NP - Here's What's at the Heart of the Crisis in Greece

[rich]

nonetheless how do you prevent Greece from sliding back into its old ways.
the new gov't wants to inject a significant amount of money into the
economy. I'm not sure anyone believes things will change

also, we would all agree much that goes on in economics isnt about money
but perception. what seems obvious to you and me as to debt levels doesnt
make sense to the Germans, Dutch or Finns. I'm not advocating for the tough
line against Greece but there are legitimate concerns about countries like
Spain and Italy as well as Greece whether they are competent enough to
manage their economies presently

my burden in life is seeing all sides to things, what can I say

rich

On Fri, Jan 30, 2015 at 10:10 AM, David Morris <fqmorris at gmail.com> wrote:

> I think the main points are:
>
> [?] Greece will NEVER be able to pay back this debt, and will thus be
> perpetually under the boot of the Euro Bank.
>
> [?] The amount of money at stake is a TINY amount relative the the rich
> nations that control the Euro bank.
>
> David Morris
>
> On Fri, Jan 30, 2015 at 9:00 AM, rich <richard.romeo at gmail.com> wrote:
>
>> will they go after the elites and get them to pay their taxes? not that
>> this is an issue only in Greece. i think the new gov't has its work cut out
>> for it. german banks have a had a hand in all this mess (not only german
>> banks tho). they should pay for their stupidity and greed as well
>>
>> rich
>>
>> On Thu, Jan 29, 2015 at 11:14 AM, David Morris <fqmorris at gmail.com>
>> wrote:
>>
>>> If you're in the market for some interesting commentary on Greece, there
>>> have been a couple of good ones recently. The first comes from Paul
>>> Krugman, who, among other things, makes a point that often gets missed:
>>> Greece is already running a primary surplus. That is, they've cut spending
>>> enough over the past few years that their budget would be balanced if
>>> it weren't for interest payments on their gigantic debt. What's more, their
>>> primary surplus isslated to rise to 4.5 percent in the future:
>>> <http://krugman.blogs.nytimes.com/2015/01/28/thinking-about-the-new-greek-crisis/>
>>>
>>> If Greece were to adhere totally to the previous terms, over the next
>>> five years it would make resource transfers of about 20 percent of one
>>> year’s GDP. From the point of view of the creditors, that’s a trivial sum.
>>> From the point of the Greeks, however, it’s crucial; the difference between
>>> a primary surplus of 4.5 percent of GDP and, say, 1.5 percent of GDP for
>>> the Greek economy and the welfare of its citizens is huge. The only reason
>>> for the creditors to play hardball would be to make Greece an example, to
>>> discourage other debtors from trying to negotiate relief.
>>>
>>> In other words, the EU is demanding that Greece not just balance its
>>> budget, but run a large surplus that it will mostly send to large countries
>>> for whom it's a trivial sum. For Greece, though, it's a *huge* sum, the
>>> difference between years of penury and a return to growth. This is at the
>>> heart of the conflict between Greece and the EU.
>>>
>>> The second commentary comes from Daniel Davies, who makes the point that
>>> Greece's gigantic debt doesn't really matter *as debt*. Everyone knows
>>> Greece will never be able to pay it back. But if everyone knows this, why
>>> are Germany and the rest of the EU so hellbent on refusing to write it
>>> off? <http://crookedtimber.org/2015/01/25/greek-games-and-scenarios/>
>>>
>>> Don’t think of the Greek debt burden, either in cash € terms or as a
>>> ratio to GDP, as an economic quantity. It basically isn’t an economically
>>> meaningful number any more. *The purpose of its existence is as a
>>> political quantity; it’s part of the means by which control is exercised
>>> over the Greek budget by the Eurosystem.* The regular rituals of
>>> renegotiation of the bailout package, financing of debt maturity peaks and
>>> so on, are the way in which the solvent Euroland nations exercise the kind
>>> of political control that they feel they need to have if they are going to
>>> be fiscally responsible for the bills.
>>>
>>> ....It is, therefore, totally inimical to the Eurosystem to hold out any
>>> hope of the kind of debt writedown that Syriza wants, as opposed to some
>>> smaller, cosmetic face value reduction or maturity extension. *The
>>> entire reason why Syriza wants to get a major up-front reduction in the
>>> debt number is to create political space to execute the rest of their
>>> program.* The debt issue and the political issue are the same issue.
>>> Syriza understands this, and so does the Eurosystem.
>>>
>>> In other words, Greece doesn't want to run a large budget surplus. They
>>> want to increase government spending in order to dig their way out of their
>>> massive economic depression. The rest of the EU wants no such thing.
>>> They're afraid that if they let Greece off the hook, then (a) everyone else
>>> will want to be let off the hook, and (b) Greece will go right back to its
>>> free-spending ways and soon require another bailout. If the price of that
>>> is years of pain and unemployment, so be it.
>>>
>>
>>
>
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