Economic Crisis in Greece.

[Brahmanyan]

Share:

Facebook X (Twitter) LinkedIn WhatsApp Email Share Link

Greece is facing its worst economic disaster now. Here is a forwarded mail that I got recently,
explaining the reasons for the crisis in a nut-shell:


"The whole Greece issue in simplified way.

The 19 finance ministers of the single Euro currency bloc have dismissed the request of the Greek PM Tsipras.
Greece is now left insolvent after 5 years of €240bn bailouts dried up.
Greece failed to make a €1.5bn payment to the IMF on time .This has thrust the 16-year-old single currency € a historic blow .

As a friend of mine from Delhi said , Delhi will probably be like Greece by the end of AAP's 5 year term.
What is happening in Greece is the result of socialism in excess.

Greeks want to lead a royal life just because they are born in Greece. After all it's the country of Alexander the great.

For example everybody gets pension. Everybody, means everybody. At the age of 57, a Greek self employed person retires with full State pension. If a Greek works in a hazardous profession, he can retire with full pension at 50.
There are about 450 professions classified as hazardous. One of them is hairdresser. Yep, you read that right, in Greece, hairdresser is a hazardous profession. So if a Greek is a hairdresser, he can retire with full state pension at the age of 50.

All entitlements- healthcare, education, unemployment benefits, housing, etc., are there.
With these securities in place, Greeks stopped having babies.
If government is there to take care of you from cradle to grave, why maintain families.
Fertility rate in Greece is just 1.41.(World Bank in fact put the figure at 1.29 in 2013.)
So there are not enough Greek youth to take care of the old aged Greeks.

Greeks have yet to discover two inescapable facts of life:
1. Government doesn’t have infinite money.
2. Government has no money of its own.

If there are no taxpayers around, government earns nothing. But Greeks say, ”We don’t give a damn. We don’t care ,just arrange the money. Just keep our Welfare cheques coming. Otherwise we will burn down the cities.”

The Greeks want their entitlements to continue, to be paid by the rest of Europe. Rest of Europeans are not ready to pick up the tab. How cruel of them, those Europeans. They are not ready to take care their poor brethren in Greece.
What is happening in Greece, is likely to happen in some other European countries.
The policy of Welfare State- of collectivizing only incomes and not means of production will end up destroying some of the richest and most advanced countries on the planet.

Greece failed to disclose their excessive borrowing from market at the time of joining EU. Now Greece can survive only by keep on borrowing to repay previous borrowing.

Tourism has taken a big hit due to this crisis .Their economy was on low wages and good sea connectivity which was the reason why EU got them. But over years Greeks have messed it up thoroughly.
Greeks still want to live in aristocratic ways even when they have no money to eat. It's a sad state of affairs.

It will affect some of the nearby countries as there banks are owned by Greeks or Greek banks".

Brahmanyan,
Bangalore.

 

[krish44]

The root cause of the EU crisis is the melt down in the after math of 2008 US crisis. which affected all european countries in different ways.

Well off countries like germany ,the netherands ,finland,austria] lost their market for their goods due to reduced demand and leading to squeezing of the wages of people of these

countries. other not so well off like Italy ,portugal,greece,spain etc became virtually insolvent.

their tie up in EU has lead to mutual animosity while both are equally in soup.

only US can resolve this crisis with a bail out plan -like the mashall plan after world war 2 .

They are the creators of the crisis.

They alone can resolve it

 

[V.Balasubramani]

Greece – What You are not Being Told by the Media

[h=2]According to mainstream media, the current economic crisis in Greece is due to the government spending too much money on its people that it went broke. This claim however, is a lie. It was the banks that wrecked the country so oligarchs and international corporations could benefit.[/h] Published: July 5, 2015 | Authors: Chris Kanthan | NationofChange | Op-Ed
------------------------------------------------------------------------------------------------------------------------------------------------------

Every single mainstream media has the following narrative for the economic crisis in Greece: the government spent too much money and went broke; the generous banks gave them money, but Greece still can’t pay the bills because it mismanaged the money that was given. It sounds quite reasonable, right?

Except that it is a big fat lie … not only about Greece, but about other European countries such as Spain, Portugal, Italy and Ireland who are all experiencing various degrees of austerity. It was also the same big, fat lie that was used by banks and corporations to exploit many Latin American, Asian and African countries for many decades.
Greece did not fail on its own. It was made to fail.

In summary, the banks wrecked the Greek government and deliberately pushed it into unsustainable debt so that oligarchs and international corporations can profit from the ensuing chaos and misery.

If you are a fan of mafia movies, you know how the mafia would take over a popular restaurant. First, they would do something to disrupt the business – stage a murder at the restaurant or start a fire. When the business starts to suffer, the Godfather would generously offer some money as a token of friendship. In return, Greasy Thumb takes over the restaurant’s accounting, Big Joey is put in charge of procurement, and so on. Needless to say, it’s a journey down a spiral of misery for the owner who will soon be broke and, if lucky, alive.

Now, let’s map the mafia story to international finance in four stages.

Stage 1: The first and foremost reason that Greece got into trouble was the “Great Financial Crisis” of 2008 that was the brainchild of Wall Street and international bankers. If you remember, banks came up with an awesome idea of giving subprime mortgages to anyone who can fog a mirror. They then packaged up all these ticking financial bombs and sold them as “mortgage-backed securities” at a huge profit to various financial entities in countries around the world.

Read more at: http://www.nationofchange.org/2015/07/05/greece-what-you-are-not-being-told-by-the-media/
Source: face book

 

[tks]

Opening Post portrays some of the reasons for the current state of crisis at Greece.

- Every country deserves the government it ends up having. The people of Greece do not work hard. I was there couple of years ago when there were demonstrations about some of the then proposed austerity measures. I found that even the demonstrators were relaxing which was funny. They did not want to do the hard work needed. The institutions like Banks were closed for 3 out of 5 days in the week I was there on the pretext of some holiday. By and large tGreece has become a nation of lazy people. The banks, government and institutions reflect the attitude of the people.

- The birth rate has fallen and it has become an inverted pyramid with fewer tax paying youngsters supporting a large number of older people. This is not sustainable

The above two are systemic issues. Blaming the government or the banks is about blaming the people who have helped to create this crisis. They have become vulnerable to manipulation by Germany & France.


Germany is a creator of this crisis also. Generally when a country runs into trade deficit in a big manner, they devalue their currency to make sure that the imports are made more expensive. The country can also sell more with devaluation.

Germany which does more exports wanted a currency that cannot be devalued. With Euro in place, poorer countries like Italy, Spain and Greece (part of the "PIGS" family) are unable to manipulate and lower the value of their currency. Therefore Germany has racked up a large amount of surplus with these nations.

The issues associated with Grexit from Euro is so disastrous at so many levels that America as well as others are putting pressure on Germany to bail out Greece once again (which is in the long term interest of Europe and Germany in particular). They just want to make sure the lazy Greeks wake up and become more productive. The crisis is also used to reduce Government IOU to enormous number of early retirees in Greece.

There will be a deal by the end end of this week since self interest of europe and USA will dominate to keep Greece in EU. USA is already putting pressure via IMF and other means to make sure Greece does not become a destabilize zone in Europe. The current issues revolve around few billion Euros which Germany can easily supply in exchange of instituting newer austerity measures that the government and people have rejected in the past.

The real resolution will require Greece to become a productive nation, make more babies and eventually get out Euro so that they can determine their own destiny.

 

[sangom]

The one question that comes to my mind is "how did the greek become so lazy and pleasure-loving?". Secondly, just as the article in http://www.nationofchange.org/2015/07/05/greece-what-you-are-not-being-told-by-the-media/ syas about UK, how come Greece/Greek banks also bought all those sub-prime securities-based bonds? Who got bribed for this?

 

[tks]

The one question that comes to my mind is "how did the greek become so lazy and pleasure-loving?". Secondly, just as the article in http://www.nationofchange.org/2015/07/05/greece-what-you-are-not-being-told-by-the-media/ syas about UK, how come Greece/Greek banks also bought all those sub-prime securities-based bonds? Who got bribed for this?

Big businesses (especially multinational ones), Big Banks and Big institutions are not to be trusted ever and are worse than vultures. They find new ways to exploit people around the world. All governments are basically corrupt.

In places like USA the corruption does not interfere with day today life of a person. Political contributions allow lobbying to pass corrupt schemes to exploit people in USA and around the world in much larger scale.

The whole financial crisis that precipitated in 2008 had to do with decades of corruption driven monetary policies, incomprehensible financial products called derivatives invented out of mathematical formulas and by invention of 'credit default swap' to provide false 'insurance' to these financial products while circumventing legislation for offering insurance (and collecting premiums). It was massive and global scale greed of select few.

Greek banks were no different in participating in the schemes> Everyone knew that this cannot continue forever but they did not care. The profits for few was the key. The attitude is much like the fellows who blow the conch in Margazhi Masam.

ஊதற சங்கை ஊதுவோம் — விடியற பொழுது விடியட்டும் !


A socialist set up promotes laziness and corruption.

The same greeks in a different environment would work hard and prosper. But the country as it stands now has become unproductive and getting exploited by big institutions.

 

[Vaagmi]

Without comments:

Origin of Greece Problem
​

http://groups.yahoo.com/group/Amdavadis4Ever/join?soc_src=mail&soc_trk=ma
http://groups.yahoo.com/group/Amdavadis4Ever/join?soc_src=mail&soc_trk=maWhat is happening in Greece is the result of socialism playing out in the city square. But you won’t know that by reading papers or watching TV.

Greece has enacted entitlements which assure the citizens a royal life just because they are born in Greece. For example everybody gets pension. Everybody, means everybody. At the age of 57, you as a private or self employed person retire with full State pension. But there is another catch. If you work in a hazardous profession, you can retire with full pension at the age of 50. There are about 450 professions classified as hazardous. One of them is hairdresser. Yep, you read that right, in Greece, hairdresser is a hazardous profession.

So if you are a hairdresser, you can retire with full state pension at the age of 50.

All other entitlements- healthcare, education, unemployment benefits, housing, etc., of course are there. With these securities in place, Greeks did what all other Europeans have done: They stopped having babies. If government is there to take care of you from cradle to grave, why go to the trouble of maintaining families and having babies? Its fertility rate is just 1.41. (World Bank in fact put the figure at 1.29 in 2013.) So there are not enough Greek nephews to take care of the old age pensions and medical care of Greek uncles. Greeks are discovering the hard way two inescapable facts of life:
1. government doesn’t have infinite money.
2. Government has no money of its own.

If there are no taxpayers around, government earns nothing.

But Greek uncles say,”We don’t give a damn. We don’t care how you arrange the money. Just keep our Welfare cheques coming. Otherwise we will burn down our own cities.” The dispute right now is that Greeks want their entitlements to continue, to be paid by the rest of Europe, whereas rest of Europeans are not ready to pick up the tab. How cruel of them, those Europeans. They all profess to be socialists but are not ready to take care their poor brethren in Greece.

What is happening in Greece, and in the rest of Europe as well, is that the latest avatar of Socialism-the Welfare State- has also bombed big time. Socialists through their control of media may put any spin to it, but the fact is that their latest project of collectivising only incomes (and not means of production or property) has also ended up destroying some of the richest and most advanced countries on the planet- the Welfare States of Europe. Another issue with Greece is their excessive borrowing from market, which they fail to disclose at the time of their application for joining EU. This means that only way they can survive is by keep borrowing to repay another borrowing. If it gets into crisis, which is likely, tourism wd take a big hit. Their economy was on low wages good sea connectivity which was the reason why EU got them interested but over years they messed it up throughly. They still want to live in aristocratic ways even when they have no money to eat. Sad state of affairs. It will affect some of the nearby countries as there banks are owned by Greece based persons or Greece based banks. It will h
http://groups.yahoo.com/group/Amdavadis4Ever/join?soc_src=mail&soc_trk=ma​ave ripple effect in coming days.

http://groups.yahoo.com/group/Amdavadis4Ever/join?soc_src=mail&soc_trk=ma*****​

http://groups.yahoo.com/group/Amdavadis4Ever/join?soc_src=mail&soc_trk=maI was so confused as to why Greece is upsetting the world's Stock markets till I read this​: ​
http://groups.yahoo.com/group/Amdavadis4Ever/join?soc_src=mail&soc_trk=maMARY is the proprietor of a bar in Dublin. She realises that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronise her bar – she will go broke.

To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later.

She keeps track of the drinks consumed on a ledger (thereby granting the customers loans).

Word gets around about Mary's 'drink now, pay later' marketing strategy and, as a result, increasing numbers of customers flood into Mary's bar.

Soon she has the largest sales volume for any bar in Dublin — all is starting to look rosy.

By providing her customers freedom from immediate payment demands Mary gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages.

Consequently, Mary's gross sales volume increases massively.

A young and dynamic vice-president at the local bank recognises that these customer debts constitute valuable future assets and increases Mary's borrowing limit.

He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral.

At the bank's corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into Drinkbonds and Alkibonds. These securities are then bundled and traded on international security markets.

The new investors don't really understand that the securities being sold to them as 'AAA' secured bonds are really the debts of unemployed alcoholics. They have had a 'rating house' certify they are of good quality.

Nevertheless, the bond prices continuously climb, and the securities soon become the hottest-selling items for some of the nation's leading brokerage houses.

One day, even though the bond prices are still climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Mary's bar. He so informs Mary.

Mary then demands payment from her alcoholic patrons, but, being unemployed alcoholics, they cannot pay back their drinking debts.

Since Mary cannot fulfil her loan obligations she is forced into bankruptcy. So she now is broke.

The bar closes and the 11 employees lose their jobs.

Overnight, Drinkbonds and Alkibonds drop in price by 90%.

The collapsed bond asset value destroys the bank's liquidity and prevents it from issuing new loans, thus freezing credit and economic activity in the community.

The suppliers of Mary's bar had granted her generous payment extensions and had invested their firms' pension funds in the various Bond securities. They find they are now faced with having to write-off her bad debt and with losing over 90% of the presumed value of the bonds.

Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations. Her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.

Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multi-billion euro, no-stringsattached cash infusion from their cronies in government.

The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who have never been in Mary's bar.

Now, do you understand economics in 2015?

 

[Vaagmi]

And this makes a lot of sense:

[TABLE="width: 589"]
[TR]
[TD="width: 589"]

It’s not Greece, it’s the Euro​

​

Jamal Mecklai​

The Financial Express​

Published on July 10, 2015​

​

[/TD]
[/TR]
[TR]
[TD="width: 589"]

A common monetary policy doesn't work without a​

common fiscal one which requires a single electorate​

The coq au vin is coming home to roost. France’s unemployment rate for people under 25 years of age is nearly 25% (overall 10.3%). For Italy, the numbers are 42.4% and 13%; for Spain, 53.2% and 24%; for Portugal, 32.9% and 13.3%. And, oh yes, there’s Greece, where youth unemployment is 50.4%, in an overall unemployment rate of 26.1%—and these numbers are from before the most current crisis. On the other side, of course, is Germany, where youth unemployment is a modest 7.5%, in an overall unemployment rate of 5%, which is lower than the 5.3% recently recorded by the US, which is being considered “full employment.” This is a union? Indeed, leaving aside Germany (and Austria and the Netherlands), the Eurozone is in a mess—average unemployment is 11.5%, with youth employment at 23.2%. For comparison, youth unemployment in WANA (West Asia and North Africa), the source of the largest number of terrorist recruits, is at 30%. What is more terrifying is that it is impossible to see how these horrifying human condition numbers in the Eurozone can be improved. Growth is the primary force that can reduce unemployment, given that complying with the Eurozone stability and growth pact ensures that none of the countries has any fiscal room. Now, there is no arguing that fiscal responsibility is a good thing—and, it would seem, that the Euro experiment will, if nothing else, ensure that European governments are more Teutonic from this standpoint into the future (just as Asian governments have accumulated FX reserves as the strategic lesson from the 1997 Asian crisis). But, as my dear mother used to—and sometimes still does—say, there’s a time and a place for everything. With global growth showing signs of worsening from its current pathetic state—witness export growth numbers in country after country (China, India, the US), and the sharp fall in the prices of copper and gold, for instance—there is no way, in the current structure, for European countries to generate sufficient growth to even make a dent in these unbelievably difficult unemployment numbers. Of course, if each country ran its own currency (or the Euro gave way to two groupings—EuroN, comprising Germany and its true relatives, and EuroS, comprising the countries of Southern Europe)—the resulting change in currency values could certainly generate some additional growth in, say, Italy, whose manufacturing is world-class and could compete much more strongly with German companies if its currency was, say, 25-30% weaker than the Euro. All this, particularly with the mirch masala thrown in by Tsipras and the Greeks, will no doubt embolden politicians across the continent—note the hero’s welcome given to Tsipras at the European Parliament by both leftist and far-right members (many of whom have been calling for an end to the Euro for some time). Clearly, we have only seen the tip of the political instability iceberg. I guess the simple truth is that the Euro is a failed experiment. There have been numerous commentators who have argued ad nauseam the point that you can’t have a single monetary policy without a single fiscal policy. And all the ECB’s structural horses and all the ECB’s structural men—whether enabling it to be a genuine lender of the last resort or whatever—will not be able to hide the fact that you can’t have a single fiscal policy without a single electorate. And, irrespective of academic discussions on political union, you can’t have a single electorate in Europe—period. The only example of a political union in history—perhaps, I should say, recent history, since I am quite a philistine when it comes to real history—was the union of East and West Germany, and this may well have been part of the trigger for this mad dream. But to think that the Italians and the Spanish and the French, on one side, and the Germans and the Dutch and the Austrians, on the other, could come together in a single political formation is hallucinating beyond even the effects of LSD. A smart young Frenchman summarised it very well to me a couple of months ago. “We can connect quite easily with Spaniards and Italians; in a sense, we speak the same language, we often complete each others’ sentences. With Germans, though, the structure of the language is such that you have to wait for them to complete their sentence to fully understand what they mean. While I have German friends (and have had German lovers), there is no real visceral connect.” These obvious facts were conveniently overlooked by the Europhiles from the time the Euro was launched in 1999, through when Greece was ceremoniously brought in (2001) through further expansions. Global growth was booming and everyone was doing well. Until, of course, 2008 made us all aware of yet another obvious fact that was conveniently overlooked by most—that the sterling growth was driven by free money from the Fed. Now, that the tide has gone out (to quote some smart person), it is pathetically obvious that almost all of Europe has been swimming without any clothes on. And while skinny-dipping is actually quite a joy, being caught with your pants down (or with declining pensions and no jobs) is no fun at all. Thus, while Greece is the obvious immediate problem and its exit from the Euro is the immediate solution, there is a lot more uncertainty to come.[/TD]
[/TR]
[/TABLE]

 

[krish44]

Thus speaks the messiah of the capitalists -Vaagmiji., Our economic czars wisdom in running down the greek and envying their welfare state is revolting

Ordinary greeks have nothing to do with what their banks,politicians or EU countries do.

The root cause is the turmoil of 2008 in US . Rest of the world had nothing to do with it.

Richer EU countries like germany were nothing better than our village money lenders ,saw an opppurtunity in absorbing greece,and other vulnerable countries in EU as a ready

captive market for their produce and it was a market where they could set their price. They crippled their currency and made it dificult to pursue their own economic

policies for growth.


Govts are meant for welfare of the common folk . If it does not do so , the suffering people can take law into their hands and should have no sense of guilt in defaulting

on debts and damaging the lenders .

Every lender requires someone who will accept what he has to offer to prosper . if the poor keep defaulting and borrowing , the lenders for their own good will have

to bend and write off the loans.probably their terms for lending were not reasonable in the first place. they are facing the backlash.

Banks keep on writing off NPAs . Why not the EU nations?

 

[Vaagmi]

Thus speaks the messiah of the capitalists -Vaagmiji., Our economic czars wisdom in running down the greek and envying their welfare state is revolting Ordinary greeks have nothing to do with what their banks,politicians or EU countries do. The root cause is the turmoil of 2008 in US . Rest of the world had nothing to do with it. Richer EU countries like germany were nothing better than our village money lenders ,saw an opppurtunity in absorbing greece,and other vulnerable countries in EU as a ready .captive market for their produce and it was a market where they could set their price. They crippled their currency and made it dificult to pursue their own economic
policies for growth.

People get the Government they deserve. In fact they elect the Government. So people are not different from the Government. If Modi declares tomorrow that each Indian will get a pension of Rs. 1,00,000 per month on reaching the age of 50 irrespective of his economic status and implements it too by printing more currency, every one will elect even a donkey he may propose to be the MP. The people of Greece can not wash off their responsibility for the present mess. And Modi has indeed declared the Atal pension Yojana which needs you to contribute towards the pension fund and the pension when you reach 60 years is just a mere Rs. 5000 per month. That is restraint caused by knowledge of economics of his team. He could have added just a zero to the 5000 as any politician will be tempted to do that. He did not do that because it is not greece and he is Modi. Do you understand now what is happening in Greece?

Govts are meant for welfare of the common folk . If it does not do so , the suffering people can take law into their hands and should have no sense of guilt in defaulting on debts and damaging the lenders .

What is your understanding of this welfare? Is it Rs. 1,00,000 per month for all above 50 years of age?

Every lender requires someone who will accept what he has to offer to prosper . if the poor keep defaulting and borrowing , the lenders for their own good will have to bend and write off the loans.
Banks keep on writing off NPAs . Why not the EU nations?

Write off can take place only within border or in a transborder deal as a special case. No country can take the load of maintaining another country in prosperity.
Banks write of NPAs within the country. The NPAs are indeed assets though non-performing. The assets can be sold to some one who can make them perform. Whereas consumption is not an asset. It becomes just gas. LOL.

 

[tbs]

hi

the big fishes eat small fishes....next poland/italy in line...may be france/german/uk will survive in eruope...

 

[krish44]

Greek people are not to be blamed for the mess that has been created . They elected others who were not socialists in the past and they were responsible for landing

them in EURO mess.Now they have opted for change. One chooses an alternate available if the existing order is unsatisfactory. Even Indian people chose NDA to UPA , as

they got tired of UPA for various reasons known to all with the hope alternate could be better. one is constrained by alternate choices available and only the better of a

bad lot is chosen. that is the rule of democracy. It is only a negative vote for UPA. Same is true of greece.

Atleast the socialists are openly defying an unfair economic order imposed by EU and getting the country into Grexit mode. They are rebelling against the EU conditions

for a fresh loan

Often even the poor in india are blamed for living on subsidies and freebies . they are told ,they are lazy and do not work when they are desperate for the next meal.

All this talk about the greek opting for easy life and early retirement is just propaganda for bolstering an existing unjust order justifying actions of a few rich nations to

squeeze the poor nations. All this will backfire only on them.

All the EU countries entered into an union though economic alone, They should be prepared to face the issues together . Sharing prosperity requires a mindset . germans do not have it.

When east and west germans came together, west was forced to subsidise the east which was greatly resented by the west. . If they cannot sacrifice for their own

brethren , they cannot have mindset to support other poor europeans.

In case of greece ,it is the lack of faith in socialists in power than anything else that is governing the actions of germany anf other well off EU countries.

The issue is not economics but political ideology
.

 

[auh]

...The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers who have never been in Mary's bar.

Now, do you understand economics in 2015?

ha ha... this in turn decreases the purchasing power of the currency, since inflation rises, and the people find that their money is not enough to meet requirements... economy stagnates, and this vicious cycle will continue to repeat itself unless the inherent wealth in it is tapped or the industrial wheels are set in motion again... how that would happen is the big question.