Acropolis Now

[Bud Struggle]

This week's cover of the Economist:

http://media.economist.com/images/images-magazine/2010/18/ld/201018ldp001.jpg


http://www.economist.com/printedition/PrinterFriendly.cfm?story_id=16009099 (http://www.economist.com/printedition/PrinterFriendly.cfm?story_id=16009099)

That article is not very fair with regard to the German position as I understand it.

1. If Germany had agreed to the bailout as early as the other European states, then Greece would have just continued what it has done for the past 30 years. Nothing would have changed, except that Greece would constantly suck money from the others.

2. The other PIIGS states must understand that a bailout will be EXTREMELY unpleasant for them.

And finally:


However unfair it seems—and the frugal Germans are as furious about the profligate Greeks as the rest of the world was about bankers—a bail-out is justifiable on the same logic: doing nothing would cost them even more.
One hears this argument a lot these days, but nobody gives evidence that this is true. There are so many variables in this equation that it is in my opinion ridiculous to make a statement like that.

What the Euro countries need is a strict debt limit. Germany has already established a debt limit in its constitution: From 2016 any national budget that increases the debt is unconstitutional.

A similar debt limit must be put in place in all other Euro countries. Germany should threaten the other Euro countries to contract out of the Euro and go back to Deutsche Mark if they don't comply.

(FYI: I am a purchaser of foreign money funds so I have a paticular interest.)

[Lynx]

No bailouts. Market "discipline" will correct the crisis ;)

[Robert]

Athens, Greece (CNN) -- Greece accepted a bailout deal including tough austerity measures, Finance Minister George Papaconstantinou announced Sunday.
He did not reveal the size of the package negotiated with the European Central Bank, European Commission and International Monetary Fund, saying it would be announced in Brussels, Belgium, later on Sunday.
It includes a promise by Greece to cut its budget deficit to 3 percent of gross domestic product, as required by European Union rules, by 2014, he said.
Greece had a choice between "destruction" and saving the country, and "we have chosen of course to save the country," Papaconstantinou said.
....

The planned austerity measures are unpopular among Greeks. Protesters clashed with police Saturday during May Day demonstrations, and strikes have been announced for later this week.

....


Papaconstantinou confirmed Sunday that the government would tighten its belt significantly, despite the protests.
"The expenses of the public sector will go down very considerably," he said.
The program includes cuts in the salaries of public-sector workers, including lawmakers, higher taxes on cigarettes, fuel, gambling and luxuries, an increase in the value-added tax consumers pay on purchases, and an increase in the retirement age for women in the public sector, Papaconstantinou said.
....

"I know that our compatriots are being asked to make big sacrifices, but the alternative way would be disastrous and painful for us," he said in a televised Cabinet meeting.
"It's not a pleasant decision for me, for any of us, but we are here to make the right decisions for our country," he insisted.
He spoke a day after Greek protesters clashed with police who fired tear gas during the annual May Day rally in Athens.
Waving red flags, the crowd at times surged toward the line of police, who wore helmets and carried riot shields. The police pushed them back each time.


____________________________


So he's raising some taxes and cutting some benefits and raising retirement ages for some in the public sector. This is necessary and eminently reasonable.



And that merits a riot? Why? How would you fix it? Or would you?

[Dimentio]

So he's raising some taxes and cutting some benefits and raising retirement ages for some in the public sector. This is necessary and eminently reasonable.



And that merits a riot? Why? How would you fix it? Or would you?

If Greece had a socialist government, it would simply refuse to pay and nationalise a lot of foreign capital (and be subsequently punished).

[Robert]

and be subsequently punished

What would be punished? The government? By its EU and other trading partners?

I guess this is why some of you at least recognize the problems with one country going socialist on its own.

Wouldn't the consequences for the average Greek be much worse than accepting the proposed austerity plan? Impossible to measure, perhaps.

But if they don't have their own energy sources, they need to play ball.

[Dimentio]

What would be punished? The government? By its EU and other trading partners?

I guess this is why some of you at least recognize the problems with one country going socialist on its own.

Wouldn't the consequences for the average Greek be much worse than accepting the proposed austerity plan? Impossible to measure, perhaps.

But if they don't have their own energy sources, they need to play ball.

My guess is that we will see massive riots in Greece later this fall. Possibly to the point of collapse for the government.

[Bud Struggle]

My guess is that we will see massive riots in Greece later this fall. Possibly to the point of collapse for the government.

But it was the PREVIOUS government that fudged the numbers and ran up the debt. (It probably doesn't matter, though.)

As to your previous point of reneging on the debt--third world governments do it all of the time, but this would be the first time (I think) a First World nation ever did such a thing. It would vastly weaken the Euro and the EU. It would also put further into question the rather shakey finances of Spain, Portugal, Italy and Ireland.

It would be absolutely wonderful for the USA if European investment became insecure.

[Bud Struggle]

I'm seeing more and more speculation that the ECB will step with the Nuclear Option by [printing money] buying up these distressed bonds. Its hard to imagine another end game that doesn't result in a few defaults, or even some countries leaving the Euro.

At any rate, this is turning into quite a show.

[La Comédie Noire]

But it was the PREVIOUS government that fudged the numbers and ran up the debt. (It probably doesn't matter, though.)Politics is like a game of hot potato.



So he's raising some taxes and cutting some benefits and raising retirement ages for some in the public sector. This is necessary and eminently reasonable.



And that merits a riot? Why? How would you fix it? Or would you? I think they are mad at what's getting cut and whose getting taxed, although I have yet to see a counter proposal. They also feel they will become a puppet of the IMF.

[Bud Struggle]

Yea, the Socialists are going to get hit ofr this one.

There's a real problem in that not many people in Greece produce much--it seems 38% of the population is employed by the state (it's 25% int the USA--and that's high!)

Also the Greeks are infamous for NOT paying their income taxes.

It looks like the part's over. :(

[La Comédie Noire]

Yea, the Socialists are going to get hit ofr this one.

There's a real problem in that not many people in Greece produce much--it seems 38% of the population is employed by the state (it's 25% int the USA--and that's high!)

Also the Greeks are infamous for NOT paying their income taxes.

It looks like the part's over.

Unemployment is also something like 20%, especially among the youth. 15% of its GDP is Tourism as well.

[Nolan]

Also the Greeks are infamous for NOT paying their income taxes.


Venezuelans never pay income tax either. Actually I think they rarely pay any kind of tax at all.

[Bud Struggle]

Here's a handy graph from Barcap:


http://av.r.ftdata.co.uk/files/2010/04/Barcap-greek-exposure-e1272458304487.jpg

Interesting that Italy has problems of its own. I'm not sure how good Italian banks are nowadays.

S&P expects recoveries in default to be 30-50%, so figure the above groups stand to lose over half of their exposure.

[Dimentio]

But it was the PREVIOUS government that fudged the numbers and ran up the debt. (It probably doesn't matter, though.)

As to your previous point of reneging on the debt--third world governments do it all of the time, but this would be the first time (I think) a First World nation ever did such a thing. It would vastly weaken the Euro and the EU. It would also put further into question the rather shakey finances of Spain, Portugal, Italy and Ireland.

It would be absolutely wonderful for the USA if European investment became insecure.

No it wouldn't. The USA and the EU are so intertwined that if the European markets falter, the USA would be affected as well. China isn't investing in anyone except themselves, and the US needs European investments as much as the American companies are needing European markets.

From a foreign policy perspective, an economically strong but politically weak EU is preferable from an American perspective, since America in order to continue to be the world's single superpower absolutely needs to have a large bridgehead in Eurasia (and that bridgehead is Europe).

If Europe gets completely destabilised, the United States would have a hell to keep its positions in the continent.

As for Greece, the country is really quite poor in its natural conditions, and I do not believe it alone could possess the strength to establish true prosperity, no matter what system. Its environment has been destroyed since antiquity, basically. Left on its own, it could probably do a little less than a substinence economy.

[Jimmie Higgins]

Yea, the Socialists are going to get hit ofr this one.

There's a real problem in that not many people in Greece produce much--it seems 38% of the population is employed by the state (it's 25% int the USA--and that's high!)

Also the Greeks are infamous for NOT paying their income taxes.

It looks like the part's over. :(

Where are you getting these statistics? According to the US Bureau. of Labor Statistics, government employment in the US is less than 8% of jobs - about 4% of the total population (2006-2007).

According to the EU, Greece public workers are about 14% of the workforce which is roughly average in Europe.

For some reason, the right always like to treat austerity from budget problems like it's a rotary club with a steady dues base that blows all it's money on a cocktail party or something. Greece had plenty of money to give away to international corporations in the run-up to the Olympics - and no doubt they could "find" the funds if they had a similar event this summer.

In Europe as in California, the "budget crisis" is a matter of priorities and unless people protest and strike and fight for their own interests, the government will likely try and make up for it's neo-liberal tax policies on the backs of workers both by cutting taxes for the rich and placing austerity measures on workers.

[Bud Struggle]

Where are you getting these statistics? According to the US Bureau. of Labor Statistics, government employment in the US is less than 8% of jobs - about 4% of the total population (2006-2007).

According to the EU, Greece public workers are about 14% of the workforce which is roughly average in Europe.

You are right there--I mosread the numbers.


For some reason, the right always like to treat austerity from budget problems like it's a rotary club with a steady dues base that blows all it's money on a cocktail party or something. Greece had plenty of money to give away to international corporations in the run-up to the Olympics - and no doubt they could "find" the funds if they had a similar event this summer. But that's part of the money they borrowed. They always could "borrow" more if needed--but Greece for a long time has been living above its means.


In Europe as in California, the "budget crisis" is a matter of priorities and unless people protest and strike and fight for their own interests, the government will likely try and make up for it's neo-liberal tax policies on the backs of workers both by cutting taxes for the rich and placing austerity measures on workers.

These places (and a lot of others) need to raise taxes an the rich and especially the middle class--and then tthey need to regulate service a bit more. It's a two edged sword.


No it wouldn't. The USA and the EU are so intertwined that if the European markets falter, the USA would be affected as well. China isn't investing in anyone except themselves, and the US needs European investments as much as the American companies are needing European markets.

From a foreign policy perspective, an economically strong but politically weak EU is preferable from an American perspective, since America in order to continue to be the world's single superpower absolutely needs to have a large bridgehead in Eurasia (and that bridgehead is Europe).

If Europe gets completely destabilised, the United States would have a hell to keep its positions in the continent.

I don't think Europe will be completely destabilized--just weakened so foreign investment would find a more secure home in the US. There is a LOT of money that would find its way into America if it feels the Europe is no longer a safe bet.

You are right that a diminshed Europe would provide a diminished market, but I truly would feel that it would be off set by the new investment in American business.

Long term though an ecomomicly distressed Europe could easily become a politically distressed Europe--and while you Communists might gain a foothold--darker forces of nationalism might also take hold making the usual mixture for war. We definooootlet don't need that to happen again.




As for Greece, the country is really quite poor in its natural conditions, and I do not believe it alone could possess the strength to establish true prosperity, no matter what system. Its environment has been destroyed since antiquity, basically. Left on its own, it could probably do a little less than a substinence economy. You are dead on correct there.

[scarletghoul]

The title of this thread is awesome; shame its so full of reactionary crap ;~;

[Bud Struggle]

The title of this thread is awesome; shame its so full of reactionary crap ;~;

Well it IS OI after all. :)

So now is THIS the Revolution?

Three Reported Killed in Greek Protests

ATHENS — Demonstrations against tough new austerity measures in Greece claimed their first fatalities on Wednesday with three people reported to have died inside a bank building set ablaze by protesters. The reports came as workers across Greece went on strike over deep spending cuts and new taxes aimed at staving off economic collapse.

Tear gas billowed across the central Sintagma Square in front of Parliament as demonstrators trying to storm the Parliament building hurled rocks, paving stones and gasoline bombs. Police responded with tear gas canisters that spread a choking pall of smoke. Fire fighters extinguished blazes in two buildings and protesters threw up barricades, setting fire to cars and a fire truck, news reports said.

http://www.nytimes.com/2010/05/06/world/europe/06greece.html?ref=global-home (http://www.nytimes.com/2010/05/06/world/europe/06greece.html?ref=global-home)

[Bud Struggle]

Further:

Hundreds of demonstrators -- including far right wing supporters -- broke away from the marches and tried to storm parliament, shouting "thieves, traitors." At the opposite end of the political spectrum, groups of anarchists hurled Molotov cocktails and ripped-up paving stones at buildings and police, who responded with barrages of tear gas.

Three bank workers -- a man and two women all aged between 32 and 36 -- died of smoke inhalation after demonstrators torched their bank, trapping them. As their colleagues sobbed in the street, four others were rescued from a balcony.

A senior fire department official said demonstrators prevented firefighters from reaching the burning building.

http://finance.yahoo.com/news/3-die-in-Athens-riot-over-apf-4019313165.html?x=0&sec=topStories&pos=main&asset=&ccode=

http://i.dailymail.co.uk/i/pix/2010/05/05/article-1273020-09711B4B000005DC-405_634x556.jpg


http://i.dailymail.co.uk/i/pix/2010/05/05/article-1273020-09715550000005DC-535_634x669.jpg

[Dean]

So now is THIS the Revolution?

Three Reported Killed in Greek Protests

ATHENS — Demonstrations against tough new austerity measures in Greece claimed their first fatalities on Wednesday with three people reported to have died inside a bank building set ablaze by protesters. The reports came as workers across Greece went on strike over deep spending cuts and new taxes aimed at staving off economic collapse.

Tear gas billowed across the central Sintagma Square in front of Parliament as demonstrators trying to storm the Parliament building hurled rocks, paving stones and gasoline bombs. Police responded with tear gas canisters that spread a choking pall of smoke. Fire fighters extinguished blazes in two buildings and protesters threw up barricades, setting fire to cars and a fire truck, news reports said.

http://www.nytimes.com/2010/05/06/world/europe/06greece.html?ref=global-home (http://www.nytimes.com/2010/05/06/world/europe/06greece.html?ref=global-home)

Ah, yes, we've found the piece that will explain the conflict to the US people. It just took awhile to find the example where the leftists were responsible for something abhorrent.

And it will be effective because US liberals tend to have sympathy for anyone who is wrongly killed (though they tend to get embarrassed when it is some right-wing regime doing it). The right wing is indignant and antagonistic when their heroes do something wrong - they should have left the country, an oft-repeated argument for the victims in any nation subjugated to US imperialism. Blaming the victim never felt so good.

[Ele'ill]

http://libcom.org/news/war-zone-athens-three-people-dead-many-buildings-burning-general-strike-march-turns-battle


There are numerous links off of that link ^ that explain in greater detail what happened.

[Bud Struggle]

http://libcom.org/news/war-zone-athens-three-people-dead-many-buildings-burning-general-strike-march-turns-battle


There are numerous links off of that link ^ that explain in greater detail what happened.

Oh, it was those damn Fascists that appeared out of nowhere and set the building on fire and then disappeared. And of course the government, and of course the bank owners.

There's plenty of blame to go around. That being said--as Demento mentioned Greece has a basic subsistance economy and for the last ten years has been living above its means and now needs to tighten it's belt a good deal. Yea, no doubt the politicians stole piles of money along the way (when don't politicians steal money?) But overall Greece has been living the high life without producing as much as it spends for a while. America is doing that now, too.

Even in Socialism someone has to earn the money for it to be shared.

[Lord Testicles]

and of course the bank owners.


When you lock people into a building which has no ceiling sprinklers or fire exits then I would say that you are responsable for those peoples deaths. So yeah, the bank owners are to blame. (http://www.occupiedlondon.org/blog/2010/05/05/an-employee-of-marfin-bank-speaks-on-tonights-tragic-deaths-in-athens/)

[ComradeOm]

1. If Germany had agreed to the bailout as early as the other European states, then Greece would have just continued what it has done for the past 30 years. Nothing would have changed, except that Greece would constantly suck money from the othersWhich assumes that an earlier bail-out did not have strings attached. The Economist (which also had a good article on this further in) is right in pointing out that often overlooked facts that a bail-out was inevitable and, like it or not, Germany and Greece are economically linked. Merkel's error was in not sooner accepting that eventually Germany, again like it or not, was going to have to cough up the cash. By deciding to play politics* the German government has simply deepened the crisis and greatly increased the amount that it will eventually have to pay

*And let's not pretend that this is some sort of principled stand on good government. Merkel simply does not want to make an unpopular decision before a key election


2. The other PIIGS states must understand that a bailout will be EXTREMELY unpleasant for them.A very moral stance to take but we're quite aware of this already, thank you very much

Of course you completely miss the point that we are still very much mired in a global recession and that sucking money of these economies at this juncture is going to kill off any prospects for recovery in these countries for years. Which will in turn make it more difficult for these governments to pay back their debts. Large countries, such as Italy or the UK, have no problem in managing their foreign debt but its the smaller ones that are caught in this trap

[danyboy27]

Oh, it was those damn Fascists that appeared out of nowhere and set the building on fire and then disappeared. And of course the government, and of course the bank owners.

There's plenty of blame to go around. That being said--as Demento mentioned Greece has a basic subsistance economy and for the last ten years has been living above its means and now needs to tighten it's belt a good deal. Yea, no doubt the politicians stole piles of money along the way (when don't politicians steal money?) But overall Greece has been living the high life without producing as much as it spends for a while. America is doing that now, too.

Even in Socialism someone has to earn the money for it to be shared.
and you know what tragic, beccause the governement took care of its citizen, instaured social programs and basicly did what was the moral thing to do, they are punished today.

its just another proof that capitalism and the welfare of human being is blatantly incompatible.

[REVLEFT'S BIEGGST MATSER TROL]

Oh christ no the greek goverment spent lavishly on unessacary pap like free healthcare how dare they now da free market must correct alllllllll.

[Bud Struggle]

When you lock people into a building which has no ceiling sprinklers or fire exits then I would say that you are responsable for those peoples deaths. So yeah, the bank owners are to blame. (http://www.occupiedlondon.org/blog/2010/05/05/an-employee-of-marfin-bank-speaks-on-tonights-tragic-deaths-in-athens/)

Everybody's to blame.

[Bud Struggle]

and you know what tragic, beccause the governement took care of its citizen, instaured social programs and basicly did what was the moral thing to do, they are punished today.

its just another proof that capitalism and the welfare of human being is blatantly incompatible.

The problem is they didn't have the means to take care of their people in the way they want to. It's nice they did try--but they didn't have the money to do it.

And that translates DIRECTLY into the Socialist world view--there has to be certain amounts of labor and raw materials that go into a society to reach a certain standard of living--the Greeks didn't achieve that goal.

As a society they didn't EARN the benefits they were given. Now--do you want to pull benefits away from the Germans who achieve more financially? Well, that's Socialism folks.

Any German Commies what to chime in on this?

[Ele'ill]

Oh, it was those damn Fascists that appeared out of nowhere and set the building on fire and then disappeared. And of course the government, and of course the bank owners.



I don't know if it was the Fascists or not and it does seem far fetched that they would have done something like that as it wouldn't have had a very high success rate- the fire could have been put out, people could have gotten out and the idea of 'framing anarchists destroying a bank' isn't that extreme as anarchists destroy banks all the time.

The fascists in Greece DO work with the police and vice a versa- The police DO frame anarchists and not just in Greece- The fascists are a HUGE problem in Greece. So the idea of fascists framing someone isn't far fetched but it is far fetched that they'd use that particular tactic.


My main point in linking that libcom article was that the person who worked at the bank came forward and ridiculed the bank owners, the police and the relationship systems that exist between corporations or institutions and state military although this wasn't mentioned verbatim.

[REVLEFT'S BIEGGST MATSER TROL]

Everybody's to blame.

How dare those damn paupers spend so frivialously as if they have a RIGHT to a house with running water!

[Bud Struggle]

Which assumes that an earlier bail-out did not have strings attached. The Economist (which also had a good article on this further in) is right in pointing out that often overlooked facts that a bail-out was inevitable and, like it or not, Germany and Greece are economically linked. Merkel's error was in not sooner accepting that eventually Germany, again like it or not, was going to have to cough up the cash. By deciding to play politics* the German government has simply deepened the crisis and greatly increased the amount that it will eventually have to pay. Well, that's all true but it thay had actually thought about it Greece and maybe Spain and Portugal would have never been part of the EU. They are only member states because of their geography not because any special economic abilities. So the pont is now that these countries are linked (and there's no way to disolve that link) the less robust economic powers are going to be a constant drain on the stronger countries. And the weaker coutries will continually bring down the standard of living for the stronger countries.



Of course you completely miss the point that we are still very much mired in a global recession and that sucking money of these economies at this juncture is going to kill off any prospects for recovery in these countries for years. Which will in turn make it more difficult for these governments to pay back their debts. Large countries, such as Italy or the UK, have no problem in managing their foreign debt but its the smaller ones that are caught in this trap I agree. The new debt load will have these small nations paying off their debt for a long time to come and will in iffect reduce them to Third World Nation status.

The problem is that they are simply living way above their means. The standard of living in Greece isn't the same as it is in the US and people can't afford the things they do here. That being said--the US gets it's higher standard of living by selling things to people that can't afford them and have to borrow to pay them---like Greece.

It is indeed a nasty litle circle we are in.


How dare those damn paupers spend so frivialously as if they have a RIGHT to a house with running water! That's an interesting question. But is it the German citizen's obligation to pay for the Greek citizen's house? What is the nature of that obligation and how far does it extend?

[ComradeOm]

Well, that's all true but it thay had actually thought about it Greece and maybe Spain and Portugal would have never been part of the EUIf ifs and ands were pots and pans...

There is absolutely no point wishing for what might be in an ideal world, not when it comes to a high-stakes game of international finance. Which is something that Germany should have borne in mind when it decided to 'punish' Greece. The reality is that the EU has to deal with this problem as it is... something that they have singularly failed to do thus far


That being said--the US gets it's higher standard of living by selling things to people that can't afford them and have to borrow to pay them---like Greece.As does a heavily export-orientated country such as Germany

[Bud Struggle]

If ifs and ands were pots and pans...

There is absolutely no point wishing for what might be in an ideal world, not when it comes to a high-stakes game of international finance. Which is something that Germany should have borne in mind when it decided to 'punish' Greece. The reality is that the EU has to deal with this problem as it is... something that they have singularly failed to do thus far.

Then I think it means that there is going to a "smoothing" of standards of living all throughout Europe. The people that produce more will get less benefit frorm their work and those that produce will get more benefit from the work they do.

I guess that's Socialism.

[Robert]

I honestly would have thought the left would see the stress and collapse of the international banking system, over Greek debt if not something else, as so inevitable a step in the direction of revolution that it would be almost ... welcome.

Not that any of you enjoy pain and suffering, but if the system must fall, and can only fall via revolution and not reform ... well, if not now ... when? If not triggered by defaults on Greek debt, then over what?

Or do most of you see a non-violent transition to communism?

[Bud Struggle]

From Paul Krugman:

A Money Too Far

By PAUL KRUGMAN
Published: May 6, 2010

So, is Greece the next Lehman? No. It isn’t either big enough or interconnected enough to cause global financial markets to freeze up the way they did in 2008. Whatever caused that brief 1,000-point swoon in the Dow, it wasn’t justified by actual events in Europe.

Nor should you take seriously analysts claiming that we’re seeing the start of a run on all government debt. U.S. borrowing costs actually plunged on Thursday to their lowest level in months. And while worriers warned that Britain could be the next Greece, British rates also fell slightly.

That’s the good news. The bad news is that Greece’s problems are deeper than Europe’s leaders are willing to acknowledge, even now — and they’re shared, to a lesser degree, by other European countries. Many observers now expect the Greek tragedy to end in default; I’m increasingly convinced that they’re too optimistic, that default will be accompanied or followed by departure from the euro.

In some ways, this is a chronicle of a crisis foretold. I remember quipping, back when the Maastricht Treaty setting Europe on the path to the euro was signed, that they chose the wrong Dutch city for the ceremony. It should have taken place in Arnhem, the site of World War II’s infamous “bridge too far,” where an overly ambitious Allied battle plan ended in disaster.

The problem, as obvious in prospect as it is now, is that Europe lacks some of the key attributes of a successful currency area. Above all, it lacks a central government.

Consider the often-made comparison between Greece and the state of California. Both are in deep fiscal trouble, both have a history of fiscal irresponsibility. And the political deadlock in California is, if anything, worse — after all, despite the demonstrations, Greece’s Parliament has, in fact, approved harsh austerity measures.

But California’s fiscal woes just don’t matter as much, even to its own residents, as those of Greece. Why? Because much of the money spent in California comes from Washington, not Sacramento. State funding may be slashed, but Medicare reimbursements, Social Security checks, and payments to defense contractors will keep on coming.

What this means, among other things, is that California’s budget woes won’t keep the state from sharing in a broader U.S. economic recovery. Greece’s budget cuts, on the other hand, will have a strong depressing effect on an already depressed economy.

So is a debt restructuring — a polite term for partial default — the answer? It wouldn’t help nearly as much as many people imagine, because interest payments only account for part of Greece’s budget deficit. Even if it completely stopped servicing its debt, the Greek government wouldn’t free up enough money to avoid savage budget cuts.

The only thing that could seriously reduce Greek pain would be an economic recovery, which would both generate higher revenues, reducing the need for spending cuts, and create jobs. If Greece had its own currency, it could try to engineer such a recovery by devaluing that currency, increasing its export competitiveness. But Greece is on the euro.

So how does this end? Logically, I see three ways Greece could stay on the euro.

First, Greek workers could redeem themselves through suffering, accepting large wage cuts that make Greece competitive enough to add jobs again. Second, the European Central Bank could engage in much more expansionary policy, among other things buying lots of government debt, and accepting — indeed welcoming — the resulting inflation; this would make adjustment in Greece and other troubled euro-zone nations much easier. Or third, Berlin could become to Athens what Washington is to Sacramento — that is, fiscally stronger European governments could offer their weaker neighbors enough aid to make the crisis bearable.

The trouble, of course, is that none of these alternatives seem politically plausible.

What remains seems unthinkable: Greece leaving the euro. But when you’ve ruled out everything else, that’s what’s left.

If it happens, it will play something like Argentina in 2001, which had a supposedly permanent, unbreakable peg to the dollar. Ending that peg was considered unthinkable for the same reasons leaving the euro seems impossible: even suggesting the possibility would risk crippling bank runs. But the bank runs happened anyway, and the Argentine government imposed emergency restrictions on withdrawals. This left the door open for devaluation, and Argentina eventually walked through that door.

If something like that happens in Greece, it will send shock waves through Europe, possibly triggering crises in other countries. But unless European leaders are able and willing to act far more boldly than anything we’ve seen so far, that’s where this is heading.

[LeftSideDown]

and you know what tragic, beccause the governement took care of its citizen, instaured social programs and basicly did what was the moral thing to do, they are punished today.

its just another proof that capitalism and the welfare of human being is blatantly incompatible.

They took care of their citizens with money they didn't have. Thats like saying someone who gets a credit card and buys a new car, gets a downpayment on a house, buys a flat screen, a new computer, an Xbox, and a puppy and eventually has to get rid of it all because his income is 30000 a year is a victim of capitalism; hes a victim of fiscal irresponsibility and living beyond his means. It is not "right" to promise things you cannot provide because people want them.

[REVLEFT'S BIEGGST MATSER TROL]

They took care of their citizens with money they didn't have. Thats like saying someone who gets a credit card and buys a new car, gets a downpayment on a house, buys a flat screen, a new computer, an Xbox, and a puppy and eventually has to get rid of it all because his income is 30000 a year is a victim of capitalism; hes a victim of fiscal irresponsibility and living beyond his means. It is not "right" to promise things you cannot provide because people want them.

Yes. Because the basic social programmes launched by the Greek goverment which provided people with some of the minimum essentials for a civilized existence can easily be compared to buying a flatscreen tv and an xbox.

Again I have to wonder, what planet do you guys live on?

[LeftSideDown]

Yes. Because the basic social programmes launched by the Greek goverment which provided people with some of the minimum essentials for a civilized existence can easily be compared to buying a flatscreen tv and an xbox.

Again I have to wonder, what planet do you guys live on?

So its okay for governments to guarantee anything they want no matter how little they produce as long as you deem it necessary?

[Ele'ill]

Everybody's to blame.

The only one that can tell use who's at fault is the one that's been there all along- The Riot Dog.

http://www.thisblogrules.com/2010/03/dog-that-hasnt-missed-a-single-riot-for-years.html/

Maybe it's to blame? :confused:

[bcbm]

The only one that can tell use who's at fault is the one that's been there all along- The Riot Dog.

http://www.thisblogrules.com/2010/03/dog-that-hasnt-missed-a-single-riot-for-years.html/

Maybe it's to blame? :confused:

don't you ever talk bad about riot dog