The big fat Greek bailout

[burn_this_city]

Greece was bulldozed by the creditors today, Tsipras essentially gave in to almost every demand to stay in the Euro. Interesting to see whether or not his coalition government collapses now.

http://www.bloomberg.com/news/articl...torture-summit

[Ducay]

Looks like they lived up to the referendum's promise of "giving Greece a strong bargaining position".....not!

Basically just postponed the death sentence for Greece's use of the Euro, not much chance they can turn things around in such harsh austerity.

[CaptainCrunch]

Its not like they could turn it around by going on their own currency either, and it would be probably worse.

They might be able to write off some debt, but the Drachma or whatever they called it would be so under marketed on the World Market that they would be paying probably 5 x as much to import foreign goods that they need to survive.

At some point Greece saw the writing on the wall in terms of setting their economic policy and how they spend and collect taxes.

What I found interesting is that I read that Greece's creditors would have a say in budgetary legislation.

[EldrickOnIce]

Originally Posted by CaptainCrunch

I don't think they're similar at all. After World War 1, The World punished Germany and it lead to the rise of an extreme government. After World War 2, it was all about rebuilding Germany so we wouldn't see the rise of German Militarism again.

And Greece, continually cooked the books, pursued what I would say is self destructive and corrupt behavior, and then went to the banks to bail them out.

I don't see where they're similar at all. Greece wasn't destroyed like Germany was at the end of WW2.

Destroyed by their own act of war - and forgiven by those they perpetrated it on.
So yeah, very different. One might say far worse was 'forgiven'.

[CaptainCrunch]

Originally Posted by EldrickOnIce

Destroyed by their own act of war - and forgiven by those they perpetrated it on.
So yeah, very different. One might say far worse was 'forgiven'.

Lets see, they were bombed into oblivion. The government was the most evil government pretty much in history. The country was split and the key site of the cold war for 35 years including the strangulation of West Berlin by the Soviets. Then when the wall came down West Germany had to repair a pretty much destitute East Germany.


Greece ran up their credit card and acted like trust fund Yalies, and were surprised when the funds ran out because of economic incompetence.
.

Yup completely similar.

[Flash Walken]

Originally Posted by CaptainCrunch

I don't think they're similar at all. After World War 1, The World punished Germany and it lead to the rise of an extreme government. After World War 2, it was all about rebuilding Germany so we wouldn't see the rise of German Militarism again.

And Greece, continually cooked the books, pursued what I would say is self destructive and corrupt behavior, and then went to the banks to bail them out.

I don't see where they're similar at all. Greece wasn't destroyed like Germany was at the end of WW2.

Come on, you don't actually believe this?

German debt was forgiven as part of the process to destabalize the soviet block.

All sorts of atrocities both economic and humane were forgiven based on the ideals of progress.

Dead men don't pay no bills. Same goes for bankrupt governments no longer part of the EU.

he London Agreement on German External Debts, also known as the London Debt Agreement (German: Londoner Schuldenabkommen), was a debt relief treaty between the Federal Republic of Germany and creditor nations. It was concluded in London during negotiations which lasted from February 27 to August 8, 1953.

The London Debt Agreement covered a number of different types of German debt from before and after the Second World War. Some of them arose directly out of the efforts to finance the reparations system, while others reflect extensive lending, mostly by U.S. investors to German firms and governments.[1]

The parties that were involved besides West Germany included Belgium, Canada, Denmark, France, Great Britain, Greece, Iran, Ireland, Italy, Liechtenstein, Luxembourg, Norway, Pakistan, Spain, Sweden, Switzerland, South Africa, the United States, Yugoslavia and others. The states of the Eastern Bloc were not involved. The negotiations lasted from February 27 to August 8, 1953.[1]

The total under negotiation was 16 billion marks of debt resulting from the Treaty of Versailles after World War I which had not been paid in the 1930s, but which Germany decided to repay to restore its reputation. This money was owed to government and private banks in the U.S., France and Britain. Another 16 billion marks represented postwar loans by the U.S. Under the London Debts Agreement of 1953, the repayable amount was reduced by 50% to about 15 billion marks and stretched out over 30 years, and compared to the fast-growing German economy were of minor impact.[2]
An important term of the agreement was that repayments were only due while West Germany ran a trade surplus, and that repayments were limited to 3% of export earnings. This gave Germany’s creditors a powerful incentive to import German goods, assisting reconstruction.[3]

The agreement significantly contributed to the growth of the post-war German economy and reemergence of Germany as a world economic power. It allowed Germany to enter international economic institutions such as the World Bank, International Monetary Fund and World Trade Organization.

[EldrickOnIce]

Originally Posted by CaptainCrunch

Lets see, they were bombed into oblivion. The government was the most evil government pretty much in history. The country was split and the key site of the cold war for 35 years including the strangulation of West Berlin by the Soviets. Then when the wall came down West Germany had to repair a pretty much destitute East Germany.


Greece ran up their credit card and acted like trust fund Yalies, and were surprised when the funds ran out because of economic incompetence.
.

Yup completely similar.

Yes, bombed into oblivion by circumstances of their own creation.

And also yes, from an economic standpoint, it was overly harsh to make future generations pay for the sins/debts of past governments.

EDIT: Much better, what Flash said

[Jacks]

[FlamesAddiction]

Germany just had way more industry and industrial potential post WW2 to not prop up by bailing out, It's hard to argue with the results.

Greece on the other hand has much less potential relatively speaking unless they have a huge cultural and economic shift, which is something they seem pretty adverse to (not sure I necessarily blame them). From a creditor's standpoint though, it makes bailing them out less of an investment or more or less just charity.

Greece is basically the EU's version of a banana republic and is too dependent on foreign capital.

[EldrickOnIce]

It's this kind of bragging/heavy hammer wielded by the EU that is really concerning to me.

Peter Kažimír, Slovakia's Finance Minister & Deputy Prime Minister tweet this morning

#Greece compromise we reached this morning is tough for Athens becasue it's the results of their "Greek Spring" #eurozone

Greek Spring, in reference Prague Spring

The Prague Spring was a period of political liberalization in Czechoslovakia during the era of its domination by the Soviet Union after World War II. It began on 5 January 1968, when reformist Alexander Dubček was elected First Secretary of the Communist Party of Czechoslovakia (KSČ), and continued until 21 August when the Soviet Union and other members of the Warsaw Pact invaded the country to halt the reforms.

So that's what the EU (be it individual states, or the EU as a whole) is suggesting they have done? The financial equivalent of a military invasion to quell a peoples' democratic will?

Still not sure how this plays out... the only thing we know for sure is it looks like the banks are taken care of and the Greek people are and will be completely ####ed for the foreseeable future.

[peter12]

This isn't surprising. The EU is a bureaucratic pseudo-empire.

[nik-]

Originally Posted by EldrickOnIce

So that's what the EU (be it individual states, or the EU as a whole) is suggesting they have done? The financial equivalent of a military invasion to quell a peoples' democratic will?

Still not sure how this plays out... the only thing we know for sure is it looks like the banks are taken care of and the Greek people are and will be completely ####ed for the foreseeable future.

You're acting like this doesn't happen in North America too. Why should this be surprising?

[Matata]

Originally Posted by EldrickOnIce

Destroyed by their own act of war - and forgiven by those they perpetrated it on.
So yeah, very different. One might say far worse was 'forgiven'.

I don't blame the Germans for starting either of the world wars. The first world war occurred because European monarchies and governments wanted to try out their shiny new post-industrial armies out on one another. The economic terms put on Germany after the first world war basically guaranteed that another war would occur. Germany was 'forgiven' after the second world war, because placing those same economic terms on them again would likely have resulted in another European land war.

[peter12]

Originally Posted by Matata

I don't blame the Germans for starting either of the world wars. The first world war occurred because European monarchies and governments wanted to try out their shiny new post-industrial armies out on one another. The economic terms put on Germany after the first world war basically guaranteed that another war would occur. Germany was 'forgiven' after the second world war, because placing those same economic terms on them again would likely have resulted in another European land war.

What nonsense is this?

[Itse]

This political commentary from the Financial Times pretty much nails it when it comes to analyzing what the latest "negotiation" results could mean for the Euro project. Somewhat brutal in it's choice of words in some cases, but it's easy to find lots of commentary in a similar vein right now. I have a feeling that Euro-skepticism could explode politically in the coming years.

I suggest reading the whole thing, but here's the basics.

Greece’s brutal creditors have demolished the eurozone project

By forcing Alexis Tsipras into a humiliating defeat, Greece’s creditors have done a lot more than bring about regime change in Greece or endanger its relations with the eurozone. They have destroyed the eurozone as we know it and demolished the idea of a monetary union as a step towards a democratic political union.

They demoted the eurozone into a toxic fixed exchange-rate system, with a shared single currency, run in the interests of Germany, held together by the threat of absolute destitution for those who challenge the prevailing order. The best thing that can be said of the weekend is the brutal honesty of those perpetrating this regime change.

Previously, the strongest argument against any forecasts of break-up has been the strong political commitment of all its members.

From a pure economic point of view, we know that the euro has worked well for Germany. It worked moderately well for The Netherlands and Austria, although it produced quite a degree of financial instability in both.

But for Italy, it has been an unmitigated economic disaster. The country has seen virtually no productivity growth since the start of the euro in 1999.

The euro has not worked out for Finland either. While the country is considered the world champion of structural reforms, its economy has slumped ever since Nokia lost the plot as the world’s erstwhile premier mobile phone maker. Whether the euro is sustainable for Spain and Portugal is not clear. France has performed relatively well during the euro’s early years, but it, too, is now running persistent current account deficits.

Once you strip the eurozone of any ambitions for a political and economic union, it changes into a utilitarian project in which member states will coldly weigh the benefits and costs, just as Britain is currently assessing the relative advantages or disadvantages of EU membership. In such a system, someone, somewhere, will want to leave sometime. And the strong political commitment to save it will no longer be there either.

I think this bit on Greece is also pretty well put:

Forget for a moment the economic debate of the past few months, over issues such as the impact of austerity or economic reforms on growth. Instead ask yourself this simple question: do you really think that an economic reform programme, for which a government has no political mandate, which has been explicitly rejected in a referendum, that has been forced through by sheer political blackmail, can conceivably work?

[Matata]

Originally Posted by peter12

What nonsense is this?

They got pulled into the first world war due to treaties they had signed and the pro-war fervor among the European ruling classes (the first world war happened for no good reason, trillions spent to kill millions, no good reason).

The economic terms placed on Germany following the war allowed an extreme government to gain control. The point of these economic terms was to make Germany pay for the first world war (an impossible task). Is it so strange to think that one of the most aggressive, industrious, militaristic, intelligent and prideful nations on the planet wasn't just going to roll over and die?

[Flash Walken]

Originally Posted by EldrickOnIce

It's this kind of bragging/heavy hammer wielded by the EU that is really concerning to me.

Peter Kažimír, Slovakia's Finance Minister & Deputy Prime Minister tweet this morning



Greek Spring, in reference Prague Spring


So that's what the EU (be it individual states, or the EU as a whole) is suggesting they have done? The financial equivalent of a military invasion to quell a peoples' democratic will?

Still not sure how this plays out... the only thing we know for sure is it looks like the banks are taken care of and the Greek people are and will be completely ####ed for the foreseeable future.

It wouldn't be the first time this century something like that has happened in Greece.

I think it's at the very least arguable that the Greek debts are the result of external pressures on corrupt or illegitimate governments.

[EldrickOnIce]

Originally Posted by Flash Walken

It wouldn't be the first time this century something like that has happened in Greece.

I think it's at the very least arguable that the Greek debts are the result of external pressures on corrupt or illegitimate governments.

Syriza should join the rest of the previously corrupt governments in paying some price for 'humiliation' of Greece. Tsipras continued to posture and bluff almost right to the end. The least Syriza could have done was done some initial preparation for a potential exit strategy. I can not see how the people will stand for this, but I suppose at this point that they have no other choice.

[EldrickOnIce]

We will see a lot of this talk in the next couple days

Why Greece should leave the euro zone

http://www.washingtonpost.com/postev...the-euro-zone/

The short-term pain could be immense. No one knows with confidence how this would play out.

But short-term pain should not blind us to long-term reality. The euro is an economic mistake. Germany and Greece are different nations with different fiscal policy — and different languages, cultures, and politics. Why would one monetary policy work for both?

If Greece had its own currency it would have been able to deal with the Great Recession and its current crisis through devaluation, making its exports more competitive, and through looser monetary policy than the European Central Bank enacted. It can’t do either because it is stuck in the euro zone. Monetary policy isn’t magic — Greece would still have needed to implement painful austerity and structural reforms. But having its own monetary policy would help.

[Byrns]

Greece was in bad shape before joining the euro, they may not have ended up in as deep a hole as they are in today, but they would still be in a big hole.