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Melech

Greece faces early election after PM loses vote on president

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161isaiah161

Fair enough

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Special Members

I think this thread gave me brain cancer.

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Stephan90

@ Sivispacem, you are wrong. With the introduction of the Euro the Greek trade balance became increasingly negative, which was only reduced when the international financial market crisis started and people in Greece didn't have enough money anymore or mainly didn't get cheap credits anymore to buy foreign goods anymore.

 

http://www.focus-economics.com/country-indicator/greece/trade-balance

 

That Greece has relatively low wages compared to other European countries isn't a point. The wages in Greece have increased more than the productivity in the country after the Euro introduction. Wages in the public and private sector have increased in 2002 by between 12 and 15% in only one year. They still increased much faster than the economy grew in the following years.

 

It doesn't matter if you have low wages compared to other countries if your productivity is still too low. The main reason for low productivity are the lack of big industrial companies with a high degree of automatisation and also the bureaucratic inefficiency. While you can improve the bureaucracy you can't force anyone to invest in the country. Nobody wants to invest there.

 

http://www.tradingeconomics.com/greece/minimum-wages

 

There is literally no big industry in Greece. Just look at who is in the Athex Composite Share Price Index and compare the listed companies to the ones in the Dow Jones or DAX. There is no industrial company of international significance there.

 

There are several smart people who say that the Euro has accelerated the growth increased the Greek public debt. For example Hans-Werner Sinn president of the President of the Ifo Institute for Economic Research.

Just to make it clear I am not talking about the time directly after the Euro introduction. I am talking about the time span from its introduction until today and the difference between the real growth of the debts amd the growth that would have happenend if they never joinend the monetary union.

 

Of course in the beginning the interest rates for bonds in the euro zone were converging at first which was good for Greece. The negative effects of the Euro on the economy were only compensated by the low interest rates and credit financed economic upturn. That's why Greece suffered most from the international financial crisis and increasing interest rates. Previously that interest rates didn't reflect the real situation in Greece but after the financial crisis the interest rates for Greece have returned to the high level that is justified for Greece economical and financial situation. If the Greek debt problem was only caused by the financial crisis and not the Euro why didn't the interest rates for non South European countries like USA; Japan, Germany or the UK rise that much?!

 

See how the interest rates for Greek ten years running bonds (dark blue) went down after the Euro introdcution but then back up. See how the difference to the other states have increased again to reflect the different financial and economical situations of the states. You might say this is exaggerated for Greece, but they are running ten years. It's not unlikely that they will be another default within the next ten years. Without the bailouts the interest rates for Greece would be much higher and country would have been bankrupt anyway.

 

eu-bonds-0003.gif

 

Greek debts have increased every year from 2005 onwards until the first debt cut and then again every year. If Greece didn't join the Euro they would have had higher interest rates during the first years but they would have made more efforts to improve on their bureaucracy and cut down unecessary public spendings instead of increasing them, like they did because the money was cheap at that time.

 

http://www.statista.com/statistics/275335/government-revenue-and-spending-in-greece/

Edited by Stephan90

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sivispacem

With the introduction of the Euro the Greek trade balance became increasingly negative

Not according to your own source, which shows that the Greek trade balance was declining well before the existence of the Eurozone, and was already negative as of 1990:

 

Greece-Trade.gif

 

You're confusing correlation with causation. You've assumed that, because there's a correlation between Greece adopting the Euro and their declining trade balance that the Euro was the cause of this; however, as we can see from the chart the trend began before their membership. If you want to claim with such conviction I'm wrong, why don't you actually demonstrate a causal link between Greece adopting the Euro and their declining trade balance, and explain why it appears to have begun declining before the Euro.

 

That Greece has relatively low wages compared to other European countries isn't a point.

Actually, it is, given that wages are the largest contributor to the fluctuations in the prices of goods and services in a free trade area.

 

The wages in Greece have increased more than the productivity in the country after the Euro introduction.

Because of economic mismanagement, not because of Eurozone membership. The only enabling factor linked to the Euro is the availability of loans at well below Greece's interest rates of 10-20% whilst they were using the Drachma. I'm not sure you can reasonably argue that it's the fault of the single currency that Greek politicians decided to spend low-interest loans inflating public sector wages by something like 200% over 8 years instead of paying off long-term, higher interest debts.

 

It doesn't matter if you have low wages compared to other countries if your productivity is still too low. The main reason for low productivity are the lack of big industrial companies with a high degree of automatisation and also the bureaucratic inefficiency.

 

That depends very much on how you define productivity. In terms of Euro per hour worked, Greece had a higher economic productivity 2008-13 than the Czech Republic, Estonia, Hungary, Poland, Portugal or Slovakia. The idea of Greece lacking economic productivity, though popular isn't quantifiably a direct cause of their economic woes, orcwe would have seen similar phenomena in the seven or so other Eurozone countries with lower productivity than Greece.

 

The lack of automation is relevant in a primarily secondary economy like Germany's but largely irrelevant in a tertiary service sector economy like Greece's.

 

There is literally no big industry in Greece. Just look at who is in the Athex Composite Share Price Index and compare the listed companies to the ones in the Dow Jones or DAX.

This is totally irrelevant though. Companies choose to register on the likes of the DAX, FTSE et cetera because of the access to capital and associated financial markets that gives them. The largest operators by revenue in Greece tend to be European multinationals (with the exception of the banks, telecom providers and Hellenic Petroleum, which are byband large state owned anyway).

 

There are several smart people who say that the Euro has accelerated the growth increased the Greek public debt.

Similarly, there are other "smart people" who disagree.

 

Just to make it clear I am not talking about the time directly after the Euro introduction. I am talking about the time span from its introduction until today and the difference between the real growth of the debts amd the growth that would have happenend if they never joinend the monetary union.

So, compared to a complete unknown then? I don't understand how you can try and make a factual comparison between two courses of action, one real, one hypothetical, without one of them ever actually taking place. The "Greece under the Drachma" idea you're drawing comparison with is pure speculation.

 

If the Greek debt problem was only caused by the financial crisis and not the Euro why didn't the interest rates for non South European countries like USA; Japan, Germany or the UK rise that much?!

One, I never said that the Greek economic issues were solely a product of the financial crisis. That's you creating straw men. The biggest issue, as I've been continuing to emphasise, was Greek economic mismanagement. Their failure to pay off existing long-term higher-interest loans obtained before their Euro membership with the readily-available low-interest loans they obtained after membership, promoting public sector wage inflation and lucrative pension schemes that by proxy escalated private sector wages and resulted in forgeign investors being put off due to rapidly escalating wage costs.

 

If the problem is one of poor productivity, why did none of the other Eurozone nations with lower productivity collapse? If the problem is one of borrowing beyond their means, then why have other European countries with similarly unfavourable rates of debt to GDP weathered the financial crisis without economic collapse?

 

Without the bailouts the interest rates for Greece would be much higher and country would have been bankrupt anyway.

I'm loathe to repeat myself, but Greece has defaulted on its debt faurky regularly for the best part of 200 years. They were in default for 32 years between 1932 and 1964. This isn't a problem related to their membership of the EU or Euro but a legacy of decades of economic mismanagement.

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Stephan90

I am not denying that there was a trade deficit before the Euro, because the economy doesn't have much high priced products for export like machines, but the Euro and the resulting low interest rates for consumers have increased the trade deficit.

 

Wages are part of the economic efficiency (output in € / input in €) lower wages mean lower input and higher economic efficiency. But when your output is still much too low due to few automatisation then the output is less than the output of economies with a much higher degree of automatisation although they have higher wages. The higher your output is the higher your wages can be. But when you are simply increasing wages without increasing your output then your economic efficiency shrinks. Very simple.

 

Of course the scenario where Greece never joined the Euro is a hypothetical one. But there are a good arguments for claiming that the debt would have been lower than it is now in reality.

 

1. low interest rates have caused the Greek government to spend too much and prevented the creation of bureaucratic effeciency. Greek consumers have bought too much on credit increasing their debt.

 

2. The economy doesn't have currency with a flexible exchange rate that fits its productivity. It is common knowledge that the exchange rates of currencies adjust to the different growth rates of the productivities between different countries in the long term. This prevents too large trade deficits or surplus. (After the Euro introduction the trade deficits and surplusses increased within the Euro zone)

 

I wasn't addressing you directly when talking about the effect of the financial crisis on interest rates of bonds. That was more of a rhetorical question.

 

 

"Why did none of the other Eurozone nations with lower productivity collapse?"

 

I can't say that any ot the other countries with said problems are too faw away from Greece's fate. The interest rates of all the South European countries would be much higher if there wasn't the ESM and Mario Draghi, who said he will do anything and buy state bonds of crisis-countries. Only the fact that he says he will do that moves the markets. As for the ESM, isn't it perverted that countries with debts take more credits to save other countries with higher debts?! After all everyone is debitor not creditor. There is the biggest inflation bubble of all time in bond prices. If the markets were not flodded with money than interest rates would be much higher and not only Greece was already bankrupt. But sooner or later the bond bubble will explode.

Another factor is the fact that Greece is only a small economy compared to Spain for example. It is the easiest target for the markets to bet on its default. Productivity is not the only factor but a big one and you have to take into consideration that Greece has a lower productivity than Spain but both have the same currecency. For Greece the Euro is more overvalued than for Spain.

 

note that I edited this post a couple of times.

Edited by Stephan90

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sivispacem

I am not denying that the there was a trade deficit before the Euro, because the economy doesn't have much high priced products for export like machines, but the Euro and the resulting low interest rates for consumers have increased the trade deficit.

Have they? Is it not a more reasonable assumption to think the increasing trade deficit is a product of the same conditions that started increasing the trade deficit before Euro membership? If not, why not?

 

Wages are part of the productivity ratio (output in / input in ) lower wages mean lower input and higher productivity. But when your output is still much to low due to few automatisation then the output is less than the output of economies with a much higher degree of automatisation although they have higher wages. The higher your output is the higher you wages can be. But when you are simply increasing wages without increasing your output by the same amount then you productivity shrinks. Very simple.

Productivity is traditionally measured in GDP per man-hour worked. Input/output ratios are much more complex than a simple productivity measure and are far from "simple".

 

You also don't seem capable of comprehending the fact that Greece is a service economy. You can't automate services; by their very definition they're human-centric. So continuing to whittle on about how they're not industrialised enough is fairly pointless as service economies are traditionally post-industrial.

 

The last bit of this comment is basically you repeating what I've already said. Wage inflation does in this instance lead to declining productivity, but not because wages are part of productivity calculations; they're not- that's a simple question of how much GDP is generated per man-hour worked. Investment in economies with comparatively low productivity can still be viable if costs of operation are equally low; the decision to artificially inflated public sector wages using borrowed money did not directly make Greece any less productive, but resulted in a decline in productivity to operating cost ratios which in turn resulted in a decline in investments due to diminishing returns.

 

1. low interest rates have caused the Greek government to spend too much and prevented the creation beaurocratic effeciency.

Which is the responsibility of the Greek government, and not directly caused by their Eurozone membership. Why is it rational to assume that loans made at higher (~10%) interest rates as would have been the case with the Drachma would not have been spent on inflating public sector wages rather than paying off existing 20% interest loans in the same way that they were under the Euro?

 

2. The economy doesn't have currency with a flexible exchange rate that fits its productivity. It is common knowledge that the exchange rates of currencies adjust to the different growth rates of the productivities between different countries in the long term. This prevents too large trade deficits or surplus. (After the Euro introduction the trade deficits and surplusses increased within the Euro zone)

 

Which begs the question (again) why is this as a fatal issue almost unique to Greece when other Eurozone countries clearly experience the same economic pressures and have the same vulnerability to static exchange rates? Answer: economic mismanagement. Fluctuations in other nations' trade deficits and surpluses occur as a product of this but it doesn't lead to their effective collapse so the issue must be something distinct, surely?

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Svip

The problem with Greece was that they should never have been given the Euro in the first place. When they first submitted their 'application', they were denied, because they did not fill the requirements. Then a year later, these requirements were suddenly 'met' and they were allowed in, even though every economist could easily see that the Greeks had cheated to get the Euro.

 

But the EU is not so much an economical project any more as it is a political one, which is why they were allowed to adopt the Euro. The envision was that the more countries using the Euro, the stronger it would be.

 

However, despite knowledge of their obvious trickery to get the Euro, no one in the EU forced Greece to change its books and do something about the potential catastrophe that would happen once a crisis hit. This is the billion euro mistake. Greece's economical woes are mostly its own doing, not the Euro or the EU. Well now they are, but you don't get help for free!

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sivispacem

^ Agreed entirely. The fact that Greece cooked the books to gain admission to the Eurozone was a pretty strong indicator they'd be fiscally irresponsible when they joined it. Stupid on the part of thecwider region and ECB for not acknowledging this but Greece's doing entirely.

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Stephan90

@ Sivispacem, I already edited my post. I messed up productivity with economical efficency ("Wirtschaftlichkeit") which is measured as output in € / input in €. And wages are definetely part of the economical efficiency, since they are the price of work as part of the input. In the end you need to value input and output with a price to make assumptions. But in a rational acting company higher productivity automatically leads to higher economic efficiency.

 

Is it not a more reasonable assumption to think the increasing trade deficit is a product of the same conditions that started increasing the trade deficit before Euro membership? If not, why not?

 

Does this assumption justify a with the time faster increasing trade deficit? I think a stable trade deficit would fit your argumentation more. The Greek trade deficit grew with an increasing speed before the international financial crisis after which people and companies couldn't buy on debt so easily anymore, which led to lower imports and reduced the trade deficit.

 

Which begs the question (again) why is this as a fatal issue almost unique to Greece when other Eurozone countries clearly experience the same economic pressures and have the same vulnerability to static exchange rates? Answer: economic mismanagement. Fluctuations in other nations' trade deficits and surpluses occur as a product of this but it doesn't lead to their effective collapse so the issue must be something distinct, surely?

 

--> See the edited version of my last post

 

 

As for service economy, how do services add up anything to exports of physical goods? The fact that Greece is so service centered only adds to the trade deficit and along with the Euro allowed it to become as high as it was because everything that has something to do with sevices goes into the "services balance"

 

The fact that the low interest rates, that were a causal result of the Euro inroduction, lead the Greek government to overspending is of course the politicians own fault. But I think other governments in South Europe have done the same to a certain degree. At that time the Greek government and the other governments anyway could do what they want. So for an external observer the link between Euro and government overspending in South Europe can be regarded as causal simply because everyone did it and not only Greece.

Edited by Stephan90

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sivispacem

@ Sivispacem, I already edited my post. I messed up productivity with economical efficency ("Wirtschaftlichkeit") which is measured as output in / input in . And wages are definetely part of the economical efficiency. In the end you need to value input and output with a price to make assumptions.

Efficiency and productivity are distinct measurements. They're somewhat related but separate. But it boils down to the same point I've been making; Greek efficiency dropped because of wage inflation that wasn't the direct result of anything other than economic mismanagement. Euro membership enabled the favourable rates at which Greece borrowed but did not dictate how it spent.

 

Does this assumption justify an with the time faster increasing trade deficit? I think a stable trade deficit would fit your argumentation more.

Yes it does, if we take into account the fact the late 90s and early 00s represented the greatest transition a way from traditional primary and agricultural industry in Greece into increased service provision, the expansion of the Greek public sector and reduction in economic efficiency due to rapid wage inflation.

 

As for service economy, how do services add up anything to exports of physical goods?

Most developed economies are postindustrial. Almost all of Western Europe. Service sector exports are traditionally stuff like financial services, telecommunications, information technology, consultancy, media, professional services, etc. Part of Greece's problem is that they invested huge amounts of public money trying to transition to a tertiary economy and promoting foreign economic investment despite the fact that service providers are much more agile in transitioning across borders in response to changing economic conditions.

 

So for an external observer the link between Euro and government overspending in South Europe can be regarded as causal simply because everyone did it and not only Greece.

But if the Euro was the root cause, and not the economic policies of Southern European economies, then surely this phenomenon would have manifested itself elsewhere?

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Stephan90
But if the Euro was the root cause, and not the economic policies of Southern European economies, then surely this phenomenon would have manifested itself elsewhere?

 

No why would that happen? Those countries are the ones with the most decrease in interest rates after the Euro introduction. If you are a country where the interest rates remained stable, why would you suddenly start with overspending when almost nothing has changed?!

 

The general definition of productivity is output / input and the difference between this and economical efficiency is that for economical efficiency you have to add prices for input and output. But if you want to make an assumption on the trade balance you need take exchange rates in consideration.

 

If country A wants to buy something from either country B or C (all with different currencies), B having a higher economical efficiency than C, then country A could still buy from country C if the currecny of country C is weaker than the currency of country B so that the price of the product from country C expressed in the currency of A is lower than the price of the same product from country B expressed in the currency of A. The exchange rate will adjust until the products from country B and C are almost same as costly for other countries. So every country has a chance to sell its goods in general. Trade deficits are reduced.

 

But when country B and C have the same currency, then country C (Greece for example) will not be able to sell much to country A. That's the most basic description on how exchange rates work and of course there are several other effects. But still this is a big problem for Greece. And the reason why country B (for example Germany) has such a high trade surplus.

 

Don't you think the unflexible exchange rate is one reason for Greece being so service centered and lacking industrial production?!

Edited by Stephan90

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sivispacem

No why would that happen?

Because numerous other Eurozone countries ran trade deficits between 200-2008? France ran a huge trade deficit between 2004 and 2008. Austria spent most of 2000-8 with a negative balance of trade. Luxembourg ran a trade deficit every single quarter. By your logic all of these economies should have collapsed but they didn't.

 

Your rambling comments about economic efficiency are largely pointless; partially because they're so Mickey-Mouse (ignoring the fact productive efficiency varies between different sectors and sub sectors of an economy, ignoring the fact a country can have a low level of absolute efficiency and still maintain product prices lower than a more efficient competitor), and partially because I'm not disputing that a lack of economic efficiency was a contributing factor in Greece's collapse- that isn't really up for debate. The question is to what degree could that inefficiency have been mitigated by manipulating the exchange rates and whether or not that would have been sufficient to prevent the crisis. I don't know the answer, and I expect nor do you, but given Greece's history of failing to control economic calamities even when they could devalue their currency, I think it's a rational assumption that it wouldn't have made much difference. Mostly because devaluing the currency of a nation reliant on primary and secondary sector imports to keep thevevonomy ticking over is going to be disastrous for businesses dependent on those imports for either domestic or export production.

 

Don't you think the unflexible exchange rate is one reason for Greece being so service centered and lacking industrial production?!

No, because the Greek economy began transitioning from primary to tertiary industry before they adopted the Euro. Most European countries are service centred and lack industrial production; that's not a product of currency union but of the fact that, generally speaking, the demand for primary and secondary industry is undercut by cheap foreign labour. Germany is the exception here as it is one of the few developed states to maintain a particularly large (circa 30%) industrial sector, but even Germany is primarily a service economy rather than an industrial one: circa 70% by GDP and about 65% by employment.

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Melech

It has been leaked by Der Spiegel that Merkel’s administration sees a potential Greek exit from the euro area as manageable. Merkel and Finance Minister Wolfgang Schaeuble both view the shared-currency area as capable of withstanding Greece’s departure, a scenario that would become almost unavoidable if a new government led by Syriza’s Alexis Tsipras were to renege on spending cuts and fail to service the country’s debt.

 

Source: https://magazin.spiegel.de/digital/?utm_source=spon&utm_campaign=centerpage#SP/2015/2/131147784-2007784

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Stephan90

It has been leaked by Der Spiegel that Merkel’s administration sees a potential Greek exit from the euro area as manageable. Merkel and Finance Minister Wolfgang Schaeuble both view the shared-currency area as capable of withstanding Greece’s departure, a scenario that would become almost unavoidable if a new government led by Syriza’s Alexis Tsipras were to renege on spending cuts and fail to service the country’s debt.

 

Source: https://magazin.spiegel.de/digital/?utm_source=spon&utm_campaign=centerpage#SP/2015/2/131147784-2007784

 

Merkel and Schäuble are the biggest jokes in German politics.

 

I can remember in February 2010 Merkel said there will be no financial aids for Greece

 

http://www.welt.de/politik/deutschland/article6635478/Merkel-will-den-Griechen-keine-Hilfe-anbieten.html

 

Three months later in May 2010 the first rescue program was passed in the Bundestag. What followed were 5 years of "alternativelesness" and the Euro had to be preserved with all its members including Greece at any cost. Enemies of these politics where ridiculed and denounced.

 

Angela Merkel coined the sayings: "If the Euro fails then Europe fails." and "The Euro rescue is without alternative."

 

In April of 2013 a new party was found AfD which promoted an exit of Greece from the Euro zone and said the Euro zone could cope with such an exit. Now after five years of Euro rescue and 240 billion € of direct credits for Greece our government has realised that Greece doesn't need to be part of the Euro.

 

But I guess that they aren't honest with it and instead want to influence the Greek election and make the Greeks afraid so that they don't vote for Syriza. But that's only my speculaion.

Edited by Stephan90

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SouthLand

I wish Spain, Italy, Greece and Portugal could leave the EU, Tell germany we are not going to pay a penny and form our own EU where every country can rule their country how they want without deppending on Anggie and Brussels' Hipsters.

Edited by SouthLand

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Stephan90

Tell germany we are not going to pay a penny.

 

You are not paying anything to Germany. Merkel doesn't rule your country either.

Edited by Stephan90

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Svip

I wish Spain, Italy, Greece and Portugal could leave the EU, Tell germany we are not going to pay a penny and form our own EU where every country can rule their country how they want without deppending on Anggie and Brussels' Hipsters.

 

Oh yeah?! Well, I'm just gonna form my own EU with blackjack and hookers! In fact, forget the EU.

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Doc Rikowski

I think that in the long run Spain, Portugal, Greece and Italy would benefit from leaving the Euro.

Also because we had no real gain in being part of it. At least not any visible one for the common people.

Quality of life has dropped immensely and we all became 50% poorer after we joined it.

An entire generation was wasted.

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SouthLand

 

Tell germany we are not going to pay a penny.

 

You are not paying anything to Germany. Merkel doesn't rule your country either.

We are paying to the EU (also known as Germany off the record)

 

Funny how we have to pay and your debt after WWII was never enforced.

 

 

 

I think that in the long run Spain, Portugal, Greece and Italy would benefit from leaving the Euro.

Also because we had no real gain in being part of it. At least not any visible one for the common people.

Quality of life has dropped immensely and we all became 50% poorer after we joined it.

An entire generation was wasted.

And not only that, now we CAN'T rule our countries because bully EU knocks on our door and threats us with economic sanctions.

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Stephan90

 

 

Tell germany we are not going to pay a penny.

You are not paying anything to Germany. Merkel doesn't rule your country either.

We are paying to the EU (also known as Germany off the record)

 

Funny how we have to pay and your debt after WWII was never enforced.

 

 

 

I think that in the long run Spain, Portugal, Greece and Italy would benefit from leaving the Euro.

Also because we had no real gain in being part of it. At least not any visible one for the common people.

Quality of life has dropped immensely and we all became 50% poorer after we joined it.

An entire generation was wasted.

And not only that, now we CAN'T rule our countries because bully EU knocks on our door and threats us with economic sanctions.

 

 

Spain is net receiver of money from the EU. Germany paid war reparations until October 2010. It paid everything that it was obliged to be the Allied forces. On the other side Spain's central bank ows other Euro states central banks billions of Euros via TARGET2 mechanism. Basically Spain imports more goods than it pays to other counties. Basically, TARGET2 means that when you buy something from another Euro state's company then your money doesn't go directly from your bank to the one of the company. It goes like that: your bank --> your central bank --> European central bank --> the central bank of the country you are buying from --> bank of the company you are buying from. The European Central Bank is like knot point of all money transfers within the Euro zone. And debts and credits between the different central banks neutralise each other. The differnce between debts and credits must be paid or received.

 

Spain's central bank still ows the European central banks over 160 billion € for its citizens importing goods that were never paid. Now tell how Spain's central bank is going to pay its debts?

 

http://www.eurocrisismonitor.com/

 

Our central bank currently gives credit to other Euro states worth arond 480 billion €. These are credits no one ever thanks us for.

 

Spain is also on of the biggest net receivers from EU. You get more money than you pay.

 

http://www.theguardian.com/world/interactive/2012/jan/25/europe-news-eu

 

Spain joined the EU by its free will and can get out if it, it it wants to do so. It agreed to implement EU law and guidelines. If these oppose the Spanish constitution, Spain must negotiate or leave. No one forces Spain to be member of the EU. There should have been sanctions against against Spain already. By joining the Euro it agreed as part of the Maastricht treaty to keep it's debts below 60% of its GDP and its deficite below 3% of its GDP: Spain has continously broken these rules but was never sanctionend like any other country of the Euro wasn't.

 

You are basically only ranting what you hear in your football stadium from other unsatisfied people who don't know the facts.

 

If Spain is in a bad economical situation then it has no one other to blame than its own politicians.

Edited by Stephan90

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sivispacem

You can't really bitch about having centrally dictated economic policy without acknowledging that it was the voluntary decisions of Eurozone members to join the single currency and it was fairly clear from the outset that centralised economic policy was part of it.

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Dingdongs

You can't really bitch about having centrally dictated economic policy without acknowledging that it was the voluntary decisions of Eurozone members to join the single currency and it was fairly clear from the outset that centralised economic policy was part of it.

Pretty much, yeah. If you want to have a monetary union you also need a real political Union with true centralized authority. Not saying that is the answer here but more of the same probably isn't either.

Edited by Irviding

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Stephan90

it was fairly clear from the outset that centralised economic policy was part of it.

 

 

You can't really bitch about having centrally dictated economic policy without acknowledging that it was the voluntary decisions of Eurozone members to join the single currency and it was fairly clear from the outset that centralised economic policy was part of it.

Pretty much, yeah. If you want to have a monetary union you also need a real political Union with true centralized authority. Not saying that is the answer here but more of the same probably isn't either.

 

 

Except the Maastricht contract neither includes a political union nor centralised economical policy. It only includes financial punishments when your debts and your yearly deficit gets too high. Simply from a logical standpoint it contradicts the claim that the states that shall be punished also shall reduce their debts and deficite at the same time. But well, the punishments were never used although they should have been used according to the contracts.

 

The Troika (consisting of EU commision, European central banks and international monetary fund) has only a say in Greece, because Greece agreed to receive help credits and thereby agreed to follow Troika guidelines for saving money. It could have also went bankrupt and let Its people starve, because no one would lend Greece any money anymore. These are two bad options considering the Euro is bad for Greece but then again, it were Greek politicians who faked together with Goldman Sachs Greeks financial figures to get into the Euro in the first place. The Greek state went into deadlock on its own.

Edited by Stephan90

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sivispacem

Except the Maastricht contract neither includes a political union nor centralised economical policy. It only includes financial punishments when your debts and your yearly deficit gets too high. Simply from a logical standpoint it contradicts the claim that the states that shall be punished also shall reduce their debts and deficite at the same time. But well, the punishments were never used although they should have been used according to the contracts.

The fact Maastricht doesn't explicitly implement a centralised economic union doesn't preclude one from existing. It's a simple consequence of monetary union obvious to pretty much anyone with a basic grasp of economics. If politicians in Europe were so shortsighted as to be unable to realise that a united currency would implicitly result in united economic policy then I don't really know what to say other than "how stupid".

 

The Greek state went into deadlock on it own.

Weren't you blaming the Euro for Greece's economic collapse last week? Funny turnaround here eh?

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Stephan90

Of course such a big monetary union between economically different states only works with political union in the long term. But a political union is not part of the contract. That's why states which can't deal with the Euro like Greece should leave.

 

The Euro is the biggest reason for Greeks problems. But it were Greek politicians who wanted to join the Euro. So it's their fault. If you inject yourself deadly poison and die, then it's the poison that kills you, but at the same time it's your own fault. I don't contradict myself at all.

 

You can argue that the contract doesn't include the possibility of a Greek exit on its free will but:

 

1. It neither includes the duty for other members to finance Greece debts.So we could simply let it go bankrupt, which would force the Euro zone to let Greece leave.

2. All members together can change the contract if everyone agrees.

3.What is the contract worth when the Greek state didn't match the requirements for entering the Euro zone in the first place?!

Edited by Stephan90

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Svip

You think Greece would be in a better financial situation today if they had stayed out of the Euro? The only difference is that no one else would have cared. And then state bankruptcy would have been inevitable.

 

Greece's financial woes are largely their own, and their decision to join the Euro is probably the best of these decisions (because it avoided a state bankruptcy at the expense of the other members of the Eurozone). Greece, however, had before and after joining the Euro an unrealistic budget, that only survived on the stable growing economics in the West. I doubt Greece would have fixed its budget and finances had it remained outside the Eurozone, because it was just not popular with the public, and who wants to save money when things are going well?

 

You have so far provided no proof that the Euro was the main problem for Greece. Just because they cannot devalue their currency anymore, what's the point if they are forced to make the drachma worthless? Controlling your own currency is only as good as your economy and budget allows.

 

Since Greece has no manufacturing industry of any notice, any natural resources of worth and aren't an attractive location for companies to open offices, Greece's economy survives on the will of others. Investors, banks and the Eurozone is keeping Greece's economy alive.

 

Personally, I agree with the solidarity aspect of the EU, that if we can raise all the Eastern European countries' standard of living to the Western Europeans', then that is a benefit for all. But I also believe that running a country is about responsibility, and Greece's laws on pensions, tax and whatnot just didn't match up.

 

If your suggestion is that joining the Euro made Greece think they were safe (from a crisis), then that argument is subjective at best. I am willing to buy it somewhat, but there is definitely no definitive and concrete proof one way or the other.

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Stephan90

Devalueing your currency is good for your export because your products are cheaper for the outside world, it also makes vacation to Greece cheaper which is good for Greece's tourism sector.

 

More export and tourism means more income even when the currency is devalued. What is a strong currency worth if nobody will buy your products and vacate to your country although tourism has always been one of your main sources of income?!

 

Devaluation doesn't mean your currency is completely worthless. It must be lowered down to the value that allows your economy to be competitive with its productivity.

 

That Greeks debts are now in Euro is because of the Greek Euro membership. That wouldn't have been the case if Greece never joined the Euro. Greek does need a debt cut but it should only be given when it agrees to leave the Euro.

 

I have literally, already adressed every aspect of your post and every claim you make within this thread.

 

I am not repeating arguments over and over, just read the thread and don't say I wouldn't have given an explanation why the Euro is bad for Greece.

 

Idealists who give a sh*t about economic principles have brought us into this mess. Now don't tell me we have to solve the problems with more stupid ideology.

Edited by Stephan90

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Doc Rikowski

You can't really bitch about having centrally dictated economic policy without acknowledging that it was the voluntary decisions of Eurozone members to join the single currency and it was fairly clear from the outset that centralised economic policy was part of it.

 

Very true. In fact I bitch as a citizen that lost half of my quality of life since the euro was implemented. And I bitch against my own politicians for putting me in this situation. But we voted them, right? Well I didn't... ;)

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SouthLand

SIN_TI%257E1.PNG

 

merkelilla.jpg

 

Euro_Alemania_Cuarto_Reich.jpg

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sivispacem

Of course such a big monetary union between economically different states only works with political union in the long term. But a political union is not part of the contract.

Er, yes it is. The Treaty of Rome implicitly implements a degree of economic union by centralising political decision making on policy areas directly related to economics. The Lisbon Treaty similarly clarifies and extends these powers across a whole range of policy areas. Pretending that EU legislation does not enact a degree political union is basically ignoring the entire underlying legislative basis and history of the EU.

 

Devalueing your currency is good for your export because your products are cheaper for the outside world

As I've pointed out multiple times, this Mickey-Mouse, primary-school, paint-by-numbers economics is clearly and demonstrably utter nonsense in a globalised supply chain where exports are dependent on foreign imports. Continuing to pretend that this inconvenient (for your rhetoric) fact doesn't exist is really very silly.

 

 

@Southland- that first image is utterly ridiculous. You'd have to be terminally stupid to try and draw parallels between pre- and post-Euro prices without factoring in inflation. Oh well, I suppose it panders to the idiots who blame Southern Europe's economic woes on those nasty Germans instead of decades of questionable economic policy. They aren't clever enough to realise it's a flawed comparison.

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