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The IMF's Road to Ruin?
Published in Pension Pulse.
Mark
Weisbrot writes in counterpunch on the IMF's Road to Ruin:
Latvia has
experienced the worst two-year economic downturn on record, losing more
than 25 percent of GDP. It is projected to shrink further during the
first half of this year, before beginning a slow recovery, in which the
International Monetary Fund (IMF) projects that it will not reach even
its 2006 level of output by 2015 – nine years later.
With 22 percent unemployment, a
sharp increase in emigration and cuts to education funding that will
cause long-term damage, the social costs of this trajectory are also
high.
By keeping its currency pegged to the
euro, the government gives up the opportunity to allow a depreciation
that would stimulate growth by improving the trade balance. But even
more importantly, maintaining the peg means that Latvia cannot use
expansionary monetary policy, or expansionary fiscal policy, to get out
of recession. (The United States has used both: in addition to its
fiscal stimulus and cutting interest rates to near zero, it has created
more than 1.5 trillion dollars since the recession began).
Some who believe that doing the opposite of what rich
countries do – i.e. pro-cyclical policies -- can work point to
neighboring Estonia as a success story. Estonia has kept its currency
pegged to the Euro, and like Latvia is trying to accomplish an “internal
devaluation.” In other words, with a deep enough recession and
sufficient unemployment, wages and prices can be pushed down. In theory
this would allow the economy to become competitive again, even while
keeping the (nominal) exchange rate fixed.
But
the cost to Estonia has been almost as high as in Latvia. The economy
has shrunk by nearly 20 percent. Unemployment has shot up from about 2
percent to 15.5 percent. And recovery is expected to be painfully slow:
the IMF projects that the economy will grow by just 0.8 percent this
year. Amazingly, by 2015 Estonia is projected to still be less welloff
than it was in 2007. This is an enormous cost in terms of lost actual
and potential output, as well as the social costs associated with high
long-term unemployment that will accompany this slow recovery. And
despite the economic collapse and a sharp drop in wages, Estonia’s real
effective exchange rate was the same at the end of last year as it was
at the beginning of 2008 – in other words, no “internal devaluation”
had occurred.
Yet Estonia is being held up as a
positive example, even used to attack economists who have criticized
pro-cyclical policies in Latvia. The reason is that Estonia has not had
the swelling deficit and debt problems that Latvia has had in the
downturn. Its public debt of 7 percent of GDP is a small fraction of
the EU average of 79 percent, and its budget deficit for 2009 was just
1.7 percent of GDP. It is therefore on its way to join the Euro zone,
perhaps adopting the Euro at the beginning of next year.
How did Estonia manage to avoid a large increase in its
debt during this severe downturn? First, the government had accumulated
assets during the expansion, amounting to some 12 percent of GDP; and
it was also running a budget surplus when the recession hit. And it has
received quite a bit in grants from the European Union: In 2010, the
IMF projects an enormous 8.3 percent of GDP in grants, with 6.7 percent
of GDP the prior year.
Greece, unfortunately, is not being offered any grants
from the European Union or the IMF. Their plan for Greece is all about
pain and punishment. And with a public debt of 115 percent of GDP and a
budget deficit of 13.6 percent, Greece will be forced to make spending
cuts that will not only have drastic social consequences but will
almost certainly plunge the country deeper into recession.
This is a train going in the wrong direction, and once
you go down this track there is no telling where the end will be.
Greece – like Latvia and Estonia – will be at the mercy of external
events to rescue its economy. A rapid, robust rebound in the European
Union – which nobody is projecting – could lift these countries out of
their slump with a huge boost in demand for their exports, and capital
inflows as in the bubble years. Or not: Western European banks still
have hundreds of billions of bad loans to Central and Eastern Europe
from the bubble years. Some big shoes could still drop that would
depress regional growth even below the slow recovery that is projected
for the Euro zone. Germany, which has been dependent on exports for all
of its growth from 2002-2007, could continue to soak up the regional
trade benefits of a Euro zone and/or world recovery.
No matter how you slice it,
these 19th-century-brutal pro-cyclical policies don’t make sense. They
are also grossly unfair, placing the burden of adjustment most squarely
on poor and working people. I would not wish Estonia’s “success” on
any population, simply because they avoided a debt run-up and are on
track to join the Euro. They may find, like Greece – as well as Spain,
Ireland, Portugal and Italy – that the costs of adopting a currency
that is overvalued for a country’s level of productivity are
potentially quite high over the long run, even after these economies
eventually recover.
The European Union and the
IMF have the money and the ability to engineer a recovery based on
counter-cyclical policies in Greece as well as the Baltic states. If it
involves a debt restructuring – or even a haircut for the bondholders -
so be it. No government should accept policies that tell them they
must bleed their economy for an indeterminate time before it can
recover.
But the problem is the
bondholders do not want haircuts or debt restructuring. So Greece and
other "PIIGS" are facing the stark reality of the IMF's wrath.
In
my
last comment, I wrote the revolts going on in Greece will likely
spread throughout Europe, threatening the very existence of the
Eurozone. While there is no question that Greece needs to reform its tax
system, pension system, and public sector, the reality is that
austerity measures will impose undue hardship on workers who had nothing
to do with engineering the global credit crisis.
As clashes
between protestors and police erupt in Greece in a May Day mayhem, I can't help
thinking that maybe it's time for Greece to default, negotiate a haircut
with bondholders, and explore other options with Russia and China.
Forget Europe and Germany, solidify your ties with China to work on
alternative energy and developing your ports as a hub for Chinese goods
into Europe. With Russia, Greece can explore developing the oil reserves
in the Aegean.
Tough economic times require tough political
decisions. It's time for Greece to explore all options and stop
being Germany's and the IMF's whipping boy. If the they don't explore
all alternatives, the IMF's road to ruin is right around the corner.
Apart from the videos below, take the time to watch this documentary, The Bankrupt State -
Greece.
»
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yeah, I'm paying my mortgage like I have been for the past 22 years though I'm presently $100 short which I can scare up by Monday. the gold I bought back when it was $887/Oz. is helping. I'll take a St. Gaudens into Dave's Gold, Silver, and Diamonds and get $840 Silver Eagles and $440 in cash, enough for some groceries, dog food, a box of shot gun shells, a reprieve from the creditors and a little peace of mind. btw, Greece is not a bug.
Why? You think my bank will take the loss any time soon?
Greece might fall under Turkey's orbit, as it has through most of recent history.
But, But, But.
Hosting the Olympic Games was such good fun. What a wonderful party we had.
Now we can show the world what we are really like. We'll not repay the loans. We will just steal the money.
Well, stealing money(default) is bussines as usual for Greece. Greece defaulted 6times in last two centuries, so what. And seven is such a beautiful and, indeed, lucky number.
"...revolts going on in Greece will likely spread throughout Europe..."
Indeed, northern europeans won´t just sit quietly, watching their taxpayer money being used to bail out profligate, corrupt, unproductive Greece. They will start riot, sooner or later.
"...Forget Europe and Germany..."
Sure, let´s just forget Europe they won´t give us more free money, so what. While we were getting billions of EURs each year, we were all for solidarity and EU and cooperation, but now, they actually want us to start doing something. What impudence! It´s all their fault. And media´s, Wall Street´s, anglo-saxons, speculators, martians, Donald Duck´s .........
BUT:
I wonder, if Greece wants to "forget Europe", how will their ports become "hubs for Chinese goods into Europe."
Mhmmmm, now back to square 1. (and this time let´s try to put in also some logic and, heavens forbid, responsibility)
Oh those frustrated Northern Europeans, watching their tax dollars go to Greece to subsidize those fucking German bankers. Give me a break with this horseshit. You never gave Greece "free money" - nothing ever came for free. And Germany is surprised with Greek debt woes? Please, unless they were fucking dumb as nails, they should have seen that you were lending money to corrupt Greek politicians. Leave the Greek workers out of your diatribe. And by the way, most Germans aren't dumb. They know exactly what is going on and who yanks Merkel's chain.
Edit:
Oh those frustrated Northern Europeans, watching their tax dollars go to Greece to subsidize those fucking German bankers. Give me a break with this horseshit. You never gave Greece "free money" - nothing ever came for free. And Germany is surprised with Greek debt woes? Please, unless they were fucking dumb as nails, they should have seen that they were lending money to corrupt Greek politicians. Leave the Greek workers out of your diatribe. And by the way, most Germans aren't dumb. They know exactly what is going on and who yanks Merkel's chain.
Leo,
there is soft censorship in Germany.
A blog referred to an Article published by an German editor of a weekly newspaper.The core statement is that Chncellor Merkel asked the German press not to report how bad the situation on the markets was during the financial crisis of 2008. The meeting did not get a lot of press coverage either.
Personally I observed a huge difference in the reporting in the blogosphere (Jesses Crossroads Cafe, Naked Capitalism and later ZeroHedge) and German press and TV.
The blog entry in German:
17. Februar 2010
http://www.berliner-journalisten.com/blog/2010/02/17/geheimtreffen-im-ka...
Geheimtreffen im Kanzleramt: Die Presse schwieg
Abgelegt unter: Medien | Richard Schnabl um 10:38
In der Süddeutschen Zeitung vom 16.2. findet sich ein Beitrag von Jakob Augstein, dem Herausgeber der Wochenzeitung Der Freitag. Die Ausführungen beschreiben ein Treffen junger Journalisten mit der Kanzlerin. Augstein wörtlich: ” Was Angela Merkel da gesagt hat, war nur scheinbar von ergreifender sprachlicher und gedanklicher Schlichtheit. Es war bezeichnend dafür, dass Journalisten und Politiker sich heute mitnichten als Gegner verstehen, sondern als Partner.
Merkel hat zu den Journalisten geredet als seien sie Mitarbeiter einer Abteilung im Kanzleramt. Und wenn man es sich recht überlegt, kommt man zu dem Schluss: Ja, so sehen sich mehr und mehr Journalisten auch selbst. Und wenn das so weitergeht, dann braucht man in der Tat keine Journalisten mehr. Dann tun Pressesprecher es auch.”
Im Folgenden kommt Augstein auf einen Vorfall zu sprechen, der bisher wenig Beachtung in den Medien fand:
Merkels Einladung der Chefredakteure
“Ein paar Monate zuvor, am 8. Oktober 2008, hatte es ein sonderbares Treffen gegeben, das in diesem Zusammenhang Erwähnung finden soll.
Die Bundeskanzlerin hatte an jenem Tag die bedeutenden Chefredakteure der bedeutenden Medien eingeladen.
Es war die Zeit, in die der Ausbruch der großen Finanzkrise fiel.
Man findet keinen ausführlichen Bericht über dieses Treffen, der veröffentlicht worden wäre und überhaupt nur wenige Erwähnungen in den Archiven, nur hin und wieder einen Nebensatz, eine knappe Bemerkung. An einer Stelle liest man in dürren Worten, worum es an diesem Abend im Kanzleramt ging: Merkel bat die Journalisten, zurückhaltend über die Krise zu berichten und keine Panik zu schüren.” (Berliner Journalisten berichtete am 2.2.09 über dieses Geheimtreffen.)
“Sie haben sich daran gehalten, die Chefredakteure. Noch im Februar 2009, vier Monate später,
wunderte sich die taz über die Medien: “Sie halten die Bürger bei Laune, auf dass diese stillhalten.
Wie viel Geld bereits in die Banken gepumpt wurde, wie viele Milliarden Bürgschaftszusagen vergeben wurden (und wie viele Hartz-IV-Monats”löhne” das sind), das steht auch nicht in der Zeitung.”
Jacob Augstein: “Wenn Journalisten ihre Unabhängigkeit verlieren, werden sie zu Dienern. Zu Staatsdienern. Solche Journalisten braucht kein Mensch.”
“Die Presse und die Regierungschefin: Warum Angela Merkel Journalisten als Handlanger betrachtet und was daran gefährlich ist.”(SZ)
Ebenfalls sehr erhellend ein Beitrag von Zapp: “Die Massenmedien belügen euch!”
"...those frustrated Northern Europeans..."
Northern Europeans are not frustrated, they just dont want to pour their money into bottomless pit, as Greece is, any more.
"...those fucking German bankers...."
All right, once again, here we go:
http://www.zerohedge.com/article/france-shaking-its-culottes-demands-imm...
"...corrupt Greek politicians..."
So, Leo. Who do you want to fight the corruption in Greece? Germans?, or french, or americans? You keep talking about how Germany want to take over Greece, but it seems that greeks themselves dont care about Greece too much.
No tax money is involved.
When it sends is a prospect that one day, tax money will be used to cover for these loans.
Good enough.
+100
The majority of poor people are not poor by an accident. These people are poor because they are lazy and stupid.
Greek policeman set on fire in may day riots.http://atlasshrugs2000.typepad.com/atlas_shrugs/2010/05/greece-police-se...
Somewhat OT,
Is pepper spray good on a gyro?
ROTFLMAO!
" solidify your ties with China to work on alternative energy and developing your ports as a hub for Chinese goods into Europe. With Russia, Greece can explore developing the oil reserves in the Aegean. "
Chinese still uncharted land and ruskies noone can trust . Last time after signed with ruskies on pipeline fm blacksea to Greek port alexandroupolis and also on some weapons buying, w/in month they were in tandem with turkey on armynavy exercises in aegean sea. forget them. (weapons cancelled)
mtime seems things going out of hand and people are getting very upset with politicians - ex parliament president owise quite respectable guy, today was trapped in a cafe loo for abt 2 hrs with people outside shouting. police force saved him.
As the politicians has no other explanation to their position than the Police, one can expect the Police to be given more leeway.
“I don’t want a stage of siege or to be a pawn of the International Monetary Fund,” the woman screamed amidst the noise and fires as police riding raging horses bore down with clubs and whips on the protesting Argentineans...
Take note… from these videos… of the ravages and impoverishment of debt:
The Cynical Eco... on Sun, 04/18/2010 -#307255 wrote” You think societal meltdown cannot happen in America? Think again...
“Those who cannot remember the past are condemned to repeat it.”
http://www.youtube.com/watch?v=rH6_i8zuffs
My emotions were totally exhausted from what I saw and heard here; I’ve not seen anything as poignant as this to express the world’s problem. It is a terrifying reality of where the world is headed if the growing pile of manufactured debt and usury by the international bankers is not contained. As davidwcooney commented regarding the video:
Argentina HAD a vibrant economy where the people were well off. ? Monopolistic international corporations used their economic influence to bribe and otherwise manipulate government officials to pillage the county's wealth and send the people into dire poverty.
The American people need to connect this debt to their loss of economic stability. It will not be believed by Americans unless seen. Here are random snatches of commentary from the video already becoming all too familiar in the United States and the world:
What happened in Argentina? How was it possible that in so rich a country so many people were hungry… the counntry has been ransacked by a new form of aggression… a daily and silent violence… the never-ending debt…of impoverishment and corruption and the biggest scandal… to enrich Argentinean financiers… to control finance and empty the county of its wealth.
Foreign debt…the policy of indebtedness favored banks and international corporations…19th century lobbyists…administrators of debts…fraudulent origins… depleted the public heritage…crisis and rising oil prices…birth of third-world debt…interest rates reach 16%…. bankruptcy of indebted countries…an alliance of foreign banks and mulitnationals comes to power in Argentina…bled dry…of which half is a private debt…23 billion is owed by multinationals operating in the country, like Citibank, First Boston, Chase Manhattan, Bank of America, Banco de Italila…. and by multinational corporations…the unending growth of debt… worst pillage ever suffered by the people…Thieves. Bankers. Government. …the police protecting the thieves…with government complicity…
And words from elderly protestors in facing loss of all their savings:
“A dollar at a time. I saved during the 25 years I worked so I could live decently when I retired, not on a State pension. Why don’t’ the banks treat us like their foreign customers? That’s why I’m banging on my pan… Bombs are not my style…
“I’m the oldest newsvendor in Avellaneda. For 65 years I’ve sold newspaper. All of my saving are in Citibank. The manager of the agency says they’ll return them to me. It’s a lie! Everything I’ve saved by making sacrifices is in their hands…”
and from an official voicing the straits of the people:
…in fact the foreign banks owe money to the Argentineans. In a way it’s a reverse debt. The parent companies must be responsible for the deposits…for the debts of their subsidiaries… it’s a swindle to make the governemnt responsible for the debts of the banks…
and the dying children…
Think it can’t happen here? Think again; it’s already happening… Argentina's implosion has the IMF's fingerprints all over it
Leo, You make some good points but it's like blaming the credit card issuers for people going out and spending money they didn't have and couldn't repay. Let's face it: there was a reason the Greeks truly wanted to hide the level of their debt vs. GDP from the rest of the world and especially their cousins in the euro.
The Greek governments understood quite well the arbitrage game they were playing with their implicitly subsidized euro-based interest rates. The people who are rioting in the street are the same guys who voted the debt hiders (crooks) into office. When I saw "The Producers" even a crook like Max Bialystock understood that if he got caught he would go to jail.
If the Greeks really wanted to take a position of bravery and leadership, they should just default and live with the consequences. If Germany really wanted to take a position of leadershi and bravery, they would be the ones to leave the euro and then they could sit back and see who comes crying to them first.
I hope that all pro-bailout politicians get kicked out of office in the provincial election on May 9.
edit:
To see the mood of the informed part of the population look at the pictures here:
Warning: Might be considered explicit or offensive, ignore the German text and scroll down. Most are showing various German politicians in power or opposition.
http://213.145.232.18/html2010/infos-DE_2010-03.htm
Greeks never had credit cards 20 years ago, and now everyone has six or eight of them, all maxed out. Easy credit was facilitated by banks, legislated by politicians, to make sure people are on the hook paying interest forever. Germans are borrowing next to nothing and lending it to Greece at usurious interest. Germans love it, as the euro tanks, their exports surge, and their bankers lend out more money at sky high interest rates. It will, however, come back to bite them in the ass. They are sewing the seeds of Eurozone's destruction.
Your post seems to suggest that any banker who makes a loan to you should be prosecuted. You are not capable of resisting asking for a loan so the next recourse is to prosecute anyone who would lend to you. That is a novel approach to eliminating the problem of irresponsible or wasteful borrowers. If, when asking for the loan, you had represented yourself as responsible and honorable, should you be prosecuted for fraud? Eliminating fraud and enforcing contracts seems to be a better route to me.
How about we eliminate dishonorable bankers who bribe politicians to make sure the perpetual credit machine goes on with terms that favor them? Contracts based on bribes and massaged by Goldman Sachs should not be honored.
LEO has arhidia balls.
And velobabe has nice tits.
Digressing, what about the Athens salesgirl making 700E a month who amassed 50 000E in credit card debt? Should she pay it all back? [She can't, of course, but take it as a matter of principle: should she?] What about the banks who handed her, one after the other, ten credit cards with a 5000 limit each? She proceeded to max them all out -- but shouldn't the banks have exercised some due diligence? Or maybe they had already factored in the risk?
From the deontic to the feasible: isn't the only realistic option for her a form of bankruptcy, paying back monthly a fraction of her debt for a couple of years and letting the rest go? I know people in Los Angeles doing just that (and of late doing much better than that--but that's another matter)... why shouldn't she be entitled to something similar? What do you suggest, indentured servitude for the rest of her life? [I do not know whether the status of her tits gives her other options]
It is a real, existing person, btw, but clearly I'm putting forth her predicament as emblematic of the entire country's. Yes, there is corruption in Greece, a bloated public sector, and so on and so forth. That is one thing, though, and the relative bargaining positions of Greece and its lenders quite another. I say, under threat of across-the-board default and resulting mayhem-in-the-banks make the lenders accept a voluntary haircut and time extension -- instead of handing over to the IMF the jail cell's keys! Both sides take up some of the pain.
Mixed solution. Like flesh and silicone in velo's tits.
the only thing i know for sure is, no silicone in these tits†
i don't do silicone, plastic, not.
You are, of course correct. But at what point in time does personal (and national) responsibility kick in and at what point in time are people (and governments) just dupes of manipulative lenders? The whole thing may well come back and bite the lenders in the ass (I would love to hear your thoughts on how it will come back to bite that Mother of All Lenders, China), but it will be for all of the wrong reasons.
Comments so far circle around the bigger issue. The global debt crisis wasn't started by Greek workers or other workers, but they will pay the price for the banksters' mistakes. The greatest wealth transfer in the history of mankind goes on unabated and people here are blaming the workers? Give me a break!
Go over to Michael Hudson's website and see what he has to say about the IMF.
"Their assumption is that all the debts have to be paid. And they have to be paid by essentially labor and industry through the financial class that will use these payments to lend out even more credit to labor and to industry to make them even more indebted, causing yet further collapse, requiring larger bailouts, requiring yet further taxes. So the basic modus operandi is self-destructive and will shrink economies until they get tinier and tinier. You’re seeing this happening in Latvia and Iceland. In Iceland mothers are telling their kids, “you better emigrate because there aren’t going to be any jobs here for the next generation.” And in Latvia, labor has been leaving for the last five years."
http://michael-hudson.com/2010/04/trouble-in-europe-eric-janszen-interview/
The counter- cyclical or 'lift by the bootstraps' concept is a farce on its face. Neither the Greeks nor the Latvians are able to add value to the inputs they are expected to exchange that value for. The same is true for almost all of the industrialized world which represents a foundational failure. The inputs bought and paid for by sweat and credit are simply the final step prior to waste - toxic gases in the atmosphere and landfill stuffing. The operating system is broken: the idea that this one- way process from irreplaceable resource to garbage is economic when it is not. The vested interests represented by the IMF - the bond holders and other lenders - are the gatekeepers of waste.
Wasting stuff is fun until it isn't ... when the cheap 'inexhaustible' inputs start rising in price. The high costs of inputs started stranding business in fuel guzzling USA starting at the turn of the new century. Now, rising input costs are stranding entire industries (airlines, shipping companies, refineries), states (California, Illinois), and countries.
The waste- based European economy is being stranded. Commerce is vanishing. All that is left is buying and selling money - therefore the IMF. Like the rest of finance, it is a looting operation: identical to Bernanke's Money Laundry on Wall Street. The professionals know the game is over and they are stealing whatever isn't nailed down and fencing it. The fact of the looting is evidence for the fact of the endgame ... even as the establishment denies it.
I suspect the Greek government is calculating the residual level of economic activity that would exist without external credit the same way the Iceland or Irish governments might also are (should be) calculating. The next step is outright repudiation.
Leo,
the bigger issue is IMHO that the current system is kept alive.
Imagine a Greek default, a big haircut to bondholders and then a big recovery.
That would be a huge incentive to other debtors too and very fast threaten the
way the current international finance system works.
I see your point that the little guy in Greece is not responsible for the current crisis,
but why should the little guy in Germany (or the US) pay for the big guy in Greece?
TPTB would say to keep the current system going.
The question is whether it is possible to keep the system up;
imagine savers realize that everybody will get a bailout with the printing press.
At least in Germany are still fears of the Weimar inflation happening
again and the few informed people run to buy gold and silver bullion.
Leo,
I have heard rumors that the Russians and Chinese have offered assistance. Any truth to that rumor? If the Greek government wants better terms, why not use this offer from Russia and the Chinese as a bargaining chip. Play one side off the other?
If Greek politicians had any "ARHIDIA" ("BALLS"), they would tell the IMF and Germany to go shove it, default on their debt, and sign a deal with China and Russia. China is the future, Germany and the IMF are the past.
So, you believe that they should screw their neighbors who have loaned them money. Then keep on doing what they have been - spend like a wino. And expect that the Chinese will lend them money without expecting repayment?
That is some very high proof drink you're taking.
There is no difference betweeen the population getting screwed with a currency devaluation (your choice) or by wage decreases. The workers gladly allowed their government to make promises of what would be done with their incomes. They should simply smile and remember how much they enjoyed the good old days.
I wish I owed you money. You would certainly just decide to let me pay you back with half dollars, I can see it now.
Maybe you'll just let me borrow your credit card for a while. I'll buy you an ice cream cone with it, I promise.
Let's get one thing straight: Germany only lends money to their neighbors when they get something in return - control of their economies. Germany has been snapping up Greek assets on the cheap, and now they're going for the whole enchilada. Germans aren't stupid, they knew long ago about Greece's fiscal woes, but they also knew they can muscle them into economic slavery once Greece hit the brick wall. Don't get me wrong, they were aided in all this by corrupt Greek politicians, but this was all in the works years ago. Only a fool would think otherwise.
I am disgusted with Kolivakis BS. All his arguments are nothing more than demagoguery and lies.
Nobody, nobody forced Greeks to live well above their means using somebody else money. Greeks became lazy parasites. It is that simple. If Greek people were not such POS, they would overthrow their corrupt politicians and restore hard work and integrity. So far, Greeks were looking for suckers to support their parasitic way of life. Greek people must look in a mirror to see their worst enemies.
For too long Greek people lived like pigs and, now, it is a slaughter time. Sorry, this is life!
What would be foolish would be for ANY borrower to assume that the lender will not ask for repayment. Do not take the money if you do not expect to repay.
I would guess that Greek assets sell for about what they are worth, based upon the earning power of the asset. And after a government default and economic collapse, that earning power will be even less. Germans are not any better or worse as buyers or sellers. If they were so damned smart they would not be holding any of the Greek debt. The Germans reportedly only own about 25% so there were quite a few other buyers for the Greeks to screw.
If you won't let me have your credit card, can I use your bar tab? I'll use it to buy you one, too. Why should I ever worry about repayment. As you suggest, you can just default after I run up your bill to the max.
Germany holds 43bln of 300bln Greek debt. Now, tell us something also about those greedy French, Swiss, Americans, Britons, Dutch ... who want to put their dirty hands on the greek high-tech economy.
http://www.zerohedge.com/article/france-shaking-its-culottes-demands-imm...
France, Germany and other nations own Greek debt, but the largest single foreign investor by far is Germany. They own Greece and major infrastructure in Greece. The plan is to own as much of Southern Europe as possible. Germans are snapping up Greek and Spanish real estate in order to promote their travel busines and control Greece's tourism industry. Now they are moving aggressively into Turkey, the next big project. Watch, by the end of the decade, Germany will own most of Southern Europe and Turkey.
I´m so tired of all these silly greek excuses. Sure, Germans want to take over Southern Europe and so the BUY up everything. Now, let me think it over. Oh, I know already, I´ve got a solution. Well, just dont sell them your infrastructure, if you dont like them. There are always dozens of investors. French, british, american, chinese, russian ...
I mean, this is just an another boring chapter in this greek endless blame-game. I´m sure the rampant corruption, bureaucracy, inefficiency in Greece is also a German failure. Yes, and they also prevent Greek companies to actually produce or invent something competitive. I wonder why they let the Finns to found Nokia. Mhmmmm ....
I will be the first to admit that there is rampant corruption in Greece and that bureaucracy is killing any private initiative there. But I simply won't give the Germans a clean pass here. They aren't dumb. They want to control Europe and they've been busy bribing corrupt Greek politicians to get their sweet infrastructure deals. The Siemens case was a fucking scandal in Greece.
So you say that by the bailout the Germans want to take over the greek economy. But something just doesnt fit in this logic. Why did they wait so long then(with the bailout)? French and Italian governments had to plead(if not beg) Merkel to agree. And even now, the bailout is not sure. Even now it´s not clear the Bundestag will approve it. And we´re talking about bailout of Greece since January. So what do they wait for? (if it was their plan from the beggining, as you seem to believe?) Sorry, it just doesnt add up, what you say.
Might depend on how you add up.
Regardless of the specific situation and then of Germany, a guy looking for a certain outcome and even pushing for it in the limits of his power, might not rush when the opportunity to hit on the outcome arises. Time is not a factor.
Especially when the guy does not have to be concerned about whom will reap the benefits of the outcome.
If a heir to a throne has the present king killed in times of chaos, he might be willing to enjoy being called as the ultimate saviour of the kingdom. He does not need to rush as he is only claimant to the throne. Being desired might be nice.
Pushing for a situation for which one is the only solution has a specific taste for power loving people. You put people in a situation they cant solve by themselves (first concrete exhibition of your power) second, you see them flocking to ask for help (second concrete exhibition of your power)
I read similar scrap about the war against Iraq, oil as a US objective. People claiming that the very fact the US did not push Iraq immediately into oil full extraction capabilities was an evidence oil was not an objective.
Time is irrelevant as well. A pirate hiding his take and not spending it immediately could also invoke time as an evidence he was not interested in the take.
Unless you provide evidences that Germany could not afford waiting or worse, did not have something to gain by waiting, time is irrelevant.
Whatsoever, this kind of reaction shows imo how much greed has grown to prevail over any thing else: if a guy waits a little bit, he is disconnected from his action as greed commands to reap the benefits of your actions immediately.
Only an idiot believes the US went into Iraq for the oil. That is like spending $10 million to stage an elaborate robbery producing a mere $1 million of goods obtained. Even if everything had gone perfectly in 2003 and onward, it would have been the most expensive oil of all time. You can synthesize it for less expense. (The Germans did this in WWII for lack of other choices, not because it was cost effective.)
If we'd just wanted the oil, we would have bought it. Simple as that. The offer had been made by Iraq repeatedly.
The reason we went in there was a fantasy about reshaping the Islamic world with a minimum of death and destruction, and defusing that bomb. Mistakes were made but even if everything went perfectly it just wasn't going to work. But there was the demand thatsomething be done and nobody came up with anything better that would be accepted by a large portion of the public.
So when you posit German conspiracies to take over big chunks of Europe by financial trickery, look at their cost for doing this vs. just being there to pick up the pieces when others do what they were going to do anyway.
One of the great difficulties these days is distinguishing stupidity from malice, and know which is driving which players. Add to the mix the True Believers who somehow thought this was a viable system that would by some miracle be solvent.
First you need to provide evidence why would Germany want to take over Greece, because this whole idea is just laughable. Why would they want to take over an unproductive, uncompetitive, corrupt country? They inherited one after the fall of Berlin Wall. And they had to invest more than 1 trillion EURs in eastern Germany and it´s stil uncompetitive. Last year german export to Greece was 6,6 bn EURs. They exported more to Romania or Slovakia. Export to Poland, for example, was 31 bln EUR.
http://www.destatis.de/jetspeed/portal/cms/Sites/destatis/Internet/EN/Na...
click on: Order of rank of Germany's trading partners
They jawboned this to death to bring down the euro, benefiting who? Who else..GERMANY! The Germans aren't saving Greece, they're protecting their own asses.
Oh, sure. I wonder why didnt they try this trick in 2008 when euro stood at 1.6 $? And we all know that it´s mailny the french who keep moaning about strong euro, not germans.
Also, not only Germany benefit from weak euro. All eurozone countries that actually produce something competitive benefit. But that´s not Greece, of course.
Last year(2009) export of two troubled countries:
Ireland - 82,1 bn EUR
Greece - 14,4 bn EUR
Ireland has a population of 4,5 mln, Greece 11 mln. And that´s the whole greek problem in short.
Eurostat, trade 2009:
http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/6-18032010-AP/EN/6-180...
Leo, who asked for the infrastructure?
What do you mean by infrastructure?
Too limited.
It seems that Greece is an access to the Mediterranean Sea.
Demand for a certain type of infrastructure built in Greece might come from people who want to transport goods through Greece, not forcefully from Greeks themselves.
Transportation infrastructures (not the only ones) usually deliver better profits when users/demanders get someone's else to burden the cost of their buildings.
W. Civ. goes from E. Med, to Europe, to N. America and now to Asia, and back to Greece to rescue itself. Wild 2500 year ride.
So true. the people are the victims, and it sounds to me everybody thinks they should just beat them down with a stick to shut them up.
This is destroying the Greek western democratic world and nobody cares. This is actually happening all over our society, and nobody cares. Meanwhile, in Azia, they are growing like crazy. We are losing this fight as is our way of live, and nobody cares.