A Greek Tragedy

oppenheimer1

So Greece is in turmoil, a national strike and their Unions refusing to take their governments austerity package, which seems to be quite tame to what we got here (pay freeze and a partial recruitment ban in the public service).

From the news tonight it looks like Germany and France are going to guarantee Greek government bonds to prevent default. One would imagine this will come at a price though. How do people thing this will go down in Greece (being punished by a country that some people are old enough to remember that they invaded). Indeed how will it go down in Germany? What impact will have on us and will the hedge funds $75bn bet against the euro pay off? This Greek issue could well have a huge impact on all our futures.

My own opinion is that the eurozone must stand behind the weak members in order to defend the currency. I also think they were too eager to invite in Portugal and Greece to the club considering it was known that the figures they provided might not be reliable. The help provided I feel will come at a significant price and will probably cause social turmoil in Greece, I don't think they will take too kindly being told by former occupiers what to do (particularly the older generation). Worst case scenario the whole thing could fall apart and Greece is forced/chooses to withdraw from both the currency and union.

Do we agree? Is the euro on the precipice and staring into the abyss?

DogmaticLefty

Rule #1 of politics: never let a good crisis go to waste.

thebman

Doesn't really matter what they think, if they want money and only one person will lend to them that they will consider borrowing from they will have to put up with whatever conditions are put in place.

nesf

Any bailout will have to come with quite serious austerity measures attached to correct the Greek budgetary issues both in the short and long term if it's going to do any good.

That said, the Greek economy is a real mess and it's going to be a nightmare to turn things around.

SLUSK

I hope the EU kicks Greece out and that Greece sinks into the sea. This will probably not happen. Some sort of bailout is very likely.

yoshytoshy

Higher interest rates from the central bank maybe on the cards ?

ei.sdraob

oppenheimer1 wrote: »

What impact will have on us

everybody in the eurozone is becoming "poorer" due to the currency loosing is value

this will eventually lead to imported goods to inflate (oil being priced in dollars for example)

as I said in another thread the unions (here and abroad) will drag (and have done so) us all down into a **** position

SkepticOne

It would probably suit Ireland to have a weaker Euro given the current state of the economy here. The Germans, on the other hand, may not be too happy.

ei.sdraob

SkepticOne wrote: »

It would probably suit Ireland to have a weaker Euro given the current state of the economy here. The Germans, on the other hand, may not be too happy.

no it wont

we are a small country and dont produce anything and everything within the economy like Germany does, and be able switch to local products if imports rise in price

the rising price (well the euro is falling against dollar, so rising from our point of view) of oil alone would have knock on effect on practically every industry in Ireland as demonstrated only 2 years ago

overall it wont be a good thing, most people are not doing to bad at them moment since the cost of living went down, but falling wages while prices are rising (biflation) wont be "pretty"

Cool Mo D

ei.sdraob wrote: »

no it wont

we are a small country and dont produce anything and everything within the economy like Germany does, and be able switch to local products if imports rise in price

the rising price (well the euro is falling against dollar, so rising from our point of view) of oil alone would have knock on effect on practically every industry in Ireland as demonstrated only 2 years ago

overall it wont be a good thing, most people are not doing to bad at them moment since the cost of living went down, but falling wages while prices are rising (biflation) wont be "pretty"

Ireland is one of largest exporters per capita in the world, so it would indeed suit us to have a weaker euro. We also have the largest trade surplus relative to GDP in the EU, so a weak euro benefits our exports more than it takes away from our import power.

http://www.tradingeconomics.com/Economics/Balance-Of-Trade.aspx?Symbol=IEP

http://www.mapsofworld.com/thematic-maps/world-export-map.htm

Amhran Nua

Cool Mo D wrote: »

Ireland is one of largest exporters per capita in the world, so it would indeed suit us to have a weaker euro.

It benefits those FDI setups (and the billions in capital flight from the economy they represent) in the country that aren't exporting to Europe, you mean.

SkepticOne

ei.sdraob wrote: »

we are a small country and dont produce anything and everything within
the rising price (well the euro is falling against dollar, so rising from our point of view) of oil alone would have knock on effect on practically every industry in Ireland as demonstrated only 2 years ago

So you are against reducing labour and other internally generated costs in Ireland? Like the union leaders in Ireland you are against this "race to the bottom" that would happen if those who complain about lack of competitiveness had their way?

Amhran Nua

SkepticOne wrote: »

Like the union leaders in Ireland you are against this "race to the bottom" that would happen if those who complain about lack of competitiveness had their way?

You should differentiate between union leaders (public sector) and wages (private sector), I think.

ei.sdraob

Cool Mo D wrote: »

Ireland is one of largest exporters per capita in the world, so it would indeed suit us to have a weaker euro. We also have the largest trade surplus relative to GDP in the EU, so a weak euro benefits our exports more than it takes away from our import power.

http://www.tradingeconomics.com/Economics/Balance-Of-Trade.aspx?Symbol=IEP

http://www.mapsofworld.com/thematic-maps/world-export-map.htm

1) theres a difference between exporting locally made products (butter)

2) and exporting repackaged products whose parts are made elsewhere (computers, medical devices)

in case of 1) then yes you are correct, in case of 2) there is nothing "better off" about it


http://www.cso.ie/statistics/botmaintrpartners.htm

if you notice our main trade is with other eu countries (most of whom are in euro) so once again not much gain

anyone holding euro is being made poorer

as per graph above we all effectively got 5-10% paycut the effects of which will take some time to affect us, but negatively affect us all they will

SkepticOne

Amhran Nua wrote: »

You should differentiate between union leaders (public sector) and wages (private sector), I think.

As far as I'm aware union leaders oppose wages coming down generally in both private and public sectors. I was wondering when ei.sdraob had his road to Damascus experience where he saw a bearded figure telling him the error of his ways.

SkepticOne

ei.sdraob wrote: »

as per graph above we all effectively got 5-10% paycut the effects of which will take some time to affect us, but negatively affect us all they will

Hello Jack O'Connor

ei.sdraob

SkepticOne wrote: »

So you are against reducing labour and other internally generated costs in Ireland? Like the union leaders in Ireland you are against this "race to the bottom" that would happen if those who complain about lack of competitiveness had their way?

im against devaluation since it makes everyone poorer EQUALLY

thats exactly whats happening as per graph before

theres a reason why we have a progressive taxation system, the poorest get affected most if we had a straight taxation system, devaluing (in this case due to loss of confidence thanks to Greece) hurts the poorest more


and if you need to know, this slide (against the dollar) has been a slight positive for me and my company (most of expenditure and income is in dollars which now buys more since im in profit thankfully )

BUT once again i think its unfair on the general population who are being made poorer without realizing it , how do you think the unions would feel if we tell them they are now 5-10% poorer

ei.sdraob

SkepticOne wrote: »

Hello Jack O'Connor

it must be a cold day in hell if im being equaled to a beard

SkepticOne

ei.sdraob wrote: »

it must be a cold day in hell if im being equaled to a beard

Deliberately so because a lot of your arguments are wrong in a similar way that the likes of Jack O'Connor's and David Begg's arguments are wrong.

ei.sdraob

SkepticOne wrote: »

Deliberately so because a lot of your arguments are wrong in the way that the likes of Jack O'Connor's and David Begg's arguments are wrong.

how are my arguments wrong? please do explain


theres a difference between "competitive devaluation" and "loss of confidence devaluation"

anyways both of the above transfer wealth from everyone to the few exporters (wow sounds like socialism robbing the many to help the few), but in the end everyone ends-up "poorer"

see UK as an example of how it didnt help much, or China where the general population is deliberately kept piss poor so to implement mercantilist policies against the US


once again i personally have gained out of this, but at the expense of everyone else, i should be arguing for devaluation but im not since currency manipulation is only a way of fiddling with the figures, not an actual way of creating more wealth due to increased productivity

mike65

oppenheimer1 wrote: »

How do people thing this will go down in Greece (being punished by a country that some people are old enough to remember that they invaded). Indeed how will it go down in Germany?

I don't think they will take too kindly being told by former occupiers what to do (particularly the older generation). Worst case scenario the whole thing could fall apart and Greece is forced/chooses to withdraw from both the currency and union.

The Greeks will have to be glad someone else is paying for their survival, its good enough for them. Germans on the other hand may indeed wonder why they are being asked to underwrite essentially corrupt states like Greece (and indeed Ireland to a lesser degree).

SkepticOne

ei.sdraob wrote: »

how are my arguments wrong? please do explain

theres a difference between "competitive devaluation" and "loss of confidence devaluation"


anyways both of the above transfer wealth from everyone to the few exporters (wow sounds like socialism robbing the many to help the few), but in the end everyone ends-up "poorer"

This is also the argument against reduction of wages that Jack O'Connor would make. Yes the exporter can now compete better abroad but the wage earners have become poorer. Whereas Jack is concerned about wages and thinks he is helping the economy by keeping them high, so you are with the value of the euro.

Yes, if the euro loses value our buying power in, say, dollar terms becomes less in the short term, our buying power is going to come down one way or the other. Unless, like Cowen, you believe "we have turned the corner".

ei.sdraob

SkepticOne wrote: »

This is also the argument against reduction of wages that Jack O'Connor would make. Yes the exporter can now compete better abroad but the wage earners have become poorer. Where as Jack is concerned about wages and thinks he is helping the economy by keeping them high, so you are with the value of the euro.

Yes, if the euro loses value our buying power in, say, dollar terms becomes less in the short term, our buying power is going to come down one way or the other. Unless, like Cowen, you believe "we have turned the corner".

our friend Jack is making that argument because it would only hurt his PS fat cat members

devaluation hurts everyone equally, and since in Ireland we are not self-sufficient that means anything that gets imported from outside eurozone and cant be created here (which is just about everything) will shoot up in value, this also has knock on effect on things that are created here (think farm produce going up due to diesel costs rising)


once again devaluation might "appear" to make us more competitive and/or productive but in reality it wont and in long term it doesnt make a difference especially if main trade partners devalue their fiat currencies too ...
and remember this devaluation is due to lack of confidence not preplanned

/

SkepticOne

ei.sdraob wrote: »

our friend Jack is making that argument because it would only hurt his PS fat cat members

devaluation hurts everyone equally, and since in Ireland we are not self-sufficient that means anything that gets imported from outside eurozone and cant be created here (which is just about everything) will shoot up in value, this also has knock on effect on things that are created here (think farm produce going up due to diesel costs rising)


once again devaluation might "appear" to make us more competitive and/or productive but in reality it wont and in long term it doesnt make a difference especially if main trade partners devalue their fiat currencies too ...
and remember this devaluation is due to lack of confidence not preplanned

But these things you talk about becoming more expensive are going to happen anyway relative to people's incomes regardless of what currency those incomes are denominated in if we are not competitive. This is where I disagree with you and Jack O'Connor (though wages not the euro in the case of Jack). Neither you nor Jack are giving thought to competitiveness.

ei.sdraob

SkepticOne wrote: »

But these things you talk about becoming more expensive are going to happen anyway relative to people's incomes regardless of what currency those incomes are denominated in if we are not competitive. This is where I disagree with you and Jack O'Connor (though wages not the euro in the case of Jack). Neither you nor Jack are giving thought to competitiveness.

your missing the point,

our high wages are making us uncompetitive when compared to other eurozone members

the currency we use on the other hand affects everyone in the eurozone


those are two very different issues

SkepticOne

ei.sdraob wrote: »

your missing the point,

our high wages are making us uncompetitive when compared to other eurozone members

the currency we use on the other hand affects everyone in the eurozone

those are two very different issues

Obviously a reduction in the Euro would not change our competitive position among the eurozone countries but it would change our competitive position among countries outside the eurozone. Our overall competitive position would improve just like it would improve with an overall reduction in wages. The principle is the same. It is about improving Ireland's competitive position.

rightwingdub

ei.sdraob wrote: »

your missing the point,

our high wages are making us uncompetitive when compared to other eurozone members

the currency we use on the other hand affects everyone in the eurozone


those are two very different issues

I agree wages need to come dramatically if the Irish economy is to regain competitiveness, lets call it short term pain for long term gain.

Idbatterim

I am 110% against any bailout for any state! even if that includes Ireland! The Greeks like here without knowing much about the situation have obviously taken the mick. There have to be consequences, its not on that competent prudent members that have subsidised countries like Ireland to the tune of countless billions, then we tell ourselves our Boom is different that any other in history, pay ourselves multiples of the salaries in other countries, that are more advanced and developed, go bust and hold out our hands again! Im imagine ther German mainly are getting infuriated at this behaviour. The only thing that will effect a change in behaviour is severe consequences!