The Kroog points out that despite five years of doing everything that it was told to do by the troika and sucking down that Good Ol’ Austerity Juice, Greece still finds itself in the bank holiday/capital control stage of the mess that it was supposed to avoid.
But doesn’t the ultimate cause lie in wild irresponsibility on the part of the Greek government? I’ve been looking back at the numbers, readily available from the IMF, and what strikes me is how relatively mild Greek fiscal problems looked on the eve of crisis.
In 2007, Greece had public debt of slightly more than 100 percent of GDP — high, but not out of line with levels that many countries including, for example, the UK have carried for decades and even generations at a stretch. It had a budget deficit of about 7 percent of GDP. If we think that normal times involve 2 percent growth and 2 percent inflation, a deficit of 4 percent of GDP would be consistent with a stable debt/GDP ratio; so the fiscal gap was around 3 points, not trivial but hardly something that should have been impossible to close.
Now, the IMF says that the structural deficit was much larger — but this reflects its estimate that the Greek economy was operating 10 percent above capacity, which I don’t believe for a minute. (The problem here is the way standard methods for estimating potential output cause any large slump to propagate back into a reinterpretation of history, interpreting the past as an unsustainable boom.)
So yes, Greece was overspending, but not by all that much. It was over indebted, but again not by all that much. How did this turn into a catastrophe that among other things saw debt soar to 170 percent of GDP despite savage austerity?
The euro straitjacket, plus inadequately expansionary monetary policy within the eurozone, are the obvious culprits. But that, surely, is the deep question here. If Europe as currently organized can turn medium-sized fiscal failings into this kind of nightmare, the system is fundamentally unworkable.
For whatever reason, this time around was different, as they say. Maybe PM Alexis Tsipras miscalculated, maybe the troika miscalculated, Junker and Merkel and the like, but the rules of the EuroCalvinball changed and now we’ve got ATMs across Greece closed today and a whole lot of people asking a whole hell of a lot of questions.
The other lesson is austerity kills economies, as can be evidenced from Greece to Kansas to the UK to Puerto Rico. I’m not sure how many more financial meltdowns we need to get this into the heads of the suits that make the decisions, but you don’t need a Nobel Prize in order to figure out that maybe drastic reductions in spending for programs that people depend on isn’t the way to save a struggling economy.
Benw
I knew I’d eventually come out ahead if I just held on to those leftover drachmas from my summer abroad!
The Pale Scot
I was asked for quick synopsis a while ago.
Misrule of the Few,
foreignaffairs.com/articles/greece/misrule-few
A must read.
Thoughts:
How was the Greek government able to borrow money that they apparently will never be able to pay back?
The government sold bonds to other EU central banks and pension funds.
How was the Greek government able to sell these these bonds?
Goldman Sachs did the bond creation and misrepresented (lied) about Greece’s numbers
bloomberg.com/news/articles/2012-03-06/goldman-secret-greece-loan-shows-two-sinners-as-client-unrave…
Why did the EU players buy these bonds?
Because the bonds offered a higher rate of return then they could get in a safer play
The Germans were either accepted the Goldman Sachs lies as truth or they bought bonds they knew were worthless.
It seems ridiculous that the Greek and German financial people were not savvy enough to understand what Goldman Sachs was doing, but if that’s not true then the other explanation is that the EU is involved in a Machiavellian plot to undermine Greece at the risk of crashing the EU banking system. Or, my explanation is the Goldman Sachs gave jobs or other bennies to the Gemans and Greeks involved in the bond purchases. The higher rate made them and their books look good, by the time the realities became apparent, they were working (or retiring) somewhere else.
The acronym is “IWBHYWBH”, I won’t be here, you won’t be here
“If you understand what Goldman Sachs is actually doing, they offer you a job”; IRS agent
This is the mortgage scam on another stage.
Tommy
Democracy Now has run a number of features on Greece where they actually talk to citizens and it was heartbreaking. Austerity seem to have crushed small business owners. Many they talked to had business that spanned generations, all gone.
Even more difficult to watch was the interviews with college students. Greece’s best and brightest. They all said they were leaving. There were no jobs, no future for them. I am not even sure you can calculate what this will mean for a nation if they lose almost an entire generation of the best and brightest.
azlib
I have always found it interesting that debt contracts are sacrosanct to the austerians, but pension contracts are not.
sparrow
As an American in Greece right now, it is definitely an interesting time. I enjoy very much reading the hysterical coverage by the Guardian, where they show the same pictures of 10 people in line at an ATM in Athens and report (easily debunked) rumors that stores are running out of bread.
I am glad to be here as my SO gets to vote in the referendum (definitely OXI). I agree with Krugman that “absurd” is the only way to describe the point we have reached. The leftist government Syriza was actually the first non-corrupt, non-crony party elected in Greece and should have been given space to make reforms (if you read Varoufakis’ speeches, he spends more time on reforming tax collection and inefficiencies than he does on asking for debt relief, not that you would know from the way he is portrayed in the media). Sigh…
sparrow
I stole this from a commenter on the Guardian liveblog but it is actually a pretty good cartoon of the whole mess:
The Story of a Company: ACME WIDGETS LTD
ACME widgets, a family company, ran into some financial difficulty. For too long it had been in the family and after a few years the owners viewed it as their own personal piggy bank. They borrowed too much money and profits went into their pockets.
But the banks kept loaning them money as they knew ACME Widgets was affiliated with their parent company ACME World Wide and would probably be good for any debt – even when those debts to the whole world looked unsustainable.
But eventually push came to shove and ACME Widgets needing bailing out. In came ACME World Wide who paid off all the debts to the banks. Wow. Things looked great. The factory workers were happy. And ACME Worldwide also had a fool-proof plan to resurrect the company:
The answer was clearly to cut back as you only make profit when you spend less than you earn.
So cut-backs were called for. First, they suggested that the company rather than using big machines, down-size all their machines, this meant that their famous widgets could only be produced at half the rate. When this brilliant policy failed to increase profits by reducing outlay, they had another idea – sell half the machines!
Unfortunately, selling half the machines (which were by now already smaller) further impacted production and thus profits.
At this stage, a meeting of was called by the parent company (ACME World Wide) and a decision was made that rather than invest they would continue with the policy of cut-backs and it seemed entirely logical that seeing as production was down that less staff were needed!
So the logical step was to let go of those staff paid the most – this would reduce the most costs. Naturally.
Unfortunately, once the clever staff were fired, there was chaos on the shop floor and many people died in accidents. Widget machines have sharp blades you see.
These losses were viewed as a totally normal sacrifice to make in the plan that was clearly working. The only solution must be to make further cut-backs they concluded. A few sacrifices on the way to profitability were only to be expected they concluded. This was the hard path that must be taken.
And on and on it went until one day, the factory was burnt to the ground.
ACME World Wide, the parent company, had a meeting and released a statement to the press saying that clearly their widget division had failed to implement their policies correctly. That they would use the same policies in all of their failing divisions.
MattF
@The Pale Scot: Goldman Sachs is notorious for screwing its customers. Always.
There’s a famous anecdote in Michael Lewis’ “The Big Short” where David Einhorn, a well-known hedge fund manager, refused to do a deal with GS unless they first explained exactly how he was getting screwed. After protestations of innocence, GS yielded and explained– and the deal was done.
Dagaetch
But if we don’t implement harsh austerity measures, how will poor people know that this whole mess is all their fault? After all, if they had just
been born wealthyworked harder, we wouldn’t be in this situation.beltane
Junker and Merkel were supposed to be the adults in the room, or in any case the ones with the actual power to avert this type of catastrophe. Instead, Juncker has spent the day raving like a madman. If the EC can’t handle a potential Greek default, what on earth would they do if confronted with a similar situation in Italy, with its much larger economy?
The behavior of the ECB actually makes me almost admire the actions of the Federal Reserve.
Tommy
@azlib: Having read a few of Matt Taibbi’s books recently and of course his stuff at Rolling Stone I have to admit I still don’t totally understand the scheme these banks are running on bonds and loans. But from what I can understand it stinks to high heaven. I have no idea how what they do is remotely legal.
And it is also clear most of the politicians and city/county governments don’t understand what they are getting themselves into as well. They all seem to think they are getting a “good deal” and then the next thing they know they are neck deep in soul crushing debit.
beltane
@sparrow: Syriza is merely paving the way for Podemos in Spain and Cinque Stelle in Italy. Perhaps Merkel and company should consider devising an alternative to endless austerity while there is still time, if there is still time.
berliner2
There is a problem with the premise: It’s not about austerity, it’s a sovereign debt crisis. It’s about Greece spending more money than the government was able to raise in taxes and lying about it for a decade after the introduction of the Euro. Greece, like Italy, has massive problems with clientelism and rich people not paying their taxes (they’re mostly sitting in Switzerland, with Swiss passports, counting their money). All the previous Greek governments were complicit in the system. In fact, they were the system. Sadly, Syriza was elected based on the premise that they would not do anything about either and let the Northern European countries continue to pick up the tab. Which ends now.
Tommy
@beltane: Yeah that is what nobody is talking about. Or not talking about nearly enough. Spain and Itlay. Nothing against Greece but they are small potatoes. I think I read if Greece was a US state it would only be the ninth largest economy. If Spain and Italy keep going down the path they appear to be on we are talking real problems.
The Pale Scot
Edit:
`
This was in the news Friday Sept.26 2014 and never made a peep in the MSM
OzarkHillbilly
@MattF: Heh. Loved that book.
Tommy
@OzarkHillbilly: Nothing like a person wth ADD, legally blind, really no formal training, just a day trader out of his house, was one of the first to figure out the mortgage scheme was nothing but a house of cards. Make millions knowing this. Got to love America :)!
OzarkHillbilly
@berliner2:
Wrong. It is about austerity, austerity that is making the sovereign debt crisis worse and worse and worse. It’s like cutting off your nose to spite your face.
tobie
None of this surprises me. Germany pursued policies that benefitted Germany alone. All loans given to Greece went to pay off debts with German and French banks. From the start Merkel & Co refused to consider the possibility of writing down Greek debt in spite of warnings from economists around the globe that you can’t impose austerity without writing off some debt. This is even more true in the case of country which doesn’t have its own currency to devalue.
The Greeks are suffering terribly now. It pains me to see this. They are really faced with an impossible choice–accept savage cuts for loan guarantees or leave the Euro and become a country with a worthless currency that can’t be used to buy basic commodities. Just awful.
Tommy
@OzarkHillbilly: Austerity might work for a person or a household. If you have debt you spend less and pay down said debt. But a country is not a person or household.
I mentioned in another comment Democracy Now has run a lot of features on Greece. In the last one they talked to a small business owner. He used to have five successful stores. Then all the cuts and people just stopped spending money. He now has one. Had to layoff more than a dozen people.
I can only assume this has happened thousands of times all across the country. People are not spending money. People then lose their jobs. Taxes are not being paid.
It is just a downward spiral that will not end.
beltane
@Tommy: Fiscal discipline is always a good thing. Austerity is like trying to make ends meet by giving up the car to save money, thus being left without transportation to work. The paychecks stop, the house is cold. Austerity demands that the doors of the house be burned as fuel, etc.
beltane
OT, but Donald Trump was just fired by NBC. I looks like we’re off to another crazy week.
Poopyman
@beltane: Two threads up. Cole bigfooted himself.
jl
I think three issues here.
One is a dispute over policy. Banks loaned the Greeks money. Yes, previous (and note, much more centrist than current one) Greek governments were irresponsible and borrowed to much, were not too careful about the truth, ran a corrupt and very inefficient administration. But no one forced the banks to loan them the money. Too-big-to-fail banks should be able to evaluate risk, including sovereign risks of the loans they make. So, who bears the risk? How much of loan principal will the banks recover. They won’t get all of it, but how much? Some accuse troika of trying to pull a bank bail out financed by Greek taxpayers, others suspicious of shiftless Greeks trying to skip out on as much repayment as possible.
Second seems to me to be over facts. Has the extent of Greek austerity hurt its ability to pay as much back as possible. Greece has to pay back using primary surples, which it is in now. Could that surplus be larger, permitting more real value in real repayments of loans if austerity was reduced. Keynesian tend to say yes. German economists, who are not friendly to Keynes at all, say no.
Third is degree that creditors should impose their favored domestic reform policies on debtor nations. Troika does not like the nature of some Greek reforms. This is done under cover of assertions about what kind of domestic structural reforms work and what don’t. But very little evidence about that, and certainly no evidence structural reforms that reduce real incomes and rights of ordinary workers any better than others, and some evidence to the contrary.
I think that there will be too much fuss over the financial panic, and irrelevant issues. Greece can convert to its own currency to institute policies that in terms of real economics, keeps it effectively on the Euro, or not. Nothing the Eurozone can do about it, despite lots of huffing and puffing. And unless Eurozone actively seeks to punish Greece after an exit, Greece should see recovery like Iceland and Argentina, which would make Greeks feel better after a while, though banks would get less money back.
Troubling issues for me, is I understand Greece will get thrown out of EU if it leaves Eurozone. That may be better for recovery of Greek recovery, since they can make up their own trade rules, but I guess depends on how much new export Greece can generate to countries outside EU if Eurozone and EU decide to retaliate against Greed in terms of real, old fashioned, trade barriers like tariffs and quotas.
Also, if Greek real economy recovers like Iceland and Argentina after their defaults, will other Eurozone losers follow suite (the PIIS of the former PIIGS, and maybe even Finland, whose growth has suffered compared to non Euro Nordic countries. IMHO, consequences of that for Eurozone is ‘who cares, might be for the best’, but if that results in weakening of EU trade union, that would be bad.
jl
@tobie:
” The Greeks are suffering terribly now. It pains me to see this. They are really faced with an impossible choice–accept savage cuts for loan guarantees or leave the Euro and become a country with a worthless currency that can’t be used to buy basic commodities. Just awful. ”
This dilemma does not need to hold. ‘Worthless’ new Greek currency may help exports, and benefit real economy.
Alex S.
The European bureaucracy is a slow-moving juggernaut steamrolling any opposition to its course. As a consequence the elite opinion, the ‘conventional wisdom’, is almost impossible to change. Then you’ve got Merkel and Juncker, both without economic experience and the latter a shameless career politician who turned his small country of Luxembourg into a tax haven where rich Greeks hide their money. Merkel only cares for Germany and thinks of the economy like mathematicians do when they do economics, i.e. the market is always right and optimal.
The failure of austerity doesn’t make it through to them, they don’t want to understand it either. The machine needs to turn, the meetings must go through, the plans must be followed. Greece is a distraction.
rikyrah
this is absolutely pitiful. a damn shame.
Brachiator
@Tommy:
Sadly, it’s not just a Greek problem:
catclub
@berliner2:
And the banks (which should have known better) loaning them the money to do so. The banks have all been made whole, since the central banks have bought all the bad bonds. NOW they no longer care if Greece defaults.
catclub
@jl:
This. I think most of those bonds that the banks were holding – which the Greeks promise to repay, are now owned by the central banks. The commercial banks have been bailed out – to some extent.
jl
@catclub: But if Greece does not default, the banks could get some more. Keynesians think reducing the austerity policies should produce a higher growth path of primary surplus, so maybe would get more money that way. But maybe that is too hypothetical. Sound and respected German macroeconomists say that Keynes is BS they will never see any more money from reduced austerity.
Squeezing more money out right now, until Greece is stone that has no more, well, they can see that cash coming right up, if only the Greek government agree to cough up more now by cutting budget even more, and in ways that meet bankers ideological preferences.
What happens year after tomorrow after Greece coughs up what little more cash it can now, well, that is just as hypothetical as how much more money Greece could cough up if they could have less austerity, and more control over the type of reforms they implement.
So, it might be banks going for the short term cash they can see is there right now. More cash is better, regardless of the extent to which they have already been bailed out.
jl
@catclub: Not sure, but banks did not get full face value for those bonds. And, more cash is better regardless of what already happened. I think banks still want more repayment of principal. Some commenters, like Krugman, have said that there is consensus about how much principal can ever be repaid. Recent events cast doubt on that?
Poopyman
And it’s been a fun day on Wall Street, no doubt with more to come this week.
goblue72
The banksters just need to be shown the door. Don’t want to take a haircut – fine. We (Greece) anxiously await the arrival of the Goldman Sachs Navy. Until then, pound sand. Sovereign nations aren’t companies. They aren’t even municipalities or territories/states. They have armies and navies. Last time I checked, the ECB was a bunch of bureaucrats in Frankfurt.
Worked for Iceland – http://www.independent.co.uk/news/business/news/three-charts-that-show-icelands-economy-recovered-after-it-imprisoned-bankers-and-let-banks-go-bust–instead-of-bailing-them-out-10309503.html
sparrow
@berliner2: You are right up until you jump on Syriza. The platform they were elected on had three planks. #2 was to tackle the clientelism and crony corruption endemic to the state. Quietly, every day in Kathimerini there is news of another doctor, jewelry store owner, etc. being arrested for tax evasion. They are making small inroads, and could do more if they weren’t kept tied up in meetings with the troika continuously the last 5 months. They are quite literally the first non-bought gov’t Greece has had.
This is also, at heart, an ideological war. A leftist government cannot be allowed to succeed.
goblue72
@sparrow: I’m really hoping that Syriza wins the referendum and gets to tell the banksters to go pound sand.
Robert Sneddon
@jl: What exports are those? Where are they going to buy the fuel to power the trucks and planes carrying those exports to foreign markets when all they can offer in exchange is worthless paper promises if they do leave the Euro?
Tourism is going to be the financial saviour of Greece if anything will be since it will be dirt-cheap to visit there as long as you have hard currency. Just don’t expect first-world standards in terms of roads, water etc. The ruins will be picturesque though.
“Austerity” isn’t the problem, it’s the result of corruption and tax avoidance. It appears the existing loans aren’t going to be serviced on time if ever, but Greece needs MORE loans right now just to cover their current spending needs. Who’s going to step up and offer them fresh loans at good rates if they’re currently defaulting on previous ones? They’re not providing any real evidence of restructuring their economy to, for example, deal with tax evasion (that’s practically an Olympic sport) which might persuade the people with money to invest that it’s not a losing proposition to make more loans to the Greek government.
The Greeks elected someone who promised them the moon on a stick, and sure enough they’re getting the shaft.
jl
@jl: To clarify. Greece can effectively stay on Euro if it wants. So, in terms of value of its currency Greece can stay on Euro. But that would probably mean disaster if it defaulted, since would not get loans and could not expand exports through devaluation of currency.
Greece would almost certainly institute its own currency and devalue. The costs of that would be small compared to real economic costs of its austerity program, though everyone would kibbitz and obsess over the currency much more than what was happening in real economy. With own currency not pegged to Euro, Greece could devalue and expand exports. How much Eurozone and EU might try to sabotage that recovery, if it is true Greece would be thrown out of EU if it leaves Eurozone, is something I hope we do not find out.
sparrow
@Robert Sneddon: You clearly know nothing about Greece or the Greek situation. I will just leave it at that.
Chris
@sparrow:
I think the last sentence hits the nail on the head. This isn’t about economics; it’s certainly not about getting Greece back on its feet; and it’s not even about the lenders getting their money back. It’s about making an example of Greece for anyone else who thinks they can defy the international creditors. It’s about avoiding at all costs the precedent of a government defying the troika by putting its people and its electoral promises above the powers-that-be.
jl
@Robert Sneddon:
” What exports are those? ”
Tourism, freight shipping services and agriculture. If Greece leaves the Euro, we will find out how much dirt cheap vacations compensate for somewhat rough accommodation.
Greece after default will get loans in accordance with banks’ estimate of the risk and return going forward. If the new Greek government is more the same BS, as you assert, they won’t get any loans, but soon they will get a new government. If it is not, then there will be loans. Read up on Iceland and Argentina.
Right now there is no “THE’ problem causing Greece pain. So you present a false dichotomy. You also ignore recent evidence and theory that conventional austerity policies are counter productive.
The last bit of snark was nice, though. Not sure it has any reality to back it up. But still, it is cute.
sparrow
@Chris: Greece also got into the EU somewhat later than other countries, and had to accept crappy deals for a lot of agricultural products so that it wouldn’t hurt the industries of existing members (especially France as I recall). They were required to uproot a lot of vineyards and orchards. Greece should be growing enough to feed itself and then some. They should start by not selling their olive oil at bargain-bin prices to be bottled in Italy and sold abroad as “Italian” EVOO. They don’t currently have the infrastructure to have extensive Greenhouses to grow tomatoes in the winter — this is the source of the famous story that Greeks by tomatoes from Holland (only in the winter of course) — but will certainly start building them after Holland tomatoes are 4 times the price they are now.
catclub
@Poopyman: I read recently that there had been no 1% or 2% up or down days in a long time.
Not any more.
Robert Sneddon
@jl: Iceland has cheap energy to export in the form of aluminium billets as well as a large fishing industry (boy howdy do they export fish…). It also has a small population that pays taxes. Argentina, ten years and more after they defaulted on a bunch of loans is now getting new lines of credit at 10% and more when any nation with a decent financial reputation can sell medium-term paper at 3% or less (US 10 year treasuries today, 2.3% or so). That knocks on to inflation which in Argentina is currently running at a about 2% a month or annualised about 40% or so. Wages, pensions, savings, they all suffer in that sort of economic situation.
Greece can only dream of getting loans at 10% today and tomorrow because no-one trusts them to pay them back expeditiously. Maybe ten years down the line, if their government can put an end to their national hobby of tax-dodging they can be in the same state as Argentina. The smart folks in Greece will hold on to their Euros for as long as they can while the New Drachma crashes and burns taking the poorer folks with it.
jl
@Robert Sneddon:
‘ (boy howdy do they export fish…). ‘
Greece gets booted out of the EU along with the Eurozone, they could increase fishing exports too. Some more exports for Greece! Yay!
You might be right. It cold be an irrecoverable mess. If you want to argue that, fine. Greece exiting the Euro this way is very risky for both Greece and rest of Eurozone (so we agree on at least half of that).
Let’s see what the Greeks say in the referendum. Hey, maybe they agree with you, and it will all be academic. But if not, we will see how Greece does.
F
As a famous socialist once said, “It is difficult to get a man to understand something, when his salary depends upon his not understanding it.”
J R in WV
When we took our (only ever) trip to Europe we booked a tour of northern Spain and southern France, focused on ancient cave paintings and archeology. We had seats on Air France to Paris, then a hop to Bilbao, Spain. The flight from JFK to Charles DeGaul was cancelled because of equipment failure, the flight from Paris never departed.
So we got put on a flight to Madrid, with a connection to Bilbao from there. When we landed in Madrid, the airport was huge, but empty. Miles of concourses, filled with fancy shops, 100% closed up. There were no passengers, and no employees. We had to get directions from the few police officers, who wouldn’t speak to us until we provided them with our passports.
We took a bus from the terminal we landed at to the terminal where the flight to Bilbao was to originate from, and were the only passengers on the bus. The second terminal was just like the first, many fancy shops and restaurants, all closed, no people at all until we found the gate for our flight to Bilbao, which was pretty full, maybe 80% or so.
But when we got to Bilbao, and caught a cab to our hotel downtown, the city was busy, clean and beautiful, with steep hills surrounding a navigable river. The hotel was very nice, on the edge of a residential neighborhood, with many nice bars with different types of food.
But the emptyness of the national airport in Madrid was so striking, and so sad. And of course Spain isn’t quite as bad off as Greece is from the numbers. This was all 3 years ago, and the 2 weeks we spent in Spain and France were interesting.
The cities were busy, especially Toulouse and Paris, which were the two big cities we saw. We were able to get seats at a Michelin starred restaurant just across the river from the Eiffel tower, which was a little surprising. They were a seafood place, which we loved.
I hate the idea that German Hobbsian economists are going to be able to cram their austerity down the throats of democratic Socialists all over Europe*. This could cause the EuroZone to collapse, throwing the world into a great depression, with war between opposing groups all over the world.
* Socialists can use that ugly metaphor too!
jl
@J R in WV:
” This could cause the EuroZone to collapse, throwing the world into a great depression, ”
Collapse or Eurozone might cause financial panic, but would not be responsible for world great depression. Bad macroeconomic and financial policy following panic could do that. Weakening or break-up of European Union following exit of countries form Eurozone would be more dangerous.
Eurozone is a currency union. It is not the European Union, a free (and at least within Europe, semi ‘fair’) international trade union, that has had far more demonstrable positive effects than Eurozone currency union has had so far.
Robert Sneddon
@jl: Problem is, the ex-EU Greeks wouldn’t be permitted to fish in EU-controlled fishing zones as they can at the moment which rather limits the amount of fish they can catch and sell. That’s assuming their fishermen can afford to buy fuel oil for their fishing boats since the fuel retailers will want paying with a hard currency like, say, Euros. That’s one downside to inflating your way out of a financial crisis, imports of essentials like fuel get VERY expensive and keep on getting more and more expensive as time goes on.
jl
@Robert Sneddon: EU fishing quotas will go too, and I imagine some EU fishing zones will have to be renegotiated.
Look, you have make up your mind completely, and are 100 percent certain about the history and the one single cause of the crisis, and think you can predict the absolutely inevitable outcome of the Greek exit, well enough I guess that you should make some money off it, looks like. If the Greek voters decide to vote no and a final crisis results in Greek exit and we will see which side is correct.
jonas
@berliner2: Yes, there’s a sovereign debt crisis, but — switching to a medical metaphor — the doctors are trying to treat a patient with a terminal illness, but the cure is too expensive, and the patient is already so deep in debt for the care he has received so far that he will never pay it off. So they tell the patient that the only cure, essentially, is to commit suicide. But if the doctors want to get paid, the patient has to live.
Paradox, ironically, is a Greek word. As is irony. But anyway…
sparrow
@goblue72: me too! my SO is voting OXI on the 5th, so fingers crossed. This has to end.
bjacques
I liked CNN’s coverage of the Athens Syntagma Square demonstration last night. They said, yes, it certainly is a demonstration. But they couldn’t bring themselves to say what the demonstration was about. Evidently nobody in the studio could read the big Greek letters on the signs, even though CNN was covering an event there. And some of the signs were even in English.
My own metaphor:
You are a peasant in a village, and one day the hetman invites you to a banquet because it’s been a good year. It’s not obvious why, but hey. Everyone in the village gets a dinner appropriate to his or her station. You get a delicious roast chicken and a decent ale to wash it down with. The goldsmiths at the other end of the table get lobster and the really good stuff, and prewar Armagnac after as well.
A few days later the hetman says the king’s finances are dire and he needs money badly, so we all have to dig deep. That banquet wasn’t free after all. Well that sucks, you say. How much for the chicken and ale then?
The hetman says, actually, you and the other peasants have to pay for the goldsmiths’ dinners too. They skipped off when the king’s men came around and they can’t be reached. WTF!? you say, and anyway, I know the goldsmiths are over in the next village, because that’s where I have to send the rent on my hovel. The hetman looks at you sharply and repeats that *the goldsmiths are gone and can’t be reached*
I don’t have that kind of money, you say. The hetman says you don’t have to send all of your kids to the doctor, and they can split dinner. Also, you can sell your cow. The goldsmiths are in the market for steak. But that’s my livelihood, you say. And that would about cover my chicken dinner, but not the lobster *that I didn’t eat*.
The hetman shrugs. Look, it’s only until the crunch is over. Or maybe not. The king’s starting to like the idea of a surplus. And you want a happy king, right?
Jado
“I’m not sure how many more financial meltdowns we need to get this into the heads of the suits that make the decisions…”
Umm, it’s already firmly in the heads of the suits that make the decisions – Austerity = Profits for the 1%!!
What else needs to be explained?