George1 wrote:There is a misunderstood. There wasn't austerity suddenly in Greece imposed by EE. Greece economy had a deficit in 2010, -15%. And then it was need for a loan to save the economy. The austerity came as a result of loan repayment+the obvious situation to reduce the deficit. Greece has borrowed money from 3 different parties, European Central Bank - Eurozone countries - IMF. And in IMF shareholders except USA and European countries, are also Russia and China
The austerity didn't came as loan repayment...the austerity came also because on 10 euros from EU/IMF/WB for 7 went to Bank recapitalisation and purge, 2 went to interests an 1 went to the Greek state. Austerity was a mean to hide the fact that this wasn't saving the economy, it was saving the EMU and the internal banking system. Not IN Greece, but in Europe. As for the reduction of the deficit, let us remind people that Greece reduced the deficit gardually by sacrificing the most profitable state owned entreprises, but yet the first round of privatisations didn't yield more than 6 billion Eur. This became a fire sale, just like at the end of the USSR. You don't privatize when in crisis, yet that's always when you're told to do it, because of typical market mentality.
Greece hasn't borrowed actually, most of the money has directly gone from Creditor to Final debtor (banks) and back to...Creditors. While Greece is left with debts. Don't confuse debtor and guarantor. Same for Germany, it's a debt guarantor, it will borrow to repay the guarantees, given the rates are flat it will actually earn money, since the Greek state will always be a debtor to the EFSF. So when Germans say we risk money, they actually lie, but no one dares to contradict them, because of the overall political structure in Europe.
so what do u suggest?? To let the banks bankrupt? and this would be social u think? If the banks collapse then a lot of people will loose their savings and a lot of enterprises that work with loans will also shut down.
Sorry if I missed your reply George.
The people have already lost most of their worth with this economy. The banking sector was and still is bankrupt in Greece, BECAUSE the current economy. I understand that you don't want to use the nuclear option. But by having a internal demand oriented economy you can't make it grow with exporter oriented strategies. The same kind of nonsense was done for the USSR. They were told to liberalize and so they did. Ask yourself, why China didn't liberalize until 2001?
Now back to Greece. If you keep the current strategy, the repayment crisies will be only systemic. IE every 3, 6, 9, 12 months you will have such drama with a carousel of parties, zero growth, and even less repayments. What needs to be done, is help Greece with its most prosperous sectors, light transformation industry, Shipping and Tourism. But that would also mean recognizing that the Troïka and Eurogroup done Fucked UP. And that's the rub. The Eurogroup DOES. NOT. WANT. THAT. Because it has been doubed an "experts" group. And "experts" that fuck up that bad is something out of Lysenko's fiasco in the USSR, albeit Lysenko did actually manage to instill the basics of an Ecosystem to the Soviet agriculture (something the Europeans would only practice in the late 60's).
Beyond that, having Greece "default" would also touch the base rate for the Euro. IE the borrowing cost for the EuroZone will go up, which would be a disaster for the German state among others. If the base rate gets higher, the borrowing gets costlier. IE the EFSF cost at the market is actually sup 0% yearly (like -0.0017%). If it gets up like up to 0.5% that would cost billions to the people that borrow through the new mechanism. Think about it. You think the EuroZone members and the rest of the EU would like to lose billions in repayment just for a haircut? Nope, they would make one of their suffer because the current cost is ZERO.
You think this is about economy? Nope my friend, this is about finance and long accounts. Greece is just a nice pretext. Personally, I'd have Greece start working more with the local market (the Balkans and Turkey) instead of Western White Elephants, and yes that means a Greexit and a devaluation. Painful? Sure, but at least you'd see light. Now you'll only be able to expect an less elaborate version of Plato's Cave coupled with Sisiphus. The more you'll suffer to pay back the more you will be forced to borrow. Catch 22 on steroids.
But the Germans do not want a Grexit, they're only fucking around with the other Europeans. The "surplus" states only want the others to quack in their boots. It's just an ideological coup doubled with a technocratic lie. But hey...feel free to not belive me.