Question about Greek economy
Nov 3rd, 2011, 01:09 PM
#2
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Free money from Germany for over a decade. Resulting in the total destruction of the economy. Creating the perfect market for imported goods, destroying everything. The classic China syndrome. Create the perfect consumer creature.
Nov 3rd, 2011, 01:17 PM
#3
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The root cause is that few pay their taxes
And 25% of workers work for the government
at inflated wages basically has been unsustainable
for years as the world exonomy has stalled.
So the usual story...under-produce overborrow/spend
Robbing Peter to pay Paul
eventually you hit the wall and go belly up.
A country or an individual...
And 25% of workers work for the government
at inflated wages basically has been unsustainable
for years as the world exonomy has stalled.
So the usual story...under-produce overborrow/spend
Robbing Peter to pay Paul
eventually you hit the wall and go belly up.
A country or an individual...
Nov 3rd, 2011, 01:27 PM
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My recollection is that the international banksters convinced the Greek government to borrow money way beyond its means--not that the politicians did not jump at the opportunity. Greeks bonds became junk bonds when the market crashed.
Nov 3rd, 2011, 01:30 PM
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All borrowed at almost zero interst. No need to produce anything anymore but import ALL the things you need from Germany and China and consume.
The "trick" is to just give them the money to pay for the goods you produce. It was extremely well done.
The "trick" is to just give them the money to pay for the goods you produce. It was extremely well done.
Nov 3rd, 2011, 01:30 PM
#7
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The Greeks have operated a cash economy for years, generally this resulted in the population oaying far less tax as transactions were undeclared.
Their first shock to the system was the introduction of the euro. Those holding piles underclared drachma spent it on cars and property. The economy then experienced a new surge - debt.
People started to use personal credit which was previously unheard of. German and French banks were faced with their own financial markets being saturated and fell over backwards to lend to the Greek personal debt markets.
Throw in a credit crunch, huge government spending and a world recession, you end up with numbers that just don't add up. Greeks have also had a pretty low concept of civil responsibility, their first question has always been "what's in it for me?"
In my view, what ever is coming their way (and it could be very painful), they richly deserve.
Their first shock to the system was the introduction of the euro. Those holding piles underclared drachma spent it on cars and property. The economy then experienced a new surge - debt.
People started to use personal credit which was previously unheard of. German and French banks were faced with their own financial markets being saturated and fell over backwards to lend to the Greek personal debt markets.
Throw in a credit crunch, huge government spending and a world recession, you end up with numbers that just don't add up. Greeks have also had a pretty low concept of civil responsibility, their first question has always been "what's in it for me?"
In my view, what ever is coming their way (and it could be very painful), they richly deserve.
Nov 3rd, 2011, 01:31 PM
#8
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I think it was an agriculural economy prior to all the low interest borrowing for infrasturcture etc.
In general of course: Now they rely on tourists, it is a culture of tax avoidance and high spending on public employee benefits and salaries, low retirement age meaning the government doesnt have alot of money to pay for these benefits or to pay back the loans or the interest now demanded on their government borrowing.
Other countries in the EU have higher retirement ages, less public benefits, a higher rate of tax collection and are now being asked to pay to bail out the Greeks.
I can understand both sides - what is the answer? I think for a fiscal union to work you need to have a common political basis and economic policy. In Canada we have have and have not provinces - transfer payments ensure that all provinces have a common level of benefits/services. It works because we all have the same federal political system and economic policy. We also have the ability to control our economic policy. In the EU they dont so to ease inflation in countries like Germany the interest rate for the EU is being raised, which is hurting the peripheries because they arent able to devalue their own currencies to make themselves competitive.
So many issues...
In general of course: Now they rely on tourists, it is a culture of tax avoidance and high spending on public employee benefits and salaries, low retirement age meaning the government doesnt have alot of money to pay for these benefits or to pay back the loans or the interest now demanded on their government borrowing.
Other countries in the EU have higher retirement ages, less public benefits, a higher rate of tax collection and are now being asked to pay to bail out the Greeks.
I can understand both sides - what is the answer? I think for a fiscal union to work you need to have a common political basis and economic policy. In Canada we have have and have not provinces - transfer payments ensure that all provinces have a common level of benefits/services. It works because we all have the same federal political system and economic policy. We also have the ability to control our economic policy. In the EU they dont so to ease inflation in countries like Germany the interest rate for the EU is being raised, which is hurting the peripheries because they arent able to devalue their own currencies to make themselves competitive.
So many issues...
Nov 3rd, 2011, 01:35 PM
#9
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The BBC's take on the Greek issues:
http://www.bbc.co.uk/news/business-13798000
Italy's issues:
http://www.bbc.co.uk/news/business-15429057
Europe's big 4 issues:
http://www.bbc.co.uk/news/business-14934728
http://www.bbc.co.uk/news/business-13798000
Italy's issues:
http://www.bbc.co.uk/news/business-15429057
Europe's big 4 issues:
http://www.bbc.co.uk/news/business-14934728
Nov 3rd, 2011, 01:36 PM
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The Greeks have operated a cash economy for years, generally this resulted in the population oaying far less tax as transactions were undeclared.
Their first shock to the system was the introduction of the euro. Those holding piles underclared drachma spent it on cars and property. The economy then experienced a new surge - debt.
People started to use personal credit which was previously unheard of. German and French banks were faced with their own financial markets being saturated and fell over backwards to lend to the Greek personal debt markets.
Throw in a credit crunch, huge government spending and a world recession, you end up with numbers that just don't add up. Greeks have also had a pretty low concept of civil responsibility, their first question has always been "what's in it for me?"
In my view, what ever is coming their way (and it could be very painful), they richly deserve.
If they do leave the euro, look the situation facing German/French banks who have lent to that market.
1. Re-introduce the drachma at a hugely devalued rate to boost the economy
2. All personal debt is valued in euros
3. An individual earning 50,000 euros and owing 200,000 euros suddenly now earns 25,000 drachma and can't service the euro debt.
4. Banks get very bloody noses
5. European governments are already at the limit of their ability to bail anything else out
6. It could all get very messy
7. Thank God Lady Thatcher refused to have anything to do with the euro
Their first shock to the system was the introduction of the euro. Those holding piles underclared drachma spent it on cars and property. The economy then experienced a new surge - debt.
People started to use personal credit which was previously unheard of. German and French banks were faced with their own financial markets being saturated and fell over backwards to lend to the Greek personal debt markets.
Throw in a credit crunch, huge government spending and a world recession, you end up with numbers that just don't add up. Greeks have also had a pretty low concept of civil responsibility, their first question has always been "what's in it for me?"
In my view, what ever is coming their way (and it could be very painful), they richly deserve.
If they do leave the euro, look the situation facing German/French banks who have lent to that market.
1. Re-introduce the drachma at a hugely devalued rate to boost the economy
2. All personal debt is valued in euros
3. An individual earning 50,000 euros and owing 200,000 euros suddenly now earns 25,000 drachma and can't service the euro debt.
4. Banks get very bloody noses
5. European governments are already at the limit of their ability to bail anything else out
6. It could all get very messy
7. Thank God Lady Thatcher refused to have anything to do with the euro
Nov 3rd, 2011, 01:59 PM
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Nov 3rd, 2011, 02:34 PM
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It REALLY!! does very much look like it has, watch the chart and the USD as a comparison. It looks like it's on purpose.
The rate seems to be fixed at 1.40 with a small bandwith.
We'll hopefully find out in the next few days.
The rate seems to be fixed at 1.40 with a small bandwith.
We'll hopefully find out in the next few days.
Nov 4th, 2011, 02:54 AM
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Most of what DickieG wrote applies to Italy, Portugal, Spain, and Ireland, though Ireland is biting the economic bullet to an extent they are not happy about but which may save them.
Before the euro, countries in trouble simply printed more money (inflation). Thus Greece flirted with staying in the EU for all the benefits ehilr dropping the euro. The message yesterday was, no Euro, no EU. It is a fluid situation. Stay tuned.
Before the euro, countries in trouble simply printed more money (inflation). Thus Greece flirted with staying in the EU for all the benefits ehilr dropping the euro. The message yesterday was, no Euro, no EU. It is a fluid situation. Stay tuned.
Nov 4th, 2011, 04:23 AM
#20
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"The message yesterday was, no Euro, no EU."
From a Brussels bureaucrat, giving a bureaucrat's pedantic answer to a question he chose to interpret as a bureaucratic one.
Ultimately, the EU is run by the senior politicians of its member states. Not by its bureaucrats, nor (in the final analysis) by its treaties. The EU has got to where it is through ruthless pragmatism, and if there's one thing that unites ALL sane EU politicians (even the British), it's that EU membership, or the prospect of it, has been vital in turning 15 unaccountable and brutal dictatorships (among them Greece) into reasonably civilised democracies, and in ensuring its biggest member doesn't feel tempted to try dictatorship again
Expect the euro itself to be scrapped before anyone with a brain seriously threatens Greece with EU expulsion
From a Brussels bureaucrat, giving a bureaucrat's pedantic answer to a question he chose to interpret as a bureaucratic one.
Ultimately, the EU is run by the senior politicians of its member states. Not by its bureaucrats, nor (in the final analysis) by its treaties. The EU has got to where it is through ruthless pragmatism, and if there's one thing that unites ALL sane EU politicians (even the British), it's that EU membership, or the prospect of it, has been vital in turning 15 unaccountable and brutal dictatorships (among them Greece) into reasonably civilised democracies, and in ensuring its biggest member doesn't feel tempted to try dictatorship again
Expect the euro itself to be scrapped before anyone with a brain seriously threatens Greece with EU expulsion
