Greece? What gives?

[Rum]

Greece was invited to join the Euro after its cooked books were put in from of the commissioners, so eager for the political ambitions of the European project to be reached that they didn't see through the complete structural and fiscal mess of the country.

On the basis of that Greece hugely expanded its borrowing and its public sector and built on their already Byzantine bureaucracy and cooked the books further. The average public sector salary became three times that of the private sector. There are four times as many teachers per head than in Finland. The Athens underground train system is reported to have paid an average of £60000 to its employees. They have 200 professions which are/were allowed to retire at 50 (hairdressers and masseurs are amongst that lot!). The tax system was a shambles (shipping magnates are exempt from any tax because of the 'good' they do for the country). ..and so it goes on.

The Greeks could return to the drachma, devalue and undercut the rest of Europe and actually develop a new viable economy that would grow its way out of the depression it is certainly in now. Alternatively there could be a set of Euro exchange 'bands'..perhaps not as practical because Italy and Spain would want their own too. The reason the European leaders will resist that is of course politics, not economics. Sure there is fear about where Greece's personal and company based debt is residing and how much of that would be lost, but it is a tiny country - only 12 million - after all. The European project must succeed or you will be taken out and shot!

What the rest of Europe is doing is torturing a creature which is half dead already and which won't, I would lay a large bet, come out of this the way they are currently supposed to be trying to.

[Atheist-Lite]

They'll be better off outside the euro yet their economy is the one messed up. Allowing people to retire at fifty with a ageing demographic appears logical even if it is unsustainable. What is happening with youth unemployment in the UK shows what happens when you ignore a ageing demographic? My solution is to allow suicide booths and nudge people into taking the correct way out, showing the responsible way to a stable population dynamic with enough work for all. Seems all the practical alternatives are being tried and proven faulty as I expected them to be.

[Seth]

California? Really, Seth? I thought California was one of the more productive states.

It is productive, but it's currently more than 40 BILLION dollars in debt to it's public pension programs and entitlement spending and it's spending more than it takes in every second of every day.

Doesn't matter how productive a state is if it spends more than it can extract in taxes.

[Guy_Montag]

They shouldn't leave the euro, just default & simply stop paying bond holders. If they leave the Euro & go back to the Drachma or similar then it's the little people that lose out, those that can't offshore their funds; then there will be immediate massive inflation, again the poorest will be those worst affected. The northern europeans will hate them for doing it, because their banks are the bondholders, but it would be the best thing for the country & the population.

Some sort of default is coming, if it's not a hard default i.e. stopping paying creditors, it's a soft default i.e. devaluation & inflation. One hits the rich worst, the other hits the poor worst.

It'll be a soft default, because the poor are just cattle for the rich.

(CLASS WAR - EAT THE RICH)

[Svartalf]

You realize that as it is, the little people are already in a mess and rioting and whatnot, right?
As it is, the cuts in slararies, pensions and benefits have roughly the same effect as if the place were undergoing 3 digit inflation.

[Pappa]

http://www.reuters.com/article/2012/02/ ... HI20120221

Euro zone finance ministers sealed a 130-billion-euro ($172 billion) bailout for Greece on Tuesday to avert a chaotic default next month after forcing Athens to commit to unpopular cuts and private bondholders to accept deeper losses.

What does the rest of Europe think about Greece?

What do you think about it, Coito?

Not sure, really.

I think they have overspent, and are in a state of unsustainable debt and excessive public spending.

Other than that, I'm not really familiar with the ins and outs of the entire situation, how the Euro effects everything, and all that. Hux seems to have more insight.

I'm not sure if the overspending was really the cause. They cooked their books to enter the Euro in the first place... so they were already in a bad way before recession hit. It was a disaster waiting to happen really.

[Seth]

http://www.reuters.com/article/2012/02/ ... HI20120221

Euro zone finance ministers sealed a 130-billion-euro ($172 billion) bailout for Greece on Tuesday to avert a chaotic default next month after forcing Athens to commit to unpopular cuts and private bondholders to accept deeper losses.

What does the rest of Europe think about Greece?

What do you think about it, Coito?

Not sure, really.

I think they have overspent, and are in a state of unsustainable debt and excessive public spending.

Other than that, I'm not really familiar with the ins and outs of the entire situation, how the Euro effects everything, and all that. Hux seems to have more insight.

I'm not sure if the overspending was really the cause. They cooked their books to enter the Euro in the first place... so they were already in a bad way before recession hit. It was a disaster waiting to happen really.

It's the overspending...well, I won't finish that so as not to insult you.

What got Greece started down the road to ruin was entitlement spending and public-employee pensions, combined with an absolutely enormous public-employee workforce. I recall seeing a television show about Greece a year or so ago which pointed out that to do something as simply as modifying the interior of a restaurant there were more than a dozen government agencies and inspectors to be consulted...and paid off with bribes, as about every fourth person in Greece works for the government to begin with.

Then they borrowed something like 12 billion dollars for the Olympics, and built a bunch of venues that are now boarded-up, decaying white elephants.

Then they borrowed some more for military spending, and more yet for more socialist entitlement spending.

All the while, the average Greek was evading (justifiably) paying taxes by participating in an open-secret black-market economy that completely sidestepped the Greek government, which continued to borrow money and spend it without any constraint at all.

They may well have cooked their books, but it was the spending...and socialism...that got them into this pickle.

And you might want to note that most of the rioters are either anarchists or public employees who are losing their cushy jobs and pensions while the average Greek goes on about his black-market business trying to survive.

[charlou]

Seems to be a situation any country population could find themselves in, depending on circumstances, in striving to scale that capitalist ladder (not a comment on my views on that, just an observation).

[Seabass]

Seems to be a situation any country population could find themselves in, depending on circumstances, in striving to scale that capitalist ladder (not a comment on my views on that, just an observation).

What does "capitalist ladder" have to do with it? It's simple math really. If you spend more than you earn, you go into debt.

[charlou]

They're not mutually exclusive.

[charlou]

[Audley Strange]

What gives? Well certainly not the Greek Taxpayer.

[Seth]

Seems to be a situation any country population could find themselves in, depending on circumstances, in striving to scale that capitalist ladder (not a comment on my views on that, just an observation).

It's not the "capitalist ladder" it's the "socialist pit directly to Hell" that's responsible. Capitalism is an economic model and it absolutely doesn't support spending more than you earn. It's socialism that says "redistribute wealth till nobody has any wealth at all."

[Atheist-Lite]

Seems to be a situation any country population could find themselves in, depending on circumstances, in striving to scale that capitalist ladder (not a comment on my views on that, just an observation).

It's not the "capitalist ladder" it's the "socialist pit directly to Hell" that's responsible. Capitalism is an economic model and it absolutely doesn't support spending more than you earn. It's socialism that says "redistribute wealth till nobody has any wealth at all."

No, it is a ageing demographic that lacks the creative will to compete in a modern global capatilistic system. The answer is a cull of the ageing population. Just like ze US it is easy to lay the blame at California but who is really dragging the the US down - the entitlement culture of Florida and other uncreative, ageing demographics. Maybe it is instinct to gamble, borrow and steal and fritter away a currency that is being used to prop up a bunch of old fogeys with nothing to contribute?

[JimC]

As I understand it, before going euro zone, Greece was a highly regarded inexpensive holiday designation, and their tourism industry was doing well. After joining the euro zone, they became much more expensive, and are not nearly as attractive to northern European tourists...

Add to that the long-term effect of a feather-bedded public service, very poor tax compliance and widespread official corruption, and you have a mess...