Author Topic: Greece - What is going on?  (Read 2721 times)

Offline Ron-the-Elder

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Greece - What is going on?
« on: May 05, 2010, 06:06:00 am »
The talking heads are all" talking" about the riots in Greece, but nobody seems to know exactly why folks are rioting.  Seems like The Germans should be rioting because they are the one's getting robbed in the deal. 

I haven't figured it out yet, but it appears to have something to do with European Union adjustments to Greece's credit ratings.  Germany for some reason doesn't want to back Greece's excessive debt.

Read here:

http://edition.cnn.com/2010/BUSINESS/05/05/germany.greece.merkel/

Any inside information from The EU side would be appreciated.

What Makes an Elder? :
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But one in whom there is truth, restraint, rectitude, gentleness,self-control, he's called an elder, his impurities disgorged, enlightened.
-Dhammpada, 19, translated by Thanissaro Bhikkhu.

Offline Spiny Norman

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Re: Greece - What is going on?
« Reply #1 on: May 05, 2010, 06:35:54 am »
Any inside information from The EU side would be appreciated.

The picture we're getting on UK news seems quite worrying, 3 killed in a fire today in Athens, lots of public anger about austerity measures and price rises, concerns that Greece will be bankrupt and the problems will spill over to Spain and Portugal, possibly destabilising the whole eurozone.   Resentment in Germany because they've been more fiscally responsible and now having to bail out Greece.

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Offline Spiny Norman

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Re: Greece - What is going on?
« Reply #2 on: May 05, 2010, 07:00:19 am »
And by the way it was the USA sub-prime mortgage fiasco that started all the trouble.  Thanks a lot.

<cue Monty Python style sketch "What have the Americans done for us?"> :teehee:


Offline Ron-the-Elder

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Re: Greece - What is going on?
« Reply #3 on: May 05, 2010, 07:05:18 am »
Oops!

Sorry! :eek:

The U.S. has been a real Obama-nation over this last year. :smack:
What Makes an Elder? :
A head of gray hairs doesn't mean one's an elder. Advanced in years, one's called an old fool.
But one in whom there is truth, restraint, rectitude, gentleness,self-control, he's called an elder, his impurities disgorged, enlightened.
-Dhammpada, 19, translated by Thanissaro Bhikkhu.

Offline Spiny Norman

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Re: Greece - What is going on?
« Reply #4 on: May 05, 2010, 07:13:15 am »
The U.S. has been a real Obama-nation over this last year. :smack:

Can we borrow him in the UK for a while?  He seems like such a sensible chap! :teehee:

Spiny

Offline Ron-the-Elder

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Re: Greece - What is going on?
« Reply #5 on: May 05, 2010, 07:19:08 am »
Actually Obama's been in Europe more than he has been in the U.S..  I have heard rumors that he's negotiating giving us back to King George III, but, U.S. intelligence hasn't been able to locate him.  Perhaps MI-5 can help?

The U.S. has been a real Obama-nation over this last year. :smack:

Can we borrow him in the UK for a while?  He seems like such a sensible chap! :teehee:

Spiny
What Makes an Elder? :
A head of gray hairs doesn't mean one's an elder. Advanced in years, one's called an old fool.
But one in whom there is truth, restraint, rectitude, gentleness,self-control, he's called an elder, his impurities disgorged, enlightened.
-Dhammpada, 19, translated by Thanissaro Bhikkhu.

Offline Spiny Norman

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Re: Greece - What is going on?
« Reply #6 on: May 05, 2010, 07:23:29 am »
Perhaps MI-5 can help?

They've been scaled down because of the spending cuts, only 1 tea-lady left... :teehee:


Yeshe Zopa

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Re: Greece - What is going on?
« Reply #7 on: May 05, 2010, 10:18:34 am »
It's due to the Eurozone.

In the USA a vast area has a single currency and a single national economy.

In the 'Eurozone' of European countries who all decided to share a common currency, each country has its own political and economic system with some central controls give to the EU.

When a country with its own unique currency gets into trouble, it can devalue that currency and make itself attractive for tourism and for its export goods.

When one of the Eurozone countries hits the skids, it can't devalue.  It can only ask the others sharing the Euro for a bale-out.

Two consequences:

Those baling-out Greece have insisted on that country taking harsh measures - and as governments control taxation, government spending and interest rates the people are furious that having made a mess of the economy the government is now making them all suffer to pay for the mess.

The riots will spread.  Greece now, but others such as Spain may follow.

The internal market within the EU is also inevitably messed around, so there may well be riots in say, Paris, as its economy suffers the knock-on pain.

Now, the likely outcome is that Greece will fail to implement the cuts properly, and will then have to leave the Eurozone and devalue what then becomes its own currency.  Should they choose to go for a Greek Euro, there will be chaos.

Euro notes are not all the same.  There is a code on them wich indicates the country of origin ('Y' in the case of Greece). So if you are German and have a load of Euros with a 'Y' prefix you are going to dump them as fast as possible, possibly even buy dollars in anticipation of the Euro system's complete collapse as each country grabs its 'own' notes which are circulating and insists that the Greeks buy back the now-devalued Greek Euro notes at a fair price.

The UK is not in the Euro-zone.   But it is in the EU and is tied to much trade within the EU, so we will suffer too.  Thee is no place for smugness - well, OK, just a little. ;)

The USA will not escape as I'm sure the World Bank will take a hit and have to lend.

My prediction is that the rising economies of China and India will continue to improve and will eventually dominate both the economic and political  future of the world, as other greedy, careless or corrupt economies implode.

Samsara! LOL :)
« Last Edit: May 05, 2010, 11:18:24 am by Yeshe Zopa »

Offline Ron-the-Elder

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Re: Greece - What is going on?
« Reply #8 on: May 05, 2010, 11:10:30 am »
See, I knew Yeshe' would know the answer!

Damn!  What a mess.  And wouldn't you know that the thrifty Germans would be at the bottom of it all.

Thanks for the explanation, Yeshe'.  It is the only one I've read today that made any sense.
What Makes an Elder? :
A head of gray hairs doesn't mean one's an elder. Advanced in years, one's called an old fool.
But one in whom there is truth, restraint, rectitude, gentleness,self-control, he's called an elder, his impurities disgorged, enlightened.
-Dhammpada, 19, translated by Thanissaro Bhikkhu.

Yeshe Zopa

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Re: Greece - What is going on?
« Reply #9 on: May 05, 2010, 11:28:38 am »
See, I knew Yeshe' would know the answer!

Damn!  What a mess.  And wouldn't you know that the thrifty Germans would be at the bottom of it all.

Thanks for the explanation, Yeshe'.  It is the only one I've read today that made any sense.

Something fishy behind it all.  My guess is that poor international bank lending decisions were combined with corruption and greed in Greece, and a failure to spot it all by the Eurocratic beaurocracy .

It's a bit like your local bank lending money to a guy who has been bankrupt twice and whose new company is 'highly geared' i.e. the debt to equity ratio is weak so there is a risk he won't have the assets to repay the debt.

It goes predictably wrong, and you suspect he may have pocketed some of the cash to pay for his new car, so as you have no chance of being repayed, you lend them more to trade their way out of the crisis. Meanwhile, he tries for once to make good and cuts the pay of his employees, who riot and finally make him bankrupt once more.

Meanwhile, the local bank is in trouble as the international bank it trades with did some dodgy sub-prime deals in the US and is pulling all credit.  Your local bank has no choice but to stop loaning money, but is too late to recover any money from the newlt bankrupt company.

So government bales out the banks and we all end uop paying for their greed and corruption.

Much like ourselves, the banks attain a rebirth in another form, but strangely do not suffer as a consequence of their karma - we do.

Moral: whatever the banks do and whatever governments do, we seem to be the ones who suffer.

My daughter in Paris has been advised by me to ditch all her Greek-origin Euros. ;)
« Last Edit: May 05, 2010, 11:51:37 am by Yeshe Zopa »

Offline gregkavarnos

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Re: Greece - What is going on?
« Reply #10 on: May 05, 2010, 02:10:08 pm »
Hmmm.... where to start?

Before Greece joined the euro zone (I have been living and working in Greece since 1996) it was an idyllic summer vacation spot for northern European tourists who took advantage of the weak national currency (drachma) in order to lie on beaches and dance to zorba the Greek.  Then two things happened:  Number one the iron curtain fell and Greek industry rushed into Eastern Europe to take advantage of cheap labour leaving a trail of unemployment in its wake.  Number two Greece decided it had to join the euro zone and swapped its currency at a rate of three and a half (350) drachma to one euro (and thus killed its tourist industry).

Almost overnight prices doubled and Greece had no income, save the agricultural sector.

The EU pumped money into the agricultural sector to develop it, but instead of developing, it mutated farmers from (really) hard working individuals into passive recipients of eu benefits.  Then the prices for agricultural goods started to plummet.

In the meantime the eu also pumped money into the private sector to try and stimulate growth, but even with eu support Greek products could not compete with the cheap products being produced by multinationals in former eastern bloc countries.

So the government tried to deal with unemployment by bolstering the military and the public sector, both of which are incapable of producing taxable profits to fill the state coffers, not only that, but also a major drain on state funds.

Add to all this decades of cronyism, bribes, scams, etc… at the highest levels of government.  Criminal activity that included dodgy contracts with multinationals like Siemens, sales of useless second grade military equipment to Greece by German companies, etc…

To keep Greece “alive” the government had to borrow continuously.  BUT the last government (which governed for six years and was involved in outrageous economic scams) did something even more devious, it fiddled with the figures and gave false statistics to the eu about the state of the economy and then lost the elections on purpose and put the socialist party back into power after a 6 and a half year hiatus.

So when the current government (which has only been in power for the last six months) cracked open the piggy bank all they found was a hastily scribbled IOU note.

Now the thing that is REALLY pissing off Greeks is that when the government went to the eu and said:  “Guys, this is the real situation” instead of jumping in as quickly as possible to ditch out Greece and save the euro they arsed around endlessly (here we must keep in mind that merkel and sarkozi are political opponents of the current Greek government) delayed the bailout, drove down Greek state stocks, and used the opportunity to set higher repayment interest rates and force changes on the Greek tax system.

Basically instead of trying to track down the criminals that stole the lions share of eu funds they are trying to impose pension cuts, salary reductions, increased consumption taxes, increased income taxes at the lower end of the scale, etc…

Greece already has the lowest wages in the euro zone and the highest prices on all necessary consumables.

Add to this eu intransigence over allowing Turkey to enter the eu and basically forcing Turkey and Greece into a hideously expensive arms race that neither side can really sustain but from which European weapons producers make a packet out of and…

POP!

PS Greece will never willingly leave the euro zone.
PPS Greek origin euros are the same as euros from any of the euro zone members.  They have the same value anywhere in the world.  Even if Greece is forced out of the euro zone they will have the same value, just that Greece won’t be able to mint them anymore.
"A genius is a person who, on a beach full of nudists, can remember peoples faces!"  Arka

Yeshe Zopa

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Re: Greece - What is going on?
« Reply #11 on: May 05, 2010, 02:20:34 pm »
Hmmm.... where to start?

Before Greece joined the euro zone (I have been living and working in Greece since 1996) it was an idyllic summer vacation spot for northern European tourists who took advantage of the weak national currency (drachma) in order to lie on beaches and dance to zorba the Greek.  Then two things happened:  Number one the iron curtain fell and Greek industry rushed into Eastern Europe to take advantage of cheap labour leaving a trail of unemployment in its wake.  Number two Greece decided it had to join the euro zone and swapped its currency at a rate of three and a half (350) drachma to one euro (and thus killed its tourist industry).

Almost overnight prices doubled and Greece had no income, save the agricultural sector.

The EU pumped money into the agricultural sector to develop it, but instead of developing, it mutated farmers from (really) hard working individuals into passive recipients of eu benefits.  Then the prices for agricultural goods started to plummet.

In the meantime the eu also pumped money into the private sector to try and stimulate growth, but even with eu support Greek products could not compete with the cheap products being produced by multinationals in former eastern bloc countries.

So the government tried to deal with unemployment by bolstering the military and the public sector, both of which are incapable of producing taxable profits to fill the state coffers, not only that, but also a major drain on state funds.

Add to all this decades of cronyism, bribes, scams, etc… at the highest levels of government.  Criminal activity that included dodgy contracts with multinationals like Siemens, sales of useless second grade military equipment to Greece by German companies, etc…

To keep Greece “alive” the government had to borrow continuously.  BUT the last government (which governed for six years and was involved in outrageous economic scams) did something even more devious, it fiddled with the figures and gave false statistics to the eu about the state of the economy and then lost the elections on purpose and put the socialist party back into power after a 6 and a half year hiatus.

So when the current government (which has only been in power for the last six months) cracked open the piggy bank all they found was a hastily scribbled IOU note.

Now the thing that is REALLY pissing off Greeks is that when the government went to the eu and said:  “Guys, this is the real situation” instead of jumping in as quickly as possible to ditch out Greece and save the euro they arsed around endlessly (here we must keep in mind that merkel and sarkozi are political opponents of the current Greek government) delayed the bailout, drove down Greek state stocks, and used the opportunity to set higher repayment interest rates and force changes on the Greek tax system.

Basically instead of trying to track down the criminals that stole the lions share of eu funds they are trying to impose pension cuts, salary reductions, increased consumption taxes, increased income taxes at the lower end of the scale, etc…

Greece already has the lowest wages in the euro zone and the highest prices on all necessary consumables.

Add to this eu intransigence over allowing Turkey to enter the eu and basically forcing Turkey and Greece into a hideously expensive arms race that neither side can really sustain but from which European weapons producers make a packet out of and…

POP!

PS Greece will never willingly leave the euro zone.
PPS Greek origin euros are the same as euros from any of the euro zone members.  They have the same value anywhere in the world.  Even if Greece is forced out of the euro zone they will have the same value, just that Greece won’t be able to mint them anymore.


Yes, I agree with your assessment, as one looking from outside.

However, the potential for a Greek Euro, distinct from the other Euros, and maybe instantly devalued, has caused a panic in the zone to dump them.

Rational argument rarely prevails in times of panic. It is to be hoped that this does not result in a 'run' on the Euro whereby the whole Euro currency suffers a devaluation, but in the long run that may be the best way out of the crisis affecting the whole zone, as I have a feeling today is greece, tomorrow is Spain etc.


Offline gregkavarnos

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Re: Greece - What is going on?
« Reply #12 on: May 06, 2010, 04:33:43 am »
The other reason that the eu is dumping Greece is that it no longer has a succinct geopolitical role to play.  During the cold war years Europe and America needed Greece in order to control shipping coming from the eastern bloc (mainly from Bulgarias and USSR's black sea ports) into the mediteranean.

Now Turkey is in NATO (and has been for some time now) and Russia is no longer the bad guy, sooo...

As for this:
Quote
However, the potential for a Greek Euro, distinct from the other Euros, and maybe instantly devalued, has caused a panic in the zone to dump them.
I imagine that if Greece is kicked out of the euro zone then it will revert back to an independent national currency (the new drachma?) but still retain some of the perks of being in the eu (like bulgaria, hungary, poland, etc...).  Since Greece receives directives from the european central bank regarding minting currency then I imagine the greek stamped euro notes and coins that are currently in existence would continue to circulate and slowly become collectors items reminiscient of a bygone era! :)
"A genius is a person who, on a beach full of nudists, can remember peoples faces!"  Arka

Offline gregkavarnos

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Re: Greece - What is going on?
« Reply #13 on: May 06, 2010, 07:49:33 am »
Check out this link (english with greek subtitles, though I am sure you could find the plain english version) for a slightly different perspective on the "crisis".
« Last Edit: May 07, 2010, 01:49:18 am by gregkavarnos »
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Yeshe Zopa

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Re: Greece - What is going on?
« Reply #14 on: May 06, 2010, 10:12:19 am »
Check out this link (english with greek subtitles, though I am sure you could find the plain enlgish version) for a slightly different perspective on the "crisis".
http://www.youtube.com/watch?v=AbH1JsOTInk



''Corrupt bankers on Wall Street?''  Twas ever thus in every country in the world.  Well, maybe not Bhutan?

I think if we sacked all the corrupt bankers in the world we would still be left with the 'legal but greedy'.

Bankers have now taken over from politicians, lawyers, estate agents and traffic wardens as our most disliked group.

In good times they fleece us,  in bad times....they fleece us.  If only Jesus had set a precedent and they had all been chucked out of the temples and onto the streets.

In the UK, we have this year discovered that our politicians are corrupt and self-serving.   Once again, we lag behind the rest of the world! LOL :)

I do feel very sorry for the Greek people who are honest and poor, and who will have to pay for the greed of others.




 


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