[krona]

> While in many occasions he had admitted the faults of the Greek economy he never took specific actions in correcting them.

By doing what, exactly? The country was bankrupt. In such a situation, the only sensible thing to do is default. Instead, Greece will be a 3rd world country with almost no public assets, and mass unemployment for decades.

Regaining competitiveness through decades of internal devaluation is, to me, far less preferable than default. What Greece was given was like Versailles on steroids.

And to make it worse, it's going to happen again, and again. I'd say we're due another club-med crisis any moment now. http://www.zerohedge.com/news/2017-02-26/european-debt-bomb-...

[sgift]

Yesterday, there was a news that Greece has reached an agreement for a new round of money in exchange for further cuts to pensions and removal of some tax exemptions. So yeah, it is going to happen again. And again. And again.

And all to save a few German and French banks, because politicians feared the results of telling them "you wanted to play in the casino and you lost, now the money is gone" after Lehmann.

[ricw]

Or rather it'll happen again and again until the casino is turned into a viable and competitive economy. I wouldn't blame the Germans and French for trying to contain a crisis at its origin..

[sgift]

> I wouldn't blame the Germans and French for trying to contain a crisis at its origin..

The origin is that banks can lend money without any risk. End of story.

Banks get interest for various reasons - one reason is risk of not seeing the money again and that has to be a real risk or banks will just lend money without thinking twice.

[Bartweiss]

> Or rather it'll happen again and again until the casino is turned into a viable and competitive economy.

By what mechanism? Each round of cuts drives up unemployment and poverty, and cutting expenses hasn't solved the deficit because trashing the economy has destroyed tax revenues.

The first few rounds were rationalization, but they were too little too late. At this point the deep restructuring that's still needed is unapproachable - it's too slow and too unpopular, and the economy is already too weak. The recent cuts haven't been sensible and structural, they've been deadline-beating short-term moves to unlock a new tranche.

Germany gains from this, certainly, but by making an example of Greece. It deters other high-debt Euro nations from getting into the same state, but it's not moving Greece closer to functionality.

[occamrazor]

Cutting expenses has not solved the _debt_ problem, but has surely solved the _deficit_. Greece has a strong primary surplus.

[shkkmo]

> but has surely solved the _deficit_. Greece has a strong primary surplus.

No, it hasn't. The "primary surplus' doesn't include any debt repayments.

[Bartweiss]

Yes, exactly. I said "too little too late" because a primary surplus doesn't resolve crippling debt - at this point it looks like the debt is far too large to handle with any kind of sensible short-term spending cuts.

[RobertoG]

I'm not sure that this approach to economics of 'beatings will continue until morale improves', it's a so good idea.

If fact, I think that, as the data show, it's in the same league of 'Trickle-down economics'.

[marcosdumay]

Each round it gets exponentially bigger... There will come a time when postponing it won't work, then what?

By the way, how injecting money in the hands of a chosen handful and taking it from a country to try to pay back can make a viable and competitive economy?

[pjc50]

> only sensible thing to do is default

The problem here was cashflow; defaulting might save you from more loan payments, although actually doing it is quite painful under international law (see Argentina). But Greece needed to take out further loans in order to meet immediate public funding needs - and defaulting would have prevented that, or made it much more expensive.

I've turned this over in my head a number of times. None of the options are particularly pleasant, but it's not a good idea to pretend that defaulting would have been trouble-free.

[marcosdumay]

"The only way out" != "trouble free"

Obviously Greece needs a balanced budget for defaulting. Too bad it seems to be moving the other way.

[Bartweiss]

The cynical play for Greece might have been trying to schedule their bailouts in a default-friendly way. Accept bailouts, conduct several rounds of aggressive cuts to balance the budget (while financing with tranche funds), blame the Eurozone for them at home, and then default with a balanced budget immediately after a funding unlock.

I'm not sure it was possible - the deficit was too big to close without damaging the economy - but I suspect that leaning on international support while preparing an easy default might have been the best chance.

[pjc50]

If they'd been able to balance the budget, they wouldn't have been in that state in the first place!

[elorant]

Greece's problem isn't the debt. It's the competitiveness of the economy, or more precisely the lack of. Even if we had all our debt erased, the way the economy is structured we'd be back in the same place give it a couple of decades, at most. We spend so much money paying pensions that it's a given we'd default one way or the other.

Furthermore, you can't just default on the debt just by saying so. There's a naivety among mostly Greeks that just by going back to drachma and defaulting on our debt will magically solve all of our problems. In a country that imports pretty much everything that would be catastrophic.

Varoufakis never came up with a plan. He admitted that there was no substantial alternative about converting into drachma. All that he did was playing bluff for six month, dragging a whole nation under his ideology. Then he moved on to greener pastures, not giving a fuck about the havoc he wrecked with his actions.

He can act as a smart-ass all he wants in his books, but we were here and we experienced first hand the results of his reign. Once we get rid of this charade of imbeciles that act as the government, he and many of his former colleagues will end up in jail for their actions. There he will have plenty of time to write memoirs.

[cinquemb]

>Furthermore, you can't just default on the debt just by saying so. There's a naivety among mostly Greeks that just by going back to drachma and defaulting on our debt will magically solve all of our problems. In a country that imports pretty much everything that would be catastrophic.

Well thinking from a trader perspective, by defaulting and going back to the drachma (and leaving the EU), Greece would have more flexibility wrt what goods they can import and from where compared to now with all the restrictions on trading that being within the EU imposes.

Combine that with land access to the rest of Europe, I can imagine a prosperous almost black market for such goods that would provide much needed inflows of capital to the Greek economy (outside of selling junk sovereign bonds and hoping pensioners die faster).

[return0]

This would require a big plunge in the greek economy that people are not willing to take. To be able to recover swiftly from such a crash, the greek economy would have to switch from a very inflexible and sclerotic one (that it is now) to an adaptible, flexible and liberal one. The demographics of Greece do not support such swift action - greece is aging rapidly and the brain drain has gotten really intense. With regards to trade, greece probably benefits from things like e.g. the common agricultural policy more than it loses through restrictions. There is little support for grexit, because of a) the rhetoric and FUD from almost all political parties (including the pro-euro syriza) and EU and b) because there is not enough consensus on the side of the people to go through what would amount to a revolution.

[cinquemb]

The thing is, Greece, IMO, doesn't even need to leave the EU, they just need leverage (in the same way Turkey's leverage is in flooding the EU with more refugees), and they can get leverage in trade by ignoring EU diktats that stipulate what goods they can import in practice (while officially denying everything). International traders would pay a slight premium to be able to have land access to the EU from shipping. Hell, I personally know a couple of traders in SE asia who would pay tens of thousands of dollars to do so.

But I guess the consensus will be in favor of trying continue to squeeze blood from stone until there is none left. And when it gets that far, compared to the threat of cheaper citric acid, steal, etc imports hurting "blessed" EU suppliers, you'll have surplus kalashnikov's coming in from the ME, which I guess is even more profitable for traders ;)

[return0]

> ignoring EU diktats

yeah no, that would be equivalent to being kicked out the EU. Greece tried to use some leverage with refugees and got some money in return but that's all. Also, COSCO has already acquired the port of piraeus so there is an asian connection already.

[cinquemb]

>yeah no, that would be equivalent to being kicked out the EU.

Has there actually been any country that's been and/or in the process of being kicked out the EU (besides threats wielded in media and talked up for ad-views)?

How do you reconcile them willing to kick out Greece but trying to put a multi tens of billion euro bill on the UK for leaving the EU? Would Greece be demanded to pay a similar bill when kicked out and actually pay such? (We already know the ability for them to pay such a bill).

What about all the northern countries running a surplus to Greece, what would happen to those companies special positions due the trade restrictions in their favor?

I really doubt the folks in Brussels want at situation like that to happen, nor do I see them having absolute control over what comes in from customs, in every country, much less in any one in particular.

>Also, COSCO has already acquired the port of piraeus so there is an asian connection already.

Not really sure how to interpret what you mean by "asian connection". So having one state related shipping company from China, now satisfies all the demand for people trying to import into Europe from all over asia, as if every trader must some how just use that port/company? Besides, the issue isn't technically with shipping things, its actually having it cleared to leave the port to the buyer with the right paperwork.

[atmosx]

The OPs perspective in the Greek's mainstream media and elite's perspective. You can't even discuss the eventually of switching currency in the TV.

At the same time other countries which are not on the brink of collapse are prepared to face an eventual break up of the Euro (e.g. LePen winning the elections in France) and the only who doesn't have a plan, and God forbid it comes up with one, is Greece...

[cinquemb]

>The OPs perspective in the Greek's mainstream media and elite's perspective. You can't even discuss the eventually of switching currency in the TV.

Pretty much how it is everywhere wrt having an actual discussion of practical options on the table (setting aside juicy ad revenue) that might not favor those whose social economic status puts their heads first in line on the not so metaphorical guillotines at some point ;)

I think the citizens of Greece should take page out of the Victoria Nuland play book.

I mean if I had means to be able to talk to the all the pensioners I would:

  - advise them the reach out to any of there family/friends who have (decision making) roles in customs/commodity importers w/ decent import volumes from other EU countries

  - work out a deal where they buy their materials from cheaper non "market economy status" places + flag them through while discontinuing imports from their northern neighbors (already profiting here, because cheaper)
  
  - then pooling their funds and shorting companies/securities with the largest exposure to their non buying before earnings calls, and close out shorts soon after. (profiting on the other end, because why not? but you have to liquidate short positions before the ECB printing press comes to the rescue :P)

Or maybe people will continue to take the raw deal while bent over a barrel with ones pants at their ankles.

[elorant]

Please, give me a break. It was the Greek media, and particularly TV shows, that launched Varoufakis to stardom. Even liberal-conservative stations invited him to spread his bs.

Just because some of us don't agree with defaulting it doesn't mean we're in the elite or we're serving some agenda. Please, you can do better than that.

[atmosx]

> Please, give me a break.

You're confusing Varoufakis with Leventis. Varoufakis, to this day, is always put under unjustifiable strain by the Greek media.

As far as your previous post, it's so mis-informed and ill-conceived, that the fact that you have a right to vote in my country scares the shit out of me.

> Just because some of us don't agree with defaulting it doesn't mean we're in the elite or we're serving some agenda. Please, you can do better than that.

Of course I can, but you're a .NET developer! So I'm not sure you could follow through even if I did :-P

ps. Jokes apart, I understand there are many different opinions in a democracy and I respect that. Let's agree that we disagree...

[elorant]

As far as your previous post, it's so mis-informed and ill-conceived, that the fact that you have a right to vote in my country scares the shit out of me.

Sure, only people who agree with you should vote. I find it quite ironic that this comes from someone who supports a leftist government.

As for being misinformed, you could provide something useful to the conversation by arguing with facts. Because all you've done so far is attacking me personally. Isn't it his fault that we have capital controls enforced? Six months before he took charge the banks were open and working just fine.