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(Independent)   Greece spiraling toward "catastrophic depression." Huh, maybe it needs more austerity   (independent.co.uk) divider line 205
    More: Obvious, Greece, green shoots, Great Depression, European leaders, fifth year, morale, metro station, sliding  
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1229 clicks; posted to Politics » on 16 Feb 2012 at 8:53 AM (2 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-02-16 08:58:16 AM
Yeah, we all saw that coming.
 
2012-02-16 09:01:16 AM
You mean kicking people while they're down isn't a valid medical practice?
 
2012-02-16 09:02:39 AM
Makes as much sense as squirting napalm on a house fire.
 
2012-02-16 09:05:04 AM

TV's Vinnie: Makes as much sense as squirting napalm on a house fire.


Why are we talking about homeopathic medicin suddenly?
 
2012-02-16 09:05:46 AM
It looks to me like Greece is going down. From what I've read, that will trigger a series of collapses in the EU. Ireland, Portugal, Spain for a start, and maybe Italy. That in turn will roil markets (to put it mildly) across the rest of the world...probably trigger many collapses outside the EU. And considering the news stories, it looks like this is just about inevitable. The Greeks are being told to starve or die. Somehow they can't seem to choose one of those options. If they go with what the EU tells them, they face massive riots, probably an overthrow of the government, and then Greece goes down. If they don't, then the banks cut them off, and Greece goes down.

It's looking a lot like June 2008 again. The head has already been shot off, but the corpse is still taking that last stride before crumpling.

I'm sure, however, that the job creators will find a way to come out of this intact, so that they can, you know, create jobs.
 
2012-02-16 09:08:23 AM
Greece - piling debt on top of debt doesn't work you say?
 
2012-02-16 09:09:08 AM
Too much debt? Borrow more! That's ALWAYS the answer!

Austerity is the only answer for the Greeks, because they can't borrow more. They can only beg for funds from the Germans, who aren't going to give it to them to piss it away like they want to. Sorry subby.
 
2012-02-16 09:09:43 AM

Kibbler: It looks to me like Greece is going down. From what I've read, that will trigger a series of collapses in the EU. Ireland, Portugal, Spain for a start, and maybe Italy. That in turn will roil markets (to put it mildly) across the rest of the world...probably trigger many collapses outside the EU. And considering the news stories, it looks like this is just about inevitable. The Greeks are being told to starve or die. Somehow they can't seem to choose one of those options. If they go with what the EU tells them, they face massive riots, probably an overthrow of the government, and then Greece goes down. If they don't, then the banks cut them off, and Greece goes down.

It's looking a lot like June 2008 again. The head has already been shot off, but the corpse is still taking that last stride before crumpling.

I'm sure, however, that the job creators will find a way to come out of this intact, so that they can, you know, create jobs.




It's disturbingly similar to the German reparations after WWI -- it hobbled their economy and took the world down with it. So far it looks like Portugal, Spain, Italy, and Greece don't have that much influence over the world economy -- but they do effect the Euro, which has a global impact. Economists don't seem too worried, but I don't like it.
 
2012-02-16 09:11:07 AM
Just imagine. By summer, we might have full-out war with Iran, thanks to our allies and good friends Israel, and a global economic collapse. And by January we might have Rick Santorum in the White House to sort it all out.

Does amazon still carry those Mayan calendars?
 
2012-02-16 09:14:02 AM

DarnoKonrad: Kibbler: It looks to me like Greece is going down. From what I've read, that will trigger a series of collapses in the EU. Ireland, Portugal, Spain for a start, and maybe Italy. That in turn will roil markets (to put it mildly) across the rest of the world...probably trigger many collapses outside the EU. And considering the news stories, it looks like this is just about inevitable. The Greeks are being told to starve or die. Somehow they can't seem to choose one of those options. If they go with what the EU tells them, they face massive riots, probably an overthrow of the government, and then Greece goes down. If they don't, then the banks cut them off, and Greece goes down.

It's looking a lot like June 2008 again. The head has already been shot off, but the corpse is still taking that last stride before crumpling.

I'm sure, however, that the job creators will find a way to come out of this intact, so that they can, you know, create jobs.



It's disturbingly similar to the German reparations after WWI -- it hobbled their economy and took the world down with it. So far it looks like Portugal, Spain, Italy, and Greece don't have that much influence over the world economy -- but they do effect the Euro, which has a global impact. Economists don't seem too worried, but I don't like it.


The whole point of the Euro is that the policy failures of one country shouldn't be able to damage the currency beyond repair. A side effect of the Euro is that your policy failures are very VERY difficult to escape from before all your currency finds its way into countries that can do more with it.

Since the inception of the Euro, Europe has been banking, literally, on demand only. Austerity measures and demand do not make good bedfellows.
 
2012-02-16 09:16:52 AM
For the people against austerity, I am wondering what you suggest?
 
2012-02-16 09:17:57 AM
That's what happens when nobody pays taxes
 
2012-02-16 09:19:07 AM
seems to me that, to the average citizen of Greece it really does't matter if it all collapses. They're not going to have jobs or money no matter what.

In that position, I'd be all like, "Bring. It. ALL. DOWN!"
 
2012-02-16 09:20:03 AM

liam76: For the people against austerity, I am wondering what you suggest?


You're in a burning house, in a room not yet engulfed in flames. Here are your choices. You can stay where you are, and burn. Or you can run out of the room, into the fire, and burn.

If you're opposed to running out of the room, I am wondering what you suggest?
 
2012-02-16 09:20:15 AM
Subby thinks Greece needs more government spending? Yeah, that'll work. They would try it if anyone would loan it to them.
 
2012-02-16 09:20:42 AM
The Greeks are being tormented for only one reason: The preservation of the EMU and (perhaps) ultimately the EU. That the southern tier countries were included in the monetary union at all was a fatal design flaw - joining fundamentally incompatible economies in a currency bloc without joining them all in a fiscal/political union. History shows that such arrangements never work, but now the Greeks (and others) must be punished to preserve the European Dream. No matter how much austerity is forced on these countries, the fundamentally flawed EMU is still fundamentally flawed. Greece - sooner or later - will not only default, but also leave the EMU and reintroduce the drachma. Quite probably, other EMU states will also splinter off.
 
2012-02-16 09:20:59 AM
Greece should go back to spending money they didn't have because that worked out so well for them.
 
2012-02-16 09:22:16 AM

Debeo Summa Credo: Too much debt? Borrow more! That's ALWAYS the answer!

Austerity is the only answer for the Greeks, because they can't borrow more. They can only beg for funds from the Germans, who aren't going to give it to them to piss it away like they want to. Sorry subby.


Austerity is obviously working out so well, what with the economic death spiral it triggered. Who knew that forcibly contracting an economy that's already contracting could have negative effects?
 
2012-02-16 09:23:08 AM

Kibbler: liam76: For the people against austerity, I am wondering what you suggest?

You're in a burning house, in a room not yet engulfed in flames. Here are your choices. You can stay where you are, and burn. Or you can run out of the room, into the fire, and burn.

If you're opposed to running out of the room, I am wondering what you suggest?


You can put the fire out and rebuild your house. Your neighbors will help you but they aren't going to do it for you.
 
2012-02-16 09:23:09 AM

Kibbler: liam76: For the people against austerity, I am wondering what you suggest?

You're in a burning house, in a room not yet engulfed in flames. Here are your choices. You can stay where you are, and burn. Or you can run out of the room, into the fire, and burn.

If you're opposed to running out of the room, I am wondering what you suggest?


Just curious if you think they are equally farked either way or if you think there is a better option.
 
2012-02-16 09:23:40 AM

Kibbler: You're in a burning house, in a room not yet engulfed in flames. Here are your choices. You can stay where you are, and burn. Or you can run out of the room, into the fire, and burn.


That might be sound advice in the rare situation of a being in a room engulfed in flames but fiscal policy doesn't work that way.

/A prudent choice might be not setting your own damn house on fire in the first place to use your analogy
 
2012-02-16 09:25:27 AM
Austerity = depression and a loss of government benefits

No austerity = debt default, which results in a loss of government benefits due to the inability to borrow which then leads to a depression


I'm still missing why austerity is the bad choice.
 
2012-02-16 09:26:09 AM

soy_bomb: Greece should go back to spending money they didn't have because that worked out so well for them.


Perhaps the French and Germans should not have loaned them all that money. It's not working out so well for them, either. Perhaps the French and Germans should not have included Greece (and the others) in a poorly-conceived monetary union that began to fall apart in its first real world stress test.
 
2012-02-16 09:26:24 AM

Debeo Summa Credo: Too much debt? Borrow more! That's ALWAYS the answer!

Austerity is the only answer for the Greeks, because they can't borrow more. They can only beg for funds from the Germans, who aren't going to give it to them to piss it away like they want to. Sorry subby.


Or they can stabilize their economy first, and worry about sorting out the debt later. It's kind of hard to balance a budget when your tax base is in freefall.
 
2012-02-16 09:28:02 AM

Troy McClure: Austerity = depression and a loss of government benefits

No austerity = debt default, which results in a loss of government benefits due to the inability to borrow which then leads to a depression


I'm still missing why austerity is the bad choice.


Kind of prevents any kind of recovery, doesn't it? "Lay off half the people in your country, so that you can't pay me back!"
 
2012-02-16 09:28:10 AM

Troy McClure: Austerity = depression and a loss of government benefits

No austerity = debt default, which results in a loss of government benefits due to the inability to borrow which then leads to a depression


I'm still missing why austerity is the bad choice.



That's because you've created a false dichotomy.
 
2012-02-16 09:29:49 AM

DarnoKonrad: That's because you've created a false dichotomy.


Really? Is there a solution out there that preserves the government benefits people are rioting about?
 
2012-02-16 09:30:06 AM

liam76: Just curious if you think they are equally farked either way or if you think there is a better option.


The better option for Greece (and some of the others) is to exit the Euro and reintroduce their own currencies. This is a matter of grotesquely mismatched economies shoe-horned into a monetary union with no political or fiscal mechanisms to balance economic conditions across the bloc. These things have been tried before, and always failed. It would be like the U.S. creating a monetary union with Guatemala and Bolivia.
 
2012-02-16 09:30:39 AM

liam76: Kibbler: liam76: For the people against austerity, I am wondering what you suggest?

You're in a burning house, in a room not yet engulfed in flames. Here are your choices. You can stay where you are, and burn. Or you can run out of the room, into the fire, and burn.

If you're opposed to running out of the room, I am wondering what you suggest?

Just curious if you think they are equally farked either way or if you think there is a better option.


I don't know what the answer is. I have strong doubts there is an answer. If there is one, it is almost certainly to continue to muddle through, with a series of actions that nobody likes, and will cause some pain for everybody, and will still carry considerable risk, may not work.

But just saying, "Greece, you have to slash everything now" will only lead to violent unrest and probably the overthrow of the government.

There are things wrong with Greece (there are things wrong with every country) and some fundamental things need to change. But if the analogy is to a drug addict (which is not a very good one, but the best I have), it's not reasonable to shout at the addict, "STRAIGHTEN UP! No more drugs! Get a job and an apartment and start living right. NOW!"

The odds of that working are 0.0.

One other thing, the situation in Greece is by no means entirely the fault of the Greeks. Yes they carry a large share of the blame. But somebody loaned them all that money they couldn't afford. And the people who loaned the money are now the very same people who are demanding that they clean up their house, right now, this very minute. And the people doing that, if taken seriously, will almost certainly ensure that Greece's house goes up in flames. They seem blithely unaware that fires can hop from house to house.
 
2012-02-16 09:31:43 AM

Troy McClure: Austerity = depression and a loss of government benefits

No austerity = debt default, which results in a loss of government benefits due to the inability to borrow which then leads to a depression


I'm still missing why austerity is the bad choice.


Troy McClure: Austerity = depression and a loss of government benefits

No austerity = debt default, which results in a loss of government benefits due to the inability to borrow which then leads to a depression


I'm still missing why austerity is the bad choice.


Speaking as "not an economist," I've heard over and over again that the way you jumpstart a flagging economy is with spending... getting money in the hands of the people, often the lower and middle classes, so they can spend it. This stimulates job creation and job growth by increasing demand. When the economy is already going down, making moves to take money away from the people you need to have spending money is bad. Or so I'm told.

/that second to last sentence was grammatically terrible, and I apologize. I'm also not smart enough to fix it.
 
2012-02-16 09:32:08 AM

liam76: For the people against austerity, I am wondering what you suggest?


Significant debt write downs, no further bailouts, and boot them out of the Euro yesterday.
 
2012-02-16 09:33:09 AM
What are historical examples of this type of austerity working? I know Canada did this but austerity critics point out that Canada did it back in the 1990s when the world economy was in better shape. Ireland has implemented austerity and aren't they slowly getting their fiscal house in order?
 
2012-02-16 09:33:20 AM

Arkanaut: Debeo Summa Credo: Too much debt? Borrow more! That's ALWAYS the answer!

Austerity is the only answer for the Greeks, because they can't borrow more. They can only beg for funds from the Germans, who aren't going to give it to them to piss it away like they want to. Sorry subby.

Or they can stabilize their economy first, and worry about sorting out the debt later. It's kind of hard to balance a budget when your tax base is in freefall.


Where is the money going to come from to continue spending?
 
2012-02-16 09:35:10 AM

Cubicle Jockey: Significant debt write downs, no further bailouts, and boot them out of the Euro yesterday.


That's probably what's going to happen, but firewalls or no firewalls, French and German banks are going to get absolutely soaked. I guess we'll see if the European banking system can survive it.
 
2012-02-16 09:37:27 AM
Yeah, let's not talk about the cause of the problem, let's talk about how inhumane it is to stop the behavior that lead to the problem!
 
2012-02-16 09:38:13 AM

liverleef: What are historical examples of this type of austerity working? I know Canada did this but austerity critics point out that Canada did it back in the 1990s when the world economy was in better shape. Ireland has implemented austerity and aren't they slowly getting their fiscal house in order?


Austerity, like all things, is best in moderation.
 
2012-02-16 09:40:31 AM

liverleef: What are historical examples of this type of austerity working? I know Canada did this but austerity critics point out that Canada did it back in the 1990s when the world economy was in better shape. Ireland has implemented austerity and aren't they slowly getting their fiscal house in order?


Canada didn't just do austerity either, it was a general spending reform that cut things here and there at the same time as raising them in other places.
 
2012-02-16 09:41:02 AM

s2s2s2: Yeah, let's not talk about the cause of the problem, let's talk about how inhumane it is to stop the behavior that lead to the problem!


What, that the government wasn't collecting taxes? Fair enough, but we should probably put out the fire before we talk about remodeling the kitchen.
 
2012-02-16 09:41:28 AM

Troy McClure: DarnoKonrad: That's because you've created a false dichotomy.

Really? Is there a solution out there that preserves the government benefits people are rioting about?


This is called "begging the question."

Look, the purpose of a central bank is to be the lender of last resort to *prevent* depressions. Not cause them.
 
2012-02-16 09:44:10 AM
I thought tax cuts were the solution to all economic problems. Why isn't Greece cutting taxes for its top earners?
 
2012-02-16 09:45:05 AM

s2s2s2: Yeah, let's not talk about the cause of the problem, let's talk about how inhumane it is to stop the behavior that lead to the problem!


You mean who loaned Greece all that money? SNP Paribas, Deutsche Bank, and other large international banks, private equity groups, and hedge funds. As I understand it, Wall Street is heavily exposed through CDSs - American funds and investment banks wrote insurance for all this bad debt. And for Portugal and Spain and Ireland, etcetera. When a bank loans money to a deadbeat, the bank has f*cked up by loaning money to a deadbeat. Maybe banks shouldn't loan so much money to deadbeats. Just a thought.
 
2012-02-16 09:45:17 AM
Liberal policies are cute when the bills come due.
 
2012-02-16 09:46:02 AM

liverleef: What are historical examples of this type of austerity working?


Debt trapped countries cutting spending and somehow emerging from debt? Zero.

That's why Bono was going around a few years back urging debt forgiveness for a bunch of African countries.
 
2012-02-16 09:46:40 AM
Debt forgiveness, subby. The words you were looking for are debt forgiveness.

Greece is in too far a hole for austerity to do anything but cause more riots. The only alternative is default, sooner or later, depending on how much good money everyone is willing to throw after bad.
 
2012-02-16 09:47:35 AM

liverleef: Ireland has implemented austerity and aren't they slowly getting their fiscal house in order?


Ireland was a different beast then Greece.

Greece = Profligate Government, Sensible Banks
Ireland = Sensible Goverment, Profligate Banks

So even though Austerity made a huge hole in Ireland's economy, they weren't deep to begin with. That said, they still only saw a 0.5% GDP increase last year.

Jan 20th NYT (new window)


Meanwhile, Iceland took a mostly fark-you-and-die attitude towards the banks, and is doing rather well with a 2.5% increase in GDP, and a falling debt ratio. Important in their recovery was a lesson for Greece. Iceland was able to depreciate their currency to help lesson the debt burden they did end up keeping.

Sept 6th Independent (new window)
 
2012-02-16 09:48:15 AM

TravisBickle62: That's what happens when nobody pays taxes


That's Greece in a nutshell. The worst of the stereotypes of the right and the left all rolled up into one country. Profligate spending and no effective tax collections.
 
2012-02-16 09:48:19 AM

TheCruxOfTheBiscuitIsTheApostrophe: Liberal policies are cute when the bills come due.


hurrr

unlike "conservative" policies, which include exploding the deficit through illegal wars, massive spending and cutting taxes for billionaires!
 
2012-02-16 09:50:16 AM

Skleenar: Profligate spending and no effective tax collections.


the funny thing is, that's been the GOP modus operandi here in the US for a decade: liberal spending without paying for it. and they still want more!
 
2012-02-16 09:51:50 AM

someonelse: I thought tax cuts were the solution to all economic problems. Why isn't Greece cutting taxes for its top earners?


Tax cuts are sort of irrelevant in a society that does not pay the legislated tax rates anyway.
 
2012-02-16 09:52:18 AM

someonelse: I thought tax cuts were the solution to all economic problems. Why isn't Greece cutting taxes for its top earners?


No, I thought deficit spending was the key to lasting growth. Look how well all the debt Greece has taken on has worked out for them! Why, this is a textbook example of how borrowing to fund deficits never ever comes back to bite you in the ass.
 
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