The Greek Economy

[Stormy]

That is a very interesting post Rupert Baehr. I think you hit the crux of the issue in paragraph 2: How are the Greeks going to feel about the EU coming in and taking over? And lets be realistic, if the Eurozone releases funds to Greece, there are (at the insistance of Germany,) going to be massive austerity measures required from the Greeks, who have a tendancy to resist such things. Recently we have seen rioting in response to relativley mild cuts and tax rises, when it gets worse (and it will,) then it could be catastrophic for Greece.

Merkel has to be tough, because she has elections coming up and any talk of bailouts is deeply unpopular with the German people.

 

There seems to be a fundamental problem with the Euro which is that whilst it tries to tie in countries together for the greater good, when there are problems the politicians revert to type and try to look after their own country and their own political ends. Like I mentioned in a previous post, Sarkozy is reportedly getting annoyed with the delays from Germany, the reason being France's massive exposure to Greek debt. If Greece restructures or defaults, France will be hit hardest.

 

With reference to your last paragraph, I have read recently that there are significant mutterings about Greek problems before they joined the Euro, not just after they started to drink the milk and honey, and that serious questions should be asked about the rigor of checks made before Greece were allowed to join.

[llamatron]

I was thinking about the UK situation this morning because some union git was talking about strikes if there were cuts to public services. I don't understand the logic of it. In the private sector if a business is going badly tough luck off you go. Why do the public sector think they should be immune-where do they think the money comes from?

[Fareast]

It seems remarkable to me, that, collectively, the West has been overspending, like a drunken sailor, for umpteen years and no -one has seen the dangers ! Lack of political courage ? Content to travel on the Gravy Train whilst it 's still moving ? Who knows ? Even now, our own politicians seem reluctant to spell out the stringent measures which will have to be taken eventually to get the U.K. out of the mess. Are they supposed to be ruling us, or fooling us ? They get paid for their ' expertise ' Expertise in what ? Flannel ?

 

" Blood, Sweat & Tears, " said Churchill, in our darkest hour. What would our mealy-mouthed lot have said ?

" Taking into account, Health & Safety, of course, there may be times when you might all be in a bit of danger when we fight the Nazis. Bombs might cause some discomfort if they fall on your head------and there may not be refreshments handy when we come to invade and liberate Western Europe. However, counsellors will be on hand to deal with any stress. "

[llamatron]

It seems remarkable to me, that, collectively, the West has been overspending, like a drunken sailor, for umpteen years and no -one has seen the dangers ! Lack of political courage ? Content to travel on the Gravy Train whilst it 's still moving ? Who knows ? Even now, our own politicians seem reluctant to spell out the stringent measures which will have to be taken eventually to get the U.K. out of the mess. Are they supposed to be ruling us, or fooling us ? They get paid for their ' expertise ' Expertise in what ? Flannel ?

 

" Blood, Sweat & Tears, " said Churchill, in our darkest hour. What would our mealy-mouthed lot have said ?

" Taking into account, Health & Safety, of course, there may be times when you might all be in a bit of danger when we fight the Nazis. Bombs might cause some discomfort if they fall on your head------and there may not be refreshments handy when we come to invade and liberate Western Europe. However, counsellors will be on hand to deal with any stress. "

 

you missed out if you get hit by said bomb you will see a specialist within 2 days!

[Vague_Boy]

It seems that, for years they have been living beyond their means

 

There's a lot of that about.

 

 

Thank god we're not in the Euro.

 

Yes, otherwise we wouldn't be able to print our way out of trouble. Terrible shame about what that will do to the £ (inflation and all that gubbins), but at least we can all look forward to inflation busting pay rises to offset it.

 

What's that? We can't?

 

It seems remarkable to me, that, collectively, the West has been overspending, like a drunken sailor, for umpteen years and no -one has seen the dangers

 

Oh plenty have seen the dangers, they just haven't been listened to.

 

Gerald Celente

Marc Faber

Max Kaiser

Peter Schiff

Fred Harrison

Jim Rogers

Ron Paul

David M. Walker

[Stormy]

 

 

Yes, otherwise we wouldn't be able to print our way out of trouble. Terrible shame about what that will do to the £ (inflation and all that gubbins), but at least we can all look forward to inflation busting pay rises to offset it.

 

What's that? We can't?

 

So do you think we would be in a better position today if we were in the Euro?

[Fareast]

Yes, Vague Boy, I 'm sorry about that. I knew certain people HAD sent out warning signals [ the financial correspondent of the Telegraph is one example ]. I was just trying to make the point that one would think that those in power [ and with responsibility ? ] would have actually done something useful. As you say, it wasn 't exactly a secret that the Western economies had been chucking money away for years.....and were heading for the rocks.......and somehow it all has to be paid for eventually !

[andyofborg]

So do you think we would be in a better position today if we were in the Euro?

 

we possibly would be, its almost impossible to tell.

 

we would have followed the fiscal rules as well, which would have helped keep the debt down.

 

there should have been more complete fiscal union along with the monetary union, which would have controlled everyone's debt better.

 

leaving the euro wouldn't necessarily solve greece's problems, if they returned to the drachma and allowed the currency to devalue then the cost of servicing the debt, most of which is in euro's will rise.

 

something like 70% of greek debt is owned by german and french banks so its in the german and french interests to cough up the cash sooner rather than later

[Stormy]

we possibly would be, its almost impossible to tell.

 

we would have followed the fiscal rules as well, which would have helped keep the debt down.

 

there should have been more complete fiscal union along with the monetary union, which would have controlled everyone's debt better.

 

leaving the euro wouldn't necessarily solve greece's problems, if they returned to the drachma and allowed the currency to devalue then the cost of servicing the debt, most of which is in euro's will rise.

 

something like 70% of greek debt is owned by german and french banks so its in the german and french interests to cough up the cash sooner rather than later

 

I cannot see how we could be in a better position had we been in the Euro. Not least because we would be in the same politically tricky position as Germany! Things are bad enough but thank god we can act in our own interest still!

 

You are right in your assertion though that there needed to be fiscal union as well as monetary union, but this leads to the fundamental problem of the Euro, and exposes exactly why the single currency will eventually fail. The EU's answers to its problems is to call for ever more integration, but the medicine for one country is not always right for another. And it also fails to acknowledge that the majority of subjects of a particular country will refuse to accept their money going to prop up the pensions and 13th/14th month wages for what they see as another country, regardless of how intergrated they are. If you dont believe me look at how Sarkozy and Merkel are acting, Sarkozy is angry the bail out hasn't been agreed due to huge French exposure to Greek debt, but Merkel is reluctant because of German public opposition and imminent elections.

For this project to work, there needs to be FULL political and fiscal union in the EU, with existing governments reduced to the status of Quangos. Only then can the EU act in the greater interest of itself and remove itself from the minor inconvenience of politics.

[Stormy]

More rioting in Greece, and strikes are spreading to Portugal.

http://news.bbc.co.uk/1/hi/world/europe/8655711.stm

http://news.bbc.co.uk/1/hi/world/europe/8653696.stm

 

Tomorrow the EU will announce the bail out and austerity measures for Greece. One can only imagine what the reaction from the Greeks will be.