Greece closes banks and imposes capital control

[JorisL]

Czibor, I can't export that data on Germany's balance of trade, but I think it's clear in the chart that in 2001 the up trend became significantly steeper. I think you're missing my point; I'm not arguing that Greece wasn't mismanaged before the crisis, nor blaming other countries for their failure, in fact I already said that in an earlier post, what I'm saying is that given the circunstances now, should we let the country fall apart along with its 11 million citizens because of past mistakes of the Greek elite? And In that case, how would that be different to have let Germany fall apart after WWII, since they were the ones starting the War that lead to millions of deaths (and coming from a party that got elected democratically)? Even if the Greeks should be punished for that, I think they've been punished enough already.

One obvious reason is that a lot of the industry was blown to smithereens during the war. Big cities destroyed so the people didn't have anywhere to live.
Another is political. Tsipras has somewhat provoked the other negotiators by refusing to give in even a little as I understand it.
Meanwhile he tried to establish closer relations with Russia, probably to put the EU/ECB under pressure.
At a given point people get fed up with such tactics and stop cooperating fully.

And finally as said before, other countries have shown it is possible to get back on track.
They have made sacrifices but I suppose everything will get back as it was or better in the end.

My 0.02 €

 

[StevieTNZ]

Just over two hours to go until Greece is suppose to pay up:

Greece's international bailout expires at midnight central European time, after which the country loses access to billions of euros in funds. At the same time, Greece has said it will not be able to make a payment of 1.6 billion euros to the IMF.

http://news.yahoo.com/tsipras-defiant-banks-shut-markets-rocked-051350780.html

 

[Czcibor]

Czibor, I can't export that data on Germany's balance of trade, but I think it's clear in the chart that in 2001 the up trend became significantly steeper.

Yes, but there were in the same time plenty of other structural reforms in Germany like agenda 2010 (2003) or Hartz reforms 2003-2005. But sure, in long run, euro prevented increased German competiveness to be just turned into stronger Deutsche Mark.

I think you're missing my point; I'm not arguing that Greece wasn't mismanaged before the crisis, nor blaming other countries for their failure, in fact I already said that in an earlier post, what I'm saying is that given the circunstances now, should we let the country fall apart along with its 11 million citizens because of past mistakes of the Greek elite? And In that case, how would that be different to have let Germany fall apart after WWII, since they were the ones starting the War that lead to millions of deaths (and coming from a party that got elected democratically)? Even if the Greeks should be punished for that, I think they've been punished enough already.

I know that speaking about guilt, sin, punishment and so on is trendy but its not my point. (In German "schuldig" means both "in debt" and "guilty" :D )

What's really the choice? The EU was able to force some troubled member countries to implement reforms by using some implicit threats. Prior Greek parties were not specially good, but at least pretended doing something. Greece under Syriza decided to say no. What's the EU choice:
a) accept "no" and let Greece drown
b) just throw lots of money on to the project

Let's think about consequences of "b":
-Greece would be left unreformed;
-Taxpayers in the North countries would be angry, some anti-EU reaction is possible not only in UK (my guess: ex. Finland);
-Voters in other South countries would decide to repeat Syriza success at home (after all - what for reform country if you just have to make a brawl in Brussels?)

Do you think that if Syriza approach would become more popular in the South, the EU would survive that?

"past mistakes of the Greek elite"?
But those were highly popular mistakes... And Greek society would like to repeat them if given a chance... They are mistakes only for us, outsiders...

If you're bringing here Germans after WW2... Big hopes of Germans changing policies (really not applicable here) and need to use them in geopolitical game (mostly not applicable here)...

 

[StevieTNZ]

Greece made last-minute overtures to its international creditors for financial aid on Tuesday, but it was not enough to save the country from becoming the first developed economy to default on a loan with the International Monetary Fund.

http://www.stuff.co.nz/business/wor...ults-on-imf-loan-despite-late-appeals-for-aid

 

[Czcibor]

Source, and whole article
https://yougov.co.uk/news/2015/06/25/europeans-expect-grexit-happen-and-few-want-stop-i/

 

[Stephen Tashi]

Are their historical studies of general phenomenon of economic crises?

Examples of a few leaders wrecking an economy probably exist in the days of government by emperors and kings. On the other hand, I don't know whether there are ancient examples of a "general economic downturn" or depression.

 

[phinds]

Are their historical studies of general phenomenon of economic crises?

Examples of a few leaders wrecking an economy probably exist in the days of government by emperors and kings. On the other hand, I don't know whether there are ancient examples of a "general economic downturn" or depression.

Why would it matter? We never learn from our mistakes anyway.

To paraphrase someone or other "those who do not learn the lessons of history probably aren't any good at math either "

 

[Stephen Tashi]

To paraphrase someone or other "those who do not learn the lessons of history probably aren't any good at math either "

I like:
"Those who do not learn from the lessons of history are destined to repeat it and those who do learn from the lessons of history are destined to face something entirely different."

 

[Czcibor]

I knew a different version:
"Those who study history are doomed to watch others repeat it"

Concerning this case - except from quantitative easing (pioneered by Japan in '90s) and problems to coordinate within a monetary union - that may have been new. Housing bubble, banking crisis, sovereign debt crisis - that was repeated many times, plenty of data on that.

 

[tom aaron]

Greece was a second world nation offered free entry into the first world economy...same with Portugal and Spain.

Instead of taking advantage of this and developing an appropriate economic infrastructure the Greeks twiddled their thumbs for two decades.

Now that Western Europe is about to cut off the allowance, they have no modern infrastructure to fall back on. They were the grasshopper that played while he should have been preparing for winter. They have had a taste of first world living...decent education, health care, social service...but are going to return to a day to day life of 'getting by'.

I grew up on the French/German border. I can't imagine any politician offering even more to greece without having rocks thrown at him. Bottom line...Greece doesn't matter economically. It's a liability. It only matters politically for those with a pan Europe vision.

 

[StatGuy2000]

Greece was a second world nation offered free entry into the first world economy...same with Portugal and Spain.

Instead of taking advantage of this and developing an appropriate economic infrastructure the Greeks twiddled their thumbs for two decades.

Now that Western Europe is about to cut off the allowance, they have no modern infrastructure to fall back on. They were the grasshopper that played while he should have been preparing for winter. They have had a taste of first world living...decent education, health care, social service...but are going to return to a day to day life of 'getting by'.

I grew up on the French/German border. I can't imagine any politician offering even more to greece without having rocks thrown at him. Bottom line...Greece doesn't matter economically. It's a liability. It only matters politically for those with a pan Europe vision.

Was Greece even a second world nation at all? From what I understand of the history of modern Greece, Greece had all the hallmarks of a Third World/developing nation -- unstable governments switching between democracies and military dictatorships, economies that depended on a very small number of sectors (in the case of Greece, primarily tourism -- Greece has few natural resources, nor much capability in either manufacturing or services) and thus highly susceptible to boom and bust cycles, large number of emigrants seeking their fortunes elsewhere, etc. Much more in common to countries in Latin America, the Middle East, sub-Saharan Africa, or parts of Asia than Europe.

I have always found it hard to understand why Greece was even allowed to join the European Union or the eurozone given the political and economic realities of the time when Greece in fact joined. Granted, I have always been skeptical of the euro to begin with, since by joining the euro, each of the member states are essentially sacrificing their national sovereignty (specifically, their ability to set monetary policy) without correspondingly sacrificing their individual sovereignty in terms of fiscal policy. Given the disparity in the economic situation across different member EU nations, the leaders of the member states, along with the general population of the member states, should have understood that there may come a situation where certain member states will need to subsidize other member states to ensure that each nation stays in the euro.

Now we're at the stage where Greek exit is all but inevitable, the question would then be about the other member states that are struggling economically (Italy, Spain, Portugal). Will contagion spread there?

 

[phinds]

Now we're at the stage where Greek exit is all but inevitable, the question would then be about the other member states that are struggling economically (Italy, Spain, Portugal). Will contagion spread there?

That seems to be WAY less of a worry now than it was a couple of years ago. Maybe it's wishful thinking, but the news reports I've seen say that European political and economic leaders just don't seem worried about it this time around.

 

[tom aaron]

Was Greece even a second world nation at all? From what I understand of the history of modern Greece, Greece had all the hallmarks of a Third World/developing nation -- unstable governments switching between democracies and military dictatorships, economies that depended on a very small number of sectors (in the case of Greece, primarily tourism -- Greece has few natural resources, nor much capability in either manufacturing or services) and thus highly susceptible to boom and bust cycles, large number of emigrants seeking their fortunes elsewhere, etc. Much more in common to countries in Latin America, the Middle East, sub-Saharan Africa, or parts of Asia than Europe.

I have always found it hard to understand why Greece was even allowed to join the European Union or the eurozone given the political and economic realities of the time when Greece in fact joined. Granted, I have always been skeptical of the euro to begin with, since by joining the euro, each of the member states are essentially sacrificing their national sovereignty (specifically, their ability to set monetary policy) without correspondingly sacrificing their individual sovereignty in terms of fiscal policy. Given the disparity in the economic situation across different member EU nations, the leaders of the member states, along with the general population of the member states, should have understood that there may come a situation where certain member states will need to subsidize other member states to ensure that each nation stays in the euro.

Now we're at the stage where Greek exit is all but inevitable, the question would then be about the other member states that are struggling economically (Italy, Spain, Portugal). Will contagion spread there?

Those countries are very different from each other other than being on the brink of insolvency. Italy is a huge market...Spain also but lesser so. Portugal is insignificant.

Italy is psychologically part of modern Europe. Spain is a newcomer. When I was a boy we would take vacations to Spain and it was a lot like being in North Africa...more like Morocco. The modern trappings in Spain today are a veneer without much underpinning it...corruption, inefficiency. I still find it hard to understand why the more industrial, educated northeast (Barcelona) hasn't separated.

As for resources...Denmark and the Netherlands that are on par with other affluent nations...their resources other than 'people' are near zero. They have an educated, efficient society.
Greece's issue is not debt but the ability to generate value. The homeless man with no debt and 50 dollars in his pocket is less well off than the guy with a good education, job, house but owes ten thousand dollars. Greece is like that homeless guy...no prospects. Germany, Denmark, etc. are like the latter.

 

[Tosh5457]

Yes, but there were in the same time plenty of other structural reforms in Germany like agenda 2010 (2003) or Hartz reforms 2003-2005. But sure, in long run, euro prevented increased German competiveness to be just turned into stronger Deutsche Mark.I know that speaking about guilt, sin, punishment and so on is trendy but its not my point. (In German "schuldig" means both "in debt" and "guilty" :D )

What's really the choice? The EU was able to force some troubled member countries to implement reforms by using some implicit threats. Prior Greek parties were not specially good, but at least pretended doing something. Greece under Syriza decided to say no. What's the EU choice:
a) accept "no" and let Greece drown
b) just throw lots of money on to the project

Let's think about consequences of "b":
-Greece would be left unreformed;
-Taxpayers in the North countries would be angry, some anti-EU reaction is possible not only in UK (my guess: ex. Finland);
-Voters in other South countries would decide to repeat Syriza success at home (after all - what for reform country if you just have to make a brawl in Brussels?)

Do you think that if Syriza approach would become more popular in the South, the EU would survive that?

"past mistakes of the Greek elite"?
But those were highly popular mistakes... And Greek society would like to repeat them if given a chance... They are mistakes only for us, outsiders...

If you're bringing here Germans after WW2... Big hopes of Germans changing policies (really not applicable here) and need to use them in geopolitical game (mostly not applicable here)...

IMO the negotiations should aim debt restructuring and/or partial default, because even if Greece is lent more money, it's not getting off 200%+ GDP on debt so soon and a future default is very likely in any case. IMF and similar entities loans carry a risk, and now it's the time to pay for taking that risk. This won't be popular anywhere, because Greece's bonds will be labeled as junk for the years to come.

 

[Tosh5457]

I grew up on the French/German border. I can't imagine any politician offering even more to greece without having rocks thrown at him. Bottom line...Greece doesn't matter economically. It's a liability. It only matters politically for those with a pan Europe vision.

Except that if Greece goes, there go all the bonds that European governments and banks hold, because they're not paying that in an undervalued Dracma. And I sense a bit of bigotry in your speech, as if 11 million people mean nothing.

 

[Vanadium 50]

A Greek exit is nor a foregone conclusion. Greece could conceivably fund its spending with euros, and just not pay its bondholders back. It looks like they have more than enough euros to do this. It may not be the path they take, for good reason, but it looks possible for them to stay,

 

[tom aaron]

Except that if Greece goes, there go all the bonds that European governments and banks hold, because they're not paying that in an undervalued Dracma. And I sense a bit of bigotry in your speech, as if 11 million people mean nothing.

The bonds? They are useless now. They were useless when issued. Everyone knows Greece is insolvent and will be for the foreseeable future.

Your ignorance is what's apparent. Not my bigotry. Ignoring reality may be noble to you. Ignorance, despite the saying, is not bliss...it is just ignorance.

 

[Czcibor]

IMO the negotiations should aim debt restructuring and/or partial default, because even if Greece is lent more money, it's not getting off 200%+ GDP on debt so soon and a future default is very likely in any case. IMF and similar entities loans carry a risk, and now it's the time to pay for taking that risk. This won't be popular anywhere, because Greece's bonds will be labeled as junk for the years to come.

Stop. Aaron said that in no so nice way, however he more he is right. When IMF and Eurozone were buying them they knew that the business is awful. The idea was to save Greece / save bondholders/ prevent contagion. The spread was many times lower than the market one. The point is they were intended to carry almost no risk.

A Greek exit is nor a foregone conclusion. Greece could conceivably fund its spending with euros, and just not pay its bondholders back. It looks like they have more than enough euros to do this. It may not be the path they take, for good reason, but it looks possible for them to stay,

May you explain your point? Because their euros are ultimately in ECB, and ECB is able now in any moment stop ELA and claim those money...

 

[Vanadium 50]

Yes, but the ECB does not have to seize assets. My point is not that Greek will not leave the Euro. My point is that default does not mandate it.

 

[StatGuy2000]

Those countries are very different from each other other than being on the brink of insolvency. Italy is a huge market...Spain also but lesser so. Portugal is insignificant.

Italy is psychologically part of modern Europe. Spain is a newcomer. When I was a boy we would take vacations to Spain and it was a lot like being in North Africa...more like Morocco. The modern trappings in Spain today are a veneer without much underpinning it...corruption, inefficiency. I still find it hard to understand why the more industrial, educated northeast (Barcelona) hasn't separated.

As for resources...Denmark and the Netherlands that are on par with other affluent nations...their resources other than 'people' are near zero. They have an educated, efficient society.
Greece's issue is not debt but the ability to generate value. The homeless man with no debt and 50 dollars in his pocket is less well off than the guy with a good education, job, house but owes ten thousand dollars. Greece is like that homeless guy...no prospects. Germany, Denmark, etc. are like the latter.

I would disagree with you about Denmark and the Netherlands having near zero resources since both countries do have very fertile land for agriculture (unlike Greece). Furthermore, doesn't Denmark have easy access to natural resources from neighbouring Scandinavian countries from which they have maintained strong trade and cultural links, like Norway and Sweden? And from my reading of history, the Netherlands have a long history as both a trading nation and a former colonial power (along the likes of Britain and France), with colonies in the Americas and Asia which contributed a certain degree of wealth, laying the foundation for future prosperity (in contrast to Greece, a long-neglected colony of the Ottoman Empire).

At any rate, you mentioned that Greece's issue is the ability to generate value -- I take it you are referring to the capacity of the Greek economy to grow their economy. In that respect, what I have stated earlier does not contradict this, since I have stated that Greece's economy is heavily reliant on tourism and not much else (apart from shipping, and I'm not sure how much Greece has the capacity grow that part of the economy).

 

[tom aaron]

I would disagree with you about Denmark and the Netherlands having near zero resources since both countries do have very fertile land for agriculture (unlike Greece). Furthermore, doesn't Denmark have easy access to natural resources from neighbouring Scandinavian countries from which they have maintained strong trade and cultural links, like Norway and Sweden? And from my reading of history, the Netherlands have a long history as both a trading nation and a former colonial power (along the likes of Britain and France), with colonies in the Americas and Asia which contributed a certain degree of wealth, laying the foundation for future prosperity (in contrast to Greece, a long-neglected colony of the Ottoman Empire).

At any rate, you mentioned that Greece's issue is the ability to generate value -- I take it you are referring to the capacity of the Greek economy to grow their economy. In that respect, what I have stated earlier does not contradict this, since I have stated that Greece's economy is heavily reliant on tourism and not much else (apart from shipping, and I'm not sure how much Greece has the capacity grow that part of the economy).

Greece has ALL of the EU to draw upon...as much as Denmark and the Netherlands. That is the point of the EU. They are also a gateway to the Near East. They have had ample time to get their act together especially with the infusion of tens of billions in Euros. They also benefit from stable currency and EU trading agreements with the rest of the world.

The Greeks have been masters of their own fate. There is no excuse for an inept system of tax infrastructure, inefficient social programs, etc. They have had ample opportunity to implement reforms and collect a billion of unpaid domestic taxes than ask the Germans for another billion.

 

[Czcibor]

Constantine Michalos, head of the http://www.uhc.gr/newsite/english/index.php?menu=main_menu&page=home , said lenders are simply running out of money. "We are reliably informed that the cash reserves of the banks are down to €500m. Anybody who thinks they are going to open again on Tuesday is day-dreaming. The cash would not last an hour," he said.

"We are in an extremely dangerous situation. Greek companies have been excluded from the electronic transfers of Europe's Target2 system. The entire Greek business community is unable to import anything, and without raw materials they can't produce anything," he said.

Pavlos Deas, owner of an olive processing factory in Chalkidiki, told The Telegraph that he may have to shut down a plant employing 250 people within days.

"We can't send any money abroad to our suppliers. Three of our containers have been stopped at customs control because the banks can't give a bill of lading. One is full of Spanish almonds, the others full of Chinese garlic," he said.

"We don't know how we are going to execute and export an order of 60 containers for the US. We don't even have enough gas. We asked for 10,000 litres but they are only letting us have 2,000. It's being rationed by the day. Factories are closing around us in a domino effect and we're all going to lose everything if this goes on," he said.

The fast-moving events come amid signs of deep dissension within the coalition over the wisdom of http://www.telegraph.co.uk/news/worldnews/europe/greece/11707952/Greek-referendum-what-will-a-Yes-or-No-vote-mean.html. The vote was originally intended to secure a stronger negotiating mandate for a showdown with Europe's creditor powers, but it is rapidly turning into an "in-or-out" decision on euro membership and the survival of the Syriza government.

http://www.telegraph.co.uk/finance/...500m-in-cash-reserves-as-economy-crashes.html

 

[mheslep]

As for resources...

See Hong Kong, Singapore for examples of societies with strong economic output and almost no native resources.

 

[Tosh5457]

The bonds? They are useless now. They were useless when issued. Everyone knows Greece is insolvent and will be for the foreseeable future.

Your ignorance is what's apparent. Not my bigotry. Ignoring reality may be noble to you. Ignorance, despite the saying, is not bliss...it is just ignorance.

So you admit you're a bigot, just that it's not so apparent?

Stop. Aaron said that in no so nice way, however he more he is right. When IMF and Eurozone were buying them they knew that the business is awful. The idea was to save Greece / save bondholders/ prevent contagion. The spread was many times lower than the market one. The point is they were intended to carry almost no risk.

That's a contradiction, if the business was awful it means the risk was actually much higher than the spread they agreed with.

 

[mheslep]

Good, recent Greek debt/default primer here:

June 29th, 2015
http://faculty.chicagobooth.edu/anil.kashyap/research/papers/A-Primer-on-the-Greek-Crisis_june29.pdf
http://www.chicagobooth.edu/faculty/directory/k/anil-kashyap

1) How did Greece get into such trouble?
2) Wasn’t Greece already bailed out in 2010?
3) Why did that rescue fail?
4) What is the troika (or the institutions) and what do they have to do with this?
5) Wasn’t Greece also bailed out in 2012?
6) Why is Greece in trouble again now?
7) What is the Greek government asking for?
8) Why do the institutions disagree with the government?
9) Why is the IMF loan that is coming due so important?
10) What did the ECB decide this weekend and why is Greece closing its banks?
11) What can Greece do to save its economy now?
12) Why not just bring back the drachma?
13) Will the Greek crisis spread?
14) What is likely to happen next in Greece?
15) What happens to the IMF if its loan is not repaid?
16) What happens to the ECB if Greece defaults?
17) Can the ECB survive if Greece defaults?
18) What should have been done to avert this crisis?

 

[tom aaron]

Good, recent Greek debt/default primer here:

June 29th, 2015
http://faculty.chicagobooth.edu/anil.kashyap/research/papers/A-Primer-on-the-Greek-Crisis_june29.pdf
http://www.chicagobooth.edu/faculty/directory/k/anil-kashyap

1) How did Greece get into such trouble?
2) Wasn’t Greece already bailed out in 2010?
3) Why did that rescue fail?
4) What is the troika (or the institutions) and what do they have to do with this?
5) Wasn’t Greece also bailed out in 2012?
6) Why is Greece in trouble again now?
7) What is the Greek government asking for?
8) Why do the institutions disagree with the government?
9) Why is the IMF loan that is coming due so important?
10) What did the ECB decide this weekend and why is Greece closing its banks?
11) What can Greece do to save its economy now?
12) Why not just bring back the drachma?
13) Will the Greek crisis spread?
14) What is likely to happen next in Greece?
15) What happens to the IMF if its loan is not repaid?
16) What happens to the ECB if Greece defaults?
17) Can the ECB survive if Greece defaults?
18) What should have been done to avert this crisis?

This is a concise good summary. However, it needs to be remembered that he ECB is essentially still German, Dutch, etc taxpayers. The Finns are the angriest with the Greeks. They have worked hard to build a viable, affluent society and are 'pissed' at Greek lethargy.

The issue also extends to other arrangements such as NATO. European solidarity is not for the sake of it but based on principles of freedom, good management, competency, etc. organizations for 'good'. A positive arrangement for all.Thus why concerns over inclusion of Turkey economically, inclusion of Ukraine in defense, etc. Solidarity is built on principles.

 

[StatGuy2000]

Greece has ALL of the EU to draw upon...as much as Denmark and the Netherlands. That is the point of the EU. They are also a gateway to the Near East. They have had ample time to get their act together especially with the infusion of tens of billions in Euros. They also benefit from stable currency and EU trading agreements with the rest of the world.

The Greeks have been masters of their own fate. There is no excuse for an inept system of tax infrastructure, inefficient social programs, etc. They have had ample opportunity to implement reforms and collect a billion of unpaid domestic taxes than ask the Germans for another billion.

My own personal opinion is that the unpaid domestic taxes in Greece is a symptom of a general lack of trust that exists within Greek society toward the government, due to a history of dictatorships and unstable governments.

At any rate, your quote above (Greece has ALL of the RU to draw upon) epitomizes the very problem inherent with the adoption of the euro to begin with -- since each nation is sacrificing their ability to set monetary policy (and monetary policy, along with fiscal policy, are among the primary tools that allow governments to shape the economy to the extent possible for any governments), in essence, every member state is drawing upon every other EU nation. Implicit within the adoption of the euro is that the fiscal and monetary status of an EU nation is tied to all others.

It has been my opinion all along that both governments and regular citizens of each of the member states never understood the full implications of what it means to be in a true monetary union i.e. no single nation has control over their own respective monetary policy (that is why I have always felt that the adoption of the common currency under the current framework of the EU was a dubious endeavour). If they did, I would hasten to state that member states would not have been so eager to consider joining the Eurozone.

At this stage, it seems clear to me that the Greek government (and likely the bulk of its population -- we'll know more based on the results of the referendum) and the main creditor nations of the EU (e.g. Germany) are so far apart in terms of what can be agreed that it seems inevitable that Greece will default in its debt commitments, and I just do not see any further benefit for Greece to stay in the euro. Your posts in this thread is in itself a reflection of this (given that you are either German or French, since you stated earlier that you grew up near the German/French border) -- it seems quite clear to me that you do not really feel that Greeks are fellow Europeans who share a common fate with the rest of Europe (part of the rationale that was trumpeted with joining the euro).

 

[Czcibor]

That's a contradiction, if the business was awful it means the risk was actually much higher than the spread they agreed with.

Yes, the risk was much higher. On market no-one was willing to buy Greek bonds. (well, the market return rate of 10 year bonds was above 30% per year, which was many times above what Greek taxpayers would be realistically able to pay). In consequence it were govs (also indirectly through IMF or ECB) who bought those bonds on much lower interest rate. The idea was to make a bail out, and not to make a business.

Some of those govs, like Italy, actually lent Greeks those money cheaper than they could borrow on their own on market...

 

[tom aaron]

Yes, the risk was much higher. On market no-one was willing to buy Greek bonds. (well, the market return rate of 10 year bonds was above 30% per year, which was many times above what Greek taxpayers would be realistically able to pay). In consequence it were govs (also indirectly through IMF or ECB) who bought those bonds on much lower interest rate. The idea was to make a bail out, and not to make a business.

Some of those govs, like Italy, actually lent Greeks those money cheaper than they could borrow on their own on market...

This is what many late comers to this do not understand. Greece was insolvent. No way out. Other countries did their best 'despite' knowing that it was not an actual investment. Like helping a brother out knowing the chances of getting your money back was zilch. Ask him to stop drinking, get a job, clean up his act...here's some money. So Greece did what? Nothing.

This isn't Germany, etc. lending the Greeks money in a vacuum. It's after a lengthy record of incompetence and trying to help them out 'again'. Greece is like the brother who now promises to look for a job 'next month' when he said the same thing last month, and last year. Europe has thrown up its arms in complete frustration.

 

[Czcibor]

This is what many late comers to this do not understand. Greece was insolvent. No way out. Other countries did their best 'despite' knowing that it was not an actual investment. Like helping a brother out knowing the chances of getting your money back was zilch. Ask him to stop drinking, get a job, clean up his act...here's some money. So Greece did what? Nothing.

This isn't Germany, etc. lending the Greeks money in a vacuum. It's after a lengthy record of incompetence and trying to help them out 'again'. Greece is like the brother who now promises to look for a job 'next month' when he said the same thing last month, and last year. Europe has thrown up its arms in complete frustration.

It was more complicated then lending a brother... Let's say that Greeks instead would have defaulted. Who would be in bad situation? Seriously? Greeks... a bit worse (they would anyway shed some this debt, even though the prior borrowing was based on fraud; out of those whole aid they had a chance to spend round 10%, the rest was for debt servicing). Banks of countries that lent to Greece at start - seriously worse. Other peripheral countries - in case of a chain reaction - much worse. So there was some kind of self interest from other countries, but not the "investment" argument.

 

[mheslep]

So Greece did what? Nothing. ...

After the initial bailout Greece did reduce government spending and has reduced its primary deficit, down to near zero IIRC. Tsipras is now trying to undo some of those spending cuts. The problem has been two fold: i) the debt Greece incurred while cooking its books was so large that it swamped other spending cuts, and ii) Greece failed to do much with regard to other actions to open up the economy (thus grow the economy, thus revenues, thus shrink the GDP/debt ratio). In this "economic freedom" ranking of nations Greece ranks 130th, based on metrics like labor law and property rights.

 

[WWGD]

See Hong Kong, Singapore for examples of societies with strong economic output and almost no native resources.

And Israel, Taiwan, South Korea. Depressingly, there are plenty of examples of the opposite: countries with plenty of resources and a broken economy. Maybe Venezuela is the most notable one, and on top of that, the world's 2nd highest murder rate. Modern, non-biblical version of Paradise lost. Not much beyond a string of beauty queens in the Miss Universe pageant.

 

[Buckleymanor]

Absolutely true, but neither should we find it acceptable that the Greek population seems to blame Europe for their troubles rather than their own corrupt and incompetent government. I don't mind that they want help to bail them out of their problem, and it seems to be in everyone's interest for that to happen, but I find it deeply offensive that they blame others for their troubles. Germany didn't whine about having had the crap bombed out of it during the war and they were grateful for the help they got from a former enemy that was under no obligation to help them rebuild. The Greeks seem to want a free lunch.

Germany didn't whine, you obviously discount the efforts of bomber Harris and his attempt to flatten Dresden.https://en.wikipedia.org/wiki/Sir_Arthur_Harris,_1st_Baronet
With some abandon!

 

[phinds]

Germany didn't whine, you obviously discount the efforts of bomber Harris and his attempt to flatten Dresden.https://en.wikipedia.org/wiki/Sir_Arthur_Harris,_1st_Baronet
With some abandon!

I don't get your point at all. No one is happy getting clobbered during war. My point was that Germans didn't whine about it after the war, they picked themselves up and got on with building what is now the strongest economy in Europe.

 

[256bits]

The Greek labor force, which amount around 5 million workers, average 2,032 hours of work per worker annually in 2011, is ranked fourth among OECD countries, after Mexico, South Korea and Chile.[74] The Groningen Growth & Development Centre has published a poll revealing that between 1995 and 2005, Greece was the country whose workers have the most hours/year work among European nations; Greeks worked an average of 1,900 hours per year, followed by Spaniards (average of 1,800 hours/year).[75]

By contrast
France and Germany had figures of 1532 and 1432 respectively.

reference,
http://stats.oecd.org/Index.aspx?DataSetCode=ANHRS

The greeks are definitely not slaggards

also,

The country's post-World War II development has largely been connected with the so-called Greek economic miracle.[60] During that period, Greece saw growth rates second only to those of Japan, while ranking first in Europe in terms of GDP growth.[60] It is indicative that between 1960 and 1973 the Greek economy grew by an average of 7.7%, in contrast to 4.7% for the EU15 and 4.9 for the OECD.[60] Also during that period, exports grew by an average annual rate of 12.6%.[60]

The downturn of the world economy was really what knocked their socks off for some reason, and they could not recover.