Should Greece Leave the Euro?

[edao]

With Greece accepting a bail out, is this mearly buying the Euro time.

Is it better for every one to release Greece from the Euro?

[Michael Folkesson]

No, I don't think so. Kicking Greece out would be stating and making a precedence that any Union country can be kicked out. Greece would have to withdraw, but either way you look at it, it would be a failure of the currency union and the Union. We clean up the mess and reform the economic policies of the Union and necessary institutions. The states will have to give up some economic sovereignty here.

This can't be allowed to happen again and the honor system clearly doesn't work. But in a way I think the Greek problem is somewhat exaggerated, or misplaced. The Greek economy is very small in the EU. I believe the problem is the effect it has on the Union project and the Euro. It's a bigger picture and it has to do with the credibility of the currency and the Union overall. We have to reform and we need to give up economic sovereignty for it too work. It all puts the Union in a difficult position but a situation we would have encountered sooner or later anyway.

If nothing is done, something like this or of a similar magnitude would happen again that would damage the perceived viability of the project.

Clean up, slap some faces and reform. The last one will be very difficult.

[LeBrok]

Maybe there should be consequences for cooking accounting books and keeping country in financial mess. That's a serious breach of trust and confidence for the whole EU. Kicking out a member for mentioned sins should be an option.
The worse part is that most of Greeks don't understand seriousness of their county's financial situation and protest against any sacrifices. At least this is what I'm getting from watching BBC news about Greece.
I like the country, I like the people, but I'm for some discipline, and I hate any kind of mess.

[Sprinkles]

Portugal, Spain, Italy, are next. Good bye Eurozone. Britain is toast. Good bye EU.

[Wilhelm]

Portugal, Spain, Italy, are next. Good bye Eurozone. Britain is toast. Good bye EU.

Wait a minute...WHat have Italy, Portugal or Spain anything to do with this ?

[^ lynx ^]

Yes Sprinkes, apocalipsis is coming...

[Maciamo]

The EU is now in a position to tell Greece how to run its economy. It's always delicate to lecture a sovereign state on on to run their affairs. Once you save them from bankruptcy you own the right to tell people how to use the money you give them and change what you don't like.

The financial crisis was a boon for the EU. It got the Irish to accept the Lisbon Treaty, Iceland to join the EU, and Greece to reform its legislative system and liberalise its economy.

There has never been serious plans to kick Greece out of the Euro-zone. If they wanted Greece out there would have been no rescue plan. On the contrary this is a perfect opportunity to strengthen the Greek economy and public finances and make the euro stronger or more stable in the long run.

[Gwyllgi]

A whole lot of the problems in Greece are as a result of possibly deliberately targeted lines of credit from US sources with the intent of Greece being the Trojan Horse of the Eurozone.

The EU is seen with alarm by the US, especially the Eurozone, because a stable and solid Euro would make a very good replacement for a massively exploited and hugely overvalued dollar as the petro-currency of the world.

Greece has been stupid and greedy and dishonest. In my opinion Greece should not be ejected from the Eurozone, that let's the Greeks off too easily. Instead Greece should now face years of austerity while they repay what they have spent and squandered.

It won't be nice for them and it won't be easy but like with a credit card, enjoy the spending but don't think you can escape the bills. Just a shame the population didn't realise what the government was delivering was on the national credit card.

The UK faces the same, it's just that Brwon's been taking out new credit cards for years to pay the bills on the ones he's already run up to their limit.

It's going to be fun after the General Election in the UK.

Not.

[A ke bono kane kotto]

A whole lot of the problems in Greece are as a result of possibly deliberately targeted lines of credit from US sources with the intent of Greece being the Trojan Horse of the Eurozone.

A Trojan horse for what ? Do they want to find the secret behind the euro ?

The EU is seen with alarm by the US, especially the Eurozone, because a stable and solid Euro would make a very good replacement for a massively exploited and hugely overvalued dollar as the petro-currency of the world

.

The dollar is overvalued ? It's never been so low for so long !

Greece has been stupid and greedy and dishonest. In my opinion Greece should not be ejected from the Eurozone, that let's the Greeks off too easily. Instead Greece should now face years of austerity while they repay what they have spent and squandered.

It won't be nice for them and it won't be easy but like with a credit card, enjoy the spending but don't think you can escape the bills. Just a shame the population didn't realise what the government was delivering was on the national credit card.

Japan's public debt nears 200% of GDP. Nobody is saying Japan is bankrupt. Why ?

[Gwyllgi]

A Trojan horse for what ? Do they want to find the secret behind the euro ?

No, think back to the legend of the first Trojan Horse. The intent then was not to see what was in Troy, it was to break into and destroy Troy.
So today it would make perfect sense to break into the Eurozone in order to destroy the Euro from inside.

The dollar is overvalued ? It's never been so low for so long !

But it is still massively overvalued based on where it should be if it were not the universal petrocurrency, a thing that more than any other has kept it as the reserve currency of first choice.

Think about it. If you could only buy petroleum products with clam shells from a certain beach and I owned that beach then my clam shells would be worth infinitely more than their value as a source of calcium and silicon, their intrinsic value.

So it is with the US Dollar. The huge amount of US debt, currently standing at around thirteen and a half trillion Dollars mid 2009 based on their value of the Dollar against the rest of the world currencies, and since then the debt has increased continually vastly exceeds the intrinsic value of the US Dollar based on the US trading position in the worlds markets.

So consider how the US could repay that now well in excess thirteen and a half trillion Dollars based on its balance of trade and you will see just why the US Dollar is so grossly overvalued if it were NOT to be backed up by its use as the currency-by-proxy that comes about due to the Petrocurrency situation.

Japan's public debt nears 200% of GDP. Nobody is saying Japan is bankrupt. Why ?

The word you should use isn’t bankrupt, it’s insolvent and that’s not just semantics. A person, business, or nation is insolvent when they are continuing to spend more than they can earn. Bankruptcy comes about when the demands for repayment can not be met.

Japan isn’t insolvent, there’s no pressure on Japan to pay any unpayable bills. In the case of Greece there is.

A number of Greek government issued Bonds are coming up for redemption, but there’s no money within the Greek treasury to pay for them.

That money has been borrowed and used to deliver a lifestyle and a society that costs far more than can be earned by Greece. The piper has played, now he must be paid.

THAT is why Greece should be kept within the Eurozone. Make the Greeks pay for what they’ve had.

Another reason is that the Eurozone should be kept intact and kicking Greece out will only result in an attack on the next weakest nation and all as a part of a strategy to undermine the Petrodollar.

To the great finance houses in the US the sums involved are big but not huge, at least not in comparison to the potential losses if the Petrodollar eventually is replaced with some other instrument and the Euro is in a prime position to be just that. Some oil producing nations already will deal directly in Euro's for their oil..

The attacks on our Euro is the fiscal attack.

The incursion into our nation states with “defense shield” weapons are a political attack to weaken us militarily and make us a target-by-proxy for anyone intending an attack on the US.

And the involvement in our politics is an attack on the minds and hearts of our various electorates by propaganda and exploitation of the inevitable xenophobia that still exists within our EU.

There is in all likelihood one hell of a lot more involved in the undermining of the Greeks than just a bit of “cooking of books”.

A very great deal more.

[edao]

http://news.bbc.co.uk/1/hi/business/8648029.stm

[Cambrius (The Red)]

The big problem is that Greece has no credibility left after cooking the books to enter the Eurozone and relying on financial alchemy to create the impression that its debt figures were substantially lower than they actually were. The Greek government is primarily to blame for this unprecedented fiasco, but what were the watchdogs in Brussels doing when all these unscrupulous machinations were taking place in Athens?

[Maciamo]

The big problem is that Greece has no credibility left after cooking the books to enter the Eurozone and relying on financial alchemy to create the impression that its debt figures were substantially lower than they actually were. The Greek government is primarily to blame for this unprecedented fiasco, but what were the watchdogs in Brussels doing when all these unscrupulous machinations were taking place in Athens?

Don't overestimate the current means of the EU to supervise what's happening in member states. The EU budget is tiny compared to the US. Yet the American government wasn't able to prevent the credit crunch or to prevent one of its biggest bank, Goldman Sachs, from cheating everyone and helping Greece cook its books.

[Marianne]

...
The worse part is that most of Greeks don't understand seriousness of their county's financial situation and protest against any sacrifices. At least this is what I'm getting from watching BBC news about Greece...

Greeks are protesting because Greeks (the people) didn't cause the problem. The problem was caused by greedy politicians and now the people must pay for their mess. No one from the current government is trying to find out who were the ones that created this mess to punish them and the financial plan they proposed to get the country out of the crisis includes salary reduction only in middle and lower class without any increase in taxes for the upper class and politicians.

And yes I know people voted for those politicians in the past (the ones who did all that) but you never know it in advance right? The people are the last to be informed in such situations and they were only informed now...

The way I see their "solution" to the problem is similar to wearing glasses instead of doing laser surgery. Wearing glasses only covers the problem temporarily but it doesn't solve it.

As for the question of the thread, if Greece gets kicked out of EU it will only show to the markets how weak the EU is and it will have a negative effect on euro. EU should help Greece and later on Portugal, Spain and Ireland (the PIGS as they call us when they refer to weak economies) solve their financial problems if we want to have a future as a union.
After all no one from the EU and especially Germany is giving money to Greece as a present. I don't call it "help" when Germany is borrowing money with 2% interest and demands strict politics against the Greek people just to lent us money with 5-6% interest. I call this stealing your "friends" and try to make huge profit out of their problems.

[edao]

I have read a huge problem for the 'PIGs' (I won't use this again) countries is the huge economic disparity across the EU. In the fact that the best and brightest in countries like Greece are looking at 5 years plus of economic stagnation, meaning less opportunities and lower wages.

If your fresh out of university why would you hang around when your free to move to more prosperous parts of the EU and earn more money. Loosing these kind of people are only going to make the economic situation worse.

[Marianne]

I have read a huge problem for the 'PIGs' (I won't use this again) countries is the huge economic disparity across the EU. In the fact that the best and brightest in countries like Greece are looking at 5 years plus of economic stagnation, meaning less opportunities and lower wages.

If your fresh out of university why would you hang around when your free to move to more prosperous parts of the EU and earn more money. Loosing these kind of people are only going to make the economic situation worse.

I agree with you.

The fact is that many graduates from Greek universities are considering obtaining a master's degree in EU and possibly stay there to work.

I myself am one of them. I've just gotten my degree and I've applied to many EU universities, so you can practically say that I'm already packing my bags... This is also true for many of my friends and classmates... When a master's degree in my field costs around 7000€ in Greek universities and 0-1000€ inside EU I prefer spending a bit more for food and accommodation and obtain one in a country like France, Belgium, Netherlands, Sweden etc...

Here in Greece people say with sadness that "Greece is kicking out it's children" when they refer to bright young people going abroad to study and work because outside the country the opportunities are a lot more and a lot better...

[Gwyllgi]

I’m minded of one of Aesop’s fables, that of The Scorpion and the fox.

A scorpion and a fox meet on the bank of a stream and the
scorpion asks the fox to carry him across on its back. The
fox asks, "How do I know you won't sting me?" The scorpion
says, "Because if I do, I will die too."

The fox is satisfied, and they set out, but in midstream,
the scorpion stings the fox. The fox feels the onset of
paralysis and starts to sink, knowing they both will drown,
but has just enough time to gasp "Why?"

Replies the scorpion: "Its my nature..."

So it is with banks. Their job is to make money. The job of politicians is to ensure that they do so in a way that will not harm the society in which they operate.

Because the politicians were gaining huge advantage because of the taxes they could rake in and so deliver what the electorate wanted and so remain in office they simply worked on the basis of Laissez les bon temps roulez on the basis that when the fan was hit they would have retired and someone else would have to sort out any mess.

A sort of variation of “NIMBY”, this time “NIMTO”.

Not In My Term Of Office.

So let’s not be too quick to blame The Banks, or let the politicians put the blame on The Banks when it is the politicians who have failed for hoping that when the scorpion stings the sting can be diverted to sting the scorpion itself.

[Cambrius (The Red)]

Greeks are protesting because Greeks (the people) didn't cause the problem. The problem was caused by greedy politicians and now the people must pay for their mess. No one from the current government is trying to find out who were the ones that created this mess to punish them and the financial plan they proposed to get the country out of the crisis includes salary reduction only in middle and lower class without any increase in taxes for the upper class and politicians.

And yes I know people voted for those politicians in the past (the ones who did all that) but you never know it in advance right? The people are the last to be informed in such situations and they were only informed now...

The way I see their "solution" to the problem is similar to wearing glasses instead of doing laser surgery. Wearing glasses only covers the problem temporarily but it doesn't solve it.

As for the question of the thread, if Greece gets kicked out of EU it will only show to the markets how weak the EU is and it will have a negative effect on euro. EU should help Greece and later on Portugal, Spain and Ireland (the PIGS as they call us when they refer to weak economies) solve their financial problems if we want to have a future as a union.
After all no one from the EU and especially Germany is giving money to Greece as a present. I don't call it "help" when Germany is borrowing money with 2% interest and demands strict politics against the Greek people just to lent us money with 5-6% interest. I call this stealing your "friends" and try to make huge profit out of their problems.

How can Greece not make the higher earners share the pain? Why would the E.U. allow a deficit reduction structure where the lower and middle classes bear the greatest part of the burden?

[Marianne]

How can Greece not make the higher earners share the pain? Why would the E.U. allow a deficit reduction structure where the lower and middle classes bear the greatest part of the burden?

Because among the higher earners are the ones who vote for these laws...

[Cambrius (The Red)]

Because among the higher earners are the ones who vote for these laws...

Some things never change...

[LeBrok]

Because among the higher earners are the ones who vote for these laws...

I feel your pain and despair Marianne, but I can't agree with your solutions.
First of all, there is not enough rich Greeks and if you even taxed them 100% you wouldn't make a dent in Greece deficit and debt.
Secondly, they already pay biggest taxes like in every country. If you tax them much more they will leave the country with a big lose to Greece. Keep in mind that generally speaking they are the smartest, most educated, best business people, great investors, etc. If you scare these people away Greece will be in even bigger sh*t. I'm pretty sure most of them have a second house already somewhere in Europe and they speak languages. I guess all they need is a little push.

Here is a solution. Reform your economy and open country for business. Make the big capital come to town, invest, double and triple GDP. If you increase GDP 3 fold in next 10 years, your debt level becomes half of GDP, manageable and easy to pay. Also you'll have more money for education, better universities, attract students from abroad (reverse the current trend) and increase intelligentsia and business elite in Greece, this will spur farther GDP growth, and this....etc

Even though, it was shown again and again, how economic growth can do miracles in any country, it's not being duplicated too often. Almost every government has to try it's own model, because they all special and so different, and smartest.
Now we'll have Papandreou model. And the communists protesting in the streets are even farther away from the realism. I'm pretty sure, most of it is an education problem, they don't freakin know how economy works, with heads floating in Utopian and selfish world, me, me, me! I had same problem with my kids after high school. Took me few year and they grown up somewhat to understand better how things are. Schooling system in Canada and probably all around the world is filled by socialistically oriented teachers, and off course it's all fortify by the strongest Unions.

[Marianne]

I totally agree with your post LeBrok.

The difference is that I wasn't talking about the rich who pay their taxes normally (those are the minority).

The problem in Greece is that the majority of the rich aren't paying the taxes they should. For example, doctors who have their own office: when people go to the doctor, they pay 50-100euros per visit (depending on the doctor, the area etc), but the doctor doesn't give them receipts. That means he doesn't pay taxes. Recently it was revealed that there are tons of doctors in Greece who get more than 100.000 euros per year and they are paying 0 taxes because their income is less than 10.000, some of them were even getting money from the state because their income is so low!!!(because they don't give receipts).

The same applies for lawyers, accountants etc. These people make fortunes every year and the average people, middle and lower class who are paying all their taxes the way they should, are now called to sacrifice their small income to get the country out of the crisis...

[Gwyllgi]

The bottom line is that a nation is like a family.

A family can only live to a standard consistent with the earning capacity of that family. It may be that the family live in a village in which some families that earn a great deal contribute to assist other families who can’t get by.

But there comes a point when if that family who are poor try to live beyond what they can afford based on their earning capacity plus the charity from others and try to “con” the rest then things have to be brought back into line.

In the case of Greece the family have not only been living way beyond that level that they can afford, but in addition the head of the family (the government) has taken out “credit cards” without telling anyone just to make himself popular with the rest of his tribe and live a better life than is justified by their earning plus charity capacity.

Now the bills are coming in and the whole family must cut back and they don’t like it, and are in effect demanding that their charitable gifts be increased to cover their (fraudulent) profligacy.

Well basically tough. The family must now put up and shut up because they’ve brought shame on the whole village.

Funny how it is that when you reduce the macro closer to the micro so many complex things have simple solutions. In this case,:” Hey, Greece, it’s payback time. Live with it”.

And think yourselves dammned lucky we don’t evict you from the village.

[Maciamo]

How can Greece not make the higher earners share the pain? Why would the E.U. allow a deficit reduction structure where the lower and middle classes bear the greatest part of the burden?

Higher earners are more mobile. In any country when trouble arise those with good qualifications and speaking several languages can always seek employment elsewhere. When one only speaks the local language and has nothing special to offer to foreign companies, they have little choice by stay at home.

[Maciamo]

The problem in Greece is that the majority of the rich aren't paying the taxes they should. For example, doctors who have their own office: when people go to the doctor, they pay 50-100euros per visit (depending on the doctor, the area etc),

50 to 100 euro per consultation ? I suppose that's only for famous specialists. Here in Belgium a visit to a GP is 22 euro. For a specialist doctor, it ranges from 40 to 70 euro. It strange that it should be more in Greece, where the salaries are lower.

but the doctor doesn't give them receipts. That means he doesn't pay taxes. Recently it was revealed that there are tons of doctors in Greece who get more than 100.000 euros per year and they are paying 0 taxes because their income is less than 10.000, some of them were even getting money from the state because their income is so low!!!(because they don't give receipts).

How are patients reimbursed by their health insurance if doctors don't give receipts ? I don't know anybody here who would pay without a receipt.