LIVE: Greeks react to the Parliament’s vote on eurozone agreement

originally posted by: Rocker2013

Maybe that's just because you don't understand the importance of the issue or the consequences this will have on other countries?

And don't think the US or UK are immune from those consequences either. If Greece leaves the Euro it could cause a major problem in the markets, and cause other European nations to start to distance themselves from the Union.

Lets also not forget the meeting the Greek PM had with Putin less than a month ago. If Greece finds itself in dire need of financial help and Russia is the only one willing to lend to it, there will be a trade-off, and that will impact all of Europe, and the US, along with NATO.

I actually think the importance (financially) to the rest of Europe has been massively overplayed. Quite simply, Greece accounts for around 2% of the Eurozone GDP - and the rest of the zone is actually not doing too bad, especially considering where it was at. Most of this is beacuase of the exposure to French and German banks (mainly) that provided most of the credit for the ECB bailouts.

I have said it from day one of this crisis - Greece shafted itself for decades but it was fixable. The ECB-IMF plan though has completely gone beyond shafting. The simple fact is that creditors consist of investors who speculate on markets. Any aspect of speculation involves risk (there are no guarantees). Therefore these investors should be told that unfortunately we are not covering their debts this time. That will then allow Greece to actually formulate a sensible plan to get some fiscal responsibility.

The thing is though, for all the improvements that Greece has made, they still have a society where a barber can retire on final salary pension at the age of 50. If this is the type of society they want, they will have to realise it is only supportable through exremely high taxation. If they want low taxes, they will have to work longer. It isn't exactly rocket science.

a reply to: ScepticScot

Have a look at this map, the economy grew 0.8 percent in 2014.
Yes their economy shrank, this is because the credit bubble burst and excessive spending stopped.
Other member states did not shrink as much as Greece because there the main problem was not a credit bubble, but mis investment, building houses that nobody needed, a housing bubble and of course the banks took a hit when Lehman fell and the wallstreet scam, derivatives junk with AAA on it.
Another reason is that their economy is a lot more friendly for entrepreneurs who want to start their business while Greece is a bureaucratic hell.
The growth shows that although there is austerity, the economy recovers, every other member state is proof of that too.

What the IMF states is that there must be debt relief because a lot of damage has been done and Greece is in a worse state than before.
This is already discussed in Germany, a new bailout will mean that debt is going to be restructured so that the burden is not to high.
Also i want to point out that this had been done before in 2012, 108 billion to private investors (banks/funds) was written off and loans from EU member states were lengthened against lower interest than member states pay themselves because they have to loan the money to in order to bailout Greece.
Greece did not have to pay before 2020 to the EU, the current payments are to the IMF and ECB.
And yet it is the EU that is made to be the bad guy and receives insult after insult, especially Germany.
We were waving Greece goodbye, have the kind of life you like and which you think your economy can sustain with your own currency, we will provide the aid were needed and write off a portion of the debt which is not possible if Greece remains in the eurozone.
That would mean money transfer which is against the rules.
But France and Italy but also the US have put pressure on Germany for a deal to keep Greece in the eurozone.
While the German finance minister is attacked from all sides, he is right about Greece, a grexit is better for them instead of a new deal and remaining in the eurozone.
And now that there is a deal, everyone points the finger to Germany because the debt becomes to high.
The reality is that the Netherlands, Finland, Germany and some other member states were fine with Greece leaving the eurozone.
Greece has shown to be unreliable, trust has been breached.
Even now with the new deal they speak of blackmail and don't believe in it, than why did Tsipras negotiate this deal and sign it?
Go... leave and be happy with the drachma!

a reply to: earthling42

Thank you

a reply to: earthling42
The Greek economy came out of recession (just) in 2014 after the longest period of continuous economic decline of any developed country in modern history. Yet your post blamed the economic situation on the government elected in 2015.
The conditions demanded by the EU for bail out are completely unsustainable and motivated for political consumption in Germany not economics.
Where I do agree is that the best situation would be for Greece to leave the Euro. Failing that massive fiscal transfer combined with long term structural reform is the only Greece can stay in the Euro. However voters in the rest of Europe don't want hear this as they have been spoon-fed the myth of austerity being the only option for themselves so why would they accept their governments funding aid to Greece. Those lazy Greeks must be punished more (regardless that the punishments falls on the poorest and youngest, so those least responsible for the economic crisis)
Welcome to the new EU, to hell with the welfare of its citizens. Bailouts for banks not people.

a reply to: ColCurious

Hi Colcurious, greetings from the dutch

originally posted by: ScepticScot
a reply to: earthling42
The Greek economy came out of recession (just) in 2014 after the longest period of continuous economic decline of any developed country in modern history. Yet your post blamed the economic situation on the government elected in 2015.
The conditions demanded by the EU for bail out are completely unsustainable and motivated for political consumption in Germany not economics.
Where I do agree is that the best situation would be for Greece to leave the Euro. Failing that massive fiscal transfer combined with long term structural reform is the only Greece can stay in the Euro. However voters in the rest of Europe don't want hear this as they have been spoon-fed the myth of austerity being the only option for themselves so why would they accept their governments funding aid to Greece. Those lazy Greeks must be punished more (regardless that the punishments falls on the poorest and youngest, so those least responsible for the economic crisis)
Welcome to the new EU, to hell with the welfare of its citizens. Bailouts for banks not people.

The Greek economy came out of recession in 2014 because of the measures imposed by the previous governments (been a few post 2008). Syriza then overturned many of these measures, hence the situation they are now in. Out of interest, what did you think would happen when they overturned the successful measures put in place?

a reply to: Flavian
You consider a 25% decline in GDP a sucesfull measure?

a reply to: ScepticScot

This is because the credit bubble burst and excessive spending stopped.

originally posted by: ScepticScot
a reply to: Flavian
You consider a 25% decline in GDP a sucesfull measure?

Accoding to the criteria inherent in the centralized financial system / the present political and economic hegemony - yes.

originally posted by: ColCurious

originally posted by: ScepticScot
a reply to: Flavian
You consider a 25% decline in GDP a sucesfull measure?

Accoding to the criteria inherent in the centralized financial system / the present political and economic hegemony - yes.

Declining prosperity, lower standard of living, failed growth policies, increasing debt, mass unemployment and shortages of essential goods. And where does the problem lie according to the EU? Not with the Euro or the economic suicide note of austerity. No its that the people are lazy and need to be punished. Genius.

a reply to: ScepticScot

ScepticScot, the alternative was no bailout for Greece in 2010 which meant Greece had to leave the eurozone and the decline would have been at least twice as much.

This is no question of lazy greeks that need to be punished, this is a question of government corruption and out of control spending which has led to Greece being downgraded by moody's Fitch and s&p until junk status in 2010.

That effectively meant that Greece was cut off from the capital market and left with only two options, either apply for a bailout, or leave eurozone and see their banks collapse, their economy implode, and this accompanied with high inflation which would erode the savings and pensions of the Greek people.

The choice was to apply for a bailout, 110 billion to recapitalize their banks, finance their deficit and interest on their debt, and repay domestic and foreign investors.
After more insight in the situation in which Greece found itself, it was clear that a second bailout was needed.

This happened in 2012 and accompanied with a debt reduction and debt restructuring, a haircut of 108 billion to private investors (banks) and lengtened loans with low interest of 1.5 percent so that the burden and cost of their debt was sustainable, in fact even lower than that of Spain, Italy, Portugal and Ireland.

Of course this gigantic bailout (247 billion) goes accompanied with oversight and reforms, Greece could not and stil cannot continue on the same path that brought them in this situation.
They have to cut spending, implement a good tax system, cadastre, make their economy more friendly for entrepeneurs, and privatize harbours and other possesions so that private investors can invest and create jobs for Greek people.

I hope you understand and see that this is by no means the populist perception "lazy greeks must be punished".

As i mentioned in an earlier reply, joining the eurozone meant that Greece gave up their own monetary policy and thus cannot devalue their currency to make their economy cheaper and more competitive, that means they have only one option, internal devaluation (lower wages and pensions) cut spending in order to balance their budget and regain competitiveness for their economy.

A little more about devaluation of the currency, it seems great but it is essentially theft, the only ones who benefit are the government and central bank who see their debt reduced by pouring more money into the economy while citizens see their savings erode and consumer prices go up while wages stay the same or even fall if there is high unemployment.

a reply to: earthling42
The economic crises wasn't caused by the greek people our even the Greek government but by irresponsible short term decision making by the major banks and financial institutions coupled with ineffective regulation by the US and EU governments.
The bailouts given haven't been to help the Greek economy they have been to stabilise the European financial system and protect creditors.
I agree that reform if the tax system is needed (but not just in Greece) however the forced privatisation has nothing to do with job creation. Its is simply an attempt to ring-fence assets.
Cutting government spending during a recession simply does not work. The private sector in Greece is in no position to kick start the Greek economy and as government spending declines and demand falls the situation will only be worse.
The question I think any observer has to ask is what is the point of the EU if it is not for the benefit of its citizens.

a reply to: ScepticScot

We are not talking about the financial crisis here, although it had a big impact on the EA, but the eurocrisis was caused by reckless investments.
One can generate economic growth through investments like we have seen, building houses and airports that nobody needs, even complete ghost cities, but there wont be a return on investment since nobody buys it and thus invested money is lost, loans aren't being payed back and businesses go bankrupt with a crisis and high unemployment as a result.

It is essentially a putting forward of demand and creating a black hole in the future which no doubt will present itself, and it did.
We see the same in the car industry, i've seen pictures of some areas where thousands of newly built unsold cars are being parked.

Here in the Netherlands we were quite reckless too, people were able to loan 9 times their income and 125 percent of the value for a home.
That is the reason for the boom in our housing market, couple that with mortgage constructions where people only had to pay interest without paying off their mortgage, and you'll know that this will cause problems.
Of course it did, from 2008 until now prises are falling and many home owners cannot sell their home without being faced with a high debt, their home is under water, they payed a lot more than their house is worth currently.
Many had to sell, due to the crisis their incomes were cut or they even lost their job and can't pay their mortgage.
Not in every business, but certainly in building companies and their affiliates the crisis has hit hard including entrepreneurs and stores.
We had to cut spending by 56 billion in 2011 in order to balance our budget and saw our debt rise from 43 percent in 2007 to 75 percent currently.
Many older people have had their pension cut by ten percent while for at least 5 years they were not indexed to compensate for rising prices.
Social benefits have been cut while unemployment soared.

Is the EU therefore not to the benefit of its citizens? it all comes down to discipline, don't spend money if you don't have it, and governments should regulate lending, because banks clearly don't care about the wellbeing of the people.

The loans to Greece were to finance their deficit, interest on their debt and to repay domestic/foreign investors as i mentioned in my previous reply.
They were not intended to be invested in the Greek economy, the money that Greece loaned from investors, already found its way to the Greek economy since 2000 until late 2009, hence the credit bubble.

As i mentioned also in my previous reply, Greece found itself unable to repay its investors nor to finance its debt and budget deficit due to the downgrades and interest on debt that went through the roof as a result.
Should the EU have said to Greece "drown in the black hole you created!"?
Of course not, it would have been disastrous for Greece, but not for the EA, instead of bailing out Greece, we could have let it sink and support Italy and Spain a little more to deal with the contagion and thus the stability of the EA as a whole.

The greek government is unable to invest in harbours, airports and so on due to their high debt, Chinese and other investors are capable to do so and therefore unused potential in the Greek economy can be accessed which will lead to more jobs.
It does not leave Greece, but it is modernized and put to use, For Greece it will mean income through taxation.

I forgot to shine a light on cutting spending during a recession.
This is certainly not prefered, to my knowledge it is keynes who taught this and in a way he is right.
However, this acyclical way of spending during a recession in order to boost the economy means that in better times during an economic boom, the spending must be cut in order to save money and lower the outstanding debt.
If however during the economic boom the policy is cyclical, by that i mean spending more, than there is no money left to spend during the recession.

a reply to: earthling42
The current situation in Greece is very much a result of the 2008 crash and what followed. While I agree that building empty airports and roads to nowhere is a poor use of resources the point of government spending is not to generate a direct return but generate demand that will stimulate the economy, increase GDP and as a result increase tax revenue.
You talk about what the Netherlands had to do to balance the budget. My point is that you didn't need to do that. It was bad economic policy for the Netherlands and it is disastrous economic policy for Greece.

originally posted by: earthling42
I forgot to shine a light on cutting spending during a recession.
This is certainly not prefered, to my knowledge it is keynes who taught this and in a way he is right.
However, this acyclical way of spending during a recession in order to boost the economy means that in better times during an economic boom, the spending must be cut in order to save money and lower the outstanding debt.
If however during the economic boom the policy is cyclical, by that i mean spending more, than there is no money left to spend during the recession.

You are correct in that politicians generally only like to see one side of the Keynesian approach (for obvious reasons).
To be exact there is no real requirement even to reduce the nominal debt during good times just to borrow at a slower rate than economic growth.
However the fact that European governments got it wrong during the boom years doesn't negate the need to get it right during the bad ones.

a reply to: ScepticScot

Νο, no bad policy, if the deficit grows and debt to gdp grows exponential as a result, investors will want a higher interest and thus more money is needed to finance our debt.

With Greece, again, they were cut off from the capital market and had no other choice than to cut spending.

This is also the answer to your reply on the keynesian approach, those who have no money because it is already spend during the economic boom will have to cut spending because they can only loan against 20 or 30 percent which is simply unsustainable.

a reply to: earthling42
It think it was bad policy as the correct way to change your debt to GDP ratio is surely to grow GDP by more than the debt not have debt fall by more than GDP.
That said it was a bad policy forced by the poor construction of the Euro zone and a political/economic ideology of Germany.
Your are right that Greece cant realistically borrow more while in the Euro. That is why I think the options are either to leave or for the ECB to provide the required funds as part of genuine reconstruction programme, not to fund external debt payments.

It annoys me when people blame the average greek citizen for the financial troubles their country is facing.
Personally I think their problems mainly come from a succession of corrupt self-serving overpaid politicians who have incurred a huge debt on Greece.Unfortunately it is the Greek people who suffer the misery while the Parasite Politicians get off scot-free.