Greece: Will this nightmare ever end?

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Binary
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Re: Greece: Will this nightmare ever end?

Postby Binary » Mon Jun 18, 2012 8:47 am

I agree with you Alkis (wow shocking ;) ) and I see your point of view.

However, I think many of us outside are getting tired of the whole situation (in an inverted pyramid kind of way, I'll explain later), and would rather see Greece get out of the Euro instead of going back to the "yeah we promise to follow the program... no wait, actually we don't, give us more money!" that has been happening.

My inverted pyramid theory: each Eurozone country is fed up with the ones below (under bigger financial strain) it, and would rather see them out of the Euro.
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Re: Greece: Will this nightmare ever end?

Postby alkis21 » Mon Jun 18, 2012 9:04 am

I could be wrong but I don't think anyone wants Greece out of the Euro, not because they love us so much of course but because of the domino effect that might follow. And trust me, us on the inside are much more tired...
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Re: Greece: Will this nightmare ever end?

Postby Binary » Mon Jun 18, 2012 10:23 am

alkis21 wrote:I could be wrong but I don't think anyone wants Greece out of the Euro, not because they love us so much of course but because of the domino effect that might follow. And trust me, us on the inside are much more tired...


I think the domino effect is kinda irrelevant. You'll find that more and more people think their own country should be out of the Euro.

I personally think that would be the best for the countries in the periphery anyway.
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Re: Greece: Will this nightmare ever end?

Postby manicx » Mon Jun 18, 2012 10:55 am

Binary wrote:I think the domino effect is kinda irrelevant. You'll find that more and more people think their own country should be out of the Euro.


Because they don't have a clue about the effects of going out of the Eurozone.

Binary wrote:I personally think that would be the best for the countries in the periphery anyway.


Not now. The mistake took place once and that was when they allowed countries to enter the Eurozone. Now it's like having a cliff in front of you and a wild river behind you. I personally prefer to take my chances in the river and fight to stay on the surface. If I jump in the cliff, I die instantly.
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Re: Greece: Will this nightmare ever end?

Postby Binary » Mon Jun 18, 2012 11:35 am

manicx wrote:
Binary wrote:I think the domino effect is kinda irrelevant. You'll find that more and more people think their own country should be out of the Euro.


Because they don't have a clue about the effects of going out of the Eurozone.


But many realize the effects of staying in. The consensus seems to be "slow and painful death" (staying) vs "very painful impact but with (slow) recuperation" (leaving)

manicx wrote:
Binary wrote:I personally think that would be the best for the countries in the periphery anyway.


Not now. The mistake took place once and that was when they allowed countries to enter the Eurozone. Now it's like having a cliff in front of you and a wild river behind you. I personally prefer to take my chances in the river and fight to stay on the surface. If I jump in the cliff, I die instantly.


It is possible I do not know the reality of Greece enough. If you had your own currency and devalue it, wouldn't you be able to slowly recuperate due to tourism/exports etc?
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Re: Greece: Will this nightmare ever end?

Postby manicx » Mon Jun 18, 2012 1:51 pm

Binary wrote:But many realize the effects of staying in.


Are they? I don't think so...

manicx wrote:It is possible I do not know the reality of Greece enough. If you had your own currency and devalue it, wouldn't you be able to slowly recuperate due to tourism/exports etc?


No. It took almost 10 years for Argentina to recover. Be careful, ARGENTINA. If you compare what Greece produces as opposed to Argentinian production, you will laugh. If I go to GrD, I will end up with 30% inflation and interest rates, useless bank deposits that are not enough to buy a 32" TV, enormous prices for all imported goods (which apparently are a lot more than exports) and most households will be officially bankrupt and unable to repay mortgages/loans (meaning that in the most optimal scenario debt will be deleted otherwise, bank simply gets the house and you end up with nothing). At the same time, EU can easily say "Greeks sell oranges cheaper? Now that we got rid off these lazy Greeks and we don't pay money for them, let's give a bounty to our own farmers and let's nuke Greece from orbit". Same about tourism. Greece has to compete mainly with Turkey. Turkey offers already cheaper holidays, Greece counts mainly on quality and the beautiful islands. Devalue does nothing when competition is a factor that can still affect things.
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Re: Greece: Will this nightmare ever end?

Postby Binary » Mon Jun 18, 2012 3:23 pm

Alright, assuming you do not have the skillset/industry to produce those things you cannot import (like the 32'' TV you mentioned), and that staying in the Euro is a necessity, what will happen then?

I have to say that at the moment, outside Greece, nobody is trusting promises from Greek politicians - and I am guessing that even Greeks aren't trusting their own politicans!

What's the plan, Stan?
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Re: Greece: Will this nightmare ever end?

Postby alkis21 » Mon Jun 18, 2012 3:35 pm

An excellent question. I'd love to know the answer myself. That's what I was talking about in my initial posts in this thread, measures are constantly announced: more taxes, more salary & pension decreases, more layoffs, even more taxes, and our question is: "OK. And then what?". Nobody knows, we would appreciate something like a 5 year plan, or a 10 year plan, or ANY plan, but is there even one? It's one thing to know that it will be very hard for X years and then it will gradually get better, but nobody says that. All these measures and we're barely scratching the deficit's surface, how will it ever be possible to turn it around and when will that be?
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Re: Greece: Will this nightmare ever end?

Postby Tripod » Tue Jun 19, 2012 10:46 am

As much as I dislike deficits - if governments acted truely Keysian they'd pay back the debt during boom times but they just never do - I think a debt of, say, 100% of GDP is considered "acceptable" by those willing to loan money. They want their interest paid on time and they want the bonds to get repayed when they are up. Of course from the government's point of view the money spent on interest can't be spent elsewhere, which is a real nuisance. But governments have been able to work with this situation for quite some time. So I think that's the current plan. Balance the yearly budget so you don't have to take up more debt. That "restores confidence", interest rates will drop, which eases the pressure even more.
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Re: Greece: Will this nightmare ever end?

Postby alkis21 » Tue Jun 19, 2012 2:49 pm

Well yeah, but the plan isn't working. Measures are getting harsher and harsher but the budget is nowhere near balanced. And you can only tax the population so much before productivity and employment drop so much that it's counterproductive.
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Re: Greece: Will this nightmare ever end?

Postby Tripod » Wed Jun 20, 2012 8:30 am

Of course, even that takes time and is going to be painful. Sadly it has to be a downward spiral first, cutting expenditures leads to unemployment, less tax income, costs more in unemployment benefits and so on but it will turn round at some point. Employment going up again, higher tax income and less spending on unemployment benefits. And it does look like there are still plenty of things the government could and should change which would lead to a higher tax income and less wasteful spending. Though the same can be said of Germany and we don't get round to tackling such problems, either, there's always a strong lobby group protecting the status quo.
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Re: Greece: Will this nightmare ever end?

Postby Binary » Wed Jun 20, 2012 10:07 am

Tripod wrote:Of course, even that takes time and is going to be painful. Sadly it has to be a downward spiral first, cutting expenditures leads to unemployment, less tax income, costs more in unemployment benefits and so on but it will turn round at some point. Employment going up again, higher tax income and less spending on unemployment benefits. And it does look like there are still plenty of things the government could and should change which would lead to a higher tax income and less wasteful spending. Though the same can be said of Germany and we don't get round to tackling such problems, either, there's always a strong lobby group protecting the status quo.


But the solution is not "higher tax income". It's lowering taxes, reducing the size of the government and state, leaving the people more choice and more money to spend however they fell appropriate, dynamizing the economy and helping job creation.

Countries with big state spending, like Greece, Portugal, Spain, etc need to "reduce the fat" first.
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Re: Greece: Will this nightmare ever end?

Postby Tripod » Thu Jun 21, 2012 6:59 am

Name one deveoped country that doesn't belong to your group of big spenders. It's an eternal debate and I think both sides are right in their own way. Governments are known to be very inefficient, allocating money the wrong way, creating jobs that don't do anything, etc. On the other hand, free market capitalism has also turned out to be a bitch and needs to be regulated in so many ways.

We are not starting from scratch, governments have already piled up debts they are supposed to pay back at some point, have promised pensions which would hurt too much if you slashed them entirely so raising tax income has to be part of the agenda. And personally I'm all for very high marginal tax rates for high incomes, up to 90%, no problem. Nobody earns millions per year - while the average wage is at 25.000 Euros/year (in Germany) - because they are that good, no, they live in a fucked up (lottery) system that allows a few to get very rich on the backs of everybody else. I see no good argument preventing the rest of us from taking most of that money back and redistributing it to those who have next to nothing.
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