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Athens is burning.
joshofalltrades
Class TraitorSmoke-filled roomRegistered User regular
Class TraitorSmoke-filled roomRegistered User regular
It's true.
So, this seems like the pot has been boiling for quite a while and is starting to boil over. 34 buildings have been set ablaze. Tons of damage, destruction, and looting. Meanwhile, a new austerity bill was signed, pissing people right the hell off.
I have to admit I don't know a whole lot about the Greek situation myself, being largely ignorant of foreign macroeconomic issues (yes I am terrible). But this seems like it could get out of hand pretty quickly. What do you think is next for Greece? Revolution? Total anarchy? Or will the protestors be put down?
There seem to be varying reports on the number of protesters there are, but everybody seems to agree that it's a lot.
So, this seems like the pot has been boiling for quite a while and is starting to boil over. 34 buildings have been set ablaze. Tons of damage, destruction, and looting. Meanwhile, a new austerity bill was signed, pissing people right the hell off.
I have to admit I don't know a whole lot about the Greek situation myself, being largely ignorant of foreign macroeconomic issues (yes I am terrible). But this seems like it could get out of hand pretty quickly. What do you think is next for Greece? Revolution? Total anarchy? Or will the protestors be put down?
There seem to be varying reports on the number of protesters there are, but everybody seems to agree that it's a lot.
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Guess we'll find out real fuckin' quick what a Greek default means for the dollar.
Supposedly not so horrible things, at least not compared to what it'll do to the Euro. Having a big market like the eurozone go into recession is not happy news for us though.
In many ways this whole half year just seems like a ploy to normalize expectations regarding Greece. Most of the places that are heavy in there are trying like hell to shore themselves up preparing for the inevitable hit they're going to take. I hope it's enough.
Yeah, no, if I hadn't seen another Greece thread a while ago I probably would have thought this was a Civilization thread about having problems with happiness put into the wrong forum.
Well yeah obviously it's not going to directly effect us very much, it's the knock-on consequences of a European panic that could completely fuck us.
From my admittedly limited understanding that panic is actually the partly good part in that the dollar is the only strong reserve currency option left. So the whole "Practically being paid to borrow money" thing our government has got going will likely continue. Of course, the strong dollar doesn't do anything good for our exports.
Really the question is going to be which financial groups crash and just how connected to them we are.
But because this really is the least bad of their possible options:
1) Austerity
2)Leave the euro and default
3)Stay in the Euro and default
um...I think that sums them up. And if they think government services are going to be better after a default than the austerity package requires well...maybe they should balance their budget by selling that super-crack they're smoking abroad.
From what i understand, it's a reduction in the min wage, which would lead to a reduction in private sector wages, but is there to allow a public sector cost reduction.
I'm hoping the major players in the Euro zone have enough safeguards in place to minimize things as much as possible. This will suck for Obama because if Greece goes all the asshole republicans are going to say "see this is why deficits are bad and if we don't fix ours we'll end up like Greece," never mind the fact that their debt issues can't be compared to the US. They don't have a currency they can tweak nor did our government act as irresponsibly as Greece's.
I also agree that it seems like the narrative for quite some time was to make this situation seem unexpected when it did happen. That's probably not a bad thing if it motivates people to shore up assets before the hit and makes it less likely for people to panic when things do tank if they thought it was happening anyways.
What I found was a reduction in the "benchmark minimum wage" according to NYT. That may be what you're seeing. That would help Greece exports become cheaper but wow, will that piss a shitload of people off. I don't understand exactly how that's governmental austerity though.
Yeah sorry, no sympathy. Welcome to the real world, where people who aren't independently wealthy don't actually retire during the prime of their middle age life.
Also, tax evasion is something of a national sport in Greece, so reducing private sector wages might not actually have much effect on tax revenues.
Austerity is going to lead to a default. Cutting the government to the extent that they are currently isn't going to result in a balanced budget, the cutting is only going to run the economy into the ground. The deficit isn't getting fixed without a default or some ridiculous amount of no strings aid dollars. The cuts are just punishing the Greek citizens to buy time for german/french/italian banks.
My sympathy for them was greatly reduced after one of the guys the EU sent in to try and work out what was wrong with their tax collection/accounting system was brought up on criminal charges. Seems he pissed off the old bureaucrats in the office and that was their response.
All I can think of... "hell, it's about time, Greece!" Show those central banker technocrat fascists that the people aren't going to play their game anymore.
While that sounds horrible if true, rioting is still the suck.
Well, Greece relatively speaking isn't that big of an economy, so the direct effects of their economy getting tanked would mostly be local. A bigger problem for non-Greeks is that a lot of their debt is sitting on the books of European banks, who are very highly leveraged, even compared to American banks in the boom days. What this means is that they have borrowed a ton relative to the capital they have, so it only takes a stiff breeze in this environment for them to become insolvent, which could potentially cause a chain reaction screwing up financial markets all over the world. Like with the subprime meltdown not too long ago that blew up a big chunk of Wall St. firms and helped push us into this depression.
Another potential risk is that while Greece is more or less guaranteed to be screwed with their debt situation, there are other larger European countries who are also in a precarious position with their debt but are in decent enough shape that they could muddle through as long as there isn't too much panic in bond markets. Countries like Spain and Italy, for example. However, if there is a panic, that could make a self fulfilling crisis where their debt gets taken out too and yields become to high for them to be able to sustain it. This is much worse than Greece going under, because they are way too big and there is pretty much no one in a position to bail them out. That happening would likely mean an end to the Euro as we know it, and beyond that who knows.
I was half listening to the radio today and I also heard something about the national minimum wage being reduced by 20%. This does seem a little mad, but looking at the Euro Stat organisation, Greece seems to pay a comparatively high national minimum wag (NMW) for the EU. I don't buy the simplified argument that NMW=job killer, but I guess if the NMW is rated much higher than the actual market price (however that may be determined), then I guess a reduction may help.
Anyway, here are some figures/diagrams I've found about EU NMW figures.
EU comparison diagrams, as of September 2011, spoilered for large, from:
http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Minimum_wage_statistics
Basically, Greece was unsustainable. They were either gonna default or people were just gonna have to give them free money.
Europe chose really really slow default.
anyone?
Kick them the fuck out of the Euro
Allow the European Central Bank to print money which would cause inflation but help stabilize the situation. Since that won't happen any time soon probably the next best was to let Greece leave the Euro, print money and default on a small amount of debt as possible. Of course that probably won't happen. Best way would of not let the Greeks into the eurozone on cooked books in the first place.
Wasn't it Norway or Sweden that was fucked by the financial meltdown and just inflated it's way out? Obviously this is a painful process but there isn't an "easy" way out, just less bad options.
I ain't no high-talkin economicist but I think if y'all actually collected taxes now and again you might help your budget sitchiation.
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Krugman's been talking off and on about this for awhile, but I think the gist of it is that there needs to be a realignment of prices between Germany and Greece (outside of just the straight up debt issues), such that Germany inflates relative to Greece or on the flip side Greece deflates relative to Germany. Since they are joined at the hip by a shared currency, they can't shift things around with floating exchange rates and have to actually have a disparity in inflation. The Germans have a bug up their ass about inflation and are more or less running the show, so they want to adjust prices by forcing Greece into deflation, which is part of this austerity business. A big part of that is cutting wages.
However, if you remember your Great Depression history, deflation often has rather nasty effects on the economy, and makes the real burden of nominal debt even higher. Since Greece's debt is in a currency they don't control and was getting completely out of hand even without their economy being ground to dust, its pretty silly to expect the austerity measures to prevent a default. At best the IMF and European response just buys time by loaning more money to a country that can't afford to pay for the loans its already made.
The long and short of it is that Greece probably should have never joined the Euro in the first place, but getting out of it will be a mess for them, so they really don't seem to have any good options. Right now they seem to be pressured into taking the particular bad choice that the major European powers want, but I doubt that is the best of the bad choices available for the Greek populace.
Yeah, I have to admit that the whole Greek crisis isn't entirely the fault of Greece. Some of that blame could be shifted over to some of the more powerful countries in the block that wanted to drive the value of the Euro up. Now I suspect even if they weren't driving up the value of the Euro, they still shouldn't have let Greece in, let alone borrow like they had the assets that Germany had. It's just that driving the value of the Euro up probably made it more likely that someone's economy in the bloc going belly up would be more damaging to the other members than it should be.
For Greece maybe...say fuck the Euro go back to the Dracma and default. Gives them the most sovereignty. But then again if you think austerity will wreck the Greek economy... default will wreck it many times harder. And they are so import dependent, and Dracma will be worth less than a Roll of Charmin(so no one will accept it for foreign trade), that any commodity swings could just demolish them.
At least we'll be united!
Leave and default soon has a good chance to end up being better for the Greeks in the long run than the current path of muddling along and cutting themselves for bridge loans, but the situation would be chaotic enough that it is rather hard to tell with any certainty. Argentina is one of the main countries of comparison, since they put a peg to the US dollar and fixed the exchange rate in the 90s, but were forced to default and drop the peg about a decade ago. Here's the wikipedia page on Argentina's experience, and Greece might have a similar experience if they drop the Euro.
Personally, if I were running Greece I'd lean towards telling the Germans to go screw themselves and default then leave the Euro, but that would not be an easy choice to take. There aren't any good choices for them.
http://forums.penny-arcade.com/discussion/143624/greece-and-the-continuing-eurozone-fiscal-crisis/p1
Basically Greece is fucked.
There are ~11 million Greeks
Only 5 million Greeks are in the labor force, thanks in part to the early retirement age.
Of that 5 million 20% are unemployed.
Of the remaining 4 million, 40% are public sector employees.
So you are down to 2.4 million people. Who need to generate enough wealth to give living expenses and full healthcare(plus schools/social services ect) to 11 million people.