Greek Financial Crisis Thread

[Skeckoa]

The Greek government should have cracked down on tax evasion as soon as it started (i.e. a long long time ago). If it did, Greece wouldn't be in the mess it is today.

It seems like the Greek government, with the extra revenue, woul have just found a justification to spend more.

No amount of tax revenue could have fixed that mentality.

[Ardoki]

The Greek government should have cracked down on tax evasion as soon as it started (i.e. a long long time ago). If it did, Greece wouldn't be in the mess it is today.

Well, income wasn't their problem. It was spending that was their problem. But getting the extra tax revenue wouldn't hurt.

Tax evasion and corruption was extraordinarily high.

The reason their spending was so high, is because they didn't raise the necessary income through taxes.

[Pollona]

The Greek government should have cracked down on tax evasion as soon as it started (i.e. a long long time ago). If it did, Greece wouldn't be in the mess it is today.

Well, income wasn't their problem. It was spending that was their problem. But getting the extra tax revenue wouldn't hurt.

It would have likely made the spending cuts less deep. But then again politicians in Greece have a tendency to not want to crack down on tax evasion, particularly when it helps their favored political constituencies. It's an issue which has festered for years. I've been told before that Greece has never collected (in its modern history) anywhere near the full taxes it imposes. I'll try to see if I can find a source for that.

But yeah, government spending and interest payments have been the real killer. Between 2001-2010 Greece accumulated something like €250 Billion in debt, about the size of the Danish economy, all the while above 100% Debt:GDP ratio. That of course carried with it immense socio-economic consequences.

[Teemant]

This is why the Taxes Are Theft mentality fails.

Uh. Taxes have been raised. A lot.

But no one pays them or paid them before. As I posted in other topic Greece has lost 90 billion dollars in tax revenue since 2009 because of tax evasion.

[Republic of the Cristo]

I feel that their austerity measures have made the situation worse for them. The cuts in spending were a good step, but by increasing the taxes you are taking money out of the private sector thus weakening economic growth. Not only that, but with higher taxes it will scare off people from paying any further taxes.

[Teemant]

I feel that their austerity measures have made the situation worse for them. The cuts in spending were a good step, but by increasing the taxes you are taking money out of the private sector thus weakening economic growth. Not only that, but with higher taxes it will scare off people from paying any further taxes.

Income taxes in Greece are not that high compared to some other Western European countries. Greece has many problems starting with tax evasion, they paid pensions to dead people, had budget deficit 40 years in a row and 6% budget deficit before crash (irresponsible policy), welfare paid to people who work (thus were not entitled to it) etc.
There is so much that Greece can and should fix on it's own but it seems there is no political will to do it. Because so many people avoid paying taxes, cracking down on tax evasionb would be one of those "unpopular measuers" and they haven't done much about it.

[Bombadil]

I don't think just talking to taxes is right, from this chart - Greece Outlier - you can see GDP starts to rise until the first of the loans that came with hefty conditions kicks in around 2010.. it begins to slightly rise again until the second loan with more conditions attached kicks in around 2012.

Clearly the austerity program has a serious effect here. It's not to say that there isn't a disease in the Greek economy but that the cure is killing it off.

[DBJ]

I don't think just talking to taxes is right, from this chart - Greece Outlier - you can see GDP starts to rise until the first of the loans that came with hefty conditions kicks in around 2010.. it begins to slightly rise again until the second loan with more conditions attached kicks in around 2012.

Clearly the austerity program has a serious effect here. It's not to say that there isn't a disease in the Greek economy but that the cure is killing it off.

Of course it gdp fell, but it had to fall. Greece wages were payed with loans they ultimately could never pay back. The scheme is unworkable in the long run. Continuing like that to keep GDP up for a few more months or years isn't the solution.

[Baltenstein]

Just out of curiosity, how would you find a mutually acceptable solutions with the current band of Greece's creditors who say "no" more times than Boehner and Obama try to diss each other? They dissed Germany - that was to be expected. They knew that they had to compromise on their platform, so they needed a bad guy, and in the EU when it comes to Greece, the bad guy's not hard to find.

And painting somebody as the bad guy will help you at convincing him to give you more favorable terms - how exactly? Because the latter very clearly didn't work. Unless you actually want a final breakout with him (which is not what Syriza was elected for)

How did they disappoint the center-left governments of France/Italy?

Well, did you see them supporting Greece in one of the Eurosummits the past few months? During all the meetings, the stand of the finance ministers was 18:1, because all the other countries (even Cyprus) rejected Greece's proposals. Yesterday, both Renzi and Hollande declare that the referendum will be about the Euro and the Drachme and that the Greek people shouldn't have illusions about that.

Because, as it stands, the "deal" that's offered to Greece sounds more like a noose around the Greek throat. They went for Russia/China, because Russia/China are the only countries that could bail Greece out if Greece has to default. They had little choice there.

The Russian government has made it absolutely clear that there will be no economic aid whatsoever to Greece from their side. They even publicly humiliated the Greek energy minister Panagiotis Lafazanis (an old school Communist who still refers to St. Petersburg as "Leningrad") when he announced the decision that Russia and Greece agreed on a 3-5 billion Dollar prepayment towards Greece for the planned Turkish Stream pipeline project. The Russian finance ministry clarified the very next day that no such prepayment will happen. (I don't blame the Russians on clarifiying things, by the way, it's the energy minister's fault that he is distributing fairy tales.) The Russian government's most recent public declaration was urging Greece to strike a deal with its creditors.
All in all, Russia has neither the means nor the interest to become Greece's sugar daddy. This was absolutely to be expected, and the Greek government foolishly tried to act as if it could have been otherwise.
Same thing for China: They have made clear that their main interest in Greece lies in using it as an entrance harbor for their goods for the European market. If the developments result in Greece being excluded from the EU's inner core, they'll simply turn towards Italy.

As for the US, erm, honestly if US gets infuriated because Athens picks Russia/China as a back up, (the only back up option available,) that's just Obama and co acting like kids. Obama had no back up plan for Libya, how's that working out? EU enjoying all of those refugees? I'm sorry Balt, but unless you can provide a decent back up plan without Russia/China, or unless you can show how they could've compromised with the creditors' piss poor approach, the whole "oh noes, we're mad because you went with Russian/China for back up plan" is just laughable.

The point is, no "backup plan with Russia/China" of any kind exists. It was the government's responsibility to know that beforehand.

[Liberty and Linguistics]

Help crowdfund the next Greek bailout...

I donated five dollars from the kindness of my heart. Why? Because a crowdfund is more competent than Tspiras.

[Teemant]

I just read that first sovereign debt was in 4BC and by who? Greek polises. I'm starting to think if this is a cultural thing.

[Pollona]

Update

It seems that Tsipras intends to resign if the referendum turns out to be a "yes" vote. So the country's voters now has two options: either vote yes and see your government resign or vote "no" and ensure your country's disruptive exit from the Eurozone. Vote to stay and you endorse a (now) non-existent austerity package, or you can vote the way the government (obviously) wants you to vote and create a fresh round of financial uncertainty. In the meantime, your banks are closed, capital controls are in place, and you can expect shortages at the supermarkets.

And this is the guy Greek voters elected to renegotiate the bailout? Incredible.

It's like a child throwing a temper tantrum after losing their favorite toy.

[Kilobugya]

It's like a child throwing a temper tantrum after losing their favorite toy.

Not the slightest. It's a reasonable, honest and courageous man who respects his people and their will. He was elected to fight austerity, which destroyed Greek economy and threw millions into poverty. He tried for months to negotiate with the Troika a solution that would allow him to take his people out of misery, and already made many (way too many, IMHO) concession to the Troika. The Troika refused to negotiate, just came up with a new ultimatum, and on things which is totally not its concern. The Troika said "we don't care what the Greek people voted, you're not a sovereign country but a colony, now execute what we want". Tsipras had no mandate to sign that. He was not elected to a sign another austerity package. So he did the right, honest and respectful of democracy thing : go ask the people concerned, the Greek citizen, with a simple question : « do you accept their conditions or not ? »

Now it's up to the Greek to decide, as it always should have been (I wish the previous government did some referendum too), if they continue the eternal spiral of austerity for a short-term relief in debt, recession, then new deadline come and new austerity and new recession for the next short-term relief, without any long term recovery in sight. Or if they don't, even if it means defying the Troika and facing a very troubled period, but then be able to rebuild, because the endless loop of austerity/recession/debt will be gone.

[Lyannesia]

Help crowdfund the next Greek bailout...

I donated five dollars from the kindness of my heart. Why? Because a crowdfund is more competent than Tspiras.

Yeah, totally more competent than Tsipras

I don't have a problem with those that say the referendum is about either the Euro or the Drachma, better the Drachma than being in the same monetary union with the Germans, the Dutch and the Finnish.

[Independent Republic of Not My Problem]

Blaming austerity for an economic crisis is like an alcoholic blaming sobriety for his hangover.

[Bombadil]

I don't think just talking to taxes is right, from this chart - Greece Outlier - you can see GDP starts to rise until the first of the loans that came with hefty conditions kicks in around 2010.. it begins to slightly rise again until the second loan with more conditions attached kicks in around 2012.

Clearly the austerity program has a serious effect here. It's not to say that there isn't a disease in the Greek economy but that the cure is killing it off.

Of course it gdp fell, but it had to fall. Greece wages were payed with loans they ultimately could never pay back. The scheme is unworkable in the long run. Continuing like that to keep GDP up for a few more months or years isn't the solution.

As I understand, less than 10% of the loans went to Greece, the rest went to paying back existing debt to creditors, many of which are private banks. In return Greece is expected to achieve a primary surplus rate unachieved by near any other country, and none on a sustained basis.

Beyond that, quite frankly this is subject to a wider problem that will be faced by most countries sooner or later, a restructuring of the economy away from manufacturing through medium to large companies, which formerly sustained an employment base. That will take investment into education and infrastructure that is also unachievable when the government has nothing to spend on investment.

The same upheavals that accompanied the global spread of the industrial age will be faced as we transition into the technology age..

There's no real solution for Greece, but there can still be a balance between human misery and debt collection.

[CTALNH]

Greek poll here:

http://www.toxwni.gr/xoni-apokleistika/ ... sta-to-oxi

No is 52% Yes is 29% and 19% I cant fucking decide.

[Lyannesia]

Greek poll here:

http://www.toxwni.gr/xoni-apokleistika/ ... sta-to-oxi

No is 52% Yes is 29% and 19% I cant fucking decide.

The-I-cant-fucking-decide are propably those who are too scared to possibly leave the Euro, yet don't want a new German **** up their ass.

Πάμε για μεγάλο γλέντι μέχρι την Κυριακή.

[CTALNH]

Greek poll here:

http://www.toxwni.gr/xoni-apokleistika/ ... sta-to-oxi

No is 52% Yes is 29% and 19% I cant fucking decide.

The-I-cant-fucking-decide are propably those who are too scared to possibly leave the Euro, yet don't want a new German **** up their ass.

Πάμε για μεγάλο γλέντι μέχρι την Κυριακή.

Yep.

I wanna believe no will win.

[Pollona]

It's like a child throwing a temper tantrum after losing their favorite toy.

Not the slightest. It's a reasonable, honest and courageous man who respects his people and their will. He was elected to fight austerity, which destroyed Greek economy and threw millions into poverty. He tried for months to negotiate with the Troika a solution that would allow him to take his people out of misery, and already made many (way too many, IMHO) concession to the Troika. The Troika refused to negotiate, just came up with a new ultimatum, and on things which is totally not its concern. The Troika said "we don't care what the Greek people voted, you're not a sovereign country but a colony, now execute what we want". Tsipras had no mandate to sign that. He was not elected to a sign another austerity package. So he did the right, honest and respectful of democracy thing : go ask the people concerned, the Greek citizen, with a simple question : « do you accept their conditions or not ? »

That's a rather rosy view of the situation. The Greek Government faced a snap election in 2015 and an anti-austerity government was elected to try and renegotiate a bailout. A bailout, remind you, which had already signed in 2012. The Syriza delegation went on a whirlwind tour, seemed oddly flirtatious with Russia, talked up reparations from Germany, and blamed most of Greece's problems on the Troika/Germany/Europe.

Quite rationally, the Eurozone leaders pointed out that this crisis in Greece is self-inflicted. After years of rampant overspending and cheap debt, Greece found itself in near bankruptcy. In exchange for a debt writeoff they had to agree to certain conditions. Austerity is not some sort of malicious design by Eurozone sadists, it's Greece's penance for years of idiocy and self-delusion. Greece's misery is almost wholly to blame on the Greek government.

Tsipras wanted a renegotiation, and the Eurozone leaders offered him one. He had months to negotiate a new set of terms. Yet, he found himself up against the wall. Instead of cutting his losses and admitting a defeat, he tried punting to voters to deflect blame. Vote yes and you can take the decision for me, vote no and I can escape the consequences. It's brilliantly short sighted. Unsurprising to no-one, the Eurozone leaders pulled the plug.

There is nothing to vote for this Sunday. The offered renegotiation package is off the table. All that is left is to decide whether to stay in the Eurozone or leave.

Now it's up to the Greek to decide, as it always should have been (I wish the previous government did some referendum too), if they continue the eternal spiral of austerity for a short-term relief in debt, recession, then new deadline come and new austerity and new recession for the next short-term relief, without any long term recovery in sight. Or if they don't, even if it means defying the Troika and facing a very troubled period, but then be able to rebuild, because the endless loop of austerity/recession/debt will be gone.

You cast a sovereign default in such an easy light. If you think the Greek economy couldn't get any worse then there is a whole new round of pain to come if Greece defaults.

At this point, Greece is certain to default to the IMF.

[Teemant]

Not the slightest. It's a reasonable, honest and courageous man who respects his people and their will. He was elected to fight austerity, which destroyed Greek economy and threw millions into poverty. He tried for months to negotiate with the Troika a solution that would allow him to take his people out of misery, and already made many (way too many, IMHO) concession to the Troika. The Troika refused to negotiate, just came up with a new ultimatum, and on things which is totally not its concern. The Troika said "we don't care what the Greek people voted, you're not a sovereign country but a colony, now execute what we want". Tsipras had no mandate to sign that. He was not elected to a sign another austerity package. So he did the right, honest and respectful of democracy thing : go ask the people concerned, the Greek citizen, with a simple question : « do you accept their conditions or not ? »

That's a rather rosy view of the situation. The Greek Government faced a snap election in 2015 and an anti-austerity government was elected to try and renegotiate a bailout. A bailout, remind you, which had already signed in 2012. The Syriza delegation went on a whirlwind tour, seemed oddly flirtatious with Russia, talked up reparations from Germany, and blamed most of Greece's problems on the Troika/Germany/Europe.

Quite rationally, the Eurozone leaders pointed out that this crisis in Greece is self-inflicted. After years of rampant overspending and cheap debt, Greece found itself in near bankruptcy. In exchange for a debt writeoff they had to agree to certain conditions. Austerity is not some sort of malicious design by Eurozone sadists, it's Greece's penance for years of idiocy and self-delusion. Greece's misery is almost wholly to blame on the Greek government.

Tsipras wanted a renegotiation, and the Eurozone leaders offered him one. He had months to negotiate a new set of terms. Yet, he found himself up against the wall. Instead of cutting his losses and admitting a defeat, he tried punting to voters to deflect blame. Vote yes and you can take the decision for me, vote no and I can escape the consequences. It's brilliantly short sighted. Unsurprising to no-one, the Eurozone leaders pulled the plug.

There is nothing to vote for this Sunday. The offered renegotiation package is off the table. All that is left is to decide whether to stay in the Eurozone or leave.

Now it's up to the Greek to decide, as it always should have been (I wish the previous government did some referendum too), if they continue the eternal spiral of austerity for a short-term relief in debt, recession, then new deadline come and new austerity and new recession for the next short-term relief, without any long term recovery in sight. Or if they don't, even if it means defying the Troika and facing a very troubled period, but then be able to rebuild, because the endless loop of austerity/recession/debt will be gone.

You cast a sovereign default in such an easy light. If you think the Greek economy couldn't get any worse then there is a whole new round of pain to come if Greece defaults.

At this point, Greece is certain to default to the IMF.

Very good post.

I'm thinking that if Greece people vote yes then who will be running the country? Tsipras will just resign (as he has hinted) and it's not his problem anymore.

[Pollona]

At this point the major Eurozone leaders have said that a No vote is an almost certainly a Grexit.

What happens to Greece the day following the referendum, I can't begin to contemplate.

[The Archregimancy]

I wasn't aware that there was a problem with the existing thread on the topic:

viewtopic.php?f=20&t=345713

Please stand by while I merge this into the existing thread (which I'll also subtly retitle).

[Pollona]

I wasn't aware that there was a problem with the existing thread on the topic:

viewtopic.php?f=20&t=345713

Please stand by while I merge this into the existing thread (which I'll also subtly retitle).

Thank you very much! I was just about to request the two topics merged.

There are mindreaders who walk among us.

Very good post.

I'm thinking that if Greece people vote yes then who will be running the country? Tsipras will just resign (as he has hinted) and it's not his problem anymore.

It was just a statement of fact, and other countries have gone through very severe recessions and periods of adjustment. It looks like you are from Estonia correct? From my limited knowledge (and personal visit through Tallinn), I understand that Estonia went through a painful internal devaluation but is now fully recovered.

As for Tsipras, it looks likely the no vote will win judging from the snap opinion polls. If he is ousted, I would suspect someone else from Syriza would become Prime Minister, it depends if the whole cabinet resigns with him.

[Teemant]

I wasn't aware that there was a problem with the existing thread on the topic:

viewtopic.php?f=20&t=345713

Please stand by while I merge this into the existing thread (which I'll also subtly retitle).

Thank you very much! I was just about to request the two topics merged.

There are mindreaders who walk among us.

Very good post.

I'm thinking that if Greece people vote yes then who will be running the country? Tsipras will just resign (as he has hinted) and it's not his problem anymore.

It was just a statement of fact, and other countries have gone through very severe recessions and periods of adjustment. It looks like you are from Estonia correct? From my limited knowledge (and personal visit through Tallinn), I understand that Estonia went through a painful internal devaluation but is now fully recovered.

As for Tsipras, it looks likely the no vote will win judging from the snap opinion polls. If he is ousted, I would suspect someone else from Syriza would become Prime Minister, it depends if the whole cabinet resigns with him.

Estonia as of now has fully recovered and everything seems to be back on track. Austerity totally worked in Estonia. People weren't very happy when reforms were made (although no large protest were held) but goverment made them anyways (because it was right thing to do). Estonia could have borrowed money from markets too (we have debt around 10% of GDP) but it din't happen.