Greece debt crisis: ECB 'to end' bank emergency lending
bbc.co.ukECB statement:
ELA to Greek banks maintained at its current level
- ECB takes note of decision on Greek referendum and the non-prolongation of the EU adjustment programme
- ECB will work closely with Bank of Greece to maintain financial stability
- Emergency liquidity assistance maintained at Friday’s (26 June 2015) level
- Governing Council stands ready to review decision
- Governing Council closely monitoring situation and potential implications for monetary policy stance
The Governing Council of the European Central Bank today welcomed the commitment by ministers from euro area Member States to take all necessary measures to further improve the resilience of euro area economies and to stand ready to take decisive steps to strengthen Economic and Monetary Union.
Following the decision by the Greek authorities to hold a referendum and the non-prolongation of the EU adjustment programme for Greece, the Governing Council declared it will work closely with the Bank of Greece to maintain financial stability.
Given the current circumstances, the Governing Council decided to maintain the ceiling to the provision of emergency liquidity assistance (ELA) to Greek banks at the level decided on Friday (26 June 2015).
The Governing Council stands ready to reconsider its decision.
Mario Draghi, ECB President, said: “We continue to work closely with the Bank of Greece and we strongly endorse the commitment of Member States in pledging to take action to address the fragilities of euro area economies.”
Yannis Stournaras, Governor of the Bank of Greece, said: “The Bank of Greece, as a member of the Eurosystem, will take all measures necessary to ensure financial stability for Greek citizens in these difficult circumstances.”
The Governing Council is closely monitoring the situation in financial markets and the potential implications for the monetary policy stance and for the balance of risks to price stability in the euro area. The Governing Council is determined to use all the instruments available within its mandate.
https://www.ecb.europa.eu/press/pr/date/2015/html/pr150628.e...
Further headlines from Bloomberg after the ECB put out this press release:
- ECB SAID TO SEE EXISTING GREEK ELA INADEQUATE FOR BANKS' NEEDS
- ECB SAID TO VIEW BANK HOLIDAY FOR GREECE AS NECESSARY
The Greek version of monopoly - they cleaned out the bank early, and everyone loses (game over!)
The ELA freeze was for Sunday. It will be reviewed on a daily basis.
They have to impose capital restrictions fast...
What Would Greek Capital Controls Look Like?
http://www.bloomberg.com/news/articles/2015-06-01/how-greek-...
Varoufakis apparently told BBC that the banks might stay closed tomorrow and that capital controls could be imposed.
http://twitter.com/suttonnick/status/615112479828348928
edit: scratch that. http://twitter.com/yanisvaroufakis/status/615127339102531584
Not imposing capital restrictions is suicide, i don't know if Yanis varoufakis is an economical genius a madman or simply amateurish.
I've noticed Greek politicians making excessively bold, emotional statements in public since the election, where perhaps some pragmatism and diplomacy would have moved things along better. It gives the impression that there is some intention to exit whilst avoiding blame with their own electorate (who I read are majority pro-EU by polling, contrary to the impression giving in media). Extremely uncooperative negotiating followed by throwing it to the people is one such tactic, claiming that you are forced to allow a banking collapse because of EU philosophy is another.
They want to be in the EU because they remember the drachma, and whilst germans will remember a strong deustchmark that was never the position of the drachma.
Well, announcing them before imposing them is even worse (everybody panics, chaos ensues).
The ECB let them keep their current lifeline for a few more days, but it looks like it's still not sure yet whether the banks will open. (which means they probably wont - see above).
http://www.bloomberg.com/news/articles/2015-06-28/running-ou...
edit: updated with the fact that the current emergency aid from the ECB might not be enough to keep the banks open.
Well, by first saying "capital controls" and then "no capital controls", Varoufakis just kept in line with the diplomatic strategy of Greece, which has been to promptly deny everything it has just said.
Alexis Tsipras is genius the referendum means he doesn't have to do his job.
He can just say "See you all decided not me."
It's his actual job - to represent and follow the opinion of the people. It's called democracy. And if the opinion of the majority is wrong, then, in this case, so be it.
He's not a representative, he's an administrator. Representing the people is the job of parliament, his job is to lead. He cannot just switch sides whenever it suits him.
We have all of these safeguards in place to ensure our leaders neither go off the rails completely, nor simply follow the popular opinion du jour with the predictable disastrous consequences.
If we would do that in the rest of Europe, aid to Greece would have stopped a long time ago.
Well, it should have stopped a long time ago... Or to be more accurate, financial help should never happen in the first place. But that's another long story.
To be fair his mandate on election was to reduce the impact of austerity. He has pushed for that but now the choice is austerity cuts or exit the Euro, neither of which he has an elected mandate for. Many other leaders would make the decision regardless but he had put it to the Greek people because ultimately it will be them that have to live with the decision and he knows that most don't want to leave he EU. So now they have to decide what is more important EU membership or no more austerity cuts.
However in reality it is no decision because without EU membership there is no money anyway so austerity is happening to Greece one way or another.
And anyway, he new all those things before saturday. If he thinks a referendum is needed, he could have held it weeks ago.
> He can just say "See you all decided not me."
A large portion of the Greek people recognizes this for what it is: an extremely cowardly opt-out for Tsipras for taking responsibility
He has an impossible job - when taxes are not paid, people retire at forty, government jobs pay people even higher salaries because they actually turn up, then any chance of balancing the books is looking like a Greek tragedy.
Please stop repeating things you don't actually know are true. Greeks work hard and don't retire at 40. Their work ethic is not the problem. Not paying taxes is a problem. The amount of pensions paid is also a problem. Individual Greek people are the victim as much as the lenders whose loans are defaulted on (iincluding me, via my country's contributions)
tl;dr ECB has leaked to BBC they will cut off emergency lending that covers the panic withdrawals. This will kill the deal and force a grexit, even before 5 July referendum. However French PM does not think they have enough independence to do that.
So we have a democratic nation potentially forced to leave Euro, after democratically deciding it no longer wants the austerity imposed, being forced to leave by non democratic ECB while the democracies that appoint the ECB think it is going too far.
What's that quote from Hunt For Red October - "with all these planes in the sky, it's only a matter of time [before we start a war]"
The lesson for democracy - force governments who are going to adjust fiscal measures past a certain point to get referendum approval
- and look how well that works in California...
What's the alternative for the ECB? Give €129 bn to Greek banks to replace the deposits that are bound to flee this week only to see it lost when they default after saying no in the referendum? The Greek banks would have been bust long ago if it wasn't for the ECB's emergency lending; they've been provided with €60 bn in liquidity over the last 6 months to replace the deposit flight. Not sure how you can characterise that as Greece being forced to leave by a decision from the ECB. Looks more to me like they have to leave because there are no other options left.
The alternative is to start investing in Greece. To build up it's economy so we can end the Greek Depression. As it stands now the austerity packages have cut 30% off of the economy and increased the unemployment rates to nearly 30%, 50% of the youth. Those are Great Depression size numbers. Hard to collect taxes when people are not working. All these bailouts are basically just the Troika hand wringing about giving money to themselves while the country they are helping is bled dry. To date the IMF have made about 2.5 Billion, Germany profited to the tune of 100 Billion.
I asked what the alternative for the ECB was and you suggested the alternative was to invest in Greece. Are you suggesting that the ECB should invest in Greece to build up its economy or are you conflating my question regarding what the alternative for the ECB was with a question which I did not ask regarding what European institutions in general should do?
To roughly answer the above questions - the ECB and IMF need to stop. This is above their pay grade.
This is a problem caused by a fixed exchange rate (single currency) at the wrong rate for Greece and co. Without a mechanism to adjust prices for differences in cost and productivity Euros looked really cheap to borrow from germane but olive oil looked really expensive to buy in. (Germany presses and bottles and exports more olive oil from Greek olives than Greece does)
The only way to solve the problem long term is to move the money from richer (urban) parts of Europe to poorer rural parts. Stupid ideas like the CAP don't really help. Redistributive taxation across Europe (ie Federal taxes and Federal government) are the next step. But that is waaaaay out of the ECBs remit.
Syriza is basically saying - fine break my legs, but only if you can promise a European wide discussion on how we got into this mess and what a federal Europe will look like
I'm not sure that the ECBs action is the cause so much as the effect.
My understanding of this was that the greek banks are (without ECB help) insolvent and have been for some time. They are unable to raise capital on the open market, as the open market has decided that they are not confident enough in those banks to lend them money.
As a result the Emergency Liquidity Assitance from the ECB has been used, but that was only provided on the basis that the greek banks were solvent but had temporary liquidity problems.
As far as I understand it, as soon as Greece is no longer in a bailout Program (Tuesday by current reckoning) those banks will not be solvent any more (they hold large amounts of Greek government debt), and ELA can't (without some form of change of rules for the ECB) continue.
The ECB is just following it's rules and it's been known that this approach is where they would likely need to go for some time, absent a political intervention from the Europgroup or the IMF.
Often in politics you want someone to feel threatened, but you don't want to look like an asshole by threatening them yourself.while the democracies that appoint the ECB think it is going too far.I'm sure France and Germany can put up the money to cover profligate Greek public spending if they want to. But if they've decided Greece needs to be cut off, I'm sure they'd much rather have an anonymous non-german non-french bureaucrat deliver the bad news than do it themselves.
It works at all scales:
"I'd love to give you a raise, but corporate is making big cuts everywhere... I'll do what I can for you, but I can't make promises."
There were similar leaks from ECB to force Irish to take bailout. Anyway we will see on monday, right now some ATMs in athens are still working.
Since this is [citation needed] I dug around. Seems like yes, the ECB pressured Ireland into accepting a bailout by threatening them to shut down ELA. But in fact they did it in a secret letter from Trichet to the then finance minister. Getting that letter released took some pressure, as well. [0][1]
So, the only similarity seems to be the ECB threatening to pull ELA. There has alreay been debate that the ECB is already overstepping their mandate, but I can't find an English source for that.
0: http://www.irishtimes.com/business/economy/o-reilly-hits-out...
My source is former Irish financial minister talking at parliamentary commission, which investigated crisis, a few months ago. Dont really remember details.
They say that newspapers readers and television viewers love a train wreck, a situation where everybody knows very bad things are coming and we all pop the popcorn and watch. It's a sad reflection on human nature, but audience numbers prove it out.
But wow, the Grexit is painful even when put into the train wreck category. It's going on and on, and the invective, hate, and hard feelings linger and fester. The amount of misery this has produced seems vastly out of proportion to the incident itself. I wonder if severe, immediate action taken at the beginning of the crisis wouldn't have resulted in something much less painful than this. 25% shrinkage in the economy and then massive bank closings? Good grief. It's becoming reminiscent of post WWI Germany.
>after five years of lender-imposed austerity that has increased Greek unemployment
That's a very easy target. Probably easier to ignore the high cost of hiring, bureacracy, corruption,...
Several people are interpreting "stays the same" as good news for Greece and contrary to the article. I interpret it as the opposite: it will not expand further to meet the demand, thus Greek banks will run out of money. I didn't have the impression anyone expected the full amount to be recalled.
The article was incorrect by stating ELA would be "turned off", as it will merely be frozen, or at least the ECB is saying so.
However if the ECB follows through on this, the end result may be the same and it's only a matter of time before the entire ELA bailout is unwound like in Cyprus.
The article seems a little confusing/confused but not strictly incorrect. There is no statement that the full amount would be recalled. The value of ELA has effectively become the extensions - the newly-lent money is being withdrawn daily. "Ending" this and refusing increase the limit could be considered the same.
Just now : ELA continued : http://www.ecb.europa.eu/press/pr/date/2015/html/pr150628.en...
The title is not particularly clear. "Continued" means that the ELA is maintained at the current level.
Put another way, there will be no further increase in ELA and the Greek banks have used the previous allotment, so their coffers are running dry. It will be a very tough week in Athens.
The BBC should know better than this, using "unnamed sources" to quote a rumour as fact.
No decision has been made yet, so this is just misinformation. Expect more of this over the next days.
Reminds me of Yes, Minister:
- Can I attribute it? "Minister speaks out"? - No, no, no. - Then, where did I get the story? I can't say, "Officially announced." - "Government spokesman"? - How about, "Sources close to Minister"? - Hold on, I don't want everybody to know I told you! Couldn't you do, "Speculation is growing in Westminster"? - A bit weak. - "Unofficial spokesman"? - Used that twice this week already! - The Cabinet's leaking like a sieve, isn't it?Certainly with the BBC, that likely means "we talked to people who gave us information we judge to be correct, but we cannot tell you who those people are (likely because that was a precondition for them giving the information)"
See http://www.bbc.co.uk/guidelines/editorialguidelines/edguide/... (I would make a clearer distinction between unnamed ("we know who (s)he is, but cannot tell you") and anonymous ("we don't know who (s)he is, so we cannot tell you") sources)
Unfortunately this is extremely common in many countries where politicians and civil servants want something out without having it tied to them.
If you've been following the greece coverage, there's been lots of documents leaking from various sources on both sides of the negotiations. Last week when the initial greek proposal and the IMF "red-lined" version were in discussion, both were leaked on the day...
I wonder if there are any democracies where this mechanism isn't used> in many countries where politicians and civil servants > want something out without having it tied to them
This doesn't mean it was a friend's uncle's brother told them, it means someone in a position to know intentionally leaked it.> "unnamed sources"But not knowing who leaked it takes away the very important opportunity to judge their motivations for leaking it, which again has a substantial bearing on how believable a leak is.
What kind of capital controls? in this situation it is quite an oxymoron. With a different currency you can control the exchange rate or limit how much one is allowed to exchange, however Greece still has the same internal currency - the Euro. You don't have a Greek euro only - its the same currency.
To me all these conflicting reports smell like panic; decision makers just don't know what to do now, and the BBC does not know what to report. Sounds like 2008 all over again.
Cyprus imposed capital controls while remaining in the Euro. Restrictions on bank transfers and cash crossing the border.
interesting. Now how is the economy supposed to function with limitations on bank transfer? Wouldn't that make it difficult to repay debt?
Lots of paperwork, I think. Every non-trivial transfer requires approval. Here's how it used to work in the UK until 1979: http://www.bankofengland.co.uk/archive/Documents/historicpub...
Edit: yes, this makes commerce difficult. A finance correspondent I follow on twitter says to expect petrol rationing.
And now it will continue:
Flagging this, way too much un-informed nonsense in this thread, lots of heat and little or no light.
As I understand it, one of the major underlying issues this whole time (aside from the silliness of trying to integrate Greece's economy with Germany's) was the ECB's refusal to act as the lender of last resort. This seems like an affirmation of that.
If Greece exits the Euro, I wonder if that will embolden other countries to do the same.
The ECB has effectively acted as a lender of last resort to Greece for a looong time (just look at ELA [1] for example), although for political reasons this fact has been sugar-coated so as not to scare the electorate in states that pay for Greece (and are now beginning to see what has been clear to anyone who looked at the figures, namely that the money is gone!). Greece was effectively bankrupt years ago. The main underlying issue is that Greece has been unable or unwilling (depending on whom you ask) to ensure that tax revenues roughly match government expenditures.
But there aren't many countries in the First World that run revenue neutral or better. The U.S. certainly doesn't, and most countries with fiat currencies and their own central banks don't. I realize it's "possible" in the broad sense, but Germany aside, it's a big ask of Greece (and austerity thus far has done about bupkis to actually deal with the fallout of the financial crisis).
Greece is now able to run a primary surplus: revenue > expenditure. However, revenue < expenditure + interest payments.
I think the ECB is actually not allowed to do that, because Europe (better: The countries of the Euro Zone) is not a debt union. If the Countries were paying for each other regardless of structural reforms, Europe would need to be constructed in a different way (with an actual central government).
To address your other point: I think the horrible situation that will arise in Greece in the following weeks/months will make other countries certainly think twice about getting out of the Euro.
No, if Greece exits then Italy, Spain, and France will be the next to get the treatment. A Grexit will mean the end of the beginning of the end for the EU and a move towards nationalism and/or fascism across the rest of Europe.
Most countries have growing anti-EU nationalist movements, and ass-raping Greece isn't going to make them less popular.
But the IMF have no interest in a strong Europe, because before 2008 European policy was heading in an aggressively anti-corporate direction.
A bleeding and uncertain Europe with a population terrified of poverty and old age is much more to their liking.
Remember total QE lending to banks is the far side of $2.5tn, and most of it is secured against assets that are clearly worthless.
The IMF itself is happy to agitate against austerity when it suits its political aims, and to hand out money that's unlikely to be repaid: see also, Ukraine.
So this is a purely political pantomime. Greek solvency is simply a pretext for political power plays - another attempt to enforce the usual neo-liberal "reform" agenda which aims to destroy the last century's traditions of socially responsible government spending.
If they leave and manage to kick-start the economy that i doubt very much they will manage to do, yes other countries will start to wonder, the next in line is Portugal with the highest speeding in % of GDP of government debt in Europe.
Its times like these that I seriously consider buying more bitcoins. Capital controls are totally unjust, in a free country. And it can happen in any country. The governments need to get their act together, instead of punishing innocent citizens. Why does a centrally controlled currency even need to exist in the first place?
It's about time. Greece has been behaving like a gambling addict, asking for money to repay the old debts only to waste them in expensive restaurants, buying iPhones, and gambling even more.
> It's about time. Greece has been behaving like a gambling addict, asking for money to repay the old debts only to waste them in expensive restaurants, buying iPhones, and gambling even more.
You have a limited understanding of the situation. And you don't need to be that insulting toward Greece.
I know here it is apparently ok to make fun of people in a dare situation and talk about them like they are fool and idiots yet in that case the responsibility is shared across many parties and the EU itself has a huge responsibility in that fiasco.
What the point saying what you just said? does it make you feel smarter or like you belong to a superior class? Would you want others to talk about you or your country that way when things turn south? no, so have a little respect. We are talking about people here who are mostly victims. Or do you think people here will laught at your speech because that's what they do in real life when you say horrible things?
Gambling addict? What an incredibly unfair and childish characterisation.
Greece is not a person, Greece is a nation state. It has implemented severe fiscal cutbacks after being forced to by its creditors. Cutbacks which have ruined the country's economy, massively increased poverty, and made it more difficult to pay back its debts.
Now its people have voted in a government that wishes to make different reforms. Ones that also keep the book balanced, but do not hurt the weakest in society as much or destroy economic productivity.
While I am certainly sympathetic to the Greeks for the hardships they have faced and will undoubtedly face in the years to come, it is incredibly unfair to deny the Greeks' own responsibility in all this.
This entire mess started with Greece not having its finances in order, and essentially lying about this for years to the rest of the Eurogroup. After it became clear how dire the situation was, the Eurogroup stepped in and helped Greece by giving them money (LOTS of money). Had the Eurogroup not done this, Greece would have defaulted on its debts years ago, and the country would have gone bankrupt.
Now if someone offers to help you by giving you money, provided you meet certain conditions, you can either accept and comply with the conditions, or you can refuse. The fact is that Greece gladly accepted the billions upon billions of euros, and the conditions that money came with.
I am fully aware that the measures demanded by Greece's creditors are tough. Some would say it is doubtful whether they are actually effective at all. And the demanded measures are certainly driven partly by political motives. All this is true.
But it is mind-boggling to me that after the Eurogroup provided several hundred billion euro's in aid to Greece, anyone would turn around and claim the current crisis is in no way the Greeks' own fault.
Your narrative is mostly incorrect.
- The EU was aware that Greece's finances were not as portrayed. This was an open secret. However, Germany and France were breaking max deficit rules at the time, and they would look like huge hypocrites if they complained about Greece's numbers. So they didn't. Rose colored glasses and political expedience played a huge role here.
- A country can't go bankrupt. They can simply refuse to pay their debts, and because they're a sovereign nation they're in their right to do so.
- When banks lend money to a country it isn't charity. They get interest payments and in exchange risk not getting paid back at all if things go sour. It was astoundingly unwise for banks to lend money to Greece at practically zero interest (as they did during the boom period). Had the banks been responsible, or had the oversight institutions not been asleep at the wheel, this crisis would not have happened.
- The banks who lent to Greece got 90% of the bailout package. Not the people of Greece. So it's not true Greece received "several hundred billion in aid".
- "Some would say it is doubtful whether they are actually effective at all.". It's certain beyond a shadow of a doubt that the austerity policies enforced by the troika were actively harmful. It's delusional to pretend otherwise, given that the GDP shrank so much the debt burden INCREASED as a result.
...> When banks lend money to a country this isn't charity. > They get interest payments and in exchange risk not > getting paid back at all if things go sour
It's a shame that these two pieces of information aren't at the absolute top of every article, every piece of coverage about Greece.> The banks who lent to Greece got 90% of the bailout > package. Not the people of Greece. So it's not true > Greece received "several hundred billion in aid"If Greece was a person, they'd have gone through bankruptcy and been discharged by now, and the banks who'd imprudently lent to them would have taken a haircut.
> While I am certainly sympathetic to the Greeks for the hardships they have faced and will undoubtedly face in the years to come, it is incredibly unfair to deny the Greeks' own responsibility in all this.
Nobody is denying that fact. But it seems you are forgetting that Greece made a lot of tough decisions for its people when asked by its creditors to "reform" yet it is just not sustainable, it's like asking the greeks to commit suicide.
> and essentially lying about this for years to the rest of the Eurogroup
And who do you think helped cook the books? Goldman Sachs
If a country gets out of the Euro, it will set a precedent and other countries might do that in the future. The euro is an insane experiment anyway. It cannot work. Too many structural and economical differences between euro countries. UK was smart enough not to get into that mess. It seems that the only country really profiting from this is Germany. While they are obviously not responsible for that mess , there is a lot of resentment against Germany in southern European countries and France. For these countries the Euro is just the Deutsche Mark 2.0.
> And who do you think helped cook the books? Goldman Sachs
Did GS get any "punishment" for this? And does this take away all guilt from Greece?
> The euro is an insane experiment anyway. It cannot work. Too many structural and economical differences between euro countries.
As someone without an economics background, I'm interested to know what these insurmountable differences are?
> Did GS get any "punishment" for this?
I guess the punishment is that former GS executive Mario Draghi now runs the ECB.
> you are forgetting that Greece made a lot of tough decisions for its people when asked by its creditors to "reform" yet it is just not sustainable, it's like asking the greeks to commit suicide.
No, I am not forgetting this. The Greek people are certainly suffering from the reforms. But this suffering would have happened anyway, with or without the Euro.
Greece has made such a mess of its finances, in a number of ways, that even if it had never joined the Euro, it would have gone bankrupt at some point anyway.
> The euro is an insane experiment anyway. It cannot work. Too many structural and economical differences between euro countries.
Perhaps, but I hope you're wrong :).
> It seems that the only country really profiting from this is Germany.
There is free trade between all EU countries, not just the Euro countries. It is this free trade that Germany is profiting from, not the Euro currency.
> It is this free trade that Germany is profiting from, not the Euro currency.
Once again a blatant falsehood.
When economically strong and weaker countries share a currency the stronger countries benefit, because it pushes the value of their currency down. This means they can export effectively, especially to the countries who suddenly have a stronger currency with more purchasing power than they otherwise would have had.
> countries who suddenly have a stronger currency with more purchasing power than they otherwise would have had
Does this mean Greece (let's stick to them) was predetermined to get hit the moment they joined the Eurozone?
If yes, could you please elaborate how that wasn't visible to them? Or, if it was, what motivated them to take this road anyway?
Yes, Greece was predetermined to "get hit" as you put it. There was no need for it to get this bad, though. A number of US states (e.g. Mississippi) have a similarly inferior economy compared to the union average, but the situation is stable thanks to federal fiscal policy.
I can only speculate about what motivated Greece to join the Eurozone.
My guess would be that Simitis' believed his reforms (Eksynchronismos) fundamentally transformed the Greek economy. Politicians take bold action to ensure their legacy, and it must be tempting to go down in history as the man who fixed his country's economy and led it down a road of mutual prosperity.
Perhaps he understood the economic risks, perhaps he didn't. He was certainly warned by economists. Perhaps he simply didn't believe the rest of the Eurozone could be this obstinate and cruel. It's hard to say for sure. We certainly can't take the politicians' words at face value.
It's no surprise that Germany only briefly went into a technical recession. I definitely didn't notice any extra financial hardship or reduction in spending here in Berlin. In fact it seems everyone is going crazy buying new sports cars.
And you really believe that the middle and lower class Greeks ie. "the Greeks" did benefit from that money, right? It's their mistake voting for shady politicians all these years but this situation is a result far away from their powers.
it is incredibly unfair to deny the Greeks' own responsibility in all this.
To what extent is any one person responsible for the actions of their government?
Except it's not just one person. Most Greeks lived well beyond their means for over a decade. I'm from Turkey and have many Greek friends, and the overall sentiment in the country up until 2008 was that they could just continue borrowing and living like kings and queens until the end of time. Then the financial meltdown happened, foreign investors became bearish and the Greeks lost their easy access to capital, and things quickly unraveled.
Reminds me of America...
No nation has its finances in order, whether they are part of the EU, or if it's the U.S. or Japan or China. Get off your high horse.
The issue is: All the cutbacks aim at the government, while all the EFSF money goes towards the banks – the greece government isn’t bailed out, it’s again banks that cash out big.
It's hard to say the austerity measures are to blame for their economic downturn. The Greek economy has by some measures continued on the path started by the financial crisis and by some measures improved (bank capitalisation, budget surplus before debt payments). If they have a recession at the same time as austerity it's a bit of a stretch to say the cutbacks ruined the economy. I'd also say that Syriza is a pretty hard left wing party, of whose proposals I've seen little that doesn't amount to "borrow more and spend more". Their election rhetoric was "we shouldn't have to repay because that's insulting to us".
That line of reasoning proves too much - If you want to use this argument then you also have to argue that the IMF is more interested in reforms that won't help Greece than a chance to get some its money back - that is that greedy international capitalistic bankers hate Greece more than they love money.
So? Much poorer countries had to support greece. How come a poor slovakia should fund the lifestyle of lazy greeks? No thanks
I don't have the statistics [0][1], but I would be very, very surprised, if the amount of money Slovakia is putting into the EU and Euro zone comes even close to the transfers they receive. Slovakia does not fund anything at all, they just receive a little bit less.
[0] Actually, here is some data for the EU (German): https://upload.wikimedia.org/wikipedia/commons/1/1b/Nettozah...
[1] And here is more: https://en.wikipedia.org/wiki/Budget_of_the_European_Union#N...
> How come a poor slovakia should fund the lifestyle of lazy greeks?
The Greeks are not lazy. Suffering is not lazy.
He may not be correct in what he is saying, but the underlying message is that Greece and the Greeks were enjoying the benefits of the EU on the never never, their attitude to taxation was part of the problem and now Greece expects to be taken care of by the rest of the EU taxpayers who actually pay their taxes. They don't want to affect their pensioners but it is many of those pensioners who benefitted the most from the money years of the EU.
So I guess the question is who should be paying for Greece's poor financial planning because Greece do not appear to think it should be them.
Greece does not want to affect their pensioners? What? Greece has already made massive cuts across the board on Government services, including pensions.
They retired at 61, whilst in Northern Europe we've just had to raise the age to 67. They - like the Italians - don't like paying their taxes.
http://www.economist.com/blogs/charlemagne/2010/02/greeces_g...
We should bail them out, but they should also retire at 67, the (existing) final salary pensions should be cut back and they should start paying their taxes.
This claim has been debunked here: http://blog.zeit.de/herdentrieb/2015/06/18/die-griechische-r...
EU data: Greece 64.4 years, Germany: 65.1.
OECD data: Greece 61.9 years vs. Germany 62.1
So it is actually the same.
Good find. The amount of self-serving disinformation around this whole debacle is disturbing.
They are retiring earlier, maybe just by a small margin, but earlier regardless. I think that if you also compare the average tax contribution of those retired people you would see that the level of contributions paid by germans would exceed those paid by Greeks. So a direct age comparison won't give a true picture of fairness.
I have to agree with this. It is inhumane and immoral not to bail them out if we can. Sure they have a huge responsibility for their situation however we all do. Much of what caused the crisis globally is being allowed to continue unchecked. We are sleep walking into another crisis yet we are all happy to point the finger at Greece's transgressions as if they are somehow worse than our own.
I don't agree with much of the fiscal and financial structures, strategies and ethos of the world at the moment however this is the path we are on and pivoting out of it will cause huge disruption and suffering. Austerity and measures forced by her creditors have so far failed Greece. It doesn't look bright in the future so they are correct to question the strategy however if they don't get their own house in order it will all be in vain. I think they realise this.
It saddens me to see someone here picturing the greece situation with such a simplistic and idiotic analogy.
It frigthens me to think such a line of reasonning could pop up on security or war matters.
That kind of thing is why politics are off topic here: https://news.ycombinator.com/newsguidelines.html
Not really. Most people I know have long hours and work their arses of. Taxi driver usually works 12 hours / 6 days a week for 20 euro a day net profit. Security guy takes about 500 euro a month for similar hours.
It is about pensioners and state employees.
I think it is unfair and lazy to characterise a people that way.
There is, however, deep structural or cultural issues that causes Greece to have such a massive tax gap: http://www.imf.org/external/pubs/ft/scr/2013/cr13155.pdf.
People may well be working hard, but a significant enough number of people are not contributing enough to the state, yet are demanding (by voting) ever more from it, and leaders seemed to have always been relaxed about it (I can't find the source again, but I remember reading that there is even a significant tax cap in the civil service itself).
What is unfair about it? Greek public sector has the same size as France. Pension system is even more generous than Italy. Retirement at 50 with full salary is not uncommon.
No, instead of cutting that, they should squeeze even more money on taxes. Even EC is criticizing Greek government for collecting too much money on income tax and VAT.
Just for illustration VAT tax on heating oil is 60%, most houses I know just do not order it. Last winter had a few weeks bellow freezing.
I was agreeing with you; I took your response to be one to a sentiment in this thread that 'Greek people are lazy'
I agree, I found the greek taxi drivers quite diligent in ripping me off when I was there last time.
That's a shockingly ignorant statement. You should be ashamed of yourself.
