The problem with austerity is that you eventually run out of other country's GDP.
Haha. "Austerity was a total failure but I'm sure it would have succeeded with a little more austerity".
It's amazing how little impact facts have on ideology sometimes.
Just pointing out that the agreed-upon reforms were never fully implemented. Those nations which did implement the EC's and/or IMF's requirements are now in growth and actually loaning money to Greece - which, I agree, is a fact that seems to have little or no impact on ideology.Haha. "Austerity was a total failure but I'm sure it would have succeeded with a little more austerity".
It's amazing how little impact facts have on ideology sometimes.
Haha. "Austerity was a total failure but I'm sure it would have succeeded with a little more austerity".
It's amazing how little impact facts have on ideology sometimes.
It won't work. Austerity is not some difficulty you endure for a better future. It's something you endure now that also hurts your future. That 50% of unemployed youth is not becoming more productive and gaining experience in the workforce. The best minds that are leaving for greener pastures are not going to be building a better Greece. The money that is leaving Greece to pay creditors or to escape risk is not going to be invested in productivity improvements. It's all going to mean Greece will become a permanent ward of the EU.
That does seem to be what's happened. He thought he was in a position to bluff the EU and they called his bluff. Sucks when that happens.Word on the street was that Tsipras and his finance minister, Yanis Varoufakis really had no other plan other than to bluff their EU creditors the whole time. When they failed to do so they pushed for a referendum where they thought a "Yes" vote would give them two opportunities,
Never assume malice when simple incompetence will do. The terms of the new Greek proposal include much more austerity than the terms they just rejected from the creditors recently, so unless that's just part of their diabolical plot to max out their borrowing before default it's impossible to say that Tsipras didn't lose huge.
Maybe that's the best outcome here. Greece becomes a third world nation, dependent on humanitarian aid from the EU to feed it's people. It will serve as a warning to the rest of Europe not to adopt their irresponsible policies.
That does seem to be what's happened. He thought he was in a position to bluff the EU and they called his bluff. Sucks when that happens.
The problem with socialism is that you eventually run out of other people's money.
― Margaret Thatcher
Yeah, it will serve as a warning for the rest of Europe to not adapt austerity.
Yeah, it will serve as a warning for the rest of Europe to not adapt austerity.:thumbsup:
Anyway, best of luck to the Greek people, from my perspective they deserved better leadership...
Uno
Last I read, which was yesterday, I didn't hear anything about a haircut. In fact both Germany and several other lenders seemed to indicate that this was no-go. I did read something about maybe increasing maturities and getting Greece more favorable rates, but that's not going to come cheap.What happens? They give you $60B instead of $8B that was being discussed before and take a debt haircut?
Last I read, which was yesterday, I didn't hear anything about a haircut. In fact both Germany and several other lenders seemed to indicate that this was no-go. I did read something about maybe increasing maturities and getting Greece more favorable rates, but that's not going to come cheap.
Generally when you bluff and lose you end up being in much worse shape than if you folded early on. That's what happened here.
The point is that the EU wants ALL of the money paid back. Net present value is only relevant if the debt has a present value. At this point, Greek debt doesn't.They'll do a haircut one way or another.
Increasing maturities is haircut by another name, since it decreases the net present value of the debt.
Restructure the debt or you get repaid in Drachmas is not a bluff when the debt is unsustainable. It's what's going to happen. If there isn't the money to repay the debt when it's due, its' not going to get repaid.
In that case you'd be increasing the supply of money by a couple hundred billion euros - worst case scenario. You can do that the way the US fed did it by making sure that the proceeds of purchases were locked up in excess reserves, but I think the value of the Euro would still take a hit.Well, whatever happens, I'm sure it's all arranged for the ECB to bail out the banks, otherwise the Troika wouldn't be forcing default.
That begs the question of why the ECB doesn't just bail out the Greeks, but apparently making them suffer somehow gives the banks cover for their part in all this.
Hell, the ECB could buy up all the Greek debt in existence & just write off enough of it so that Greeks could support the remainder. As we've seen with the TARP program in this country, a central bank's balance sheet really doesn't matter because that's where "money" comes from in the first place.
Greek conflict just a proxy for larger global issues?In Europe, cash-strapped Greece is at a crossroads between cutting a deal with foreign creditors or cutting out of the euro zone. In America, the burden of student loans has become a major issue for the budding 2016 presidential race – with one candidate announcing this week a plan for “immediate relief” for college-loan borrowers.
These two news headlines, although distinct from each other in many ways, point to a common theme: Across at least part of the developed world, a political battle is under way between advocates of fiscal rectitude and forces of fiscal populism.
“The conflict [between Greece and its creditors] is a proxy” for this larger global tussle, ... “The political war is over populist and nationalistic policies aimed at addressing the economic cost of the long and severe recession.”
Two changes explain why this conflict is coming to the fore... First, evidence of widening inequality within advanced nations has increased in recent years. Second, more economists have begun leaning toward the view that these high levels of inequality are harming economic growth...
The people hit hardest by the Great Recession, in terms of lasting declines in family net worth, have been low-income households, according to US data tracked by the Federal Reserve. The housing bust also hit African-Americans particularly hard.
Two-thirds of adults in 10 advanced nations, from the US and Japan to Germany and other European nations, say they expect today’s children to be worse off financially than their parents...
This time, again, old realities hold true. Not all debts get repaid in full, but deep troubles can come to nations that completely lose face with creditors...
Apparently Tsipras got the votes.
So, let me get this straight..
Tsipras and co. spend weeks wrangling over austerity measures, even going as far as holding a referendum over an EU proposal...that he subsequently uses (for the most part) as his plan?
This is supposed to be effective leadership?
The point is that the EU wants ALL of the money paid back. Net present value is only relevant if the debt has a present value. At this point, Greek debt doesn't.
Reducing interest rates on existing and/or future loans also amounts to a "haircut" in that sense as well. The real issue seems to be outright loan forgiveness.
Granted that we're splitting hairs here but as with most things, appearance is more important than substance.
In that case you'd be increasing the supply of money by a couple hundred billion euros - worst case scenario. You can do that the way the US fed did it by making sure that the proceeds of purchases were locked up in excess reserves, but I think the value of the Euro would still take a hit.
And besides, forgiveness is still forgiveness even if it's the central bank that takes the loss. That's really the issue, not whether or not it's technically feasible.
I'm sure the referendum was expensive. The money could have been put to better use elsewhere.