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The Greek debt crisis....why?

999 replies

InDespair · 27/06/2015 17:24

cant find another thread about this so.....

Before anyone accuses me of being thick or burying my head in the sand, I can';t always watch the news in full, and I dont read newspapers. (and Im sure others are wondering too).

Who exactly is in debt?

the people?

the banks?

How did they get themselves into this mess, and why and how do they expect a bailout?

what have they spent all their money on?

And what about tourism?

Laymans terms please.

OP posts:
LurkingHusband · 06/07/2015 17:31

I thought Osborne might be a bit embarrassed now with his austerity and cutbacks when Greece has said a firm no.

Except the British people voted for the Conservatives, and austerity.

Hullygully · 06/07/2015 17:32

That's not true claig. They want to be part of the EU, but a fair EU, not this nonsense.

LurkingHusband · 06/07/2015 17:32

people never learn the lessons of history. it is part of the tragedy of the human condition.

Not quite true ... our ruling elite learn very well. Which is why they are the ruling elite. Starting with bread and circuses.

Viviennemary · 06/07/2015 17:41

Yes but we didn't know we had the option not to pay back what we owe. So if a country is in the Euro it now means they can borrow as much as they like but not pay back. Doesn't seem fair to me.

claig · 06/07/2015 17:42

"Politically, it's a loss for the Obama administration, who supported the far-left Greek government's demands for debt relief and easier terms. The president made no friends in the rest of Europe by advocating this path, and because of that, the U.S. is a non-player in the crisis"

www.americanthinker.com/blog/2015/07/what_does_the_greek_vote_mean_for_the_us.html

Hullygully, you are right, they want to stay part of the Eurozone and the EU. But I think we are only at the very early stages of the breakup of the EU. I think it will be America who ends up helping Greece because the EU elite are too inflexible and myopic. I think America will get the future oil contracts and America will provide stability.

The EU was defeated by Varoufakis. That shows that all their threats came to nothing and the writing is now on the wall, it is just a matter of time until the unelected, unaccountable, ossified elite in the EU preside over the decline of their dream.

It has taken years for the stresses and strains withi the EU to reach this stage, and it may take years more before the EU collapses, but I think that day will now come.

RedToothBrush · 06/07/2015 17:51

What gets me is that the EU stepped in to help Greece from its debt in a move that is technically socialist in nature. There was nothing really to be gained from a capitalist point of view from doing so. People will make comment about how they were getting the Greeks to pay interest on these loans, but you have to remember that the loans themselves were financed by other EU states effectively borrowing on Greece's behalf at a better rate and because as no one would do it directly. Politically this was unpopular but was done to stabilise things under the proviso that Greece would act in a way to fall into line with the rest of Europe in terms of how it collected taxes and what state pensions were. Its a principle of universality throughout Europe.

Instead what has happened is the Greek Government has sort to paint the other EU states helping them as exactly the same as the private banks who lent in the first place. Its fundamentally different as its now taxpayers throughout Europe who are footing the majority bill. Yet the rhetoric is purely about 'The Bankers' as these faceless monsters who should foot the bill. So whilst the Greeks are complaining about how unfair it all is, and are victims they are now somewhat unfairly blaming those who acted to help them and are passing the problem to other taxpayers elsewhere. Talk about biting the hand that feeds you.

At the same time they have completely failed to be the socialists they claim to be, by wanting to retain a pension age lower than those bailing them out, and exempting areas of their country from VAT when there are already huge problems with income tax collection. So that's two of the fundamental problems that have gone completely undealt with, in the pursuit of political power and the popular vote. This is to the detriment of the people. The political parties if they were acting in the best interest of the people they represent and were the socialists they profess to be, should have sold the bitter pill. Instead they are just as corrupt as the ones they replaced, in pursuing the vote rather than what the country needed.

Taxation is something none of us like but it is to our benefit regardless of your political stance either as a capitalist or socialist. Unfortunately the entire system has now broken down with tax evasion culturally acceptable for all social classes. You can't blame the elite any more than the poor because of that, even if it became a question of survival. The problem simply wouldn't be to the extent it now is, if the scale of the evasion hadn't become so widespread and people weren't willing to turn a blind eye. That again is not socialist in nature. Socialism more than other political system relies on taxation as a form of economic redistribution. So the way the Greeks have voted does not reflect their own real beliefs.

The comparison between post WWII Germany and modern day Greece therefore fails down at this point. Germany survived and was granted debt right off because it complied with its creditors and recognised it had to live in a way that fitted in with those who lent it money rather than trying to argue that it should be granted exceptions that others elsewhere didn't share. It didn't matter what the political cost was or who was in charge at this point. It was beyond this point. Democracy really came after reconstruction. In Greece politics have been put ahead of economics. Germany traded the goodwill for doing so, and accepting it had to do that to simply survive. Greece has shown no such will to the rest of Europe. Good will is a currency just as much as cash.

Instead Greece continues to play the martyr and play pin the blame on the donkey, rather than just getting on with actually solving the problems it faces. Something that post war Germany just couldn't afford to do. Playing the martyr is a luxury that the bankrupt can not afford, regardless of who is at fault.

I've heard today, talk of humanitarian relief for Greece, and I suspect that might be the way things now go. With no more credit, and an exhaustion of goodwill and patience, there does seem little other option. Other countries have a duty to their own people who have elected them and protecting their interest. Democracy does not begin and end at the Greek borders, which seems to have bypassed their thinking. Humanitarian aid can be distributed from an external source effectively missing out the influence of the government - and therefore undermining it further.

Its horrible to watch but I dispute that what is going on is a victory for socialism on any level.

claig · 06/07/2015 17:51

There was a former ECB bank employee on Radio 4's World at One programme today and he said that the danger now is that there will be other referenda across Europe on whether to stay in the Euro or other issues and that there is no guarantee of the outcome. That is what worries the great and the good, events are now spiralling out of their control.

The majority of the young in Greece wvoted "No" because they see no future. The pensioners mainly voted "Yes" because they feared for their pensions.

In Spain, the young may vote in a similar way to the young Greeks in any referendum.

Hullygully · 06/07/2015 17:59

redtoothbrush - Germany both had a debt write-off, and was allowed to restructure payment of the rest linked to GDP. Exactly what the Greeks want.

The pension system came about because of cronyism, but right now pension support three generations of a family because there is no welfare state.

Industrially, and taxably, Greece has shipping, awarded tax free status in 1973 for international profits, something that obviously needs changing and will be tackled (but it's complicated), fairly low-level agriculture, a bit of olive oil, and tourism. And that's it. The "squeezed middle" in our terms, are already heavily taxed.

The Greeks borrowed huge sums egged on by Germans and French amongst others who took the money straight back out again for arms and useless submarines etc (thank you Germany).

Hullygully · 06/07/2015 18:01

And they all want to be in Europe, of all ages. Yes, the old voted yes through fear, the young voted no because five years of austerity has made everything worse, they have no future and nothing ot lose.

caroldecker · 06/07/2015 19:20

Hully

The average 'squeezed middle' in Greece has long had mortgage repayments of more than thier declared income. Tax evasion is a national sport.

DoctorTwo · 06/07/2015 19:28

The Greek bailouts since 2010 were not designed to help the Greeks, they were to aid French and German banks in a move which is highly anti capitalist. In a capitalist economy those banks would've failed. But we have a revolving door between politics and big business, and big business isn't afraid to put big money into politicians to buy influence. So we have a corporatist economy being undone by the people who invented democracy. Good work Greek people. We owe you. Because this will spread. France, Portugal, Spain, Italy and others are all looking on interestedly, because they know the system is fucking their economies.

RedToothBrush · 06/07/2015 19:31

The problem is that faith in the taxation system collapsed but no one has addressed that. The issue was corruption and tax invasion rather than tax returns not being big enough. Increasing tax was the wrong solution to the wrong problem.

Its very clear that the bigger problem is evasion and the acceptability of it. So the problem that needed solving was restoring that faith, not squeezing anyone. The only way you could do that would be to reduce income tax, to increase revenues. Sounds counter intuitive, but can be effective. The heavy taxation encourages evasion. The issue is making more people be willing to pay tax not encouraging them to avoid it. VAT is a slightly different matter. Making islands completely exempt doesn't produce anything though. A small fee whilst reducing other liabilities would have been a better way to go.

Iceland is often touted as having beaten the system (very very wrongly and inaccurately). One of the things they did do that helped a lot though was to try to move away from being so cash based in order to stop people similar problems. Again it could have been introduced in some way by Greece, even with the Euro.

Hullygully · 06/07/2015 20:10

Ok, someone explain this to me.

Angela and Francois' press conference just now.

Francois makes noises

Angela says, they had a very generous offer, it's up to them etc.

Why is everyone ignoring the reality of the situation? The IMF report inter alias on the ludicrousness and pointlessness of signing up to the offer?

Why is Angela, a bright and intelligent person pretending she thinks it's a "very generous offer"?

Arguments aside, we all know it can't work, the debt deflation cycle is in full swing.

So what is it about?

Hullygully · 06/07/2015 20:11

yy doctor.

Hullygully · 06/07/2015 20:11

carol, your post and question is predicated on assumptions that don't apply.

DoctorTwo · 06/07/2015 20:23

Thank you Hully. You're one of my MN heroes, probably just for painting your toddler blue. :o And other classic freds. But you also have your heart in the right place about the human cost of what big business is trying to do to Greece. Because this is not about Euro nations looking after each other, which is as it should be, but corporate led governments dictating government policy. That's wrong, it should be people doing that. Hence the word democracy.

When you Tory twats read this you'll say 'yeah but we elected a torry guvmint so shut up' and yes, a self serving bunch of scratters is now in charge with less than 25% of the population voting for the useless fuckers.

Hullygully · 06/07/2015 20:26

You are confusing me with someone else, someone who immaced and also painted their toddler blue, but did name their dog after me...ah well.

TTIP. All our piddling nationalisms shall be as nought.

Hullygully · 06/07/2015 20:27

Ayn Rand should be taken out and shot. Even if she has to be disinterred or dug up first.

Hullygully · 06/07/2015 20:28

haha I mean unburnt or disinterred.

claig · 06/07/2015 20:46

"Why is Angela, a bright and intelligent person pretending she thinks it's a "very generous offer"?"

It's the classic good cop, bad cop routine for show and public consumption. Angela has to play it tough for the German public and Francois is playing good cop because he senses disaster. But behind the scenes you can bet that there are desperate phone calls to the Greeks begging them to see reason.

Varoufakis told us that after they called the referendum, they were suddenly deluged with better offers than all those over the past 5 months.

caroldecker · 06/07/2015 22:18

Hully No question in my post, and few assumptions, whether they apply or not???

Angela's offer is the best they will get if they want to stay in the Euro, Elsewise a managed exit through emergency aid.

claig · 06/07/2015 22:40

OhtoblazeswithElvira, I have found the estimated loss for the German economy if Greece leaves the Euro

"€87bn in estimated losses for Germany alone"

www.ft.com/cms/s/0/85bc1c90-23c0-11e5-9c4e-a775d2b173ca.html#axzz3f3vtacQT

claig · 06/07/2015 23:03

Watching Newsnight and readng between the lines, it looks like the EU elite will have to cave in. They may try the publicity stunt of flying in humanitarian aid and their usual charidee to show the European people how tough they are before they cave in, when in reality all they need to do instead is allow the ECB to provide liquidity for the Greek banks which are and never were insolvent (unlike Ireland's banks) but just need liquidity, but their hardball policy is to impress the European people so they may string that policy out to punish the Greek people for voting against the bankers.

Italy is already starting to cave in along with France, so soon Germany may be left with only the European minnows in demanding more austerity.

claig · 06/07/2015 23:06

The UK is of course a winner, and noticeably Varoufakis was University of Essex, Birmingham, Cambridge etc and the new Greek FInance Minister was University of Oxford. Game, set and match over the EU elite.

claig · 06/07/2015 23:28

OMG, I just read that the new Greek finance miniser went to St Paul's school in London, where Osborne was educated and wait for it, would you Adam and Eve it, he is only a .... PPE

Game set and match.

"He is also from a wealthy background and spent much of his life in Britain. Business Insider writes:

Though he is about as far from the British Conservative party as one could be in European politics, he does share something with UK Chancellor George Osborne — they both went to St. Paul’s, the elite London private school.

There was no crossover, because Tsakalotos is 11 years older than Osborne.

He went on to study Politics, Philosophy, and Economics (PPE) at Oxford, the degree beloved by UK members of parliament. Like Varoufakis, he is a trained economist, with a Ph.D. in the subject, also from Oxford."

www.breitbart.com/london/2015/07/06/euclid-tsakalotos-the-champagne-socialist-who-is-greeces-new-finance-minister/

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