france goes with the socialist

[dre]

How much of this protest should be about the inherent unfairness of the system ? Because if it's about that, then this discussion is clearly about blowing up (figuratively, I hope) and starting over. Regardless of the proclaimed benefits of that option, people need to know what might happen in the near term.

The fairness of the system is the regressiveness I tried to explain to you in another thread recently.

This is a perfectly example of this. All of the dollars created by Greek borrowing still exist! If you want to settle the debt then go and get them, and give them back! Where are those dollars? The poor certainly dont have them... all that money ended up in the pockets of the wealthy just like the borrowed/newly created money in Canada and the US.

Picture you and I are the citizens of a country. You are very affluent but Im just a wage earner. The government borrows/creates a million dollars and loans it or spends it into the economy. You will end up with pretty much all of it. You have much better credit, and you have the infrastructure required to chase that new money down and corner it. Even if some of it gets spend on services on my behalf you will STILL end up with it.

So now youre sitting there with that million dollars, and Im sitting there with my hourly wage and no savings... And the government now burdened with that debt decides they need to cut services and that its time for austerity. Who does that hurt? Not you... it only hurts me. But then it gets better! Now the government is forced to privatize valuable assets, and whos in a position to buy those? You... with the exact physical dollars that the government owes in the first place. This is exactly why wealth is concentrating at the upper levels and why the "gap" is growing so quickly.

People SHOULD take to the streets over this. Its outright theft by one class from the others.

There IS however a fair way to do this. Allow those dollars to devalue. Then the burden is correctly apportioned, and the people that actually have all that owed money in their posession are the ones that have to pay.

Same goes for the debt in the US and Canada. If you want to pay down the debt then go and find out where those borrowed dollars are... and up to date statistics on the concentrate of wealth at the top make it extremely clear who got that money. It sure as phuck wasnt the poor or wage earners.

Edited May 9, 2012 by dre

[Michael Hardner]

They should re-establish their own currency and default. IMO the recent bailout and its austerity provisions will just make things worse. The government is being forced to sell off assets that generate a profit for them. And it does nothing to address the real problem which is that interest rates in the eurozone are way to low for a country in greeces position.

Not to mention they are taxing you and I to "fund it". The Eurozone was a bad idea especially for certain countries, and the sooner it fails the less it will cost all of us.

Speaking of bad ideas...

What would be the effects of defaulting? The economy would grind to a halt, wouldn't it? Has this ever happened?

[Michael Hardner]

The fairness of the system is the regressiveness I tried to explain to you in another thread recently.

This is a perfectly example of this. All of the dollars created by Greek borrowing still exist! If you want to settle the debt then go and get them, and give them back! Where are those dollars? The poor certainly dont have them... all that money ended up in the pockets of the wealthy just like the borrowed/newly created money in Canada and the US.

So you're saying that they should just nationalize the assets of the wealthiest Greeks ? That is indeed a 'revolutionary' idea.

Picture you and I are the citizens of a country. You are very affluent but Im just a wage earner. The government borrows/creates a million dollars and loans it or spends it into the economy. You will end up with pretty much all of it. You have much better credit, and you have the infrastructure required to chase that new money down and corner it. Even if some of it gets spend on services on my behalf you will STILL end up with it.

So now youre sitting there with that million dollars, and Im sitting there with my hourly wage and no savings... And the government now burdened with that debt decides they need to cut services and that its time for austerity. Who does that hurt? Not you... it only hurts me. But then it gets better! Now the government is forced to privatize valuable assets, and whos in a position to buy those? You... with the exact physical dollars that the government owes in the first place. This is exactly why wealth is concentrating at the upper levels and why the "gap" is growing so quickly.

Except that regular working people were employed; they earned, saved, and spent money too.

Wealth is concentrating for a lot of reasons, not because the wealthy are lending money to the poor. There are more areas for investment now, and more competition for capital.

People SHOULD take to the streets over this. Its outright theft by one class from the others.

There IS however a fair way to do this. Allow those dollars to devalue. Then the burden is correctly apportioned, and the people that actually have all that owed money in their posession are the ones that have to pay.

Same goes for the debt in the US and Canada. If you want to pay down the debt then go and find out where those borrowed dollars are... and up to date statistics on the concentrate of wealth at the top make it extremely clear who got that money. It sure as phuck wasnt the poor or wage earners.

How would Greece do that ?

[dre]

So you're saying that they should just nationalize the assets of the wealthiest Greeks ? That is indeed a 'revolutionary' idea.

Except that regular working people were employed; they earned, saved, and spent money too.

Wealth is concentrating for a lot of reasons, not because the wealthy are lending money to the poor. There are more areas for investment now, and more competition for capital.

How would Greece do that ?

Wealth is concentrating for a lot of reasons, not because the wealthy are lending money to the poor. There are more areas for investment now, and more competition for capital.

Its concentrating for exactly the reason I gave you. It started when the money supply began to expand quickly for obvious reasons. When a zillion dollars worth of new money is dumped into the economy the people who already have the most wealth are in the best position the corner the vast majority of it, and even IF that money is spent once on behalf of the public it will STILL end up concentrating.

So you're saying that they should just nationalize the assets of the wealthiest Greeks ? That is indeed a 'revolutionary' idea.

I dunno... Im just explaining who actually has all that borrowed money in their posession. What seems more revolutionary to me, is your idea to take it from wage earners who never ended up with any of it in the first place, by reducing their standard of life, and in the process risking major upheaval or even revolution.

But like I said before... theres another way.

[fellowtraveller]

It's the same thing, within a given frame of reference. People feel just as passionately about getting ripped off in France as they do in Canada, no matter how much you tell them they've still got it better than in Pakistan.

No, public attitudes in France are dramatically different overall than they are in Canada. The levels of expectation/entitlement from the social contract is well, an ocean apart, and that influences everything there. Running a small business in France is an institutional nightmare, the level of government disincentive is Orwellian. The old joke that 'entrepreneur' is both a French word and a foreign concept is , well, no joke. The state serves two masters: itself and big business, anytthing else is really not welcome. And I speak from personal and recent experience.

[fellowtraveller]

They should re-establish their own currency and default. IMO the recent bailout and its austerity provisions will just make things worse. The government is being forced to sell off assets that generate a profit for them. And it does nothing to address the real problem which is that interest rates in the eurozone are way to low for a country in greeces position.

Not to mention they are taxing you and I to "fund it". The Eurozone was a bad idea especially for certain countries, and the sooner it fails the less it will cost all of us.

ah, no. Greece is utterly f**ked if they abandon the EU and Euro and resume with the drachma. They won't get one penny from anybody in loans to maintain their social contract unless they agree to repay those loans in hard currency or gold, and they can't do that because they won't have any hard curency or gold. No lender will give them anything if it is to be repaid in completely worthless currency like the drachma. If Greece leaves the Euro, they are in deep trouble immediately both internally and externally.

The real problem in Greece has nothing to do with Euro or Europe, they are floundering in large part because they have a culture of not paying income taxes. Tax evasion is the norm there, at al levels of society. They need to get really , really harsh about tax evasion there and a lot of friends of the govt will have to go to jail to turn it around.

But all of that misses a whole side of the equation, which is the question of who profits from a Euro currency that is a bit weak compared to others like the dollar, pound, Swiss franc? Not surprising, it is Germany that makes out like a bandit from a low value Euro. Germany is a major exporting country and they get a lot more Euros for their exports when the Euro is at a lower value. If the Euro ad EU collapsed, the value of the new German mark would skyrocket and Germany would be uncompetitive overnight. That would spark a German recession that they have avoided, Germany has low unemp[loyment and is doing very, very well. If part of amintaining that is propping up flyweights like Greece, it is a relatively small price.

The juggling act ahead is to keep that Greek illness from spreading too far.

[cybercoma]

I would characterize those clashes as people fighting for their own economic well-being.

The government is where we go for help, as it should be.

Of course we should, but then the government needs to turn around and make industries more accountable for what they do to the economy and the burden they place on society to pick up after their parties.

[-TSS-]

There is the legislative elction in one month's time and if his party can not get a majority of the seats he becomes a lame-duck President within one month since the start of his term as President.

[Michael Hardner]

Its concentrating for exactly the reason I gave you. It started when the money supply began to expand quickly for obvious reasons. When a zillion dollars worth of new money is dumped into the economy the people who already have the most wealth are in the best position the corner the vast majority of it, and even IF that money is spent once on behalf of the public it will STILL end up concentrating.

I'm dubious of that reasoning. There are a lot of factors that have caused wealth to move - globalized markets, new technologies, and favourable legislation.

You seem to be focusing on one aspect, which may be a symptom for all I know, not a cause.

I dunno... Im just explaining who actually has all that borrowed money in their posession. What seems more revolutionary to me, is your idea to take it from wage earners who never ended up with any of it in the first place, by reducing their standard of life, and in the process risking major upheaval or even revolution.

"Taking it" means two different things in your scenario as I see it. Everyone will see a reduction in standard of living. If you're concerned about that, then defaulting will cause the biggest shock, I think, in the medium short term.

[Michael Hardner]

Of course we should, but then the government needs to turn around and make industries more accountable for what they do to the economy and the burden they place on society to pick up after their parties.

Everyone will pay more in the end.

[dre]

Speaking of bad ideas...

What would be the effects of defaulting? The economy would grind to a halt, wouldn't it? Has this ever happened?

Well there IS no "good ideas" for Greece. Trying to borrow their way out of a debt problem will be the least painfull in the short term, but the most painfull in the long term.

Defaulting would be the most painful in the short term but the least painful in the long term.

Argentina is probably the best example of whats likely to happen. There was riots, massive depreciation in the peso, inflation, the mass flight of foreign investors... a three year recession followed by a collapse. People fell back on barter networks for local trade and many of those failed as well. They had to make it illegal to take your own money out of the bank for about a year as well.

Edited May 9, 2012 by dre

[wyly]

This is my big problem with analyzing the left/right struggle in America and Europe with the same lens. Was Greece, with its relatively generous pensions and benefits not providing a living wage ? If they had cut back, they would still have a better situation for their worker than we do.

how do you know what their situation is? was the Greek crisis caused by Greeks living beyond their means or was it a national epidemic/pastime of tax dodging.....there is a lot talk about who gets what but first hand knowledge is scarce....there are socialist European countries have generous social programs that have lower unemployment figures than Canada 7.2%,( Netherlands 4.9%, Germany 5.7%, Denmark 6.5%) benefits/socialism isn't the source of the problem it's how they're paid for...even north americans perception of what socialism is skewed, which the OP "France goes with socialist" demonstrates, France has elected it's first socialist pres in 30yrs but France has very socialist during those thirty years...

[Michael Hardner]

how do you know what their situation is? was the Greek crisis caused by Greeks living beyond their means or was it a national epidemic/pastime of tax dodging.....there is a lot talk about who gets what but first hand knowledge is scarce....

It's generally acknowledged that they have a generous social system, and reported that they have a large public service. Do you think that's incorrect ?

there are socialist European countries have generous social programs that have lower unemployment figures than Canada 7.2%,( Netherlands 4.9%, Germany 5.7%, Denmark 6.5%) benefits/socialism isn't the source of the problem it's how they're paid for...even north americans perception of what socialism is skewed, which the OP "France goes with socialist" demonstrates, France has elected it's first socialist pres in 30yrs but France has very socialist during those thirty years...

Exactly - this is why I don't understand why we use the same language when talking about our system versus theirs. It has been submitted that the question is about loss of power, loss of status, loss of benefits rather than the absolute position or rank of these countries on the social scale, if such a thing exists. That's fine with me, but the language should be precise.

[wyly]

It's generally acknowledged that they have a generous social system, and reported that they have a large public service. Do you think that's incorrect ?

that could very well be true but exactly are those benefits and how were they to be paid for and why did it fail?...there's a lot of speculation on forums but little in the way of facts...it's a knee jerk reaction to claim "socialism" is the cause but as demonstrated by other economically healthy socialist countries it's much more complex than blaming everything on social benefits...

[Michael Hardner]

that could very well be true but exactly are those benefits and how were they to be paid for and why did it fail?...there's a lot of speculation on forums but little in the way of facts...it's a knee jerk reaction to claim "socialism" is the cause but as demonstrated by other economically healthy socialist countries it's much more complex than blaming everything on social benefits...

I should clarify: when I talk about looking at the situation with the same lens, I'm talking about the discussion of working class situations in those societies, not at these crises in particular. We can talk about austerity and cutting back 10%, 20% ... but if they had that many more benefits to begin with shouldn't that be brought forward ? If cutbacks happen in Greece and in America, shouldn't the discussion have a different tone ?

Is anybody quantifying what we're talking about here, or are these arguments banned from using numbers ? Are we unable to talk about economics as numbers and hard facts, even if they're simplified numbers and facts ?

Lots of questions. I'm more interested in the nature of the discussion than in the matters themselves, you see.

[bleeding heart]

Speaking of bad ideas...

What would be the effects of defaulting? The economy would grind to a halt, wouldn't it? Has this ever happened?

Many people claim that Argentina's defaulting saved the country. It's certainly better off now than it was under imposed austerity.

[bud]

Many people claim that Argentina's defaulting saved the country. It's certainly better off now than it was under imposed austerity.

since 1998:

Venezuela, July 1998 - defaulted on $270 million worth of domestic currency bonds

Ecuador, August 1999 - missed a payment, leading an an eventual restructuring of over 90% of their bonds. Default amount was around $6.6 billion

Ukraine, January 2000 - defaulted again (1.06 billion) in January of 2000. Defaulted on both DM-denominated Eurobonds and USD-denominated bonds.

Peru, September 2000 - defaulted on $4.87 billion of debt

Argentina, November 2001 - a massive $82.26 billion dollar default

Moldova, June 2002 - defaulted on $145 million worth of debt,

Uruguay, May 2003 - Argentina's troubles spread to Uruguay, and the government of Uruguay defaulted on $5.7 billion dollars worth of debt

Dominican Republic, April 2005 - Defaulted on $1.62 billion dollars worth of debt

Belize, December 2006 - Defaulted on $242 million dollars worth of debt

Ecuador, December 2008 - Defaulted on $3.2 billion dollars worth of debt obligations after calling several of their previous debt offerings "illegal and illegitimate".

link

[dre]

Many people claim that Argentina's defaulting saved the country. It's certainly better off now than it was under imposed austerity.

Yes it really comes down to short term thinking VS long term thinking.

Argentina experienced significant short term pain for an economy that was structurally stable in the end, but it took a few years to turn things around.

Greece is avoiding much of the short term pain but all this debt will be a drain on its economy for many many decades, the country will suffer because the government is being forced to privatize many assets that actually generated revenue for the taxpayer and helped pay for services.

People tend to think of bankruptcies and defaults as a horrible thing but thats not necessarily true. For someone that has levels of debt that are extremely hard or flat out impossible for them to service, bankruptcy is actually the best thing that can happen to them. Thats why its such an important capitalist institution.

In any case... Its really nobodies business what Greece does. Its a democracy and if people there want to tell the EU/ECB/EP/IMF to go fuck themselves thats exactly what they should do. And the disgusting thing is that they were actually threatened and browbeaten into NOT having a general election until after the bailout deal had been signed.

[dre]

They won't get one penny from anybody in loans to maintain their social contract

I agree... Foreign investment would dry up completely for a few years. People will stop lending money to greece for the same reason a bank wont give a mortgage to someone with a minimum wage job. The question is... is it really HELPING that person to lend them 300 thousand to buy a house, or is it guaranteeing he will be completely hosed sooner or later.

When someone is in an inescapable debt spiral are you helping them by allowing them to saddle future generations with hundreds of billions worth of additional debt?

The fact is, that if Greece had kept its own currency it would not be in the position it is now. THe social contract would rewritten itself because the drachma would have devalued, and interest rates would have gone up... wages would have gone down without contraversial austerity measures, and domestic production would have become more competitive.

This is EXACTLY why we have the floating exchange system, and its exactly why we have bond markets. What Greece needed was for people to stop buying their bonds about 8 years ago... and thats exactly what investors WOULD have done. But the ECB/IMF kept buying them because they quite simply dont care if they make shitty investments or not. They take all that money from taxpayers... they dont even HAVE any money of their own. And they did this not to help Greece but to keep their little eurozone dream alive.

The sooner these dirtbags are shut down the better.

Edited May 14, 2012 by dre

[Wild Bill]

Interesting thread but I'm surprised everyone seems to think the election was based on such complicated thinking.

Fellowtraveller seems closest, IMHO. The voters in France thought they could vote away their troubles! Change to a socialist leader who will refuse to impose painful measures and life will be wonderful!

Sadly, they are going to get a reality check. They cannot ignore their debts or the consequences of not repaying them. The people who have been giving them the money don't care. They no longer trust France to repay the loans and will cut off the funding.

How can a French election convince a German citizen to cheerfully accept higher taxes to keep the French living the high life?

Like I said, for many European countries there is a very painful reality check coming.

[dre]

Interesting thread but I'm surprised everyone seems to think the election was based on such complicated thinking.

Fellowtraveller seems closest, IMHO. The voters in France thought they could vote away their troubles! Change to a socialist leader who will refuse to impose painful measures and life will be wonderful!

Sadly, they are going to get a reality check. They cannot ignore their debts or the consequences of not repaying them. The people who have been giving them the money don't care. They no longer trust France to repay the loans and will cut off the funding.

How can a French election convince a German citizen to cheerfully accept higher taxes to keep the French living the high life?

Like I said, for many European countries there is a very painful reality check coming.

They no longer trust France to repay the loans and will cut off the funding.

That is exactly what NEEDS to happen to an entity that takes on more debt that it can reasonably service. In the long term its a good thing for both the lender and the borrower.

If Germans or the ECB or the IMF dont think France is a good credit risk they SHOULD NOT BUY THEIR GOD DAMN BONDS! And if they KEEP buying them, they should expect to lose most or all of their money.

Like I said, for many European countries there is a very painful reality check coming.

Yup. And more and more borrowing just pushes that reality check off into the future a bit but guarantees it will be more painful.

Edited May 14, 2012 by dre