Greece Goes Broke

[Big Guy]

Looks like Greece is going to default on its latest repayment of loans and is going bankrupt.

http://money.cnn.com/2015/06/28/news/economy/greece-banks-ecb/

Is this going to affect the Canadian economy?

Putin has stated that he will help if asked. I thought the Russian economy was in trouble. Is Putin in a position to help Greece and pull this NATO nation into the Russian sphere?

[dre]

This is a good thing for Greece in the long term, but will be painful in the short term.

And its gonna shock global markets, so it will affect the Canadian economy at least a bit. Its bad news for the EU as well, because theres a number of other Mediterreanian countries that could end up in the same boat.

[Canada_First]

Result of left wing radical governments.

[Shady]

Greece hits its enitable end to other people's money. #Socialism

[dre]

Result of left wing radical governments.

Greece hits its enitable end to other people's money. #Socialism

Actually it was the result of a realestate bubble much like what happened in other countries.

People like to parrot this meme that Greeks are lazy socialists that just spend other peoples money, and dont pay taxes. But the reality is that greeks are the hardest working people in Europe.

Figures from the Organisation for Economic Co-operation and Development (OECD) show that the average Greek worker toils away for 2,017 hours per year which is more than any other European country.

Greeces problems have nothing to do with socialism. Theres two major causes for the collapse of the Greek economy...

1. Realestate and Banking Folly - A massive property boom and realestate bubble that eventually collapsed.

2. The EURO itself - Greece is an agrarian economy, comprised of self employed farmers etc. It should never have had the same interest rates that a country like German with a large manufacturing sector has. Those artificially low rates encourage free spending, and cause the build-up of massive debt.

[PrimeNumber]

Actually it was the result of a realestate bubble much like what happened in other countries.

People like to parrot this meme that Greeks are lazy socialists that just spend other peoples money, and dont pay taxes. But the reality is that greeks are the hardest working people in Europe.

Greeces problems have nothing to do with socialism. Theres two major causes for the collapse of the Greek economy...

1. Realestate and Banking Folly - A massive property boom and realestate bubble that eventually collapsed.

2. The EURO itself - Greece is an agrarian economy, comprised of self employed farmers etc. It should never have had the same interest rates that a country like German with a large manufacturing sector has. Those artificially low rates encourage free spending, and cause the build-up of massive debt.

Of course you'll have the anti-socialists running around screaming socialism every chance they get, regardless of weather it has anything to do with socialism or not.

[Bonam]

Actually it was the result of a realestate bubble much like what happened in other countries.

People like to parrot this meme that Greeks are lazy socialists that just spend other peoples money, and dont pay taxes. But the reality is that greeks are the hardest working people in Europe.

"Socialism" is not necessarily about the workers being "lazy". In fact, in many socialist/communist regimes, workers have been forced to work very hard, much harder than they do voluntarily in free nations.

Rather, the aspect of "socialism" that is being decried in the case of Greece is the government's spending of money on an extensive welfare state program (the "socialist" part), without actually having the money to pay for said programs (the "irresponsible" part).

Anyway... seems like a nice opportunity to buy into the stock market if it drops some more as a result!

[TimG]

Greeces problems have nothing to do with socialism. Theres two major causes for the collapse of the Greek economy...

The amusing part of these kinds of crisis is it is often possible for people to spin the data to support whatever pre-conceived notions/pet theories that they may have.

Personally, I think it is clear that more austerity was not going to help the Greeks because the budget was in surplus were it not for the interest payments. Default is necessary and for political reasons that includes an exit from the Euro.

That said, It is a bit disingenuous to say this problem is not directly connected to political culture that expects a lot of government handouts while evading the taxes needed to pay for those handouts.

Edited June 29, 2015 by TimG

[dre]

"Socialism" is not necessarily about the workers being "lazy". In fact, in many socialist/communist regimes, workers have been forced to work very hard, much harder than they do voluntarily in free nations.

Rather, the aspect of "socialism" that is being decried in the case of Greece is the government's spending of money on an extensive welfare state program (the "socialist" part), without actually having the money to pay for said programs (the "irresponsible" part).

Anyway... seems like a nice opportunity to buy into the stock market if it drops some more as a result!

The amusing part of these kinds of crisis is it is often possible for people to spin the data to support whatever pre-conceived notions/pet theories that they may have.

Personally, I think it is clear that more austerity was not going to help the Greeks because they budget was in surplus were it not for the interest payments. Default is necessary and for political reasons that includes an exit from the Euro.

That said, It is a big disingenuous to say this problem is not directly connected to political culture that expects a lot of government handouts while evading the taxes needed to pay for those handouts.

The problem is that these are memes... Pieces of mythology. You believe them because they sound right to you, not because they are true.

The truth is that Greek State expeditures were lower than the Eurozone average.

Social expenditures were ALSO lower than the EU average.

And the reality is that a huge ammount of government spending post 2k was payments to banks... Not social spending....

[Bonam]

Those are some pretty terrible looking unexplained/unlabeled/cutoff graphs. May want to fix that if those graphs are supposed to prove something.

Anyway, doesn't matter if spending was below euro zone average if revenue was also far below euro zone average. Nordic countries can afford way more social spending than Greece, if they want them. We can call these countries "socialist" but not "irresponsible socialist" as Greece is.

[Argus]

Actually it was the result of a realestate bubble much like what happened in other countries.

Oh nonsense. Greece has been living on borrowed money for decades. Its tax compliance level is ridiculously low. It had far too many people on the government payroll, and the social welfare system was far too generous. Most Greek retirees collect 96% of their salaries as pensions, for example. I'm not sure what it is for CPP, but by way of contrast, Canadian public servants only get a maximum of 70%, after 35 years of work, and now can't collect before 65. If you tried to impose the same pension requirements on the Greeks they'd burn their parliament buildings.

The great recession might have brought things to a head, but their end was inevitable.

http://www.smh.com.au/federal-politics/political-opinion/greek-lesson-in-the-perils-of-overspending-20100506-ugso.html

Edited June 29, 2015 by Argus

[Moonlight Graham]

Result of left wing radical governments.

No, result of governments spending far too much compared to incoming revenue (taxes etc.)

Many right wing governments also fail at balancing the books. ie: George W. Bush admin via funding stupid wars, leading to payment difficulties and the downgrading of US credit.

[Moonlight Graham]

"Socialism" is not necessarily about the workers being "lazy". In fact, in many socialist/communist regimes, workers have been forced to work very hard, much harder than they do voluntarily in free nations.

Rather, the aspect of "socialism" that is being decried in the case of Greece is the government's spending of money on an extensive welfare state program (the "socialist" part), without actually having the money to pay for said programs (the "irresponsible" part).

Exactly. As I just said in my last post above, it's a balance of payments problem, not necessarily a "socialist" problem.

[Argus]

No, result of governments spending far too much compared to incoming revenue (taxes etc.)

Many right wing governments also fail at balancing the books. ie: George W. Bush admin via funding stupid wars, leading to payment difficulties and the downgrading of US credit.

His problem wasn't funding wars it was multiple tax cuts robbing the treasury of the needed money to support spending.

[TimG]

Social expenditures were ALSO lower than the EU average.

The issue is the difference between spending and revenue - not the absolute amount.

And the reality is that a huge ammount of government spending post 2k was payments to banks... Not social spending....

This is the inevitable consequence of too much government borrowing because eventually the interest payments will force cuts to social services. This is point that Greece at now but that does not change the fact that Greeks demanded a lot of government services without any willingness to pay for them in taxes. Edited June 29, 2015 by TimG

[Moonlight Graham]

His problem wasn't funding wars it was multiple tax cuts robbing the treasury of the needed money to support spending.

Spending trillions on wars wasn't at least a major part of the payment problem?

[dre]

Those are some pretty terrible looking unexplained/unlabeled/cutoff graphs. May want to fix that if those graphs are supposed to prove something.

Anyway, doesn't matter if spending was below euro zone average if revenue was also far below euro zone average. Nordic countries can afford way more social spending than Greece, if they want them. We can call these countries "socialist" but not "irresponsible socialist" as Greece is.

The graphs are snippets of much wider images. I cant fix them, but they show the portion of data desired.

http://www.thepressproject.net/article/58136/Ignoring-the-data-about-Greeces-debt-why-austerity-is-based-on-a-myth-and-will-not-work

And yes... There obviously revenue problems, but for the most part they are not the result of social spending (which was below the EU average prior to the crisis).

I never claimed that Greece has been well managed. I just pointed out that the "lazy greeks" meme, or the "socialist greeks" meme that are often trotted out in places like this are bogus and easily debunked.

[dre]

Spending trillions on wars wasn't at least a major part of the payment problem?

Of course it was. Funds are fungible, and any item on one side of a balance sheet can be cancelled out by an item on the other. The Global Fake War On Terror represented trillions of dollars in new spending at a time when the government was already running deficits.

[bush_cheney2004]

Greece did not spend trillions on wars...thread drift.

[Shady]

Greece's problem was uncontrolled government spending for decades with large and lavish entitements. You can retire at age 50 in Greece at full pay. That type of stuff sounds nice, but the bill comes due eventually.

[WWWTT]

Actually it was the result of a realestate bubble much like what happened in other countries.

Yep!

There's a couple of stories that the corporate austerity media don't want to make any mention of!

My parent's have a house in Sao Miguel Acores Portugal.

They bought it in the early 90's at a fair price. The value skyrocketed to it's pinnacle around 2008 and now we can't give it away!

All thanks to northern European Euro countries migrating there to retire.

This artificial real estate boom and bust is very hard on the locals.

As well, the seniors retiring to these southern warm locations are sucking up very expensive health care/social and other services.

My parents house taxes are less than 200 Euros per year. Taxes can't go up either because it would be a nut busters on the local.

So transfer payments are in order. But when we hear about the transfer payments, it's made to sound like countries such as Germany don't owe anybody and are only paying out of charity!

This is total BS because Germany is relieved of supporting many of their seniors and have a windfall in healthcare/social spending! After all, those seniors were paying income taxes when they were younger and healthy!

WWWTT

[WWWTT]

Rather, the aspect of "socialism" that is being decried in the case of Greece is the government's spending of money on an extensive welfare state program (the "socialist" part), without actually having the money to pay for said programs (the "irresponsible" part).

You're putting Greece in a no win scenario here.

How can Greece have the money to take care of seniors who only showed up at their country after they retired after working and paying taxes in northern Europa countries?

WWWTT

[Bonam]

You're putting Greece in a no win scenario here.

How can Greece have the money to take care of seniors who only showed up at their country after they retired after working and paying taxes in northern Europa countries?

Uhh... the better question would be why would they be expected to take care of any such seniors? Same can be asked of Canada, too...

[WWWTT]

Uhh... the better question would be why would they be expected to take care of any such seniors? Same can be asked of Canada, too...

I suggest you research the obligations of European nations.

Anyone whom is a citizen of a Europa country can migrate to any other and take up residence.

Similar to the relationship that provinces within Canada have with each other.

There are also transfer payments within Canada. Possible parallels can be drawn.

WWWTT

[Bonam]

I suggest you research the obligations of European nations.

Anyone whom is a citizen of a Europa country can migrate to any other and take up residence.

Migrate sure. But expect the new nation to pay for everything? Seems unreasonable. If "retirement" nations like Greece/Italy/Spain agreed to a rule like that, they made a mistake.