Bank runs and a possible stock market crash... who didn't see this coming? Apparently a lot of people.
I've been saying it for probably at least five years. Greece is broke. They were broke yesterday and they will still be broke tomorrow. The money just aint there. There are a lot of reasons for this clusterbleep - the Euro was a
horrible idea, the predatory way the emergency loans were structured
etc. But the bottom line is that this is a Greek tragedy mostly of their
own making. You can’t run a country that promises everyone a minimum
standard of living and government pensions for all while no one pays
taxes.
“The problem with socialism is that sooner or later you run out of
other people’s money to spend. “ -Margaret (Baroness) Thatcher
Asad Rustom on the Patriarch Sylvester
2 hours ago
8 comments:
It may be an unavoidable financial ruin for Greece, but the removal of the atheistic regime of Syriza is a paramount cause. A default will discredit them entirely.
Not sure how the Maggie quote enters into this. Since Syriza took office they have run a +1.5% primary budget surplus. Greece was indebted by the right wing ND and the centrist PASOK parties.
The quote is apt because Greece went on a socialist binge with Europe's credit card.
As AG notes, Greece has not had a righting government in its democratic history. They were all just variations of socialism.
This allegation of "socialism" is the exact opposite of what the data actually say.
--Greece spends less per capita in public healthcare than any other pre-2004 EU member (2010 Eurostat numbers)
--The average Greek pension is less than €700 (ie, pensioners have to live on less than $10,000/year), and 60% of the pensions are less than €400
--In annual hours worked, Greeks work more hours than any other European OECD country.
And this is of course not to mention that 35% of the population is under the poverty rate (highest in EZ) and that unemployment is north of 25%.
This is not Greece living high on Europe's hog.
So where is all the money? Well, of the first two bailout tranches, 92% went to bail out (mostly) French and German banks, never entering into the Greek economy. Meanwhile, the IMF's greatest profit last year came from Greece to the tune of $16b: in other words, austerity forced on the already impoverished Greek population is being used to subsidise bankers: the opposite of the claim that Greece is mooching off of Europe.
Dear Rabid Gandhi,
I am sympathetic to the point you are making (Greece has been more than amply punished, and the rest of Europe should cut them some slack by this point), but I do not think that you are really engaging with John's point. You are simply talking past him.
Sure, Greek pension and healthcare payments are miserly now, but John is talking about Greece living like Socialists back in the aughts. Greek spending was much more profligate then. That is John's point. There is no free lunch. Germany offered to loan Greece quite a lot of money on very easy terms, and Greece spent that money on salaries for an inflated public sector and some ill-advised boondoggle of an Olympic games. That was the "Socialism"* to which John alludes.
You are surely correct that Greece is no longer behaving so profligately. Now they are stuck in grinding austerity as their creditors demand that Greeks pay their loans with money that Greece does not have. But John is not criticizing their present behavior. He is criticizing their behavior in the aughts.
* One can quibble as to whether the Greek regime in the aughts should be called "Socialist" or "Crony Capitalist." Both disparagements have some merit. At the point that one is quibbling at terminology, however, one has already conceded the essential force of the substantive critique.
I agree with you Gregory that there is a fine line between Crony Capitalism and a type of socialism that is actually socialism for the Rich and harsh pull-yourself-by-your-bootstraps capitalism for the rest of us.
Nevertheless, the data, once again, do not show the Greeks as ever (even in the aughts) having had an exorbitant lifestyle compared with the rest of Europe. The social services (public housing, healthcare, etc.) have always been at the bottom of the EZ. The only place where they were in the middle of the pack (until austerity started in 2010) was in pensions, but the reason for this is that they have one of the oldest populations in Europe. Otherwise incoming capital from Europe has not gone to an overbloated public exchequer; it has gone to pay interest on the ill-advised investments from French and German banks.
If one wants to point to socialism in Europe, the countries that are more obviously socialist are the Scandinavian countries, Belgium, Austria... yet for some reason the Thatcher quote is not brought up for them, but rather for Greece which never achieved half the level of social services.
Lastly, the point about German loans is key, except it is crucial to understand that these loans were not given from goodheartedeness and they only exacerbate the problem. To wit, the EU has been designed with a fatal flaw: you cannot have countries in a trade union all running trade surpluses: it's mathematically impossible. So what naturally happens is that capital accumulates in the north, while credit bubbles are created in the south to relieve the excess capital. (Ironically, this is the same error Germany made after the Franco-Prussian War when the indemnifications they demanded from France swamped Germany with excess capital and thus led to the stock market bubble and crash of 1871-73, except this time theyre stuck in the same currency-- yikes).
Bottom line is the whole idea that these credit crises are due to socialism in the broader sense is just an interpretation in search of facts. The data say the exact opposite.
Greeks don't get a Scandinavian or German lifestyle because they're not producing as much. It's as if a schlep like me tried to live the same lifestyle as a neurosurgeon or genius entrepreneur. I don't generate the same income, so the difference has to be made up by credit which, on the other side of the ledger, is somebody else's savings.
Greece can and should default, like they've already done with the IMF. But then the real state of the Greek economy becomes clear: they don't produce enough to live like Germans and Scandinavians; their current living standards are all OPM.
Of course, to suggest that humans and the cultures they generate might be fundamentally different, and that these differences can have real-world effects, is one of those things we can't discuss. So we deny reality and pretend there are no differences between Greeks and anybody else.
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