What's most interesting to me in this entire crisis is the moral discourse surrounding debt. More often than not, you'll hear stuff like: "Of course Greece must pay its debt", "You mean to say you can just take money and not pay?", "Why should taxpayers bail Greece out?"...<p>All the while, there is absolute ZERO condemnation for banking entities making risky loans. There is not even a tacit nod towards acknowledging that if banks make loans that fail, it is their loss to eat. Not a whisper about how taxpayers have been surreptitiously bailing out banks, and not Greece.<p>Somehow, a creditor is deemed morally superior to the debtor. What repulsive rhetoric!
Fairplay to them, the whole point of the EU project was to make us all "Europeans" and to prevent constant disastrous fighting between states and people of the continent.<p>Sometime in the last 10 years many people and the media in the "core" countries got all smug and uppity towards those lazy "peripherals" and so on forgetting exactly why the project was started, overnight we stopped being "Europeans" and became "undustrious Germans", "smart and holier than thou Nordics", "lying Greeks", "lazy Spanish" and in case of my own little peripheral island country "reckless Irish".<p>Yeh :(
The <i>real</i> problem is that banks lent to Greece without doing their due diligence evaluating risk. Instead the bankers collected their fat fees for making the loans. Usually when banks make bad loans they have to write them off but when in 2010 the Troika (Euro Community, IMF, ECB) took over the Greek debt they paid 100% instead of insisting on the banks taking a "haircut" of say 50%. In truth some of the smaller members of the IMF did ask that they banks take a hit but the larger members turned that down.<p>The problems with the Greek economy that lenders are complaining about now, about the lowest tax collection rate in Europe, the "overly generous" retirement plans all existed <i>before</i> banks made the loans and fixing these problems should have been made a condition of making the loans in the first place.<p>It will be impossible for Greece to pay off the debt and now instead of the bank management (and the shareholders who appointed them) taking the hit for their incompetence in making the loans the taxpayers will take the hit.<p>The German and other taxpayers should not have a problem with Greece, but rather that Merkel and other governments decided to pay off the banks 100% instead of insisting that they take a large "haircut."<p>Ideally, the banks should have been made to take a "haircut" on the loans and the shareholders should have fired the management. Instead Merkel and other leaders let the banks off the hook putting the burden on the taxpayers. Now the taxpayers should fire Merkel and the leadership of other countries that OK'd the 100% payout to the banks in the next elections.
I am astouned by all the comments, who say that "Greeks were getting a shitty deal" or that the bailout terms were somewhat "unfair".<p>Facts are:
Greece had a spending deficit for several decades now. This spending deficit accumulated to such a big dept, that no investors were willing to lend greece any more money.
18 european countries transferred billions of euros in the last couple of years to greece, to help the country and the people. In return they had an agreement that greece would cut their spending. Greece never lived up to the agreements it made.
In the last weeks 18 european countries offered greece another bailout, where greece would receive several bilions again. In return they asked greece to finally cut spendings.<p>Now greece voted against this bailout. There are a lot of people in europe (myself included, I am from Germany by the way) who are not willing to transfer further billions of euroes to greece, just so that a socialist party can fullfil its "promises" and increase their deficit.
Here is Bloomberg animation for european debt crisis:<p><a href="https://www.youtube.com/watch?v=C8xAXJx9WJ8" rel="nofollow">https://www.youtube.com/watch?v=C8xAXJx9WJ8</a><p>I kept this in my bookmarks more than a year.<p>Euro is failed project by its core because monetary policy without fiscal polity doesn't work.
At the risk of being a moralizing bore, may I remind everybody that "Germany", "Greece" etc. are not people, and that people are not countries? I am surprised by the national coloring, however faint, of some comments here and there <a href="https://news.ycombinator.com/item?id=9835433" rel="nofollow">https://news.ycombinator.com/item?id=9835433</a>. "I am a German" or "Greek here" should have no relevance to the ideas put forth. "Your money" and "your banks" are not really "my money" and "my banks" once I have paid the tax and don't own the bank!<p>The theory of complex systems reminds us that aggregates can have properties that are not traceable to any individuals themselves. Game theory tells us that incentives and constraints can get so messed up that developments take on an eigendynamic which was nobody's intent nor interest.<p>Please, be civilized and don't let yourselves be infected by nationalistic passions.<p>Your moralizing nanny...<p>(No seriously, I am starting to get concerned.)
I'm astounded at the fight here between pro and contra austerity. It's not about to save or not to save - it's about where to save. Greece could (have) bailed out itself with just a semi-decent stab against rampant corruption, without endangering the common people at all. Switzerland offered to collect billions of Euros of Greek tax offenders on Swiss accounts on their own. The List with the names "disappeared", and some years and dozens of questions later, reappeared with half the names removed. Switzerland's still waiting for Greece to make a move. While the last weeks were all about the 1.5 bil EUR rate, Greeks moved 3 bil EUR out of the country every fricking day. Greece infamously doesn't even have a register who owns which property and real estate.<p>Greece is still in the top 5 state: of military spending per capita, and the list goes on.<p>No matter how much money you pour into this banana republic, it's just going to evaporate on the way there.<p>Still, their best option is probably where they are going already: a proper default and return to a weaker currency, just as it helped iceland.<p><a href="http://netrightdaily.com/2015/06/icelandic-default-could-save-greece/" rel="nofollow">http://netrightdaily.com/2015/06/icelandic-default-could-sav...</a><p>Still won't help, if they don't tackle corruption as well.
The Greeks were getting a shitty deal, and knew they were getting a shitty deal. Good for them for decisively telling the Germans to get stuffed (who conveniently forget about their WWII related debts being forgiven).<p>Iceland demonstrated that it's possible to say no to perpetual debt peonage and go on to do well. If Greece has to leave the Euro, so be it. The Euro made sense as the Deutschfranc, but that's about it.
A Greek friend once told me that, in Greece, "only idiots pay 100% of the taxes they owe". His perception of his fellow Greeks' attitude towards taxes wasn't wrong. In Greece, tax evasion is endemic.<p><a href="https://en.wikipedia.org/wiki/Tax_evasion_and_corruption_in_Greece" rel="nofollow">https://en.wikipedia.org/wiki/Tax_evasion_and_corruption_in_...</a><p>It's hard to be surprised by the financial troubles of a government that is so utterly feckless when it comes to collecting taxes that members of it's own finance ministry are suspected of hiding their funds abroad. It is also hard to have sympathy for Greeks, most of whom apparently view tax evasion as a virtue.<p>Now that they've burned Germany and the EU, where is Greece going to get the money it can't collect from it's own citizens?
OK let me say this as clear as I can after reading most of the comments. Yes we have a dysfunctional economy. We have a lot of red tape and corruption going on in the public sector. We spend a lot of money in pensions and salaries, more than any EU country. We have an inefficient to say the least tax collecting mechanism. And many other problems.<p>But. You expect us to change all that in just five years. This is fucking impossible guys. Please, get a grip of reality. Countries don’t just change in five years. And then you get disappointed and become nihilists arguing that we haven’t implemented any reforms. All the effort Greece has done in the last five years, moving from a 14% deficit to 1% surplus doesn’t get enough credit. All we get is been constantly hammered for our failures. No wonder the NO vote took 60%. People here are so fucking tired. Six years of recession and we have the Troika constantly down on our throats without cutting us any slack. If EU leaders had shown some flexibility things would have turned up a lot better for everyone. We could extend the maturity of some loans, achieve a sustainable surplus and start repaying. Instead we’re facing the nuclear option of defaulting on most of our debt. How does that help anyone?<p>And if you think Tsipras is radical wait until Le Pen wins the French presidency. She has an open agenda of exiting the euro. Then we can talk what compromises Germans are willing to do.
I have been collecting links for days now, here are a few. The picture is <i>really</i> not pretty and while you can place some blame on the Greeks, for the last five years at least it would seem they are not the one to blame.<p>if you want a very simplified slightly hilarious explanation, <a href="https://www.reddit.com/r/OutOfTheLoop/comments/3bhwij/what_is_going_on_in_greece/csmlkp1" rel="nofollow">https://www.reddit.com/r/OutOfTheLoop/comments/3bhwij/what_i...</a> this will do.<p><a href="https://twitter.com/cstross/status/617775611642257408" rel="nofollow">https://twitter.com/cstross/status/617775611642257408</a>
<a href="http://faculty.chicagobooth.edu/anil.kashyap/research/papers/A-Primer-on-the-Greek-Crisis_june29.pdf" rel="nofollow">http://faculty.chicagobooth.edu/anil.kashyap/research/papers...</a>
<a href="http://www.truth-out.org/news/item/26112-an-economic-hit-man-speaks-out-john-perkins-on-how-greece-has-fallen-victim-to-economic-hit-men" rel="nofollow">http://www.truth-out.org/news/item/26112-an-economic-hit-man...</a>
<a href="http://www.interfluidity.com/v2/5965.html" rel="nofollow">http://www.interfluidity.com/v2/5965.html</a>
<a href="https://twitter.com/AP/status/616622654234169344" rel="nofollow">https://twitter.com/AP/status/616622654234169344</a>
<a href="http://www.irishtimes.com/opinion/who-will-dare-say-out-loud-emperor-has-no-clothes-1.2267032" rel="nofollow">http://www.irishtimes.com/opinion/who-will-dare-say-out-loud...</a>
<a href="http://www.forbes.com/sites/niallmccarthy/2015/03/13/contrary-to-what-most-people-think-greeks-work-the-longest-hours-in-europe-infographic/" rel="nofollow">http://www.forbes.com/sites/niallmccarthy/2015/03/13/contrar...</a>
<a href="http://www.theguardian.com/business/2015/jun/30/greek-debt-troika-analysis-says-significant-concessions-still-needed" rel="nofollow">http://www.theguardian.com/business/2015/jun/30/greek-debt-t...</a>
<a href="https://fsaraceno.wordpress.com/2015/06/27/its-the-politics-stupid/" rel="nofollow">https://fsaraceno.wordpress.com/2015/06/27/its-the-politics-...</a>
I think one of the core problems in the whole euro zone disaster was the ability of previous governments with low credit ratings suddenly going from paying 8-10% on their bonds to 2-3%. Basically the lenders completely ignored historic risk, counting on the richer euro countries to bail out any country that abused the cheap credit.<p>I think we are seeing the effect of that policy. For the people who are demonizing the Greeks I would like to remind them that it takes two to party.<p>The drunk sailor who wastes all his money, and the fool who lends him more money, expecting to be repaid.<p>Either there is a full currency union with the transfers (meaning more and more federal like rule) or we will get some sort of collapse of the euro zone at some point in the future.
"Europe exemplifies a situation unfavourable to a common currency. It is composed of separate nations, speaking different languages, with different customs, and having citizens feeling far greater loyalty and attachment to their own country than to a common market or to the idea of Europe."<p>Milton Friedman, The Times, November 19, 1997<p><a href="https://en.wikipedia.org/wiki/Optimum_currency_area" rel="nofollow">https://en.wikipedia.org/wiki/Optimum_currency_area</a>
I know I will be treated as an extreme futurist, but we live in this little tiny spec called Earth and we're all in this together. The idea that there are laws about environmental protection in one country and none in others, calls to the idea that we should just have a single unifying country called "world" and keep the current separation only for cultural reasons.<p>The EU was a step in this direction but it seems that yet again centralization of power ended up making things worst. So from one end I'm happy that Greece gets to go its own way and escape centralization that forced it into a shitty situation. On the other hand though, this breaks the dream I had of building a system which would allow better collaboration between nations, and most of all, better understanding of the real issues that we're facing as a species (overpopulation, climate change, food scarcity, etc..).
Ahh, the nytimes. If there are two biases the NYT is guilty of, then its being stubbornly progressive and subconsciously anti-German.<p>Take this for example: "... financial carpet bombing. The European Central Bank severely limited financial assistance to Greek banks, ... making it hard for retirees ..."<p>Calling it "financial assistance" helps in framing it as an assault on a guaranteed right the Greek Banks have. Especially if it's something that was "severly limited" by that evil Frankfurters.<p>I know perspectives fluctuate quite heavily from country to country. It is actually the reason why I read as broad as possible (including NYT) to get to know a possible different viewpoint on pending issues.<p>But the american progressive view on the Greek-Bailout-topic is so much flawed that I might call it derailed. It is not simply flawed by ideology but that ideology also decides what details are to be amplified over the distance-caused resistance. And more importantly, that ideology decides what details are not to be amplified.<p>The ECB is still lending money, it is just not legally allowed to issue new credits (credits are what those "financial assistances" really were) to a benkrupt country. And the whole american-progressive story of Germany/Rich-Europe enslaving the poor Greeks is just as stupid as the european-progressive story of America enslaving the third world. The world is not that simple to just blame everything on the fat cats.<p>And actually those uninformed progressive world-views (wether it be european progressives judging american foreign policies toward third parties or vice-versa) bear something deeply anti-progressive in them: framing a whole nation evil, accepting illiberal leaderships as long as they are anti-<evilnation> and often calling for harsh intervention.<p>Or in the case of the Greferendum: Making it a progressive virtue, that nation A's tax €s utilization ought to be decided by nation B's voters.
I'm not a financial expert and can't speak to what's true or not, but here's [1] a short interview with Swedens former Tax Agency chief who was apparently part of a small task force to evaluate Greece's tax collection and aid in its improvement.<p>He claims that removing corruption is not the only problem, and that the rest of the EU are underestimating the lack of tax collection competence with regards to modern methods and processes, as well as the powerlessness and political isolation of the Greek tax chief, making his/her job impossible - e.g. by not even being allowed to pick his/her own employees.<p>Again, I don't know what's true or not, just providing the opinion of a former Tax Agency chief of a country that collects <i>a lot</i> of taxes and who apparently had the opportunity to take a closer look at Greece's tax collection.<p>Google Translate does a decent job with the article translation.<p>[1] <a href="https://translate.google.com/translate?sl=sv&tl=en&js=y&prev=_t&hl=en&ie=UTF-8&u=http%3A%2F%2Fwww.dn.se%2Fnyheter%2Fforre-skattechefen-domer-ut-grekiska-skatteverket%2F&edit-text=" rel="nofollow">https://translate.google.com/translate?sl=sv&tl=en&js=y&prev...</a><p>EDIT: Grammar.
An analogy I used with my wife trying to explain / argue Greece. It struck a chord.<p>Fiscal Union:<p><pre><code> Would you lend me 10 million dollars?
No
If I was Warren Buffets adopted son (!) would you lend it to me?
Maybe.
</code></pre>
Well that's how the rest of the world's investors saw Greece. Despite all the protests that it was separate debt no one believed them. And Greece is about to prove them right.<p>Debt restructuring (ie fiscal Union "just this once")<p><pre><code> If I am having to spend five months negotiating with the Bank Manager to get an overdraft that will let me pay him the next months mortgage payments with that overdraft, then we should stop talking about the cuts I need to afford the overdraft and look at how to deal with the mortgage.
</code></pre>
I don't like the situation Europe is in - but it was clear in the 1970s where this was all going - just because it is not politically palatable right now, Euro zone countries are going to have to become responsible for each other's debts, and that means negotiating on fiscal policies across Europe.<p>Stuff TIPP - that's a serious agreement to hammer out. And don't do it in secret.
I really hope EU doesn't propose any more bailouts / help to them until they sober up and go through the withdrawal and all the grief stages.
After 5 years of "rescuing" that did lead the country into ruins, no wonder!<p>It is a widespread knowledge (at least the US has it), that forceful saving in a crisis, will deepen the crisis.<p>As a German, I know that Germany got a dept-cut after the second World war, that the German nation could rise from misery. We should have allowed the Greek the same luxury.<p>Instead, the governments cared only for the banks.
Good for the Greeks to stand up against bullying and remaining somewhat dignified (as much as they could be after years of destroying their society at the whim of the "austericides").<p>That said, the vote means lots of pain coming their way, and Euro or not, their economy will take the hit now and the North will pretty much be able to buy half of the country at garage sale prices. Talk about some value investing for "deserving" German and French banks: you lend recklessly, get bailed out by your debtors, then you buy the damn farm.
No matter which way this went this whole referendum seemed like a political stunt. It was a huge distraction, frayed nerves and made everyone more entrenched in their negotiation positions. A good deal and compromise is generally negotiated behind closed doors without making loud speeches that you can't walk away from. I feel sorry for the Greek people. They deserve better from their own leaders.
Good for Greece. What they now need asap is digital drachma with automatic tax on incoming transfers, capital controls on imports, default on debts to ECB, haircut on deposits above 100k, exit Schengen/Russia sanctions and currency swaps with Russia and China/India. Next they need to improve balance of trade by devaluing drachma, removing expensive imports, replacing EU imports with imports from China, encouraging local food and energy production, exporting fish/fruits/vegetables to Russia and China. Also cut defense expenses with defense pact with Russia vs attack by Turkey and sell old military equipment to Iraq. Once all of this is done, they can start fighting corruption and waste, which can be done by cutting max pensions, reducing the public sector and centralizing government services.
Pretty amazing lack of leadership on all sides to let this degenerate into a game of political chicken with no good endings for anyone. Clearly the Greeks were going to have an exceptionally hard time paying back their debt and certainly the Germans who were in a similar situation after WWI should have realized the depth of the problem [1]. Anyone who honestly thought that the situation would get better under the austerity program despite all economic history to the contrary should have realized a couple years in that it wasn't going to work. After a few years the debts would be even more difficult to pay after Greek GDP shrunk by 25%[2].<p>From my personal it seems like if Europe had really wanted to help Greece tackle their debt they should have used the crisis to change Greek laws to make it easier to start and run a business there. Currently Greece is by far the hardest country in the Euro currency to run a business as it ranks just before Russia (61 vs 62) in the World Bank's "Ease of Doing Business Index"[3]. The other economies that are held up as examples of recoveries like Iceland and Ireland rank 12 and 13 respectively.<p>Having a monetary union without a political union is a questionable undertaking in general [4]. Given that the leaders of Europe know that they should either be working to get closer to a political union with similar laws and workings or looking for a way to gracefully exit economies that aren't working out. The current approach of bashing Greece with no real alternative to grinding economic suffering seems like the worst sort of denial about the reality on the ground.<p>[1] <a href="https://en.wikipedia.org/wiki/Treaty_of_Versailles" rel="nofollow">https://en.wikipedia.org/wiki/Treaty_of_Versailles</a>
[2] <a href="http://www.slate.com/blogs/moneybox/2015/02/18/how_bad_is_greece_s_economy_these_charts_will_tell_you.html" rel="nofollow">http://www.slate.com/blogs/moneybox/2015/02/18/how_bad_is_gr...</a>
[3] <a href="http://data.worldbank.org/indicator/IC.BUS.EASE.XQ" rel="nofollow">http://data.worldbank.org/indicator/IC.BUS.EASE.XQ</a>
[4] <a href="http://www.euro-know.org/europages/articles/rmu.html" rel="nofollow">http://www.euro-know.org/europages/articles/rmu.html</a>
[5] <a href="http://www.theatlantic.com/business/archive/2014/05/which-states-are-givers-and-which-are-takers/361668/" rel="nofollow">http://www.theatlantic.com/business/archive/2014/05/which-st...</a>
Here is a fairly detailed rundown of the situation:<p><a href="http://www.washingtonpost.com/blogs/wonkblog/wp/2015/07/05/7-key-things-to-know-about-greeces-debt-crisis/" rel="nofollow">http://www.washingtonpost.com/blogs/wonkblog/wp/2015/07/05/7...</a>
The failure and shame should be shared by the lenders. If you really want a risk-free investment, you should be willing to accept a risk-free return. You receive a return on a loan commensurate with the risk of default. Sovereign debt should not be special.
What does this mean for startups/tech industry? I assume not very much as long as it is limited to Greece, but more so if it spreads to Portugal, Spain, Italy, right?
all those useless emotions.<p>simple facts can't be avoided.<p>nobody is willing to lend greece money besides the ECB. tsipras tried putin and china, both turned him down.<p>the greek-style of socialism (coalition with the extreme right notwithstanding) relies on foreign capital. once that runs out, it is over.<p>greece has never built up any robust, modern facets of statehood. there is no central database of landownership. parties act like clans, hand out positions based on loyalty, not merit.<p>it's a second world country that thinks of itself as the leader of the first world, as witnessed in endless, tiresome discussions with various greek representatives. they're all so smart, yet their economy doesn't produce shit.<p>spain, portugal, the eastern europeans all got their act together and worked out plans to move along. greece decided to call the people they're borrowing money from nazis and terrorists.<p>greece never qualified as a member to the EU, it was a historic mistake to accept them. grexit, now. let the rest of europe govern and prosper in peace.
You folks are deep in the Group Trap. You should read more Harry Browne and think less about politics...<p>Not because I say so but because it makes your life happier.