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DominicConnor
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Greece Bailout

February 16th, 2015, 10:01 pm

No one has ever explained to me how Greece can leave the Euro.Mechanically, it's easy, "currency" can usefully be defined as whatever the government takes as taxes and whatever it chooses to pay in.Printing the paper will be hard, they'll probably have to outsource that to the UK and China, because of the sheer volume they will need, because...If Greece leaves then the new Drachma will be the currency of a government with a huge deficit and a credit rating worse than Zimbabwe, so its is hard to see any rational person accepting it in payment, except at a vast discount leading to Weimar level inflation.First up, we will see tourists paying in Pounds and Euro, with any place that can avoid using Drachma doing so.Despite having the best conditions for Solar power in Europe and a decent amount of wave and solar, Greece imports a remarkable amount of energy, indeed it seems to import more than the size of the economy implies, anyone know why ?Energy is priced in dollars, not a nice thing for a country without a hard currency.Greeks still genuinely believe they can vote themselves rich and so there will a two speed economy of people who can get hard currency through tourism and this being Greece through corrupt exchange controls, ie you won't legally be allowed to use Euro or Pound without permission gained through pay offs.That will lead to more voting for richness and strikes which simply reallocate wealth from people that do useful things to those who strikes have the most effect.I was in in the UK during the 70s this is exactly what happened, we came that close to a militatary take over, this is not a "long ago and far away" fantasy.The euro zone could take the sort of measures that the US tried (and failed) to use against Cuba for 50 years to try and stop them using the currency, didn't work on Cuba and the humanitarian crisis will be so bad that few will want to kick the drunk lying on the floor retching his guts up.This will fuel anti-immigrant feeling in the North and West of Europe, any Greek who can get out, will. Until now despite what one reads in the dimmer end of the ress, migration has been very low around the EU as a % of the population, mostly workers who are some mix of skilled and young. What happens when whole families, including older people and "workers" whose only skill is having a brother in law who "knows the right people" ?Greeks inability to deal with their own corruption and economic illiteracy will very probably cost us freedom of movement in the EU, one of its greatest accomplishments. It has nevr been very popular and this will probably sink it.
 
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Martinghoul
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Greece Bailout

February 17th, 2015, 7:56 am

QuoteOriginally posted by: AnthisQuoteOriginally posted by: MartinghoulBut if Greece is part of the EU, surely it should expect that some, if not most of these issues, are going to be a pan-European problem, rather than solely a Greek problem? Conversely, if Greeks feel that the EU is unable or unwilling to deal with these issues, maybe they shouldn't have ever joined such an arrangement?EU, unlike NATO, is not a defence coalition, consequently apart from few Frontex officers serving in Greece, trying to cope with illegal immigration there is no other assistance from other EU countries, neither its foreseen from any current EU treaties. Regarding illegal immigration, Greece is a tranzit country for most of these people, while its rather not impossible to enter the country from northern or eastern borders, if they dont get arrested, die from snow and frost, step into minefields, eaten by wolves or bears, or just get drown in the sea or a river, its almost impossible to pass to Italy and then to their eventual destination countries. That means those people are essentially trapped in Greece, a fact that offers some comfort to other EU countries. Moreover, Turkey being, supposedly, a NATO ally country, makes things more complicated, nothing is foreseen on NATO treaties in case to NATO countries engage in war between themselves. Thus, untill EU is transformed to some sort of federation and forms a common defence policy and defence forces, such issues are to be remained unresolved by EU. On the other hand, I am not sure why I should feel safer if Dutch armed forces units are stationed in say Lesbos, French in Kos, Brits in Crete, or Germans in Myconos.This, unfortunately, is telling me that, at least from this angle, membership in the EU is simply not an optimal for Greece.
 
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Anthis
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Greece Bailout

February 17th, 2015, 8:15 am

QuoteOriginally posted by: DominicConnorNo one has ever explained to me how Greece can leave the Euro.Mechanically, it's easy, "currency" can usefully be defined as whatever the government takes as taxes and whatever it chooses to pay in.I really laugh when I read on news thoughtful analyses about Grexit. Going from drachma to euro was a multiyear project, and this didnt happen without problems during the initial period. Yet some people think that changing currency will be something trivial like changing a shirt. There is no foreseen procedure to kick a eurozone member out, and a willful exit from eurozone for a member state implies an exit from EU too. Supposedly ECB can choke local banks to the point that ATM will run out of money and Greeks will beg to get out of euro, i am not sure if there is any genuine motivation for ECB to act like that. The new Syriza government, has been elected on a taugh anti-austerity rhetorics and plenty of demagogy, that has found ground on a rather heterogeneous voters' base. From youth (50% youth unemployment, especially on graduates), to pensioners (many of them have seen their pensions halved), civil servants (some have seen their pay reduced to 1/3, and their notorious job security is at risk), to tycoons (if you have parked your hard currency millions in foreign banks, upon a grexit you can buy out local assets really cheap). Many people voted them believing that they have just nothing to lose, "lets try them" they said. Even jailed leaders of golden dawn party issued a statement essentially supporting current government, insane...Currently, the new government tries to negotiate some milder austerity, i am not sure if they will succeed, but if they fail, for sure they will collapse and will be bashed by their own voters. Nevertheless, I tend to believe they are the best to fight corruption, because they are not vested in any interests yets. On the other hand it puzzles me its widespread support from civil servants, allegedly the most corrupted part of the society.
 
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Anthis
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Greece Bailout

February 17th, 2015, 8:22 am

QuoteOriginally posted by: MartinghoulQuoteOriginally posted by: AnthisQuoteOriginally posted by: MartinghoulBut if Greece is part of the EU, surely it should expect that some, if not most of these issues, are going to be a pan-European problem, rather than solely a Greek problem? Conversely, if Greeks feel that the EU is unable or unwilling to deal with these issues, maybe they shouldn't have ever joined such an arrangement?EU, unlike NATO, is not a defence coalition, consequently apart from few Frontex officers serving in Greece, trying to cope with illegal immigration there is no other assistance from other EU countries, neither its foreseen from any current EU treaties. Regarding illegal immigration, Greece is a tranzit country for most of these people, while its rather not impossible to enter the country from northern or eastern borders, if they dont get arrested, die from snow and frost, step into minefields, eaten by wolves or bears, or just get drown in the sea or a river, its almost impossible to pass to Italy and then to their eventual destination countries. That means those people are essentially trapped in Greece, a fact that offers some comfort to other EU countries. Moreover, Turkey being, supposedly, a NATO ally country, makes things more complicated, nothing is foreseen on NATO treaties in case to NATO countries engage in war between themselves. Thus, untill EU is transformed to some sort of federation and forms a common defence policy and defence forces, such issues are to be remained unresolved by EU. On the other hand, I am not sure why I should feel safer if Dutch armed forces units are stationed in say Lesbos, French in Kos, Brits in Crete, or Germans in Myconos.This, unfortunately, is telling me that, at least from this angle, membership in the EU is simply not an optimal for Greece.Please elaborate. Even if there is no expectation for common defence, EU membership upgrades geopolitics and economy which in turn contributes significantly to defence capabilities.
 
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Cuchulainn
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Greece Bailout

February 17th, 2015, 9:16 am

I am not an economist but what amazes me is that Greece held the Olympic Games in 2004. (Only a few years ago Montreal paid back it debt from 1976).The legacy ..QuoteAs of 2012 many conversion schemes have stalled owing to the Greek government-debt crisis. The annual cost to maintain the sites has been estimated at £500 million, a sum which has been politically controversial in Greece,[34] though many of these facilities are now under the control of domestic sporting clubs and organizations or the private sector.
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Cuchulainn
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Greece Bailout

February 17th, 2015, 9:16 am

I am not an economist but what amazes me is that Greece held the Olympic Games in 2004. (Only a few years ago Montreal paid back it debt from 1976).The legacy ..QuoteAs of 2012 many conversion schemes have stalled owing to the Greek government-debt crisis. The annual cost to maintain the sites has been estimated at £500 million, a sum which has been politically controversial in Greece,[34] though many of these facilities are now under the control of domestic sporting clubs and organizations or the private sector.That's half a billion. It would be interesting to see the original cast-benefit analysis report for Athens 2004...
Last edited by Cuchulainn on February 16th, 2015, 11:00 pm, edited 1 time in total.
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Martinghoul
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Greece Bailout

February 17th, 2015, 10:09 am

QuoteOriginally posted by: AnthisQuoteOriginally posted by: MartinghoulThis, unfortunately, is telling me that, at least from this angle, membership in the EU is simply not an optimal for Greece.Please elaborate. Even if there is no expectation for common defence, EU membership upgrades geopolitics and economy which in turn contributes significantly to defence capabilities.In which case, wouldn't it be fair to expect some sort of a downward trend in Greece's military spending as a %age of GDP after EU accession? Having taken a cursory look at the World Bank data, I don't see any evidence of this...My simplistic point here is that there are two possibilities, at least from this particular angle: 1) the Greeks have been sorta "taking a piss" and abusing the system, in which case Greece's membership is not optimal for the EU; and 2) the Greeks genuinely feel they get nothing from the EU, in which case Greece's membership is not optimal for Greece.I know I am trivializing the issue, but I am doing so intentionally.
 
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Cuchulainn
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Greece Bailout

February 17th, 2015, 2:30 pm

QuoteOriginally posted by: MartinghoulQuoteOriginally posted by: AnthisQuoteOriginally posted by: MartinghoulThis, unfortunately, is telling me that, at least from this angle, membership in the EU is simply not an optimal for Greece.Please elaborate. Even if there is no expectation for common defence, EU membership upgrades geopolitics and economy which in turn contributes significantly to defence capabilities.In which case, wouldn't it be fair to expect some sort of a downward trend in Greece's military spending as a %age of GDP after EU accession? Having taken a cursory look at the World Bank data, I don't see any evidence of this...My simplistic point here is that there are two possibilities, at least from this particular angle: 1) the Greeks have been sorta "taking a piss" and abusing the system, in which case Greece's membership is not optimal for the EU; and 2) the Greeks genuinely feel they get nothing from the EU, in which case Greece's membership is not optimal for Greece.I know I am trivializing the issue, but I am doing so intentionally.1) Greece got a huge bailout but not much has happened it seems.2) It would seem Greece is blaming the EU for its woes? In the case of poster-boy Ireland1) There was a bail-out and no one got burned except the people (BTW the banks crashed, not the economy).2) People blame the government and the bankers for the fiasco (and rightly so). It's all documented.
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DominicConnor
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Greece Bailout

February 17th, 2015, 4:32 pm

Martinghoul, sadly the NATO countries did recognize the possibility of war between NATO members, recall that it formed just after WWII, so the treaties were set up to avoid getting embroiled. Indeed a major reason military re-involvement of the US Europe comes from the point at which Britain lost the ability to defend Greece.The short version is that after WWII, Britain sort of "looked after" Greece but the whole UK economy was collapsing and the cabinet papers of the time talk about fears that Britain might not be able to feed its own people, let alone defend Greece against Russian insurgency and bullying in the south of its empire (not wildlyunlike today).At first the Americans found hilarious the idea that the might British Empire with it's superior technology, huge army, fighters that could piss on the USAF, nukes being built and a hard earned reputation for being generally good at killing people would have a problem "looking after" Greece (AIR there was no treaty). Then they saw the economic figures. Europe "led" by Britain (Germany was trashed, France was a mess), was about as capable of defending itself against Russia as girl scouts vs werewolves (that's a good name for a film). Today it is of course different. Greece refuses to grow up over its spiteful little squabble with Turkey, who is no better. A problem that many people have with this is that there are no good guys, just nationalist politicians (of the left and right) who make the Tea Party look like Vulcan philosophers.You're right about Mark Carney being far from perfect, I just said he was better than anyone involved in running Greece, that's not a high bar, my cat would choose a better leader than a Greek voter.
 
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Anthis
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Greece Bailout

February 17th, 2015, 5:29 pm

QuoteOriginally posted by: DominicConnorYou're right about Mark Carney being far from perfect, I just said he was better than anyone involved in running Greece, that's not a high bar, my cat would choose a better leader than a Greek voter.Do you mean demagogy and populism are unheard of and non existent in other countries? If this was true, I guess papers like the Sun or Bild, would have been bankrupt now.
 
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Anthis
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Greece Bailout

February 17th, 2015, 7:21 pm

QuoteOriginally posted by: CuchulainnI am not an economist but what amazes me is that Greece held the Olympic Games in 2004. (Only a few years ago Montreal paid back it debt from 1976).The legacy ..QuoteAs of 2012 many conversion schemes have stalled owing to the Greek government-debt crisis. The annual cost to maintain the sites has been estimated at £500 million, a sum which has been politically controversial in Greece,[34] though many of these facilities are now under the control of domestic sporting clubs and organizations or the private sector.That's half a billion. It would be interesting to see the original cast-benefit analysis report for Athens 2004...Olympics was a succesful and worthy project to take over. Left a lot of infrastructure projects done, promoted the country, especially the tourism industry, boosted GDP, at twp years before and after Olympics GDP growth was some 4% yearly. Some things might have been done even better in retrospect, but this doesnt change the overall picture. The budget was indeed overrun, mainly over security costs, but the initial budget was made some 10 years before the event. If there was a a deficit of surplus, it all depends on the point of view, what expenditures and benefits one tries to balance. In any case its rather silly to accuse the Olympics which cost some few billions for a public debt of ~300 billion.
 
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Martinghoul
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Greece Bailout

February 17th, 2015, 8:04 pm

QuoteOriginally posted by: DominicConnorYou're right about Mark Carney being far from perfect, I just said he was better than anyone involved in running Greece, that's not a high bar, my cat would choose a better leader than a Greek voter.Actually, I think I'd take Varoufakis over Mark Carney any day, tbh... Lots more substance to the former than the latter, IMHO.As to the history, my point was not to compare the EU with NATO, but rather to suggest another aspect of the EU where the underlying design is poor and lacks foresight. To be fair, it's all an instance of the same fundamental flaw that people have been talking about since the project started in earnest.
 
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Anthis
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Greece Bailout

February 17th, 2015, 8:12 pm

QuoteOriginally posted by: MartinghoulQuoteOriginally posted by: DominicConnorYou're right about Mark Carney being far from perfect, I just said he was better than anyone involved in running Greece, that's not a high bar, my cat would choose a better leader than a Greek voter.Actually, I think I'd take Varoufakis over Mark Carney any day, tbh... Lots more substance to the former than the latter, IMHO.As to the history, my point was not to compare the EU with NATO, but rather to suggest another aspect of the EU where the underlying design is poor and lacks foresight. To be fair, it's all an instance of the same fundamental flaw that people have been talking about since the project started in earnest.I am about to sell Varoufakis' only necktie at ebay...:DThough many people here paraphrase his surname to Baroufakis (baroufa=nonsense), no pun intented.
 
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Cuchulainn
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Greece Bailout

February 17th, 2015, 10:18 pm

QuoteOriginally posted by: AnthisQuoteOriginally posted by: CuchulainnI am not an economist but what amazes me is that Greece held the Olympic Games in 2004. (Only a few years ago Montreal paid back it debt from 1976).The legacy ..QuoteAs of 2012 many conversion schemes have stalled owing to the Greek government-debt crisis. The annual cost to maintain the sites has been estimated at £500 million, a sum which has been politically controversial in Greece,[34] though many of these facilities are now under the control of domestic sporting clubs and organizations or the private sector.That's half a billion. It would be interesting to see the original cast-benefit analysis report for Athens 2004...Olympics was a succesful and worthy project to take over. Left a lot of infrastructure projects done, promoted the country, especially the tourism industry, boosted GDP, at twp years before and after Olympics GDP growth was some 4% yearly. Some things might have been done even better in retrospect, but this doesnt change the overall picture. The budget was indeed overrun, mainly over security costs, but the initial budget was made some 10 years before the event. If there was a a deficit of surplus, it all depends on the point of view, what expenditures and benefits one tries to balance. In any case its rather silly to accuse the Olympics which cost some few billions for a public debt of ~300 billion.I did not say the Olympics caused all of the 300 billion debt, but something did. What was it then? Or did the money go up in smoke? A random search produced this: QuoteAlthough Athens put on successful Games, they went badly over their $4.6 billion budget and many believe that the debt accrued, $14-15 billion according to Stephen Wenn, Professor of Sport History and Olympic studies at Wilfrid Laurier University, contributed to the country?s financial crisis.In the months after the Games the shortfall was estimated to be around 50,000 euros for each Greek household but no official figure for the cost has ever been published.Athens lost the chance to change the face of the city, by failing to keep up the modernization started by the Olympics. Many of the venues lie vacant and rotting; the Independent newspaper reports as many as 21 out of 22 are unused. Promised parks never materialized, new transportation infrastructure has caused problems like flooding and increased traffic. The Socialist government decided to finance the full cost of the Olympic venues out of the public investment budget, without developing a strategy for post-games use. Wenn says Olympic ?success comes to those who most fully grapple with the issue of legacy and remain firmly fixed on what their city hopes to achieve.? But for Athens this does not seem to have happened. ..Debt $14 billion.
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Anthis
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Greece Bailout

February 18th, 2015, 4:30 am

Albeit I do not endorse the figure of 15 billion, because as I said earlier its a matter of what you count in, eg improving Athens roadways is an expenditure that might or might not be considered as relevant, it might have been deemed as necessary to host such a huge event, but this has saved Athenias billions of manhours in traffic jams every year since then. Its true that too many projects had to be completed within short deadlines and local contractors tried to corner the government, and most of the times succeeded. Its true that many venues, rotted after the games, there was new government in 2004 untill 2009, which was the worse one since 70s. On the other hand, a portion of this expenditure was recouped by the government in the form of VAT income tax and insurance contributions.On the other hand tourism statistics show that there were some 10-12 million tourist arrivals yearly before Olympics and some 16 million in the years after. This year it was some 22 million people. This difference is not negligible. I am curious to hear views from Londoners about the more recent London Olympics.QuoteI did not say the Olympics caused all of the 300 billion debt, but something did. What was it then? Or did the money go up in smoke? I read somewhere recently that the pension system, which is indeed problematic due to chronic mismanagement, not to mention demographics, has absorbed some 200 billion from government budget since 2000. If this figure reflects reality, and accrued interest is factored in, then it must be the No1 cause, given that public debt is accumulated primary deficits plus accrued interest.