This Bloomberg interview with opposition leader Kyriakos Mitsotakis has attracted wide attention. Justifiably so, I think.
The interview is undoubtedly music to the ears of foreigners with an interest in Greece; or to so-called internationalists. Particularly if they have a background at an Anglo-American elite school and professional experience at an Anglo-American company. Mr. Mitsotakis' command of the English language is outstanding (on par with that of Yanis Varoufakis'). The way he handles himself is impressive and would be respected in any international boardroom. Last but not least, he seems very intelligent.
I am reminded of an experience I had in London back in 1972 when I had just joined an American bank there. I was assigned to the American who handled ship financing for Greek shippers. One day, a potential new Greek customer came in for an appointment with the American and I was invited to listen in. The Greek was utterly polished. A Savile Row suit, a perfect pocket square, perfectly groomed, super manners of an 'old boy', Oxford accent, etc. I was most impressed and I thought the American would be, too. I asked him after the meeting what his impression was. The American said: "I don't know. I have an awkward feeling. He emphasized so much being Greek but he just didn't seem Greek".
As important as it will be for the next Greek Prime Minister to be trusted and respected by foreigners, it will be even more important for him to have to support of his Greek countrymen; to be perceived as 'one of us'. The interviewer asked Mitsotakis about this and Mitsotakis said that he always felt perfectly comfortable speaking 'with regular Greeks'. One thing is for sure: Mitsotakis is not a regular Greek!
I was impressed that, when asked what his first priority would be, Mitsotakis mentioned the reform of public administration. He claimed that based on his previous experience (he had been the responsible minister for 2 years) he felt certain that this could be accomplished. And I was also impressed that eduction reform was on the top of his list.
My intuitive reaction to the interview was "The message well I hear, my faith alone is weak" (Goethe). The interviewer must have felt similarly because he asked whether change in Greece was not so much an issue of reforms but more an issue of sociology. Mitsotakis, of course, disagreed with any assessment that Greece and Greeks might never change. It would all depend on the leadership, he said. Well, 100 years of experience would not necessarily support that view.
The cutest statement of Mitsotakis came when he was asked about PM Tispras' performance and the current relationship with foreign creditors. He said: "Right now Mr. Tsipras is pretending to reform and I think that a lot of people outside Greece are pretending to believe that Tsipras is actually implementing reforms".
The interview is undoubtedly music to the ears of foreigners with an interest in Greece; or to so-called internationalists. Particularly if they have a background at an Anglo-American elite school and professional experience at an Anglo-American company. Mr. Mitsotakis' command of the English language is outstanding (on par with that of Yanis Varoufakis'). The way he handles himself is impressive and would be respected in any international boardroom. Last but not least, he seems very intelligent.
I am reminded of an experience I had in London back in 1972 when I had just joined an American bank there. I was assigned to the American who handled ship financing for Greek shippers. One day, a potential new Greek customer came in for an appointment with the American and I was invited to listen in. The Greek was utterly polished. A Savile Row suit, a perfect pocket square, perfectly groomed, super manners of an 'old boy', Oxford accent, etc. I was most impressed and I thought the American would be, too. I asked him after the meeting what his impression was. The American said: "I don't know. I have an awkward feeling. He emphasized so much being Greek but he just didn't seem Greek".
As important as it will be for the next Greek Prime Minister to be trusted and respected by foreigners, it will be even more important for him to have to support of his Greek countrymen; to be perceived as 'one of us'. The interviewer asked Mitsotakis about this and Mitsotakis said that he always felt perfectly comfortable speaking 'with regular Greeks'. One thing is for sure: Mitsotakis is not a regular Greek!
I was impressed that, when asked what his first priority would be, Mitsotakis mentioned the reform of public administration. He claimed that based on his previous experience (he had been the responsible minister for 2 years) he felt certain that this could be accomplished. And I was also impressed that eduction reform was on the top of his list.
My intuitive reaction to the interview was "The message well I hear, my faith alone is weak" (Goethe). The interviewer must have felt similarly because he asked whether change in Greece was not so much an issue of reforms but more an issue of sociology. Mitsotakis, of course, disagreed with any assessment that Greece and Greeks might never change. It would all depend on the leadership, he said. Well, 100 years of experience would not necessarily support that view.
The cutest statement of Mitsotakis came when he was asked about PM Tispras' performance and the current relationship with foreign creditors. He said: "Right now Mr. Tsipras is pretending to reform and I think that a lot of people outside Greece are pretending to believe that Tsipras is actually implementing reforms".
Greece has an abundant surplus of political words with very little action. Trying via words to impress people so that you become an order taker for Troika sounds like a fool's errand to me.
ReplyDeleteMitsotakis will not be able to perform and/or deliver in the austerity desert land called the EU.
ReplyDeleteThe most that could be said is that Europe’s economy is not declining, but is still unable to break out of its stagnation in anything resembling a decisive way. Part of the problem is Europe’s interdependence. EU countries trade heavily with each other. When there is general prosperity, this is great. But when everyone is in a slump, there is no engine to pull them out. Production depends on markets with appetites for goods, and interdependence makes a breakout pulled by the extraordinary performance of one country unlikely.
The rest of the world has minimal appetite for European products. Russia, the Middle East and China are all caught in their own problems. The United States has been pulling Europe’s engine, particularly buying German exports, but the American economy has slowed and with it American appetite for European goods. The problem is that each European country’s economy is export oriented. They cannot sell more to each other, and there are few large markets in a position to provide any sort of solution for Europe.
Do you want to implement meaningful reform and save big in Greece? Then this is where you start:
ReplyDeletehttp://www.avgi.gr/article/10840/7527035
https://www.youtube.com/watch?v=juW7SC_7bfM&list=PLM81rE1oXDgsAalB8TrLgGZmkJLNuby1c&index=8
ReplyDeleteIt Ain't Necessarily So
George Gershwin - Porgy & Bess - Armstrong & Fitzgerald
It ain't necessarily so
It ain't necessarily so
The t'ings dat yo' li'ble
To read in de Bible,
It ain't necessarily so.
Li'l David was small, but oh my !
Li'l David was small, but oh my !
He fought Big Goliath
Who lay down an' dieth !
Li'l David was small, but oh my !
Wadoo, zim bam boddle-oo,
Hoodle ah da wa da,
Scatty wah !
Oh yeah !...
Oh Jonah, he lived in de whale,
Oh Jonah, he lived in de whale,
Fo' he made his home in
Dat fish's abdomen.
Oh Jonah, he lived in de whale.
Li'l Moses was found in a stream.
Li'l Moses was found in a stream.
He floated on water
Till Ol' Pharaoh's daughter,
She fished him, she said, from dat stream.
Wadoo ...
Well, it ain't necessarily so
Well, it ain't necessarily so
Dey tells all you chillun
De debble's a villun,
But it ain't necessarily so !
To get into Hebben
Don' snap for a sebben !
Live clean ! Don' have no fault !
Oh, I takes dat gospel
Whenever it's pos'ble,
But wid a grain of salt.
Methus'lah lived nine hundred years,
Methus'lah lived nine hundred years,
But who calls dat livin'
When no gal will give in
To no man what's nine hundred years ?
I'm preachin' dis sermon to show,
It ain't nece-ain't nece
Ain't nece-ain't nece
Ain't necessarily ... so !
You must be one of the few who is impressed by this fool from the Mitsotakis family. I suggest that you learn to tell the difference, Klaus, between privileged educational background paid for by a corrupt family and genuine intelligence. I also urge a distinction between hypocritical fine words -- uttered merely to gain political and personal power -- and genuine commitment to doing something to save your country. On these two criteria, the guy is a disaster-in-waiting. As if Greece does not have enough disasters already.
ReplyDeleteSad to see that also this forum like some others has been hijacked by the Syriza trolls.
ReplyDelete@Anonymous at 4:52 PM
ReplyDeleteActually, I like reading leftist blogs in order to appraise my own convictions. I enclose such an article which, though utterly leftist, is very serious at the core. It would be good if those who disagree would state their views.
http://www.defenddemocracy.press/looting-greeks-country/
Serious, yes ... mayby. But is still the usual communist perspective on society and economy that is so often found among Greek academics. It is almost like the political correctness among intellectuals in the country. Beware to publish liberal ideas.
DeleteIt is a tragedy in many ways that Greece did not become part of the Soviet black after the second world war. To experience communist repression and dictatorship, and the reality of the workers paradise with "free ice-cream for all" might have cured the Greeks from their never-ending love relation with communism. As it is now they never stop dreaming.
Impressive yes. Tsipras did not impress likewise at his congress, he again resorted to threats. Will somebody please have the mercy to tell this man that in a peeing contest with Europe he will always loose? He just don't have equipment that measure up.
ReplyDeleteImpressive does not pay the bills. What pays the bills is an independent Greek government which under Mitsotakis would be under the thumb of both Brussels and Berlin. There is no way for Nea Tromokratia to return back to power anytime soon. To do what? Changes for appearances only? No thanks, been there done this already.
Delete@Anonymous at 10:10
DeleteQuote: "What pays the bills is an independent Greek government"
Could you give us some details on how a truly independent Greek government will manage to pay the bills?
Thanks
Urs
Urs:
ReplyDeleteThe present Greek government already pays the bills since it has a primary surplus of 5.3 Billion euros.
The fact that the EU has to continue to recycle Greek debts because its own mismanagement has locked out Greece from access to international markets at reasonable rates it's an entirely different problem which points firmly to European stupidity. There is nothing we could do about your stupidity other than to highlight it and direct people's attention to it.
As a former banker, I can't help it but I do have to point out that paying interest on debt is also part of "paying one's bills". Given the extremely low interest rates which Greece presently pays on much of its debt (practically zero), Greece's interest burden is comparatively lower than that of most other EU countries (if not all): for 2015, the General Government reported total expenditures of 76,9 BEUR, or which interest represented 5,8 BEUR. That was 7,5% of total expenditures which is a very low percentage. Certainly all of the Southern EZ has higher percentages (and Germany/Austria, too!). So please engrave the following to your memory:
DeleteYes, Greece has an enormous debt level, some say it is unsustainable. And yet, there are few countries which, with very normal debt levels, have to allocate only 7,5% of expenditures to interest.
Now you may say that all current debt is odious and that Greece should have no debt at all. Then Greece would be able to pay all of its bills and more. Then you would be saying what the IMF is saying, i. e. that Greece should have a (significant) primary surplus for a very long time. Are you a fan of the IMF?
By the way, Greece had returned to markets back in 2014 and actually at quite good rates then. Greece probably would have continued along that path if there hadn't been this accident in January of 2015. A very expensive accident, I am sure you would agree.
Kleingut:
DeleteThe "return to markets" in 2014 was for 3-yr notes in the 5%+ range. In other words higher than the IMF loans with are really high. Greece can not return to markets in recycling 10-yr debt that's why now there is talk of a 4th memorandum because trying to recycle Greek debts by 2018 from below 1% to close to 8% (or perhaps 6% in two years) does not make any sense at all.
We are talking about 2 different issues here:
1. One issue is debt service which is low because among other things the Greek economy has imploded and the real fix (if ever possible) would be way long term (there will be no fix for the next 5 years for example).
2. The other is the size of the Greek debt. At 175%-180% debt to GDP Greece is no longer an investable country. So if you want foreign investors to participate in the reconstruction of Greece the debt to GDP needs to return to 60%. I don't care who you do this and what European excuse you need for European parliaments for such alchemy to be performed but it needs to be done.
Therefore Greece carrying an enormous debt at artificially low rates is only an accounting trick for the very short term. To show that somehow Greece is not a disaster and a joint Berlin-Brussels wreck but that somehow things are moving "in the right direction" (which of course are not).
I am not quite sure how Europe is going to solve the Greek mess they created but it is very clear to me that Greece is at about the limit of its contributions because the so called "remaining reforms" are marginal at best and further depress the economy instead of reviving it.
@Anonymous at 1:14 am
DeleteDebt service is low because Greek economy imploded? No! Debt service is low because Greece's European partners have already given very substantial debt relief (presently no interest on much of the debt).
When you say that with an indebtedness of 175-180% Greece is no longer an investable country, you are simple repeating what you read in some places. Japan's indebtedness is about 250% and, yet, it remains very much an investable country (look at the Nikkei).
If Greece's debt were cut to 60% of GDP, that would be about 110 BEUR. If priced at the IMF's rate of 3,5%, the debt service would be almost as much as the present debt service with 180% of GDP. This is assuming that Greece could borrow in markets at 3,5%, which I doubt very much. Before the Euro, Greece's borrowing rate was about 7% over that of Germany's. At the outset of the Euro, it was still 5% higher. It then converged not because Greece got better but because investors considered Greece de facto EU risk.
Yes, zero interest rates are an accounting trick, a trick which allows creditors to take their losses over time instead of one-time upfront. But losses the creditors will take, that's for sure. At the same time, zero interet rates reduce the present value of debt substantially! (have you read things by Paul Kazarian?)
As long as you and (and other Greeks) think that Europe created the Greece mess, there will not be a positive future for Greece because improvement requires that you recognize what caused the trouble, so that you can correct those causes.
Europe is responsible for converting what originally was a Greek mess into a Euro-mess and, arguably, into a global mess.
Many Greeks live under the illusion that if there had been a default/restructuring back in May 2010, all problems would haves been solved. Well, as long as that illusion has followers, things will be tough for Greece. A default/restructuring DOES NOT change the amount of debt, it only spreads out the debt over longer years and lowers interest rates. Even if all of Greece's creditors had gone bankrupt, the level of Greece's debt WOULD NOT have changed!
What you generously overlook is that, back in 2009/10, Greece had a primary deficit of (if memory serves correctly) about 25 BEUR. In case of a disorderly default, Greece would have been domestically illiquid (no pensions, etc.).
I have been a fierce critic of what the EU did back in 2010. See my posts of 2011. At the same time, one must not overlook that the EU's actions had a lot of benefits for Greeks, too. There were about 250 BEUR bank deposits back in early 2010. How much of those would have survived?
You claim that you have a banking background. So, let's talk numbers then.
DeleteIf the debt service of Greece per next year budget is roughly 6 Billion euros ( I rounded the actual 5.8 Bil figure to the nearest non decimal), then you as a banker use the following formula:
Assume that Greece could return to markets for recycling 10-yr notes at 8%, then the formula is: Debt service = % interest X debt
or 6 = 8% X Debt ===> Debt = 75 Bil.
So at 8% market interest if Greece is to maintain its current debt service the total Greek debt can not be more than 75 Billion. So that's your target.
Regarding the "illusion part" why is this my problem? There is a mess created in Greece and you are asking me to embrace it and get on with your program? That's a laughable proposition and it will never happen.
What basically Berlin/Brussels are asking Greece to do is to return to markets so that the recycling of Greek debt becomes less and less of European responsibility. In other words you are asking us to begin to pay punitive interest rates again so that you could gradually could get repayment of your loans.
Only a fool would ever do such thing. Your loans are your loans and obviously no Greek would break his/her back to get you repaid. You should not have made these bogus loans to begin with and you should have allowed the flawed euro to collapse.
It's hilarious to ask us to support your export driven economies so that you continue to make profits while Greece suffers. Only in fairy tales such things happen.
So what is your plan B because for Greece to return to markets so that you could become whole again on your loans I can not see it. And no other international sane person could see it either. Talking about Brussels/Berlin illusions on a grand scale.
Addendum
DeleteI just read that ELSTAT revised the 2015 primary surplus down to 0,2% of GDP. GDP was 175,7 BEUR, thus the primary surplus was 350 MEUR. What this means is that since 2010, Greece hasn't really paid any interest to its creditors out of its own means (i. e. all interest paid by Greece was first lent to Greece).
Kleingut:
DeleteAs far as you ridiculous argument that Japan has a 250% debt to GDP and we ought to use this as a comparison to Greece, I wish to remind you of the following hard facts:
1. Japan has a much larger economy than Germany. If I am not mistaken Japan ranks in GDP terms just below the US and China.
2. Japan is a great exporter country in fact much greater than Germany.
3. Japan has its own currency which in matters of debt to GDP is the defining factor.
You say that Japan is an investable country. In fact it is not. It is Japan that tends to invest overseas and not the other way around. There is no European or Chinese or US investment in Japan of any consequence. It is Japanese companies who open factories in US, Chinese and European soil so that they are closer to their consumer customers and avoid large transportation costs.
No, you didn't understand my numbers example. I said that if Greece's debt were 110 BEUR at an interest rate of 3,5%, then annual debt service would be 3,850 BEUR, about 2 BEUR less than it was in 2015 but still money which Greece cannot afford out of its own means (not enough primary surplus). So Greece would need to borrow in order to pay interest. Not to mention the fact that I don't think Greece could borrow at 3,5% ceteris paribus.
DeleteLeave Europe aside; it should be of concern to you whether Europe collapses or not. Only Greece should be your concern. And if Greece doesn't radically change the policies, structures, etc. which it has built up since 1981, you live in an illusion if you think that Greece would be a lot better of if it didn't have any debt. Greece has to become a value-generating economy which can employ its people and so far Greece is far from that.
Kleingut:
DeleteI have little interest in acting as a bean counter or engage in bean counter talk. Focus on the larger picture please and leave the ridiculous ELSTAT to cook its own revisionist numbers. By the way we are in year 2016 and I couldn't care less of what happened in 2015 the year of Berlin's brutality against Greece for all the world to see.
And the big picture is this. There is no way (reform or no reform) for Greece to ever repay its loans especially now that the loans are owned by European governments.
The only thing that remains to be discussed is in which manner and in what amounts the lenders are going to begin the write down process.
And no Greek would ever feel either sympathy or help you minimize your loses. It would be ridiculous to expect such from Greece because we all know what you did. Redemption will come sooner or later for your bad deeds. It just a matter of time.
You overlooked the one reason why Japan can borrow so much: most of its debt (if not all) is denominated in a currency which Japan can print and it is held domestically by Japanese. And foreigners can indeed invest in Japan and are doing a lot of it (I mentioned the NIKKEI).
DeleteI am not saying that Greece should not worry about 180% when Japan does well with 250%. All I am saying is that of all the problems which Greece has, the national debt is by far not the greatest one. The national debt can be resolved by less than a 100 people in a conference room, if those people agree. The real problems of Greece require the gigantic generational effort to develop Greece into a modern economy "characterized by economic opportunity and social equity, and served by an efficient administration with a strong public service ethos." This will require not a few hundred people but all Greeks.
The 100 people in the conference room will agree as soon as they are convinced that Greece is making that generational effort.
@Anonymous at 9:22 am
DeleteSadly, you haven't been following my blog for very long. Otherwise, you would better understand where we agree or not.
I have argued over and over again that the the loans to Greece (at least for a very large part) are a loss to creditors and that the only question is how they record that loss: immediately or over time. To Greece it should be indifferent whether the losses are taken immediately or over time. To creditors it matters a lot because if they can spread the losses over, say, 50 years, their tax payers won't notice all that much.
So if Greece accepted that, say, 75% of the debt is extended to somewhere between 50-100 years at zero interest, the creditors could fool their tax payers and tell them that they "haven't forgiven one Euro of Greece's debt". And what 75% of Greece's debt is worth in 50-100 years is something none of us will live to see. That's the history of sovereign debt: move it out into the future and hope it gets less through inflation and/or growth.
Kleingut @ 9:37 am
DeleteI am not authorized to negotiate the Greek debt in anyway, shape or form. I personally wish that the idiots who imposed nonsense on Greece soon to choke on their own vomit. I have zero sympathy for European nonsense, disturbing bias and the never ending propensity of ex-barbarians of being at constant war with each other. Europe means nothing to me but a very big and bad thing that deserves to be extinguished for good.
It's a free world,Greeks can create all the (stupid) incidences it wish to, likewise they should pay for them, pride is not a priceless commodity.
ReplyDeleteExactly by what mechanism do you make Greece "pay"? You are only offering empty rhetoric of which we have plenty to go around.
DeleteKleingut:
ReplyDeleteAs a bad European (in other words a product of monarchies and oligarchies aka the AustroHungarian mess) you tend to issue ultimatums along the lines of "Greece better do this or else".
In my professional opinion Greece has to do absolutely nothing. There will be a 4th memorandum, 5th memorandum and perhaps a 10th memorandum or higher because now the funding of Greece is clearly your responsibility forever. And there is nothing any European government can do to either force Greece to repay or force Greece to further dilapidating austerity so support your propaganda that somehow you know better or know what you are doing (because obviously you don't). We all know that you have failed in Greece and now the counter measures period will begin.
@Anonymous at 9:40 AM
DeleteDelusional reasoning doesn’t get you anywhere.
Urs
Urs:
DeletePerhaps ( and almost certain) the delusional thinking is all yours. You have no idea what you are doing in Greece and you want us to redouble our efforts in supporting your nonsense. You may ask of such things but I hope you don't expect them to come true because if you do then you are in an advanced delusional state and you must be treated for such condition.
I am beginning to sense that you may be missing the point. You are certainly free to express your professional opinion that Greece has to do nothing. Indeed, Greece has to do nothing at all. No problem at all. All you have to be aware of is that the less Greece does, the more Greek living standards will decline. Over time, living standards correlate with the economic value creation of an economy. If you think Greece should be allowed to create less and less economic value, no problem at all. But, please, don't whine when countries like Bulgaria, Romania or Slovakia start overtaking Greece. Not today, not tomorrow but some time in the future for sure. Unless Greece begins focusing on economic value creation.
DeleteKleingut:
DeleteNo one would ever invest in Greece, a country that does not have its own currency and with a debt to GDP at 180%. All foreigners know that the debt issue could turn upside down the best laid out plans.
It's not Greece's job to create economic value after the the worst peace time recession ever hitting a country. Greece's job is to win a damages case against those who created this problem.
I couldn't care less about eastern Europe. Greece is not eastern Europe.
I don't know whether it is one anonymous commentator or several, but at least one of them is using language which has so far been absent from this blog. I ask that it continue to be absent.
ReplyDeleteIt seems obvious to me that a number of commentators have a rather limited interest in economics in general and the economics of the Greek crisis in particular. They let their hurt feelings dictate their responses to your thoughtful and interesting posts. Please keep up the good work.
DeleteUrs
So a thoughtful response would be to cooperate with the perpetrators of the crimes committed against Greece and help them white wash all their errors and in fact pretend that the path given to Greece is the correct one?
DeleteWhy don't you ask a lawyer to advise you what to do in a malpractice case?
What sort of language? "Syriza trolls", for example? I really don't think it reasonable on your part to host a blog on the catastrophe of the Greek economy and society, and expect people to keep calm. This has been going on for 6 years now, and the situation worsens week by week. It is also fairly clear that there is a divide between Germanic posters (who seem genuinely deluded about the eurozone and austerity economics) and Greeks, who have no delusions that Greece cannot possibly recover under the conditions set by its so-called "lenders". As far as I know, there is no respectable economist in the world, other than some self-interested German quacks, who believes that Greece can recover without immediate debt relief and a change in the macro-environment that would permit FDI. AS things stand, German politicians are more interested in their own domestic politics than in the parlous state of Greece that they have created. Even the IMF considers Greece to have been maltreated and mishandled, yet the Germans carry on with their egocentric nonsense....
DeleteSo, let me ask you: is it reasonable to demand formal politeness from Greeks, when they have every reason to be angry? Is it reasonable to ask anonymous posters to be courteous when the two candidates for the presidency of the USA are openly obnoxious and insulting (one of them more than the other, of course)?
@Anonymous at 8:24
DeleteA thoughtfull response would be to discuss what has to be done in order to build an economy that helps Greece and Greeks to care for themselves and don’t have to ask for subsidies. This btw. seems to be the purpose of this blog. Neither name-calling nor inflammatory propaganda will get you anywhere.
Urs
@Anonymous at 2:38
DeleteI agree with you that many Greeks (not all!) have every reason to be angry. The only questions is who they should be angry at.
Greece's debt stood at 328 BEUR last June. At the outset of the crisis, it had stood at 300 BEUR (increase due to bank recaps). So the myth that the EU has overburdened Greece with debt since the beginning of the crisis is just that - a myth. The debt was there before the crisis. In fact, it caused the crisis.
During my time in South America, there was always a close correlation between the level of sovereign debt and the amount of private money in offshore accounts. Much of the 300 BEUR which flowed as debt into Greece from 2001-10 ended up in foreign accounts owned by Greeks in Greece. The Swiss National Bank once hinted that in Switzerland alone there were about 150 BEUR.
Deposits in the Greek banking system increased from 100 BEUR in 2001 to about 250 BEUR before the deposit flight started in 2009.
The real estate investments since 1981, particularly during the Euro-period, defy description. Quite a bit of it in luxury investments of lasting value. And a large chunk in Olympic investments which are now rotting away.
What I am trying to say is that an enormous amount of Greek wealth has been created through the inflow of debt. Remember: the alchemy of money is such that sovereign debt taken up by the state converts into private income/wealth when the state spends the money. Much of that private wealth has been squandered but there is quite a portion of the population where not only today's but also a couple of future generations are provided for with the wealth piled up and not squandered. That's why I am saying 'many' but 'not all' Greeks have reason to be angry. Quite a few Greeks have all the reasons in the world to be happy with what happened since 1981, particularly since the Euro.
What can the EU be blamed for? It did not give Greece enough fresh money after 2010 in order to reduce the amount of recession. The EU DID NOT take money out of Greece (like Versailles took money out of Germany). Instead, the EU PUT MONEY INTO GREECE, albeit not enough to avoid the collapse.
Actually, what is that collapse? It is a collapse only when you compare today's GDP to that of 2009. If, however, one thinks that 2009's GDP was ridiculously inflated due to all the debt flowing into the country, then perhaps all that happened is that Greece returned to levels which it would have had before if there hadn't been all that debt inflow.
Don't get me wrong. I do not want to belittle the pain many, many Greeks are feeling. My wife's family is feeling a lot of pain and I see how that affects people. The only thing is: all I have heard from the Greek side since 2010 are the worst two words of the Greek language: εσύ φταις.
It's always someone else's fault. And that in a country which - rightly so - prides itself of an ancient culture which, among other things, taught the world the importance of "know thyself" or "accept thyself". Since 2010, there has not been one single longer term industrial development plan proposed by the Greek government. Others (like McKinsey) proposed plans but they were quickly discarded by Greek governments.
Yes, I would be angry, too. In fact, if you read my posts of 2011, you will see how angry I was (one was titled "A Nueremberg Trial for EU elites!"). Nevertheless, I feel that the targets of my anger are more appropriate than yours.
Klaus: I am happy to hear that you understand the Greek anger. Some of that anger is directed at the corrupt Greek "class" that you describe quite accurately as massively increasing their wealth through Greece's debt. Most, if not all, are associated with the parties Pasok and ND. So, the problem for ordinary Greeks who did not benefit from the greed and incompetence of 2000-2010 is whom to blame, and whom to entrust with the management of the Greek economy. What the world can see quite clearly is that the Germans were very happy to deal with the crooks who had caused the crisis of the Greek economy, yet determined to humiliate and rebuff a new government (Tsipras, last year) that had no culpability in the mistakes of the past.
DeleteIndeed, what we saw was that the Eurogroup (a non-legal political construction that does not even record its meetings) was furious that Varoufakis attempted to discuss the economic disaster known as the eurozone, as opposed to taking instructions from Germany. What we saw was that the Germans imposed a brutal deal on Tsipras (whose only other option was potentially to quit the eurozone), with debt that can never be repaid, onerous conditions of taxation that could only lead to further economic depression, and an absolute impossibility of FDI other than for strategic reasons (such as the Chinese and COSCO).
What the Greek people and most of the world see is a despotic Germany that supports corruption and refuses to debate the incompetent mess of the eurozone that they actually created. What we see is a Germany that prioritises itself over the eurozone (and is therefore unfit to direct it) and prioritises the maintenance of a failed monetary union over functional and dynamic economies and actual quality of life of a hundred million people or more in southern Europe. You cannot expect anything less than anger from people whose lives have been badly damaged, for the second or third time in a century, by the same nation and with the same arrogance and disregard on all three occasions.
The EU is not to blame? Are you kidding? Here is the big difference between US and Europe in crisis management.
DeleteIn the US on Sunday, the head of the Federal Reserve Bank, the Secretary of the Treasury and major bankers get together in a room, they threaten each other, they violate several laws, undoubtedly, in making a deal, and on Monday morning, the banks open. The Europeans had the same crisis. They couldn’t get all the ministers in one room, they couldn’t get the European central banker in room. They couldn’t get any consensus on what to do because they had never been built for crisis. The European Union was built for peace and prosperity, and if either one left, they didn’t know what to do. The difference between the United States and Europe was that when the crisis came, the political structure knew how to respond because they had been there before. They had built the Resolution Trust, they created Brady Bonds, they've invented things that no one had ever seen before and they created them fairly rapidly. For the Europeans, this was beyond them. They needed the consensus between the Italians and the Germans. Now, you haven’t had that since Mussolini and Hitler got together.
Okay, what was underlying this entire economic destabilization backed by the political? A massive export crisis. It had been the religion of the post war world that free trade was good and the most efficient economies were the ones that exported the most. We all knew that. We learned that, and we knew that the United States was a terrible place because it doesn’t export a lot, relative to GDP. What we forgot was that any exporter is hostaged to its customer. That the ability to export depends entirely on the appetite of the customer to buy. And the future of an exporting country doesn’t depend on its abilities, it depended on its customers' abilities. So when the Europeans and the Americans screwed up during the sub-prime crisis, when both continents went into recession and were unable to buy Chinese goods, the Chinese staggered and fell. It’s not exactly how much exports contracted.
Now normally, if commodity prices fall, industrial products become more attractive. This was a case that we are in right now, unlike any other, where all of the exporters are getting hammered. And as a result, Russia, Europe, the Middle East and Saudi Arabia and the Emirates and the other Persian Gulf countries, and China, as a major exporter, all have gone into an economic downturn which is no longer economic in nature. This ain’t about economy. The economics are set. They are set by the overcapacity and the under-consumption of products. We have not seen a pattern like this, geopolitically, since World War II. In World War II, all these countries were engaged in internal/external conflict. Europe, Russia, China, Japan, the Middle East. We have not seen such a universal pattern since then. (continued)...
Part 2 of reply:
DeleteThe point that I’m making, however, is that we have entered a period that we have not seen since 1941 and it is a frightening scene. It is not like it was in 1995. It isn’t even like it was in 1970. It was a cold war, but it didn’t take this dimension. And it is being driven by the geopolitical fears of the Chinese or Russians, the weakness of the Europeans, the need to restructure the Middle East all at the same time, and on top of that, this weird export crisis, where everybody who exports is suddenly being killed by their customer’s lack of appetite.
Now, this situation is being compounded by two emerging crises. One is small one, the Italian banking crisis. The Italian banks claim that only 18% of their portfolio of loans are nonperforming. They have an elastic definition of nonperforming and they also have a very careful definition of how to count. They are in far worse shape than that. I will assert that the Italian banking system is unsustainable and I will also point out that Italy is the eighth largest economy in the world. This is not Greece. The people who hold Italian paper are most of Europe, particularly Germany, but also other institutions around the world. The Italians are in the unsustainable position, and there is nothing on the economic horizon to indicate that they are going to refloat themselves because the economies of Southern Europe, in particular, are in depression.
The economy of Greece has 25% unemployment, Spain has 23% unemployment, southern Italy is at 21% unemployment. In other words, these are the levels of unemployment that the United States reached during the Great Depression. Southern Europe is in massive depression. Unemployment among the young, including college graduates, ranges between 50 and 70%, in other words, you are not getting a job any time soon. And in these countries, it is the middle class that says, you have got to cut that government spending. Government spending in Europe means doctors, nurses, engineers. It is not the unpleasant lady in the motor vehicle bureau, in the pink cardigan, who is getting laid off and deserves it. It is entire sectors of the economy that are critical, that are failing. When you are 40 years old and you get laid off in 2009, you say, okay, I’ll get a new job. It’s 2016, and he hasn’t gotten a new job and he’s pissed. So because now he’s 46 years old and he realizes he’s never going to get that job again that he had, certainly not at something that could support him. A friend in Greece is an architect. He worked for the government. He used to earn 3000 Euros a month. He’s still employed. He gets 800 a month. He’s lost his house.
Part 3 - I forgot to tell you about the 2nd part of the crisis involving stupid Germany.
DeleteWhen the poor get poorer, they understand the grammar of poverty. When the middle class is hurled into poverty, which is what has happened in southern Europe and other regions as well, they know how to organize, they know how to get angry, and if you saw the Austrian outcome or the Hungarian outcome, or the rise of right wing parties or left wing parties in the rest of Europe, what you know is there is a total delegitimization of what I call “The Financial Times Crowd.” If you read the Financial Times, the basic problem of Europe is the banking system and if the banking system is okay, we’re okay. They made it okay by creating a social catastrophe in parts of Europe and those people are coming back and they are not coming back economically, they are coming back politically. And they will impose nationalist rules. The Hungarians pioneered this. How did they pioneer it? They were loaned money in Euros and Yen to buy houses. They currency fell. They turned around and they basically said, we’re not paying you, or actually, we’re going to pay you in footage. We’re going to give you sixty cents on a dollar or we’ll give you nothing. Give us a call in the morning and let us know what you think. Europe did nothing. They accepted the deal.
So we are in a situation where this problem is now compounded by Germany. German exports 50% of its GDP. Half of its economy depends on exports. Half of those exports go to the Euro zone, Euro trade, the trade zone, and a bunch of those go to countries that can’t buy anymore. Yet Germany has actually maintained its export level. That’s a miracle. How could you maintain your export level when all of your customers are starving? Part of it went to the United States, but part of it came from cutting prices dramatically. Daimler recently issued its report. Imports were maintained. Profits were slashed on those imports. They are doing what the Japanese did in 1989, buying time but it is unsustainable. The fourth largest economy in the world cannot, in this environment, fuel one half of its economy this way. In the meantime, the United States is stupid, dumb and happy. It exports 13% of our GDP, 40% of that to NAFTA and is relatively immune to its customers. They buy their own stuff. North America has become self enclosed. And therefore in a situation, unlike others, where the uS and the rest of the American continent are isolated from many of the phenomena going on by policies that were deeply condemned by the financial community when they were undertaken. They were the customers, not sellers, and that puts them in a tremendously powerful position, because they don’t depend on other people to buy most of their goods.
Part 4 of reply.
DeleteInterestingly enough, the foreign policies suggested by Barack Obama and Donald Trump are the same, excluding the insults. Both of them are saying, look, we are not going to continue getting involved in the chaos of the eastern hemisphere. It is impossible for us to intervene on a continual basis and in a world that is so chaotically economic, (and this is where Trump and Obama disagree), in a world like this economic isolation protects us. We are changing our foreign policy dramatically because the world has change dramatically. And therefore many of the truisms previously simply don’t hold today. Efficient exporting is a way to cut your own throat and indifference to military matters and then getting into countries, like, hey, why don’t we invade Iran, raise the question that the US have lost every war except the Korean war, which ended in a tie, Vietnam, Iraq, Afghanistan, and it is time to consider that the US may not be doing the right thing. Which is invading a country of 25 million like Iraq may not be the best strategy to follow. And whatever Hillary says, this is the new direction for the American foreign policy. They do not have the force to do otherwise. So the world is, in fact, going to Hell. But the Americas are doing okay. They’re doing okay precisely because they did not compete well on exports. They are not caught in the export crisis and they can or can’t involve themselves in the east depending on their desires. They don’t have to do it. This is a message for Europe that not only the old continent is alone in facing up to its own messes but there is also zero probability of outside intervention which is very bad news for Europe indeed.
Maybe you want to read my below article just so you understand that I am not entirely blind to the circumstance that the Euro, as it developed over the years, has done damage so Southern economies (and to others as well).
Deletehttp://klauskastner.blogspot.gr/2013/04/crime-punishment-and-guilt-in-eurozone.html
Yes, Mitsotakis have some good ideas and a grasp of what the situation really is. He will not be able to implement his ideas. His party won't let him, they are deep Greek supremacists and waiting for their time to cash in on the money. The population won't let him either, for pretty much the same reasons.
ReplyDeleteWhat we will have after the next elections, is a power vacuum in a nation without institutions, that is bloody dangerous for that nation. It leads to situations like Libya, Afghanistan and Iraq.
A civilized nation can work flawlessly for years without a government, Belgium did so for 2 years. The institutions carry on as usual and administrate the laws as they are supposed to do. Nations with weak institutions stop working when the politicians are not there to tell them what law to apply in what case. That nation than changes from having a biased law to being lawless.
Lennard
Mitsotakis is a nice guy but unfit for the PM job and leads a political party which produces enough political sewage to permanently stink the globe for at least one calendar year if not more. Putting ND back in the driver seat would be a total disaster for Greece and it would mean that Greece has learned nothing during this austerity hell.
DeleteAnd people who have not learned from their mistakes they are certainly bound to repeat them.
This is to update those who are new to this blog. Back in 2011, I started out as a champion of Greece. Having observed a similar economic turn-around as required in Greece years before in another country, I felt sure that Greece would quickly succeed in getting out of its mess. Somewhere around 2013, I lost my confidence. Why? If my hopes were to be fulfilled, there would have had to be many developments in 2011/12 which did not happen. From then on, I became pessimistic about Greece. And after a brief romantic excitement that SYRIZA might become the white knight of Greek politics, I have totally given up hope that Greece will ever see greener pastures until it has the kind of government and leadership which the country desperately needs and deserves. Below is a summary of my critiques back in 2011.
ReplyDeletehttp://klauskastner.blogspot.gr/2012/09/what-this-blog-is-all-about.html
But Klaus:
DeleteProf. Otmar Issing, an architect of the euro, says exactly the opposite of what you say about Greece. So why would we listen to you and not a real insider to the euro architecture?
Prof Issing said the euro has been betrayed by politics, lamenting that the experiment went wrong from the beginning and has since degenerated into a fiscal free-for-all that once again masks the festering pathologies.
“Realistically, it will be a case of muddling through, struggling from one crisis to the next. It is difficult to forecast how long this will continue for, but it cannot go on endlessly," he told the journal Central Banking in a remarkable deconstruction of the project.
The comments are a reminder that the eurozone has not overcome its structural incoherence. A beguiling combination of cheap oil, a cheap euro, quantitative easing and less fiscal austerity have disguised this, but the short-term effects are already fading.
The regime is almost certain to be tested again in the next global downturn, this time starting with higher levels of debt and unemployment, and greater political fatigue.
Prof Issing lambasted the European Commission as a creature of political forces that has given up trying to enforce the rules in any meaningful way. "The moral hazard is overwhelming," he said.
The ECB is now buying corporate bonds that are close to junk, and the haircuts can barely deal with a one-notch credit downgrade.
The European Central Bank is on a "slippery slope" and has in his view fatally compromised the system by bailing out bankrupt states in palpable violation of the treaties.
"The Stability and Growth Pact has more or less failed. Market discipline is done away with by ECB interventions. So there is no fiscal control mechanism from markets or politics. This has all the elements to bring disaster for monetary union.
"The no bailout clause is violated every day," he said, dismissing the European Court's approval for bailout measures as simple-minded and ideological.
The ECB has "crossed the Rubicon" and is now in an untenable position, trying to reconcile conflicting roles as banking regulator, Troika enforcer in rescue missions and agent of monetary policy. Its own financial integrity is increasingly in jeopardy.
The central bank already holds over €1 trillion of bonds bought at "artificially low" or negative yields, implying huge paper losses once interest rates rise again. "An exit from the QE policy is more and more difficult, as the consequences potentially could be disastrous," he said.
"The decline in the quality of eligible collateral is a grave problem. The ECB is now buying corporate bonds that are close to junk, and the haircuts can barely deal with a one-notch credit downgrade. The reputational risk of such actions by a central bank would have been unthinkable in the past," he said.
Cloaking it all is obfuscation, political mendacity and endemic denial. Leaders of the heavily indebted states have misled their voters with soothing bromides, falsely suggesting that some form of fiscal union or debt mutualisation is just around the corner.
Yet there is no chance of political union or the creation of an EU treasury in the forseeable future, which would in any case require a sweeping change to the German constitution - an impossible proposition in the current political climate. The European project must therefore function as a union of sovereign states, or fail.
The Greeks should have been offered generous support, but only after it had restored exchange rate viability by returning to the drachma
Prof Issing slammed the first Greek rescue in 2010 as little more than a bailout for German and French banks, insisting that it would have been far better to eject Greece from the euro as a salutary lesson for all. The Greeks should have been offered generous support, but only after it had restored exchange rate viability by returning to the drachma.
I agree entirely with Issing. But he is not the only one who is/was aware of the Euro's weaknesses. See here:
Deletehttp://klauskastner.blogspot.gr/2012/12/did-they-really-know-what-they-were.html
My greatest concern is the decline of state of law credibility in the EU. The EU has repeatedly set out rules for itself to avoid potential push-come-to-shove's. And when push's came to shove, they broke their own rules. Maastricht was only the beginning. The bail-out's, ECB bond buying, etc. etc. And on the political side: Schengen, Dublin, etc.
A union which violates its own rules repeatedly will eventually cease to be a union.
I just figured out what is wrong in our communication here in your blog. We are both saying the same things but then we reach radically different conclusions.
DeleteIf you are agree with Otmar Issing that the EU is just a house of cards waiting to collapse, how could you possibly then turn to the Greeks and say that you think Mitsotakis is a good alternative. Mitsotakis and Venizelos are two stupid politicians who want to stay in the eurozone at all costs not because this is good for Greece but because their political class finds shelter and 2nd more lucrative careers in Brussels. What is Greece to do with such rats as its own politicians? At least Tsipras, limited in skill or strategy that he is in many ways, refuses to cooperate with the odious part of Europe to which Mitsotakis, Venizelos, Samaras and all the other clowns have already given an oath of loyalty. Why would we ever want these morons back in power?
How could you possibly say that you a friend of Greece, or that you care about Greece, and then point us to the wrong choices?
Sobering reading, I read up on it frequently. The optimistic years when we all thought that Greece could make it, if for no other reason than because the faults were so many and blatant that if you just did something, never mind what, it could only improve.
ReplyDeleteNow, after 5 years of talking, even the McKinsey report is not as good as it once was. Other south eastern European nations have taken up the slack in food production. Even the tourist industry has been messed up. But, "Keep Talking Greece", and by all means resist, be against, and wait for Messiah.
Lennard
Messiahs are a foreign concept to the Greek culture. Greeks are good at waiting out the enemy and then delivering a blow where and when it hurts the most. If I were the eurozone at the moment, I would be trembling at the thought of Greek revenge and anger which is coming for sure and in a manner that will fragment this ridiculous concept of Charlemagne's Europe forever. If I were you I would be running for cover right about now because this thing (whatever it morphs out to be) would be the nastiest manifestation of blind fury that you have seen in your life. None will be spared.
DeleteThis language sounds familiar. Is it you, D.?
DeleteIt's a good thing that Greece does not have might as she has intentions. Should Greece wish to start Armageddon then start in Greece and we shall see how wide it spreads.
ReplyDeleteAaaand, Keep Talking Greece.
Actually Greece will not be involved in any hostilities. That's because it is in a wretched condition and no one has any interest in being involved with a population close to a state of revolt.
DeleteThat was a rather martial statement, if not in accordance with my understanding of history. One should not underestimate the Greek potential for causing harm. There are a lot of things Greece could do to cause damage, they could leave the EZ, and the EU as well. They could stop cooperating with the Troika and stop paying their loans. They could even vote in a government of Golden Dawn. They could cancel their membership of NATO. Or they could talk themselves into oblivion. Don't underestimate a friend .
ReplyDeleteAfter all, it is a country where people would rather see their own goat die than their neighbors thrive.
Lennard
Greece at the moment is the most inconsequential part of the eurozone mess. Due to its flawed architecture the eurozone will collapse during the next global economic downturn. And then you have the Italian and other messes which exceed the EU's capacity to handle. The lesson here is that the EU and eurozone are nothing more than a free trade area and as such they are manipulated by Germany for its own advantage. This now has to stop; enough with the exploitation of southern populations for the benefit of a trade junkie and its collaborators.
Delete@Lennard:
DeleteI doubt that they will do any of the fooleries you listed. Greece on its own is not a viable entity neither politically nor economically and I guess the majority of Greeks including Tsipras knows this. Outside EZ, EU or NATO neither Russia nor China is waiting for them. In essence the listed threats are bluffs and in the moment they are called they will evaporate into thin air as they did in the past.
Urs
Urs:
DeleteThen why Obama is visiting Greece first on November 15 and then goes to Germany on the 17th to lecture them about their mistakes in Greece? Are you suggesting that the USA is not a strong ally of Greece? Greece has the best natural harbor for the 6th fleet in the Mediterranean. Why would Greece care about the EZ, EU and NATO? Are you suggesting that any of the euroclowns have any particular geopolitical gravitas? All Greece needs is to have the USA by its side. Which it does already.
@Anonymous at 5:17 AM
DeleteOMG are you still harbouring this illusions? Have you forgotten what happended the last time when Greeks tried to play the geopolitical card? All these bluffs had been called already and Tsipras folded. Just get over it.
Urs
Urs:
DeleteYou claim to be a Swiss. Is Switzerland part of the eurozone? part of the EU? part of NATO?
So why are you suggesting Greece to be part of groups that your own country has deemed unfit and unnecessary?
@Anonymous at 11:51
Delete- My passport says I am, so I claim I am. Any indications that I am not?
- Switzerland is neither a member of NATO, EU or EZ - that’s true. Apart from Nato (that’s another story - neutrality etc.) you are right that a vast majority of Swiss (though not all of them) think the EU let alone the EZ is a club they don’t want to enter at almost any cost.
- Yet Greece is not Switzerland. One could argue that Greece is the antithesis of Switzerland in almost any aspect of political and economic life.
- But don’t take my word for it. Look at Mr. Tsipras deeds don’t listen to his words. When push came to shove he always did what it took to keep Greece within Nato, the EU and the EZ. Why do you think he acted this way? Because he is such a committed European? Come on.
Urs
Urs:
DeleteThe only valuable thing related to the Swiss membership is participation in the EFTA (European Free Trade Agreement). Greece could participate in the EFTA also. You don't need to have similarities in countries for free trade. Switzerland does not have to be Greece and Greece Switzerland in order to trade. Anyone is free to trade or not trade.
NATO is a club without a mission; it does not even have US support to stay alive. It's just a social club because for sure in its present form is not a military alliance. So whether you belong in NATO or not makes no real difference.
Greece should not be in the eurozone because all eurozone countries are subject to internal devaluation to keep German exports alive. Having undergone its own internal devaluation Greece does not need to participate in a second devaluation so that all remaining Greek assets denominated in euros are now (or soon to be) worth 50% less because Germany needs the weakest possible euro to maximize trade surpluses.
As to the EU, Greece could never leave the EU and has no reason to leave the EU since it receives structural funds each year for as long as its economy remains below the european median. If Greece ever becomes a super rich country then it would be time to leave the EU as well.
@Anonymous at 9:15
Delete- You may have a second look at EFTA regulations. EFTA membership is not for free. Furthermore you can not be a EU and EFTA member at the same time. So Greece has to decide: It is either EFTA or EU but never both.
- NATO is not the issue at hand. Let’s ignore this issue completely.
- It seems you have a somehow distorted view of economics in general. When Greece lost it’s access to credit markets many Greeks argued that the Germans will have to underwrite Greeks sovereign debt because otherwise the Greeks could not afford to buy german exports any more. Now you are arguing that internal devaluation funds german exports? I guess you think of the low Euro but even here you miss the point. The germans are the most critical when it comes to Draghi’s dovish policy and Germany’s main export markets are still within the EZ.
- According to your reasoning (when rich enough Greece should leave the EU) Germans must be quite stupid to stay within the EU.
Urs
Urs:
Delete1. For now Greece is a permanent EU member for life. The EFTA comment points to the essence of the EU which is a trading club. So all you need is an EFTA if you are not an admitted EU member. The essence is the same. Either way you are allowed to trade freely.
2. NATO is not an issue for Greece because NATO has become irrelevant over the years and without a new mission.
3. It seems to me that you have a distorted view of reality because when the Germans decided to become the lender of last resort it had little to do with Greek access to capital markets and everything to do with saving German and French banks plus keeping the euro from collapsing.
4. Germans are stupid to believe that we can not see that they have to stay in the EU because otherwise their trade surpluses will vanish in thin air. The EU in its present form in nothing more than a giant export market for german goods. Therefore the Germans may claim that they want to leave the EU but in reality and they can't cut off their nose despite their face. Spare us the hypocrisy please that somehow germans will do better with an overvalued DM outside the EU. Germany's job is to constantly undermine and manipulate the euro towards the lowest possible value as a means of survival. Otherwise the german economy would implode. Even kindergarten students know such undisputed facts.
@Anonymous at 1:12 PM
Delete- If you really think that Germany’s economic success is solely based on a weak Euro please try to explain why:
1. Switzerland with her highly overvalued Swissie had in 2015 a trade balance surplus of CHF 36.53 billion.
2. The germans managed trade balance surpluses with their highly valued DM for decades.
3. Whereas Greece had trade balance deficits with a not so strong Drachma.
You are completely delusional if you think that Greece and Greeks with their current mindset would be better off outside the EZ. If this would be the case why doesn’t Tsipras call it quits?
The facts you call undisputed are in fact only known to students in Greece with a kindergarten mindeset. Try to open your eyes, get your facts right and grow up.
Urs
Mitsotakis is completely out of touch with the current political sentiment in Europe. He is a yes man at a time the trend is clearly for a no man. Mitsotakis does not know the meaning of the word defiance; he is a collaborator to forces that great leaders would be against. In summation he is a Brussels and Berlin puppet.
ReplyDelete"taly’s economy minister said yesterday (23 October) the European Union must choose between allowing Rome to raise its deficit to cope with a recent earthquake and the migrant crisis, or the “Hungarian way” of putting up barriers, which he said would spell doom for the bloc.
“Europe must choose which side to take. They can accept the fact that our deficit goes up from 2% to 2.3% (of gross domestic product) to tackle the earthquake and the migrant emergencies,” Pier Carlo Padoan told la Repubblica daily in an interview.
“Or they can choose the Hungarian way, which puts up walls against the migrants and must be rejected. That would be the beginning of the end.”
The Italian government has been stepping up an anti-Brussels rhetoric after unveiling an expansionary 2017 budget plan last week ahead of a referendum on constitutional reform that may decide Prime Minister Matteo Renzi’s political future.
taly’s economy minister said yesterday (23 October) the European Union must choose between allowing Rome to raise its deficit to cope with a recent earthquake and the migrant crisis, or the “Hungarian way” of putting up barriers, which he said would spell doom for the bloc.
“Europe must choose which side to take. They can accept the fact that our deficit goes up from 2% to 2.3% (of gross domestic product) to tackle the earthquake and the migrant emergencies,” Pier Carlo Padoan told la Repubblica daily in an interview.
“Or they can choose the Hungarian way, which puts up walls against the migrants and must be rejected. That would be the beginning of the end.”
The Italian government has been stepping up an anti-Brussels rhetoric after unveiling an expansionary 2017 budget plan last week ahead of a referendum on constitutional reform that may decide Prime Minister Matteo Renzi’s political future."
Today without a lot of fanfare, 2.7 Billion were disbursed to Greece on a matter that the Nea Tromokratia of Mitsotakis and the other right wing clowns were claiming 3 weeks ago to be a Waterloo for Tsipras. It turns out nothing of the kind, the Tsipras government was praised (actually the Greek people were praised for reformation) and the ineffective and hysterical opposition is now in search of a new false target against the government.
ReplyDeleteThis is why Mitsotakis and Nea Tromokratia they don't have a chance for the next 3 years. If by some voter fatigue, Mitsotakis wins the next election and forms an independent government (highly doubtful) then maybe Mitsotakis might see some play time. For the moment he is strictly a substitute and the coach's clear instructions is that he stays on the bench.
There will be so many calamities in Europe by 2019 that no one would ever remember that Nea Tromokratia represents a valid political choice. So pumping for Mitsotakis at this stage shows a bit of desperation for the opposition.
For those of you under the illusion that Mitsotakis is a leader of a solid political front rather than a fragmented New Democracy party of 2 extremes, this is a good time to use your Google translator and learn something about the true nature of the not so good condition for the Greek opposition:
ReplyDeletehttp://www.tovima.gr/politics/article/?aid=839303
Last time Greece threatened playing any card of that sort, a nice old German gentleman said, in his usual polite way, something like "tu was du nicht lassen kannst". In my ears it sounded like "do you feel lucky punk". He also offered Obama that if USA had strong interest in Greece, he was willing to swap it for Puerto Rico. This time Obama will likely say "sorry mate, it's out of my hands now".
ReplyDeleteIt's not a threat. That's reality. Greece has zero alignment geopolitically with a sinking EU on a severe decline trend and 100% benefit for aligning with the USA.
DeleteThis Puerto Rico business is off the mark. Why would the US actually pay for the messes the EU has created? The EU will continue to pay for Greece forever and the US will provide the strong geopolitical support Greece needs as a sovereign country.
Germany has no military to protect itself, let alone Greece. The only functional militaries in Europe are that of the UK and France. The rest of Europe from a geopolitical perspective is a cruel joke. No sane country would ever align itself with the EU and expect any protection or any hint of appearance of protection. The EU is just a free trade zone. Nothing more and nothing less.
If Greece has zero alignment with the EU (and consequently with the EZ) she should leave both. Easy. Then finally the ECB could stop to finance Greece. All problems solved.
DeleteUrs
Urs:
DeleteWhy would Greece leave a free trade zone that owes it money?
Urs:
DeleteBecause by definition smaller EU economies receive money from the surplus counties in order to equalize purchasing power among the 28 countries.
Greece would be stupid to leave the EU; the eurozone it should leave immediately because it only derives losses from a common and very weak currency.
@Anonymous at 4:31
DeleteYou got that wrong. It is Greece that owes goods and services to the other EZ countries. Target2 balances, you know.
Urs
@Anonymous at 9:01
DeleteWrong on all 3 accounts.
1. Subsidies have nothing to do with the size but with the strength or productivity of an economy.
2. And the purpose is not to equalize purchasing power (what a joke) but to foster the economic development of economically underdeveloped regions.
3. If you think the Euro is a very weak currency be surprised how weak a new Drachma will be.
You seem conflicted on many counts.
Delete1. We can use the term of per capita income if you are so confused about size.
2. Absolutely the purpose is to equalize purchasing power otherwise you can NOT afford to buy german products. And if you can't afford to buy german products pffff... there goes trade junkie germany up in smoke.
3. We can use the Swiss franc as the new currency. The message here is anything but the underperforming and rapidly devaluing euro.
Urs:
DeleteGreece owes nothing to anyone. It's the EU that owes structural funds to Greece in perpetuity so do us a favor please: keep paying up and spare us the phony advice. Your purpose is to pay up and ours to decide how to use your monetary obligations in the best possible way and to our maximum advantage.
@Anonymous at 10:31
Delete- I would prefer per capita productivity. You may argue that this more or less the same but I have some issues with the understanding of the term income of some commentors here.
- No, the purpose is not to equalize purchasing power in order to allow countries with a low productivity to spend like countries with a higher one but to allow these low productivity countries to develop and improve their productivity. I am starting to understand the funny "economic" reasoning of the Greeks. I guess this is where you end up if you get on the slippery slope of demand oriented thinking. If high productivity countries would fund low productivity countries just in order to "sell" them goods and services it would be more reasonable to give the net funding back to their own tax payers instead of giving it to foreigner.
- In a currency union with Switzerland (we had this in the past and if failed) Greece would be forced to an even more radical internal devaluation don’t you think so?
Urs
@Anonymous at 10:35:
Delete- No I am sure you are a Joe job.
- I pay my taxes in a country that is neither a EU nor an EZ member so apart from EFTA obligations and low Euro headaches I am not in the business of subsidizing Greece. Sorry.
Urs
Urs:
DeleteSo let me summarize your Swiss hubris for posterity:
1. Apparently you live is a lovely mountainous country which has never been invaded because apparently ferocious fighters are guarding all mountain passes with their swiss army knives and their swiss watches synchronized for maximum efficiency on bicycle brigades.
2. Your main product is tax sheltering of ill gotten profits since every criminal around the world is urged to open a Swiss bank account of strict anonymity. In addition to being a Mecca of money laundering and undeclared income you are also the favorite place to deposit plundered wealth each time a European country to your north (better to remain anonymous for secrecy reasons) invades and steals from other Europeans because no one could possibly trace the loot back to you.
3. You refuse to form a monetary union with Greece because instinctively you understand that all stolen capital which is safely stored in your unaccounted vaults deeply buried in mountain caves might actually flee to Greece for better weather and much better service thus depriving you of the monopoly status of sanctioning financial corruption and opaque unlawful activities since you are sworn to total secrecy and no one knows about it.
4. You are proud to pay your taxes to a system based on financial fraud and you don't wish to support any other country except your domestic criminals masking as world class bankers.
Have I missed anything? Please feel free to add to the unholy list of your achievements and the reasons why you have earned the undisputed right of preaching and pontificating towards the Greeks.
@Anonymous at 4:10 PM
DeleteAre you so desperate, so at you wits end that you have to move the goal post time after time? After your economic "arguments" all failed and your reasoning had been unmasked as wishfull thinking you now try to paint the Swiss economy as one solely based on black money and cherish the illusion that Greek banks could successfully do the same if not better. So let me tell you:
- The banking sector in Switzerland represents between 10% and 12% of GDP around the same number as in the UK.
- You may have heard of international renowned companies like Nestlé, Novartis, Glencore, Roche, Holcim, Swatch, Rolex, Richemont etc. etc.
All based in Switzerland and not one of them a bank. And then there are all the SMEs you never heard of (often so called hidden champions) - the backbone of the swiss economy.
Yes indeed you missed a lot.
- Cyprus and it’s banking system failed big time. Remember? So much for the fear that capital might flee to Greece for much better service (chuckle).
Urs
Urs:
DeleteYour defense of the Swiss economy reminds me of rich people who started their fortune through some illegal means and now display virtue and business acumen.
So the contributions of the Swiss economy to the world are some food and drug companies plus some watch makers? How unique. I guess the rest of the world knows nothing about food consumer goods, drug making and chocolate bars.
Thanks for putting me in my place. Good thing you didn't mention the Templars as the original Swiss bankers and their unlawful persecution by the King of France.
@Anonymous at 10:58..
Delete1. The Swiss economy doesn’t need any defense. And of what my post reminds you is of no interest to me.
2. The wrongdoings of Swiss banks in the past had been and will be heavily fined by US institutions - and their dubious business will be taken over by banks in Miami and Delaware. So everything is fine and fined.
3. The purpose of companies is not to be unique, trendy or sexy but to deliver goods and services people - domestic and abroad - are willing to pay for. In this sense Nestlé and Roche, ABB and Swatch are doing their job quite well.
4. Having that said I am curious what unique and world-renowned Greek companies you think of.
5. Please singn your posts with a name like I do. It gets tedious to address my posts always to @Anonymous. Thanks.
Urs
Urs:
DeleteLikewise I have zero interest in hearing the faulty opinions of a Swiss person about Greece. Not only you have no idea what you are talking about but you lack the qualifications and education to contribute in any meaningful way.
Why a person like you want to observe Greece? for what reason? is this a sick hobby? Do you have such a void in your life that you have decided to offer opinions on matters that you know little about? Why don't you start observing Italy which is your neighbor and half Greek by the way and at least offer advice to people that you are linked with?
@Anonymous at 4:26 PM
DeleteYour reaction shows me that I touched a nerve. Facts seem to be hard to swallow for you.
That’s good. You don’t know anything about me or my qualifications - keep on speculating or calling me names - frankly I don’t care. I of course shall continue to comment.
Urs
The second parousia has now been planned for the 15 November, 2016. The Messiah will first "come" to Greece to set up the glorious kingdom of God (mostly consisting of Greeks), thereafter he will go to Germany to hold the last judgment (mainly of Schauble and Merkel). What he will do in Peru has not been divulged, but since it is a weekend he may just rest.
ReplyDeleteYou forgot to mention that by the time he reaches Peru, the Mayan Gods would have devoured the disabled German and the sausage shaped Frau. And that this necessaty blood sacrifice would have appeased the Gods of Matsu Picchu.
DeleteHere some sobering thoughts for the all is well crowd which likes to give false advice to Greece instead of looking at its own weakened condition.
ReplyDeleteSMEs are the backbone of the German economy, making up 99.95 percent of all German companies and employing about 70 percent of the total workforce. Micro-enterprises with fewer than 10 employees account for about a third of SMEs’ workforce. Therefore, news relating to their willingness to invest is an indicator not only of the level of business optimism in Germany but also social stability. Most foreign sales for SMEs are in Europe, a market that is still contracting due to the Continent’s socio-economic problems. However, SMEs’ foreign sales outside Europe have continued to decrease – from 17 percent of total sales in 2013 to 13 percent in 2015. While sales in Germany have been boosted by domestic private consumption and residential construction, both of which have grown due to declining interest rates, the fact that small businesses are selling bonds to individuals and spending their savings reveals that they do not have much confidence in Germany’s economic future.
Complaints about banking regulations are normal, but it isn’t the bureaucracy that stops companies from investing – even if, indeed, there is more bureaucracy in the banking sector following the 2008 financial crisis. SMEs prefer to finance their spending by using their own resources because they are not sure future profits can pay back new loans. Businesses used to accept some risk by taking out loans to finance their projects. But this is becoming less common because the success of new projects is increasingly uncertain, especially in light of stagnant and even decreasing economic growth in Europe.
Instead, as rules for getting a loan have toughened, business managers’ trust in financial markets has declined. Risk aversion has risen due to managers’ worries about new crises affecting their businesses. They believe the benefits of taking out a loan today will be outstripped by the cost of paying it back in the future, especially if the economic outlook for Europe continues to be underwhelming. Such an attitude may work in the short term. While some positive indicators from the German economy relate to seasonality, considering that it is normal for consumption and industrial purchases to increase before the holiday season, investment relates to medium- to long-term prospects. German companies may rely on their own financial resources until better investment prospects become more apparent, but they may be waiting a long time. Until then, Europe’s political instability will continue to translate into cautious German investment behavior. This in turn lowers the ceiling for potential growth, which causes even more political instability on the Continent. And then, the cycle repeats.
@Anonymous at 10:51
DeleteI have no insights into the shape of german SMEs but what you write sounds quite plausible to me. Yet I can’t see in which way your post refutes anything Kleingut or others had written here at ObservingGreece. Nobody had claimed that "all is well" quite the contrary. And none of the advice Kleingut gave in his posts is contradicted by the fact that life for german SMEs is not a bed of roses. Europes political and economical instability is by no means caused by cautious SMEs but rather by red tape, budget overspending and low productivity.
Urs
Urs:
ReplyDeleteThe point here is that if Germany is a house of cards waiting to collapse why then do you offer Germany as a model for Greece? Don't you have enough problems of your own to spend your time fixing? Why are you trying to offer Greece unsuitable advice as if you know the subject well?
Why don't you take Lord Owen's advice and just shrink to four core counties in the eurozone and go from there?
In a keynote speech in Zurich, Switzerland, this afternoon, the veteran eurosceptic claimed much-needed changes to the debt-laden eurozone could be enacted soon after Britain’s exit.
Lord Owen said the creation of a “core eurozone” will need to be “openly discussed” in order to avert the entire collapse of the Brussels single currency project.
He suggested Germany, the Netherlands, Belgium and Austria could form a quartet of countries to integrate their economies further by signing up to an initial fiscal and banking union.
But the former SDP leader expressed doubt about France’s involvement.
Lord Owen said: “Even if something dire happens to the eurozone these four countries will ensure that a small eurozone continues. The question is who will be their partners?
“As for France a lot will depend on the outcome of the French elections. But for the first time, whereas it would have been automatic in the past that Germany would insist on French membership, there may not be the level of public support after the elections in Germany to include France initially.”
@Anonymous at 6:41
DeleteYou are wrong:
1. The issue at hand is in a blog named ObservingGreece surprisingly Greece and her economy.
2. Any problems Germany’s or Switzerland’s economy may or may not have pale in comparison to the ones Greece faces right now. So although it is far from me to paint Switzerland as the land of milk and honey I think any unbiased Greek could get a few ideas from the way things are handled here especially in the economic sphere.
3. I was a Eurozone sceptic before the monetary union was installed and I am well aware of it’s many flaws but Greece problems run far deeper than that and I guess you know that.
4. I would suggest that Lord Owen should repeat the speech he held in front of a liberal (in the european not in the american sense) audience at the Zunfthaus zur Meisen in Zurich in front of Syriza and ANEL audience in Athens.
5. Please note that as a Swiss I have no influence on any decisions made about the future of the EU or the EZ. Btw. even the influence of a retired british SDP politicians is if at all minute.
6. Please sign your posts with a name like I do. It gets tedious to write to a bunch of anonymous posters. Thanks.
Urs
No the issue at hand is not observing Greece. Blind people can't observe anything other than spewing their blind bias 24/7 assuming that their darkness is a base condition for others as well.
DeleteTo want to observe Greece is to have the background and qualifications to offer something of value. Trying to project to Greece the malformed mess of opinions you have, I'd rather have you do something like this for Bosnia or Croatia. Greece does not need your nonsense, you have to understand this by now. And Greece is not a lab animal under observation and/or for European nonsense drug testing.
So do me a favor and stay strictly out of Greek affairs because it's none of your business.
@Anonymous at 4:33
DeleteThis is the ObservingGreece Blog so the issue at hand is indeed Greece and not Bosnia or Croatia. Feel free to ignore my comments. I myself shall of course continue to comment.
Urs
No one has asked you not to comment. It's the quality of your commentary that's in question.
Delete@Anonymous at 6:47
DeleteQuote: "So do me a favor and stay strictly out of Greek affairs because it's none of your business."
Quote: "No one has asked you not to comment. It's the quality of your commentary that's in question."
So much for the quality of your comment.
Urs
The quality of my comment stands and highlights your need to have things interpreted for you.
DeleteSo grab a paper and pencil and write this down:
"Urs is not an expert on neither Greek politics nor the Greek economy. Urs and others like Urs have a sick fascination about Greece as a means of profit making in currency or stock market movements. As such Urs' commentary is biased, has very little to do with reality but instead attempts to stoke false sentiment so that Urs and his followers make a few euros in day trading. Urs is the typical profile of a german saver who wants interest to increase so that his savings account creates some profit instead of being idle not realizing that an increase in interest rates and the abrupt termination of QE (which includes his hated subsidies to Greece) will make most of the german loans to the rest of the eurozone uncollectible (and most and foremost the Greek loans)
Therefore, based on the above Urs needs to stop his habit of manipulating Greek news for personal gain and focus instead on other areas that he actually knows something about.
Urs is a free citizen and he could theoretically opine on everything under the sun but once caught red-handed in full display of disturbing biases he ought to quit from such annoying habits and look for the salvation of his soul elsewhere other than Greek affairs."
Quote: ""Urs is not an expert on neither Greek politics nor the Greek economy."
DeleteTrue, yet you are neither and you lack the most basic understanding of economics.
Urs and others like Urs have a sick fascination about Greece as a means of profit making in currency or stock market movements."
How do you know? You are free to publish my name, my age and my profession. Come on, tell them all about me. This guesswork you are posting is childish.
Quote: "As such Urs' commentary is biased, has very little to do with reality but instead attempts to stoke false sentiment so that Urs and his followers make a few euros in day trading."
Wrong. I would never engage in day trading. Btw. your allegations wouldn’t make sense for someone who daytrades.
Quote: "Urs is the typical profile of a german"
Boy you are obsessed with everything german. I am a Swiss and I have no intention to change my nationality.
Quote: "saver"
What? A moment ago I was a daytrader and now I’m a saver? Come on, Stavros, make up your mind.
Quote: "who wants interest to increase so that his savings account creates some profit"
Shure and my stocks create some losses. Dear, oh dear, Costas!
Quote: "instead of being idle not realizing that an increase in interest rates and the abrupt termination of QE (which includes his hated subsidies to Greece) will make most of the german loans to the rest of the eurozone uncollectible (and most and foremost the Greek loans)"
The Greek loans are uncollectible (at least from the Greeks) for the forseeable future with or without QE, Ioannis, you know that quite well.
Quote: "Therefore, based on the above"
In other words: Based on hot air.
Quote: "Urs needs to stop his habit of manipulating Greek news for personal gain"
If only.
Quote: "and focus instead on other areas that he actually knows something about."
Why should I when I can profit from the Greeks while having so much fun with you, Spyridon?
Quote: "Urs is a free citizen"
Ahh, thanks Athanasios.
Quote: "and he could theoretically opine on everything under the sun"
Theoretically? What do you mean by theoretically, Aristeidis?
Quote: "but once caught red-handed in full display of disturbing biases he ought to quit from such annoying habits"
Sorry, Vasileios, I shall never become the guy who tends to gloss things over.
Quote: "and look for the salvation of his soul elsewhere other than Greek affairs"
I am not a religious person and I do not seek for the salvation of my soul but for profit and entertainment, Theodoros.
Urs
Urs:
DeleteIf you are for profit then why are you observing Greece? Where exactly is the profit potential? As far as your entertainment claims only a sadist would find the torture of the Greek people amusing.
Quote: "Where exactly is the profit potential?"
DeleteShorting Greece. Despite the ban still possible via some ETFs.
Quote: "As far as your entertainment claims only a sadist would find the torture of the Greek people amusing."
Urs
Come on, you won’t take this conversation serious, won’t you? One has to have a glutton for punishment to enjoy economic discussions with certain greek commenters.
Fresh concerns were raised about the outlook for the euro following the chief economist of Deutsche Bank claimed "Europe is seriously ill".
ReplyDeleteThe German giant is calling for as much as €150billion (£133billion) to recapitalise the bank.
Speaking on the BBC programme This Week, former Tory MP Michael Portillo said: "I can’t find many people who think the euro is going to survive.
"And if the euro does survive then it simply means the enduring economic crisis in Europe will just continue longer.
Quote: "former Tory MP Michael Portillo said: "I can’t find many people who think the euro is going to survive."
ReplyDeleteYou find the answer to a dying EZ in the markets:
http://www.finanzen.ch/devisen/chart/euro-pfund_sterling-kurs
Urs
urs:
Deletewhat does a chart of past performance mean anything for future performance?
Quote: "what does a chart of past performance mean anything for future performance?"
ReplyDeleteIt reflects the expectations of market participants. If you expect the Euro to devalue against the GBP you wouldn’t buy Euros. Likewise if you expect the GBP to increase it’s value in Euro terms you would not sell it against the Euro. In other words, maybe Mr. Portillo should have asked some FX traders if they think the Euro is going to survive.
Urs
Urs:
DeleteIf market expectations were right then we would never have crashes in stock and currency markets.
Instead of Mr. Portillo consulting the equivalent of voodoo charts maybe he needs to consider the opinion of experts which indicates that the euro will go down:
http://www.bloomberg.com/news/articles/2016-10-19/world-s-fourth-biggest-currency-trader-sees-euro-decline-ahead
Quote: "If market expectations were right then we would never have crashes in stock and currency markets."
DeleteI did not suggest that the future of the Euro follows th FX market expectations. I pointed to the decline of the GBP against the Euro in regard to Mr. Portillo’s claim that he "can’t find many people who think the euro is going to survive."
"Instead of Mr. Portillo consulting the equivalent of voodoo charts maybe he needs to consider the opinion of experts which indicates that the euro will go down:
http://www.bloomberg.com/news/articles/2016-10-19/world-s-fourth-biggest-currency-trader-sees-euro-decline-ahead"
So what you are saying is that Mr. Portillo should not listen to all market participants but only to those (or better yet: the one) whose opinon you share.
Sir, you are funny.
Urs
Funny - or what a difference a missing s can make:
ReplyDeleteQuote: "Fresh concerns were raised about the outlook for the euro following the chief economist of Deutsche Bank claimed "Europe is seriously ill".
The German giant is calling for as much as €150billion (£133billion) to recapitalise the bank."
Let’s see: Market Cap of DB is according to Yahoo 20.58 Billion USD. If DB would ask for 162 Billion USD it would need around 7.9 times it’s market cap as additional capital. This can not be true. Even if one assumes that the negotiations shipwreck and DB has to pay the full ammount of the DOJ fine of 14 Billion USD.
So what went wrong? The statement was not made in regard to DB but in regard to the whole european banking sector and the last word is "banks" not "bank".
You quoted from https://reportuk.org/. I wouldn’t call this the most reliable source - to put it mildly.
Urs
I doubt it. The Italian bank problem alone is far more than 150 Bil. euro. So it would take far more to properly recapitalize the entire european banking sector. Just wait and see as we enter a new recession cycle globally. You will then realize that these are truly fabricated estimates.
DeleteJust as a reminder for those peddling soft numbers:
Delete"At the heart of the country’s banking woes lies €360 billion of nonperforming loans (NPLs), a figure that represents about one-fifth of the nation’s total GDP and that is also a near-tripling from 6 percent of total loans just under 10 years ago to the 17 percent at which it stands today. Indeed, the NPL problem looms large over the entire European Union (EU), with the Centre for Economic Policy Research noting at the end of 2014 that the region had amassed €1.2 trillion in bad debt, or 9 percent of the EU’s GDP. Today, Italy’s banks continue to suffer more than most at the hands of an economically stagnant Eurozone. Most recently, Brexit has proven to be particularly damaging, with the shares of Italy’s listed lenders plunging by more than 50 percent since the UK’s decision to leave the EU."
Quote: "I doubt it. The Italian bank problem alone is far more than 150 Bil. euro."
DeleteQuote: "Just as a reminder for those peddling soft numbers"
You missed my point. Or do you claim that DB wants to raise EUR 150 billion fresh capital?
Urs
Urs:
ReplyDeleteWhy don't you explain to us the between a rock and a hard place Germany finds itself today?
"Two years ago, Germany casually let the Greek bank system go to the wall, allowing the cash machines to be closed down as a way of whipping the rebellious Syriza government back into line. This year, there has been an unfolding Italian crisis, as bad debts mount, and yet Germany has insisted on enforcing euro-zone rules that say depositors – that is, ordinary people – have to shoulder some of the losses when a bank is in trouble.
For Germany to then turn around and say, actually we are bailing out our own bank, while letting everyone else’s fail, looks, to put it mildly, just a little inconsistent. Heck, a few people might even start to wonder if there was one rule for Germany, and another one for the rest. In truth, it would become impossible to maintain a hard-line in Italy, and probably in Greece as well.
And yet, if Deutsche Bank went down, and the German Government didn’t step in with a rescue, that would be a huge blow to Europe’s largest economy – and the global financial system. No one really knows where the losses would end up, or what the knock-on impact would be. It would almost certainly land a fatal blow to the Italian banking system, and the French and Spanish banks would be next. Even worse, the euro-zone economy, with France and Italy already back at zero growth, and still struggling with the impact of Brexit, is hardly in any shape to withstand a shock of that magnitude."
Quote: "Why don't you explain to us the between a rock and a hard place Germany finds itself today?"
Delete1. Economics is said to be the "science of resource allocation under the assumption of limited means and unlimited wants." In this sense every country is located between a rock and a hard place. Apart from that, most countries in the world would be very happy if they had Germany’s economy. So in essence: Because she is not.
2. Because I am not a german - maybe there are some german readers who want to step in?
3. Having said that you may know, that is would be a breach of EU regulations to bail out DB with german taxpayers money.
4. Furthermore from what I get reading german online media there is very little support for helping banks again with taxpayers money and the german government seems to be very well aware of that.
Urs
A couple of points in the Urs vs. Anonymous debate need clarification:
ReplyDelete(1) „Greece owes nothing to anyone“, Anonymous stated. The authority on what Greece owes to the rest of world is the Bank of Greece (BoG). Per June 2016, Greece owed the rest of the world 436 BEUR. The borrowers of that debt were the government (270 BEUR), the BoG (98 BEUR), banks (43 BEUR) and other sectors (25 BEUR). The Konstantopoulou Committee concluded, on the other hand, that this entire debt was illegal, illegitimate and odious, i. e. not payable. Thus, Greece either owes 436 BEUR or nothing. The former are facts, the latter wishful thinking. Nikos Dimou called the distance between facts and wishful thinking the „suffering of Greeks“.
(2) EU subsidies have nothing to do with purchasing power equalization. The structural subsidies are supposed to promote development in less developed regions and the sectoral subsidies (i. e. agricultural) are supposed to promote development in sectors. Applications must be approved and disbursements must be controlled by member states (the EU claims not to have enough resources for that). When Greece approves that a Greek farmer buys a Porsche Cayenne with EU subsidies, exactly 2 parties benefit: Porsche Germany for making/selling the car and the farmer for enjoying the use of it. The impact on Greek economic development is zero. Since joining the EU, Greece has received roughly 200 BEUR in total subsidies. These are non-interest-bearing and non-repayable funds.
(3) There is no commitment in the EU that purchasing power should be equalized between countries. In fact, I know of only one continent where the countries equalize the purchasing power between themselves. It’s name is Utopia.
Thanks Kleingut, your help is highly appreciated.
DeleteUrs
On the Switzerland (CH) debate, it is clear that few countries are as different from one another as CH and Greece. Still, there is no law which disallows learning from others. The following observations might give Greeks some thought about possibilities for their own economy.
ReplyDeleteCH has virtually no natural resources but, still, exports of products account for about 50% of GDP. Greece has some natural resources (agricultural) but, still, exports of products account only for about 10% of GDP. An analysis of the CH situation would give Greece interesting thoughts.
In CH, exported products cover about 120% of imported products. In Greece, exported products cover only about 60% of imported products.
Transit trade has been a major contributor to the CHF current account in recent years/decades (roughly 25 BEUR in revenues annually). Glencore is one of the major transit traders. In fact, exports and transit trade have been the major sources of CH wealth in recent years. Financing is substantial in terms of volume and employment but not in terms of revenues.
Telis Mistakidis is one of the co-founders of Glencore, major shareholder and top executive. One wonders why this Greek citizen runs a transit trading company in a small town by a small lake near the Alps in a country which has really no culture of trading and not in Greece whose location is geopolitically and geographically most attractive and which has a long trading culture. Above all, one wonders what Greece could learn from that.
Last but not least, CH’s foreign currency reserves (not including gold) are about 100% of GDP whereas Greece’s foreign currency reserves are practically nil.
Quote: "Telis Mistakidis is one of the co-founders of Glencore, major shareholder and top executive. One wonders why this Greek citizen runs a transit trading company in a small town by a small lake near the Alps"
DeleteIn Baar, a suburb or rather an outer borough of Zug. I am glad you point to a greek manager because.. well cough Marc Rich - 10 most wanted etc. - not sure if Glencore is beacon of virtue but I guess this goes for all commodity traders wherever they are based.
Quote: "Last but not least, CH’s foreign currency reserves (not including gold) are about 100% of GDP"
Switzerland has the fourth biggest foreign currency reserves after China, Japan and the Eurozone. A bit of a mixed bag as most of these reserves result from the SNB interventions to keep the Swissie from going through the roof against the Euro.
Likewise I am not so happy to learn the our SNB is one of the biggest shareholders in AAPL.
Urs
Urs:
DeleteWhy are boasting about Switzerland in a blog related to Greece? Who cares what the Swiss have or not have? How did you come up with the idea that Switzerland is a role model for Greece? Based on what?
Why don't you find a blog called observing Switzerland and offer your insights there?
Quote: "Why are boasting about Switzerland in a blog related to Greece?"
DeleteYou may re-read Kleingut’s post. I couldn’t give a better answer.
Urs
Urs:
DeleteI am assuming you want to express opinion so that others respect your point of view. If on the other hand you want to express opinion just to express it you have not established your credentials and as such you will not be treated kindly. C'est la guerre!
Quote: "I am assuming you want to express opinion so that others respect your point of view."
DeleteNope, I don’t seek your respect.
Quote: "If on the other hand you want to express opinion just to express it..."
That’s it, exactly.
Quote: "you have not established your credentials and as such you will not be treated kindly."
You are wrong, I don’t have to "establish my credentials". You can argue with me without knowing anything of me. When I write: 2 + 2 equals 4 this is true even if I am not a math teacher and if I state that 2 + 2 equals 6 this is wrong even if I would teach math at Harvard. Btw. why don’t you sign your comments. Hiding behind Anonymous? What are you afraid of?
Urs
Kleingut:
ReplyDeleteYou need to learn realism. Greece's debt is zero because it's not repayable. If you think otherwise please indicate the mechanisms of collecting such debt.
Greece does not need Glencore or any other commodity trading company. We have better things to do in Greece.
Let me inform you about reality. The question with sovereign debt is never whether it can be repaid because sovereign debt never (or rather: hardly ever) gets repaid. The only question with sovereign debt is whether it can be refinanced. From time to time, countries manage to reduce their debt in terms of % of GDP but a reduction of debt in nominal terms almost never happens (again: CH if an exception). My county, Austria, has increased its debt in nominal terms for 52 straight years in a row and still has AA or AAA.
DeleteIf you search for countries which have received haircuts on sovereign debt, you will find that Greece is in the company of third-world countries and no country ever received a haircut as large as that of Greece.
Sovereign debt must be 'regularized' and not repaid. The US under Bill Clinton had huge budget surpluses and they debated the full repayment of debt within a decade. Markets were scared about the possible loss of risk-free assets. The most important aspect of regularization is that the debt can be serviced. Classical mechanisms are the extension of maturities for a very, very long time (including Evergreen Bonds) and reducing interest rates to close to zero. If you want to learn, read up on the sections "haircut" and "rescheduling" below.
http://klauskastner.blogspot.gr/2012/09/what-this-blog-is-all-about.html
Greece would strike me as the near-perfect location for trading companies, above all since Greek culture has such a long trading background. Trading, to me, trading is one of the classical aspects of Greece's comparative strengths. If I recall, after the fall of the junta, efforts to attract trading companies for trade in the Near and Middle East were very successful but Andreas Papandreou changed tax laws to chase them away.
PS: if Greece has better things to do than using its comparative strengths, Greece will have to do them rapidly if it wants to avoid a long-term decline in living standards to levels which are remembered only be the older generation of Greece.
Then let inform you about reality too. The Greek debt can not be refinanced. Because one has to be an idiot to refinance existing debt at below 1% interest into replacement debt at 20 times higher interest. Therefore the Greek debt is both frozen in time and non repayable. And sooner or later there has to be a severe haircut of the Greek debt. This mickey mouse theater the lenders are playing that somehow they will be repaid someday, somehow is nothing more than an unreal super lie.
DeleteKleingut:
DeleteThis childish behavior of threatening Greece with loss of living standards unless it reforms per the lenders nonsense is not going to get you anywhere and certainly not make you any friends in Greece. Greece does not need taskmasters, it needs partners but now this EU has been exposed to be anything but an equal partnership. So clearly for Greece to restore its living standards first on the list comes a rejection of the eurozone.
And you need to stop these games of asking the Greeks to save the badly architectured euro under the cloak of them taking care of themselves. The Greeks are not that stupid to believe that "in saving themselves" they will need to deliver actual benefits for the lenders. This is the part that Greece will never do. The euro currency is doomed and if it is not Greece that triggers the domino effect then it will be Italy or some other country which will trigger the house of cards collapse.
Greeks are not interested to hear what Greece could do from strangers. What Greeks are interested in hearing from outsiders is why do they thing that the eurozone and EU are good deals anymore. Because it is obviously clear that they are no longer good deals and a severe and non-reversible fragmentation has begun in the free trade zone called the EU.
To both of the anonymous commentators above: I always enjoy hearing the kind of views you express because they increase my admiration for Nikos Dimou as an extremely astute observer of peoples and societies.
Delete@ Kleingut:
Delete"Axiom: a Greek does whatever he can in order to widen the gap between desire and reality."
Nikos Dimou
Could be the answer to many if not most of unsigned Anonymous comments. Thanks for hinting at this great author I did not know of.
Urs
Never heard of Nikos Dimou and I have difficulty understanding why his opinion counts. If he is unhappy as a Greek then he could change his nationality to obedient subject of Troika.
DeleteWhat part of Nikos Dimou career to you deem noteworthy? The fact that all his political ambitions ended up with failure or his religious disagreements with the only insignificant party that would have him?
https://en.wikipedia.org/wiki/Nikos_Dimou
I am not impressed by Dimas in any way, shape or form. He was born in 1935 and obviously his family was sympathetic to the Nazi occupation forces. He must have been 9 yrs old when the germans withdrew from Greece. He then proceeds to get a german education. Just by looking at him he is a sort of ugly man (perhaps the stereotype of dirty money lender) and he is totally uncomfortable in Greece because his appearance is not Greek at all. He is neither handsome or athletic or anything resembling Greek. No problem, every country has a minority of citizens who do not naturally fit in said country. No big deal. But why admiration for a man who obviously is battling his own daemons and lacks the self-confidence to be at ease with himself?
DeleteNot only has the language, in this blog changed. There are more comments, I assume it is because some of the issues are becoming urgent and relevant. There are a lot more comments from from Greeks, I hope it is because Greeks have realized that there are issues they want to discuss with non-Greeks. The tone has become more confrontational and, I think, more honest, that is always good. That the words and language become rather rough when opinions differ so much is natural, if not always pleasant, our host has been able to temper it.
ReplyDeleteDisturbing is, that whenever an opinion is being aired or quoted, attention is always shifted from the opinion to the person who has expressed it, the latest attacks on Nikos Dimous's opinions are typical, but also those on Mitsotakis's. I have observed here, in politics and in private, a certain pattern in discussions:
Act 1.
You discredit your opponent and his family and ancestry. The most common is to accuse him of being un-Greek or a fascist. Also popular is his type or place of education, outside Greece is suspicious, and USA or Germany is damning. Further proof of unreliability is if he has worked in a large multinational company(any company that employ non-Greeks or is not 100% controlled by the Greek state or employ more than 3 people)or has had even a modest success.
Act 2.
Should normally be reserved for the pro/contras of the opinion. here it is slightly different, it is taken up by shouts of "how dare you speak when I interrupt".
Act 3.
Is rounding off with assurances that, contrary to my opponent, I am a true patriotic Greek anti-fascist.
It all gives the impression that the participants have not studied or understood the opinions, but feel impotent at not being able to counter them.
Lennard
But Lennard:
DeleteNikos Dimou is not a player worth mentioning. He is an outlier. Before you quote a man because his opinion fits your bias and/or profile at least do a research on him, listen to his lectures published on YouTube and other channels and then form an opinion about his character. Dimou is neither a known or significant persona to inject into a conversation about Greek politics. Dimou is a Greek who shares very little sympathy for his own kin and has decided as a means to survival to appease foreign opinion and stereotypes. If you dislike attacks on him as a person then try to choose more carefully on who you bring on to the conversation and why.
Quote (Lennard): "
DeleteDisturbing is, that whenever an opinion is being aired or quoted, attention is always shifted from the opinion to the person who has expressed it"
Quote (Answer by Anonymous): "But Lennard:
Nikos Dimou is not a player worth mentioning. He is an outlier."
Without words.
Urs
I do not feel competent to judge any man's character from a 5 minute u-tube clip or his physiognomy. i have read whatever has been translated of his publications and seen a lot of his photos that has given me a favorable impression of his opinions. People who say that Nikos Dimou is un-Greek just have to read him. His artistic career has been one long declaration of love for Greece. Most countries would be well served having more citizens like him.
ReplyDeleteAs for why he live in Greece let him answer that himself, "there are many who maintain that I do not love my country, that I would rather live elsewhere, and that this is the cause of my discontent. It is true that I would rather live elsewhere. But I would prefer that other place to be here".
Lennard
In other words he is a hypocrite and a bad actor. Case closed. Of course he does not have to be Greek. He could be Turkish for example living in a german ghetto. That will build him character, I am sure.
Delete