Video So one currency Euro was a bad idea ??

[kallipolis]

Only once since 1932 has Greece defaulted on a loan repayment. And that was last Tuesday. And that, arguably, would not have happened if the EU had treated Greece as generously as it has the uncreditworthy banks of northern Europe.

Worth repeating....for the lending banks were bailed out by the Euro Zone tax payer i.e. 90 pct of the bailout funds covered the losses sustained by the banks that had lent so recklessly, enabling the banks to survive, and prosper...

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This post is also worth repeating:


https://medium.com/@gavinschalliol/t...d-7b5e7add6fff

I quote:

After the war ended in 1945, Germany’s debt amounted to over 200% of its GDP. Ten years later, little of that remained: public debt was less than 20% of GDP. Around the same time, France managed a similarly artful turnaround. We never would have managed this unbelievably fast reduction in debt through the fiscal discipline that we today recommend to Greece. Instead, both of our states employed the second method with the three components that I mentioned, including debt relief. Think about the London Debt Agreement of 1953, where 60% of German foreign debt was cancelled and its internal debts were restructured.

 

[kallipolis]

The lenders would never lend to Greece if they KNEW Greece couldn't pay, because that's just dumb.

The lending banks lent to the Greek Government at extortinate interest rates knowing that should the borrower fail to repay, the Euro Zone governments would cover their losses....this is exactly what eventually occurred.

Can one imagine lending Euros 320 billion to a borrower without the respective finance ministries of the countries of the lending banks, and the European Central Bank not being aware of the loan transactions?

While the irresponsible banks were bailed out by the Euro Zone countries, despite reckless lending, it would appear that the borrower has not been so lucky.

 

[kallipolis]

So you're solution to failed economic imperialism...is more economic imperialism? Reminds me of the troop surge in Iraq.

An accurate observation...

...The German/Euro Zone offer demands that the price for staying in the Euro is possibly 10 years of further austerity following the past five years of austerity that has shrunk the Greek economy by some 25 pct. and increased unemployment to 25 pct. of which some 60 pct is youth unemployment i.e. people between 17/25 years.

There would be no further debt forgiveness leading to years of low growth as the Greeks grind out a meagre existence largely from tourist euros with Greek tourist hotels an attractive investment for German corporations extending their ownership of most of the Turkish Aegean coastline, to Greek assets available at reduced prices.

Germany's last invasion of Greece, along with their Italian allies came to an abrupt stop in 1944, when they suddenly scurried back to Germany...imperialist interventions wear a variety of faces...

 

[kallipolis]

Interesting comments that reflect the position being argued by the Greek Government:

US Treasury Secretary: Greece debts aren't sustainable

US Treasury secretary Jack Lew appears to have thrown his weight behind calls for a Greek debt restructuring.

Speaking at the Brookings Institution in Washington DC, Lew warned that Greece’s debts are not sustainable, echoing the IMF’s concerns. He pointed to a “deep” reluctance among some European countries to face up to the issue, though.


Lew also (again) urged both sides to reach a deal, warning that Greece would face a painful adjustment if it left the euro.

We simply don’t need the “geopolitical mistake” of a Greek meltdown, he added (perhaps looking nervously towards Moscow?)

 

[T-Rexx]

@bankside A "financial protectorate" is exactly what Greece, and the other bailed out Southern European countries currently are. You do realize that every single one of those bailouts came with austerity measures attached them right? They went right down to what specific programs should to be cut.

When the EU first adopted austerity few economists outside of Europe thought it was a good idea, and even fewer still do today. European leaders impose economic mandates on their poorer countries that the rest of the world doesn't believe in and then wonder why everybody is losing faith in the Euro. Nothern Europe needs to stop treating their southern neighbors like children if they actually want the EU to work.

Agreed.

For reasons unclear to me, irresponsible northern European banks were bailed out at FAR greater sums than has been allocated for the entire nation of Greece. And the banks were NOT required to implement any sort of "austerity" measures or even modify the stupid lending practices that got them in trouble in the first place. They were just given lots and lots of taxpayer money (far more than has been given to Greece, or even considered for giving to Greece).

Lenders are not at fault because they don't KNOW what you claim.

It's like saying a gas station is at fault if they let someone fill up the tank and drive away when they KNOW the thief can't pay.
NOTs,
Of course they're not at fault because if they knew the thief couldn't pay, they would shut off the gas pump. The lenders would never lend to Greece if they KNEW Greece couldn't pay, because that's just dumb.

This is nonsense.

A thief is not a borrower, and his or her creditworthiness is not assessed prior to a theft, to determine whether or not the thief will be able to pay back what he stole.

Of course the EU's behavior is at fault here. While Greece's behavior has been reprehensible, it could not have gotten into trouble without the help of people who were trying to exploit it. Germany has benefitted enormously from the euro, and has used it to exploit its neighbors, particularly in the south of Europe.

I quote:

After the war ended in 1945, Germany’s debt amounted to over 200% of its GDP. Ten years later, little of that remained: public debt was less than 20% of GDP. Around the same time, France managed a similarly artful turnaround. We never would have managed this unbelievably fast reduction in debt through the fiscal discipline that we today recommend to Greece. Instead, both of our states employed the second method with the three components that I mentioned, including debt relief. Think about the London Debt Agreement of 1953, where 60% of German foreign debt was cancelled and its internal debts were restructured.

If I remember my history correctly, only one European nation ever completely paid back its post-WWII aid debt to the USA in full, and that was Italy. Germany (and Britain, and everyone else) stiffed the USA for billions, as they did not think it reasonable for the USA to expect payback when their economies were so devastated.

Considering recent history, Germany is a stunning hypocrite here.

 

[kallipolis]

If I remember my history correctly, only one European nation ever completely paid back its post-WWII aid debt to the USA in full, and that was Italy. Germany (and Britain, and everyone else) stiffed the USA for billions, as they did not think it reasonable for the USA to expect payback when their economies were so devastated.

The Italian Armistice of September, 1943 transferred its (The Kingdom of Italy) military assets to the Allied cause. Post war reparations due to the Allied nations included loss of most of its overseas territories, with Greece retrieving its South Aegean islands, and Yugoslavia the disputed North Adriatic territories now part of Croatia, or Slovenia. Military assets, such as warships were also transferred to various Allied nations as compensation. In this sense Italy got off lightly having changed sides.

The United Kingdom paid off its post war loans to the USA, and Canada...in full...

http://www.independent.co.uk/news/b...alment-of-us-loan--after-61-years-430118.html

I quote:

Britain will today make the final payment on a multi-billion-dollar loan it took out in 1945 to refinance the country in the wake of the Second World War.

In a transaction that will draw the curtain on the devastating economic consequences of the bloodiest conflict in modern history, the Treasury will transfer £43m to the US and £12m to Canada.

The original loan of $4.34bn - equivalent to £27bn today - was made to avert Britain from bankruptcy at the end of the war rather than to finance the combat itself.

Germany had its debts, owed to many countries, written down by some 50 pct...per The London Agreement 1953 with its final payments completed in 2010. I would add that Germany was granted a facility that enabled it to pay its debts...a similar facility that Greece has requested....but has been rejected by Germany...namely:

An important term of the agreement was that repayments were only due while West Germany ran a trade surplus, and that repayments were limited to 3% of export earnings. This gave Germany’s creditors a powerful incentive to import German goods, assisting reconstruction

. :

https://en.wikipedia.org/wiki/London_Agreement_on_German_External_Debts

However Greece has now broached the matter of reparations for war time damage to the Greek economy, and infrastructure by German occupation forces, including the theft of reserves from the Bank of Greece by Germany to finance its military campaign in North Africa against Allied forces.:

http://www.euronews.com/2015/04/07/greeces-claim-for-war-reparations-from-germany-explained/

I quote:

Greece’s Deputy Finance Minister Dimitris Mardas said on 6 April 2015 that Germany owes Greece almost 278.7 billion euros in reparations, according to calculations by the country’s General Accounting Office.

 

[bankside]

Did an asteroid strike Athens? Did it get carpet-bombed whilst I was away from my computer?

No; it has the same inherent economic capacity it always had, which was just a bit less than it pretended to have. Confidence in that economy is trading at a significant discount right now, mind you, because of the mind-bogglingly-incessant refusal of anyone in Greece to exhibit any leadership, or even any sense of reality, in connection with the problems they have chosen to have.

If Greece had been remotely resolute or determined to pay this off, starting from 5 years ago, the decline in GDP would be half or a third of what it has been. i.e. Greek debt is only unsustainable, in comparison to Greek GDP, when Greek governments sabotage their own economy with their special combination of ineptitude, recklessness, and delusional arrogance.

Let me repeat that:
Greek debt is only unsustainable, in comparison to Greek GDP, when Greek governments sabotage their own economy with their special combination of ineptitude, recklessness, and delusional arrogance.

Worse, hundreds of thousands of jobs could have been spared.

This country must pay, or have its government appointed by its solvent creditors instead.

 

[kallipolis]

^Well clearly there are those cognoscenti whose expert opinion conflicts with your pronouncement:

http://www.theguardian.com/business...crisis-reform-plan-grexit-tsipras-draghi-live

I quote:

Things might be eased, however, if the growing calls for debt relief are heard by those (Germany) who are so opposed to them. Donald Tusk joined Christine Lagarde and Jack Lew in stating that negotiations do not go one way, and that if Greece’s proposal is sufficient it has to be matched by an ‘equally realistic’ proposal by the creditor cabal on debt sustainability.

Rumours of a French helping hand in drawing up these proposals also suggest that the Eurozone, or at least certain members of the region, remain committed to avoiding a Grexit, with Irish finance minister claiming that there is more than a 50% chance of a deal being made.

 

[hotatlboi]

^Well clearly there are those cognoscenti whose expert opinion conflicts with your pronouncement:

http://www.theguardian.com/business...crisis-reform-plan-grexit-tsipras-draghi-live

I quote:

I think it probably is the case that given the current situation Greece's debt will not be repayable without a write-off, however I think it would be hard to argue that ineptitude and recklessness didn't play a large part in getting us to the current situation.

 

[Telstra]

Expert on TV keep saying Greece cannot pay back the debt because it has no money.
So therefore sooner or later Greece will use its own currency again yes ?

 

[bankside]

^Well clearly there are those cognoscenti whose expert opinion conflicts with your pronouncement:

http://www.theguardian.com/business...crisis-reform-plan-grexit-tsipras-draghi-live

I quote:

Honestly it's like a nightmare gathering at a restaurant where everyone makes small talk for hours hoping someone else will pick up the bill. Is that normal in Greece or do people generally pay for what they order?

How many years of that now? More than half a decade.

THAT untrustworthy behaviour is what has drained investment from Greece and cost it jobs: prudent investors have been watching this unfold for more than half a decade, and they see no signs of Greece reaching for the bill, so they get the hell out. Why should they stay when even Greeks are moving their assets out of the country. THAT is why GDP is in the toilet, and why the debt looks so high by comparison.

 

[Alnitak]

No. The bad idea was having one currency without singular authority over monetary policy.

 

[kallipolis]

I think it probably is the case that given the current situation Greece's debt will not be repayable without a write-off, however I think it would be hard to argue that ineptitude and recklessness didn't play a large part in getting us to the current situation.

Certainly...on the part of the lender, and the borrower...do doubts, here.

 

[kallipolis]

Expert on TV keep saying Greece cannot pay back the debt because it has no money.
So therefore sooner or later Greece will use its own currency again yes ?

No...the currrency of Greece will remain the Euro....

The Greeks correctly state that one cannot impose severe austerity, whilst at the same time expect the loans to be repaid....i.e. shrinking the Greek economy, in anticipation of generating wealth that enables Greece to repay its lenders lacks logic.

Writing off part of the debt while encouraging a growth economy can ensure that the loan repayments can be made.

 

[kallipolis]

Honestly it's like a nightmare gathering at a restaurant where everyone makes small talk for hours hoping someone else will pick up the bill. Is that normal in Greece or do people generally pay for what they order?

How many years of that now? More than half a decade.

THAT untrustworthy behaviour is what has drained investment from Greece and cost it jobs: prudent investors have been watching this unfold for more than half a decade, and they see no signs of Greece reaching for the bill, so they get the hell out. Why should they stay when even Greeks are moving their assets out of the country. THAT is why GDP is in the toilet, and why the debt looks so high by comparison.

It may surprise you to learn that most of the corrupting of Greek officials came from German companies selling military equipment (tanks, artillery, missiles, trucks, jeeps, submarines, and frigates) ....huge sums of money borrowed from German banks to finance German exports.... to the Greek armed forces....those puritanical Germans...now, playing holier, than thou....telling the world how corruption is rampant in Greece...

 

[hotatlboi]

So what exactly was the point of the referendum? The Greek people rejected austerity, but now the proposal they've offered is full of austerity and pretty close to what the creditors wanted. Now I'm not surprised by this at all, they pretty much have no other choice at this point if they don't want to see their financial system collapse. But given they knew this would be necessary I'm not sure what the referendum accomplished.

 

[kallipolis]

So what exactly was the point of the referendum? The Greek people rejected austerity, but now the proposal they've offered is full of austerity and pretty close to what the creditors wanted. Now I'm not surprised by this at all, they pretty much have no other choice at this point if they don't want to see their financial system collapse. But given they knew this would be necessary I'm not sure what the referendum accomplished.

I voted, YES...to the last Euro group proposal.

It would appear that the underlying goal of the Greek Government has always been to persuade the powers, that be that the final agreed package should include a further measure of debt relief, quid pro quo for accepting the Euro group's austerity programme....

That the United States, and the IMF have intervened by expressing their support for further debt relief encourages me to believe that Germany will accept the Greek proposal....which should be sufficient to persuade the other Euro Zone nations....to agree.

 

[Telstra]

No...the currrency of Greece will remain the Euro....

The Greeks correctly state that one cannot impose severe austerity, whilst at the same time expect the loans to be repaid....i.e. shrinking the Greek economy, in anticipation of generating wealth that enables Greece to repay its lenders lacks logic.

Writing off part of the debt while encouraging a growth economy can ensure that the loan repayments can be made.

Are you sure?
Experts say Euro is too expansive and not competitive outside Europe.
Therefore Greece is expansive and un-competitive and keep on borrowing Euro forever.

 

[kallipolis]

Are you sure?
Experts say Euro is too expansive and not competitive outside Europe.
Therefore Greece is expansive and un-competitive and keep on borrowing Euro forever.

There is no support in Greece for leaving the Euro except among those few on the loony left who live in fantasy land.

Last night...Thursday.... the Greek Government made a fresh proposal to the Euro group accepting most of its demands with a proviso that there should be further debt relief....the deal will be passed by the Greek parliament this Friday evening, and hopefully, the Euro Zone nations will agree by this Monday...with the finer details to be worked out by the respective officials of Greece, and the Euro Zone nations.

This should prove to be an interesting weekend...I'm the eternal optimist....

 

[hotatlboi]

There is no support in Greece for leaving the Euro except among those few on the loony left who live in fantasy land.

I assume you just mean within Greece. A lot of the opposition from Germany and some others is coming from conservatives.