The Deepening Greek Crisis

[esstii]

Professor Costas Lapavistas on "Nonsense Economics" (of austerity) in the Greek context.

"The situation is definitely getting worse in real terms [in Greece]. What is happening is that the country is now forced to engage in a new bout of cuts, basically, a new bout of austerity. Basically, the country will have to reduce public spending by perhaps €13.5 billion up to 2014. This is a very large sum for the Greek economy, a large proportion of its GDP. So the country's being forced to do that. And to achieve this target, the government will now have to cut wages, pensions of public servants, and it will have to effectively fire a large number of civil servants, up to 150,000 people, to 2014..."

Watch, and share ideas about the story.

http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=8731

What did you think of Professor Lapavistas' analysis?

[Wild Bill]

Professor Costas Lapavistas on "Nonsense Economics" (of austerity) in the Greek context.

"The situation is definitely getting worse in real terms [in Greece]. What is happening is that the country is now forced to engage in a new bout of cuts, basically, a new bout of austerity. Basically, the country will have to reduce public spending by perhaps €13.5 billion up to 2014. This is a very large sum for the Greek economy, a large proportion of its GDP. So the country's being forced to do that. And to achieve this target, the government will now have to cut wages, pensions of public servants, and it will have to effectively fire a large number of civil servants, up to 150,000 people, to 2014..."

Watch, and share ideas about the story.

http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=8731

What did you think of Professor Lapavistas' analysis?

There's an old story that fits his analysis:

A biology professor brings out a frog and puts it on his desk at the front of his class. He takes a pencil and tickles the frog near his butt and says "Joomp!"

The frog jumps. Then the professor takes out a dissecting knife and cuts off the frog's rear legs. Again, he tickles the frog near his butt and says "Joomph!"

The frog of course just lies there. The professor turns to his class and says "You see? Ven you cut off der legs you interfere mitt der hearing!"

Greece is feeling the effects of mistakes made for years. The austerity measures are not causes, they are corrective attempts. Greece is head over heels in debt. It now is acceding to austerity cuts in order to maintain credit, since the country has lost the confidence of its lenders that it will ever get its house in order and pay them back.

The good professor is blaming the lenders for wanting their money back, not Greece for having blown the money. The lenders are concerned that if they keep loaning money to Greece without any strings they will NEVER be repaid!

He is right that the austerity measures are hurting Greece's ability to repay. The problem for Greece is that their lenders have heard this before. They no longer believe Greece will make any attempt to fix its economy without the pressure of terms with their loans.

So Greece has no other options. They have run out of lenders. If they go bankrupt, they will not get another dime for generations. So they have no choice but to bite the bullet. The Greek people can change their government all they want but they can't change the cold hard reality that the gravy train is over.

[TimG]

Professor Costas Lapavistas on "Nonsense Economics" (of austerity) in the Greek context.

So who do you think should be lending the Greeks money so they can avoid "austerity"?

[GostHacked]

Welcome to the Age of Austerity brought to you by international bankers who are raping economies around the world.

[TimG]

Welcome to the Age of Austerity brought to you by international bankers who are raping economies around the world.

So who do you think should be lending money to the Greek government?

[GostHacked]

So who do you think should be lending money to the Greek government?

Greece should have never been given the money in the first place, by anyone. But this is a systemic result of the integration of economies within the EU. Greece was never a strong economy to begin with. They need money, so the bankers lent it to them at an interest rate in which the country will NEVER be able to get out of debt. Greece sold off some of it's public infrastructure to foreign entities. What kind of sovereignty does Greece maintain when they have been absolutely raped by bankers? You now have the bankers in control of the country. The former head of the EU Central Bank is now the head of the Greek Central Bank. George Provopoulos helped create the problem that is going on in Greece. And people STILL cannot see the real f'n problem here?? Now instead of it being just Greece's problem, it's a global problem. Simply because there are global banking entities that are now calling those shots.

The banks can't possibly expect a country to reduce it's debt with the amount Greece has borrowed. The banks actually want it this way Can't pay it back, so then the country is sold off in bits to foreign entities. Economically they are destroying the country by design. That much is evident, well at least to me.

Why would more money be lent to a country that is in economic shambles? Why would you give money to them in the first place? Why not let them fail, self correct and then start the recovery? All this money lending is just putting off the inevitable crisis a bit further down the road. The longer that crunch is put off, the harder it will be for Greece or any other country to properly recover.

I keep pointing to Iceland as an example of what needs to be done. They kicked out the international bankers, forgave much of the debt, and now they are on the way to recovery. Their hurting period has passed. There was even a ploy to get them back into that scheme by way of offering them the Canadian dollar. They said stuff it. Good for them.

[TimG]

Greece should have never been given the money in the first place, by anyone.

So you are saying that the Greeks should have accepted these austerity measures long ago along with the hardship and slower growth that goes with it? I agree. But Greeks did not do that and now they must pay the price. That is hardly the bankers fault.

Blaming bankers is simply a distraction designed to avoid pointing figures at the real culprits: the Greek people who refused to restrain their demands for social services.

The Iceland example does not apply. Iceland simply refused to bail out private enterprises. They never defaulted on their sovereign debt. It is a completely different situation.

Edited August 29, 2012 by TimG

[Canuckistani]

I keep pointing to Iceland as an example of what needs to be done. They kicked out the international bankers, forgave much of the debt, and now they are on the way to recovery. Their hurting period has passed. There was even a ploy to get them back into that scheme by way of offering them the Canadian dollar. They said stuff it. Good for them.

Yes. Better to take a quick sharp pain than just keep drawing it out. I'm not sure how Iceland and Greece compare tho. Iceland always seemed to have a pretty decent standard of living - few people and lots of resources. Greece is the opposite to that. But of course going by our pro immigration people, if Iceland had just flooded the place with immigrants, they'd all be much richer now.

[GostHacked]

So you are saying that the Greeks should have accepted these austerity measures long ago along with the hardship and slower growth that goes with it? I agree. But Greeks did not do that and now they must pay the price. That is hardly the bankers fault.

It's not really the people. Governments around the world (Canada included) are indebted to these international banks because government spending is always more than taxes can pay. So even Canada borrows money from a central bank to shore up it's accounts. Eventually that money needs to be paid back, but who is it payed back to. So even Canada is kicking the can down the road. Since 'sustainable' seems to be a buzz word these days, let's call it 'sustainable debt'. You cannot possibly blame the people for governments always spending more than they make. And go ahead and try to change how government spends. People don't even think there is a problem and will be totally blindsided when crunch time comes. Look at is as a business in every aspect (because essentially countries looks more like corporations than countries).

Unemployment rates are going up, costs of everything is rising constantly (housing, food, fuel, ect) while wages have gone up slightly overall, but for the middle class and the poor, the wages have declined and they have had to cut back essential things just to survive. Eat or roof over your head. Those are their problems. And if we are not careful and correct this issue, austerity will come to Canada. This is a systemic global problem.

Not to mention the places that for example the Canadian government is cutting back on, Oceans fisheries, forest management, and other resource management entities. Instead of the politicians taking a haircut to benefit the country in which they represent they continue to ride our coattails while many think that they deserve to continue the raping. No problem with finding money to buy weapons of war, but no money to put back into the country where it will actually make a difference.

Blaming bankers is simply a distraction designed to avoid pointing figures at the real culprits: the Greek people who refused to restrain their demands for social services.

You have got to be kidding me. Why would Greece hire a EU central banker as head of Greece's central bank, that had direct involvement in Greece's problem in the first place?

The Iceland example does not apply. Iceland simply refused to bail out private enterprises. They never defaulted on their sovereign debt. It is a completely different situation.

Personal debt and soveriegn debt may be different, but how each got into debt is exaclty the same. Spend more than you make. Borrow expecting your personal or sovereign wealth to grow enough to the point to pay that money back. We should look at some history so see which country on this planet manages to have no debt. Or countries that managed to get out of debt.

[Canuckistani]

It's not really the people. Governments around the world (Canada included) are indebted to these international banks because government spending is always more than taxes can pay. So even Canada borrows money from a central bank to shore up it's accounts. Eventually that money needs to be paid back, but who is it payed back to. So even Canada is kicking the can down the road. Since 'sustainable' seems to be a buzz word these days, let's call it 'sustainable debt'. You cannot possibly blame the people for governments always spending more than they make.

I absolutely blame the people. We all want something for nothing, and will follow any pol who promises it. I'm for hefty government spending to ensure income redistribution, social mobility and infrastructure that supports economic activity. So, I also have to be for hefty taxes. That includes taxes on the middle class. I don't support all the regressive taxation on the working poor tho - they have a hard enough time as it is.

[TimG]

It's not really the people. Governments around the world (Canada included) are indebted to these international banks because government spending is always more than taxes can pay.

The only people to blame for spending exceeding revenue are the voters. Also governments don't borrow money from international bankers - they borrow it from pension funds and other individuals looking for an ROI on a secure investment. Most of the Japan government debt is owed to the Japanese people holding personal savings.

You have got to be kidding me. Why would Greece hire a EU central banker as head of Greece's central bank, that had direct involvement in Greece's problem in the first place?

Greece begged to join the Euro. Again, the only people to blame for the current problems created by being in the Euro are Greeks.

[TheNewTeddy]

The only people to blame for spending exceeding revenue are the voters.

This times a million.

[GostHacked]

The only people to blame for spending exceeding revenue are the voters. Also governments don't borrow money from international bankers - they borrow it from pension funds and other individuals looking for an ROI on a secure investment. Most of the Japan government debt is owed to the Japanese people holding personal savings.

Greece begged to join the Euro. Again, the only people to blame for the current problems created by being in the Euro are Greeks.

What about Italy, France, Spain, Portugal? And now we are seeing Germany having tough times.

Also you can blame the voters, but each government that is voted in has carried us further down the debt hole.

[TimG]

What about Italy, France, Spain, Portugal?

All problems the populace brought on themselves.

Also you can blame the voters, but each government that is voted in has carried us further down the debt hole.

Canadians elected majority governments in 90s who promised to cut spending, raise taxes and get the country out of debt hole. The Canadian example demonstrates that it is the voters that decide what policies governments adopt and if a country runs perpetual deficits it is because the voters refuse to vote for politicians with coherent plans to eliminate them. Edited August 29, 2012 by TimG

[Guest Manny]

each government that is voted in has carried us further down the debt hole.

I remember a liberal government not too long ago that paid down our debts substantially. It was done with intention and forethought, and we prosper from those actions, sacrifices made by Canadians years ago.

[GostHacked]

I remember a liberal government not too long ago that paid down our debts substantially. It was done with intention and forethought, and we prosper from those actions, sacrifices made by Canadians years ago.

So why did that trend not continue?

[Canuckistani]

What about Italy, France, Spain, Portugal? And now we are seeing Germany having tough times.

Also you can blame the voters, but each government that is voted in has carried us further down the debt hole.

Ultimately the voters are responsible for the government. The one excuse the Greeks have is that the government colluded with Goldman Sachs to fool the EU about the debt situation, so how could the average voter know. But avoiding taxes is a national sport in Greece, and they voted to have cushy retirements schemes etc without having the means to pay for it.

Same is true of every country. We may also be called upon at some point to make even bigger sacrifices. I hope that when the time comes we don't follow the siren call of either the right or the left that it can be done without pain. My bias is that the pain should be at the top, because that's where the money is.

[GostHacked]

Ultimately the voters are responsible for the government. The one excuse the Greeks have is that the government colluded with Goldman Sachs to fool the EU about the debt situation, so how could the average voter know. But avoiding taxes is a national sport in Greece, and they voted to have cushy retirements schemes etc without having the means to pay for it.

Same is true of every country. We may also be called upon at some point to make even bigger sacrifices. I hope that when the time comes we don't follow the siren call of either the right or the left that it can be done without pain. My bias is that the pain should be at the top, because that's where the money is.

So how does the voter correct this? Or a better question is CAN the voter change this? Again I point out to a system that has been in place for a few decades and most of us have no influence on it at all.

Call my a cynic, but I don't think the votes matter. Look at the situation we are in.

If a country goes to war, and the war is not supported by the majority of people, then how do you blame the people to prevent the war, when the government does not care and will not listen to the people?

[Canuckistani]

So how does the voter correct this? Or a better question is CAN the voter change this? Again I point out to a system that has been in place for a few decades and most of us have no influence on it at all.

Call my a cynic, but I don't think the votes matter. Look at the situation we are in.

If a country goes to war, and the war is not supported by the majority of people, then how do you blame the people to prevent the war, when the government does not care and will not listen to the people?

Take a look at BC and the HST. The people certainly cared about that, made their displeasure known, and we had a Premier at the top of his game have to step down and his successor agree to get rid of the HST. That's how it would work with a truly unpopular war too - say the Quebec conscription crisis.

Govt spending vs revenue is a long term deal - people have lots of chances to vote for something different. But as I say, we all basically want something for nothing. A huge majority of Canadians want to maintain or increase social spending, but less than 50% are willing to pay higher taxes for it. They'll believe the right when they say that lower taxes will result in more govt revenues, when that doesn't work jump to the left with the siren song of tax the rich (with which I agree) but oh, no, not little ol 100k a year me, I'm not rich, I should pay less. Most people are going to have to pay more taxes and we'll have to cut some social spending if we want to pay off our debt.

The govt is us, there's no way to avoid that. Yes the rich influence the govt more than their numbers warrant, but if voters were really unhappy about that they wouldn't keep voting for the same people.

Edited August 30, 2012 by Canuckistani

[bleeding heart]

Take a look at BC and the HST. The people certainly cared about that, made their displeasure known, and we had a Premier at the top of his game have to step down and his successor agree to get rid of the HST.

True. Here in NB, the voters overwhelmingly turfed out the Liberal Premier after one term...which is exceptionally rare in New Brunswick. It was because he was going to sell the Energy utility to a private Quebec company. I'm not overstating: that was virtually the entire election issue.

Whether the idea was good or bad, it was a more than usual and obvious example of democratic will at work.

That's how it would work with a truly unpopular war too - say the Quebec conscription crisis.

Maybe, at least in some cases. I do think the Chretien government stayed out of the Iraq War (well...sort of!) more or less exclusively because they figured the public was angry at the idea. They probably would have been happier to join the coalition, if they could...but considered it politically dangerous.

[Canuckistani]

I'm sure they would have loved to join Iraq for the bonus points they would have gotten from Bush, since it wasn't their asses that would have been on the line. Even Astan was in large part fought to give us cred with other nations. We took on too big a task to show we had the right stuff. Again, a lot of Canadians killed for nothing but glory.

[TimG]

Take a look at BC and the HST. The people certainly cared about that, made their displeasure known

At the same time this is an excellent example of the stupidity of voters. Basically they have sent a message to politicians that taxes cannot be raised. This means services have to be cut but if people are not willing to live the service cuts that means deficit spending. Deficit spending means a Greek like meltdown in the future.

[dre]

Greece is feeling the effects of mistakes made for years. The austerity measures are not causes, they are corrective attempts. Greece is head over heels in debt. It now is acceding to austerity cuts in order to maintain credit, since the country has lost the confidence of its lenders that it will ever get its house in order and pay them back.

Greece is feeling the effects of losing control of its own interest rates. They have suffered with rates that are too low for their economy... when that happens credit is too easy and you wind up with both public and private debt problems. Its fun to bash the greeks but this is essentially the same thing that caused mortgage meltdown in the US, and will also cause a recession in Canada over the next few years.

The real mistake they made was assuming that the Greek economy can exist with the same monetary regime as the French and German economies.

When they joined the euro interest rates became way to low, and there was a huge false economic boom in Greece, and when that happens a recession is guaranteed to follow.

Edited August 30, 2012 by dre

[dre]

So how does the voter correct this? Or a better question is CAN the voter change this? Again I point out to a system that has been in place for a few decades and most of us have no influence on it at all.

Call my a cynic, but I don't think the votes matter. Look at the situation we are in.

If a country goes to war, and the war is not supported by the majority of people, then how do you blame the people to prevent the war, when the government does not care and will not listen to the people?

Voters cant correct this, and they arent supposed to. Debt levels are controlled by monetary policy and debt markets. THe problem is that Greece has artificially low interest rates for way too long, and the ECB kept buying greek bonds which prevented yields from going up which would have force Greece to start tackling this problem years ago.

Its useless to blame Greek voters for this. They were not even given a chance to vote on whether or not they should surrender the ability to control their own monetary policy, and if they HAD been given a chance Greece would not be in the eurozone in the first place.

[dre]

So why did that trend not continue?

Because we are in a period of global easing, and our ENTIRE PLAN for creating economic growth, and mitigating recessions is to finance consumption with debt. This effects not just government but consumers as well which is why we have the lowest savings rate in modern history.

BOOM - BUST - BOOM - BUST - BOOM - BUST. Thats just how the system works.