Questions Regarding the Eurozone and Greece

[soonerhubs]

In the news we have heard news of numerous cries for and against austerity in the numerous Eurozone countries.

My questions: Do the Greeks truly have it so bad that they need to be rioting, or are they actually rioting because they aren't able to have 4 day work weeks, early retirement, and many other entitlements? I honestly would like to know if it's truly that bad over there? Are the riots justified? Are they honestly seeking work, and not able to find it?

Caveat: If you don't know, please refrain, and if you make a snarky comment towards any political affiliation, you are dubbed a poo-poo head in this thread.

TIA!

[rock on sooner]

My understanding of the situation is that it is bad with
extremely high unemployment with the Greek gov't
trying to do severe cuts to almost everything. The biggest
problem now is they can't really form a gov't because of so
many fragmented groups trying to seize control. The movement
is Europe is anti austerity. All the efforts to solve their problems
revolve around cuts, cuts and more cuts. Efforts for revenue increase
is stymied because of little economical growth.

Don't believe that rioting is the answer or is justified. The French
just changed leaders and more may be on the way.

[cleller]

Lots of it over my head, but the Euro situation is bad, and the Greek situation so bad that many of the EU economic people were stunned when it came to light how bad things are.
The two schools of thought on how to get out of these crises are either austerity; or "spend more", and grow out. With Greece, the situation was so bad, I believe any idea of "spend more" was impossible.
So now, you've got people that are having their lifeline pulled away. They're in a panic. Merchants are scared, because no one has any more to buy anything. Now the merchants can't pay their rent. The landlords can't pay their taxes, utilities...you get the idea.

So, rioting doesn't help, but the frustration is so high its the only outlet. Scary stuff, hard to imagine Greece will not default. Who knows what will happen then.

[Bourbon St Sooner]

My limited understanding of the situation in Greece is they have a huge public sector (I think I read that 40% of people work for the gov't) and a stagnant private sector. The gov't also has huge pension costs due to the generous retirement benefits. Foreign lending was allowing them to pay for all this, but that well has now dried up and the gov't doesn't have enough cash to meet its obligations.

Of course there's a lot of German banks that hold the Greek bonds so the German gov't has decided to bail out the Greek gov't to save its banks as well as the Euro. But to get bailed out they are forcing austerity on the Greek gov't. So the greeks can either accept the austerity or have the cash pipeline shut off which means default and probably getting kicked out of the Euro. The Greek people are seeing their gravy train getting shut off and blaming it on the German bankers. In short things are pretty bad and the options aren't good.

[diverdog]

Austerity is not going to work. Greece will default and leave the euro. Banks are already working on a soft landing if you will and the conversion to their old currency.

[KantoSooner]

Ah, the Drachma! You got it about right BSS. Fundamentally, the Greeks have little that anyone else wants. No natural resources, no ag products to speak of and they are not cheap enough to do grunt manufacturing and not skilled enough to compete with the Germans, Swiss, Austrians, French, et al.
Compound this with the fact that they've been living on the Euro gravy train for ten plus years being able to buy all that stuff they had never been able to afford.
Now it's time to pay the fiddler and they ain't got the money.

They'll riot, they'll have revolving door governments and ultimately some azzhole will take over; hopefully more of a Lyndon Johnson type azzhole rather than a Mussolini type, and the Greeks will go back to being great people, grindingly poor living in one of the world's most beautiful countries.

But, yeah, they're going down.

[Mississippi Sooner]

Opa! Yasu!

Do they still have the big Greek festival in OKC?

[soonerhubs]

Thanks for all the insightful comments. Kudos to all of you!

[SouthCarolinaSooner]

The protesters are angry with education cuts, pension cuts, sin and luxury taxes as well as the removal of university 'asylum' law. Some additional austerity measures that have been offered, like slashing minimum wage by 22%, and by a further 11% to those under 25. You can imagine that goes over well...

Debt is 155% of GDP, even with serious austerity measures I don't think they're going to get that down any soon. Spending out obviously doesn't work, I agree with others above me, Greece is heading to default. The best hope to save them is that someone else in the Eurozone (Germany) steps up to the plate and takes on Greece's debt. I don't think there's any EU protocol for this, and there is certainly no protocol in the Maastricht Treaty for any nation leaving the Euro. I think it will essentially require an entire new treaty of its own, or at least a large amendment.

New elections are set for June month, it will be interesting to see if Syriza (far leftists who have been blocking negotiations) gain extra seats. They've essentially been daring the EU to kick them out, and flat out reject austerity measures.

[Midtowner]

This is why the EU doesn't really work.

You can't have a shared currency outside of a federal system.

[pphilfran]

This is why the EU doesn't really work.

You can't have a shared currency outside of a federal system.

This is exactly correct...

[Chuck Bao]

I predicted this 15 years ago just after the Asian economic crisis. Obviously, there are no points won for predicting anything 15 years too early.

What does Greece or Spain or Ireland offer to the world besides a great tourist destination/history. The available jobs are exactly what?...a bellhop, a receptionist, a hotel manager?

The US at least has cheap Mexican labor to keep its house of cards still standing for a while. Our corporations seem to be doing well despite the hardships of ordinary people.

I really hate to admit this, but at the end of the day (new global economy and all that), it is the big corporations that decide a nation's health and well-being. Germany is still strong. Switzerland is still strong (not EU)...because they have global brand names and value. When is the last time you bought something and the label said made in Greece? If you bought olives or booze, what do you think the workers (probably Turks) were actually paid?

[SouthCarolinaSooner]

What does Greece or Spain or Ireland offer to the world besides a great tourist destination/history. The available jobs are exactly what?...a bellhop, a receptionist, a hotel manager?

This is a key right here, all three of these economies are overly reliant on tourism and have a very rigid labor market. Spain is at a ridiculous 25% unemployment, Ireland is a little better off but Greece is really going to ****. And you have these radical leftists defying the EU's bailout package, completely rejecting any austerity and proclaiming they will grow out of the recession. Grow with what? Breaking all the windows in your country? Magical ****ing Keynesian beanstalks coming out of the ground? They have to bite the pill of austerity.

Btw here are the terms of the latest February austerity package

"150,000 jobs cut from the state sector by 2015, of which 15,000 should be cut by the end of the year; lowering the minimum wage by 20 per cent from $978 a month to $781; pension cuts worth $390m in 2012; liberalisation of labour laws; and privatisations worth $19.5bn by 2015, including Greek gas companies."

In exchange for $170bn

[KantoSooner]

And, of course, the ability to access world credit markets again this century.

[rock on sooner]

This austerity crap is what the Tea Partiers and a lot of other Pubs espouse.
It ain't gonna work without revenue increase! Not one economist that I have
read has said anything different. Wake up, folks, it's going to take a lot of
give and take on both sides. Otherwise, Greece is small potatoes against
what happens of the good ol' USA adopts that approach!

[soonercruiser]

Left wing talking points!

All reasonable economic analysis have confirmed that the U.S. CANNOT tax our way out of this!
There isn't enough money, even if you took everything from the top 1%!
The big drivers in the debt are the social programs like SS and Medicare.
Sorry to burst your LW baloon. BANG!

[dwarthog]

Lots of it over my head, but the Euro situation is bad, and the Greek situation so bad that many of the EU economic people were stunned when it came to light how bad things are.
The two schools of thought on how to get out of these crises are either austerity; or "spend more", and grow out. With Greece, the situation was so bad, I believe any idea of "spend more" was impossible.
So now, you've got people that are having their lifeline pulled away. They're in a panic. Merchants are scared, because no one has any more to buy anything. Now the merchants can't pay their rent. The landlords can't pay their taxes, utilities...you get the idea.

So, rioting doesn't help, but the frustration is so high its the only outlet. Scary stuff, hard to imagine Greece will not default. Who knows what will happen then.

I don't think they were stunned in the slightest, the other countries in the eurozone knew Greece was fudging their numbers.

http://www.thisamericanlife.org/radio-archives/episode/455/continental-breakup

The above seems to present a reasonable synopsis of the Eurozone and Greece.

It's an hour long show but from about 10 minutes on to the 15 minute is some interesting information with regards to Greece and the fact that the finance ministers from other country's knew that Greece was fudging their numbers, they just didn't have the stones to call them out.

[diverdog]

I don't think they were stunned in the slightest, the other countries in the eurozone knew Greece was fudging their numbers.

http://www.thisamericanlife.org/radio-archives/episode/455/continental-breakup

The above seems to present a reasonable synopsis of the Eurozone and Greece.

It's an hour long show but from about 10 minutes on to the 15 minute is some interesting information with regards to Greece and the fact that the finance ministers from other country's knew that Greece was fudging their numbers, they just didn't have the stones to call them out.

Actually it was Goldman who fudged the numbers first.

http://www.spiegel.de/international/europe/0,1518,676634,00.html

[soonerhubs]

Rock on and cruiser are the thread poopoo heads. Congrats ******s!

[dwarthog]

Actually it was Goldman who fudged the numbers first.

http://www.spiegel.de/international/europe/0,1518,676634,00.html

Diver, no doubt there a villains here, but the "good guys" stood by and let it happen knowing full well how badly this could end.

[rock on sooner]

Left wing talking points!

All reasonable economic analysis have confirmed that the U.S. CANNOT tax our way out of this!
There isn't enough money, even if you took everything from the top 1%!
The big drivers in the debt are the social programs like SS and Medicare.
Sorry to burst your LW baloon. BANG!

My "baloon" is left of center but, got some news for ya...SS does not contribute
a single penny to the debt/deficit...not one. In fact, the SS trust fund has been
a banker for the gov't to the tune of over two trillion. Now Medicare is a different
story. IF the gov't could eliminate fraud, waste and abuse from Medicare/Medicaid
then the program wouldn't be nearly the drag on the eceonomy that it is. I agree
that we can't tax our way out of this mess, nor can we cut our way out of this mess.
We can, on the other hand, cut and tax our way out of this mess.

[Bourbon St Sooner]

The protesters are angry with education cuts, pension cuts, sin and luxury taxes as well as the removal of university 'asylum' law. Some additional austerity measures that have been offered, like slashing minimum wage by 22%, and by a further 11% to those under 25. You can imagine that goes over well...

Debt is 155% of GDP, even with serious austerity measures I don't think they're going to get that down any soon. Spending out obviously doesn't work, I agree with others above me, Greece is heading to default. The best hope to save them is that someone else in the Eurozone (Germany) steps up to the plate and takes on Greece's debt. I don't think there's any EU protocol for this, and there is certainly no protocol in the Maastricht Treaty for any nation leaving the Euro. I think it will essentially require an entire new treaty of its own, or at least a large amendment.

New elections are set for June month, it will be interesting to see if Syriza (far leftists who have been blocking negotiations) gain extra seats. They've essentially been daring the EU to kick them out, and flat out reject austerity measures.

Treaties, smeaties. Didn't the Maastricht treaty contain a provision the no gov't should run a budget deficit greater than 3% of GDP. I don't think one single country has held to that.

The Greeks need to reinstate the Drachma, pay off their debts with money that's not worth the paper it's printed on and get on with it. The Germans can use the bailout money to insulate their banking system against the losses and get rid of the bad penny.

I guess the risk is that you start seeing runs on banks in Italy, Ireland and Spain with folks in those countries seeing the writing on the wall.

[pphilfran]

My "baloon" is left of center but, got some news for ya...SS does not contribute
a single penny to the debt/deficit...not one. In fact, the SS trust fund has been
a banker for the gov't to the tune of over two trillion. Now Medicare is a different
story. IF the gov't could eliminate fraud, waste and abuse from Medicare/Medicaid
then the program wouldn't be nearly the drag on the eceonomy that it is. I agree
that we can't tax our way out of this mess, nor can we cut our way out of this mess.
We can, on the other hand, cut and tax our way out of this mess.

Outlays started exceeding tax income in 2010 and is expected to continue (and grow) far into the future...

The only reason it is in the black is due to the interest income on the Special Issue Bonds...so we pay that interest ourselves by printing more money to pay the interest on the bonds that were issued so we could spend the money on many wars and increasing entitlements...

http://www.ssa.gov/OACT/TRSUM/index.html

Social Security’s expenditures exceeded non-interest income in 2010 and 2011, the first such occurrences since 1983, and the Trustees estimate that these expenditures will remain greater than non-interest income throughout the 75-year projection period. The deficit of non-interest income relative to expenditures was about $49 billion in 2010 and $45 billion in 2011, and the Trustees project that it will average about $66 billion between 2012 and 2018 before rising steeply as the economy slows after the recovery is complete and the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers. Redemption of trust fund assets from the General Fund of the Treasury will provide the resources needed to offset the annual cash-flow deficits. Since these redemptions will be less than interest earnings through 2020, nominal trust fund balances will continue to grow. The trust fund ratio, which indicates the number of years of program cost that could be financed solely with current trust fund reserves, peaked in 2008, declined through 2011, and is expected to decline further in future years. After 2020, Treasury will redeem trust fund assets in amounts that exceed interest earnings until exhaustion of trust fund reserves in 2033, three years earlier than projected last year. Thereafter, tax income would be sufficient to pay only about three-quarters of scheduled benefits through 2086.

[Position Limit]

greece will default and tell goldman and the boys to suck it. credit rating will get smashed and a year later they will have some other risk taker to lend. life will go on. then spain, then italy etc... i cant wait for the "euro" to find fair value. that's when i'll book my trip to spain. until then watch the central banks go full print to try and save more banking *** to no avail.