Default by Greece Inevitable - Update : Heave to Oust Greece From the Eurozone

[riposte]

Riposte

A very eloquent response! Puts me into a corner that I don't want to in. Anyway, I apparently asked for it..

As a former banker, I would subscribe to everything you say that has been happening for a couple of decades now in the scene of big finance (not in the scene of local and regional banking, I should add!). So much for that.

What I definitely object to is the following: "Some people are comfortable enough to pontificate about honour and reputation .... other people just want to deliver food to the mouths of hungry children", because it is demagoguery out of the text book.

My wife is Greek and we spend about half the year there. Other than Argentina, I have never lived in a country where one part of society lives so much at the expense of the other part; where the ruling class (however you want to define it) cares so little about the others; where that ruling class has taken the others for such a ride as the ruling class of Greece has since joining the EU 30 years ago.

Our last stay was from April-Juni this year. Now, I could spend my time in those parts of Thessaloniki where life and the people are miserable. Our apartment happens to be on the better side. A crisis? Not visible! Supermarkets with prices higher than those in Austria and full of shoppers. The same goes for utterly expensive boutiques downtown. Weekend traffic to Chalkididi (to visit summer homes) bumper-to-bumper. Any noticeable concern about the fact that over 20% of their compatriots are out of a job? Not noticeable.

I have lived through one major financial crisis in Chile and two more in Argentina. One could see the crisis at all corners of society (with the possible exception of a small ruling class). None of that in Greece.

I find understandable, but still utterly ridiculous to link Greece's financial problems to derivaties & Co. The Greek financial sector, only 3 years ago, had the great distinction of not being involved in any of the bubbles of the day like Ireland, Spain & Co. (such as sub-prime, real estate, Bernie Madoff, etc.). The trouble of the Greek economy throughout modernity has been its dependence on foreign funding for its own living standard. Before the Euro, limited access to foreign currency held that in check. Since the Euro, the Greek economy has spent about 50% more abroad than it earned abroad. The difference had to be covered with foreign debt. Once the flow of foreign funding slows down, the economy stutters. Once it stops, the economy stops. You can find all the answers in Greece's Balance of Payments.

A similar thing happened to Cuba once it was cut of from Soviet funding. I don't want to compare Greece with Cuba but will say this about Cuba (in contrast to Greece): the Cubas quickly recognized that they had to find foreign funding elsewhere to survive. Loans they couldn't really find then, so they looked - correctly so! - for foreign investment (which they got in the field of tourism, much from Canada). Greece, instead, is scaring foreign invstors away.

I attach two blogposts I have written about the issue of "banks" and "starvation", just in case you are really interested how I feel about that.

http://klauskastner.blogspot.co.at/2...-dealings.html

http://klauskastner.blogspot.co.at/2...nd-others.html

Klaus .. I have taken the time to read your two blogs and see little to disagree with in them ..... but my reponse is to your above post. My wife is not Greek, I have never lived in Chile, Argentina or Cuba but hopefully that does not disqualify me from dicussing the poverty of the people in Greece, a fact that is widely validated by the world's press.

I never said that the probelms in Greece were caused by "bubbles" or "drivatives " I mentioned the fraudulent sale "drivatives" as an example of the lack of honour and carelessness of "reputation" on the part of the world's bankers ...... as this was the matter you seemed most concerned about in your first post.

In your above post you give me a history of how the Greek crisis came about but dismiss any concern for the suffering of the Greek people as demagoguery. You should look the meaning of words before you use them....... I am not a political leader.

A demagogue or rabble-rouser is a political leader who appeals to the emotions, prejudices, and ignorance of the poorer and less-educated classes in order to gain power. http://en.wikipedia.org/wiki/Demagogue

[Klaus Kastner]

Fair enough. But we have to keep the dimensions of the "misery" in mind. Yes, a lot of things are widely reported in the world's press. Leading to the situation that, when we are in Greece, we get inquiries from friends how bad it really is and whether we are affected by it (and for us as well as for the people we see in day-to-day life, life is wonderful). Of course one is ashamed when one reads that pharmacies are short of medicine. What is not mentioned is that if (Greek) racketeers in the supply chain were eliminated, there would be not shortage.

When I lived in Germany, I got used to the fact that the tax office made cross-checks between asset and other large purchases and one's income tax declaration. Within 4 weeks after I purchased an apartment, I got an inquiry from the tax office how I had paid for it. They couldn't find any interest income in my tax declaration. After I explained that they couldn't find it because I had not lived there before to file an income tax declaration, they were satisfied.

Just imagine the following: cross-checks are made between asset purchases and property holdings, as well as between money transfers abroad, with the corresponding income tax declarations. You could make a nice deductible but my guess is you would still find enough tax revenue potential to give every unemployed a decent unemployment beneft.

When I see poverty in Bangladesh, I feel sorry for the country. When I see misery in Greece, I get angry at those Greeks who could eliminate that misery if they only contributed their fair share (no more!) to society.

Let me just cite two cases; both known to me. A pensioner who collects close to 10.000 Euros per month from 3 pensions (3 careers in public sector institutions). And a teacher couple in their early thirties whose net income is now 588 Euros net per month. The latter can't afford to have children. The former can afford summer homes in Chalkidiki and in a ski resort. Both resorts of a quality that they might just as well be in Gstaad.

I know that our debate doesn't make the misery of those who are suffering any easier. From that standpoint, it is purely academic. Of course, immediate measures should be taken that the teacher couple can afford children and that those who are in even greater misery are helped. I would be all for that. At the same time, the "other debate" just can't be ignored because that is the essence of the Greek problem.

[riposte]

Fair enough. But we have to keep the dimensions of the "misery" in mind. Yes, a lot of things are widely reported in the world's press. Leading to the situation that, when we are in Greece, we get inquiries from friends how bad it really is and whether we are affected by it (and for us as well as for the people we see in day-to-day life, life is wonderful). Of course one is ashamed when one reads that pharmacies are short of medicine. What is not mentioned is that if (Greek) racketeers in the supply chain were eliminated, there would be not shortage.

When I lived in Germany, I got used to the fact that the tax office made cross-checks between asset and other large purchases and one's income tax declaration. Within 4 weeks after I purchased an apartment, I got an inquiry from the tax office how I had paid for it. They couldn't find any interest income in my tax declaration. After I explained that they couldn't find it because I had not lived there before to file an income tax declaration, they were satisfied.

Just imagine the following: cross-checks are made between asset purchases and property holdings, as well as between money transfers abroad, with the corresponding income tax declarations. You could make a nice deductible but my guess is you would still find enough tax revenue potential to give every unemployed a decent unemployment beneft.

When I see poverty in Bangladesh, I feel sorry for the country. When I see misery in Greece, I get angry at those Greeks who could eliminate that misery if they only contributed their fair share (no more!) to society.

Let me just cite two cases; both known to me. A pensioner who collects close to 10.000 Euros per month from 3 pensions (3 careers in public sector institutions). And a teacher couple in their early thirties whose net income is now 588 Euros net per month. The latter can't afford to have children. The former can afford summer homes in Chalkidiki and in a ski resort. Both resorts of a quality that they might just as well be in Gstaad.

I know that our debate doesn't make the misery of those who are suffering any easier. From that standpoint, it is purely academic. Of course, immediate measures should be taken that the teacher couple can afford children and that those who are in even greater misery are helped. I would be all for that. At the same time, the "other debate" just can't be ignored because that is the essence of the Greek problem.

My point Klaus is that academic debates about "reputation" and "honour" are redundant when all the institutions of capitalism are devoid of such virtues .... and do nothing to assist those who are suffering from the mistakes and criminal conspiracies of those who pulled the EU and the Euro together under false pretences such as the fiddling of the figures to bring Greece into the Euro.

Anyway . welcome to the forum Klaus ..... and you could do worse than read this thread by our esteemed colleague Ephilant.

http://www.politicalworld.org/showthread.php?t=10796

[ang]

Greece ratings revised by S&P =

@zerohedge
Greece Outlook Cut to Negative From Stable by S&P. So... another default coming?

[MPB]

Fair enough. But we have to keep the dimensions of the "misery" in mind. Yes, a lot of things are widely reported in the world's press. Leading to the situation that, when we are in Greece, we get inquiries from friends how bad it really is and whether we are affected by it (and for us as well as for the people we see in day-to-day life, life is wonderful). Of course one is ashamed when one reads that pharmacies are short of medicine. What is not mentioned is that if (Greek) racketeers in the supply chain were eliminated, there would be not shortage.

When I lived in Germany, I got used to the fact that the tax office made cross-checks between asset and other large purchases and one's income tax declaration. Within 4 weeks after I purchased an apartment, I got an inquiry from the tax office how I had paid for it. They couldn't find any interest income in my tax declaration. After I explained that they couldn't find it because I had not lived there before to file an income tax declaration, they were satisfied.

Just imagine the following: cross-checks are made between asset purchases and property holdings, as well as between money transfers abroad, with the corresponding income tax declarations. You could make a nice deductible but my guess is you would still find enough tax revenue potential to give every unemployed a decent unemployment beneft.

When I see poverty in Bangladesh, I feel sorry for the country. When I see misery in Greece, I get angry at those Greeks who could eliminate that misery if they only contributed their fair share (no more!) to society.

Let me just cite two cases; both known to me. A pensioner who collects close to 10.000 Euros per month from 3 pensions (3 careers in public sector institutions). And a teacher couple in their early thirties whose net income is now 588 Euros net per month. The latter can't afford to have children. The former can afford summer homes in Chalkidiki and in a ski resort. Both resorts of a quality that they might just as well be in Gstaad.

I know that our debate doesn't make the misery of those who are suffering any easier. From that standpoint, it is purely academic. Of course, immediate measures should be taken that the teacher couple can afford children and that those who are in even greater misery are helped. I would be all for that. At the same time, the "other debate" just can't be ignored because that is the essence of the Greek problem.

A brilliant defintion of both the Greek problem and the EU problem.

With Govt comes favouritism. With new Govt comes more favouritism and so on and so on.

Govt is supposed to be a public service. It is nothing of the sort. It is organised thievery.

It is the transfer of public taxes to the acolytes of the political parties of the day.

All political parties are criminal organisations by definition of criminal organisations.

[DCon]

It looks like the bit of IMF blackmail has worked. Last week they made it clear that unles our debt sustainable again, the IMF would not contribute any longer to the "saving of Greece".
The famous "anonymous EU source" has now let it be know that the EU is considering a further haircut worth 70-100 billion Euro to Greek debt, aimed at bringing the debt down by 30% or to an almost 1005 of GDP. This would involve a haircut to bonds held by the European Central Bank, the national central banks and possibly the eurozone states.

Reuters reports that the cost of this second restructuring will be borne by the ECB and the 17 national central banks, a number of them including the ECB will also require recapitalization themselves.

I'm not sure if Merkel, Schauble & Co Inc is going to be very happy with this, but it is reproted that this deal could be announced as soon as next week.

A German politician has said

US must tell IMF to stay in Greece, not pull out

http://www.forexlive.com/blog/2012/0...id-for-greece/

[Ephilant]

Did he let the cat out of the bag?

Eurozone finance ministers' group chief Jean-Claude Juncker has said a Greek exit from the eurozone would be "manageable" but not "desirable", according to an interview published Tuesday. "The way things look now, it would be a manageable process," he told Germany's WDR public broadcaster, according to a transcript on the government website of Luxembourg, where Juncker is prime minister.

"That's not to say it would be a desirable occurrence because it would be linked to considerable risks, above all for the average person in Greece." Asked whether Greece could, in theory, drop out of the 17-nation single currency bloc in two days' time, Juncker denied that would happen, adding: "In any case not before the end of autumn, and not even then."

http://www.brecorder.com/money-a-banking/198/1224942/

September again? I think there is a little something else happening here, and as predicted many a time, greece is heading for yet another election. Why? Well, of course all the obvious reasons, unhappy people, incompetent politicians, greedy banks, etc. But something else is happening. According to tne MoU. Greece must fire 150,000 civil servants, something PASOK does not want to do, because that is their voter base depleted by 150,000 votes. So, they have now revived a very typical Greek solution to a Greek problem. It's a thing called the "Labour Reserve". What does the "Labour Reserve" mean? It's another little perk for the chosen few. Under the plan, the civil servants would not be layed off, they would be transferred to the Labour reserve, where they get 60% of their wages, keep their perks, but don't work. They are not considered unemployed, but can look for other employment. Their time on the Labour reserve can be up to 3 years.
You can see where this is going, can't you? A pool of people on 60% their wages, which still leaves them with well above the average industrial wage. As they are technically not unemployed, there are no controls over what they do or don't do, and we have an instant black market labour force. The last time this crack was tried was under Papandreou. Out of the 15,000 who went into "labour reserve", only 765 ended up leaving the civil service. The others? to a man ended up working as tempers for, indeed, the government....

This issue is very likely to bring down the government. ND is all for this, 150,000 people, handsomely paid for by the taxpayer, and perfectly capable of topping up their wages always make for a good extra few voters. PASOK and DEM Left, who have the experience from the Papandreou days, say "Nein". Categorically. Both Venizelos and Kouvelis maintain this was nver discussed, and like everybody else, the first they heard of it was on TV. Not a good basis for government confidence.
September is getting closer, and Junkers got the first shot across the bow in. We are willing to help Greece, but by the end of the autumn (after the elections!)..... He wouldn't be pushing for an allout ND majority this time would he? He couldn't, could he?

[DCon]

From zerohedge, http://www.zerohedge.com/news/greek-...s-only-day-job. These guys should teach FG how to do it properly!

As Athens News reports revelations that Vyron Polydoras, who held the position of speaker for just a single-day during the hung parliament of May 2012, rushed to hire his daughter - Margarita - as an employee of his office. Not only did he hire her on his one and only day in office, despite defending himself by stating he was entitled to hire up to six staff, but he also managed (all in this one day remember) to approve a two million euro 'election bonus' for his staff and police.

[Ephilant]

Indeed, but good old Vyron didn't get it all his way. The "election bonus" has not been paid yet. the government is "looking at ways to revoke the decision". I think it has just been put on the back boiler so that people will forget, and we can then expect a political "masterstroke" by Samaras in September, when he has to call elections, and decides they "haven't been able to revoke the decision", of course guaranteing him a few 1000 votes next time around. That, and his "tolerance" of Golden Dawn are the pillars of his bid to get a full majority next time aroudn and then really put the boot in...

[Ephilant]

the same journalist who "exposed" Polydoras has gone digging a little further and has found another few niceties.
While more and more people are struggling to put food on the table,

Former Prime Ministers like K. Mitsotakis (no longer MP), K. Simitis, K. Karamanlis and G. Papandreou enjoy the privilege of offices and employees. A total of 70 people

Former Parliament speakers: Kaklamanis, Petsalnikos (PASOK), Psarouda-Benaki, Sioufas (Nea Dimocratia), are no longer MPs but offer work places to six people each. Benaki recently hired a niece, Sioufas daughter has a permanent work contract

The Greek taxpayer, that endagered species, is paying for all these people, 100% of their wages. Nobody really knows what they are doing, or why they are needed, but it's fully legal. Perks of the job, even if the job of the benefactor is gone. Only in Greece...

[C. Flower]

From zerohedge, http://www.zerohedge.com/news/greek-...s-only-day-job. These guys should teach FG how to do it properly!

"Entitled"....

[Dr. FIVE]

Deutsche Telekom, which is 32% owned by the German government, in turn has a 40% stake in the Hellenic Telecommunications Organization – or OTE as it is generally known in Greece. OTE is down for €4.9 billion of debt…roughly what the Athens Coalition is short of an austerity programme. Or put another way, a great deal of money.

But this is investment, shareholders, profits, dividends, bonuses and business we’re talking here – not citizens. Thus, different rules apply.

http://hat4uk.wordpress.com/2012/08/...py-to-pay-for/

[Sam Lord]

How the ECB is keeping Greece afloat utilising the ELA programme:

http://www.counterpunch.org/2012/08/...-greece-alive/

[ZeroWedge]

Former Parliament speakers: Kaklamanis, Petsalnikos (PASOK), Psarouda-Benaki, Sioufas (Nea Dimocratia), are no longer MPs but offer work places to six people each. Benaki recently hired a niece, Sioufas daughter has a permanent work contract
The Greek taxpayer, that endagered species, is paying for all these people, 100% of their wages. Nobody really knows what they are doing, or why they are needed, but it's fully legal. Perks of the job, even if the job of the benefactor is gone. Only in Greece

This is standard left wing "job creation", that leftwingers are always clamouring for. The standard leftwing argument is that these six "workers" are stimulating the economy. So why are you now indicating that this job creation is wrong?

The six leechers should have put the job title "special needs assistant" on their contracts, and youd be applauding them as heros, rather than criticising them.

You leftwingers are so confused in your tiny, tiny brains.

[Ephilant]

This is standard left wing "job creation", that leftwingers are always clamouring for. The standard leftwing argument is that these six "workers" are stimulating the economy. So why are you now indicating that this job creation is wrong?

The six leechers should have put the job title "special needs assistant" on their contracts, and youd be applauding them as heros, rather than criticising them.

You leftwingers are so confused in your tiny, tiny brains.

You really are scraping the bottom of the barrel here to try and create an argument. To go and label Neo Democratia and PASOK as left wing as about as credible as calling FF die hard communists. You would be a lot closer to the truth with the FF statement.