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Should Greece Default?

Atrios says yes:

I really don't know why Greek leaders aren't telling the EU to suck on it. They're actually the ones who seem to be holding the cards, but they just don't realize it. Or pretend not to.

The EU seems to believe the alternative to Austerity Now! for Greece is worse:

The EU's economic and monetary affairs commissioner Olli Rehn said he was "certain that Greece will be able to take the decisions needed because the alternative is so much worse".

Not knowing the specifics, I can't say, but it seems to me the Euro-types have more to lose than Greece, who probably needs out of the Euro anyway. Last November, we had a similar discussion regarding Ireland. I think the Argentina model is worth studying here.

Speaking for me only

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    Austerity Measures (5.00 / 6) (#1)
    by Stellaaa on Tue Jun 21, 2011 at 09:13:19 AM EST
     Everyone talks of the economic implications but I think the interesting discussion is the idea of the sovereign nation state in the times of new economic alliances, treaties and arrangements.  The conflict is that the politics are local but the power is external.  The Greeks have one and only choice, if they stay in the Eurozone, they have to do what they are told to their detriment.  The worse is the forced privatization of national assets.  Why they even sold portions of the port to the Chinese with exemptions from the labor laws: nor organizing, no defined hours, 24/7 on call etc. etc.  

    When you have Moody's and Standards and Poors deciding the public policies of nations we have a problem.  These are the same guys who brought us the economic calamity with AAA ratings.  

    The funny thing is that in Greece they still have these notions that there is some kind of validity to representative democracy.  So, if someone else is elected, unless they opt out of Eurozone, they will still be bound by the austerity zone mentality.  

    I don't defend my compatriots for the mess, but when the Eurozone banks were financing the party and making money, Merkel et. al were not complaining, neither were the German citizens.  As when the French and Americans were selling weapons to Greece's disproportionate military expenditures.

    The Greeks broke all their cultural and traditional ways with money.  They became borrowers when they never were.  It's an impasse because we only look at the economic issues.  This makes the nation state feeble.  Funny that just across the sea in Egypt people are fighting for democracy when in truth modern democracy may give one rights, but have little power for social justice.  


    Lets understand why that is.  The Greeks are and have been consuming more wealth than they are producing.  The reason they can't tell the creditors to eat poop and bark at the moon is they need the next transfer of wealth (loan) from those creditors to cover the promises the pols have made to their dependent classes.  

    As has been noted time and again, that which can't continue, won't continue.  The trouble with socialism as Maggy Thatcher observed is that sooner or later you run out of other peoples money.  The Greeks are just getting to that point sooner than others.

    Parent

    Raise taxes (5.00 / 1) (#70)
    by cal1942 on Tue Jun 21, 2011 at 02:23:06 PM EST
    Margaret Thatcher is a boil on the fanny of humanity just like every other moron conservative at home and abroad.

    Since conservatives came to power (make no mistake, both of our major parties are conservative) all of western civilization has been in a downward spiral.

    Parent

    it is not a fiscal problem (none / 0) (#74)
    by Abdul Abulbul Amir on Tue Jun 21, 2011 at 02:53:32 PM EST

    The fiscal mess is a symptom rather than a cause.

    They are consuming more wealth than they are producing.  Raising taxes on the productive class makes the problem worse.  Raising taxes (cutting benefits) on the dependent classes is politically unacceptable.

    Parent

    Productive Class? (5.00 / 1) (#84)
    by cal1942 on Tue Jun 21, 2011 at 04:05:48 PM EST
    What class is productive?  

    The people at the top of the income scale?

    NO.  The leeches at the top are not the productive class.  Tax the crap out of them.

    Parent

    Dependent Class? (5.00 / 1) (#85)
    by cal1942 on Tue Jun 21, 2011 at 04:07:14 PM EST
    That's the highest income class.

    Parent
    Actually (5.00 / 1) (#104)
    by Stellaaa on Wed Jun 22, 2011 at 09:59:06 AM EST
    The Greeks used to save and consume wealth very carefully.  Then around the 1990's, the EU and other finance giants swooped in and started peddling the Neo-Liberal open market, borrow, leverage and spend model.   The Greeks, clever as they are, bought into the model in a surprising fashion.  They went from zero borrowing to over spenders.  Expansion and growth was promised.  

    Do I not blame the Greeks?  No.  But, it was not as if they were sitting around eating wealth, they were borrowing money from the willing lenders, the European and American Bankers.  They got into the big Leagues, when as we say, all we were is a rock in the Aegean.  

    The only problem is that the clever ones get fooled the fastest.  In truth, the government before Papandreou, who was handed on a platter the spoils of the expansion, was not socialist, it was the party of the ones who created the borrowing and expansion mess.  Oh, yes, the Papandreou party helped in many ways.  

    The Greeks got to the point of understanding that neo-liberal economics and markets are not working.  When will we face that the free market scheme is failing?  No, we would rather blame pensioners and make ethnic generalizations, much more like the free market mentality.  


    Parent

    Funny how that works (none / 0) (#105)
    by Abdul Abulbul Amir on Wed Jun 22, 2011 at 12:13:41 PM EST
    .

    They went from zero borrowing to over spenders.  Expansion and growth was promised.

    Overspending is often sold as the driver of expansion and growth.  It just does not seem to work out that way.

    .

    Parent

    So much of what has happened that has (5.00 / 8) (#2)
    by Militarytracy on Tue Jun 21, 2011 at 09:30:26 AM EST
    made things impossible for the poor and the middle class has to do with trying to prevent the invisible hand from punching through all the moral hazard out there.  If Greece defaults some insist it would set off a chain reaction of defaults like Lehman did.  Even if it did should we discourage it?  I don't think so.  It is time to expose the insolvency.  It is time to take the defaults and stop expecting our grandchildren to pay for impossible insolvencies so that the rich can maintain their fat spreadsheets and their fat bonuses and golden parachutes.  It is time to deal with all of that moral hazard that was created by leaders so that there would only be consequences for the serfs and never for the kings.  This is a time for king unmaking.

    The BBC News Broadcast this morning (5.00 / 2) (#47)
    by inclusiveheart on Tue Jun 21, 2011 at 01:08:47 PM EST
    had a lengthy discussion about this and there was - miracle of miracles - an economist who was quite insistent that the banks should take their hit.  It was a refreshing thing to see given the fact that there are few to none here who have the guts to say that and also able to get on TV to say it.

    Parent
    I was just reading Timmeh (5.00 / 2) (#69)
    by Militarytracy on Tue Jun 21, 2011 at 02:18:08 PM EST
    wizzling his britches again.  He insists the ponying up by other insolvent nations must happen, they do it, Wall Street surges on the promise of forever moral hazard.  Nobody even knows what market and economic fundamentals are anymore. That shit is for New Deal dinosaurs like me.  It's so crazy you couldn't even make it up if you wanted to :)

    Parent
    The reality is that this technique (5.00 / 3) (#77)
    by inclusiveheart on Tue Jun 21, 2011 at 03:08:53 PM EST
    of first world entities and governments bankrupting other nations and stealing their assets has been going on in third-world for decades and centuries.  The most interesting part of this 21st Century story is that we are on the verge of cannibalizing ourselves now.  Around the edges... Greece, Ireland, Portugal, Spain... Look at that circle of fire and understand that it will move inward - engulfing the larger European nations - especially if the bankers are successful in those weaker "starter" countries.  Default is probably Greece's only protection from losing its sovereignty.

    Parent
    I know (5.00 / 2) (#82)
    by Militarytracy on Tue Jun 21, 2011 at 03:24:58 PM EST
    I was reading that some are demanding their islands from them.  How crazy, piss on these corrupt evil blankety blanks....default.

    Parent
    The Obama Administration is selling (5.00 / 3) (#89)
    by inclusiveheart on Tue Jun 21, 2011 at 04:17:57 PM EST
    federal land and properties in the middle of a housing depression under the premise of debt reduction.

    But few to none in this country are paying attention or even understand the implications of that program.  

    Of course, this is the Administration that seems to adhere to the tenet of buying HIGH and selling LOW in just about every deal they make.

    Parent

    Another good example (5.00 / 8) (#7)
    by Makarov on Tue Jun 21, 2011 at 10:52:28 AM EST
    that supports Greek withdraw from the Euro is Iceland. Iceland is a member of the EU, but not the Eurozone. When its private banks went bust (to the tune of several times the Icelandic economy's GDP), they refused to bail them out, beyond a modest amount for individual, FDIC-type insured accounts. They then allowed their currency, the Krona, to devalue.

    The result has been a more rapid economic recovery, improved employment, and lower sovereign debt interest rates than countries like Greece and Ireland which following the IMF playbook for bailing out private banks on the back of government spending.

    Iceland is doing well (5.00 / 3) (#10)
    by Militarytracy on Tue Jun 21, 2011 at 11:46:23 AM EST
    Their have firmly grasped that it is about the people/their people too, not imaginary kingdoms and their imaginary numbers.  Being able to live and exist and having a worthwhile worthy reason to get up every morning is about the person you see in the mirror and the eyes you meet passing you on the streets.  The financial sectors have proclaimed that they are more important than those faces and eyes and leaders have seen enough money waved in their faces that they want to believe it too.  That belief is patently false when you are standing on the streets with the rest of the unwashed.  You can only buy that bullshit when you sit in lofty penthouse towers watching the ants down below.

    Parent
    I just read a post at Naked Capitalism (5.00 / 5) (#9)
    by Anne on Tue Jun 21, 2011 at 11:42:08 AM EST
    that is well worth a read:

    Here's the beginning:

    I have never been more desperate to explain and more hopeful for your understanding of any single fact than this: The protests in Greece concern all of you directly.

    What is going on in Athens at the moment is resistance against an invasion; an invasion as brutal as that against Poland in 1939. The invading army wears suits instead of uniforms and holds laptops instead of guns, but make no mistake - the attack on our sovereignty is as violent and thorough. Private wealth interests are dictating policy to a sovereign nation, which is expressly and directly against its national interest. Ignore it at your peril. Say to yourselves, if you wish, that perhaps it will stop there. That perhaps the bailiffs will not go after the Portugal and Ireland next. And then Spain and the UK. But it is already beginning to happen. This is why you cannot afford to ignore these events.

    And perhaps this sounds familiar:

    It is vital to understand that I do not wish to excuse my compatriots of all blame. We did plenty wrong. I left Greece in 1991 and did not return until 2006. For the first few months I looked around and saw an entirely different country to the one I had left behind. Every billboard, every bus shelter, every magazine page advertised low interest loans. It was a free money give-away. Do you have a loan that you cannot manage? Come and get an even bigger loan from us and we will give you a free lap-dance as a bonus. And the names underwriting those advertisements were not unfamiliar: HSBC, Citibank, Credit Agricole, Eurobank, etc.

    [snip]

    ...We became a nation sleepwalking toward the deep end of our newly-built, Italian-tiled swimming pool without a care that at some point our toes may not be able to touch the bottom.

    That irresponsibility, however, was only a very small part of the problem. The much bigger part was the emergence of a new class of foreign business interests ruled by plutocracy, a church dominated by greed and a political dynasticism which made a candidate's surname the only relevant consideration when voting. And while we were borrowing and spending (which is affectionately known as "growth"), they were squeezing every ounce of blood from the other end through a system of corruption so gross that it was worthy of any banana republic; so prevalent and brazen that everyone just shrugged their shoulders and accepted it or became part of it.

    Read the debunking of the myths about what is happening in Greece and why; pay attention to what the bailout was supposed to do, and what it really did.  Some familiarity there, too.  And the austere conditions under which people there are living, with more to come if Greece accepts the conditions of another bailout, should make your blood run cold.

    Thank you (5.00 / 1) (#21)
    by Stellaaa on Tue Jun 21, 2011 at 12:18:51 PM EST
    I get so sick of the cultural pomposity of all those who speak of this topic.  The lies are perpetuated and compounded.  He takes on each if the myths perpetuated by the culprits.  The EU with all it's cleverness is letting the markets invade Greece.  The privatization is horrible.  

    Thank you Annie.  

    Parent

    There's Been a Whole Series (5.00 / 2) (#25)
    by The Maven on Tue Jun 21, 2011 at 12:22:21 PM EST
    of excellent articles by Michael Hudson at NC on the Greek situation (with references to the austerity crowd over here as well), including:
    --Replacing Economic Democracy with Financial Oligarchy, June 3, 2011

    --Will Greece Let EU Central Bankers Destroy Democracy?, June 6, 2011

    --The Financial Road to Serfdom - How Bankers are Using the Debt Crisis to Roll Back the Progressive Era, June 13, 2011

    Essentially, the ECB and their allied bankers are attempting to accomplish the privatization of the entire public sphere, leaving government with little-to-no impact on the populace's daily lives.  Grover Norquist would surely applaud.

    Parent

    Wow (none / 0) (#15)
    by sj on Tue Jun 21, 2011 at 11:59:24 AM EST
    really powerful article.

    Parent
    Also, I (none / 0) (#19)
    by sj on Tue Jun 21, 2011 at 12:12:28 PM EST
    hadn't even heard of Los Indignados until that article.  Thank you.

    Parent
    Yup, what we've got is a case of M.A.D. (5.00 / 2) (#28)
    by NYShooter on Tue Jun 21, 2011 at 12:31:15 PM EST
    Mutually assured destruction.

    There simply is no one good answer, just a bunch of "less bads."

    Everyone here has stated some facts, some possible steps to take, and, of course, some plain crazy ideas.

    As far as Greece voluntarily defaulting, someone here stated that it would be "lights out" for Greece as no one on earth would help in that event. I agree, It would make austerity look like a Roman, Gluttonous feast. However, if they choose that option, and are willing to suffer real traumatic pain for a good long while, and if they get some enlightened Leadership that can realistically reassess its assets, then somewhere down the road Greece can have a pretty good future.

    But the greater risk, or Black Swan, if you will, is what happens to the rest of Europe? I contend that nobody knows, like with our derivative exposure, nobody can know what the effects will be on the whole enchilada, Europe.....followed by....everyone else.

    If it were me, I'd tell'm to phuck off. I'd rather die standing erect, than be subjugated to the vampires that caused this disaster.

    And please don't give me that nauseating, selective crap about how "nobody put a gun to their heads, and blah blah yadda yadda, puke! They are human beings no better, or worse, than any of us. When you have the combined wealth, power, and devious, criminal intent that the Trillionaire Goldmans, Chases, Citis, et al have; and when they utilize every marketing scheme known to man to "refinance, invest, roll over," and so on, no country on the planet could, or did, reject those advances. Put the damn blame where it so rightfully belongs: Right square in the fat guts of the Plutocrats who are making their final takeover attempt of the world.

    They may have the money, but when the realization hits that they didn't "earn it," but rather bribed, blackmailed, tricked, and plain stole it, then I wonder how Jamie Damon wil feel when a few thousand of the "lower 99%" comes-a-calling to one of his mansions demanding what was robbed from them.

    THAT'S what Europe is afraid of, and by extension, so are the American Oligarchs.

    Tell`m "Up Yours!" Greece.  

    Secret fantasy (5.00 / 1) (#31)
    by Stellaaa on Tue Jun 21, 2011 at 12:38:48 PM EST
    Greece defaults and creates a Balkan and Middle Eastern alliance.  Sort of a new Byzantine/Ottoman alliance.  We did it the Western way and that did not work.  Bring back the raw markets of the bazaar.  Let the Western Europeans have their toys.  

    We had and still have a saying in Greece: One Europe, but some are more European than others.  

    Wealth and health is more equally shared (5.00 / 1) (#45)
    by Militarytracy on Tue Jun 21, 2011 at 01:05:12 PM EST
    at the bazaar.  That's for damned sure.

    Parent
    At this point, (none / 0) (#3)
    by jeffinalabama on Tue Jun 21, 2011 at 10:00:08 AM EST
    we have a country in the headlights, Greece, that people from NGOs and transnational entities want to tell what to do. How long will the Greeks put up with it?

    The EU may have it's first secession. One could hardly blame Greece.


    Why is Greece blameless? (none / 0) (#13)
    by AngryBlackGuy on Tue Jun 21, 2011 at 11:55:28 AM EST
    I am very confused by the need to put the white hats on Greece and the black hats on the EU and everyone else. Most of Greece's issues are problems of their own making. Unlike other countries of similar size, lots of their debt is in foreign hands and they turned over a lot of their power. Their slow growth can't keep up with their debt and their current situation is unsustainable.  If they default, they will get killed on the financial market in the future and at a time when they need cash for growth, none will be available.

    As terrible as it is, the EU isn't insisting on austerity measures because they are evil or hate the people or whatever.  They are insisting on them because Greece wants to be bailed out again and no rational person wants to make an investment in a company or country that can't get its expenses under control.

    The average citizen isn't responsible but the parties those citizens elected are.

    My personal opinion is that there is no right answer. If they default the people will suffer and if the austerity route is taken, they will suffer slightly less.

    If anyone thinks there is a way to fix Greece without some years of misery, they should speak up. I can't see it.

    Parent

    Why are you interested in blame? (5.00 / 3) (#24)
    by Big Tent Democrat on Tue Jun 21, 2011 at 12:21:40 PM EST
    Blame must be allocated so (5.00 / 5) (#29)
    by MO Blue on Tue Jun 21, 2011 at 12:32:55 PM EST
    that you don't help regular people who don't deserve to be helped.

    Only banksters and savvy businessmen can be bailed out regardless of their reckless behavior.

    Parent

    There shall be no blame placed on the CEOs (5.00 / 1) (#41)
    by Militarytracy on Tue Jun 21, 2011 at 12:57:53 PM EST
    How well we can all remember bailing them out with our grandchildren's wealth and then the next round of bonuses was even larger than the huge ones they gave themselves before we found out they were all broken and broke.

    Parent
    Blame (none / 0) (#32)
    by AngryBlackGuy on Tue Jun 21, 2011 at 12:39:18 PM EST

    Someone is going to have to take a fall.  Whether that is the Greek population or the bondholders and shareholders (including teachers and other good folks through pensions and other methods) or the people of the EU who have to foot the bill, there will be someone unfairly impacted.  In trying to decide who should take the hit, I think it is fair to look at who is primarily responsible from a moral perspective. The fact that austerity is an option, and we as liberals identify with those fighting against it, predisposes many of us to side with the Greek protestors, but I don't know if that is fair blame allocation.

    It could be that we hate austerity AND believe that the Greeks population brought this upon themselves with unwise elections and an inability to make hard financial decisions.

    At the end of the day, blame will color who I think should shoulder the biggest burden for their bailout.

    2. If I am a citizen of Germany or France, I feel better about bailing out Greece if it turns out that I unfairly  benefited somehow from their downfall.  

    Parent

    Bosch and Siemens (5.00 / 2) (#39)
    by Stellaaa on Tue Jun 21, 2011 at 12:49:30 PM EST
    It was fine when they were making the contracts and bribes to the corrupt politicians to earn the contracts.  Like the economic collapse here, you have taken a basic failure of an economic system and made it a personal/national responsibility.  

    Step back and accept that the global economy is broken and the old school calvinist morality and blame calculus is an overisimpification that only fuels xenophobia and bad solutions.  

    Parent

    Not an answer (5.00 / 1) (#49)
    by Big Tent Democrat on Tue Jun 21, 2011 at 01:10:03 PM EST
    imo.

    The best solution is not looking for ONE entity to take a fall.

    Parent

    The EU (5.00 / 2) (#26)
    by Warren Terrer on Tue Jun 21, 2011 at 12:26:55 PM EST
    is insisting on austerity because it represents the non-Greek banks who lent to Greece and want their money back. This is how the IMF operates. Selling off the country to foreign bankers to pay off the debt is madness and the Greek people should toss out their government and put a stop to it immediately.

    If they default and go back onto their own currency they can begin a stimulus program right away (not that they will, but they could). This won't be simple but it will be far better than waiting for austerity to work. Austerity will make the Greek economy worse and worse, generating lower revenue and higher expenditures for the government, requiring further borrowing by the government at increasing rates of interest. Either the EU must bail them out or Greece must default in whole or in part. There is no other way out of this.

    Parent

    Where does the money (none / 0) (#33)
    by AngryBlackGuy on Tue Jun 21, 2011 at 12:42:03 PM EST
    for that stimulus program come from?

    Also, because the EU is financing that debt and will have its economy thrown into chaos if Greece defaults, they have a legitimate interest in making sure Greece upholds its obligations.
     

    Parent

    It comes from (5.00 / 2) (#35)
    by Warren Terrer on Tue Jun 21, 2011 at 12:43:35 PM EST
    where all fiat money comes from. The government spends it into existence. Where do you think money comes from?

    Parent
    They may have (5.00 / 1) (#37)
    by Warren Terrer on Tue Jun 21, 2011 at 12:46:10 PM EST
    a legitimate interest in saving Greece, but they don't see it that way. Their legitimate interest is in saving their own national banks. If it was about saving Greece the ECB would simply lend Greece the money it needs or engage in some form of stimulus spending. If only the euro had a central treasury. Alas it does not, a huge flaw in its design.

    The EU plan right now is to squeeze Greece for every drop of blood and pray that the world economy improves in the mean time. That's not a plan to save Greece.

    Parent

    The full faith and credit of the ECB? (none / 0) (#36)
    by andgarden on Tue Jun 21, 2011 at 12:44:00 PM EST
    No (5.00 / 2) (#38)
    by Warren Terrer on Tue Jun 21, 2011 at 12:47:47 PM EST
    I'm referring to the Greek government spending its own currency into existence, not the ECB. Greece should immediately abandon the euro and the ECB.

    Parent
    Ah, right (none / 0) (#43)
    by andgarden on Tue Jun 21, 2011 at 01:01:02 PM EST
    I misread the thread.

    Parent
    At least Argentina (none / 0) (#4)
    by me only on Tue Jun 21, 2011 at 10:13:23 AM EST
    had oil and soy products to export.  Greece imports oil, natural and coal.  That works for Japan, but Japanese labor productivity is very high and Greek productivity is terrible.

    Productivity data (5.00 / 5) (#5)
    by Stellaaa on Tue Jun 21, 2011 at 10:36:27 AM EST
    I always cringe at productivity rates as indicators of economic virtue.  America is very productive, but the economy sucks.  

     

    Parent

    Stellaaa, your (5.00 / 1) (#6)
    by jeffinalabama on Tue Jun 21, 2011 at 10:46:55 AM EST
    comment about Moody's and S & P is right on target, as is the one on productivity.

    I must say, though that outside observers do examine those numbers, and give them meaning. I don't often watch, for example, CNBC, but the announcers there-- can't really call them newspeople, or business reporters, too much opinion going on, tend to throw around such numbers.

    So they speak in a jargon that reflects economics, but not the existential reality. There's no good 'misery index' out there. Why? Would you want to be the president under whom the misery index doubled?

    As long as we treat these entities as real, the Emperor's clothes look fantastic. It's that step back that lets us see that, in fact, he's naked and it's all made up, just like fairy tales or Harry Potter.

    Parent

    Jeff, you do know (none / 0) (#66)
    by NYShooter on Tue Jun 21, 2011 at 02:04:37 PM EST
    that there's a real "misery index," don't you?

    "The misery index is an economic indicator, created by economist Arthur Okun, and found by adding the unemployment rate to the inflation rate."

    For what its worth, Obama's on his way to have the highest misery score of any President since the index was born.  If the trend continues, his re-election is in mortal jeopardy.


    Parent

    It's called a misery (none / 0) (#71)
    by jeffinalabama on Tue Jun 21, 2011 at 02:27:51 PM EST
    index, but it's too abstracted from the people who are miserable, in my opinion. Another situation where macro data doesn't report what happens on the ground.

    Parent
    Not really (none / 0) (#101)
    by NYShooter on Tue Jun 21, 2011 at 08:17:49 PM EST
    If you're unemployed, and the necessities of life (food, fuel, clothing) are increasing in cost so fast that the few pennies you might scrape together somehow wouldn't buy you anything anyway......I'd say that misery is pretty "micro," no?

    Anyway, thanks for bringing up the index, I had forgotten about it. Regardless of whether you view it as "macro," or "micro," the fact seems to be that's its a most accurate indicator.

    Just take a look at the little boy who was lifted up into the President's seat in 2000, and even after that horrendous mistake, We Re-elected the dunce four years later. Guess what? As bad as he was, the misery index in '04 was really quite low. Both inflation and unemployment were low and Americans don't throw out Presidents when thats the case.

    Anyway, its kind of interesting........unless you're Obama.

    Parent

    well I AM currently unemployed. (none / 0) (#102)
    by jeffinalabama on Tue Jun 21, 2011 at 08:22:12 PM EST
    The combination of these two doesn't describe my reality... it's an abstraction. It woks as a macro tool, but it doesn't mention such areas as, say differing unemployment payouts in different states, bills, lack of cooperation from banks concerning loans, insurance, etc.

    It's a macro tool, but not a micro tool.

    Parent

    Oh, I wouldn't worry about that (none / 0) (#72)
    by nycstray on Tue Jun 21, 2011 at 02:32:01 PM EST
    If the trend continues, his re-election is in mortal jeopardy

    They'll just blame Greece, or sumthin' ;)

    Parent

    Hear hear! (none / 0) (#11)
    by Militarytracy on Tue Jun 21, 2011 at 11:47:01 AM EST
    Greece default or grease the fault? (none / 0) (#8)
    by Dadler on Tue Jun 21, 2011 at 11:28:50 AM EST
    Like you, I suggest the latter, which will make the EU quake.

    Greece defaults, and its economy ... (none / 0) (#12)
    by RonK Seattle on Tue Jun 21, 2011 at 11:48:18 AM EST
    ... stops on a dime. No bailouts, no credit, no purchasing power, no food, no fuel, no nothing.

    Whether or not the domino cascade teaches the EU a lesson, Greece falls immediately into far worse austerity than any yet proposed.

    Yes, EU has more to lose, because EU is bigger -- but Greece is swiftly and surely screwed.

    Greece is screwed regardless (5.00 / 3) (#16)
    by sj on Tue Jun 21, 2011 at 12:09:48 PM EST
    At the end of a bailout, the Greek people have already lived under those conditions, will (if the bankers have their way) have lost much of their very land (really? the money men are telling them to sell their islands to private interests?), will owe even more and will be no better off in the end.  The markets?  They'll be happy.

    I don't know about the Greek people, but speaking for myself, I'm much more prepared to live with austerity if the end of the road means stability for me and mine.  The austerity being proposed here is for the same beneficiaries as the austerity abroad.  And this not for the ultimate benefit of our citizens.  It's for the benefit of the plutocracy.  

    Something is going to give.  Either full out capitalism will fall under its own weight or it's back to the Robber Barons and serfs model of society.

    This is what happens when the concept of the Common Good is thrown away.  It's chilling.  Really, really chilling.

    Parent

    Got a link for that prediction? (5.00 / 1) (#17)
    by Big Tent Democrat on Tue Jun 21, 2011 at 12:11:40 PM EST
    Everyone said that about Argentina.

    At one point, I would have agreed with you.

    After Argentina, I have become skeptical of these claims.

    Parent

    I think the basic argument (none / 0) (#20)
    by andgarden on Tue Jun 21, 2011 at 12:15:27 PM EST
    is that Greece doesn't have any domestic industry worth a damn.

    I personally don't know enough to say, but if I were Greek, I would be thinking long and hard about whether to die of starvation (austerity) or to take a risk by "walking away."

    Parent

    That argument is ludicrous (5.00 / 5) (#23)
    by Big Tent Democrat on Tue Jun 21, 2011 at 12:20:40 PM EST
    Greece has an economy that does what it does. I'm no expert on it, but I'm not a believer in the "you have to make things" version of economics.

    What Greece would lose is access to credit. How much credit does it get now? I imagine not a lot and not at a good price.

    So who is going to cot them off - the rest of Europe? This is the same bluff that Europe is playing now. Personally, I am not sure that Greece is not sitting in the better bargaining position.

    In fact, I'm pretty sure they are. I think they have less to lose. And that the loss will not be catastrophic as implied in Ron's comment.

    I thought it would be for Argentina and I was wrong. Won;t be fooled again.  

    Parent

    Greece won't need (5.00 / 1) (#30)
    by Warren Terrer on Tue Jun 21, 2011 at 12:33:13 PM EST
    access to credit if it runs its own fiat currency. A country sovereign in its own currency has no need to borrow that which it creates. Unfortunately this stark fact is denied. If its true implications were understood no country would have ever gone on the euro in the first place.

    Parent
    value, then sure.

    Parent
    The drachma (5.00 / 1) (#50)
    by Warren Terrer on Tue Jun 21, 2011 at 01:14:08 PM EST
    had value before the euro, it can have value afterwards.

    Ask yourself this though. If you created your own money and everyone else wanted that money, would you ever have to borrow it? Does Saudi Arabia ever have to borrow oil?

    Parent

    I accept your point (none / 0) (#51)
    by Big Tent Democrat on Tue Jun 21, 2011 at 01:18:12 PM EST
    But Greece's currency is not the dollar so, their situation is not the same.

    Nonetheless, not seeing the argument for catastrophe as a result of default, mostly because Greece is not exactly a debt market darling anyway.

    Parent

    Greece's currency (none / 0) (#53)
    by Warren Terrer on Tue Jun 21, 2011 at 01:23:00 PM EST
    isn't the dollar, it's the euro. The euro is supposedly a powerhouse of a currency, second only to the USD. In fact its value against the USD has only gone up on average since its introduction.

    And yet Greece is in one heckuva major economic crisis, the value of its currency notwithstanding. I think we can conclude that the forex value of one's currency doesn't automatically equate with economic success.

    Parent

    I think the basic explanation (none / 0) (#55)
    by andgarden on Tue Jun 21, 2011 at 01:24:20 PM EST
    is that the value of the Euro probably reflects the state of Germany's (and perhaps France's) economy. At least, I think that was Paul Krugman's speculation.

    Parent
    I agree with that (5.00 / 1) (#58)
    by Warren Terrer on Tue Jun 21, 2011 at 01:28:41 PM EST
    but my point is that the value of your currency becomes irrelevant if your economy is collapsing.

    Greece needs to get off the euro and go back to the drachma. Yes the new drachma will probably decline in value over time, but it will stabilize once the Greek economy begins to grow again.

    And Greece will never have to borrow its own currency. Fiat countries do so entirely as a relic of the gold standard, not because it gives their currency value.

    Parent

    I'm inclined to agree (none / 0) (#34)
    by andgarden on Tue Jun 21, 2011 at 12:43:31 PM EST
    But for whatever reason, the Greek government seems to be playing along.

    Who will remember in ten years?

    Parent

    The Greek People will remember. (5.00 / 3) (#60)
    by inclusiveheart on Tue Jun 21, 2011 at 01:42:56 PM EST
    They have no where near as forgetful a culture as we have.

    Based on the people's response there, they are also no where near as docile as we are when faced with invaders.

    Parent

    Tell me about it. (5.00 / 2) (#83)
    by Zorba on Tue Jun 21, 2011 at 03:32:35 PM EST
    Mention the Turkish Ottoman Empire to a Greek, and you'll get an earful.  Ask about Cyprus- same thing.  The Former Yugoslav Republic of Macedonia, ditto.  As I tell my friends, the Greeks don't just hold grudges for days, weeks, months, years, or even decades.  They hold grudges for centuries.  They'll remember.  

    Parent
    Remember.... (5.00 / 1) (#86)
    by Stellaaa on Tue Jun 21, 2011 at 04:09:38 PM EST

     My father used to say us Greeks are like potatoes, everything we cherish is buried underground.  

    There seems to be a notion that Greeks are not doing some soul searching over this.  That they went on a mad spree and now they are crying uncle.  Sorry to burst your bubble, there is a lot of self reflection.  The point is that Greece is being used as the sacrificial lamb of the markets to break down sovereign power.  

    The EU did no give Greece money, they just let them borrow at a lower rate, but still high rate.  The German taxpayer is not paying for the Greeks anything.  

    Parent

    You're not bursting (none / 0) (#90)
    by Zorba on Tue Jun 21, 2011 at 04:34:55 PM EST
    my bubble.  I agree with you.  Of course there is a lot of self-reflection.  They don't actually hold grudges for no reason- they have legitimate, ongoing reasons for being mistrustful of Turkey, and, to a lesser extent, ΠΓΔΜ (Πρώην Γιουγκοσλαβική Δημοκρατία της Μακεδονίας)- FYROM.

    Parent
    Beware Germans bearing gifts. (5.00 / 1) (#93)
    by jeffinalabama on Tue Jun 21, 2011 at 05:04:59 PM EST
    Greece is just the latest example of hegemonic solutions that benefit the people not at all. If Greece falls, will that be the straw that collapses this house of smoke we call the world economy? If it's that fragile even now, years into the 'recovery,' then the system isn't working.

    Untrammelled capitalism rarely does work, though. There HAS to be regulation. And that regulation should never be top-down.

    Parent

    I don't even know why (none / 0) (#95)
    by Zorba on Tue Jun 21, 2011 at 05:16:12 PM EST
    so many European countries thought that it was a good idea to have the same currency.  Free trade, sure.  Open borders, why not?  Environmental and human rights regulations standardized, makes sense.  But the same currency?  It just leads to a bigger likelihood for, as you suggest, hegemonic solutions.  Not necessarily for what may be the best for a particular country or for the people in that country.

    Parent
    That is certainly where all this ended up (5.00 / 0) (#96)
    by Militarytracy on Tue Jun 21, 2011 at 05:21:52 PM EST
    I meant "remember if they default" (none / 0) (#62)
    by andgarden on Tue Jun 21, 2011 at 01:45:50 PM EST
    No one (none / 0) (#63)
    by Warren Terrer on Tue Jun 21, 2011 at 01:49:57 PM EST
    Especially the people who are predicting that default will be a catastrophe for Greece. They won't want to remember just how wrong that prediction was, just as they were wrong about Argentina and wrong about Iceland and don't want to remember that.

    Parent
    I think that's probably right (none / 0) (#65)
    by andgarden on Tue Jun 21, 2011 at 02:03:45 PM EST
    Oh hey (5.00 / 1) (#68)
    by Warren Terrer on Tue Jun 21, 2011 at 02:15:20 PM EST
    I meant to tell you earlier, here's a pretty good primer website on modern monetary theory (MMT) if you are interested.

    I think all progressives really need to take the time to understand MMT because, not only is it logically the best explanation I have ever seen of how money really works, but it is essential to advance progressive goals that we abandon the fallacious 'deficit doveism' that has plagued liberal thinking and gotten us nowhere over the past 40 years.

    Parent

    And, just like tax cuts (none / 0) (#76)
    by me only on Tue Jun 21, 2011 at 03:03:46 PM EST
    pay for themselves (Right), MMT cures every economic ill and Cures AIDS (LEFT).

    I wish people were smart enough to realize that life isn't played out in classroom.  Argentina had a miserable few years after default.  Today their inflation rate is in neighborhood of 20%.

    Parent

    Nobody is saying that default is (5.00 / 1) (#78)
    by andgarden on Tue Jun 21, 2011 at 03:15:16 PM EST
    all flowers and candy. The point is that it's probably the last bad option.

    Parent
    That is probably right. (none / 0) (#88)
    by me only on Tue Jun 21, 2011 at 04:13:37 PM EST
    The problem is that it appears the Greeks want a return to 1990-2008.  Default is not going to give them that.

    In the short term due to lack of a currency they might even have significant shortages of fuel and food.

    It might end fine (long term), but the short term is going to be a big mess.

    Parent

    What a lie (none / 0) (#80)
    by Militarytracy on Tue Jun 21, 2011 at 03:18:10 PM EST
    In May their inflation rate was .7% and the GDP for the year is projected at 7.7%.  Unlike how all of the gloomy projections for our economy have to be readjusted later on when the real figures come in to be even gloomier, Argentina's projected GDP had to be raised by who?  By Goldman Sachs.  Argentina refuses to do as badly as Wall Street keeps trying to project them doing while our own financially ruined country can't meet any of its Wall Streets projections no matter how bad they are or how low that bar is.

    Some people are willing to even be more honest and project that Argentina GDP will hit 8% this year.  The vampire squid is killing us, but keep fiddling.

    Parent

    HAHAHAHAHAHAHAHA (none / 0) (#87)
    by me only on Tue Jun 21, 2011 at 04:10:53 PM EST
    Nobody even believes the "official" rate, and since the government now fines economists for publishing their own rate, we'll never know.

    But 0.7% is a lie.

    Parent

    And also (5.00 / 2) (#94)
    by Militarytracy on Tue Jun 21, 2011 at 05:07:54 PM EST
    is inflation due to incredibly high aggregate demand really an enormous problem?  If only our problem was that aggregate demand was causing our imflation to shoot up instead of speculators trying to bleed one of the few veins left dry.

    Parent
    Your link leads open (none / 0) (#91)
    by Militarytracy on Tue Jun 21, 2011 at 05:00:02 PM EST
    an email window.

    Parent
    2 (none / 0) (#98)
    by me only on Tue Jun 21, 2011 at 07:01:49 PM EST
    And it is Goldman Sachs saying how great they (none / 0) (#92)
    by Militarytracy on Tue Jun 21, 2011 at 05:00:54 PM EST
    are.......the same people you seem to listen to about everything else.

    Parent
    So that is your retort? (none / 0) (#99)
    by me only on Tue Jun 21, 2011 at 07:03:39 PM EST
    I don't read anything by Goldman Sachs, but if it makes you feel better believe whatever foolishness you want.

    Parent
    0.7% is a monthly rate, not an annual rate (none / 0) (#103)
    by RonK Seattle on Tue Jun 21, 2011 at 10:15:55 PM EST
    CIA Factbook estimates full year 2010 inflation [consumer prices on a purchasing power parity basis - other methodologies may vary] at 22.0% - 3rd worst among 223 national entities for the year.

    Parent
    May I suggest (5.00 / 2) (#27)
    by Stellaaa on Tue Jun 21, 2011 at 12:31:09 PM EST
    Reading  Annie's link.  One industry of note is shipping.  

    Parent
    Not to mention (5.00 / 2) (#40)
    by Zorba on Tue Jun 21, 2011 at 12:51:59 PM EST
    tourism, which is not to be sneezed at.  Last I read, it was about 15% of Greece's GDP.

    Parent
    They've got tourism. n/t (none / 0) (#52)
    by inclusiveheart on Tue Jun 21, 2011 at 01:21:58 PM EST
    Indeed (none / 0) (#54)
    by andgarden on Tue Jun 21, 2011 at 01:23:20 PM EST
    And probably they could offer considerable bargains after a devaluation.

    Parent
    But they need to hold onto (5.00 / 3) (#57)
    by inclusiveheart on Tue Jun 21, 2011 at 01:28:40 PM EST
    their airports and other infrastructure to do that...  I'd tell the bankers to wait their turn and start rebuilding with my assets in tact.

    Parent
    The Airport (none / 0) (#61)
    by Stellaaa on Tue Jun 21, 2011 at 01:45:07 PM EST
    The new Athens airport is operated by the Germans.  They probably financed it.  

    Parent
    Lucky they can't repossess it (5.00 / 4) (#67)
    by inclusiveheart on Tue Jun 21, 2011 at 02:07:16 PM EST
    as if it were a car.

    Parent
    It is because people carry on (none / 0) (#44)
    by Militarytracy on Tue Jun 21, 2011 at 01:03:52 PM EST
    We will get up in the morning and carry on with our lives and use the resources we have.  The systems serve us until oligarchs take them over and brainwash everyone otherwise. We don't serve the financial systems, they serve us and they can't survive without us and when some system explodes it does not mean that we will because we are what is alive and drives everything....not some nonliving feeling breathing system.

    Parent
    This is my point (none / 0) (#14)
    by AngryBlackGuy on Tue Jun 21, 2011 at 11:57:14 AM EST
    Default will cost more benefits to disappear than austerity.  

    There just won't be any money to fulfill the promises if they default.

    Parent

    Argentina? (5.00 / 1) (#18)
    by Big Tent Democrat on Tue Jun 21, 2011 at 12:11:57 PM EST
    Argentina surpluses and exports food (none / 0) (#42)
    by RonK Seattle on Tue Jun 21, 2011 at 01:00:02 PM EST
    ... and is a little better than internally self-sufficient in energy. Both are essential to self-sufficiency, and either one is "good as gold" in certain international markets no matter what the currency situation.

    Greece is in rather corner-opposite position as far as ability to weather the storm -- and recall that Argentina's years between default and restructuring were no picnic.

    Parent

    But Argentina still has their country (5.00 / 2) (#56)
    by inclusiveheart on Tue Jun 21, 2011 at 01:24:56 PM EST
    and their nationally held assets.

    If Greece does what the EU bankers want, they will still be impoverished and in debt - which they clearly already are - and be with no assets to build upon.  Why do that if they don't have to?

    Parent

    Meh (none / 0) (#48)
    by Big Tent Democrat on Tue Jun 21, 2011 at 01:08:52 PM EST
    Not really.

    Argentina trade was fine after default.

    Argentina was not a net exporter.

    Parent

    Heh (none / 0) (#59)
    by RonK Seattle on Tue Jun 21, 2011 at 01:40:13 PM EST
    Deny the facts, and miss the point.

    Can't argue with that!

    Parent

    If they go back (5.00 / 2) (#22)
    by Warren Terrer on Tue Jun 21, 2011 at 12:19:59 PM EST
    onto their own fiat currency they will have all the money they need to keep their promises. The problem is they are on the euro, a currency which they do not control but must obtain by borrowing or taxing.

    Greece runs a trade deficit. This means that money leaves the country, which strangles the economy. To counter this Greece borrows, both the government and the private sector, and has no mechanism for money creation, i.e. stimulus. It was as system that was bound to collapse.

    Parent

    Kickin the can down the road (none / 0) (#75)
    by Militarytracy on Tue Jun 21, 2011 at 02:56:59 PM EST
    that goes where everyone knows it goes :)

    Tracy, I think that was a spam comment, (5.00 / 1) (#79)
    by Anne on Tue Jun 21, 2011 at 03:18:06 PM EST
    at least that's what it looks like to me with the link that appears at the bottom.

    Parent
    Heh (none / 0) (#81)
    by Militarytracy on Tue Jun 21, 2011 at 03:19:12 PM EST
    I was just reading that it looks like they have decided to kick that can though.

    Parent
    Greece and Turkey (none / 0) (#97)
    by diogenes on Tue Jun 21, 2011 at 06:12:22 PM EST
    If Greece thumbs its nose at Europe, maybe Europe will stop running interference for it against Turkey.  Cyprus could easily be a Turkish island with no real security consequences for Europe.  

    Sounds like gunboat diplomacy to me (5.00 / 1) (#100)
    by andgarden on Tue Jun 21, 2011 at 08:05:52 PM EST