cheap money – until now.
Vote:May 18th, 2012 at 3:10 pm
My understanding is that Germany doesn’t have a vast exposure to Greek debt, French banks on the other hand is massively exposed
Heres a simple overview of how its all linked in Europe.
http://www.bbc.co.uk/news/business-14985256
Basically, Germany is exposed through its Banks lending to Greece much like France. I also recall another article that I can’t find again showing how much Germany has lent to France. Basically it was saying if the PIGS fall over France will get hammered, if that then pushes France over the edge – then Germany gets hammered.
Although I guess France could just give them Alsace and Lorraine.
Vote:May 18th, 2012 at 3:48 pm
New Zealand is already economically behind Tasmania.
Vote:May 18th, 2012 at 3:50 pm
My dear old late Dad was a banker but one of the old school variety. He believed it was his job to make sure that those he lent his banks money to could pay back both the interest and principle on time. He despaired of the new generation of bankers. He correctly predicted it would all end in tears many years before it did.
He said it was made round to go round and when it stopped going round you had a problem.
He saw the clever clogs for what they were. All piss and wind. No substance.
Good households run like good economies. You spend within your income. You borrow only so much as you can repay within your budget. Very simple.
But many NZ households are in the shit and many have been for years.
Old Dad said it depressed him to hear some of his fellow bankers talking of clients they kept lending to who were always one pay packet away from broke.
And go it goes for the morons running the countries of Europe UK USA et al. Dumb arses who wouldnt know if the postman was up im until he blew his whistle.
Because thats what they all are. Sensible citizens who order their finances so they only spend what they earn have every right to look at these fools and treat them with the disgust they deserve.
Alas that doesnt change the destruction these morons have and will continue to cause because of their dim wittedness selfish self centred arse holes that they are.
So I and I suggest my fellow citizens who act with fiscal prudence can look down our noses at the pollies bankers economists et al and treat them with the contempt they so richly deserve.
Vote:May 18th, 2012 at 4:19 pm
lastman, agree. For me there is no excuse – if you are not financially literate, get so – there is plenty of free and freely available resource with which to do so.
Me, Im going as liquid as I can at the moment, in the final stages of selling my company to an overseas corporate thats been wanting it for a while. Down to one rental property. Hang on to job in LG to keep me from going postal and out from under the Mrs feet
With the baby boomer retirement wave about to break, I suspect the next 20 years are going to be bloody interesting to watch. I intend on doing so from the deck of my house, wine in hand
Vote:May 18th, 2012 at 4:48 pm
I suspect the ECB is going to act within the next week, I would think there would have to be meetings this weekend. If the ECB fails to act and shore up the European banks that are in trouble, the markets are going to slide straight down, forcing the Fed., the BOE and the ECB to step in and flood the banking system with new money. There is no other way as the system needs time to inflate away all the excess debt. We are talking 5-10 years here. You can have it the hard way, instant depression, or the lesser hard way, a very long recession.
Vote:It is already baked into the cake. The system that evolves from this global crisis of obscene debt will be set to stay for many decades to come.
May 18th, 2012 at 4:58 pm
hmmmokrightitis
As you may guess Im a baby boomer who has managed to keep hold of my modest wealth over the years. Im mostly in cash and the part thats in stocks is on watch. At the first signs of trouble at mill these will be cashed up like they were in 1987 courtesy of my late dad refered to above.
The old boy taught me lot so good lessons that have stood the test of time. IMHO being a loooong way from troubled markets is a good thing. Canada Aust and NZ have the been the 3 countries that weathered the GFC best and hopefully that will continue.
But we need to be careful as the knock on effect will get us in some way.
as I say Cash is King.
Vote:May 18th, 2012 at 5:02 pm
https://www.youtube.com/watch?v=DOFAnpb8I3E
Don’t stress it’s 4 seconds long
Vote:May 18th, 2012 at 5:06 pm
“Daigotsu, you got this key information from whom? Your keyboard?”
From a History degree and a lifetime of reading. But I don’t expect you believe me for that reason… how about we come back in ten years time and see whose opinion has been born out, yours or mine. If Greece has become a military dictatorship I’ll buy you a beer.
Remember how people said the US government would collapse into civil war after the 2004 elections? How’s that coming along anyway?
Vote:May 18th, 2012 at 5:25 pm
People didn’t say that the US government would collapse into civil war. Well, maybe in your imagination and certain doomsayers.
Vote:May 18th, 2012 at 5:27 pm
I fear there is a fourth possible outcome: the left-wing loonies win the election and the EU caves in and renegotiates the bail out. Talk about moral hazard…
Vote:May 18th, 2012 at 6:01 pm
Ha!
When the Eurocalypse thread came out I went looking for this great cover of The Economist from two years ago.
Just love Merkel on the cover and the fleet of choppers in the background: The Horror, the horror.
Vote:May 18th, 2012 at 6:05 pm
@s.russel
There is no moral hazard involved here, unless you include the moral hazard of Greece’s ability to pay its way in the world being stripped by the over-acquisitiveness of Germany, sucking up all the Euros and throwing a few coins in begging bowls along the way.
Germany wanted Greeks to be plunged into penury while the Germans sunbathed with Greek maidservants hovering over them. While it’s easy to say Greek governments ran deficits too often, it is a democracy and democracies don’t often send their own people back to subsistence level existence while just across the way their neighbours bask in opulence. Just follow the money trail and it all went to Germany.
If the austerity programme being forced upon Greece (a mere 2% of the Eurozne economy) is not adjusted, Greece should default. But I suspect Merkel is not that stupid, and renegotiation and the issue of Eurobonds is on the cards. And in the future, Germany’s wings will need to be clipped so the smaller nations can compete and survive.
Vote:May 18th, 2012 at 6:07 pm
Meanwhile, talking about Paul Krugman, why not watch the man in action, filmed just yesterday:
http://www.democracynow.org/2012/5/17/end_this_depression_now_paul_krugman
Vote:May 18th, 2012 at 6:16 pm
http://www.dailymail.co.uk/debate/article-2145560/Merkels-real-fear-exit-Euro-good-Greece.html
Wouldn’t that be funny.
Vote:May 18th, 2012 at 6:20 pm
“People didn’t say that the US government would collapse into civil war. Well, maybe in your imagination and certain doomsayers.”
Yep, they were definitely doomsayers. That’s basically my point.
Vote:May 18th, 2012 at 7:12 pm
The rest of the Krugman interview
http://www.democracynow.org/2012/5/17/krugman_jamie_dimon_should_resign_over
http://www.democracynow.org/2012/5/17/paul_krugman_on_eurozone_the_whole
http://www.democracynow.org/2012/5/17/paul_krugman_debt_commission_chair_alan
Vote:May 18th, 2012 at 7:31 pm
I believe that it should be **mandatory** for NZ governments to deliver balanced budgets. No more “borrow and hope”.
Vote:A simple measure, but oh so effective and the only way to run a country.
May 18th, 2012 at 7:38 pm
Good grief. I really think that Loco Jew-hater actually believes that shit.
Given his leanings, one might have expected him to be positively disposed towards the leading exponents of oven technology. However, in this instance, it clearly doesn’t suit his purpose so he prefers to blame the oven manufacturers because the Greeks wanted to keep on spending more money than they had. Some might say that Greece was a sovereign jurisdiction (putting aside the euro nonsense) that suffers because of self-interested stupidity but it would seem that once more the oven salesmen steamed across the border; this time in their mobile lending vans rather than their tanks, and forced the Greeks to borrow far more than they could service and repay.
Vote:May 18th, 2012 at 7:48 pm
Daigotsu:
“From a History degree and a lifetime of reading. But I don’t expect you believe me for that reason… how about we come back in ten years time and see whose opinion has been born out, yours or mine.”
Maybe you should read a little more carefully then – I dont express an opinion, I express uncertainty. You express certainty. My uncertainty comes from knowing a little bit about economics. Your certainty comes from looking back – you assume countries learn from their mistakes? Really? The history of mankind would politely like to beg to differ.
But Ill drink your beer. Epic IPA for me thanks
Vote:May 18th, 2012 at 8:05 pm
“I don’t think one can even rule out a military coup if this happens, and you get widespread rioting. I hope I am wrong, but time will tell.”
” You’re wrong. Not gonna happen. Not that things can’t potentially get bad, but they won’t get bad in that fashion.”
Daigotsu I wouldn’t rule it out at all, we know that Greek generals like power, we should consider institutional memory. I sure as hell wouldn’t bet against a new currency and it wouldn’t surprise me discover that the printing presses have already been running and if that is the case how do you introduce a new currency ? Soldiers standing outside banks with machine guns tend to focus ones attention and if you are going to reduce everyone’s savings by between 40 to 60 % that might be called prudence.
Do you think that there will be an announcement and time frame given ? We aren’t talking about 1,2 and 5 cent coins type of currency change.
Vote:May 18th, 2012 at 8:08 pm
Worth a read.
http://www.spiegel.de/international/europe/euro-struggles-can-be-traced-to-origins-of-common-currency-a-831842.html
Vote:May 18th, 2012 at 8:30 pm
http://www.youtube.com/watch?v=OnGxfrWaqP8
Not exactly Greece but along the same lines
Vote:May 18th, 2012 at 8:36 pm
this is quite an interesting article about who Syriza and its leader Alexis Tsipras are…
http://www.bbc.co.uk/news/world-europe-18056677?ocid=us_news_syndication_pulse&utm_medium=referral&utm_source=pulsenews
Vote:May 18th, 2012 at 8:57 pm
All the analysis in the world doesn’t decry from the fact that Greece’s problems were caused by big-spending, lazy, populist politicians.
Yet the party in this country that wants to spend less, encourage hard work, and prefers ideology to populism gets 1% at the polls.
Vote:May 18th, 2012 at 9:27 pm
Ill think you’ll find that’s because they couldn’t organise a pissup in a brewery Nick. Policies might be friggen awesome, but if you are voting for a goat with great policy, youre still going to get a goat.
Vote:May 19th, 2012 at 4:56 am
tom hunter says on May 18th, 2012 at 1:40 pm:
Wrong.
Yes, Greece is stuffed.
Vote:May 19th, 2012 at 8:12 am
Cheater
Vote:May 19th, 2012 at 11:51 am
Nick K makes a very good point.
With Greece well and truly in the poo and a number of other countries heading the same way, it would be completely appropriate for ACT to shout in the streets “We told you so.”
I was torn between voting for the Nats or for ACT at the last election. In the end, I went for the Nats, but I still admire ACT for (a) policies that are the opposite of Greeces, and (b) sticking to their guns.
I think the bottom line is this. The economic chaos in Greece and a number of other European countries (and even the US with its nightmare debt problem) well and truly puts the last few nails in the coffin of the left’s economic “policies”. “Borrow, spend, tax and hope” is dead, guys.
Vote:May 19th, 2012 at 12:36 pm
The following piece should be read by people who keep yammering on about Greece being only two percent of the Eurozone: The Forthcoming Hellenic Curse.
Just to summarise the stuff that’s not counted as part of the sovereign debt of €160 billion plus from all the loans, even after the writeoffs:
- Derivative contracts that will likely default and the losses will then have to be taken at the French, German and American banks.
- The contractual obligations of the nation that will probably get revoked and hit the health providers, Greek companies providing goods and services to the country and the Greek banks which have been lending money on these obligations.
- The Greek banks who have their debt guaranteed by the sovereign.
- The municipal debt which is found throughout the European banks and insurance companies.
- The loans, the mortgages and other debts that have been securitized and pledged to the ECB and other European banks which then rehypothecated the securities and also pledged them to the ECB as collateral so that there is a cubed effect that is going to be set-off as the house of cards implodes in upon itself.
- The banks will probably renounce their obligations to other European banks which is not included in the sovereign debt figures and will certainly have a significant impact.
The number is approximately $1.3 trillion.
Vote:May 19th, 2012 at 1:06 pm
Always good to have an appropriate quote at a time like this:
“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world’s greatest civilizations has been 200 years.”
Possibly, Alexander Tytler (circa late 1700′s)
This process was hastened by the smug self-congratulatory Technocrats in Brussels like Barosso and Van Rumpoy who encouraged Greece’s adoption of the Euro and their willing belief in a free-lunch
Vote:May 19th, 2012 at 1:28 pm
The really frightening thing to me is that the clowns in Brussels may actually be looking at this in Rahm Emanuel terms: Never let a crisis go to waste.
In other words the Eurocrats probably see this as yet another opportunity to further centralise the Euro project; another step on the way to becoming a United States of Europe. They’ve always been aware of the cracks that existed between a monetary Eurozone crunched on top of still sovereign control of tax and spending, but the attitude has been to just ignore these and keep moving forward, solving the “problems” as they arise. Look at how they dealt with multiple rejections of the European constitution.
Right now this is the only other solution to the PIIGS crisis: turn the ECB into a Federal Reserve equivalent that can issue true Euro-bonds backed by every country in the European union, meaning backed by Germany. It would be the equivalent of what Alexander Hamilton did in the USA as the Constitution was created and the 13 colonies became one nation: a central assumption of local debts, combined with fiscal re-distribution to the poorer areas as required.
The Eurocrats would see this as the capstone to their decades-long effort. You can see the argument that will be presented to Merkel and company:
Either let Greece exit, with all the collateral damage involved across the rest of the PIIGS – or accept the Federalised Europe and European Central Bank solution you’ve always resisted, but that promises less short-term damage. Sure, you may say that means German is truly on the hook for PIIGS insanity, but you’ll have more direct control over them all: no more Maastricht Treaty bullshit that we all knew was going to be breached anyway.
It’s a seductive argument. We’ll see of Merkel and company go for it.
Vote:May 19th, 2012 at 1:32 pm
Ick
It’s a seductive argument. We’ll see of Merkel and company go for it.</iIt’s a seductive argument. We’ll see if Merkel and company go for it.
Vote:May 19th, 2012 at 1:54 pm
tom, would a United States of Europe necessarily be a bad thing?
Vote:May 19th, 2012 at 2:03 pm
@adze
Not necessarily. But it has to be based on something more than a gigantic, central bureaucracy in Brussels, backed by a gigantic constitution that nobody reads, and supported by politicians that ordinary people feel are not accountable to them via voting.
All of which is very different to how the US Federal government got started in 1787. What Europe is trying to do now is as if the thirteen colonies had grown into independent nations for two hundred years and then started trying to build a United States of America.
And this does not even touch the vastly greater gaps of language and culture that exists between European countries and regions, than what existed within the USA – and even the USA had a civil war 60 years later to resolve problems created at the birth of the nation.
I just don’t think it can work in Europe. But even if it could, imposing such beautiful dreams from the top down is a recipe for failure.
Vote:May 19th, 2012 at 2:11 pm
Shame this won’t be happening in Greece.
Or will it?
http://ireport.cnn.com/docs/DOC-787377
Vote:May 19th, 2012 at 2:17 pm
“I just don’t think it can work in Europe. But even if it could, imposing such beautiful dreams from the top down is a recipe for failure.”
Fair comment. I’ve actually supported the general concept of a united Europe for some time, as long as it is based on coherent economic policies and modern democratic principles of course. The economic and political benefits could be great – for the world as well as Europeans. But it’s unquestionably a huge task.
I heard on NatRadio yesterday that Greece had actually fudged the books in order to be approved entry into the Eurozone. Maybe the EU as well as sorting out a coherent monetary policy could aim for a two-tier Eurozone – economic unification with the future option of political unity; and non-unified but affiliated (trade/immigration/fiscal policy) nations.
Vote:May 19th, 2012 at 2:31 pm
Well yeah. As shown by a brutally funny cover image from the February 2010 edition of German magazine Focus.
I suppose it’s just my sense of humour but I laughed until I cried when I saw that. As you can see from the link, the editor was found not guilty of insulting a national symbol – which probably opens the possibility that he can do something similar with the Euro!.
In any case there was also a news story from several days ago about recently released papers from the early 1990′s, showing that Kohl and other Euro worthies, strongly suspected that they were being lied to – and ignored their own senior officials in service the glory of a unified Europe. Everybody bought into this lie.
Vote:May 19th, 2012 at 2:37 pm
Somewhat off-topic but I thought this para was interesting:
I guess there’s no European branch of the Anti-Defamation League, then.
Vote:May 19th, 2012 at 4:04 pm
Well said Mr Hunter, right on cue Jean-Claude Trichet (head of the European Central Bank up until December 2011) proposes an “exceptional federal mechanism” whereby Brussels takes direct administrative control of a failing member state and rules by diktat to the delight of attendees at the current G8 summit, see here:
http://www.cnbc.com/id/47471171
Unfortunately a United States of Europe would be nothing at all like a USA, it would be much closer to a EUSSR.
A very cynical person might wonder if the great and good of Europe knew full well that a currency union and Schengen could not possibly survive without full fiscal & monetary union and political union as well, and have engineered this knowing full well the people would never agree to give up sovereignty but a crisis like this allows a big step towards “an ever closer political union”.
This monster is very, very far away from a multilateral European Coal and Steel free trade common market.
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