I am new to this forum (again thanks for the warm welcome everyone), I simply found this forum by typing on google a search "List of top ten economic forums", which lead me to another forum post with a couple of guys recommending this forum... so here i am, eager for some economic related discussions that will further reinforce my passion to learn more about the world macro economics. Being from Greece originally and knowing Greece's economy is collapsing, please allow me to start a thread about this subject. I would like to hear what everyone thinks about the economic crisis in Greece? What are the main causes of the crisis? Did having Greece a part of the eurozone in 2001 have positive or negative effect on the Greek economy? Are the austerity measures helping Greece or doing further damage to its economy? What do you foresee in the economic future of Greece? I've been doing my own research so please let me present my opinion: Greece's economic crisis wasn't born in 2009, but is only the breed of decades of corruption, chronic and severe fiscal and public debt crisis which started way before that time. Joining the Eurozone was a bad decision, replacing the drachma by the more powerful euro was a mistake. In 2001 when Greece joined the eurozone, each 1 euro was almost ~ 340 drachma. At that time, I was already in Dubai, and I remember as the euro went high, every product coming from Europe shot exponentially high as the UAE derham is tied to the USdollars. Also any of my friends (non Greek) given a choice to visit any touristic country would probably visit south east Asia or Turkey or any other place rather than visiting the more expensive Greece of the eurozone, thus killing the touristic sector and with it weakening the services sector in Greece. Just take a look at the chart below or this link to see how the Greece tourist arrival counts went flat after 2001 In short, I believe the euro destroyed the already struggling economy of Greece and was the death penalty of an ill economy. The austerity measure simply did further damage to the Greece economy, the public debt is still increasing, currently more than 160% of the GDP and the unemployment is in a record high of more than 24 %, all the young talents of Greece are migrating else where, and people are still loosing their jobs. Thanks for reading, if this subject interests you, please answer the questions I posted above.
The Greek economic issues started at 1832 when the country declared independence. Yes you are right on spot , the eurozone , corruption and tax exceptions for the rich brought the economy down . THIS is only one scandal out of thousands
They need to sell their Mercedes and should buy tractor to improve agriculture . This is the only way they can amend the conditions .
Seriously the big issue was they gave up the traditional Greek ways wanting to be like other major EU nations and went into debt to fund it. I was in Greece when my dad was in the military back in the 70's it was very laid back, people did work but more to make enough to live on and some extra and based on a modest lifestyle. There were exceptions but by and large long lunches, shorter work days, vacation time and the like were frankly part of the lifestyle. In the 90s+ they lost that wanting to live far better ,I considered that relative they did live well IMHO is quality of living, and didn't change the underground culture. The government had ambitions but most of the people liked the way things were and didn't want to work harder or longer, without that economic growth was hobbled.
I like the statistics, I am so surprised that Greece comes as the second highest country in the yearly worked hours per worker. This puts a question on the efficiency of this work, If the average German employee only works 1420 compared to 2034 in Greece, where as the German economy is one of the strongest export based economies; makes me believe the average Greek employee spends his time socializing, drinking coffee, browsing the web perhaps? I have had German/ Austrian colleagues before and working side by side with them made me respect their dedication and work ethics. I went out of Greece almost as soon as I graduated, so unfortunately, I can't tell if the same applies to Greece.
LOL, the Mediterranean countries people (on average) value luxury too much, i've seen too many people buy most expensive phones, brand clothes, luxury cars all when they are already in debt... also heard that this is applicable not only to Greece, but Turkey, Italy, Spain, Syria, Lebanon, Cyprus... even a bit up to the north towards Serbia... Must be the water?
I did state the 70's in my case 1976-1980 it was not like that. Its not shocking though the government had changes but just because they work on paper that many hours doesn't mean they are "working". I emailed a friend there if one goes to his café he runs to order a meal and coffee the whole process can take 90 minutes since the cook works as they feel like and the staff are not in a hurry where in the US it might be half that time to get in an order, get served and all. But customers don't complain if Greek no one is usually in a hurry unless vital to their work (emergency services, the police and such). And it might take longer if key staff are on break.
I think the problem is mainly socialism. Everybody wants something and nobody want to contribute. It is very hard for a politician to cut back on spending and stay in office. So they just push the problem ahead of them, on to the next covernment. Socialist politicians are especially prone to this, but It may be a fundamental problem with democracy. The people want to have their cake and eat it too. So the debt grows and grows and few politician has the balls to do anything about it. The few that do get voted out. Only when it gets to the point where the covernment can no longer pay the civil servants does the people realise that something must be done. Denmark almost went bankrupt in the 70s under a socialist goverment. It took most of the 80s to get the economy back on track. Since then, I knew socialism would never work. You simply can't have your cake and eat it too. As for how to get out of the hole Greece has dug itself into... I belive austerity measures are the only way. It is tempting to keep spending in order to stimulate the economy, but that does not really work out when the debt is already 160% of GNP. Lowering the unemployment rate and get more people off welfare is the only way forward. For this, wages must be lowered all round. But the unions will resist this fiercely. The unions only care for the workers that have jobs, not for the unemployed. The baltic counties like Estonia, Latvia and Litauenia took the hard route with austerity measures. It sucked and a lot of people migrated out to find jobs elsewhere. But at least their economies are in pretty good shape and starting to make a rebound. It sucked, but it was good in the long run. Greece will be burdened with huge debt and intrest on that debt for many, many years.
The euro is bad because they can't repudiate their debt. The euro is good because it gives them some debt responsibility pressures. But of a double edges sword I think. Welcome aboard!
Greece is the canary in the coal mine. They are were Western Democracy are headed. Democracy ends when people realize that they can vote themselves money from the treasury. The Greek voter is irresponsible. It's give me, give me, give me. Take, take take. They don't want to hear the truth. They don't want to hear, "we can't afford it" The only politicians that win elections in Greece are politicians who promise the most goodies from government. Basically, Greece can't afford its lavish welfare state. But Greek voters don't want to hear it. They want more and more hand outs. The end of all of this is a wrecked economy.
Why you are comparing a country in European south with 11m people to a country in central Europe with a population of 85m ? Apples and oranges , if you want to compare equal sizes then countries similar to Greece are Portugal, Belgium , Hungary, Belarus, Czech republic and Sweden. Portuguese economy is 2/3 of the Greek one (or was before the crisis) , Belgium has an advanced industry and traditional enterprises like say beer that Greece has not , Belarus is a backwards dictatorship , Hungary is not even close to Greece economy wise and the Czechs are lately doing a bit better . Sweden is in a safe hood that doesn't have to overspend in the army and they had advanced industry while Greece was an Ottoman wasteland. The majority of Greek workforce before the crisis was either self employed or working in small businesses that got swallowed by European corporations after the introduction of € . Through privatisation lucrative public enterprises were sold (like OTE) and public monopolies were broken ( unlike Sweden ) thus the state lost all the revenue outside taxes , Now they are negotiating to sell public lottery which made €500m profit after taxes in 2012. In Greece benefits, pensions and medical care are not paid by the government but from funds each occupation has (for example doctors have theirs, typographers theirs , truck drivers etc ) , retirement age , level of pension and medical coverage was up to the strength of the fund ; nothing to do with the government. During the 80's governments put their cronies to manage those funds and "invested" the money losing everything down to the cent , they bankrupted our system not bad work ethics .
I would agree with your general assessment, with one exception. Although everything you say is true, you are focusing on 'big picture' issues. The problem is more fundamental than that. It has to do with mentality of the public. I first read about this is Alex Spanos book "Sharing the Wealth". http://www.amazon.com/Sharing-Wealth-Story-Alex-Spanos/dp/0895261588 Alex is a multi-millionaire CEO of a construction company. He started out earning minimum wage at a bakery, quit his job, and started selling sandwiches to farm helpers. Alex's father was a Greek immigrant. In the book, Alex talks about going back to Greece, and seeing the poverty there. The people in his fathers home town, asked why he didn't bring money. Alex explained that he knew if he handed out cash, they would spend it, and it would be gone. Instead he wanted to find a way to bring business, and jobs, so the people could earn a living. But the people saw that as "exploitation", and the government had hundreds of regulations and controls that made building a business there, nearly impossible. So Alex gave up on it completely, and said he was very discouraged over the whole thing. This is the fundamental problem in Greece. The Greek people don't want to work for anything. Instead of realizing the duty of success is on their own shoulders, they want government to make success happen. Government can't create wealth, and the current problem is the result of that. Same thing is true of the unemployed youth of Greece. The problem is that businesses can't pay youth workers, as much as they are worth. The minimum wage is too high, and thus they don't get hired at all. Greece can recover, but it will require the government to do exactly the opposite of what the people want. They have to reduce regulations, reduce taxes, and reduce costly labor laws. The moment businesses are able to profitably employee people in Greece, they will. I promise they will. This is a great quote. I love it because of the irony. The author meant it sarcastically, but in reality it is absolutely true. 80% of all millionaires are first generation rich. They started off poor, and because this country has so much freedom and opportunity, they can become millionaires. Steinbeck is absolutely right, even though he didn't intend to be.
They were self employed because your labor laws are so bad companies do not hire employees, and everyone prefers to work with independent contractors.
Our laws pre-crisis were far better than yours and before we joined EU there was work for everyone , anytime and well paid . Good labor laws favour the worker , bad labor laws get half of you in food stamps . We are not going to get economically schooled by failures printing a (*)(*)(*)(*)ton of fiat money everyday to survive.
I agree with you that it was a mistake for Greece to enter the Eurozone. I also agree that the root causes of the Greek economic collapse go much deeper. Among the many problems are: -) a state sector that is far too large and not dynamic and efficient enough -) lack of a real industrial base -) over-investment in prestige projects and under-investment in real infrastructure -) corruption and political nepotism (Greece is hardly unique in this, but it's much worse than in many advanced European countries) -) poor fiscal policies -) etc. etc. The result has been that there now is basically hardly any Greek economy to speak of. It has to be built up from the ground. To do this, an orderly default and exit from the eurozone are inevitable.
Based on what measurement would you claim Greek labor laws were 'better' than American labor laws, before the crisis? And FYI, the Greek unemployment rate in 2006 was 9%. The US unemployment rate in the same year was 4.5%. I couldn't find unemployment rates prior to 1981, which is when Greece joined the EU. So I don't know if that claim is true. Unless you meant the European monetary union (EMU), when they adopted the Euro, which was in 2001. In which case, that claim is not true. The unemployment rate was consistently between 8% and 12% during the time prior to EMU. Lastly, that utopia ~10% unemployment rate in Greece, was based on borrowed money. Even if they had not joined the EMU, you can't borrow forever, and eventually those bills come due.
The unemployment numbers were high because of seasonal jobs , in the tourist industry you work 7 months and you spend the rest 5 taking unemployment benefits , you should also add the fact that after 1991 country started to get an abnormal number of immigrants who were willing to work for nothing. In 1992 i worked in potato harvesting making €35 a day , now illegals do the same job for €21 . The country borrowed money because neoliberals sold all the lucrative public enterprises (some to their competitors) and broke state monopolies . Opening a medium size country ( for European standards) to the unrestrained competition from France, UK, Italy and Germany of course destroyed the base of our economy which was small & often family size businesses .
I have to ask what was so bad about the traditional modest economy and living standards in Greece that made the government want to change things? When I was there people were to us poor, some middle class and a few wealthy but mostly poor but they had strong families, were largely content, everyone ate and had essentials and were generally healthy with a rich culture as in were good people that didn't worry about much and had nice lives. Seems to me lifted some regulations would have helped matters but their underground economy was big I don't buy their unemployment rate being so high, officially perhaps but unofficially they had and have now a good cash economy. My friend with the café has his on the books workers and his off the books ones and several suppliers are locals where only cash changes hands, fishermen often bring in some for his business and he pays cash under the table. And in season he brings in wait staff working only for tips and added a service charge to the bill for that, I gave him that idea. When busy the workers get more money over a wage and off season he has his regular on the book workers his family members. He cannot be unique.
Having worked with Greek companies it also seems about ethics and how they do business. When I agree something with a German / Belgian / Scandinavian company I receive the documents ( receipt confirmation etc ) as soon as possible. I Also get correct information on the phone and get clear answers. Now compare it to a Greek company I must constantly nag about a status update, to receive a invoice, and even then i must pray I get it on time. When A german company says We will do it within the week its usually within the week, a greek company will use vague terms. I despise working with Soutern European companies, the larger ones are allright but so Middle-Small sized companies are awfull to deal with.
The so-called crises in Greece is actually a result of the same financial engineering that has been happening to Argentina periodically since the 1960s. Massive inflows of foreign capital inflate the entire economy, the right wing government borrows massively. A financial crises elsewhere triggers a sudden massive outflow of foreign funds which causes the economy to implode, including the property markets that local private banks are heavily invested in. Because of capital flight and a collapsing portfolio banks are unable to find new investment to increase reserves banks begin to fail on a wholesale basis. All lending stops, and small savers run to the banks to get their money out. There is a general sell off of government debt and the government becomes unable to borrow. At this point the IMF or one of its proxies steps in to offer of "help", which is actually a gun to the head. It offers to roll over whatever government debt is due and provide new lending but in return for that the government must agree to take on the debts of the private banks and institute draconian austerity measures that redirect government revenues from social spending to paying off failed private investments. The situation for Greece and Spain and Portugal and Ireland was all the same thing, the forcing of private debt on the public in times of financial crises has impoverished them for a generation. If these nations did not have the obligation of private debt the lives of their people would not be so difficult and their economies would have recovered and begun growing again at least two years ago. Meanwhile the reckless lenders who caused these calamities get repaid and the hedge funds that bought up their debt at pennies on the Euro make a windfall.
So-called? So you don't actually believe there's anything bad going on in Greece? It's perfectly fine? Inflows of foreign capital grow the economy, right? Do you think inflows of capital are a negative? The Chinese sure seem to be enjoying inflows of Capital. Right-wing, and borrows massively, are at odds with each other. One of the Fundamentals of right-wing ideology is fiscal conservatism. They can't be that much on the right, if they borrow massively. How exactly does foreign investment 'outflow'? If Lexus builds a dealership, how do they outflow that investment? Do they pick up the dealership, put it on a boat, and float it to China? How exactly does that work? The history of Argentina trying to nationalize, and regulate business, makes me think the real problem is that the government squashes the economy. Well of course the IMF helping comes with conditions. If you need help, and I offer to help you with money, I'm going to have some stipulations too. And if you don't follow my directions, then you don't get the money. That's how ALL lending works. Isn't the problem really the government of Argentina which borrowed itself into bankruptcy, and not the IMF which wouldn't be needed otherwise? Are you suggesting that if no one, let alone the IMF or world bank, were to give money at all to Argentina, that no 'draconian austerity measures' would happen? How would they pay for anything, without a bailout? Wouldn't the result be a far worse austerity known as bankruptcy? Forcing of private debt on the public? How does a bank, with no army, no law enforcement, no way to enforce their will, somehow 'force' anyone to do anything? Are you really suggesting that if the politicians in government said "no we will not bail you out", that the banks would show up with armed accountants and brokers, and force the government to bail them out? At least here in the states, the very opposite happened. The Federal Reserve directly pressured banks to take the bailout money, or risk sanctions. http://www.hartfordbusiness.com/art...documents-paulson-forced-9-banks-to-take-tarp And worse, some banks actually had to pressure the regulators to "allow" them to repay the TARP money. http://www.cleveland.com/business/index.ssf/2011/09/pnc_other_banks_pressured_regu.html Isn't the real problem government that did the bailouts, and not really the banks? You seem to be looking at all sorts of things government does that screws everything up, and amazingly blaming everyone except government for the problems.
Right wing ideology only pretends at fiscal conservatism when it is out of power but once in power cuts taxes and borrows massively. In the US every republican president since Eisenhower increased the budget deficits and the national debt. In Greece the conservative government conspired with Goldman Sachs to create off book entities that hid its obscene levels of borrowing for years. It was only when they lost the election and the new leftist government was able to look at the books that the deception was discovered, the announcement of which directly precipitated the debt crises. The opposite way it flows in. In the case of Greece and many other places where financial crises occur, individual investors and investment firms begin buying up property. Property values begin to rise. Local banks seek financing to fuel the rising demand from property buyers. Foreign banks and private investors finance their increased lending by buying up bonds they issue. Foreign investment continues to flow in until something bad happens. In the case of Greece it was the discovery that the conservative government had been hiding Greece's massive deficits and debt for years. Foreign investors began selling off their property holdings and the entire real estate market collapsed almost overnight. The short term lending that Greek banks were using to finance their long term mortgage lending operations ceased. With no ability to roll over their short term borrowing and saddled with a mass of mortgages that they were unable to sell on that were losing value every minute the enitre Greek banking system came to the verge of complete collapse. The history of Argentina is the history of a nation trying to save its economy from the serial rapist conspiracy of right wing government and foreign investors. The model for raping an entire nation of its wealth for the benefit of private interests was perfected in Argentina and then exported across the world. The southern EU is just the latest victim. The conditions that the IMF imposes on nations is not meant to help them recover from economic calamity but to insure that the investors who created the calamity do not lose. The conditions that the IMF imposes has a history of destroying economies all over the world for generations. In the Asia crises of 1998 the only nation that refused IMF help was Malaysia, which was also the only nation whose economy recovered quickly. In much of South America the IMF is considered persona non-grata and its personnel are not even allowed entry because of their history of forcing the debts rung up by right wing dictators onto the people to pay off. What I am suggesting is that private lenders should be subject to the consequences of the risk they undertake and that the people should not be held liable for a fraud perpetrated by government officials in collusion with foreign lenders. How does the Prime Minister of Ireland announce that the debts of Ireland's private banks will be made good by the government without asking the people, or even the legislature how they feel about that? The only nation where the people actually had a say was Iceland and two referendums came down decidedly against that sort of crap. I am not holding the governments blameless because they did a lot of things to set these calamities in motion. But neither am I holding the financial community blameless because it was their pressure on governments that caused them to act as they did. What I object to is the end result, which is that when push came to shove every government except for Iceland chose to put financial losses on their people instead of the financial community that profited so immensely during its run up and should have lost the most in the collapse. The real problem is that the financiers have the government in their thrall and so can direct it to do their bidding at the expense and peril of everyone else. The mantra of large scale finance is private profit at public risk. The minute that financiers risky bets go bad and endanger the economy the government will step in and rescue them from their own excesses. It is no mystery how that happens since the only ones who politicians believe understand finance are financiers with credentials who move fluidly between government and academia and the private sector always looking after their own. In 2009 we should have just let the entire financial system collapse. The resulting 40% unemployment would have completely changed the way people in the US view capitalism and government.
Again, this makes no sense. Put another way... Vegetarianism only pretends to not eat meat. Vegetarians eat meat all the time. If you see someone claiming to be a vegetarian, and they are sitting down to roast chicken dinner, you don't claim "Well vegetarianism must support eating meat!". No, you would conclude that the individual in question must not be a vegetarian. This is the problem. Actions define your ideology. Not your ideology ascribed to your actions. If you only eat vegies, you are a vegetarian. Your actions define what you are. You can scream that you are not a vegetarian, and if you only eat vegies, then you are in fact a vegetarian, regardless of what you say your are. Otherwise, we could have a 'pacifist' that makes war. That doesn't make sense. If you make war, you are not a pacifist, no matter what you call yourself. So when you look at what someone does, just because they say "I'm a conservative" doesn't mean they are. They are if they follow conservative thought. If they don't.... then they are not. So you can say the "conservative government..." blaw blaw blaw, but as far as the American definition of 'conservative', they simply are not. Doesn't matter what label you give them, because their actions don't fit our definition of the label. That's all there is too it. Case closed. When someone invests into a country, it simply can't flow out the way it flows in. If Lexus builds a car dealership in Greece, how exactly do you expect it to "flow out" of Greece? You think they loaded the dealership on a boat, and floated it back to Japan? Of course not. Again.... explain to me how you think these investments "flow out" of a country? They should have let it collaspe. Iceland also had a similar crash in Mortgage Backed Securities, and the government simply allowed them to fail. The result was that the banks were sold off, the toxic securities were simply liquidated, and they have had a growing economy since 2010. That said, isn't America proof that what you just outlined isn't the whole story? Our property values crashed too. Yet our economy for the most part is stable. Their economy is absolutely ruined. At the very best it's ruined. At worst, is practically imploding. Why are people still investing in the US, but not Greece? Well yeah, that's the claim the leftists in Argentina use to justify their socialized hostile take overs of private business. But every country that has followed that path, has used that as the excuse, and their economies are constantly ruined. You complain about people stopping investment into Argentina, but then ignore that Argentina's socialism is likely the direct cause of that halt of investment. Now take Brazil on the other hand, where government has a more hand-off approach and doesn't nationalize, their economy has been growing fairly constantly. Even in 2009 while the rest of the world was crashing, Brazil's growth rate was barely below zero. Somewhere around -0.3% By 2010 it was up near 8%. But here's my problem with this logic. If you really believe that the actions of the IMF were completely negative, then why use them? No country is "forced" to use the IMF. It's not like the IMF shows up with guns, and demands that you take their money. That's not logical. If the IMF conditions are so bad, and have always caused problems, then why do countries take the money? And here's the other aspect. Wouldn't it be better to simply not get into that position? Here you are moaning about the conditions the IMF puts on their hand outs, and yet completely ignoring the people who have spent themselves into bankruptcy. Here's a thought.... don't spend money. Don't borrow yourself into debt. In 2009, I paid off my last debt. I owe no one anything. Chase, and Capital One send me stuff all the time. Want to know what I do? I tare them up, and toss them in the trash. I do not *have* to borrow money from them. And I most certainly do not borrow money from them, and then start crying and wailing over the terms. I just don't borrow. Period. No one is forced to borrow from the IMF. So Argentina doesn't have to borrow. How about that. If they don't have the money for blaw blaw blaw, then they can't buy it. Then they'll never end up borrowed into bankruptcy, they'll never have to deal with the IMF at all, and you'll run out of these to complain about. There's an idea. Personal responsibility. Imagine that. Yes and no. I'm all for private lenders being left to bankruptcy when they make bad loans. I was against TARP, against the bailouts, against all of it. All those banks should have simply been allowed to fail. Bankruptcy, and sold off. Nothing would have happened, except what should have happened, namely the sub-prime mortgage back securities would have been worthless.... which.... is good. However, when you say the people should not be held liable for fraud by government.... if you mean individually, yeah.... but if you mean the public in general form public services, no. Public services have to be paid for be someone. If the government doesn't have the money.... then you can't pay for the those services. That's how life works. Well, and they simply didn't have the money to bail them out. But yes, I agree with the Iceland system. I personally voted against every single politician the was in favor of the bailouts. Every one of them. Sadly most left office anyway. No no no.... Look if you have a child, and he wants to stay up to 4 AM during a week day, and eat junk food all day, and never take a bath, that child will give you pressure. But you are the adult. You have the authority. You are the one in charge. If you choose to submit to your child, it's not the child's fault. It's YOUR fault for abrogating your responsibility. Banks pushing to get money for themselves, is no different than US Vets, School teachers, Professors grants, green energy companies, and AARP. Everyone has their hand out. The authority, the responsibility, the duty, is on the government to not give the children everything they want. You can't blame banks for politicians giving out money that's not theirs to give. And honestly, it's hypocritical, because if *YOU* were CEO of a bank, you would try and get money too. Don't even try and deny it, because we both know you would. Really? So when they added all those rules and regulations to TARP against the wishes of the banks, that was all do to Financiers forcing government to do something they didn't want? When those banks were pressured into taking TARP money they didn't even want, it was actually the banks pushing government to force themselves to take the money? Come on..... This is the lamest part of leftism. You make up these conspiracy theories, that contradict themselves constantly, yet you still believe it. No, that's mythology. See, you right here are brainwashed by the very banks that you claim to be trying to defeat. You believe they have ultimate power over the government, even though there are glaring contradictions, and then oppose them at ever turn, yet believe them blindly when they tell you "If you harm us the world will end!" Garbage garbage garbage. Lehman Brothers was allowed to fail. It was one of the biggest failures. What was the result? Nothing. Nothing happened except people invested in Sub-prime loans panicked..... well yeah... that's what should have happened. Sub-prime loans were bad. We want them to panic, and sell those off. Again, Iceland allowed their banks to fail, and those banks that failed, held a massively larger portion of Iceland's economy, than the banks in the America had of the American economy. Yet Iceland is fine and growing. If all the banks had been allowed to fail, they would have gone into bankruptcy. They would have had the bad parts of the banks, sold off. The good profitable parts would have either been bought out, or reincorporated. In either case, the rest of the economy would have gone on just fine.
