Talk Elections

I just read the astonishing fact that Greek primary spending -- excluding interest payments -- has been rising this year. We have been told that Greece has been undergoing austerity. But it turns out that "subsidies to pensions" and unemployment insurance payments have caused a 4.5 increase in primary spending.

This obviously raises a question of how the IMF expects Greece to get out of its deficit, but it also raises a question of why the Greek economy is even shrinking. We are told Greece is in recession because austerity has cut government money out of the economy-- but the government is actually injecting more money into the economy. So why is Greece even in recession at all?

So not only is primary spending rising, but the inflation rate has been higher than Germany's, meaning Greek costs are not falling relative to Germany. I thought this entire bailout was supposed to be a gambit on internal devaluation?

Regardless of whether Greece restructures its debt, it should go into primary budget surplus immediately, operating as if it were on a balanced budget amendment. This means cutting whatever is needed to be cut.

Failing that, the other two options are for Greece's lenders to stop lending to it altogether, and force Greece to go int primary surplus immediately, or for them to lend to Greece like there is no tomorrow using printed money, in a bid to get Greek growth going again. Either option would work, but the present situation is untenable. Internal devaluation might have worked, but apparently that is not what is happening.

What is going on at the IMF? They have a legion of PhD economists there.

This is not about economics but about politics. Stupid politics at that.

Given the size of the Greek deficit I'm not sure the primary surplus even matters anymore. Especially since they won't reach it in the next couple of years anyway. If they're paying, say, 5% on a debt that is 200% of GDP that's 10% of GDP right there. That's a key reason why I don't see them getting out of their hole.

Presumably the increase in spending is caused precisely by the fact that the Greek economy is shrinking - these are basic social payments to keep the poorest and unemployed from dying (after all it is a European country, so an American level of 'austerity' has been somewhat resisted).

Obviously the solution to this problem is 1) have the ECB buy up all the Greek debt with fiat money, and 2) institute the Euro-bond solution for future borrowing.

Beet and Gustav,

From what I have seen, you both have some good points.

It seems to me that the Greek government is engaged in a massive farce to extract as much in subsidies from the rest of Europe before they go bankrupt.  The pretended 'austerity' in Greece is just a farce.

The sad thing is that it seems that Portugal, Ireland, Italy and Spain my end up getting screwed by the bad behavior of the Greeks.

The European community would be better off to isolate Greece and instead concentrate on helping the other countries in financial straights that are at least making some real efforts to deal with their problems.

Predictable, inaccurate.

So that we Germans can pay even more?

I think that would be the general idea, yes. ;)

While it is a bit wrongheaded to call it 'paying', and after all in the world of Greeks and Germans it is the Germans who are the privileged, relatively speaking, the obvious point to you, Franzl, is what the devil are you Germans doing in the Euro if you don't want to deal with this sort of thing?

The Germans were forced into the Euro in exchange for French support for unification. The German people has never wanted the Euro.

I agree with this.

I agree with this as well. Greece should be suspended from the Eurozone as long as they have their budget and foreign debt consolidated and implemented several reforms, such as imposing a tax/budget discipline similar to the German/Austrian/Swiss/Dutch/Swedish etc. one, cracking down hard on corruption and work loopholes, cutting their military expenditures to 1% of GDP instead of 6% like it is now, strong reforms in their school/university system that's completely inefficient and incompetent and producing 50% youth unemployment. Further, they should sell their islands and government property to repay the debt to other countries and reform their pension system that favors big bonuses for government workers and even pays out pensions to dead people.

The farcical thing is how the rich in Greece don't pay taxes.  It's interesting that spending on teachers and health care for the poor has been attacked but the fact that the rich don't pay their fair share has been totally ignored.  Remind you of another country?

Haha, well if that is the case then the situation is truly hilarious.  Revenge is a dish best served cold, took almost 70 years but there it is.

A very good analysis, with excellent recommendations.

What I am afraid of is that Portugal, Ireland, Italy and Spain may be unfairly punished for the antics of Greece.

Um, why would they do all that stuff if they're not going to be bailed out?  The incentive to do all that draconian counter-productive stuff is the bail-out.  If you aren't going to be bailed out and are going to be suspended from the Euro, you just default.  Christ it would be stupid to sell off things you own to pay a debt you can simply repudiate.

Opebo,

The simple truth is that what is going on in Greece is a farce.

The Greek government is NOT taking real steps to deal with their fiscal irresponsibility.

They are just play-acting.

Well, that is encouraging if true.

It is a tough love approach, but it is ultimately correct.

Haha, yes.  Not only are national budgets of sovereign nation-states exactly like your own personal budget, their relationships with one another are exactly like that of a stern father and errant child.  Good luck with the over-simplification and mis-direction.

Sorry but I didn't see this topic earlier.

1)The spending rising is a combination of a deeper recession that forces increased safety net spending and the unwillingness of certain parts of the administration to tighten their belts.
It's disappointing and frustrating but somewhat expected. Going cold turkey after decades of profligacy was never going to be easy, especially when large parts of the society and the political world refuse to accept reality and demagogue like it's the 90's (even the conservative parties).
Also the fact that our constitution says that civil servants are permanent employees that can't be fired makes our choices even more limited when it comes to scaling down our public sector.

2)Ousting Greece out of the Eurozone will only make matters worse as it will show to other EU countries that the concept of European Solidarity is just empty words and that if they fall in difficult times, the great powers will have no qualms to do the same to them. Needless to say that will mean the end of EU as a legitimate organization that can influence world policy (even though I understand that many people here don't see anything wrong with that).

3)Cutting military expenditures is an excellent solution. There is only one problem with that: Germany and France vehemently oppose such a measure. The reason? We are one of the best clients of their military/industrial complexes.
When our prime minister visited Merkel and Sarkozy, it was really hilarious seeing them advising a strict austerity plan and at the same time lobbying for even more german and french weapon purchases by our army.

4)If the Eurobond means Germany paying more, then so be it. You can't pretend to be the boss and when time comes to fulfill your responsibilities to start whining about how hard is your job. Germany didn't have a problem when greek banks borrowed money which Greeks used to buy German goods or when the adoption of Euro led to skyrocketing exports and its commercial surplus. 
And the idea that Germany didn't want the Euro is about as credible as the conspiracy theories about Obama's birth certificate.

Lyndon,

You raise a number of interesting points.

First, I want to thank you for being honest about the "unwillingness of certain parts of the administration to tighten their belts."  Actually, I would say almost all of the government in my estimation is unwilling to engage in belt tightening.

Second, you are very correct that after a lengthy period of profligacy, it isn't easy to adopt reasonable economic policies.  In the United States we're going through a similar problem with people like Obama refusing to accept reality, and engaging in demagoguery.

Third, if the Greek government were to act in good faith it would amend the constitution to remove the provision making government employees "permanent" who "can't be fired."

Fourth, its not that people want to stop subsidizing Greece because they have falling "in difficult times," but rather that the Greek government is NOT taking the necessary steps to address their financial predicament, while other governments in Europe with similar problems are taking those steps.  The simple principle is that if you refuse to help yourself, there is NO reason others should try to help you.

Fifth, you are quite correct that Greece can and should significantly cut military expenditures.

Sixth, yes the Germans made some big mistakes themselves in believing they would seduce other countries to act like Germans.  When Greek goes bankrupt, a number of German banks will take a hit for the stupid loans they made to Greece.

Our constitution was amended during the 2006-08 period and can be amended again only 10 years after its last modification(2016). Even so, I highly doubt that any government would dare to change that particular article.

Thank you for that information.

However, I fail to see why the rest of Europe should pay for such a policy.

You're unaware that Germany has never been keen on the Euro? I don't see it as a conspiracy theory, to be honest.

And adoption of the Euro did not lead to skyrocketing exports in Germany. Maybe you should check German growth figures during the first years of the Euro. They weren't good. Germany took painful measures during the early years of this decade to increase competitiveness and they are now reaping the benefits of that.

Hmm...seems like there's another big problem in Greece that I don't see mention of in this thread.


http://www.ritholtz.com/blog/2011/05/kicking-the-can-to-the-end-of-the-road/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheBigPicture+%28The+Big+Picture%29 (http://www.ritholtz.com/blog/2011/05/kicking-the-can-to-the-end-of-the-road/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheBigPicture+%28The+Big+Picture%29)

Translation - they made life worse for the working class.

In fact of course the real problem with Europe isn't Greece, it is Germany.

Obviously. It's always good policy to punish success.

Ah, but, you see, Germany is only successful because of thievery... from Europe... or... the poor... or... something... yeah.

I guess Californians and New Yorkers could say the same seeing how their money go to welfare states like Alaska and Mississippi.

We're too generous. We love them, they don't love us back.

Californians and New Yorkers can, at least in theory, outvote Alaska and Mississippi.

I think your approach, saying that "if Germany wants to be the boss they have to pay for us" is wrongheaded. It's more that "if Germany is to pay for Greece, they'll want to be the boss"

Right now, they're paying without control. But control over decisions has to be aligned with carrying the risks. Otherwise, you have a recipe for disaster.

California and New York outvoted Alaska and Mississippi back in 2000. The rest as they say is History.

And maybe you haven't noticed, but nothing gets done in EU until Germany approves. Germany's unwillingness to act, due to internal politics, is after all the reason why this crisis dragged on for months the first half of 2010, exacerbating the problem.
And it was Germany who insisted the IMF be a part of the rescue package and then put in place punitive conditions as to make an example out of us, despite vocal opposition by France and the IMF.

...


So, here is the chain of events, again.

Greece goes bankrupt.

Greece asks Germany for money.

Germany puts in place certain demands to give that money.


It isn't as if Germany first put these demands out and now you can ask for money in exchange for following those demands.

And the introduction of the euro, as I noted, is a prime example of something being pushed through without Germany wanting it. France has been calling the shots in EU development up to quite recently. Are you not aware of that?

Europe needs to form a fiscal union, or they should just say "fukc it" and get rid of the Euro. Neither is a viable option though. Ugh.

Greek short-term bond yields have now risen above their post "bailout" highs - 2 yr bond yielded 44% today. 

lol, that's called default.

While you are basically right about that, if the Euro would go down now, a reintroduced D-Mark (or what ever a German currency would be called) would be revalued and go through the roof and hurt our exports badly.

Which, in the long run, wouldn't even be such a bad thing imho, as Germans were forced to give up the policy of wage restraint we practiced in the last 20 years.

But it would still be very painful. So instead, we pay some money to avoid that. Look at it as a charge we pay, in exchange for the privilege of cheap exports.

If we bailout Greece every 10 years or so, it should still be a net surplus for Germany.
Not that this is a healthy way of interacting between the Euro nations, but well, the whole Euro wasn't a healthy idea in the first place.

To an extent. Yes, I agree. I don't think their money should go to MS and AK, at least the way it's done now.

But at least....despite everything....it is one country consisting of Americans. As much as I support decentralization, it's still true.

I like you, px...but Greece isn't my country and Greeks aren't entitled to (one of my) country's money :) I think we made a massive mistake getting so deep into this union so quickly. No offense, but if you're going to do somethink like the Euro, it needs to be done among countries that are somewhat comparable in economic power and wealth. I'm afraid Greece never really qualified...admitting countries like crazy was the feel-good pro-Europe position. It just had to be done!

Unlike some of my compatriots, I never asked for charity. I understand the harsh conditions (but not the punitive ones) and if I were in your shoes I'd probably feel the same.
But it wasn't feel-good sentiments that put Greece and Portugal into the Eurozone. It was Germany's calculation that thanks to the wage-restraint policy that followed it would dominate financially over these countries (and the massive trade surplus shows they were right).


Thank you, you put it better than I ever would.
And I'm sure that if Germany concludes that the costs of bailing out the PIGS are greater than the profits, it will have little problem abandoning the Euro and returning to the Mark. The whole notion that some people propagate about Germans being dragged into the Euro against their will, is laughable. 

So...you think I have a conspiracy theory and your idea is that Germany created the Euro to be allowed to dominate financially over Greece and Portugal? Why would they even want that? Germany has never favoured a fiscal union for Europe.

The only reason Germany is gaining from the Euro NOW is the fact that the other countries ed up. Had they acted like Germany that gain wouldn't have been there.

Why do you think Germany demanded the stability pact to be introduced as a prerequisite for having the euro? Was it because they really, really wanted the euro and wanted the other euro countries to screw up their public finances so they could take over Europe (sane theory)?

Or was it because they were worried about ending up having to pay for those other countries and not really wanting the euro in the first place? (craaaaazy conspiracy theory)?

Germany has tied themselves emotionally to the European project as a way of dealing with the Nazi past. That's why they've been unable to say no to stuff (until fairly recently). And it's why France has been allowed to push the European agenda throughout most of the EU's history. This is rather well-known and hardly a conspiracy theory. It would be very difficult, economically, yes, but above all politically for Germany to abandon the euro.

The funny thing is, that it is just impossible that everybody "acts like Germany". If every nation had a export surplus, practiced wage restrain and had a high saving ratio, the world economy would collapse.

If one has a surplus, another one has to have a deficit, inevitable. Germany competed (and still competes) its customers into the ground, and than punishes them for this very fact.

I'm not saying that the GIPS are without guilt, but so ain't Germany.

Yeah...not everyone can have an export surplus, that's true. There is no obvious reason why not everyone could practice wage restrain or have a high savings ratio. Besides, this only applies within the euro zone so any imbalances could be picked up by other countries, say in the third world.

Anyway, your reasoning here is something along the lines of me losing my job to you because I'm an alcoholic and then complaining that if you were also an alcoholic I might have been allowed to keep my job. True as that may be it seems more reasonable to say that had I not been an alcoholic I would have kept my job and the appropriate course of action is to get fewer alcoholics rather than more.

And Germany had to increase competitiveness because their economy was doing so badly in the first years of the euro.

If your point is that it's problematic to force all the euro countries to adopt the same policies and the same level of competitiveness, I agree. That's why the euro is such a bad idea in the first place and should not have been adopted. But given that it's there it seems smarter to try and make all countries have equally strong economies rather than make them all conform to the weakest economy.

You should probably bring this up with Wikipedia, they've apparently been taken over by the Birthers:

"France and the UK were opposed to German reunification, and attempted to influence the Soviet Union to stop it.[7] However, in late 1989 France extracted German commitment to the Monetary Union in return for support for German reunification.[8]"

http://en.wikipedia.org/wiki/History_of_the_euro#Relaunch (http://en.wikipedia.org/wiki/History_of_the_euro#Relaunch)

I'd hope for an apology for you calling me a conspiracy theorist and a propagandist pushing ridiculous theories when I just stated the standard history but I suspect that would be too much to ask.

Yeah, a wikipedia article talking about something that happened 13 years before the Euro was introduced (and never mentioning explicit official German opposition) is undeniable proof that you were right all along.

Happy now?

We traditionally do punish the successful - people who are very good at murdering, raping, stealing can all be punished with jail terms (except if they are 'soldiers', or bankers, or businessmen). 

Please remember that all economic 'success' is, under the current system, also a crime against others (and of course I don't mean 'crime' in the sense of a 'moral wrong' - I mean simply that the success was in utilizing power over others, not in some namby pamby 'skill' or 'talent').  And thus, in every society where there are social or economic problems resulting from the impoverishment of some members, the first thing we have to do to solve such problem is to jettison the idea that the poorer party caused the problem - only the richer can cause the problem.  In this case Germany by its 'success' is caught red-handed, and Greece by its 'failure' is completely acquitted.

See? Exactly what I said.

Ok, now you're being hilarious.

So, you might think that the euro just jumped into existence by itself. That is not the case though. The article I quoted is titled "history of the euro"

The reason for this is that it explains the HISTORY of the euro. You see, the decision to launch the Euro was, surprising and counter-intuitive as it may seem, taken BEFORE it was actually created!! Who could have guessed!

So, that decision is what is known as the Maastricht treaty. It was approved in the early 90s. And it was done because the Germans were forced to accept it in exchange for getting unification. Like the article quotes.

Now, you claim the article is "never mentioning explicit official German opposition" That's strange, since the paragraph I quoted (I'm assuming you read the link) says: "Germany was cautious about giving up its stable currency, i.e. the German Mark" I know you don't like facts to trouble your prejudices but you might want to read this: http://specials.ft.com/euro/FT3SS4YUTPC.html (http://specials.ft.com/euro/FT3SS4YUTPC.html) It describes German opposition to the Euro.

But, then again, since I was offering a ridiculous conspiracy theory, I assume you have plenty of proof of your position, right? I mean, the Wikipedia article probably mentions Germany creating the Euro to gain dominance over Europe, since that's what actually happened? Please feel free to quote all the sources you have for this self-evident position of yours.

Thirteen years is VERY long time, even for a multi-year project like the Euro. A lot of things had changed between 1989 and 2000 when the final decision was taken.

The wikipedia article is vague about what kind of opposition existed in Germany: was it the government that opposed it, the parliament, the voters? And "being cautious" isn't the same as being opposed.
And of course according to the article even France (the driving force of the project according to you) approved the creation of Euro with only a narrow majority.

My position is reality based, unlike yours. Unless of course you think that Germany being the big beneficiary of the creation of the Eurozone is just a coincidence which nobody, not even Germans themselves could've predicted.

Final decision? You're not seriously claiming the decision was taken in the late 90s are you? Maybe you should read up on this. Maastricht Treaty. Google it.

Now, the French voters almost rejected the Euro, but that's because the Euro has not been popular hardly anywhere in Europe (except in Club Med where people expected to piggy-back on Germany). The French political establishment, on the other hand was heavily in favour. Again, this is very, very basic. It's like I'm teaching a child on basic European politics. I suspect you're just pretending not to be aware of this to avoid having to admit that you were wrong.

Again, your claim is that Germany created the Euro to gain dominance over Europe. You have yet to come up with anything to back this up. Please. Since it's the mainstream idea (as opposed to my conspiracy theory) I assume it must be cited somewhere right? Maybe on Wikipedia? The Economist? Wall Street Journal? Take your pick.

And of course, I already explained why Germany is now benefitting to the Euro. They did the things that Greece or any other country could have done. Increased competitiveness. There is no secret conspiracy involved, just sound policy in face of difficulty.

I would reject this idea that Germany wanted the Euro or wants to keep the Euro in order to gain/maintain "dominance" over Europe. It just does not make sense and does not jive with history, as others have pointed out. I think the current state is mostly a matter of much of Germany wanting a peaceful Europe, which is most likely achieved through a united Europe. This is a noble goal and what one would expect from Germany considering 20th century history, the guilt that comes with that, etc.

With that said, it is hard to see the Euro being around at the turn of the decade. It is not possible to coordinate fiscal policy effectively unless all nations give up their sovereignty, which is not going to happen. As a result, how does one sustain the common currency of the Euro indefinitely?

I do believe the European Union itself, the single market and such, will likely remain in place beyond this decade at least. However, I suspect by 2020 each nation will have its own unit of currency (Think of it being the EU as it is today, but every nation is like Britain and Sweden in that they maintain their own currency and monetary policy instead of using the Euro). The biggest question, in my mind, is how they are going to manage to move from the Euro back to national currencies. The shedding of the Euro will probably not be pretty nor nearly as smooth as the adoption of the Euro was...

Oy.

You know, as in the DSK thread you take something someone writes, interpret it completely different and then launch a self-indulging tirade about how wrong is what the other person "says" and how right your opinion is. No wonder you are so sympathetic every time we mock people like Palin.

Just because something was negotiated and written it doesn't mean that its implementation is inevitable. Otherwise we'd have a European Constitution by now. Heck, just see what happens now with the July decisions about the bailout mechanism.
If Germans REALLY didn't want the Euro then they could have used that "overwhelming" public opposition and scuttled the entire project, Maastricht or no Maastricht.

And by saying that the Euro was "popular" here in the Mediterranean you are showing your ignorance. Here at least it was always viewed with suspicion, if not outright hostility, and the rising inflation that came with its adoption did nothing to enhance its popularity. Even during better times the populace always remembered fondly our old drachma.

The "painful" measures Germany took was a decision to increase wages by a lower % than the rest of the Eurozone countries. That was impossible to do here (and probably the other regional countries) because our wages were already lower and because of the inflation caused by the Euro. Obviously it was a sound policy decision but to the detriment of the other european economies and not exactly helpful in the supposed ongoing quest of erasing the inequalities between the EU countries.   

This is the last time I respond to you. You can now have all the fun you want by misinterpreting what I wrote and giving another lesson to your "ignorant" pupils.

Everyone practicising wage restraint and having a high savings ratio has never actually been tried, except perhaps during the Great Depression. All the major countries that do that in capitalism have a big trade surplus. It is a very supply side view to say that the slack of aggregate demand in such an economy would not be a problem.

The effect of Germany practicing wage restraint has not been good for the euro, because it is undercutting its neighbors. Without Germany, the euro would massively devalue, and this would help the PIGS, obviously. Some have even proposed that one solution to the problem is to have Germany leave the euro by itself.

Hm.

Paragraph 1 is an unfounded personal attack, trying to distract from your lack of arguments, so I'll skip that.

Paragraph 2 is sort of...eh? They did prevent the Euro for a long time. But they had to give that up in exchange for unification. And Germany wasn't very good at getting their way in the EU in those days, for reasons I've already explained. And a major treaty (THE major treaty, in fact, of EU history) is vastly different from some negotiated deal over bail-outs. And we did get the European constitution under another name. The only reason they had to change the name was because of voter rejection. This is also rather well known.

When I talk about euro popularity I was going off of poll figures around the time of the introduction. But I'll readily accept your anecdotal evidence as proof of how I'm clueless. Here, check this out: http://ec.europa.eu/public_opinion/archives/eb/eb50/eb50_en.pdf (http://ec.europa.eu/public_opinion/archives/eb/eb50/eb50_en.pdf)

"Looking first at the "EURO 11" countries shows that support levels are highest in Italy (88%), Luxembourg and the Netherlands (both 79%). In four further "EURO 11" countries, around 3 in 4 people are in favour of the single currency, while in 4 other countries more than half of the population supports it. Highest opposition levels are noted in Finland and Germany (both 32%), although these are significantly lower than they were in the spring of 1998.
Looking next at the "pre-in" countries shows that people in Greece (75%) are significantly more likely to support the euro than people in Denmark, the UK and Sweden are. In these three countries there are more people who oppose the euro than people who support it. However, in Sweden (-2) the gap between opponents and supporters is very small."

So, as could be expected citizens in Finland and Germany tended to correctly predict that the euro would not be good for them. I won't expect you to admit to being wrong again though. I guess I twisted your words on this one. You clearly agreed with me that Germany was the country most opposed to the euro, right? (it should be noted that Eurobarometer polls notoriously overstate support for European policies so the absolute levels here are likely to be off).

Finally, you don't seem to understand how competitiveness works. It's not a question of how high wages are but how high they are compared to productivity. Thus, there is nothing inherent saying that Greek workers have to be overpaid compared to productivity. Germany adjusted wage inflation to productivity gains, which is what most countries should do.

It's convenient though that as you're running out of arguments and is being proven factually wrong on pretty much everything you say (still waiting for some evidence on your mainstream theory on how the euro was created, btw), you decide to walk out of the debate, after hurling a couple of personal insults my way.

Is it so hard to admit to being wrong?

I still disagree that the main problem for mismanaged euro countries is that other countries have been doing well. Of course, if everyone else also sucked they'd be doing relatively better but it remains a weird approach, imo.

Again, though, the fact that Germany and Southern Europe are not in step economically is of course the reason why the euro was a poor idea to begin with. So I agree with that part.

The demand point is relevant, but I still think that productivity increases is what drives demand in the long run. Wages will eventually have to follow productivity which is why the German way beats the Greek in this case.

I agree that productivity drives increased demand (in the long run), but I think that the sole driver of productivity in the long run is technology, not wages. Increasing productivity by reducing or suppressing wages is a political question of distribution, not an economic question.

Go see a therapist. Really.

I need to go see a therapist because I proved you wrong? It's surprisingly common for useless posters on here to resort to some random personal insult as a last resort after having been conclusively defeated in terms of arguments.

But any time you're ready to explain how I showed that I'm clueless by stating something that was factually correct, go ahead. I find it psychologically interesting how people like you try to justify themselves in public (beyond telling me to go see a therapist. Which is rather weak. I've been called lots worse by people losing arguments to me).

I don't think we disagree on that. I'm not claiming wage decreases leads to higher productivity. Merely that if one has low productivity growth, wage growth will have to be cut to match.

In other words, I think the root of the problem is not that Germany cut back on wage growth relative to Greece but that they increased productivity relative to Greece (and especially relative to the countries' wage growth).

Certainly technology has been a major driver of productivity increases over the past several decades, but, in many cases the organization of an enterprise (or reorganization if you will) can have major impacts on improving productivity.

()

I have a Napoleon-complex because I base my views on real data? I never claimed that knowledge of any of the things I mentioned here was particularly impressive. I never met anyone before who wasn't aware of it so I hardly think it's a sign of megalomania. But I've understood you're a bit of an expert on psychology so I guess I should defer to your analysis.

But I hope none of the hard work in picking apart my narcissism distracts you from backing up your claims in this thread. If you can prove me clueless I'll gladly accept being a narcissist as well.

And why not? If Germany had had high wage growth to match its productivity growth, it would be contributing much less to the imbalances in the region. Not only that but most German workers would be better off.

Right, but isn't that a bit marginal? What I mean is that German workers were overpaid about a decade ago. They rectified that. You're claiming that they went too far, if I read you correctly.

However, that seems to imply that the Germans should have anticipated the weaker Euro economies letting their competitiveness go to hell and slowed down to match them.

Germany might be worried about competing with China and the US as well, for example. While I get the argument in technical terms, I'm not convinced of its merits in the long-term. Shouldn't the goal be for the other countries to catch up in productivity growth terms rather than Germany letting inflation run amok?

But don't you see, this defintion of 'doing well' is not a reasonable one - it is destructive of the regional (and in some cases global economy).

Borrowing and spending, and paying people as much as possible is a postive boon to the world economy, but 'competing' and racing to the bottom is just a road to ruin and harkens back to mercantilism.  You might 'win' for a while playing that game, but in the end everyone loses if we don't install an anti-competitive inflationary Keynesian redistributionist regime.

The eurozone economy is $11 trillion. If the entire eurozone had a trade surplus the same percentage of GDP as Germany, it would be a roughly $550 billion surplus. Who would absorb that?

Well, if no one wants to absorb it, there won't be a surplus that big, right?

Well then the economy would depressed, because everyone is very productive, but there is not enough aggregate demand.

Today, I have to agree with you.
I used to support the Euro until this year, but when I see that Greece, Portugal, Ireland, Spain are going to lose their sovereignty and their democracy, and are forced to roll back the social achievements of the last 30 years, I have to change my mind.

If I have to choose between the Euro and democracy, I take the latter.

Yup. Since the euro means losing monetary policy as a tool to combat recession fiscal policy must be used instead. Weirdly, this has traditionally been liked by the left, which makes no sense to me - it means, in the end, to turn the core of politics (budget decisions) away from political considerations and make it into a tool wielded by economic experts. That's what we see happening now in the eurozone and the reactions to this dismantling of democracy and sovereignty is also happening. And it isn't looking pretty.

But this again boils down to the same point. If you think supply is exceeding demand, isn't it more reasonable to increase demand than to decrease supply? Wouldn't the latter just shrink the economy? If you forced 10% of the German workforce to lose their jobs and sit at home, Germany would export a lot less and produce a lot less. But it wouldn't help the world economy much, would it?

Who said anything about forcing 10% of the German workforce to lose their jobs and sit at home? I think the goal is to increase demand, not decrease supply. However, if you cut wages in every European country with the goal of increasing competitiveness, so that every European country was like Germany, and there was no external demand to soak up the trade surplus that others now soak up for Germany, the result would be that, even at those reduced level of wages, there is not enough demand to support those jobs (assuming that the workers are not extended credit irresponsibly beyond their ability to repay). So a lot of those workers would be laid off again. I think your proposal is the one that results in unemployment, not mine.

Essentially, we seem to agree that there is a problem in that German workers are more productive than Greek ones. You seem to be arguing that this should be solved by German workers lowering their productivity (one way of doing this, on average, would be to just fire a lot of German workers). I think Greek productivity should be stimulated as a first solution.

My main point is that the problem is not that German workers are too productive but rather that Greek ones are not productive enough.

I think that if productivity was increased demand would go up (or be sustained at higher levels than would otherwise be possible). We will have to accept lower demand than was the case under the unsustainable regime of overspending.

I think the problem is not just productivity, it is also one of distribution. First of all you have to ask yourself what you mean by productivity. There are two ways to be productive. The first way, is to produce more goods for a certain amount of time spent. That is one definition of productivity. The other way, is to produce more goods for a less amount of money paid in wages. We cannot confuse these two things. The latter, is a great deal of what Germany has done.

I do not think this would be helpful because it creates an imbalance in supply and demand. It is not that workers are producing more, rather they are producing the same amount but they are getting paid less for it. Or they are producing more but they are not getting paid any more. In either case, the benefits of production are not realized. The company cannot sell the goods being produced, because the workers cannot afford it. So he must sell it abroad. But if he does not sell it abroad, then he must lay off workers.

The problem with the German model is that its apparent success has come at the cost of others. And even if all the other countries in Europe became like Germany, they would be no different. Were they to replicate German success, then it would have to come at the cost of others, as well. The reason, is that in this economic model there is not enough aggregate demand. Only when there is enough demand, meaning higher wages, to match productive capability, will the capitalistic system of exchange be balanced.

Ok, I never heard anyone use productivity in the second sense, so that's not what I've been saying here. I've been meaning productivity as in producing things in a certain time. Reputable sources like Wikipedia agree with me on this: http://en.wikipedia.org/wiki/Productivity (http://en.wikipedia.org/wiki/Productivity) :P

Now, German economy was stagnant a decade ago. Most people, I think, agreed that this was largely because they had an over-paid workforce. That is, wages were too high relative to productivity. This was also true of other countries in Europe. Germany got its act together, they didn't.

For me this reasoning is something like there being a bunch of alcoholics not doing their job properly. One of them finally goes through rehab and can now do the job that everyone did on his own. So the other alcoholics are fired. Then they complain. "If you were still an alcoholic, we would all still have jobs. Your success is built on us not being sober."

Firstly, that just seems plain wrong, morally if nothing else. It's hardly fair to claim that someone shouldn't have the right to go through rehab for solidarity reasons. Secondly, it seems dubious. If everyone sobered up they would be able to do more productive work, demand would thus be higher, etc. And thirdly, someone else who's sober might come along and kick them all out on the pavement at any time.

http://www.ecb.int/pub/pdf/scpops/ecbocp90.pdf (http://www.ecb.int/pub/pdf/scpops/ecbocp90.pdf) Look at the table on page 18. While it shows that Germany has indeed has the relatively lowest wage growth, it shows that Greece has had by far the highest. Furthermore, they explain it like this:

"As can be seen in Table 3, all euro area countries except Germany and, to a lesser extent, Austria, have recorded wage growth for many years persistently above the euro area average during the past 14 years (see Chapter 5). The major factor behind this divergence between Germany and the rest of the euro area is an adjustment process in Germany following unifi cation. Wage growth in Germany in the immediate aftermath of unifi cation exceeded that in the rest of the euro area countries by an accumulated 30% between 1991 and 1994, and with productivity differentials being much smaller, relative unit labour costs rose by a similar extent as did wages in Germany. With adjustment via a devaluation of the D-Mark not being an option, and with productivity differentials remaining rather limited, wage growth had to fall substantially below that in the rest of the euro area in order to restore competitiveness. This process started in the second half of the 1990s and gained momentum in the past few years."

You may also note that in table 19, when wage growth rate relative to the euro area, excluding Germany, is calculated Greece still soars higher than the average by a similar figure (3.6% higher without Germany, 4.1% with Germany).

During a similar time-period (2001-2006) Greek productivity rose by on average 2.9% compared to a eurozone average of 1.2%. As is evident from this, Greek wages rose faster than productivity thus eroding their competitiveness. Germany had slightly higher prod. growth than the euro average and lower wage growth.

Basically, while there is something to your story of Germany holding back wage increases, it is also clear that a) this was an adjustment that might well have been motivated by concerns about competitiveness and b) that Greece isn't simply being hurt by Germany's actions here, but by their own decision to let wages run away from productivity.

PS: I'm interested in what you think Germany should have done in the early 2000s? Continue to slide behind all other nations in terms of cost-efficiency due to overcompensation? Why should they kill their own economy to make things marginally better for mismanaged economies elsewhere in Europe? 

You write: "It's hardly fair to claim that someone shouldn't have the right to go through rehab for solidarity reasons." Of course, and I'm not claiming that. Germany has every right to do what it did, and I have sympathy for its current position. However, the effects should not be denied, when you are talking about other countries following in its path.

You write: "If everyone sobered up they would be able to do more productive work, demand would thus be higher." Here's my question to you in this story. One person has sobered up here, so why is demand not already higher? You say that he has improved his work so much that he can now do the same job as all the other alcoholics. So shouldn't it be reasonable, if demand follows supply in this manner, that he has also increased his demand so much that it is equal to all the others' demand combined? And if so, why should the other alcoholics get punished? Since the factory now has that much more demand, it should continue to keep on both the newly sobered worker and the alcoholics.

And if that were the case, there would be no complaint by me. Not only would the newly sobered worker be many times more productive, but he would also be handsomely rewarded by many times as much consumption. The problem is that this newly productive worker has increased his productive capacity many times more than he has increased his demand. So your reply of "demand follows supply" did not apply.


Most certainly. I agree that Greece let its own wages run away from productivity, and this must be cut. I am not saying the Greeks have no blame here.


I do not know what Germany should have done (I think this is a political question as well as economic with some inherently subjective factors and can only be decided by the voters).

My only point is that Germany chose this path, but this path cannot be evaluated only on its effect on Germany. As I am sure you know Germany's current account surplus surged and the growth has come largely from international trade. Due to this, your suggestion that every country become like Germany is impracticable, because under a perfect model they would all have to run a huge trade surplus.

" The restraint of the German Joe the Plummer, here called “Otto Normalverbraucher” (Otto Average-User) is not a new phenomena. He sits on his cash for years, already. That is no mystery; from the economic growth, he sees hardly anything back on his pay slip. An investigation executed by the economic institute DIW from Berlin, of which the results were published last week, showed that Germany employees LOST 2.5% in real income over the last ten years. The hardest hits were suffered at the bottom of the salary scales: some employees lost over 22% of real income."

http://blogs.minyanville.com/ernst-labruyere/2011/07/25/germany-an-economic-miracle-or-the-result-of-growing-imbalances-in-europe/

This shows that Germany is just like a worker that is much more productive (you can call him a former alcoholic if you like), and is kicking his co-workers out of work, because he has not increased his consumption to match his production. The reason is that his pay his not increased commiserate to what he deserves. This is causing social instability currently in the euro zone and contributing to what could be a worldwide financial crisis.

I realize that it sucks for Southern Europe that they suck. I still think it's wrong to frame this problem as "Germany is too efficient. If they only produced less the world would be better off"

I'm sorry, but I just don't think economics works or should work that way.

I think that if all countries pursued a policy where wages reflected productivity instead of being allowed to sky-rocket the world economy would be better off than if all countries pursued a policy where wages are allowed to soar out of control.

Basically, I think forcing Greece to be more like Germany is a better idea than to try and turn Germany into Greece.

It seems like we're in agreement on a lot of it, but my main objection is really the notion that the problem in Europe is that Germany exports too much. I'd rather say that it's that Greece can't compete with these exports and that's what should be fixed.

I never said that Germany should produce less. Instead German workers should get more, so they are rewarded by their productivity. With regard to things like Hartz IV, if they can't bring down unemployment without relying on external demand, then they haven't really solved the problem with unemployment, just pushed it onto someone else.


And I don't think it's so simple that Europe only has one problem. Europe has multiple problems. To say that everyone should be like Germany does not acknowledge that. The idea that German wages currently reflect its productivity is incorrect. German wages are below German productivity.

Actually it does work that way.  If a country produces in excess of what it consumes, it creates a huge burden upon other countries to consume that production.


This is precisely where you are wrong, Gustaf.  We have pursued this kind of world for the last thirty years - where wages are subjected to competitive pressures and end up in a downward spiral of deflation.


Again, dead wrong.  A world of Germanies is a world of Depression and dearth of demand.

Doesn't that amount to the same thing though? If you decrease marginal profit you would presumably push back production.

I agree that there is more than one problem but I don't see the others as relevant to this discussion.

You seem very confident that German wages are too low, but what is this based on? Are they low compared to the US, China or India? They're certainly lower (relative to productivity) than Greece's, but, again, that's more that wages are too high in Greece, or so I suspect.

Once again, you only see the supply side. Marginal profit depends on the demand curve as well as the cost of labor.


My judgement is based on Germany's significant trade surplus. That means that Germany is making more than it is consuming, literally. In Greece, the reverse is true. China's wages are also too low, but the aggregate imbalance is actually less than Germany.

Beet trying to debate Gustaf in this thread reminds me of the heroic, but ultimately futile, task undertaken by Ernest a few days ago when he tried to debate CARLHAYDEN.

I ate a roasted lamb gyro for dinner.  Fear not Greece, $8.50 is coming your way.

They duped you. Real gyro is made of pork or veal.

whoa seriously?!

America ruins everything... :(

Right, but I still think a sudden jump in wages would not compensate itself entirely.

I realize that Germany is making more than it is consuming. My point is this: if we simplify the world a bit, we have Germany exporting and the troubled economies importing. You seem to be assuming the problem is that German wages are too low. Couldn't it be that Greek wages are too high? Given that Germany, in one of the links I posted, is still described as having rather high labour costs and given how they were doing back in the early 00s, I don't think it's given that they're now "too low" by whatever measure. It is undoubtedly true though that a country like Greece is too high, because their productivity growth has been running below wage growth for some time.

That's why it seems reasonable for me to start at that end, rather than at the German end.

But you're very ardently on the demand-side here, I'm really not as much of a supply-sider as I might come off right now.

I'm sorry, this is an adult conversation involving people who know something. I think you entered the wrong thread.

Seriously, you can't be disproven, run away like a little baby and then come back with some cheap insult. My posts proving you just made up stuff you had no idea about are still there. If you have proper responses to them, go ahead. Otherwise, it's really more appropriate for you to shut up.

()

See, this is what I mean. Posting funny pictures doesn't win you a debate in economics, since it's about facts and stuff. But that's all right. If posting pictures of Mussolini is what you need to do to feel good about yourself, I won't stop you.

Also, very Woody Allenesque move there.

PS: if you want to be taken seriously, learning how to post words instead of just pictures might be an idea.

That's the biggest compliment I've ever received. Thanks dude!

It is in fact extreme supply-sideism, Gustaf to want to start at the 'wages are too high' end rather than the wages are too low end.  Your recommendations are deflationary - infinitely more hazardous than to err on the side of 'wages are too low' and perhaps create a little inflation.

In a world where you have Germanies and Chinas, as well as Greeces and Americas, the problem children are the Germanies and Chinas.  They create a deflationary, depressionary spiral to the bottom.

As I've said, I think both are true. Remember, the question we are asking is whether every country should strive to be like Germany. It is physically impossible for every country to be like Germany, unless you think that countries should manufacture a great deal of products only to dump them into the ocean! On that point I would hope my position is indisputable.


But why must you start at one end or the other? You accuse me of being ardently on the demand-side, but I actually treat both sides as equally bad. You're the one who insists on starting at one end.

What evidence do you have that Greek productivity growth has been running below its wage growth? It's not a question to challenge your premise but I am curious to see what metric you use.

Finally I do not follow that just because Germany had it bad in the early 00s, that it is doing things right today. If you pardon the expression, I think that to some extent they went out of frying pan and into the fire. They traded one problematic situation for another problematic situation, that seemed to solve some problems but has created new problems. Your link seemed to discuss Germany as having high wage growth from reunification until 1994, and the process of adjustment began in the late 1990s. That narrative is not contradictory to my preferred metric of trade balance, because in the 1990s Germany consistently ran a small trade deficit.

I think we're using slightly different definitions. When I say strive to be Germany I don't mean in the sense of running a huge trade surplus. That's obviously impossible. I mean it in the sense of controlling inflation, improve productivity, stimulate industries that can compete globally, etc. Of course, in the case of Germany, this has led to trade surpluses. If other Euro countries did the same Germany's trade surplus might well erode, but I still think everyone would be on average better off.

And I'm not accusing you - since I'm not that much of a supply-sider it's not really an insult. ;) For me, it's a question of problem framing. I don't necessarily mean that Germany should change nothing and Greece should simply become like Germany. Rather, that for me it seems more natural to focus on changing the behaviour of the economy that is going to hell, rather than that of the economy that is doing well. Especially since I think the approach where success is villified and punished is not conducive for creating good economic policy, imo. I think any energy spent by Greece on criticizing or changing Germany has lower marginal return than energy spent on dealing with all of their home-made problems, to put it in silly economic jargon.

I posted a couple of links earlier in the thread, IIRC, where I noted Greek wage increases and productivity increases. They seemed to indicate the pattern I described.

I'm not following your last paragraph entirely. Germany didn't change a problematic situation for another - they traded a problematic situation for themselves for a problematic situation for Greece, no? But then again, I don't fully agree with that either. Had Greece pursued better policies, Greece wouldn't be so badly off (and I think that's the driving factor). I agree though that it does not follow from their earlier problems that they're doing things right now. Merely that it indicates they had to move in the direction they did. They might have moved too far, but I think the marginal effects at that point probably aren't the important stuff in this context.

The crux of the difference at this point I think is that I believe that when there is an imbalance of trade between two countries, whether driven by a differential in relative competitiveness or not, both the creditor and the debtor share responsibility for resolving the situation. It is not the case that only the debtor is at fault.

The reason, rooted in simple identities, is that not everyone can be a creditor. The creditor's performance is dependent on someone else being a debtor. Now what would happen if there were a world of economies in which everyone behaved like a creditor (low wages, high productivity) but not everyone could actually be one? In my opinion this would lead to an economy with a chronic shortage of aggregate demand, needless unemployment, and wages below what could be achieved at a sustainable steady-state.

That is the theory. In practice, large, persistent imbalances between countries can lead to many real world problems. The current problems which Germany is not primarily responsible for, but which it has contributed to inadvertently, is not only Greece's problem, it is also Germany's problem as we now see. Germany is being called to spend lots of money to bail out Greece. Even if Germany refused, it would have to spend lots of money to recapitalize its banks, and in the event of a breakup of the euro, its currency would rapidly appreciate and Germany would again lose competitiveness. Either way it is a headache for everyone. It is even a headache for the United States!

PS, If anyone is interested, this paper will provide many answers about Greece, although admittedly it is a bit technocratic and does not take into account market chaos and street chaos"

http://www.imf.org/external/pubs/ft/scr/2011/cr11175.pdf

The paper, unfortunately, does not as far as I can tell address the reported rise in Greek primary spending, except to note that the definition excludes money spent by Greece to bail out its own banks on top of interest payments, and that projected spending for the year as of July was expected to be down to 50.4 billion euros from 51.7 billion euros. Total spending is still expected to rise.

The paper is slightly more satisfactory on the question of Greek inflation, noting that tax-adjusted inflation is well below the euro zone average. Productivity has fallen because output has fallen faster than employment, but labor costs have been adjusting downward and Greece has improved its competitive position in the euro zone.

Right, I wasn't talking about what Greece is doing now but what they did leading up to the current situation. One would hope they wouldn't still be losing competitiveness. (although given the track record it might be wise to not put too much stock in statistics out of Greece until a couple of years have passed...)

I do think we've reached the point of disagreement, at least. It seems to come down to a demand versus supply thing and wiser men than the two of us have disagreed on that, so I'm fine with agreeing to disagree there.

If you do want to carry the discussion into that general theme I'm fine with that too, though. But it wouldn't really be about Greece and Germany anymore.

I did like your debtor creditor thing though. What I would say in response though is that if we imagine the borders being closed and both countries suddenly falling into complete autarky, I think the creditor would still be better off than the debtor. Do you disagree?

I don't disagree. The debtor would re-adjust through inflation/demand destruction, permanently raising the cost of living, while the creditor could adjust through Keynesian stimulus without as much dislocation in the price level.

But keep in mind, that depends on the creditor choosing to adopt enough Keynesian stimulus to bring its demand in balance with supply. If it did not choose this policy course, it would not necessarily be better off than the debtor, no. In any case, Germany has not chosen Keynesianism since the Chancellorship of Willy Brandt, so it is not likely to choose so today without a significant push, which is rather unfortunate for the future of Europe.

This is the most disturbing news I've heard all day.

Here are some additional facts (http://www.minfin.gr/portal/en/resource/contentObject/contentTypes/genericContentResourceObject,fileResourceObject,arrayOfFileResourceTypeObject/topicNames/budgetExecutionBulletin/resourceRepresentationTemplate/contentObjectListAlternativeTemplate#fragment-1) regarding the Greek situation.

What I gathered from this is the following. The State Budget is composed of Ordinary expenditures and Public Spending.
(1) The deficit is up to 15.571 billion euros vs 12.449 billion euros from the first 7 months of 2011 vs 2010, or by 3.1 billion euros.
(2) Net revenues were 26.846 billion euros in the first 7 months of the year, down 6.4% from last year. (By my naive calculation this implies net revenues of 28.682 billion euros for the first 7 months of last year). The total loss of revenue is 1.8 billion euros.
(3) Expenditures in the ordinary budget increased 7.1%, excluding interest payments they increased by 4.8%, or 1.39 billion euros, due in part to
(a) "increased grants to Social Security Funds as a result of the reduced receipts from social security contributions" by 1.69 billion euros. This item alone is responsible for more than the entire increase in primary spending, but I don't see how it is strictly a spending item. It seems to be saying they are forced to make up for a shortfall in revenues from loss of social security contributions. Can someone explain how this works?
(b) "increased grant to Employment Agency (OAED) for the payment of unemployment benefits by 301 million Euros." This makes sense.
(c) increased grants to "hospitals by 779 million euros (535 million euros for the year’s 2011 procurements expenditure and 244 million euros for the settlement of past years obligations from procurement)." Don't they use accrual basis of accounting? Jeez, with their credibility problems you would think so.
(4) Additionally we get this gem. "Public Investment Budget (P.I.B.) expenditures declined by 37.6% or 1.581 billion Euros." If you subtract the fall in public investment from the rise in ordinary primary spending, I get a total fall in spending of 191 million euros, excluding interest payments. So perhaps things are not as bad as the thread title would suggest. Still, a fall in spending by only 191 million euros is clearly not sufficient.

Further, one sees from the IMF's own study that cutting public investment is the most damaging way to attempt austerity. ()

So basically, the technocrats at the IMF already know this is the worst way to cut spending, yet Greece under their tutelage has primarily cut spending in this area. It appears that the difficulty arises from the relative ease of having the theoretical idea of what is the best way to do things versus the actual real world implementation of ideas into reality. In the real world, cutting public investment is probably the least controversial, while cutting transfer payments is the most politically difficult. Unfortunately the economists' models do not appear to control for this.

()

Ouch.

At risk of this becoming a slightly more informative version of the JJ thread, I am double posting a journalist's twitterstream (http://twitter.com/#!/MatinaStevis) of the PM's address yesterday:

Papandreou finishes his speech saying: "We will succeed together". #Greece #gfc2
12 hours ago

MatinaStevis Matina Stevis
2 major announcements by Papandreou: plan to distribute state land to young aspiring farmers/search for oil&gas in Ionian & S. Crete #deth
12 hours ago

MatinaStevis Matina Stevis
Papandreou concludes address
12 hours ago

MatinaStevis Matina Stevis
Papandreou: I 've said it before, I'm not here for my position or to get re-elected, I'm here so that we can succeed together #deth
12 hours ago

MatinaStevis Matina Stevis
Papandreou: to those hoping that if Greece leaves the euro, they can buy up the country cheaply, every Greek will stand opposed #deth
12 hours ago

MatinaStevis Matina Stevis
Papandreou: I ask that all political parties act responsibly.... It's not me pleading. It's the motherland #deth
12 hours ago

MatinaStevis Matina Stevis
Papandreou:Any bank that needs recapitalisation, this will be done through common stock so the ppl can benefit from future profits #deth
12 hours ago

MatinaStevis Matina Stevis
Papandreou: I ask the banks to respect the support they've received from the state & the ppl. The state supports them.
12 hours ago

MatinaStevis Matina Stevis
Papandreou: I know our youth want to leave the country... I understand them... but I ask you to not give up... the country needs you #deth
12 hours ago

MatinaStevis Matina Stevis
Papandreou: I look around me and see ppl of my generation... we have given huge burdens to the youth. We owe the youth a lot #deth
12 hours ago

MatinaStevis Matina Stevis
Papandreou: We can make it and we can prove those seeing Greece as a failure wrong #deth
12 hours ago

MatinaStevis Matina Stevis
Papandreou: I am determined to fight to the end against everything and everything holding Greece back (ref to trade unionists, closed shops)
12 hours ago

MatinaStevis Matina Stevis
Papandreou implicitly lashes out against highly remunerated public-sector workers, mega-haves & newspaper/TV owners #deth
12 hours ago

MatinaStevis Matina Stevis
Papandreou: we hope that those who have made money here will participate in our efforts, like rich ppl abroad asking to be taxed more #deth
12 hours ago

MatinaStevis Matina Stevis
Many of you asking about the "land redistribution to youth who want to go into agriculture" thing. I have no details but it's public lands
12 hours ago

MatinaStevis Matina Stevis
@
@Old_Holborn Don't get excited. It sounded like minor policy to redistribute state agri land to unemployed youth
12 hours ago

MatinaStevis Matina Stevis
Papandreou outlines expenditure programmes of 3.5b euro to combat youth & women's unemployment #deth
12 hours ago

MatinaStevis Matina Stevis
I stand corrected: search for oil & gas will be south of Crete, not "around" Crete as previously tweeted. Apologies #deth
12 hours ago

MatinaStevis Matina Stevis
Correction: Papandreou says Greece to look for natural gas AND oil in Ionian and Crete #deth
12 hours ago

MatinaStevis Matina Stevis
Papandreou: I announce that Greece is to begin searching for natural gas in the Ionian sea and around Crete #deth
12 hours ago

MatinaStevis Matina Stevis
Ha, just got the little theme the speech-writer got into the Papandreou address. He outline policy, follows w "can we do it? of course!"
12 hours ago

MatinaStevis Matina Stevis
Papandreou: tomorrow we start distribution of land to young people who want to go into agriculture #deth
12 hours ago

MatinaStevis Matina Stevis
After tourism bit, Papandreou turns to agriculture #deth
12 hours ago

MatinaStevis Matina Stevis
Papandreou: we are aiming at China and India, as well as the US, for tourism #deth
12 hours ago

MatinaStevis Matina Stevis
Papandreou: we are fighting against entrenched interests... we need every single citizen's help (weak applause) #deth
12 hours ago

dexpatia Philomila Tsoukala
 by MatinaStevis@
@MatinaStevis he also said "how will growth return if deposits don't return, deposits that today...are returning"!!!!!
12 hours ago

MatinaStevis Matina Stevis
Papandreou outlines improvement in exports, tourism figures in H1 2011 #deth
12 hours ago

MatinaStevis Matina Stevis
Papandreou now outlines expenditure cuts & revenue performance in 2010 #deth
12 hours ago

MatinaStevis Matina Stevis
Papandreou: Who will fund our growth if our banks can't reach the market to borrow? #deth
12 hours ago

MatinaStevis Matina Stevis
First break for ovation for Papandreou at "Yes, we can make it" line. #deth
12 hours ago

MatinaStevis Matina Stevis
Papandreou: we will not allow Greece to become the scapegoat for problems in Europe #deth
12 hours ago

MatinaStevis Matina Stevis
Papandreou: at the point where Eurozone stands right now, every time we delay, any hesitation we show, puts the country in peril #deth
12 hours ago

MatinaStevis Matina Stevis
Papandreou: despite the deeper-than-expected recession this year, we will stay the course... to achieve a primary surplus #deth
12 hours ago

MatinaStevis Matina Stevis
Papandreou: we are prepared to make more decisions, do whatever it takes to ensure the country stands tall #deth
12 hours ago

MatinaStevis Matina Stevis
Papandreou: we are fully determined determined to stick to our end of the deal. Starting w sticking to the July 21st decisions #deth
12 hours ago

MatinaStevis Matina Stevis
Papandreou: the decisions we made are unique in the history of Europe, we cannot abandon it and waste our sacrifices #deth
12 hours ago

MatinaStevis Matina Stevis
Papandreou: we made decisions that have guaranteed our financing needs until 2020 & improvement of debt profile through extension to 30 yrs
12 hours ago

MatinaStevis Matina Stevis
Papandreou: we are giving a huge fight, seriously negotiating for our collective and national interest #deth
13 hours ago

MatinaStevis Matina Stevis
Papandreou: We decided to fight to avoid a disaster, to avoid default and to make sure we stay in the euro #deth
13 hours ago

MatinaStevis Matina Stevis
Papandreou: ...the banking sector that did not always manage the national wealth in a transparent and correct manner #deth
13 hours ago

MatinaStevis Matina Stevis
Papandreou recounts run-up to 2010 deficit revelation, cites bad statistics and chronic overspending & weak revenues #deth
13 hours ago

MatinaStevis Matina Stevis
Papandreou: reforms... are an upward struggle among a international thunderstorm. Our priority is to save the country from default #deth
13 hours ago

MatinaStevis Matina Stevis
I refuse to translate rhetorical crap. Will only be live-tweeting policy-related stuff & significant statements from Papandreou #deth
13 hours ago

MatinaStevis Matina Stevis
Papandreou takes to the stage to give keynote economic policy address amid rumours of default. #deth
13 hours ago

MatinaStevis Matina Stevis
A few moments before Papandreou sets out his economic policy in keynote Thessaloniki address, police violently clash w protesters #deth
13 hours ago

MatinaStevis Matina Stevis
I believe it's the president of the Thessaloniki expo speaking now, ahead of PM Papandreou. You can watch it here government.gov.gr #deth
13 hours ago

MatinaStevis Matina Stevis
Papandreou makes his way through the hall to the stage, lots of handshaking, address commences #deth
13 hours ago

MatinaStevis Matina Stevis
Reminder: live-tweeting Papandreou address on the Greek economy, which is starting now in Thessaloniki #deth
13 hours ago

MatinaStevis Matina Stevis
Papandreou arrives at hall accompanied by his wife, welcomed by standing ovation by most party chieftains #deth
13 hours ago

[1] A lot of impressive chest thumping from a guy who only managed to cut ex-interest spending by 191 mln.

[2] And yes, Matina Stevis is hot, I would totally do her.

There is evidence of growing civil disobedience against tax payments in Greece.

The only way the government can save itself now is by making its deficit targets statutory - a step it should have taken long ago. In other words, if the country is missing its deficit targets, then automatic spending cuts are immediately implemented without another vote by Parliament.

Why not let Greece default, and just kick them out of the EU? Just asking.

Tiny Greece seems to be holding everyone hostage as it were, and it's annoying. They need to get a memo that the penalties will be severe. Just cut them loose is my visceral reaction, so tell me why that is unwise. It may well be, but I want to start a discussion on this. I want to get educated. Thanks.

Well, it's bank bailout writ large, really.

The fear is that if Greece fails markets will turn on Portugal, Spain and Italy and bring down the entire euro zone.

Greek finance ministry reports that the primary surplus is projected to be 3.2% next year. It only turns into a 6.8% deficit once interest payments are factored in. But seeing as Greece is not borrowing from the market, it is borrowing from the Troika, I do not understand this. The whole point of the bailout is to save Greece, so why not charge a low interest rate, such as 0.5%? If that were the case, wouldn't Greece run a primary surplus? Just another thing that makes no sense when it comes to Greece.

1) There aren't institutional mechanisms inside the EU for such a thing.

2) There would be a radical mistrust in the other PIIGS compromises.

2) Every country in possession of greek doubt will be quite fuçked, incluiding Germany.

Goddamn, you're an elitist authoritarian. :P

Actually, surveys in a number of EU countries indicate that the voters are opposed to continuing the Greek bailout,

Its the supporters of the bailouts who have ignored the voters who are the arrogant elitists.

This is quite true. Even Spaniards criticize the idea of giving more money to Greece.

ATHENS, Greece (AP) — Greece's central government deficit continued to grow in the first nine months of the year despite a series of austerity measures designed to raise revenues, figures from the country's finance ministry showed Wednesday.

Read more: http://www.seattlepi.com/business/article/Greek-deficit-widens-in-first-9-months-of-years-2214340.php#ixzz1aZa9pCvZ

lol?

This is understandable.

Greece is unique among the PIIGS in failing to make reasonable efforts to curtail spending.

I don't see the point of more bailouts. What will it happen when Italy ask for 10 times the same help?

Let's put it simple:

EU gives credit to EU to pay EU.

But that "x" amount because of inefficiency and devaluation returns as "x-1". And, in order to pay interests, the country will ask for more "x" ad infinitum.

It's a vicious circle. Politicians are only trying to save their asses for the upcoming elections, but sooner or later the bomb will explode.

You just print it, Peep.  The lesson of every debt-deflation depression is - replace everything with fiat.

Curtailing spending is madness in a depression, the Greeks are the heroes, and the Germans the villains.

Heroes and villains? What archaic and moralistic terms to use. Surely you do not believe in such comic book nonsense?

I would support a bailout if it would work, but this isn't working. I mean it's not really a bailout if you don't succeed in bailing them out. Where is the road map forward?

Kicking the can until it explodes?

There is no public will in Greece to stave off default, therefore the country will default.

I don't know if I posted this before:

Bloomberg: So many Greek companies and employees cheat on their taxes that a third of all economic activity delivers no revenue to the government, the Finance Ministry says. Some Greeks say tax evasion is rooted in the Ottoman Empire’s control of the country for centuries until the 1820s. “We very much lack a tax conscience,” says Ilias Plaskovitis, the Finance Ministry’s general secretary. “Some trace it back to the Ottoman Empire, when tax evasion was resistance to foreign powers.”

http://www.businessinsider.com/corruption-in-greese-hampering-economic-recovery-2010-1

Don't pay taxes, say that it's cultural because of the struggle for independence.

Good policy = hero, bad policy = villain.  They're just figures of speech, lunkhead.

youth unEmp in Greece is now over 40%.

The youths should be eliminated by the market soon.  'Market clearing' don't you know.

Another option is that instead of giving money to Greece, the EFSF will purchase Greek debt directly at a discount and then let Greece out to dry. The country will go bust and be forced into adjustment, but at the same time avoid crippling interest payments.

There are just so many possible solutions-- I just can't understand why none of them are being implemented. What the Europeans are doing now is making a plan for disaster, all the while living in an obvious fantasy world. It's surreal.

It is almost moving to see such a simple mind at work. Like watching a little child playing with his first action man.

You are talking about pedophilia ?

Your simplicity seems to be of the autistic variety, Gustaf.  It is a commonplace to refer to effective policies as 'good', and damaging policies as 'bad', and in the same way to refer to governments in the positive and the negative based on an overall assessment of their performance.  

Rhetorical flourishes are also common among the emotionally and cognitively normal.  Remember, your writing doesn't have to be as boring as it is.  Try harder, and we'll all try to give you encouragement.

You really have lost your touch, haven't you?

I'm talking about "playing with action man", if you catch my drift.