To think that Greece should have some debt forgiveness

[ReallyTired]

I would like Greece to leave the Euro and have help in rebuilding their ecomony. Remaining in the Euro and having high taxes will mean that no one will be able to go on holiday there. I feel that giving more loans to Greece will just make their problems worse. There is simply no way that Greece will ever be able to pay those loans back.

Brutal repatations after the first world war cause untold hardship in Germany. It is thought that the brutally of the reparations on ordinary German people was a factor in the rise of Hitler and the Nazi party by some historians. In 1953 many European countries including Greece, Spain, Italy and Ireland to mention a couple wrote of a sizable chunk of German debt. These countries helped to build the sucessful post war German ecomony. Those countries forgave Germany for far more serious things than not paying loans back.

Germany is one of the countries most resistant for giving Greece a debt haircut. I feel that Chancellor Merkal should be reminded of the parable of the debtor. Its is morally repudgent to have an EU country reduced to third world status. If Greece had a debt haircut then there would be more chance of getting loans paid back. There is no way that Greece can afford the interest payments yet alone pay off any of the debt. The international monetory fund says that the level of debt is totally unsubtainable for the Greek ecomony.

The problem isn't 'Greeks good, Germany bad' or 'Germans good, Greeks bad' it's that Greece and Germany (standing for North and South Europe) are shackled together in a monetary system that can't accommodate both their economies without either inflicting massive unemployment and stagnation on the south or demanding fiscal transfers from the north. All the various bailouts and so on have been fudges to conceal this fact. But it's not the fault either of Greece or Germany - the problem is the euro.

Unless the eurozone either federalises (which European electorates don't want) or gets rid of the euro, this sort of thing will happen again and again. And meanwhile we watch all the old lazy racist stereotypes emerging - German imperialist bullies and disciplinarians, lazy feckless Greeks - and all the old European hatreds being fanned. Witness the rise and rise of nationalist parties across the EU, including in the UK.

The EU was created to hedge against European nationalism, and instead it's driving an explosion of nationalist hostility.

however surely we should be focusing on the future and how to rebuild Freece

(I take it that was a typo, and not a subconscious confusion with the word "fleece" )

I think that's what people are doing. The question is: who pays ?

The EU was created to hedge against European nationalism, and instead it's driving an explosion of nationalist hostility

Maybe we need to revise the EU ? After all, if - as they say - armies are always equipped to fight the last war, the same could be said of political institutions.

The EU was forged in the furnace of post war Europe, and in the main has been spectacularly successful in preventing European wars. People under a certain age (myself included) need to remember that the 70 years since 1945 have been the most peaceful for centuries.

However, times change, and the rise of Islamic terrorism, and the pressure on Europe from the south, suggest we need a new paradigm.

A military dictatorship in Europe now that will make things interesting

Really? I went on holiday to Spain as a child in the early 1970s. It was a military dictatorship. Plenty of people went to Portugal for holidays, too, which was a military dictatorship for longer. Europe appeared to be functioning at the time, and the French didn't feel the need to keep tanks parked on the Col du Pourtalet.

This sort of stuff is the problem that Greece's brainstrust don't get. No-one cares. The markets aren't spooked, because Greek Default is already priced in. Politicians don't care, because Greece is a long way away. The electorates of western European countries don't care, because they see Greece as not only a far off country of which we know little, to misquote, but as a lazy and corrupt country that is finding the bed it has made for itself uncomfortable. Yelling "give us money or we default" or "give us money or we fall into dictatorship" gets a "meh, so what?" from the Bundestag.

They've been bailed out several times and even then continue to retire at fifty and pay little tax. Who cares? So they become a military dictatorship? So what? Was that meant to be a threat so scary that the CDU will soil itself and hand over their electorate's wallets?

The Greek military is an expensive joke and with no oil, would cease to function in weeks anyway. Iran has kept F14s flying for thirty-five years on cached and smuggled parts, but has lots of oil to make lots of JP4 to power them; the Greek F16s won't fly on Retsina. If they got out of line, Turkey could reduce the Greek military capability to that of your local CCF, and would barely class it as a small training exercise. Greece has to negotiate in good faith, because no-one is scared of them. No, Varou, they aren't worried, they're just shaking their heads in disbelief about how stupid you are.

But this is the point outtolunch. You can't just ignore Greece's actions over the last five years (and longer) if you are trying to deliver a rescue package. The country has shown a total unwillingness to reform its economy or its institutions. Germany, ECB and IMF could write off all of Greeks debt tomorrow yet the country would be back on its knees within a decade without the required reforms. As mentioned before they have not run a surplus in 40 years, their public sector was funded by borrowing on the international markets at rates impossible under the drachma as the euro was being underwritten by Germany (and others).

Take Ireland for example, Ireland's economic woes were a result of an overheated property bubble that lead to the collapse of the banks and subsequent nationalisation of their debt. Ireland's economy prior to 2008 was running a surplus budget, it returned a surplus budget last year after rolling out Troika imposed policies that were a condition of its bailout. Despite its debt obligations its economy is on a sound footing and rated A+ whereas Greece is still rated at CCC...or junk status. Talk to your average Irish person, there is anger that some of the key banking/political personal who acted illegally have not seen any jail time but there is a collective acknowledgement that things 'got a bit out of hand' during the Celtic Tiger when everyone was buying second homes and taking three foreign holidays a year on credit. They have taken responsibility and taken their medicine. The Greeks on the other hand, refuse to reform, blame everyone else and expect poorer countries like Romania and Bulgaria who have much lower standards of living to prop them up.

Maybe we need to revise the EU ?

My point exactly.

I really hope the UK votes Out next year. The EU is on a catastrophic trajectory to becoming an authoritarian bureaucracy run purely for the interests of finance and big business.It has shown itself unreformable 'from within' and at this rate is going to end up precipitating the European conflict it was created to prevent.

Lefties should oppose it because it's on a mission to impose permanent austerity, everywhere it governs. Right-wingers should oppose it because it's hostile to national self-government and political freedom. Brexit is the only way we can start the process of re-imagining with our European neighbours what kind of a fellowship we actually want on this continent.

But when Spain was a military dictatorship they did not share a common currency , I was thinking more of the incongruity of European ideal of the EU being a force for peace but having a military dictatorship in its midst .

Don't get me wrong I do believe Greece should change but I think this latest Euro plan is ludicrous and will not work , why do we believe that within a year Greece will make a surplus of 3.5% when it hasn't done that in 40 years . We don't so then the sweeping automatic cuts will kick in making it impossible for the next year and so on in perpetuity. How will this plan break the circle of debt and corruption ?

OTheHugeManatee

Food for thought. Up until now, my view was UK membership of the EU was a good thing (for both). Mainly as a a prophylactic to the (understandable) insular nature of the English character.

However (and this is probably the biggest danger Greece poses. Not fiscal, but existential) now all the working parts of "Europe" appear to be exposed, it's looking more and more likely that the UK could be out of the EU, but still in Europe.

Let's it this way. A year ago I would have voted to stay in the EU. Now, I'm less certain.

Lurking One of my biggest frustrations in recent years has been the lazy Guardian-ish stereotyping of eurosceptics as mean-spirited, racist Little Englanders. Many of us have long been worrying about the corporatist, anti-democratic turn of the EU but risked being branded as swivel-eyed Ukippers for daring to say so. I really hope that's going to change, now that more people have seen a bit more of whose interests it really serves and how it actually works.

It's not a left-wing (kittens and rainbows and human rights and the EU) vs right-wing (tattooed hooligans and racist farmers and whinging about Brussels and immigration) debate. It's about democracy (anyone, right or left, who wants a say in how they're governed) versus technocracy (government by a remote and unaccountable elite who don't give a stuff what you think).

... government by a remote and unaccountable elite who don't give a stuff what you think

Why should they? We are a resource. If we are not required it makes little sense to expend other resources to maintain us. If we are an inconvenience, then employ the more aggressive and dominant members of the mass to control and influence their weaker minded kin. Until we are a threat, we do not need anything more than a basic existence.

But when Spain was a military dictatorship they did not share a common currency

If Greece became a military dictatorship they wouldn't be sharing a common currency either.

Lots of confusion her about the difference between the Eurozone and the EU - as yet, we (in the UK) haven't paid a penny to bail out Greece. We didn't meet the criteria to join (devaluation anyone?)...
Leave the EU by all means...hope you don't own a business that relies on exports. Or imports to make stuff. Or you buy foreign stuff.
What about the increase in exports Germany has seen because it benefits from a currency that is valued less than the Deutschmark (sp?) would be?

Leave the EU by all means...hope you don't own a business that relies on exports. Or imports to make stuff. Or you buy foreign stuff.

Yeah, one thing I've noticed about China, which isn't a member of the EU, is its inability to export to the EU. You can't find Chinese-made manufactured goods in the UK for love nor money. Same as Japan: nothing here from Japanese manufacturers. And Vietnam and India: no clothing here made in those non-EU countries at all. Step into your local highstreet and you'll see that all the stuff on sale is manufactured in the EU. Hang on, wait a minute...

Oh, what's that you say? That they're trading under GATT terms which limit tariffs to 6% and place sharp restrictions on non-tariff barriers with resolution at a tribunal that does a pretty reasonable job? And that both the UK and the EU are signatories to GATT? And that it's not unlikely that a UK outside the EU would be in a position to subsidise its manufacturing to the tune of 6% out of the savings in budget and therefore provide customer loading dock prices on exports that are unchanged? And that in any event, a trade war between Germany and the UK would have only one winner, and it certainly wouldn't be VAG?

Don't get me wrong: I'm a fervent European integrationist to the point of near-Federalism. But there are so many good reasons to stay in the EU that we don't need to produce scare stories that evaporate with a spritz of facts.

as yet, we (in the UK) haven't paid a penny to bail out Greece.

Er, we have. As members of the IMF. And any UK institution investing in bonds and currencies has as well. And in both cases, we haven't had a real say.

as yet, we (in the UK) haven't paid a penny to bail out Greece.

www.bloomberg.com/news/articles/2012-02-23/rbs-reflects-greek-debt-damage-with-credit-agricole-days-after-aid-accord

RBS has taken quite a hit writing down greek debt. Remind me who owns RBS? But then again can't they offset losses against tax so it hits the overall tax take in the UK.

We will have to see if they use the EFSM or not.

"Leave the EU by all means...hope you don't own a business that relies on exports. Or imports to make stuff. Or you buy foreign stuff."

We need to believe that other countries would still want to trade with us. We have a population of 60 million wealthy (by planet earth standards) people. Our country would be in a similar position to Norwary or Iceland.

If I recall correctly Cameron went to China to try and improve our trade links... and yet we still export relatively little outside the EU. I did make my point rather flippantly this is true, but I was getting a little annoyed at the lack of any real debate on here, at least that is happening now We are not like Norway, they invested oil revenues and we spent ours.
Yes, we can buy goods from all over the world (and in fact have trade agreements with non EU countries) but the free movement of people and goods benefits us greatly (I believe)... better to avoid tit for tatt protectionism like the bananas/steel/leather shoes nonsense some have seen.
I will remember in future to remain very serious at all times...

And I speak as someone who buys Chinese steel and has sold to EU and non EU counties....and thinks the monetary union premise of the Eurozone is fundmentaly flawed. (For those who check posts over time...this is my second job )

If I recall correctly Cameron went to China to try and improve our trade links... and yet we still export relatively little outside the EU.

China is the rising financial superpower. It is also the largest market in the world with the fastest growing middle class. Behind the is a whole plethora of emerging markets who work for, supply, and are beholden to China for access to the rest of the globe. Chinese demand IS their engine of growth.

It would be wise for a small but wealthy country, with relatively little in the way of exports to contribute to the global economy, but wielding influence and power for the time being, to placate, if not align with rising nations. The old guard is dying. Just as the UK gave up its crowd as the world superpower at the turn of the last century, and spend the subsequent 80 years aligning itself and sucking up to its successor, so we now recognise that America is falling, and China is rising, and we must re-align ourselves once again. It took 80 years for the transition to occur between UK dominance to US dominance of the planet, and it may take another 80 for the pendulum to swing east once more, but that process has begun and is unstoppable. China is the only nation on the planet to have held centre stage more than once.

I think that is why Cameron was sent to China. He did as he was told.

No. Chinese growth (whilst a higher percentage than ours) has stabilised. Of course, still a huge market available in terms of population but China is by no means in any way a 'free trade' nation . I think we will see a return to a number of growth areas rather than one or two superpowers but we will not build trade agreements overnight and we currently trade mainly within EU.

You are talking about trade growth. I am talking about increasing financial power. Don't mix the two, because the Chinese do not view the world the way we do. One is a metric of what is happening today, the other is a momentum of the financial power of the world moving from west to east.

When I responded to the post above, I was talking about an acceleration in the movement of global financial power, over the next 50-80 years, not respective trade balances over the next 12-18 months.

Besides, this has nothing to do with Greece. Greece is a sideshow. Let's all go and watch the sideshow. It is distraction politics at its best.

the Chinese do not view the world the way we do

When SIAC bought the Longbridge plant, a local businessman was interviewed on radio. He'd been doing business in China for years, and he said that there would be a 25-year plan for the venture. That's how they think.

I wonder how many countries managed a 3.5% surplus of GDP for 30 years annually. Norway has a huge surplus all the time but sher is not inside EU.

I wish people would stop saying that Greeks retire at 50 (using the present tense)

They could , in the past, retire after 17 1/2 years of work on half benefits (as could citizens of many other EU countries, by the way); many however did not, certainly not the majority. And after the two rounds of 'austerity' (including the wholesale dismemberment of unions and collective bargaining) that right was withdrawn completely so that there should be no retired 50 year olds today in Greece.

Source:
www.newstatesman.com/blogs/world-affairs/2012/05/exploding-myth-feckless-lazy-greeks

(2012) : extract:
" Greeks retire early . The figure of 53 years old as an average retirement age is being bandied about. So much so, that it is has become folk-fact. It originates from a lazy comment on the New York Times website . It was then repeated by Fox News and printed in other publications. Greek civil servants have the option to retire after 17.5 years of service, but this is on half benefits. The figure of 53 is a misinformed conflation of the number of people who choose to do this (in most cases to go on to different careers) and those who stay in public service until their full entitlement becomes available.

Looking at Eurostat’s data from 2005 the average age of exit from the labour force in Greece (indicated in the graph below as EL for Ellas) was 61.7 ; higher than Germany, France or Italy and higher than the EU27 average. Since then Greece have had to raise the minimum age of retirement twice under bail-out conditions and so this figure is likely to rise further."

that right was withdrawn completely so that there should be no retired 50 year olds today in Greece.

Untrue.

Instead of a three year old polemic in the New Statesman, let's turn to a more details analysis from The Economist, three weeks ago. According to Professor Tinios, “the vast majority of those planning to retire this decade are grandfathered” (shielded) from the reforms.

www.economist.com/blogs/freeexchange/2015/06/greek-pensions

To quote:

Yet there was a crucial hole in the reforms: they largely sheltered older workers, so that they could retire on broadly the same terms as before. As an example, Platon Tinios, a pensions expert at Piraeus University, highlights the reform limiting the list of arduous occupations. This no longer included new hairdressers from 2012 but all those with more than ten years’ experience retained their previous right to retire five years early. The new accrual rates applied to years worked from 2011; previous years worked still benefited from the earlier more generous formula (although the resulting benefits are then subjected to the cuts applied to pensions in payment). According to Professor Tinios, “the vast majority of those planning to retire this decade are grandfathered” (shielded) from the reforms.

The result has been a wave of early retirements as people take advantage of the old rules at a time of high unemployment. That has pushed up spending while contributions fell away leaving the pension system more and more reliant on huge transfers from the taxpayer, now worth 9% of GDP. Pension spending jumped to an unaffordable 17.5% of GDP in 2012 (although this figure overstates the burden because the economy has been so depressed). The position is not helped by the fact that Greece has the third most elderly population in the 28-strong European Union, gauged by the share of people aged 65 or more in the population, just behind Italy and Germany.