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

[David Morris]

If Greece's debt was mostly or completely forgiven, Greece wouldn't be able
to get into that same kind of hole again, unless They let/lead it.

On Fri, Jan 30, 2015 at 9:18 AM, rich <richard.romeo at gmail.com> wrote:

> 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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