Austerity politics

Does anyone remember pre-crisis Greece?
I am a younger guy, and my family visited during the 2004 Olympics. I remember thinking even then "Wow, these people lead some kind of life". A 35 hour workweek was deemed hard enough for frequent naps, smoking breaks, and simple inattentiveness on the job, entire businesses were closed after 3pm, and cabs showed only a vague interest in actually picking up passengers, because they were so heavily unionized they'd end up being paid anyway. Even a 14 year-old with no intimate knowledge of Greek government could sense that something was wrong. The people were lazy.

Now I'm not saying that the Greeks aren't hurting now, they most certainly are. But noone should think that this was forced on them by an external force. Voters voted in the Socialist Party, and begged for more and more public jobs/services/guarantees. Politicians passed the laws, banks financed them. As recently as last year my friend went on a tour of Greece. When I asked what stood out, his eyes immediately lit up describing their easy lifestyle, and again how he couldn't find a store open past hours considered more than normal here in America.

Now eleventh-hour creditors are running in to save their hides, and Greeks are paying for it in priviledges they shouldn't have had in the first place, and then some. It was obvious and inevitable to a 14 year-old boy 7 years ago

This cold austere European winter we are suplementing our home heating with building timber off cuts, starting the fire with dried mandarin peels and newspaper.

Austerity measures are unpopular as per some as well.
But austerity measures which include productive spending cuts, are not at all a good thing for an economy.

http://naveenkalyani.blog.com/2012/02/13/greece-default-and-the-euro-aba...

Recovery and austerity are diametrical opposites just creating a “catch 22” situation. For economic matters to recover is by adhering to what the “Laws of Economic dictates us to follow. This means for everyone is work/income subject to the desire to improve our living standards.
http://theworldmonetaryordertocome.blogspot.com/2010/11/introduction.html

There are no limits on how much austerity a coalition government can impose on its so called electorate. Representatives are asked to resign beforehand if they cannot approve the measures asked for in good conscience. They are then easily replaced with someone who is all to willing to take the job and tow the coalition governments austerity line.

European banks want to be paid, and Greek banks want to be bailed out. So, it is a marriage made in heaven. Austerity plays the simple role of not allowing the Greek people to spend the loans on their needs. You see, most, if not all of the loaned money must go right back to pay the banks.

Of course, government officials cannot be seen in public. This is easy enough to do. Who has the appetite to be burdened with the problems of the underclass they are creating anyway? Also, it may even eventually become dangerous!

The illusion of political choice. It exists everywhere, but rears its ugly head most in the poorest of globalized places.

A more apt comparison is with 1920's Germany :

"It is what can happen if you join a fixed exchange system, then take out very large debts in what amounts to a foreign currency, and then have simultaneous monetary and fiscal contraction imposed upon you.

Germany discovered this on the Gold Standard when it racked up external debt from 1925 to 1929 (owed to American bankers) in much the same way as Greece has done.

When the music stopped – ie, when the Fed raised rates from 1928 onwards – Germany blew apart in much the same way as Greece is blowing apart. This is not a cultural or anthropological issue. It is the mechanical consequence of capital flows into a country that cannot handle it, as Germany could not handle it in the late 1920s."

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/

http://thebottomline-us.blogspot.com/2012/02/divergent-union-part-2-econ... The second part of an ongoing series on the European sovereign debt crisis, this post discusses some economics fundamentals.

We ignored the lessons of history to get into this mess; why stop now?

Since Greece cannot devalue its currency or raise tariffs for goods and services from other EU countries with which it has trade imbalances, the entire burden of its debt obligations falls on its labor force with higher taxes, lower wages, and fewer social benefits. A labor force unable to add enough value to goods and services within its economy to repay those debts. The leaders of the EU must know Greece will never be able to earn enough revenues to sustain its debts, yet they continue to exact a misery on the Greeks that will not resolve the problem. Greeks should return the favor, but perhaps they should borrow as much as they can before defaulting, exiting the Euro, and following Argentina's example in order to ensure that misery is shared with finance capitalists.

More like echoes of Groundhog Day (the movie).

German Finance Minister Wolfgang Schaeuble said the Greek plan was "not at a stage where it can be signed off".

Few details of the plan have been released, but unions have already called a 48-hour strike in protest.

Luxembourg's Prime Minister Jean-Claude Juncker, head of the so-called eurogroup of finance ministers, said he doubted whether the Greek plan was ready for approval.

"I do not have reasons to believe that there will be a definitive deal this evening," he told reporters as he arrived for the Brussels meeting.

But he hailed the progress Greece had made and said eurozone countries were likely to thrash out a deal with Athens by next week.

"Of course, when Britain did leave the gold standard, the results were much less damaging than the bankers feared..."

Who cares if leaving the gold standard was less damaging to bankers. Retirees had a portion of their pensions and life savings confiscated. Employees were able to buy less with their pay.

Its the little people who get harmed by printing. A drachma worth 50% of the Euro means that their retirees have just lost half of their pensions and life savings. Employees are now getting paid half as much. What about them?

Opt in the creditors.
Make them a part of the recovery.
Find a way to re-package Greece's debt in such a way that allows Greece to re-pay their debt down the road at guaranteed rates.
The creditors will still get their money, they just have to wait.
That or they can be given the opportunity to get out now with nothing but the benefit of being free of Greece.

130 billions is more than one third of the GDP of Greece.Let's call it a gracious present,rather than a loan.They will never give back that money.The equation is simple:more sacrifices,more fall of the GDP,and so on with that music till the end of the game for breakdown of the juke box.

"Their debts would still be in euros but their revenues in devalued drachmas."

I'm not sure about this. It's certainly a tricky legal question, but I wouldn't be so sure of the outcome.

"...if Greece left the euro; its banks and corporate sector wouild be faced with bankruptcy (their debts would still be in euros but their revenues in devalued drachmas)."

Greece has suffered five long years of recession and much more to come. Non-competitive private companies with debts in Euros are on their way to the wall already. A public sector default and private sector bankruptcy would leave Greece debt free and a financial pariah. But financial pariahs always seem to work their way back into good graces within a couple of years (Argentina, for example).

Keeping Greece in the Euro seems cruel.

I really do feel for the Greek populace on this. Some of the measures allegedly insisted upon by the Troika seem designed to inflame passions but I fear that this is mainly due to the electioneering in anticipation of an election within two months. The whole Papedemos government was doomed to failure given it's pre-determined short stay and more crucially the refusal of New Democracy to sign up to the whole concept back in October. This is in stark contrast to Italy where Mario Monti's term is open-ended and enjoys cross-party and popular support.

Yes, we're going to have accept write-downs of Greek debt across the board but the price will be to prevent a return to the bond markets after the write down. Eurostat is in Athens to stay and whoever wins the election is still going to have to dance to the tune played in Brussels. This is only way to convince markets that any default is going to be limited to Greece.

The gold standard again. The 19th century saw 44 recessions and 6 depressions. The 20th century, 22 years of recessions with one depression. From a business cycle standpoint that gold system does not seem to be make any difference whatsoever...

What if the Greeks default to everyone, private or official creditors, leave the Euro, bankrupt all its companies with debt in Euro, start printing new (worthless) money to issue to its pensioners? It would be damaging to other Euro countries, but would it not give the Greek economy the necessary adjustment? Sure, foreign creditors won't be keen to lend them anything for a while, but creditors have short term memory, and someone somewhere would take that risks sooner or later, with a reasoning that now that the previous debt was wiped clean, Greek debt can be reassessed at whatever is the current capacity?

Cut,cut,cut how much can you carry on cutting when there will a time whne there will be too small to cut, may be this will give you the idea of the dismall Gitmo, and out habits to cut,We have come to such a stage that we will use any language to express. Kicked out , after the fall in the economy. Squeezed by a tight job market, young Americans are especially struggling. They have suffered bigger income losses than other age groups and are less likely to be employed than at any time since World War II. An analysis by the Pew Research Center, released Thursday, details the impact of the recent recession on the attitudes of a generation of mostly 20- and 30-somethings. With government data showing record gaps in employment between young and old, a Pew survey found that 41 percent of Americans believe that younger adults have been hit harder than any other group, compared with 29 percent who say middle-aged Americans and 24 percent who point to seniors 65 and older. A wide majority of the public — at least 69 percent — also said it's more difficult for today's young adults than their parents' generation to pay for college, find a job, buy a home or save for the future. Among young adults ages 18 to 34, only a third rated their financial situation as "excellent" or "good," compared with 54 percent for seniors age 65 and over. In 2004, before the recession began, about half of both young and older adults rated their own financial situation highly. Germany has kicked out four Syrian diplomats after the arrest in Berlin earlier this week of two men suspected of spying on Syrian opposition activists in the country, the foreign ministry said Thursday."After the arrest of two suspected spies, I have ordered four members of the Syrian embassy in Berlin to be expelled," Foreign Minister Guido Westerwelle said in a statement. German prosecutors believe the two men, arrested Tuesday, had been spying for years for the intelligence services of Syrian President Bashar al-Assad. Steven Covey with his 8 habits would not buy this. And no wonder Republicans on the House Armed Services Committee slams both the Bush and Obama administrations for taking too many risks when releasing prisoners from Guantanamo Bay prison, Fox News has learned.. I wonder if this helps. I thank you Firozali A.Mulla DBA

The Greeks have been gaming the system(s) for years, indeed decades. This is just the latest in a long, long series of Greek financial crises brought on by a culture of lethargy, duplicity and malfeasance. Cue the apologist Greek Chorus...