Is Greece Really On The Verge Of Another Financial Crisis?

Tyler Durden's picture

Submitted by Milton Ezrati via The Strategic Culture Foundation,

Just about every adult on earth has seen this show before. Greece faces a debt repayment that it cannot meet: for this performance, €86 billion due in July. It needs fresh bailout funds from the European Union and/or the International Monetary Fund because borrowing directly on global capital markets comes at too high a cost—10 percent to replace the maturing bonds. Germany, leading the EU, states that before Greece receives a single euro it must first commit to more severe budget policies. The IMF points out that Greece cannot possibly live up to Germany’s demands, and even if it did, the country would not be able to repay its outstanding debt burden, which at last count stood at 181 percent of Greece’s gross domestic product. The IMF goes on to hint that Greece may have to leave the eurozone. Throughout this familiar point and counterpoint, few focus on Greece’s need for the fundamental economic reforms that offer the country its only hope of using its own resources to meet its obligations.

Pretty much the same actors are playing the same roles as a couple of years ago, when Europe last staged this farce. Greek prime minister Alexis Tsipras has assumed his same initial tough stance toward Greece’s creditors, just as he did last time, before he caved into EU demands. German finance minister Wolfgang Schäuble insists that the EU will give no help until Greece broadens its income tax and cuts public pensions enough to create a budget surplus excluding debt service costs—known as a primary surplus—that is equal to 3.5 percent of GDP and maintain that surplus for ten years. Greece has countered by saying that it might commit to three years. The head of the IMF’s Europe department, Poul Thomsen, has argued that such goals are impossible. He has pointed out that next year Greece expects a primary budget surplus of only 1.5 percent—even after two years of severe budget constraints. He has also gone on to stress that such fiscal severity is counterproductive given Greece’s depressed economy and fragile politics.

The IMF has a point. Past budget stringency has failed to relieve Greece’s predicament. To be sure, Greece has never really lived up to its commitments in this regard, but even previous watered-down tax hikes and spending cuts have so depressed growth that progress on public finances has remained problematic. Since this crisis first emerged in 2010 and Greece first began to comply with EU budget demands, the real economy has shrunk 4.2 percent a year through 2015 (the last full year for which data is available). Unemployment has climbed to 26.2 percent of the workforce, and youth unemployment stands at 49.8 percent. Such economic reverses have increased needs for government relief, even as they have reduced government revenue flows from income and value-added taxes. As a result, public finances have suffered. German demands for more severe action along these lines seem unlikely to have a different, more favorable effect going forward.

Meanwhile, everyone seems to ignore the fundamental economic reforms that might get Greece out of its untenable situation. If Greece were to liberalize its constraining labor and product laws and ease restrictions on new business formation, then its economy could grow—even in the face of stringent budget regimes. Unfortunately, since the 2010 opening night of this farce, Greek governments left and right have resisted such steps. Instead, Greece’s established business interests have managed to keep down competition with a regime of government red tape, which is extreme even by European standards. Instead, Greece maintains a set of product regulations that stymies the free flow of goods in favor of existing buyers and suppliers. Instead, unions and others in established positions have secured themselves behind labor laws that constrain the ability of businesses to either hire or fire—at the expense of job seekers.

If Athens were to unwind this crony-capitalist regulatory regime, it would generate an economic dynamism that Greece desperately needs. Organic economic momentum would overcome the constraining effects of German budget demands. The country could break the vicious cycle it is in, where budget stringency fails to improve public finances because it also impedes growth and leads to more calls for greater restraint. That cycle only redoubles the weight on the country’s economy and future budgets. By promising organic growth, fundamental reforms might even give private investors enough confidence to lend Athens money at supportable rates and obviate its need to go to Europe, hat in hand.    

But such reform is unlikely to take place any time soon. Since Athens has overseen an economic disaster without tackling the entrenched interests that benefit from the status quo, then it is a good bet that the current regulatory mess will prevail. That leaves only two potential paths for Greece and Europe. In one, Greece fails, stiffs its creditors and leaves the eurozone to return to a depreciated drachma. Greece would have trouble borrowing at supportable rates for years following such an event, and though a depreciated drachma might help Greek exports and tourism, it would further impoverish an already suffering population by reducing the global buying power of its income. Such an event would also raise additional doubts about the European experiment as it is currently structured. But what is more likely is that Greece will pretend to comply with the EU’s demands, secure funding and avert a crisis until it becomes apparent that Athens cannot make the next big payment. At that time, the same players—or their understudies—will take the stage for the next remake of this show.

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Arrest Hillary's picture

If Greece only had 5% of Italy's gold hoard ?

sinbad2's picture

Half of Italy's gold is in the fed, it's gone forever, so they have about 1200 tons, still good, but not fabulous.

Haus-Targaryen's picture

Where did all the comments go? 

MS7's picture

Greece will be the last country to voluntarily exit the eurozone. They're brainwashed by MSM: Leaving the euro= becoming a deplorable. They can't embrace being despised by MSM like Americans did.

firefightergr's picture

Greek people voted "NO" in th e referendum,the governement is not acting legal and not on behalf of the Greek people. 

Sudden Debt's picture

Well we knew they could buy time by selling their soul but in the end, the greed of the technocrats will destroy them.

Greece needs the drachme and needs to devalue.

If others call it a currency war or whatever, for Greece it's survival.

And when they do, I might take a trip over there and buy me a nice place close to the sea for peanuts :)

BorisTheBlade's picture

Yes, 3Ds for Greece: Default, Drachma, Devaluation. They will disqualify themselves from the debt markets for at least a decade, but will get plenty of tourism and foreign currency inflows that come with it (upd: that if they can avoid civil unrest).

Ghordius's picture

why all three "medical remedies"? a devaluation is often done so that a default is not necessary. a default could mean that a Drachma does not get necessary

so why are you proscribing all remedies? just curious, and even more curious how you would sell your package to the common man on the Greek streets

BorisTheBlade's picture

It's great that you appeal to common man on Greek streets, because there's no possible way that common man can repay all that debt accumulated over the years. That man was called lazy, cheating etcetera while in all honesty he had little if any influence over how the debt was accumulated. How would I sell it? Not that I am interested in selling anything to Greeks, but if I were to, I would put it in the most plain terms possible, no sugar coating: Fuck the EU, fuck Euro, go back to Drachma - it will be a mess, but it will be your beloved mess, be lazy, be relaxed, you aren't Germans, no reason even trying to be.

Ghordius's picture

I am not appealing to him, just questioning if your appeal would be heard

as a reminder, the one thing that is never discussed here, or explained, is why 65% of Greeks are holding tight to the EUR

tell me one thing: is the Greek debt being forgiven, in tranches, or not? I look at the number and say it is... albeit very slowly, and with the request on the Greek state to do a part, too

forgiveness = not impossible to repay = the way the common man on the Greek street sees it ought to be

whereas the fight between the IMF and the rest is only about how much the Greek state is supposed to contribute

it's about the state, Boris. and no, it's not my state, it's that of the Greek Nation, i.e. the Greek People in Greece. I just try to understand that common man in Greece. do you, too? then explain why he is supporting the EUR instead of the Drachma. I have an explanation. do you have one?

piratepiet2's picture

it seems that if you want to keep Greece in the euro, you are only fighting half the battle.  You only seem to argue why all of this is an acceptable deal for the Greek citizens, and that they themselves still prefer the euro over the alternative.  Now convince the citizens of other eurozone countries why it is in their interest to have Greece in the eurozone.  

Ghordius's picture

the premise is wrong: the monetary club has a purpose, but the exit doors are a key feature, as in the case of the EU

from the perspective of a pure pro-EUR side, the "best" thing to happen would be Greece going over to the Drachma, or France going over to the French Franc

but that's not what those clubs are for

the scope of those clubs is to help the involved Nation States by pooling resources: cooperation

in the old adage "don't throw the baby with the dirty bathwater", both EU, EUR and even NATO are the dirty bathwater, and the Nation States are the babies

as a reminder, I do have an explanation why the common man on the Greek street is a "partisan" of the EUR: he wants to get on, live his life, have a stable currency (as much as possible) in his pockets and go on about his business despite whatever the Greek gov does with the Greek state

because when it comes to People, it's the Nation States that are the dirty bathwater, and the Peoples those that have to be saved as babies

I do not have to argue what is an acceptable deal or not. I just have to point out that every attempt by the Greek gov to get rid of the EUR for some hypothetical "betterment" of the situation has been met with a clear "Oxi", i.e. "NO"

and no, the citizens of the other eurozone countries have, imho, a better understanding of the situation of the Greeks then many here on ZH. we'll see if I am right or not in the upcoming elections

piratepiet2's picture

Thank you for your answer.  

-"the premise is wrong: the monetary club has a purpose, but the exit doors are a key feature, as in the case of the EU"

now you, Mr Euro, are yourself (deliberately) mixing up the eurozone and the EU?  yes, a procedure to exit the EU is in place, but I heard the treaties are silent on exiting the euro.  not so?   


-By your double layered baby/bathwater analogy , I sense some critisism of my audacity of bypassing the level of the nation state.  Not a very European attitude.  One of the attractions of the EU for me (I am Flemish) is that I am culturally and linguistically closer to the Duth, the Germans and even the British, than to the francophones (whom I respect a lot nevertheless)  (In a similar vein, why o why do you think voting is compulsory in Belgium?  Well actually voting isn't, you only have the obligation to present yourself at the polling station, but almost nobody knows that)


-"the scope of those clubs is to help the involved Nation States by pooling resources: cooperation"

Sure, but the question remains, how are the other "states" (and their citizens for that matter, imagine that) helped by the membership of Greece.  Now I understand the importance of Greece from a geostrategic perspective and I understand that has a price, but what do the cititzens of other eurozone countries get even from that perspective?  Do we have a secure outer border provided by Greece?  

Ghordius's picture


yes, I brought all the clubs in. but just to show a hierarchy of... sovereignty. first comes the People, then the Nation State, then Alliances. my point of view

when are you guys exiting Belgium, btw?

how do you want to have a secure border from Greece? it's an utterly "undefensible" border, as long as you don't want to shoot at boats. you can defend that border militarily, but not humanely

sorry, this will grate to many, here, but the best functioning borders are always a cooperation between two countries, and the worst... well, we have seen that

so yes, we might go on with those bribes to the Great Turk

I care for People, not necessarily the institutions. my defense of existing institutions is only based on if the scrapping of an institution will improve things for the People... or, as often, the complete opposite

+1 for this splendid example: "In this vein, why o why do you think voting is compulsory in Belgium?  Well actually voting isn't, you only have the obligation to present yourself at the polling station, but almost nobody knows that"

it reminds me when Belgian law forbade comic cartoons like TinTin to show "unmanly behaviour". who's fault is it that nearly nobody knows the exact obligation of that Belgian law? how many people care for the difference, or the law itself?

my perspective... is that we Aristocrats had systems. and that the Citizen's Revolutions took those systems for everybody. and that is good, in my book, and that is not the first time that this happens, and if it breaks down, it will come back again

the smallest problem out of that is that the Citizen is now the new Aristocrat. the opposite of that is if he becomes the Serf of the new Oligarchs

ignorance of the systems leads to the second case, knowledge of the systems in the first case

"There is only one good, on this world: Knowledge. And there is only one evil, on this world: Ignorance". (from memory) Socrates

jus_lite_reading's picture

The cost to maintain the EURO currency and EU bloc is too high. Only the globalists benefit from the EURO and the EU - the citizens suffer as indentured servants. That's the short of the story. Cheap money is cheap for a reason and vice versa. Greece never was ready for 1% bonds. They borrowed, lived high on the hog until they had to pay up. Who loses? The everyday citizens of Greece. The fat politicians sit comfy in their luxury villas.

edotabin's picture

They hang on to the EUR because they don't trust themselves. The Greek people are stuck in a weird intermediary stage: Wishing for self rule but knowing they can't pull it off. If they try and fail, it will be a blow from which they will not be able to recover financially or psychologically. They will be decimated in every way.

Meanwhile, under the present scheme, they can curse at Germany. This way they absolve themselves of any wrongdoing (in their minds) and they get to let off some steam.

We've been through this stuff countless times during the first crisis. I hope everyone tasked with "solving" this crisis understands the above thoroughly. I also hope the Greeks find the courage to openly admit it.

Killdo's picture

meanwhile Greek children are forced to pray before being allowed to enter PUBLIC shchools every morning - reinforcing the message: god is everything - You are nothing. 

if they refuse to pray they are punished (my Greek friends' little daughter told me - and it's the gym teacher who is in charge of enforcing prayers - regardless whether your parents are religious or not)

No wonder they have no confidence and are always waiting for invisible freinds to solve their problems

BorisTheBlade's picture

You seem to think that debt forgiven in small increments is a wonderful thing, you may also prefer cutting dog's tail by little pieces. I may or may not understand Greeks, but who I really seem to fail to understand are the Germans.

Ghordius's picture

perhaps because you look at Germany, imho a wrong way to look at things, instead of looking at the factions across the EU countries?

two main factions: the "spend more and everything will be better" and the "balance the budget, and time will heal"

try to have an Austrian School view on that, then try to look at things like Dr. Krugman, and note the differences

this instead of thinking that there is a super-fast "solve all issues" radical solution of cutting off the dog's head without any consequences

BorisTheBlade's picture

So, there's a golden mean is what you're saying? And it supposedly lies between Austrian and Krugman or where is it?

And no, there will be pain, extreme one. Importantly: once, then the dog learns to live without a tail. Importantly: it won't have it either way.

Ghordius's picture

Boris, imo there is always a Golden Mean. even in radical solutions. I prefer to err on the Austrian side, yes. I ask for balanced budgets, period

ergo balance a budget and you put me in the obligation of helping, if possible. if not, no help is warranted

as you noted, the collateral of sovereign debt... actually it's People. and the state taxing them, aka "Tax Base"

and no, telling other people to get rid of their state or what to do with it... is kind of "globalist" even while it's anarchic

yes. There Is Always A Golden Mean. what is lacking, at times, is the will to look out for one

BorisTheBlade's picture

Roger, that I can understand. Thank you.

Ghordius's picture

"If others call it a currency war or whatever..."

a total misunderstanding about the real and existing Currency War

first, the current Currency War is not about the "small fry" like Greece. it's about the Dollar as Reserve Currency, and the Global one to boot

it involves the war on cash, but also the repression of gold as monetary metal. it is, at the end, mainly a thing between the US and China, primarily. the rest of the world is just a bystander being washed by the waves that those two giants cause in their struggle

second... would you buy Greek debt denominated in Drachmae?   <------ 

Macavity's picture

Agree.  I reckon the war on cash is either a US/Fed move to control the flood return of USD from abroad or a move towards smaller currency dominoes and a new, official global currency.

Seb's picture

Just look how great the Bolivar worked for Venezuela. It is devalued to almost nothing. Greece should really follow their example, right?

sinbad2's picture

Works for China and Russia.

The drop in the Rouble has stimulated the Russian economy, after the initial shock.

Venezuela is different, it's a US destabilization campaign.

Seb's picture

Works? Not for the people.

RockySpears's picture


 Right up close to all the North Africans, good luck with that,



Ghordius's picture

the key sentence here is this one: "To be sure, Greece has never really lived up to its commitments in this regard"

the easiest, simplest way to explain the Greek-to-rest-of-EU situation is this: they all know that time is the healer

yes, the Greek debt accumulated thanks to corrupt Greek politicians and a whole mess of other corruption, arms dealing and catastrophic decisions by other countries, all aided by the criminal acts of the Vampire Squid

nothing new, really, including the involvement of French and German banks

but the facts would be there, if someone would care to really look at them: the Greek debt is being forgiven... at glacial speed

meanwhile, the "forgivers" have an agenda: balanced budgets going forward

and the Dr. Krugman faction has a different agenda: budget deficits forever

I prefer the balanced budget agenda even when at loggerheads on how to reach them in the case of Greece

all in all, the real dispute now between the IMF and the rest is only about how much to ask... and how much the Greek state will do

the underlying dispute is much more important, globally: is Dr. Krugman right? is neo-Keynesianism right?

I don't think so, particularly using an Austrian School perspective

(and again, see my finger pointed to the fresh usd-denominated debt that the Greek state "magically" accumulated in recent times)

CatsPaw's picture

A country, in the european union, has a debt it cannot pay for 181 billion Euros.

I guess the bigger issue is, who will not receive their money once Grece defaults. Then they have a problem.

But dont worry, everything is fine.

taggaroonie's picture

Did this guy really write "going forward"?

What is this? 2013?

Ghost who Walks's picture

Doing the same thing repeatedly and expecting a different outcome?

BobEore's picture

Whatever the theoretical impact of this author's chosen panacea, from ground level perspective, it simply does not have any traction.

Greece has been inside the European system for far too long now to be successful in finding something called "organic growth" to do the heavy lifting of removing the structural impediments which came with membership in that Club Decadence.

Not just addicted to the sugary diet of subsidies and special "infrastructure improvement" projects which have rained down for decades now, the country also suffers a fatal economic palsy as a result of the special market distortion formulas of Brussels - which cut off member countries from using the resources which work best for their geographical situation, and impose artificial quotas, production embargoes, and statist supply-demand control formulas which have ruined the agricultural sphere and spoiled the entire work ethic of several generations now.

All those wonderful paved roads which take the tourists up into the otherwise inaccessible hills - in search of pockets of "authentic Greek culture" which no longer actually exists - are "gifted" by the northern neighbors and will start to completely fall apart the first season such largesse is made to stop.

The double irony is those of them - like the road which leads from the northern coast of Crete to the Lassi Plateau - for millennia a veritable treasure house of verdant production of foodstuffs which kept the whole island fed and independent for centuries - which lead into the highest parts of that once magical island provide a tragic trip past barren fields which haven't produced a vegetable, tree crop or grain harvest in years. The ancient water wheels still brood over the scene in silent reproach at the waste and foolishness of it all. All the fresh produce, the meat and grain for breadstuff is brought in by costly ferry-borne trailers from points north now - imports a country with an economic crisis in it's midst cannot actually afford.

Most of the islands will be in a state of crisis if the water deficit situation continues any longer. And who would bail out that additional impediment to "organic growth" and "fundamental reform?" Certainly not Athens.

Keep the pipe-dream visions for the neighbor across the Aegean way - whose imploding economy will soon enough model what happens when statist economic visions are allowed to interfere with the imperatives of economic rationality and agricultural self-sufficiency.  For Greece, there are no more "fixes," - the time of living high on the hog has simply run out for a country which was sold a vision of modern lifestyles it never had the wherewithal to afford.

Ghordius's picture

excellent comment, but...

... do you remember Greece, or any other now-EU country before the EU? I do

look, BobEore, that "statist" thing... applied in the strongest possible way to all of them, and still does, in many ways

as you tell yourself, "Athens" vs the islands. as you tell yourself, "artificial quotas, production embargoes, and statist supply-demand control formulas "

all this was the norm, before the EU

what the EU really was... is the opposite of all that. the real history contains taking dozens of statist setups and dozens of over-done regulations and streamline them into one package

the EU resulted into less regulation and statist control then before

and if you read carefully what the new populists really demand... isn't that moar statist control?

a border wall is statist control. a border tax is statist control. a country leaving the EU... is it more likely to turn "free trade" or "statist control"?

nope, in the same way that I never encounter a criticism of the EUR that is not neo-Keynesian (and could have been written by Dr. Krugman)...

... I never encounter criticism of the EU that is both "free trade" and (economically) liberal (TM) and that really applies to the whole history of the EU

Brexit UK will be a splendid example for what I am writing here

GreatUncle's picture

Ghordius free trade between countries of wide ranging production costs does not work.

The more expensive country may have used Keynes more (that's the UK for sure) and inflated its values far higher than the cheaper producer countries around it and allowing free trade without a tarriff economically destroys the population. This is the same issue the US has with Mexico and it is revealing itself all around the world.

Seen this the last 40 years in the UK, we didn't earn it we printed it into existence for future generations to pay.

The EU has exactly this problem internally in the different costs north / south / east / west blocks. Internally those countries currently running their own budgets and breaking all the economic rules prices populations out of work, home and families hence the EU "and UK" resorts to immigration to prop up the population and makes the natives pay for it. A few war struck failed nations and thats your immigrant flow ... the Sorosite or liberal globalist at work.

This is how the bastards are running the show, support them if you want your call, but I always remember how we were sold by the politicians on the concept of a cheaper loaf of bread from europe would be available etc. making things all nice and rosy. Nope a lie, just like the rest of it, that price of a loaf of bread here is set by the taxation level here. Why do we have such a large number of Polish workers here? UK people cannot afford to get a home and family if they are stuck in the system many Polish go home with the income to create their life. I have suggested long ago that the UK government should have bought all the homes in Poland and house our welfare recepients there to save money and fuck them polish workers up.

On that point tarrifs please ... can you understand the economics of what is happening, not the political spin on it, this is not between peoples this is the manifesting war of elite liberal globalist v populations manifesting itself.


Ghordius's picture

GreatUncle, I fear I have to disagree with you

yes, some places are more expensive then others

but if you were to follow your logic to the hilt, you would have to introduce tariffs... inside the very countries, among the various regions

the differential between Greater London, the South, the North and Scotland is greater then that between many EU countries and the UK

the biggest differential that your country, the UK, ever had was between the UK and Ireland, for a while

this did not prevent what you call "globalist liberals" in the UK to open immigration with that Act of 1917 for all Irish. it's still valid British Law, btw

meanwhile, may I remind you that your PM May is speaking of a "Global Britain"? paired with BoJo's comments of a "Greater Singapore"?

your government looks poised to take your country to the "bottom" of the "free trade" world, to full free trade without any tariffs (if possible)

oh, and with more immigrants from non-Christian, non-White countries instead of those Poles

after all, it's the same Mrs. May that had the power in her hands to reduce immigration from non-EU countries. what did she do... or not?

(+1 for that nugget, "that price of a loaf of bread here is set by the taxation level here")

Ghordius's picture

BobEore, note (edit: the author's) recipy:

"...everyone seems to ignore the fundamental economic reforms that might get Greece out of its untenable situation. If Greece were to liberalize its constraining labor and product laws and ease restrictions on new business formation, then its economy could grow—even in the face of stringent budget regimes. Unfortunately, since the 2010 opening night of this farce, Greek governments left and right have resisted such steps. Instead, Greece’s established business interests have managed to keep down competition with a regime of government red tape, which is extreme even by European standards. Instead, Greece maintains a set of product regulations that stymies the free flow of goods in favor of existing buyers and suppliers. Instead, unions and others in established positions have secured themselves behind labor laws that constrain the ability of businesses to either hire or fire—at the expense of job seekers. "

BobEore's picture

Just to kill two birds, so to speak. I'll reply to both your comments directed towards me, here.

First, I fear that you, dear Ghordius, may have finally succumbed to the inevitable damage to the synapses which comes from being hammered from all directions about your treasured defense of all things EU. Perhaps unlike those of any of your other interlocutors here, I neither defend "populists" of whatever description, nor denounced the EU as an entity. My comment was directed at the reality of Greece's situation, irregardless of it's future relations with the European Union. When zero options are left - outside of leaving a body making unfullfillable demands - there will come a time of much sufferering... and maybe, just maybe some relief after that.

But that's just a prelude for a time which will arrive for Spain, Portugal, and likely Italy - possibly other "southern underbelly" members. Germany has no reason to continue in the vein of holding them above water - all of it's resources will have to be directed towards saving France and the rest of the neighbors which can still pretend to having some kind of industrial infrastructure. Germany itself can only survive via exports - exports which will be paid for, not subsidized, debt retired, or even rolled-ever. Those markets are east not south."Populists" need not apply for the job of cultivating such markets, nor technocrats, nor autocrats.

I'm almost entirely indifferent to what it was like "before the EU," because the over-riding issue is and always been - what is the inevitable consequence of countries pretending to a lifestyle which their economies cannot support? Not statism, which is a condition of trying to hide from those same consequences... not tax regimes or Keynesian/neo-Keynesian nor Austrian economics. Even governments themselves are peripheral to that one over-riding issue. The choice of the individuals who collectively make up a nation state -  to either live low or high on the (consumption vs saving)hog is all that really matters. Once those individuals have fully entered the debt/usury/interest cycle of lifestyle there's really not a damn thing any form or faction of government can really due to change the trajectory of societies' slide to penury. Except start wars which wipe out the whole ledger board.

I don't think that anyone could assemble a comment more laudatory towards you than the one I left just yesterday regarding the NATO is Obsolete thing - so pls don't go further down the the path of defending what is not being attacked. It's no longer about the EU squire - it's just about coming to grips with the way things are.

Ghordius's picture

BobEore, not me.

sure, my synapses aren't what they used to be, but I find it's an excellent comment even though you miss why I am "defending" the "status quo"

because most of the offered "solutions" go exactly where you are pointing at

+1, splendid comment

charlie303's picture

I sense similar times of ancient water wheels will soon be returning to Greece

BobEore's picture

Your sense is not lying to you.

What's most frightening to me is the utter lack of any such sensibility on the part of those who will be most affected by turbulent economic times. When arriving in Greece from a place where the cacaphony of domestic livestock is an integral part of the daily rhythmn of a community, the sense of desolation is overwhelming - cows, goats, sheep, fowl, even chickens - the absence, even in the countryside, along with the paucity of tractors, home gardens, kids who look like they'd ever be caught doing an hours' chores, before or after school.

In towns, the most striking reverse image to that is the cars whizzing by are almost uniformly late model, the kids in the garden cafes where I'd never dream of buying a coffee, let alone a main... are all decked out in the latest of fashions and hairstyles, no one seems to be hurting for spending money. Spoke with a horseman(eg., one of those guys trying to eke out some kind of living leading tourists along the beach, while paying somewhere's near what would be $15/18 US for a bale of good hay.) He said it was well within living memory when the mules, donkeys, even the equines who used to proudly pull the ploughs and carriages of the previous generation, literally HUNDREDS OF THOUSANDS of them, were brought down every week from the mountains to board the boats heading to Italian abbatoirs. Not a sick one among them.

It's a crime of indifference that's going to haunt that place for a long long time.


Vigilante's picture

The biggest contributor to GR's ills has been the Left.

Since 1981 they dominated politics.

They never allowed any market-friendly reforms but instead created a humungus public sector stuffed with party supporters.

Brief cuckservative govts were hamstrung by the ultra-powereful unions (Leftist)...never managed to make any reforms

In those days they used to borrow/print and also get EU subsidies...this kept the ship afloat for a while

With the coming of the Euro they couldn't print anymore and also less subsidies were coming from Europe

The party was over

Nunyadambizness's picture

LEFTISTS are at the heart of most problems in the world these days, IMHO.  Well...LEFTISTS and stupid people who follow them.  

Brutus Buckeye's picture

Exactly, as if the prior crisis, or the one before that, had been truly resolved.  The hole just keeps getting deeper.

zippy_uk's picture

SHORT Greek government workers and LONG Greek prostitutes

bundas kenyer receptek's picture

was there a time they were not?

Batman11's picture

How is the system supposed to work?

Bankers are given the privilege of creating money out of nothing for loans which they can charge interest on.

In reality it provides a mechanism for you to borrow your own money from the future and the interest you pay is the charge for this service. You pay the initial sum, plus the interest, back in the future and get to spend that money today on a house or a car or whatever.

For large loans banks set the interest rate depending on the risk assessment of the loan.

Loans to countries are large loans and the interest rate is set depending on the risk of default.

Greece and many Club-Med nations used to have to pay high rates of interest as there was a higher risk of default.

Then The Euro came along.

The ECB was helping Germany get over its bust when the Neuer Markt collapsed by 97%.

The financial sector made an assumption that everyone would be bailed out by Germany if they got into trouble. The lending risk across the Euro-zone was the same as that of lending to Germany.

Interest rates were set at very low levels across the Euro-zone, due to the incorrect assumption of risk by the financial sector and the ECB’s efforts to help Germany.

The Club-med and Ireland boomed, they had never seen interest rates like these, borrowing was so cheap.

Interest rates in Greece used to be about 18% with the Drachma, it was time to party and stock up on German luxury goods like the Porsche Cayenne, a great favourite in Greece at the time.

Housing bubbles inflated in Spain, Ireland, Greece and Holland.

The good times would never end, until they did.

A hurricane blew out of Wall Street and laid low the once vibrant global economy. The Euro-zone nations had to load up on debt to bail out their banking sectors.

The financial sector realised that Germany wasn’t going to be bailing everyone out and re-assessed the risks and raised interest rates accordingly. The sustainable debt became unsustainable and the housing booms turned to bust.

The Euro-zone crisis was in full swing and things were allowed to run for quite a long time before the ECB swung into action and bought down interest rates at the periphery and a lot of damage had already been done.

The EU took the debt off the private banks and placed it on EU taxpayers, they were still very concerned about the health of their banks after 2008.

The vast majority of Greek bailouts just return to the EU as repayments on the debt and less than 10% goes to Greece.

There is plenty of evidence to suggest austerity doesn’t work including the IMF’s own forecasts for Greek recovery with austerity.

The IMF predicted Greek GDP would have recovered by 2015.

By 2015 it was down 27% and still falling.

There are many players in this comedy of errors but Greece gets the blame.