Greece Debt Crisis - Après Oxi

Labarbapostiza · 24-07-2015 6:12pm

Permabear wrote: »

This post had been deleted.

Yes, I know it's in the MOU. But if you notice, the signatures on that document are Brian Lenihan and Patrick Honohan. Most of proposals in the memorandum would be the dictated by the Troika. and you could assume all propositions were dictated by the Troika. Ajai Chopra has said he did not ask for a cut in the minimum wage. As I said, he could be lying. But the other narrative is that Cowen and Lenihan put the cut in the memorandum, so they could turn around and shrug their shoulders, and blame the Troika. The Troika weren't going to reject the memorandum on the basis of a cut in minimum wage being added.

24-07-2015 6:40pm

Labarbapostiza wrote: »

Yes, I know it's in the MOU. But if you notice, the signatures on that document are Brian Lenihan and Patrick Honohan. Most of proposals in the memorandum would be the dictated by the Troika. and you could assume all propositions were dictated by the Troika. Ajai Chopra has said he did not ask for a cut in the minimum wage. As I said, he could be lying. But the other narrative is that Cowen and Lenihan put the cut in the memorandum, so they could turn around and shrug their shoulders, and blame the Troika. The Troika weren't going to reject the memorandum on the basis of a cut in minimum wage being added.

Was Tsipras' signature on the Greek Memorandum of Understanding?

Labarbapostiza · 24-07-2015 6:52pm

Deleted User wrote: »

Was Tsipras' signature on the Greek Memorandum of Understanding?

Was this question an attempt at cunning? Like the questions the temple Jews used to ask Jesus to trip him up.

Brian Cowen's signature is not on the Irish Memorandum of Understanding. It's signed by Brian Lenihan, minister for Finance, and Patrick Honohan, governor of the Irish central bank. So, what's your point?

24-07-2015 6:58pm

Labarbapostiza wrote: »

Was this question an attempt at cunning? Like the questions the temple Jews used to ask Jesus to trip him up.

Brian Cowen's signature is not on the Irish Memorandum of Understanding. It's signed by Brian Lenihan, minister for Finance, and Patrick Honohan, governor of the Irish central bank. So, what's your point?

Well it appears that you are doing your best to paint the contrast between the actions and efficacy of two states and their respective representatives as anything but a contrast.

FG inherited a FF signed MOU and made changes (equivalent measures) which you suggest had nothing to do with the Troika.

Syriza inherited a PASOK signed MOU and you pronounce that the Troika does not do negotiations.

It just doesn't seem to tally very well, unless you squint very hard.

K-9 · 24-07-2015 6:59pm

Labarbapostiza wrote: »

Yes, I know it's in the MOU. But if you notice, the signatures on that document are Brian Lenihan and Patrick Honohan. Most of proposals in the memorandum would be the dictated by the Troika. and you could assume all propositions were dictated by the Troika. Ajai Chopra has said he did not ask for a cut in the minimum wage. As I said, he could be lying. But the other narrative is that Cowen and Lenihan put the cut in the memorandum, so they could turn around and shrug their shoulders, and blame the Troika. The Troika weren't going to reject the memorandum on the basis of a cut in minimum wage being added.

Minimum wage cut, water rates, property tax, were all in the FF/Green plan for Economic Recovery. The Troika had landed a few days before. My recollection was FF had been working on it pre the Troika coming.

Labarbapostiza · 24-07-2015 9:12pm

K-9 wrote: »

Minimum wage cut, water rates, property tax, were all in the FF/Green plan for Economic Recovery. The Troika had landed a few days before. My recollection was FF had been working on it pre the Troika coming.

The minimum wage is a long standing bug bear among certain types. Gentleman ranchers and gentleman publicans for instance. The big men of little Ireland.

Although as of yet it's still hazy. I believe Renua's big shake up, is major cuts to the minimum wage and the dole. Though it will be presented as the same "activation of the workforce, structural reform" hogwash as the MOU.

The gombeen man is often a short sighted little hob goblin. He might think he's cute screwing the 160 quid out of the minimum wage people working for him, but that means the minimum wage people who drank in his pub, are now drinking at home, because they no longer have that 160 quid. And even if it's not that direct, every contractionary measure has a multiplier effect.

Cutting the minimum wage needlessly made the situation worse. But I'm sure it made a few people feel good for a while.

Rightwing · 24-07-2015 9:26pm

Labarbapostiza wrote: »

The minimum wage is a long standing bug bear among certain types. Gentleman ranchers and gentleman publicans for instance. The big men of little Ireland.

Although as of yet it's still hazy. I believe Renua's big shake up, is major cuts to the minimum wage and the dole. Though it will be presented as the same "activation of the workforce, structural reform" hogwash as the MOU.

The gombeen man is often a short sighted little hob goblin. He might think he's cute screwing the 160 quid out of the minimum wage people working for him, but that means the minimum wage people who drank in his pub, are now drinking at home, because they no longer have that 160 quid. And even if it's not that direct, every contractionary measure has a multiplier effect.

Cutting the minimum wage needlessly made the situation worse. But I'm sure it made a few people feel good for a while.

This part is true. A bit like Joan Burton's classic, 'the welfare punters' spend boosts the economy'. That afforded me a chuckle if nothing else.

However, the fact remains that the minimum wage raises the unemployment level.

The problem as I see it, is with immigrants and the downward effect they have on the minimum wage. I would like the market to determine the wage level, but I do accept that you can't flood the country with immigrants from bangladesh and the likes and then let the market find the equilibrium price.

Godge · 24-07-2015 9:41pm

Labarbapostiza wrote: »

The minimum wage is a long standing bug bear among certain types. Gentleman ranchers and gentleman publicans for instance. The big men of little Ireland.

Although as of yet it's still hazy. I believe Renua's big shake up, is major cuts to the minimum wage and the dole. Though it will be presented as the same "activation of the workforce, structural reform" hogwash as the MOU.

The gombeen man is often a short sighted little hob goblin. He might think he's cute screwing the 160 quid out of the minimum wage people working for him, but that means the minimum wage people who drank in his pub, are now drinking at home, because they no longer have that 160 quid. And even if it's not that direct, every contractionary measure has a multiplier effect.

Cutting the minimum wage needlessly made the situation worse. But I'm sure it made a few people feel good for a while.

So all credit to FG and Labour for heroically resisting the Troika and restoring the cut?

Labarbapostiza · 24-07-2015 9:57pm

Rightwing wrote: »

This part is true. A bit like Joan Burton's classic, 'the welfare punters' spend boosts the economy'. That afforded me a chuckle if nothing else.

It's true because it is true. You can be sure it never crossed the mind of the gombeen, how much money would be sucked out of the local economy he depended on.

However, the fact remains that the minimum wage raises the unemployment
level.

It's not a fact. And the only research you'll find that confirms your 'fact', will have emanated from a dodgy right-wing think tank, written by a hack economist; it will probably contain a meta study of Swedish papers (conveniently in Swedish). Even the English Tories have embraced the positive effects of the minimum wage.

Labarbapostiza · 24-07-2015 10:11pm

Godge wrote: »

So all credit to FG and Labour for heroically resisting the Troika and restoring the cut?

Yeah, they could look heroic........Because it appeared they'd won a concession from the Troika....When the Troika hadn't conceded anything.

You'd have to laugh.

K-9 · 24-07-2015 10:56pm

Funnily enough Renua came out with stuff today on white collar crime, reckless lending, directors fraudulent trading and abuse of limited liability. More stuff like that and they might turn into a credible part to vote for.

Rightwing · 24-07-2015 11:01pm

Labarbapostiza wrote: »

It's true because it is true. You can be sure it never crossed the mind of the gombeen, how much money would be sucked out of the local economy he depended on.

It's not a fact. And the only research you'll find that confirms your 'fact', will have emanated from a dodgy right-wing think tank, written by a hack economist; it will probably contain a meta study of Swedish papers (conveniently in Swedish). Even the English Tories have embraced the positive effects of the minimum wage.

Think about it in relation to a supply and demand graph, and a price floor.

Is there are any minimum wage rate that you think will that start to impact on employers demand for labour ?

matthew8 · 25-07-2015 1:18am

Very few people actually work on the minimum wage. Most low paid workers are paid above it. It's really just a political talking point.

Labarbapostiza · 25-07-2015 1:28am

K-9 wrote: »

Funnily enough Renua came out with stuff today on white collar crime, reckless lending, directors fraudulent trading and abuse of limited liability. More stuff like that and they might turn into a credible part to vote for.

Well, maybe it's a little like fringe left-wing parties......They can make grandiose and popular promises while they're not in power.

The resistance to the pursuit of white collar crime is not limited to our elected officials. The judiciary do not want to put people from their golf or boating clubs behind bars, they'd rather jail homeless people for burglary, when found sleeping in derelict NAMA buildings. And the "professions", believe it's bad for business. One developer, who's back in the saddle, who I can't name, his cachet, or unique selling point, is corruption. The elements that compose the Troika make a lot of recommendations, literally across the global, cracking down on white collar crime is never one of them. It's just FIFA, with different shaped balls.

Rightwing · 25-07-2015 9:51am

matthew8 wrote: »

Very few people actually work on the minimum wage. Most low paid workers are paid above it. It's really just a political talking point.

Who needs a minimum wage when you can just roll out the fine Labour scheme called jobsbridge

washman3 · 25-07-2015 10:27am

K-9 wrote: »

Funnily enough Renua came out with stuff today on white collar crime, reckless lending, directors fraudulent trading and abuse of limited liability. More stuff like that and they might turn into a credible part to vote for.

Can't remember a single one of them raising any of these issues when they belonged to their previous parties.!
Just wonder why it has become such an important issue for them now.

SeanW · 26-07-2015 8:07pm

Deleted User wrote: »

Sean, can you do us a favour and talk us through an alternative scenario to what has happened? It is far far easier to criticise than to create.

Let's imagine we're back at the start of the whole Greek nightmare. You get to call the shots.
What does Greece do?

How does that alternative choice affect the relationships Greece has with the EU, the EZ and other trading partners?

Where would Greece be now?

Thanks

OK, I'll bite:

What does Greece do?

Start by recognising the root causes of the crisis. There were two, equal causes. Firstly, the government wasted (borrowed) money. Second, they had an inappropriate currency and monetary policy. The first of these are agreed I think between most everyone.

Second, more controversial, is that Greece had an inappropriate monetary policy. Not only did their interest rates plummet for no reason, but the ECB pursued a loose monetary policy at the behest of Germany and France, which all main schools of economic thought (except Eurocrat ones it seems) including the dominent Keynesian school, but also the smaller Austrian school, agree that having an interest rate that's "too low" will cause a bubble somewhere, be counter-cyclical, or otherwise lead UNAVOIDABLY towards disaster. Granted, Keynesian and Austrian economics differ on what is "too low" but I suspect either measure would have red-flagged Greece's interest rate as being so. Good chance both, and by large margins.

Either of these factors (their awful gov't, Euro membership) on their own could have put Greece under. Combined, Greece had no chance. This MUST be understood if Greece is to have ANY chance of recovery.
So to start they should have left the Euro, took back control of their monetary policy with the Drachma.
Impose "haircuts" on the international lenders, chiefly Goldman Sachs and the Western banks. They lent stupidly, were and should only have been, someone elses problem.
Seek help ONLY from the International Monetary Fund. The IMF could have lent them what they needed to keep the government functioning, while they re-organised their government and banking system.
The banks ... Greece was a unique case in that rather than the banks breaking the country (like Ireland), the country broke its banks (Greek banks were massively overexposed to Greek gov't debt)

Any measures necessary to restore a functioning banking system should have been taken, up to and including forced liquidations, large scale "haircuts" on bondholders, and - if necessary - "bail-ins" from accountholders. Much like Iceland. It would have been painful in the short term, but over the long term much less so than the current mess. (Seven years after the crisis started, the ECB was able to cause the collapse of the Greek banking system by threatening to withdraw "emergency" supports. Clearly, a banking system in this condition qualifies a being populated by "Zombie banks" and cannot possibly support a vibrant economy).
Limited devaluation of the New Drachma would have made imports to Greece more expensive and made exports from Greece (and Greek services) much more attractive to people and businesses outside Greece. People outside Greece could choose to take their next holiday in Greece "out of solidarity" or for the reality that it's just become X% cheaper. The amount of devaluation would be determined by credible economists with detailed knowledge of the Greek situation at any given time during the crisis.
Austerity. Balancing the books would obviously be a great priority, perhaps even more so than with what actually happened. But the Greek people would have been stronger at the end of an austerity process that also resolved the banking system issues and provided currency devaluation.

How does that alternative choice affect the relationships Greece has with the EU, the EZ and other trading partners?

Greece should be treated like a bankrupt company or insolvent individual. You lent them money and they subsequently went under? They pay what they can, when they can, and you take a bath on the rest. Like most countries it should leave the Eurozone and the EU. It should at most seek to be in the EEA, like Norway, Switzerland, Leichtenstein etc. Those countries seem to do quite well with their own currency, their own central banks, considerably more powerful national legislatures, and haven't had the same - simultaneous - catastrophic boom-bust cycle as the peripheral EZ countries.

The Greek government could forget about borrowing on international markets for at least a decade to come, but considering that's what got them into trouble in the first place that wouldn't be so bad.

There are only two potential drawbacks here:

Greek companies might have difficulty accessing international finance if they needed any. Greek banks might have to work very hard to establish their credibility.
There is, I believe, a certain attitude in the EU that would not want to see a country leave the European Project and recover. I have no doubt that there would be an effort from some in the EU to sabotage any Greek recovery plan.

Where would Greece be now?

With any luck, recovering, the way Iceland is. (Unemployment there has dropped to an 80 month low, Iceland suffered the same catastrophic collapse as Greece but has recovered much more quickly and more robustly)

The jobless rate in Iceland dropped for the second consecutive month in June to hit an 80-month low, revealed the latest figures from Statistics Iceland.

The seasonally adjusted unemployment rate declined from 4.4 per cent in May to 3.2 per cent in June to mark its lowest point since October 2008 when it was at 2.8 per cent. It stood at 4.7 per cent in April.

On an unadjusted basis, meanwhile, the unemployment rate fell sharply from 6.8 per cent in May to 2.9 per cent in June. It was at 5.6 per cent in April.

The alternative ... let's see, they stayed in the Euro, did everything the Eurocrats told them and now they have:

Over 50% youth unemployment.
A deflationary death spiral where their economy has effectively collapsed and continues to fall.
National debt approaching 200% of GDP and rising. Continuously.
A zombie banking system.
A minimum of 10,000 Greeks who've committed suicide because of the economic situation.

I can't see how an alternative could be any worse.

KingBrian2 · 26-07-2015 8:59pm

SeanW wrote: »

The alternative ... let's see, they stayed in the Euro, did everything the Eurocrats told them and now they have:

Except they did not.

Maastricht criteria

Inflation of no more than 1.5 percentage points above the average rate of the three EU member states with the lowest inflation over the previous year.
A national budget deficit at or below 3 percent of gross domestic product (GDP).
National public debt not exceeding 60 percent of gross domestic product. A country with a higher level of debt can still adopt the euro provided its debt level is falling steadily.
Long-term interest rates should be no more than two percentage points above the rate in the three EU countries with the lowest inflation over the previous year.
The national currency is required to enter the ERM2 exchange rate mechanism two years prior to entry.

If they had a problem they could have objected to the treaty.

relax carry on · 26-07-2015 9:41pm

SeanW wrote: »

OK, I'll bite:

What does Greece do?

Start by recognising the root causes of the crisis. There were two, equal causes. Firstly, the government wasted (borrowed) money. Second, they had an inappropriate currency and monetary policy. The first of these are agreed I think between most everyone.

Second, more controversial, is that Greece had an inappropriate monetary policy. Not only did their interest rates plummet for no reason, but the ECB pursued a loose monetary policy at the behest of Germany and France, which all main schools of economic thought (except Eurocrat ones it seems) including the dominent Keynesian school, but also the smaller Austrian school, agree that having an interest rate that's "too low" will cause a bubble somewhere, be counter-cyclical, or otherwise lead UNAVOIDABLY towards disaster. Granted, Keynesian and Austrian economics differ on what is "too low" but I suspect either measure would have red-flagged Greece's interest rate as being so. Good chance both, and by large margins.

Either of these factors (their awful gov't, Euro membership) on their own could have put Greece under. Combined, Greece had no chance. This MUST be understood if Greece is to have ANY chance of recovery.

So to start they should have left the Euro, took back control of their monetary policy with the Drachma.

Impose "haircuts" on the international lenders, chiefly Goldman Sachs and the Western banks. They lent stupidly, were and should only have been, someone elses problem.

Seek help ONLY from the International Monetary Fund. The IMF could have lent them what they needed to keep the government functioning, while they re-organised their government and banking system.

The banks ... Greece was a unique case in that rather than the banks breaking the country (like Ireland), the country broke its banks (Greek banks were massively overexposed to Greek gov't debt)

Any measures necessary to restore a functioning banking system should have been taken, up to and including forced liquidations, large scale "haircuts" on bondholders, and - if necessary - "bail-ins" from accountholders. Much like Iceland. It would have been painful in the short term, but over the long term much less so than the current mess. (Seven years after the crisis started, the ECB was able to cause the collapse of the Greek banking system by threatening to withdraw "emergency" supports. Clearly, a banking system in this condition qualifies a being populated by "Zombie banks" and cannot possibly support a vibrant economy).

Limited devaluation of the New Drachma would have made imports to Greece more expensive and made exports from Greece (and Greek services) much more attractive to people and businesses outside Greece. People outside Greece could choose to take their next holiday in Greece "out of solidarity" or for the reality that it's just become X% cheaper. The amount of devaluation would be determined by credible economists with detailed knowledge of the Greek situation at any given time during the crisis.

Austerity. Balancing the books would obviously be a great priority, perhaps even more so than with what actually happened. But the Greek people would have been stronger at the end of an austerity process that also resolved the banking system issues and provided currency devaluation.

How does that alternative choice affect the relationships Greece has with the EU, the EZ and other trading partners?

Greece should be treated like a bankrupt company or insolvent individual. You lent them money and they subsequently went under? They pay what they can, when they can, and you take a bath on the rest. Like most countries it should leave the Eurozone and the EU. It should at most seek to be in the EEA, like Norway, Switzerland, Leichtenstein etc. Those countries seem to do quite well with their own currency, their own central banks, considerably more powerful national legislatures, and haven't had the same - simultaneous - catastrophic boom-bust cycle as the peripheral EZ countries.

The Greek government could forget about borrowing on international markets for at least a decade to come, but considering that's what got them into trouble in the first place that wouldn't be so bad.

There are only two potential drawbacks here:
Greek companies might have difficulty accessing international finance if they needed any. Greek banks might have to work very hard to establish their credibility.

There is, I believe, a certain attitude in the EU that would not want to see a country leave the European Project and recover. I have no doubt that there would be an effort from some in the EU to sabotage any Greek recovery plan.

Where would Greece be now?

With any luck, recovering, the way Iceland is. (Unemployment there has dropped to an 80 month low, Iceland suffered the same catastrophic collapse as Greece but has recovered much more quickly and more robustly)

The alternative ... let's see, they stayed in the Euro, did everything the Eurocrats told them and now they have:
Over 50% youth unemployment.

A deflationary death spiral where their economy has effectively collapsed and continues to fall.

National debt approaching 200% of GDP and rising. Continuously.

A zombie banking system.

A minimum of 10,000 Greeks who've committed suicide because of the economic situation.

I can't see how an alternative could be any worse.

Apologies if I've missed it but I don't see anything in your solution about their massive problems with taxation which should be fundamental in how any country funds itself.

SeanW · 27-07-2015 10:57pm

relax carry on wrote: »

Apologies if I've missed it but I don't see anything in your solution about their massive problems with taxation which should be fundamental in how any country funds itself.

I do agree that austerity was and remains necessary in Greece, that includes taxes, or more to the point, a balance between tax and expenditure as the key.

Simply put, they should raise as much tax as they need to spend, if they need more money for expenditures, they raise or do a better job collecting taxes. If they're happy to spend less, then ... not so much.

But I feel very strongly that the balance of better tax collection vs. spending cuts is a matter for the Greek people. We just tell them "get your s*** together and balance your books, how you do that is up to you". But while that's a large part of a solution to Greece's problems, I don't think it's enough, they need some devaluation, bank recapitalisation and a partial write-down as well.

Zubeneschamali · 28-07-2015 9:29am

SeanW wrote: »

We just tell them "get your s*** together and balance your books, how you do that is up to you".

On past history, they say "Don't want to". Then what?

The Eurogroup don't want to kick them out, and there is no good mechanism to do that anyhow. The only possible way would be to utterly wreck their economy by yanking ECB support and hope they go away, which would be enormously unfair on the Greek people.

And what if they don't leave? Will the Eurogroup really stand by and let Greeks starve? Riot? Die in the street as their hospitals lock their doors?

So, let's extend a trickle of credit for a baby-step of reform, and then check their work, and keep doing that incrementally for 20 years or so.

Labarbapostiza · 28-07-2015 2:58pm

Syriza are crackers with their left wing student politics and get rich quick schemes. Socialism is spending other peoples money until it's all gone.

What they need is a sensible conservative plan, and I have one.

First to recapitalise their banks they need a "bad" bank to park the unperforming assets. Then they need to cut social welfare, and increase taxes, on the lowest paid, so as not to discourage wealth creators from creating wealth. Since the socialists have nearly destroyed the economy of Greece, many of Greece's wealth creators will have been prohibited from creating wealth, and some will even have been pushed to the verge of bankruptcy by socialism. They can be put on the pay roll of the bad bank. A wealth creator who does not exude success is as useful as an estate agent dressed as a tramp.

The Greek government can then borrow billions to recapitalise the banks.

When the Greek banks are recapitalised, the wealth creators in the bad bank will be able to borrow, to buy the assets from the bad bank. They'll also be able to borrow "working capital", so they can buy nice big houses, and have helicopter rides with dolly birds. This will attract even more "investors".

Greece will be a buzz with manly men with their buckets and shovels, estate agents in their shiny shoes, investment prospectuses with photographs of men with hi-vis jackets over their business suits, and hard hats on their heads, pointing at things. Money will trickle down to all the shops selling breakfast rolls, car dealerships (there'll be a pent up demand for 4x4s in Greece after all these years). Greek farmers will be able to sell that little bit of frontage. The Greek economy will be boom.

What do ye tink lads? None of this crackers socialism. An Irish conservative solution to a very Irish conservative problem.

There's a saying, fool me once, shame on you...Fool me twice, and Johnny, I'm going to take that shovel and shove it so far up your fluffing arse, it'll shave off that stupid beard and wipe that "good time" Johnny stupid grin from your face, once and for all.

KingBrian2 · 28-07-2015 8:40pm

There was a Greek politician on BBC's programme HardTalk the other night. I was watching him, he was from the Left wing platform of the Syriza party, other than speaking over the presenter he did a very shall we say thankless job in defending the people however of substance he had very little. He spoke about how Syriza was elected into power to object to European Austerity. That is some bluster. He should be reminded that Syriza was elected into gvt with over 30% of the vote as he was eager to point out but on the condition they reach a negotiated settlement with European leaders. So this guy is making all of this up. Syriza was not elected on a platform to oppose increased taxation and improving the balance of the banks. This tells me everything. These guys are not serious about restoring the public finances of their own country and would rather behave as a belligerent on the side-lines of European policy making.

professore · 28-07-2015 8:44pm

KingBrian2 wrote: »

Except they did not.

Maastricht criteria

Inflation of no more than 1.5 percentage points above the average rate of the three EU member states with the lowest inflation over the previous year.

A national budget deficit at or below 3 percent of gross domestic product (GDP).

National public debt not exceeding 60 percent of gross domestic product. A country with a higher level of debt can still adopt the euro provided its debt level is falling steadily.

Long-term interest rates should be no more than two percentage points above the rate in the three EU countries with the lowest inflation over the previous year.

The national currency is required to enter the ERM2 exchange rate mechanism two years prior to entry.

If they had a problem they could have objected to the treaty.

No country has adhered to all these criteria bar possibly Luxembourg in the lifetime of the euro, including Germany. So they all should leave?

KingBrian2 · 28-07-2015 9:08pm

professore wrote: »

No country has adhered to all these criteria bar possibly Luxembourg in the lifetime of the euro, including Germany. So they all should leave?

Just because countries are not complying does not make it unworkable it only shows politics is used to persuade countries.

Labarbapostiza · 28-07-2015 9:12pm

KingBrian2 wrote: »

Just because countries are not complying does not make it unworkable it only shows politics is used to persuade countries.

It's unworkable....and always has been unworkable. It has some clownish right-wing 'pie in the sky' aspirations. But even sanctimonious Germany has never achieved those figures. And never will.

KingBrian2 · 28-07-2015 9:39pm

Labarbapostiza wrote: »

It's unworkable....and always has been unworkable. It has some clownish right-wing 'pie in the sky' aspirations. But even sanctimonious Germany has never achieved those figures. And never will.

Then Greece should leave since they have already made up their mind that austerity does not work according to them. The picture is very different, the previous gvt was bringing the public finances back into balance while Syriza was making baseless statements.

Greece experienced rapid growth as did many during the 00's and uncontrollable spending is what crippled the economy sucking the entire zone into a dangerous situation.

Look at the details of the Italian economic uplift and you will be surprised to see decreasing unemployment and improving debt levels. Miles away from the predicament Athens is in.

johnnyskeleton · 28-07-2015 9:57pm

Labarbapostiza wrote: »

What do ye tink lads? None of this crackers socialism. An Irish conservative solution to a very Irish conservative problem.

There's a saying, fool me once, shame on you...Fool me twice, and Johnny, I'm going to take that shovel and shove it so far up your fluffing arse, it'll shave off that stupid beard and wipe that "good time" Johnny stupid grin from your face, once and for all.

Mod note:

I'd almost think you stumbled into the wrong forum, but you must be aware of the posting quality standards required here. Please, no more of this sort of thing. Serious posts are required on this serious topic.

Labarbapostiza · 28-07-2015 10:06pm

KingBrian2 wrote: »

Then Greece should leave since they have already made up their mind that austerity does not work according to them. The picture is very different, the previous gvt was bringing the public finances back into balance while Syriza was making baseless statements.

Greece experienced rapid growth as did many during the 00's and uncontrollable spending is what crippled the economy sucking the entire zone into a dangerous situation.

Look at the details of the Italian economic uplift and you will be surprised to see decreasing unemployment and improving debt levels. Miles away from the predicament Athens is in.

I don't want to get into the finer details. But, the singling out, and hanging out to dry of Greece, is a diversion from the reality that every Eurozone country, and our neighbours; perfidious Albion, have been up to their own shenanigans.

Greece had the choice in the early 00's of borrow for growth and hope something turned up, or get punished then.

Out little scheme with NAMA, the re-capitalisation of our banks, and the re-capitalisation of our clowns, is as harebrained and suicidal as anything Greece has ever pulled. Yet we get the nod of approval from the institutions.

KingBrian2 · 28-07-2015 10:33pm

Labarbapostiza wrote: »

I don't want to get into the finer details. But, the singling out, and hanging out to dry of Greece, is a diversion from the reality that every Eurozone country, and our neighbours; perfidious Albion, have been up to their own shenanigans.

Greece had the choice in the early 00's of borrow for growth and hope something turned up, or get punished then.

Out little scheme with NAMA, the re-capitalisation of our banks, and the re-capitalisation of our clowns, is as harebrained and suicidal as anything Greece has ever pulled. Yet we get the nod of approval from the institutions.

The Greek parliament passed the bill. The PM will have to deliver on his promises. You want to create a scenario that does not exist. He will have to increase taxation on certain items. The left was going to have to do this either way. In this programme they are limited as to how much they can spend as we have seen in the past they have had unreliable gvts.

Labarbapostiza · 28-07-2015 10:55pm

KingBrian2 wrote: »

The Greek parliament passed the bill. The PM will have to deliver on his promises. You want to create a scenario that does not exist. He will have to increase taxation on certain items. The left was going to have to do this either way. In this programme they are limited as to how much they can spend as we have seen in the past they have had unreliable gvts.

Greece is such a shambles, that these discussions are like a bunch of doctors standing around a patient in very poor physical condition on a life support and saying things like "let's tell him to cut down on the fags and booze....maybe eat a few salads, and take a little exercise".

Now, if you've been around long enough, back as far as the early 90s, there was a discussion that there would eventually be a debt crisis, like we have. And all parties going "on no, we're going to behave...mammy, we're all going to be good boys". And of course they all went nuts. A few glasses of TK orange, and madness ensues. Johnny Ronan thinking he was Donald Trump, when he was only ever a jumped up pig farmers son.

SeanW · 01-08-2015 4:13pm

Zubeneschamali wrote: »

On past history, they say "Don't want to". Then what?

Tell them "you have no choice, we're not lending you any more money" they would balance their books in short order.

The Eurogroup don't want to kick them out, and there is no good mechanism to do that anyhow.

Wolfgang Schauble wanted to throw them out. He said it would have been "for five years" but we all know that if Greece started to recover with a new Drachma, exports became cheaper, imports became more expensive, youth unemployment began to fall, that would be endgame for Greece in the Euro. They would suffer a few hard months, but if they began to recover outside the Euro, that might very well be the end of it.

The only possible way would be to utterly wreck their economy by yanking ECB support and hope they go away, which would be enormously unfair on the Greek people.

They've already done this, yanking support from Greek banks and causing a run on all of them. Literally, this is how bad the situation is - that with one statement the ECB and other Eurocrats can bring the whole edifice crashing down in a chaotic mess of bank runs. The Greek banks have been like this for the last 7 years. Zombie banks.

No country can ever recover without a strong and solvent banking system. Back in 2011-2013 I think, Irish small business reported widespread difficulties getting routine credit. Literally, solvent, well run SMEs were threatened because they could not get normally expected day-to-day credit. This was with a banking system that had begun to be recapitalised.

Now imagine you're a small business in Greece, the Greek business that did not go bankrupt prior to the current escalation of the crisis are now in extreme danger. The fact that this can still happen, 7 years into a crisis, suggests that the response to the crisis has been an abysmal failure at all levels, both national and European.

And what if they don't leave? Will the Eurogroup really stand by and let Greeks starve? Riot? Die in the street as their hospitals lock their doors?

They'd sort their **** out. When you go bankrupt, and you brankruptcy trustee tells you "you can only spend what you have" you spend what you have. And you get by.

So, let's extend a trickle of credit for a baby-step of reform, and then check their work, and keep doing that incrementally for 20 years or so.

Meanwhile their youth unemployment barely if at all goes below 50% and they still have a hopelessly insolvent "Zombie" banking system that drains the living bejesus out of the economy. And the "trickle of credit" makes their debt-GDP ratio continue to get worse each year, and they still have no effective means of making their services and exports more competitive (like devaluation usually does).

It won't work.

Labarbapostiza wrote: »

Greece is such a shambles, that these discussions are like a bunch of doctors standing around a patient in very poor physical condition on a life support and saying things like "let's tell him to cut down on the fags and booze....maybe eat a few salads, and take a little exercise".

Precisely, this is what people right across the political spectrum (from left wing SF, AAA types right on through to Nigel Farage and UKIP) have been saying for 7 years.

Greece has been running a primary surplus (i.e. collected more money than they spent, excluding interest payments) but their economy has continued to contract, their youth unemployment is still over 50% and they still have a zombie banking system. They can't give any more. They don't have any more to give. It won't work.

SeanW · 01-08-2015 4:27pm

Some semi-related news from our fair isle on this - IBEC has called for the government to seek exemptions from EU budgeting rules to allow more investment in capital expenditure. http://www.independent.ie/business/irish/push-spend-on-infrastructure-up-125bn-ibec-tells-noonan-31405304.html

Ibec is urging the Government to use any political capital it has in Europe to persuade the European Commission to allow further exemption for Ireland from strict EU budgetary spending rules for all innovation and capital investment.

"Ireland cannot return to the reckless day-to-day spending patterns of the past, but equally the business community urges Government to challenge the EU constraints which are restricting much needed and sensible productive investment," the body's submission said.

So: even for relatively solvent, relatively well run countries like Ireland (well, relative to Greece anyway) austerity-only is not a credible economic policy. And this is coming from IBEC, who would not be considered lefty spendthrifts ...

BoJack Horseman · 01-08-2015 4:31pm

SeanW wrote: »

So: even for relatively solvent, relatively well run countries like Ireland (well, relative to Greece anyway) austerity-only is not a credible economic policy. And this is coming from IBEC, who would not be considered lefty spendthrifts ...

You can easily boost capital expenditure.

You just need to keep current expenditure in check & not spend €700m - €1bn on pre-election tax cuts, as is anticipated.

Ireland will end this year within the 3% deficit threshold with time to spare anyway, so the request is moot.

And don't worry, IBEC are rather sclerotic in their press releases.
Within a couple of months, they will be crying out for tax relief.
They don't know what they want

SeanW · 01-08-2015 4:40pm

They seem to be suggesting that we balance or near balance our budgets on day-to-day spending, but borrow for stuff that will help the economy, like capital infrastructure. If so, it's difficult to see what is wrong with that, except for EU budgeting rules. And if that is what they're asking for, it shows that while austerity is a good idea, it can't be the only plank in an economic policy.

BoJack Horseman · 01-08-2015 5:00pm

SeanW wrote: »

They seem to be suggesting that we balance or near balance our budgets on day-to-day spending, but borrow for stuff that will help the economy, like capital infrastructure. If so, it's difficult to see what is wrong with that, except for EU budgeting rules.

The rules can be ignored at will & they are.

Ireland ended 2014 with an overall deficit of around 4.5% of GDP.

Its estimated that this will drop to 2.7% of GDP by the end of the year.
So ahead of target & ahead of schedule.

The government can always borrow more, but I don't see the point.
There is cash there anyway, but elections aren't won by promises of capital expenditure.
FF knew that, that's why they all but ignored it.

Labarbapostiza · 01-08-2015 8:52pm

SeanW wrote: »

Some semi-related news from our fair isle on this - IBEC has called for the government to seek exemptions from EU budgeting rules to allow more investment in capital expenditure. .

This would be IBEC's immediate concern for the profits of some of its' members, than a genuine need for infrastructure. Much of the cheese for bucket and shovel businesses comes from the government. (or in fact the tax payer).

KingBrian2 · 01-08-2015 9:47pm

There is one good thing to come out of all this, Europe is talking about all of this. Nothing is being ruled out. The conversation is bringing back war memories and even ourselves are debating the finer points of joining the €. I see this as a positive development. Open conversation bringing those that have a stake in a future Europe into the debate. Much preferable to discouraging different opinions.

Rightwing · 03-08-2015 12:19pm

Greek stock market reopens -23%. Looks like an over reaction to me.

Jawgap · 03-08-2015 12:42pm

Rightwing wrote: »

Greek stock market reopens -23%. Looks like an over reaction to me.

Yup, markets usually overshoot in response to news good or bad, it'll be interesting to see where it settles back to over the next few days.

Labarbapostiza · 03-08-2015 7:36pm

Yanis earlier this year with Joesph Stiglitz

The whole thing is worth watching, but jumping to the 54th moment Yanis starts talking about the need for a "bad bank", ring any bells?

https://www.youtube.com/watch?v=OY3Qxm6BoUI

SeanW · 04-08-2015 10:14am

Labarbapostiza wrote: »

This would be IBEC's immediate concern for the profits of some of its' members, than a genuine need for infrastructure. Much of the cheese for bucket and shovel businesses comes from the government. (or in fact the tax payer).

We do need infrastructure though, personally I've been advocating some for years, (like Dart Underground, the M20 etc).

Labarbapostiza · 04-08-2015 4:50pm

SeanW wrote: »

We do need infrastructure though, personally I've been advocating some for years, (like Dart Underground, the M20 etc).

We need infrastructure, not "infrastructure".

The primary concern with "infrastructure" spending is to give all the mickies and Jimmies and Dickies, high paid bucket and shovel work.

Why we don't have something like the Dart Underground. is our domestic bucket and shovel men don't have the expertise. We can't hire in foreign expertise, because our bucket and shovel big men demand protection from the free market.

Up to very recently, we had less motorway than Albania.

Looking at Renua's facebook post today, the state spending over thirteen billion on procurement from the "private" sector. There isn't that much transparency in the process. I would say that without exception these procurement processes in all countries are deliberately inefficient, to reward people of high social value, who don't really have much of an economic value.

There are towns in Ireland that are economic black holes, yet have had capital projects, that can't possibly yield a return. Except to buy nice cars, and big houses for people who'll live a few miles outside the town. You know the kind yourself.

Most of that 13 billion would go on national school drop outs. For 100 million, I could give every town in Ireland super fast broadband. For a billion, I could wire up every farm and village. And I could make it pay for itself by leasing it back to the internet providers. But the "people" (the only people considered to be people in this country), don't want that. They just want money shovelled out on to them. They deserve it. They're entitled to it.

Labarbapostiza · 04-08-2015 6:53pm

Let's have a look at Renua's proposals for procurement.
https://onedrive.live.com/view.aspx?resid=23F78DA590205D49!230&ithint=file%2cpdf&app=WordPdf&authkey=!AFVO4ffM9zbll88

1. Social Impact Clause

We would introduce social impact clauses requiring Government Buyers of goods and services to consider the economic, social and environmental impacts of their purchasing. These impacts would form a part of the overall objective scoring criteria for the award of public procurement contracts.

Peculiarly socialistic for a party that places itself right of the centre right.

But oh wait...here it comes.

The rationale behind the social impact clause is that if a small local supplier loses a contract to a larger outside competitor, the impact on the local economy courtesy of lost jobs and commercial activity can be significantly greater than any apparent savings.

The small local supplier. Little Micky. Too gentlemanly to ever have competed in his life. And now the "outsiders" are coming to disrupt his easy way of life.

RENUA Ireland will develop new systems of procurement which will favour a regionally orientated tendering process over national framework agreements

I'll tell you how this is intended to work. Say Micky has a "business" supplying gravel for projects, and Micky lives down in Mayo. Micky is the only man for projects in his area, but if there's a large project in Dublin, he's been done out of the pot. If the Renua propositions are in acted then if there's big works in Dublin, Micky and a whole list of little men, will need to be called to order gravel in dribs and drabs. All the little Mickies will then call through to a larger supplier, who will drop off gravel as one big order at the site. Micky and the other Mickies, will be able to buy new tweeds, flat caps, and 4x4s. Even put their children in private schools.
.

Quin_Dub · 04-08-2015 7:01pm

Labarbapostiza wrote: »

Let's have a look at Renua's proposals for procurement.
https://onedrive.live.com/view.aspx?resid=23F78DA590205D49!230&ithint=file%2cpdf&app=WordPdf&authkey=!AFVO4ffM9zbll88

1. Social Impact Clause

We would introduce social impact clauses requiring Government Buyers of goods and services to consider the economic, social and environmental impacts of their purchasing. These impacts would form a part of the overall objective scoring criteria for the award of public procurement contracts.

Peculiarly socialistic for a party that places itself right of the centre right.

But oh wait...here it comes.

The rationale behind the social impact clause is that if a small local supplier loses a contract to a larger outside competitor, the impact on the local economy courtesy of lost jobs and commercial activity can be significantly greater than any apparent savings.

The small local supplier. Little Micky. Too gentlemanly to ever have competed in his life. And now the "outsiders" are coming to disrupt his easy way of life.
RENUA Ireland will develop new systems of procurement which will favour a regionally orientated tendering process over national framework agreements

I'll tell you how this is intended to work. Say Micky has a "business" supplying gravel for projects, and Micky lives down in Mayo. Micky is the only man for projects in his area, but if there's a large project in Dublin, he's been done out of the pot. If the Renua propositions are in acted then if there's big works in Dublin, Micky and a whole list of little men, will need to be called to order gravel in dribs and drabs. All the little Mickies will then call through to a larger supplier, who will drop off gravel as one big order at the site. Micky and the other Mickies, will be able to buy new tweeds, flat caps, and 4x4s. Even put their children in private schools.
.

I think it's actually intended to work in reverse - Still crappy, clientelist , "jobs for the boys" bullshít however.

But what this says to me it that instead of being able for example , to give a single national contract to a supplier and thereby gain benefits from bulk discounts etc. etc. They want us to have to deal with every little 2 bit supplier at the local level thereby driving up both the direct costs and the admin required to manage the multiple suppliers..

Brilliant....

Labarbapostiza · 04-08-2015 7:56pm

Quin_Dub wrote: »

I think it's actually intended to work in reverse - Still crappy, clientelist , "jobs for the boys" bullshít however.

But what this says to me it that instead of being able for example , to give a single national contract to a supplier and thereby gain benefits from bulk discounts etc. etc. They want us to have to deal with every little 2 bit supplier at the local level thereby driving up both the direct costs and the admin required to manage the multiple suppliers..

Brilliant....

You can read the whole document. Pushing up costs is very deliberate, though they don't state it in those terms. The idea is to transfer more money to the little 2 bit suppliers, of the one horse towns across Eireann. Which they do clearly state.

The document is a laugh, they go on about "joined up thinking". Clientelism is toxic for a number of reasons. The worst is you spend and you don't get the infrastructure you need.

The lack of major needed infrastructure projects between 1922 and recent decades wasn't because of lack of money. The Marshall Plan gave Ireland a few billion in the 40s/50s, to build a motorway network.........instead we got thousands of miles of asphalted borreens, that didn't go particularly anywhere.

Clientelism in Greece, is a major, if not thee major factor choking the country to death. It costs five time as much to build a road in Greece as it does in Germany. And this is with much lower labour costs. Where does the money go?

05-08-2015 10:13am

Labarbapostiza wrote: »

Yanis earlier this year with Joesph Stiglitz

The whole thing is worth watching, but jumping to the 54th moment Yanis starts talking about the need for a "bad bank", ring any bells?

Yes, it does ring a bell, it reminds me of the best decision the Irish government made throughout the Irish sovereign & banking crisis: the creation of NAMA.

When 40% of assets across the banks are not performing, there are two alternatives to a bad bank: (i) a wind-down of these banks or (ii) direct cash transfers from the taxpayers, capital injections.

As has been in the case in Ireland, a bad bank can be an enormously effective way of isolating risk, whilst being able to maximally tailor legislative powers to get a return on those assets, and even turn a profit.

In small countries like Ireland and Greece who both have a strong history of corruption, the 'bad bank' is of course fraught with a potential for further corruption. However, the corruption can be mitigated to the point where it is unlikely to render the whole enterprise unprofitable.

Labarbapostiza · 05-08-2015 5:39pm

A Tyrant Named Miltiades! wrote: »

Yes, it does ring a bell, it reminds me of the best decision the Irish government made throughout the Irish sovereign & banking crisis: the creation of NAMA.

Yup, NAMA. An Idea we borrowed from Finland, who'd had a similar crisis in the early 90s. And if you listen to Yanis, there is absolutely nothing in his proposals that are not straight out of the play book that was used in Ireland. Though absolutely misrepresented by clowns like Schauble, as Yanis proposing to build a socialist paradise.

My only problem with Yanis, is his priorities. He places the Greek NAMA as his 5th priority. Whereas stabilisation of the system should be the sine qua non. You can have the best intentions in the world for your pensioners, but the longer the system slides, the less you'll be able to do for them.

Did Schauble have any sensible prescription?

When 40% of assets across the banks are not performing, there are two
alternatives to a bad bank: (i) a wind-down of these banks or (ii) direct cash transfers from the taxpayers, capital injections.

We had to wind down Anglo, (wasn't there another one?), we did have to borrow to recapitalise the banks, NAMA is on the books as sovereign debt.

There's plenty wrong with the idea of NAMA, but without a NAMA, it's pointless to recapitalise banks, you end up like Greece, just having to borrow more to capitalise zombie banks, that just gives you a short period before you have to recapitalise them again.

Why isn't a NAMA for Greece, a prescription of the ministers of Europe?

As has been in the case in Ireland, a bad bank can be an enormously effective way of isolating risk, whilst being able to maximally tailor legislative powers to get a return on those assets, and even turn a profit.

The only positive thing to say for NAMA is that it stopped a Greecian style melt down.

What are these "assets" and if they're to make a profit, whose paying for that profit. A lot of the "assets" are overpriced crap we have no need for, or have a real commercial demand for. Our banks are stable, so they can lend again.....But what are they lending for?.......And it's the crap from NAMA. This is deeply problematic. It goes without saying.

It's not really an Irish problem. It's a global problem. But for the moment, that's how global capitalism functions, and we're integrated into that system. And the more foreign idiots we get to buy our rubbish (with money not borrowed from our banks), and the less exposure we have to it, the better. (but how many people, especially our elected officials, understand that.)

In small countries like Ireland and Greece who both have a strong history of corruption, the 'bad bank' is of course fraught with a potential for further corruption. However, the corruption can be mitigated to the point where it is unlikely to render the whole enterprise unprofitable.

Of course if corruption is at a point it paralyzes a country, that's a thing. But a lot of problems, like clientelism, the intention is not corrupt. Let's build a national motorway network, or let's tarmac a thousand borreens, and spread the money around, so it comes back into the economy. That idea isn't corrupt, it's just not going to work as intended. The money will be spent, a lot on new cars (which we don't make), and when the money has fled the country, there isn't an economic return on the investment in borreens. We're worse off than we were before, we're saddle with a capital debt, without a matching asset, that will pay down that debt. (By the way, that is not a hypothetical situations, that was a statement of history of our wonderful little nation.)

So, Renua believe with their "joined up thinking", their policy will increase prosperity, but it's essentially the same "thinking" that leads to situations like Greece. ......I'm sure Renua brainstorming sessions must be exciting; a rush of brilliant ideas coming like low hanging fruit. And no one there to tell that's the poison apples.

There's also factors of social ideology, which may be compatible or incompatible with good economics. I mean had I been a bank manager in Mayo, and some national school drop out in wellington boots, came in looking for 20 million to build a ghost estate in a bog, I would have kicked and boxed him out the door. But I wasn't a bank manager in Mayo, and I was never integrated into that social ideology.

12-08-2015 1:41pm

And so it appears that Bailout #3 has been prepared, and is now to be debated and passed.

A return to prior actions, a return to Memorandums, a return to reform (though one might argue that this will actually be a first time!), a new player enters 'The Institutions' as the ESM comes aboard (the 'Quadriga'), a return to attempting to balance the books will surely involve further pain for the Greeks on the streets, a return to the centre for the Greek government?

Are we indeed even a single step closer to an 'Overall Solution' as Varoufakis painfully titled it? Does there even exist an 'Overall Solution'? And is it politically achievable? Hugo Dixon asks whether political/fiscal union is really necessary or realistic here.

Yannis Palaiologos asks American theorists to swap places and try the reality of the situation here, instead of providing a buffer for radical rogues to hide behind.

The reality of the situation is that Greece today is now in a far worse place than she was 12 months ago, with additional debt, additional contraction, a lower GDP growth prospect, less market confidence, less consumer confidence, capital controls, zombie banks to contend with, less goodwill and far, far less political capital.

Perhaps, as in the case of a gambling addict who can't give up until every last penny is gone, Greece needs to hit rock bottom before finally maturing as a state? Will they manage it under the terms of an agreement with creditors the current Government swore to 'defeat'?

Zubeneschamali · 12-08-2015 1:48pm

Deleted User wrote: »

The reality of the situation is that Greece today is now in a far worse place than she was 12 months ago, with additional debt, additional contraction, a lower GDP growth prospect, less market confidence, less consumer confidence, capital controls, zombie banks to contend with, less goodwill and far, far less political capital

This is due to Syriza badly misjudging what they could get away with. Their creditors were quite clear on their position throughout.

Are we nearer a real solution? Yes - the creditors have also always been clear that debt restructuring will be on the table once this bailout agreement is seen to be working.

Greece Debt Crisis - Après Oxi

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