Really? I am beginning to truly wonder if there is any word other than 'austerity' that can be used to describe any attempt by any government to reduce their national expenditure, or at least to live within their means. The Greeks, currently, have no intention of raising any taxes, cutting any spending or raising any money through borrowing or printing money. In fact the last two are no longer options anyway as Greek government bonds are now less than worthless and they, as a Eurozone country, cannot print money. Maybe once they leave the Eurozone they can pursue the printing money route (in fact they will almost certainly have to print money constantly to continue to float their economy) but then the cost to import will skyrocket. At some point, the Greeks will have to wake up and realise money does not grow on trees and you cannot feed your people with worthless notes. At some point they will have to consider raising their retirement age, raising taxes, funding the islands less or actually enforcing some of their tax laws instead of the current lax attitude both the government and the Greeks have to paying and collecting taxes. I do not think that a country realising that it cannot continue to increase spending forever without having the means for paying for it can be described as austerity, it is more reality.
The EU have to share the blame though, they let Greece cook their books both for the entry into the Euro as well as their continued participation and will bear the costs for not stepping in sooner.
To be honest this referendum was a massive sham and waste of everyone's time and money. It has only delayed the inevitable - whether they cut spending now or later, the only difference is whether they do so with or without the Euro as the currency. I do not think that the rest of the Eurozone will continue to indulge Greece's ludicrous sense of entitlement but the only way that Greece will remain in the Euro is if the Eurozone countries decide to go for a humiliating climb down and give in to Greece's demands. Interesting times lie ahead.
The current impasse occurred because the Greek government wanted to increase taxes but the Eurozone ministers rejected this and said they had to make further cuts to spending instead.
90% of EU money 'given' to Greece has been used to recapitalise Eurozone banks.
Last statistics I saw, when interest payments were excluded, Greece was running at a (very small) surplus.
I'm still confused as to what the Greeks were actually voting on. I guess it was probably more of a vote of confidence in the government
People are celebrating when millions of people's pensions and savings are now going to go up in smoke. Woo yeah! Fuck austerity!
Indeed - the Greeks borrowed the money and many of the Greek people were direct beneficiaries of the billions that were borrowed, via a wide range of mechanisms.
The way they are carrying on you'd have thought the EU was robbing them blind - all they want is the Greeks to show they intend to try and pay back some of what they owe.
If you were a German or French tax payer how would you feel this morning watching the Greeks celebrating the fact they are refusing to act responsibly? Most will be furious.
If the Greeks don't wake up to themselves they are going to end up putting the country back 30 years and turning themselves into Europe's Argentina.
People are celebrating when millions of people's pensions and savings are now going to go up in smoke. Woo yeah! Fuck austerity!
If you were a German or French tax payer how would you feel this morning watching the Greeks celebrating the fact they are refusing to act responsibly? Most will be furious.
Never mind the Germans and French. How do you think the taxpayers in Lithuania - a country poorer than Greece - are going to feel about subsidising Greek fecklessness?
But surely the Greeks have basically just voted away their pensions and savings! Most who have paid euros into pension funds and other savings over their lives will probably never get this money back now. It will be converted into Drachma and devalue to a tenth of its original value.
They need to make this sacrifice to get their economy moving and find some hope for the future.
I've got family in Slovakia. Most of the country is dirt poor and it shows. People have low wages and the infrastructure has barely moved on since Soviet times. Why should Greece be allowed to provide provide its citizens with a superior standard of living on borrowed money that it never intends to repay? What makes the Greeks think they have a god given right to Northern European levels of welfare (or better) on Eastern European levels of income?
The whole Greek crisis it could be argued is an absolute Godsend for the EU and acquis communautaire 'ever closer union.'
The EU and governments generally love a 'beneficial crisis' because it gives them scope to justify removing freedoms and liberties and exerting more authoritarian control.
In the overall scheme of things EU the debts of Greece are a relative 'piss in the ocean' and for that reason what we have seen and are seeing is a cunning piece of theatre, an up date of Much Ado About Nothing perhaps.
The play opens with the Greek Prime Minister solemnly announcing that he needs to obtain democratic legitimacy from his people for any more oppressive austerity measures. Cue hand wringing and head slapping from (Matt) Hollande, Angela Merkel, the Greek establishment et al about how the end of the world is nigh and Greece will be thrown out of both the Euro and the EU causing untold catastrophe if the Greek people vote 'No' the one thing calculated to guarantee that result!
It's now the interval and in Act 2 the Greek PM will return to his Masters in Brussels who will ever so magnaminously say something along the lines of:
We have listened to the democratic voice of the the Greek European Citizens and do not want to lose them from 'The Project' we will therefore write off a substantial amount of debt and negotiate a new financial settlement to reduce the burden on our Greek Partners.
In a flurry of trumpets the EU, often criticised even by supporters for lack of democratic legitimacy, suddenly appears to be the good guy as it listens to the desperate voices of European citizens. David Cameron comments that the EU really does represent The People and the UK really should vote YES in the forthcoming referendum.
Meantime the IMF set to work arranging how it is all going to be paid for and surprise, surprise, the UK's contributions increase once more along with those of the US since they also favour a supranational country called Europe in the long term.
Really? I am beginning to truly wonder if there is any word other than 'austerity' that can be used to describe any attempt by any government to reduce their national expenditure, or at least to live within their means. .....I do not think that a country realising that it cannot continue to increase spending forever without having the means for paying for it can be described as austerity, it is more reality.
Nail on head. "Austerity" is not an objective, it's the outcome of pissing someone else's money up the wall and then finding you have to live off what's down the back of the sofa.
Whether in or out of the EU or in or out of the Euro, the objective is for Greece to modernise and find a way of collecting taxes in an economy that is largely cash based, and then only spending what it generates.
It's solving Greece's inability to modernise that is the first problem Greece needs to address because there's no money for Greece, let alone it's creditors, until that happens.
Here's my take on what Greece people are saying:
We don't know/can't be trusted to run our economy We need an institution like the EU to take control and sort us out. The EU as currently set up, and controlled by the money men, cannot address the humanitarian dimensions of the austerity we know we must face.
The whole Greek crisis it could be argued is an absolute Godsend for the EU and acquis communautaire 'ever closer union.'
The EU and governments generally love a 'beneficial crisis' because it gives them scope to justify removing freedoms and liberties and exerting more authoritarian control.
In the overall scheme of things EU the debts of Greece are a relative 'piss in the ocean' and for that reason what we have seen and are seeing is a cunning piece of theatre, an up date of Much Ado About Nothing perhaps.
The play opens with the Greek Prime Minister solemnly announcing that he needs to obtain democratic legitimacy from his people for any more oppressive austerity measures. Cue hand wringing and head slapping from (Matt) Hollande, Angela Merkel, the Greek establishment et al about how the end of the world is nigh and Greece will be thrown out of both the Euro and the EU causing untold catastrophe if the Greek people vote 'No' the one thing calculated to guarantee that result!
It's now the interval and in Act 2 the Greek PM will return to his Masters in Brussels who will ever so magnaminously say something along the lines of:
We have listened to the democratic voice of the the Greek European Citizens and do not want to lose them from 'The Project' we will therefore write off a substantial amount of debt and negotiate a new financial settlement to reduce the burden on our Greek Partners.
In a flurry of trumpets the EU, often criticised even by supporters for lack of democratic legitimacy, suddenly appears to be the good guy as it listens to the desperate voices of European citizens. David Cameron comments that the EU really does represent The People and the UK really should vote YES in the forthcoming referendum.
Meantime the IMF set to work arranging how it is all going to be paid for and surprise, surprise, the UK's contributions increase once more along with those of the US since they also favour a supranational country called Europe in the long term.
And then there's a debt crisis in Italy, Spain and France as they want their debts written off too. The Euro either buckles under their demands and it all falls apart or it's the crisis that forces 20+ nations to give up their remaining sovereignty and agree to a full political union.
I agree 100% about the Greeks having to adjust their economy and raise taxes to pay for what their government spend. However, the people who rattle on about the Greeks not wanting to pay back the money seem content to ignore the fact that Greece has consistantly said it WILL pay the money back, but not at a cost of wrecking their social securities, pensions, hospitals and all the other things that the rich fat cats in the EU consider to be luxuries for what they seem to cheerfully regard as the peasant classes. The whole of the recent eight or so years of recession has involved VAT hikes, income reductions, precarious work contracts and generally, pushing back living conditions to a level previously enjoyed in 1938. In economy, I'm fairly pragmatic. The fact is that big money will only invest if they see a net return. However, the idea that we have enjoyed in Spain, thanks to the Troika, that the rich créate wealth and should not be touched, does'nt work. The Spanish economy remains fairly moribund. Spending won't increase,as most people have short term contracts (rubbish contracts in Spanish) so only buy the bare necessities. The same will occur in Greece if the IMF are allowed to dictate terms. The economy will pick up if the residents feel secure enough to spend. Austerity will piss on that. If the rest of Europe are honest about wanting Greece to stay, they can now negotiate on a slightly more level playing field. If they simply wanted to shaft Greece, they still can, but they'll lose their loans. This may well be a Pyrric victory for Greece, but at least they'll go down bravely.
Greece has consistantly said it WILL pay the money back,
Waiting for a Greek to pay you back would be like expecting to get your food served some time this century in a Greek restaurant - that's even if half the stuff on the menu was even available in the first place. How can they pay the money back when they make next to nothing - bottling Coca-Cola is their 10th largest industry for God's sake - have no services industry to speak of (save tourism) and otherwise just grow a few olive trees, catch a few fish and run a few ships? To put it in perspective, if you divide BP's revenue by three, you get close to the whole country's GDP.
#CAFCfan, if thats the case, why were they allowed in, or lent the money in the first place. All the more reason to arrange repayment in a way the country can afford. Still, the IMF would prefer a legalised sack of the country, with Merkel and Rayoy to tell everyone "nothing to see here, keep moving".
As I understand it, not paying back what you owe does not equate to a write-off by your creditors. No does not take Greece any closer to reducing its obligations to its creditors, it just makes dealing with it even harder. Reality/ austerity call it whatever, but things could start getting a lot tougher for them. Without the Euro they will need to tackle the effects of inflation, remembering what they owe is fixed in the relatively hard currency of the Euro.
Making the effort to try and pay something back would be in everyone's interest. Personally if it's true that Greeks retire on pensions at younger ages than most of their creditors, I understand why the creditors would be hacked off in being expected to pay for that.
A few years off yet, but this country could easily end up with similar issues as pensions liabilities are not factored into our already massive national debt which is not being paid off and relies on inflation and growth to maintain. That's state and public sector pensions which together on an actuarial basis has so many zeros in it that nobody dares say how much it comes to! Have a nice day.
Bryan, my understanding of the UK economy is the same. The debt is not actually being paid off, merely stabilised, so many of those making jokes about Greece may yet wish they had a finance minister like the one who resigned in Greece this morning.
Never mind the economic/political issues that are still to be resolved, there is a very real humanitarian crisis about to unfold. More than half of Greece's food supplies and almost all pharmaceuticals are imported into the country, and since capital controls were introduced, suppliers cannot be paid and imports have stopped. Eventually all those No voters will turn up at their local shop with what little money they have been allowed to withdraw and unable to feed their families or buy medicine. How will Syriza act once the rioting starts?
Austerity - if that is what you want to call it - is on Greece's doorstep, whether or not they want it. There are no more credible alternatives.
The likelihood now is that Greece will exit the EMU. The ECB is likely to switch of the Emergency Liquidity Assistance (ELA) by 20 July at the latest, when a €4.2bn payment to the ECB comes due. At that stage, the pledged collateral to the ECB would be retained and would wipe out all shareholder equity in Greek banks (if it hasn't effectively gone already).
The EU have to be very careful about how they play this now with elections coming up in Germany and Spain. Voters in Germany won't take kindly to subsidising the Greeks any more and in Spain they may well think "feck it" and vote in their own anti-austerity party/parties and try and play the same hand the Greeks have.
At the moment, the direct exposure of the other EMU countries amounts to c. 3.5% of EA GDP. European banks have also massively scaled back exposure to Greece in the last few years. This should be manageable, but contagion is a risk if other countries sense that a more preferential deal is being offered to Greece than they themselves have.
I have recently come back from Kefalonia and I have to say things there seemed normal, shops, restaurants were taking credit cards and the supermarkets and pharmacies were all stocked. One guy I spoke to said that for them tourism is everything and as long as that continued he felt that they will be OK. Of course that is the small picture and not relevant to the whole of the Greek situation.
Seems to me that they are the architects of their own downfall having no proper Tax collection system and the expectancy of retirement in their fifties. We can all pontificate on what has gone wrong but that is now irrelevant they have to come to a settlement that is agreeable to both parties or become a third world nation. My best estimation is that the ECB/IMF et al have calculated the risk of Greece dropping out of the Euro and consider it doable for the rest of the union. The big threat is contagion to other economies such as Spain and Italy then the shit really will hit the fan.
One lesson you cannot have a common currency with common interest rates, VAT and economic policies it doesn't work.
The likelihood now is that Greece will exit the EMU. The ECB is likely to switch of the Emergency Liquidity Assistance (ELA) by 20 July at the latest, when a €4.2bn payment to the ECB comes due. At that stage, the pledged collateral to the ECB would be retained and would wipe out all shareholder equity in Greek banks (if it hasn't effectively gone already).
The EU have to be very careful about how they play this now with elections coming up in Germany and Spain. Voters in Germany won't take kindly to subsidising the Greeks any more and in Spain they may well think "feck it" and vote in their own anti-austerity party/parties and try and play the same hand the Greeks have.
At the moment, the direct exposure of the other EMU countries amounts to c. 3.5% of EA GDP. European banks have also massively scaled back exposure to Greece in the last few years. This should be manageable, but contagion is a risk if other countries sense that a more preferential deal is being offered to Greece than they themselves have.
Of to Zante on Thursday. Read Zante grows and produces. grapes olives yogurt and nougat.Dont like olives and yogurt. So guess we will be living on wine and nougat all holiday.
Austerity is pointless if you strangle the economy at the same time. "great operation - a shame the patient died!" The Greek budget was running at a surplus before interest payments, the government have agreed to privatise assets and raise the retirement age.
The gap between the two sides had, I think, narrowed and then there was a leak from the IMF suggesting it was inevitable that some debt would have to be written off. Back in 2010 perhaps 15-25% needed a haircut? I don't know the numbers nor how one would calculate / negotiate an adjustment.
For those wishing the return of the Drachma then it's less than 100 years since the Weimar Republic, hyper inflation and reparations. If you think we have issues with Syria, IS and North African people trafficking today then imagine a post €uro Greece.
I expect they will cut a deal especially now that the Greek finance guy has resigned. As the chief economist of Munich Re stated in a talk at Lloyds back in 2012: "which German Chancellor will allow the €uro to die on their watch?!"
Have to say, you've got to fear for the future of a country who's economy relies so heavily on tourism. We had an all inclusive holiday in Kos 3 years ago and had a brilliant time. However even then you could see (while on the coach transfers) that towns were dying on their arses with many shops and showrooms boarded up. We got talking to one of the holiday reps in the bar one night and her feelings were that all inclusive holidays must be knocked on the head in the not too distant future as holidaymakers were not going out and spending their money in the bars and restaurants outside of their hotels. They still need us to take our holidays there but I think hold fire for the time being and see what develops. It seems such a shame that a beautiful country like Greece has essentially not only shot itself in the foot but is now holding the gun to it's own head.
A few years off yet, but this country could easily end up with similar issues as pensions liabilities are not factored into our already massive national debt which is not being paid off and relies on inflation and growth to maintain. That's state and public sector pensions which together on an actuarial basis has so many zeros in it that nobody dares say how much it comes to! Have a nice day.
Don't be silly. Generous, unaffordable pension plans and not actually paying off debt are the sole preserve of feckless warm countries where they make olive oil.
People wont want the Euro unless it delivers. The EU has failed to export German economic success, and what do countries like Greek have to show for it now after a banking crisis, bankers aren't poor, but the masses suffer
And economies like Greece and Spain now have high living costs for no real good reason, and I am sure others do to. Different for the UK as we have an economic base and a floating currency to help us, but yes our standard of living is taking a hit too
This feels like a fail for the EU and they need to sort it quick with a more liveable package
The whole Greek crisis it could be argued is an absolute Godsend for the EU and acquis communautaire 'ever closer union.'
And then there's a debt crisis in Italy, Spain and France as they want their debts written off too. The Euro either buckles under their demands and it all falls apart or it's the crisis that forces 20+ nations to give up their remaining sovereignty and agree to a full political union.
If we had a totally United States of Europe, politically, economically and with one defence policy surely FIFA would only give us one World Cup slot? No one will stand for that!
Comments
Really? I am beginning to truly wonder if there is any word other than 'austerity' that can be used to describe any attempt by any government to reduce their national expenditure, or at least to live within their means. The Greeks, currently, have no intention of raising any taxes, cutting any spending or raising any money through borrowing or printing money. In fact the last two are no longer options anyway as Greek government bonds are now less than worthless and they, as a Eurozone country, cannot print money. Maybe once they leave the Eurozone they can pursue the printing money route (in fact they will almost certainly have to print money constantly to continue to float their economy) but then the cost to import will skyrocket. At some point, the Greeks will have to wake up and realise money does not grow on trees and you cannot feed your people with worthless notes. At some point they will have to consider raising their retirement age, raising taxes, funding the islands less or actually enforcing some of their tax laws instead of the current lax attitude both the government and the Greeks have to paying and collecting taxes. I do not think that a country realising that it cannot continue to increase spending forever without having the means for paying for it can be described as austerity, it is more reality.
The EU have to share the blame though, they let Greece cook their books both for the entry into the Euro as well as their continued participation and will bear the costs for not stepping in sooner.
To be honest this referendum was a massive sham and waste of everyone's time and money. It has only delayed the inevitable - whether they cut spending now or later, the only difference is whether they do so with or without the Euro as the currency. I do not think that the rest of the Eurozone will continue to indulge Greece's ludicrous sense of entitlement but the only way that Greece will remain in the Euro is if the Eurozone countries decide to go for a humiliating climb down and give in to Greece's demands. Interesting times lie ahead.
90% of EU money 'given' to Greece has been used to recapitalise Eurozone banks.
Last statistics I saw, when interest payments were excluded, Greece was running at a (very small) surplus.
I'm still confused as to what the Greeks were actually voting on. I guess it was probably more of a vote of confidence in the government
The way they are carrying on you'd have thought the EU was robbing them blind - all they want is the Greeks to show they intend to try and pay back some of what they owe.
If you were a German or French tax payer how would you feel this morning watching the Greeks celebrating the fact they are refusing to act responsibly? Most will be furious.
If the Greeks don't wake up to themselves they are going to end up putting the country back 30 years and turning themselves into Europe's Argentina.
They need to make this sacrifice to get their economy moving and find some hope for the future.
Foolhardy or brave?
The EU and governments generally love a 'beneficial crisis' because it gives them scope to justify removing freedoms and liberties and exerting more authoritarian control.
In the overall scheme of things EU the debts of Greece are a relative 'piss in the ocean' and for that reason what we have seen and are seeing is a cunning piece of theatre, an up date of Much Ado About Nothing perhaps.
The play opens with the Greek Prime Minister solemnly announcing that he needs to obtain democratic legitimacy from his people for any more oppressive austerity measures. Cue hand wringing and head slapping from (Matt) Hollande, Angela Merkel, the Greek establishment et al about how the end of the world is nigh and Greece will be thrown out of both the Euro and the EU causing untold catastrophe if the Greek people vote 'No' the one thing calculated to guarantee that result!
It's now the interval and in Act 2 the Greek PM will return to his Masters in Brussels who will ever so magnaminously say something along the lines of:
We have listened to the democratic voice of the the Greek European Citizens and do not want to lose them from 'The Project' we will therefore write off a substantial amount of debt and negotiate a new financial settlement to reduce the burden on our Greek Partners.
In a flurry of trumpets the EU, often criticised even by supporters for lack of democratic legitimacy, suddenly appears to be the good guy as it listens to the desperate voices of European citizens. David Cameron comments that the EU really does represent The People and the UK really should vote YES in the forthcoming referendum.
Meantime the IMF set to work arranging how it is all going to be paid for and surprise, surprise, the UK's contributions increase once more along with those of the US since they also favour a supranational country called Europe in the long term.
Whether in or out of the EU or in or out of the Euro, the objective is for Greece to modernise and find a way of collecting taxes in an economy that is largely cash based, and then only spending what it generates.
It's solving Greece's inability to modernise that is the first problem Greece needs to address because there's no money for Greece, let alone it's creditors, until that happens.
Here's my take on what Greece people are saying:
We don't know/can't be trusted to run our economy
We need an institution like the EU to take control and sort us out.
The EU as currently set up, and controlled by the money men, cannot address the humanitarian dimensions of the austerity we know we must face.
In economy, I'm fairly pragmatic. The fact is that big money will only invest if they see a net return. However, the idea that we have enjoyed in Spain, thanks to the Troika, that the rich créate wealth and should not be touched, does'nt work. The Spanish economy remains fairly moribund. Spending won't increase,as most people have short term contracts (rubbish contracts in Spanish) so only buy the bare necessities. The same will occur in Greece if the IMF are allowed to dictate terms. The economy will pick up if the residents feel secure enough to spend. Austerity will piss on that. If the rest of Europe are honest about wanting Greece to stay, they can now negotiate on a slightly more level playing field. If they simply wanted to shaft Greece, they still can, but they'll lose their loans.
This may well be a Pyrric victory for Greece, but at least they'll go down bravely.
How can they pay the money back when they make next to nothing - bottling Coca-Cola is their 10th largest industry for God's sake - have no services industry to speak of (save tourism) and otherwise just grow a few olive trees, catch a few fish and run a few ships? To put it in perspective, if you divide BP's revenue by three, you get close to the whole country's GDP.
Making the effort to try and pay something back would be in everyone's interest. Personally if it's true that Greeks retire on pensions at younger ages than most of their creditors, I understand why the creditors would be hacked off in being expected to pay for that.
A few years off yet, but this country could easily end up with similar issues as pensions liabilities are not factored into our already massive national debt which is not being paid off and relies on inflation and growth to maintain. That's state and public sector pensions which together on an actuarial basis has so many zeros in it that nobody dares say how much it comes to! Have a nice day.
Austerity - if that is what you want to call it - is on Greece's doorstep, whether or not they want it. There are no more credible alternatives.
The EU have to be very careful about how they play this now with elections coming up in Germany and Spain. Voters in Germany won't take kindly to subsidising the Greeks any more and in Spain they may well think "feck it" and vote in their own anti-austerity party/parties and try and play the same hand the Greeks have.
At the moment, the direct exposure of the other EMU countries amounts to c. 3.5% of EA GDP. European banks have also massively scaled back exposure to Greece in the last few years. This should be manageable, but contagion is a risk if other countries sense that a more preferential deal is being offered to Greece than they themselves have.
Seems to me that they are the architects of their own downfall having no proper Tax collection system and the expectancy of retirement in their fifties. We can all pontificate on what has gone wrong but that is now irrelevant they have to come to a settlement that is agreeable to both parties or become a third world nation. My best estimation is that the ECB/IMF et al have calculated the risk of Greece dropping out of the Euro and consider it doable for the rest of the union. The big threat is contagion to other economies such as Spain and Italy then the shit really will hit the fan.
One lesson you cannot have a common currency with common interest rates, VAT and economic policies it doesn't work.
The EU have to be very careful about how they play this now with elections coming up in Germany and Spain. Voters in Germany won't take kindly to subsidising the Greeks any more and in Spain they may well think "feck it" and vote in their own anti-austerity party/parties and try and play the same hand the Greeks have.
At the moment, the direct exposure of the other EMU countries amounts to c. 3.5% of EA GDP. European banks have also massively scaled back exposure to Greece in the last few years. This should be manageable, but contagion is a risk if other countries sense that a more preferential deal is being offered to Greece than they themselves have.
The Greek budget was running at a surplus before interest payments, the government have agreed to privatise assets and raise the retirement age.
The gap between the two sides had, I think, narrowed and then there was a leak from the IMF suggesting it was inevitable that some debt would have to be written off. Back in 2010 perhaps 15-25% needed a haircut? I don't know the numbers nor how one would calculate / negotiate an adjustment.
For those wishing the return of the Drachma then it's less than 100 years since the Weimar Republic, hyper inflation and reparations. If you think we have issues with Syria, IS and North African people trafficking today then imagine a post €uro Greece.
I expect they will cut a deal especially now that the Greek finance guy has resigned. As the chief economist of Munich Re stated in a talk at Lloyds back in 2012: "which German Chancellor will allow the €uro to die on their watch?!"
And economies like Greece and Spain now have high living costs for no real good reason, and I am sure others do to. Different for the UK as we have an economic base and a floating currency to help us, but yes our standard of living is taking a hit too
This feels like a fail for the EU and they need to sort it quick with a more liveable package