Posts Tagged ‘Greece’
Perhaps intuition is all we have to hear clearly.
John O’Donohue, in yesterday’s post, touched on the essence of today’s theme, “The greatest philosophers admit that to a large degree all knowledge comes through the senses. The senses are our bridge to the world.“
Dogs, of course, demonstrate powerfully how their senses provide a ‘bridge to the world’.
This odd collection of writings (ramblings?) that comprise Learning from Dogs is based around the ‘i’ word – Integrity. The banner on the home page proclaims Dogs are integrous animals. We have much to learn from them. Ergo, dogs offer a powerful metaphor for the pressing need for integrity among those that ‘manage’ our societies.
Thus my senses are more tuned, than otherwise, to the conversations in the world out there that support the premise that unless we, as in modern man, radically amend our attitudes and behaviours, then the species homo sapiens is going to hell in a hand-basket!
End of preamble!
Professor Bill Mitchell is one person who recently touched my senses. As his Blog outlines he is an interesting fellow,
Bill Mitchell is the Research Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the University of Newcastle, NSW Australia.
He is also a professional musician and plays guitar with the Melbourne Reggae-Dub band – Pressure Drop. The band was popular around the live music scene in Melbourne in the late 1970s and early 1980s. The band reformed in late 2010.
Professor Mitchell’s Blog is not for the faint-hearted, it can be pretty technical at times. Nevertheless, I have been a daily subscriber for a couple of months now.
On the 24th, Prof. Bill wrote a long article under the heading of ‘What if economists were personally liable for their advice‘. I want to quote a little from that article. Starting with,
Economists have a strange way of writing up briefing documents. There is an advanced capacity to dehumanise economic advice and ignore the most important economic and social problems (unemployment and poverty) in favour of promoting non-issues (like public debt ratios). It reminds me sometimes of how the Nazis who were brutal in the extreme in the execution of their ideology sat around getting portraits of themselves taken with their loving families etc. The training of economists creates an advanced state of separation from human issues and an absence of empathy.
In a sense, we all understand this, this use of language to separate us from our collective humanity. A random Google search came up with this. A statement by British Prime Minister, David Cameron, to Parliament on the 24th regarding Europe, as in,
Mr Speaker, let me turn to yesterday’s European Council.
This European Council was about three things.
Sorting out the problems of the Eurozone.
Promoting growth in the EU.
And ensuring that as the Eurozone develops new arrangements for governance, the interests of those outside the Eurozone are protected.
This latter point touches directly on the debate in this House later today, and I will say a word on this later in my statement.
Resolving the problems in the Eurozone is the urgent and over-riding priority facing not only the Eurozone members, but the EU as a whole – and indeed the rest of the world economy.
Britain is playing a positive role proposing the three vital steps needed to deal with this crisis – the establishment of a financial firewall big enough to contain any contagion; the credible recapitalisation of European banks; and a decisive solution to the problems in Greece.
Read the last paragraph. Wonderful words that seem to make sense to the casual listener but picking up on Prof. Bill, an utter ‘separation from human issues and an absence of empathy‘. There is no humanity in those words from the British Prime Minister. We all know there are hundreds of other examples from mouthpieces all across our global society. Back to Bill Mitchell’s article,
Greece has failed. To say this is not another report of investment banks or research centers, but directly Troika officials who have just completed their review on Hellenic public finance. Linkiesta is in possession of the entire report of the troika, composed of officials from the International Monetary Fund (IMF), European Central Bank (ECB) and European Commission.
I have a rule of thumb that I use when considering documents such as these. The rule is to assess how strong the concern for unemployment is. How often is unemployment mentioned? The answer is zero. The document never mentions the word or concept.
So obsessed are the Troika and their bean counters about public debt stabilisation that they have completely lost sight of one of the worst problems an economy can encounter – the failure to generate work for all.
Read those last words again, “completely lost sight of one of the worst problems an economy can encounter – the failure to generate work for all“. One last extract from the article,
There is absolutely no historical evidence which shows that when all nations are contracting or stagnant and private spending is flat (or contracting) that cutting public spending will create growth.
So why did these economists think that a nation would grow when all components of spending were strongly indicated to fall or were being actually cut? The answer lies in acknowledging that they operate in an ideologically blinkered world and are never taken to account for their policy mistakes. They are unaccountable and do not suffer income losses when the nations they dispense advice to and impose policies on behave contrary to the “expectation” which results in millions being unemployed.
In my view, my profession should be liable for the advice it gives and economists should be held personally liable for damages if their advice causes harm to other individuals. If the economists in the IMF and elsewhere were held personally responsible then the advice would quickly change because they would be “playing” with their own fortunes and not the fortunes of an amorphous group of Greeks that they have never met.
Very powerful words that strike at the heart of the matter, that of integrity. (If you want to read it in full, then the article is here.)
Let me move on a little. The 24th also saw a powerful essay on Yves Smith’s Blog Naked Capitalism, from Philip Pilkington, a journalist and writer living in Dublin, Ireland. Here’s a taste of what Mr. Pilkington wrote.
Every now and then a terrible thought enters my mind. It runs like this: what if the theatre of the Eurocrisis is really and truly a political power-game being cynically played by politicians from the core while the periphery burns?
Yes, of course, we can engage in polemic and say that such is the case. But in doing so we are trying to stoke emotion and generally allowing our rhetorical flourish to carry the argument. At least, that is what I thought. I had heard this rhetoric; I had engaged in it to some extent myself; but I had never really believed it. Only once or twice, in my nightmares, I had thought that, maybe, just maybe, it might have some truth.
Can you see the parallels between Prof. Mitchell and Philip Pilkington? The latter wrote, “a political power-game being cynically played by politicians from the core while the periphery burns“, the former wrote, “If the economists in the IMF and elsewhere were held personally responsible then the advice would quickly change because they would be “playing” with their own fortunes and not the fortunes of an amorphous group of Greeks that they have never met.”
It’s clearly obvious to all those that have commented to both the Bill Mitchell and Philip Pilkington items. That is, in my words, a complete lack of integrity, truth and a commitment to serve the people, from so many in places of influence and power.
We all sense this, hear it so clearly, a separation from human issues and an absence of empathy.
We have so much to learn, so much sense to learn, from dogs!
Footnote. Had just completed the above when I came across a piece by Patrick Cockburn in last Sunday’s Independent newspaper, that starts thus,
World View: A sense of injustice is growing. Elite politicians and notorious wrongdoers appear immune as ordinary Greeks reel from wage and job cuts
Up close, the most striking feature of the reforms being forced on Greece by its international creditors is their destructiveness and futility. The pay cuts, tax rises, cuts and job losses agreed to by parliament in Athens last week will serve only to send the economy into a steeper tailspin, even if it extracted a much-needed €8bn in bailout money from the EU leaders. “Nothing but a lost war could be worse than this situation,” one left-wing ex-minister tells me. “What is worse, no party or political group in Greece is offering real solutions to our crisis.
Say no more!
At last, an in-depth analysis of what is going wrong in Europe!
With grateful thanks to Neil K. for sending me this.
The agony of watching a country (and a planet) slip.
Readers will be aware that I very rarely stroll through the tangled pastures of international politics and finance. The only reason that I do so today is on the back of a very impressive letter published in the German newspaper Handelsblatt. That was brought to my attention by my subscription to Mike Shedlock’s (Mish) Blog Mish’s Global Economic Trend Analysis. You will see that I muse at two levels about where we are today.
Earlier, I had read in last Saturday’s, The Economist a leader on Greece’s debt crisis, entitled Trichet the intransigent. That started thus,
The European Central Bank’s refusal to consider a restructuring of Greek debt could wreck the euro zone
May 12th 2011 | from the print edition
IF THE stakes were not so high, Europeans’ incompetence in the euro-zone debt crisis would be comic.
and concluded thus,
It is time for the Germans and the IMF to call the ECB’s bluff. Together they should demand, and instigate, a restructuring of Greek debt. Germany should push other European governments to cough up money to support Greek banks and, if necessary, to make whole the ECB. The fund, which knows how to restructure debt, must ensure the process is run in a competent manner. The ECB will then be faced with a choice: go along with an orderly restructuring, or trigger a much greater mess by in effect forcing Greece out of the euro zone. Surely Mr Trichet does not want that to be his legacy.
So with that as background, the letter to Georgios Papandreou, Prime Minister of Greece written by Gabor Steingart is powerful and hard hitting. Here it is in full.
Mr. Prime Minister,
Dear Mr. Papandreou,
With the greatest respect, the Western world is monitoring your efforts to master your country’s debt crisis. No other democratic country has ever managed anything like that in peacetime. You are shrinking the state apparatus; you are fighting corruption; you are teaching your fellow countrymen how to become honest tax-payers.
You are a modern hero. You are attempting the impossible. As the son of a persecuted and ostracized politician who was chased by the military junta you grew up close to danger. When the officers were looking for your father who was hiding in the attic, they threatened you by putting an unlocked pistol to your forehead and challenged you to betray your father. You denied your father’s presence until he, worried about his son’s life, left his hiding place.Later you fled with him to America where you spent your adolescence. You are alarger-than-life-character.
Preceding governments almost ruined your country. Debts amounting to 340 billion Euros are burdening the Greek state,equaling 155 times the profit of the 60 largest companies of your country and 1.5 times the amount of debts the Maastricht Treaty allows. A year ago, this newspaper, Germany’s biggest Business Daily, appealed to the public to buy Greek government bonds in order to give to the country what Greece needs just as urgently as money: confidence. We also wanted to assist in breaking through the negative spiral of growing doubt and increasing interest rates. Everyone who granted you guarantees and loans wanted it, the European Union, the International Monetary Fund, the heads of state and government.
But since then, the spiral has picked up in speed instead of slowing down. In May 2010 the interest rate at which your country was given money on a ten year basis was at eight per cent. Today, it is at 16 per cent. And in all probability, it will be going up further. The bitter truth to which you and all parties who wanted to help Greece have to admit is that the help doesn’t help. Your country is getting deeper and deeper into the mess. Debts are growing, the gross national product will decrease by at least three per cent in 2011. But it would have to grow by three per cent instead if you were to lower your debt to the allowedlimit until 2040. This is becoming more and more unrealistic. You can’t starve and build up your muscles at the same time.
The truth that Greece has to cut back and save has turned into an untruth. The right thing has turned into the wrong thing. You already cut pensions, lowered the salaries of civil servants by 30 per cent and raised the prices of gas by almost 50 per cent. You can’t restore the health of your country by saving. And the European Union can’t restore your country’s health by again and again injecting new loans.
Soon, the day will come when the tortured body will surrender. The Greek construction industry already shrank by 70 per cent. Sales of car dealers sank by half. A daily export volume of 50 million Euros Greece is achieving far too little. Soon the day will come which investors fear in their nightmares. Then the word “insolvency” will be on everyone’s lips.
But it is also the day when a new truth will be born: Don’t save but invest, they will tell you – so that the Greek economy will grow again. Do not service debt with debt, you then will be recommended, but spread out the debt service, cut it and maybe even completely suspend it for a while. It will be a day of impositions, especially for those who lendmoney to you and your people. Financial markets will grind to a halt in horror – and then they will turn to embrace the future. Because Argentina in 2001, Mexico at the beginning of the eighties and Germany after World War II taught us that there is a life after death – at least, in the case of highly indebted states.
Mr. Papandreou, so far, you attempted the impossible. Now you should do the possible. Just as you deceived the officers as a boy and denied to know where your father was hiding you now must repudiate the pride of the Greeks - in order to save your country. Come to meet the new uncomfortable truth before it knocks at your door. It’s already on its way.
The author is an award winning Journalist, the former White House Correspondent of “Der Spiegel” and now Handelsblatt’s Editor-in-Chief. His book “The war for wealth. The true story of globalization or while the flat world is broken” was published in the US, GB, China and several other countries by McGraw Hill, New York, in 2008.
You may contact him at
Powerful, as I said.
In a sense, in a very real sense, this illustration of the end game of our love affair with debt is symptomatic of the end game in terms of mankind’s love affair with, well with mankind. The following was written by an inmate of Oklahoma Prison in 1998.
At the root of my humanity lies a potentially insatiable self-centredness. Given its way, it can become unquenchable. Nothing, not even the richest of imagination, will put out its fire.
This ‘what’s in it for me’ mindset is at the root of all my problems and is where my fears live. From those fears come anger, greed, intolerance, and a host of other shortcomings.
It is no accident that all religions point to the forgetting of self, because all religions know salvation lies in self-forgetting.
As we head relentlessly towards a level of 400 parts per million (PPM) of carbon dioxide in the atmosphere, 50 PPM above the highest safe limit determined by climate scientists, the time for mankind to move on from the debt-laden, over-leveraged, disconnected life from Planet Earth, is now.
A guest post from Chris Snuggs, a long-term supporter and author on Learning from Dogs.
EU QUESTIONNAIRE - C Snuggs, 26 November, 2010
This questionnaire is designed to test your knowledge and opinions of the EU. Your answers will be collated and go towards the production of a report to present to your MEP (Member of the European Parliament)– if you can find him or her. Please give your opinion by ticking either T (true) or F (false) for each proposition.
1 Greece falsified its statistics in order to “qualify” for entry to the euro.
2 EU leaders KNEW this (like almost everyone else), but ignored it.
3 The EU’s OWN economists had told them that Greece and others could not live in the Eurozone alongside Germany.
4 Ergo, the EU elite connived in a LIE about the finances of Greece and the future of the euro..
5 Once Greece was in the Eurozone it spent money wildly and wastefully with many people retiring at 50, a bloated and overpaid civil service, civil servants who often didn’t bother to turn up, pensions bequeathed to relatives and so on.
6 The EU elite knew all this but DID NOTHING EFFECTIVE about it.
7 Now European taxpayers are having to pay BILLIONS to bail out feckless countries that vastly overspent.
8 The EU elite that lied and ignored these deep problems have been utterly incompetent guardians’ of EU taxpayers’ money. More than incompetent, they have been party to DEFRAUDING many millions of taxpayers for their own ambitions and political ends.
9 The VAST payouts of taxpayers’ money to bail out Greece, Ireland and soon Belgium, Portugal, Spain and Italy DO NOTHING TO FIX THE UNDERLYING PROBLEMS as highlighted in 3 above. This policy therefore represents an appalling further waste of money and merely postpones difficult decisions that EU leaders must make, and should in fact have made YEARS ago.
10 According to the EU’s OWN RULES it is ILLEGAL to “bail out” a bankrupt country. Despite this, the EU countries have bailed out Greece and now Ireland. Mr Van Rompuy was charged with finding a way that this could be done legally. Frau Merkel has suggested that the Lisbon Treaty be amended to allow bailouts to be done legally. How she proposes to amend this Treaty without the consent of member countries is a mystery.
11 The EU elite, knowingly having illegally bailed out Greece and now Ireland should be arrested en masse for illegal use of public money. The EU is very strong on law, except apparently for itself when it suits it.
EU FINANCE, SPENDING & REMUNERATION
12 The EU has failed to get its accounts signed off for the nth year in succession; NO PRIVATE CONCERN COULD GET AWAY WITH THIS.
13 At this time of economic crisis the EU wants to spend SIX BILLION EUROS on a new diplomatic service, including the placing of FORTY-SIX “diplomats” on Barbados and over FIFTY on Madagascar.
14 The number of EU citizens demanding this vast expenditure must be microscopic; though nobody knows for sure since the EU would never dream of asking its paymasters their opinion.
15 Europe is going through the worst period of financial chaos since WWII. Jobs are being lost almost everywhere; many EU countries are technically bankrupt; people’s living standards and public services are being drastically cut, except it seems in the EU in Brussels.
16 The EU has just won a court case against the people that finance it, the national governments. As a consequence, EU workers will receive a payrise backdated to last year with interest of 3.7% at a time of desperate economic hardship for many millions of EU citizens.
17 The head of the vast new “diplomatic” organisation is a Brit who has NEVER BEEN ELECTED to any post of significance and earns more than TWICE as much as ANY European leader, plus very considerable expenses. She is far from unique in the EU circle of the elite.
18 EU workers receive extraordinary perks (benefits) and also pay around 8% income tax. Very few of their electors (who pay their wages) benefit from anything like this sort of remuneration.
19 Peter Mandelson RESIGNED from his post as Commissioner to become an English Lord. Since his ludicrous remuneration for this was LOWER than his EU income the EU is paying him around £62,000 of taxpayers’ money for FOUR years to make up the difference, EVEN THOUGH HE RESIGNED.
20 The above-mentioned practice amounts to institutionalised THEFT of taxpayers’ money.
21 The EU has just created an English-language website to inform us of how wonderful they are. In other words, WE are paying to have EU PROPAGANDA shoved down our throats.
22 The EU paying some 300,000€ for a dogs’ home in Poland at a time when millions of people in Europe are suffering real economic hardship is just one example of frivelous use of taxpayers’ money.
THE RATIONALE OF THE EU
23 Mr van Rompuy, unelected “President” from a failing and disintegrating state (is this the reason for his obsession?), has said that “The nation states are dead.” He and the EU elite seek the creation of a European “superstate” controlled from Brussels.
24 Mr Van Rompuy has presumably informed President Sarkozy, Chancellor Merkel and other EU leaders personally that their states “are dead”. Their reactions have not been published so far.
25 This agenda was denied by the EU elite for many decades, which of course represents yet another LIE.
26 This unelected “President” earns more than any national leader in the EU. This is to give the impression that he is more important, since clearly the more money you are paid the more important you must be.
MEPs & DEMOCRACY
27 MEPs have just demanded a near 6% increase in the EU budget.
28 In this they are certainly not reflecting the wishes of the majority of their electors.
29 Many turn up in Brussels, sign on to qualify for their attendance allowance and then go away.
30 I do not know of any other profession where you get paid a vast salary and expenses and then EXTRA MONEY just for attending a meeting.
31 Most people haven’t got the foggiest idea who is supposed to be “representing” them in Brussels.
32 The EU as it stands is a top-down decision-making organisation whose leaders have a degree of self-righteousness (“Only we know what is good for you.”) that has to be suffered to be believed.
33 MEPs do not take their electors wishes into account.
34 The EU hates referendums since they give an opportunity to the people to express their opinion and actually make a decision. Naturally they can’t be trusted with decisions.
35 When a referendum goes against the EU the usual reaction is to oblige the country involved to do it again and again till the “right” answer is produced. In this the EU is a laughing stock, but the elite do not care as long as they get their way
36 MEPs periodically flog up and down from Brussels to Strasbourg. Sitting in Strasbourg is supposed to be some sort of symbol, but I don’t know of any voters who were asked if they wanted to pay through the nose for a symbol at vast expense, not least in carbon emissions.
37 The modern world is characterized by greed, arrogance and incompetence. These are qualities that the EU elite has demonstrated in abundance.
38 The EU elite has totally and utterly FAILED the people of Europe and is not fit for purpose.
39 Most people believe in cooperation within Europe, but not in a European superstate ruled from Brussels, a country both disintegrating and vastly endebted.
40 The EU elite has completely destroyed the faith that many ordinary people had in the EU as primarily a “common market”.
My overall reaction to the EU elite and its management of the EU is as follows. (Please tick ONE box.)
A) In general I am very pleased with the EU leadership.
B) I am quite pleased, even if some things could be improved.
C) I don’t care much either way. They can get on with it as far as I’m concerned.
D) I am not very pleased with the way the EU is run.
E) I am very dissatisfied indeed about the way that my money is being spent.
F) It is such a corrupt, wasteful and undemocratic shambles that we have to abolish it up and start again. My country is certainly better off outside the EU AS IT IS CURRENTLY RUN. I am profoundly disappointed.
F) I am disgusted at the EU elite’s arrogance, incompetence, dishonesty and venality.
[NB. If after reading the above, you really would like to submit your answers to the above questions to your local MP or MEP, then Chris has a form you may use that may be downloaded from here. Ed]
By Chris Snuggs
Fiddling with gravity!
Financial crises can be very difficult events to understand. Even for those who have spent a great deal of time studying such areas as finance and economics, comprehension of these disasters can be elusive. However, analyzing shared elements in the recent American and Greek financial crises can help give even the economic layman insight into their common causes.
One word can be used to sum up the basic concept behind both of these crises – overextension. Both the American and Greek governments attempted to take on a much heavier economic load than either could handle. While, in both cases, this has been painted by some as a noble, humanitarian effort to help those in need, methods such as inflationary monetary policy tantamount to theft and the disguising of massive budgetary deficits (in both cases with the help of Goldman Sachs) would not justify the means employed even had these efforts been successful, and certainly should be taken to task considering the disastrous ramifications of these actions.
In both cases, many are citing unrestrained spending as the source of the problem. For example, CNN wrote of the Greek crisis that “years of unrestrained spending, cheap lending and failure to implement financial reforms…whisked away a curtain of partly fiddled statistics to reveal debt levels and deficits that exceeded limits set by the Eurozone.”
Without suggesting that CNN was attempting to be deceptive in this explanation, as the points made certainly are important, it must be noted that things like unrestrained spending, cheap lending, and fiddled statistics are merely symptoms of the deeper disease. Instead of asking the government to spend less, tighten lending laws, and implement financial reform, one should instead ask the deeper question – how does the government even have the power to cause such problems in the first place, and why are the results of such government power so often much more hurtful than helpful?
This deeper problem, whose symptoms we are now dealing with, is central banking. The Federal Reserve System and its Greek counterpart, the Bank of Greece, each had a heavy hand in their respective nations’ financial collapses. This is due to these banks’ attempts at economic manipulation – the Federal Reserve directly sets interest rates, while the Greek system uses more indirect methods to do nearly the same thing. Note that it is due to their attempts at economic manipulation, as attempting to set economic law is about as useful as attempting to set gravity.
Consider this metaphor of setting gravity. A man claims to be able to set the force of gravity on the earth. He tells a stunt biker that he can set gravity to be half as much as normal. So, the biker attempts to jump a distance that is much longer than he normally would attempt. Upon jumping, the biker finds that, obviously, the first man never was able to set the nature of gravity at all, and he falls to the ground long before reaching his destination.
This is exactly what happened due to the actions of central banks in the cases of both the United States and Greece. Interest rates and other natural economic restrictions were said to be more flexible than they truly were. Thus, individuals who based their actions on this information ended up engaging in activities that were far more risky than usual. However, once they had “jumped,” so to speak, they found that, in fact, economic law was as strict as ever, and they “fell.”
However, if the answer is so obvious, why are we not hearing more about it? Each of these financial crises is extremely complicated, and the above described scene is, it must be admitted, an oversimplification. This is not to say that it is not accurate, but rather that this nature of the crises’ root cause is not immediately apparent to all upon examining the situation.
For example, a person who has been educated their entire life in an economic school that praises central banking, deficit spending, and government action in general would certainly seek to find another cause for the crisis, perhaps by blaming business owners for making risky investments or stating that government controls were not strict enough. However, a person who has studied and understands the damage done by central banking and government economic controls will be quick to realize what has occurred.
People with such knowledge are becoming more and more common in both the United States and around the world. “Even today, with an economic crisis raging, the response by our government and the Federal Reserve has been characteristic,” Ron Paul writes in his recent book, End the Fed. “Interest rates are driven to zero and trillions of dollars are pushed into the economy with no evidence that any problems will be solved. The authorities remain oblivious to the fact that they are only making our problems worse in the long run.”
While he may be one of the most popular adversaries of central banking, it is not just Ron Paul, or even Austrian economists, who are calling out government for its role in these financial crises. In an e-mail to supporters, Democratic congressman Dennis Kucinich cited “the 1913 Federal Reserve Act, the banks’ fractional reserve system and our debt-based economic system” as major factors in the American crisis.
Such complex and important issues as economic crises need all the attention we can give them, and it is impossible here to provide the in-depth analysis that these situations merit. It also must be noted that while both the United States and Greece have to an extent both engaged in central banking to their detriments, each country does have a different system. Still, the general principles hold, always returning us to that first word – overextension. As long as nations attempt to manipulate the laws of economics to engage in far grander pursuits than they can sustain, we can expect to see such economic crises as have been seen in the United States and Greece in the future.
By Elliot Engstrom
I told you so!
German Chancellor Angela Merkel’s party and its coalition allies have been defeated in regional elections in North Rhine-Westphalia.
German Chancellor Merkel appears to have lost the state vote in NRW and may see her control of parliament reduced or eliminated. It’s her own fault.
Germany and in particular NRW (the industrial powerhouse of Germany) are in a serious economic situation with enforced cuts left, right and centre and yet she has loaned (aka given) billions to feckless, idle, corrupt and shambolic Greece.
The Germans have had to tighten their belts and are still paying vast sums to bring East Germany up to speed, yet Merkel feels she can fritter away her people’s money to “save the euro“. It won’t save Greece or the euro.
The Greeks fully deserve to go bankrupt and are incapable of complying with the degree of “cuts” the Germans are demanding. Other European countries will lose money if Greece defaults. Tough.
Better to suffer a one-off loss than an endless shelling-out into a black hole. No bailout of Greece, Portugal, Spain, Ireland or Britain. Did the PEOPLE of ANY of the rest of EU countries have ANY say in this at all?
It seems the French pushed hard for a bailout. What a coincidence that some of their insurance companies have invested heavily in Greece. TOO BAD. Greece’s problems have been well-known for years; which moron poured billions into their black-hole, retire-at-53, inherit-your-sister’s-pension, go-to-work-if-you-feel-like-it economy?
And the Greeks? They seem to feel it is the fault of the REST of us that they have to make cuts. Was a reality check ever more fully needed? Sadly, but inevitably, there will be social breakdown in Greece from which something new will emerge. What that is, one cannot say, but I do not believe it can include membership of the Euro.
The Brussels Overlords think differently. Their little Euro brainchild must be saved at all costs. But they are all personally very well off and have no problems with money, unlike the majority of their constituents thanks to the despicable fraud perpetrated on them by the banks under the appallingly-negligent supervision of a multitude of governments.
I have written about Greece several times in recent weeks since to me it is a symbol of the combination of arrogance and utter folly of many of Europe’s governments – and in particular Brussels – who have overspent wildly, who have allowed their banks to make fraudulent loans and have imposed an ever-increasing burden of bureaucracy, Human rights, paperwork and regulations on the peoples of Europe.
How we are supposed to compete effectively when we A) price ourselves out of the market and B) wildly overspend is a mystery.
Has Europe now to prepare itself for a long period of decline and retrenchment in living standards as Asia maintains its inexorable growth and raw materials rocket in price? I fear so, but it’ll be the ordinary people bearing the brunt of all this, not the increasingly-remote politicians in national governments and Brussels.
Greece is a warning for the rest of us. There is no law that says we cannot go the same way. The UK and France in particular have bloated, feather-bedded public sectors. The chickens always come home to roost, and they are now flocking rapidly towards the hen-house.
By Chris Snuggs
Market Swings are Normal…nay…Desirable!
Just to try to help put stock market swings into perspective, consider this:
- the 347.8 point fall in the Dow Jones Industrial Average last week, from 10868.12 at the start of the trading day on Thursday, May 6, 2010 to 10520.32 at the close of trading, can be COMPLETELY explained by an increase in the perceived cost of capital from 12% to 12.23%.
- do the math. Using the constant dividend growth model, a very simplified model of the market value of equity, or Market Value = Current Dividend/(cost of equity capital – dividend growth rate), and assuming a long-term average cost of U.S. equity capital of 12% and average growth rate of 5%, we find that the opening level of 10868.12 = 760.77/(.12 -.05), and the closing level of 10520.32= 760.77/(.1223 -.05).
- I think it is entirely possible that the chaos in Greece and surrounding nations, and the interconnections between worldwide supplies of liquidity and financial capital, that an increase in the perceived risk and uncertainty of the returns to equity from 12% per year to 12.23% per year makes perfect sense.
- The market’s are working. Market participants, from the individual investor using on-line trading at 2:00 in the morning from their living room to the most sophisticated computerized large-scale institutional trader, understands that a borrower’s ability to pay back its investors depends on the real productivity and growth of private industry, whether the borrower is a company or a country.
by Sherry Jarrell
The art of saying something and meaning something totally different.
I must confess to being a bit fed up with Greece.
In Anglo-Saxon language their attitude used to be called “taking the piss“. Today’s “funny” (or if preferred take your pick from: tragic, surreal, ludicrous, ridiculous,bizarre, insane or indeed all of these at once) is something the Greek Prime Minister said. Admittedly he said it in February and I’ve only just picked up on it.
Here’s an extract from what was said:
‘We are a country which cannot alone deal with the speculation. So this has become a European problem, because if we do have a major problem, this could create a contagion for other countries too who are not to blame.’
Brilliant and I especially love the use of the word “speculation”.
This makes it seem as if it isn’t Greece’s fault at all; it’s all down to those nasty fat people in suits and sunglasses, the evil international financial mafia seeking to destabilize his country.
Then there is the “if” word. Now normally this is associated with a condition, but anyone who even in February thought that there was any conditionality involved in Greece’s meltdown must have been looney, or perhaps the Head of the International Monetary Fund (IMF) who said this on March 8th:
Greece will be able to deal with its own financial problems without needing a bailout, the head of the International Monetary Fund said today.
IMF managing director Dominique Strauss-Kahn said that Greece’s debt mountain is unlikely to spread to other eurozone countries with high levels of public debt.
And Mr Strauss-Kahn dismissed market speculation of potential default by other heavily indebted eurozone countries such as Portugal, Spain or Ireland as scare-mongering.
Yes, this is the same DSK who is paid a vast salary and expenses and could be the next President of the EU.Of course he could have been lying to try to restore “confidence”. However, lying is lying, for whatever reason. Or he could have just been humungously wrong.
That’s the trouble with our leaders and financial experts these days; you never know whether they’re lying or just stupid; it’s usually one or the other and sometimes of course both.
And Papandreou’s quote continues: ” a contagion for other countries“. Indeed, Mr P. And what do we do with a “contagion” in the body? We destroy it and get rid of it …. and finally we have “other countries too who are not to blame“.
AHA! At last! Proof that my old Mum in the UK on her measly pension is not to blame. Thanks Mr P. At last some recognition fo the truth. Let’s have a bit more of that ….
As for the merits of Greece’s plea for funds, you only have to read this devastating article to feel your flabber gasting to breaking point.
No wonder the Germans are increasingly threatening to dump Greece, and so they should. Not the German government (all governments seem currently to lack the guts to do anything really necessary or serious).
No, this time it’s an economics professor threatening to take the EU to court if they allow this blatantly EU-illegal bailout, and public opinion is increasingly on his side.
It is a horrendous mess, but the only solution is for Greece to leave the euro. Bailing them out is a black hole. Does anyone in their right mind think the Greeks can really change their traditional practices and suddenly become honest, thrifty and hard-working?
Well, the answer is probably “Yes”, but then cloud-cuckoo land is becoming seriously over-populated.
Which reminds me, I must get back to the British General Election Campaign ……
By Chris Snuggs
A fateful day for the eurozone
…. is how Gavin Hewitt recently headed up a post on his BBC Europe blog. The headline caught my eye and then when I read the full article it seemed as yet another piece of western civilisation was sliding into chaos. Maybe it’s my age!
Gavin Hewitt is the BBC’s Europe Editor and as you can see from his bio, Gavin is a very experienced reporter. Here’s how this Eurozone article starts:
Friday [April 23rd, Ed] will be remembered as the day the euro needed rescuing. Sure it is Greece that has asked to be bailed out but it was still a day that the architects of the single currency had never envisaged. For when it came to it, there were no plans to save a euro member in trouble.
You see what I mean about grabbing one’s attention!
In fact the article is so powerful that I am going to run the risk of incurring the wrath of the BBC’s legal department by republishing it in full.
Here it is:
P’sst! Got a dime?
This bloke needs a reality check. If he is not going to ask for the dosh “formally” how IS he going to ask for it? Over a pint
at the pub?
And what exactly are “preparatory moves”? A long sidle up to the Treasurer standing at the bar? And how do you “prepare” to ask for 30 billion euros? Either you ask for it or you don’t? Oder?
Perhaps something is lost in translation ……
Greek Prime Minister George Papandreou has said his country is making “preparatory moves” to take advantage of a multi-billion euro rescue package.
He added, however, that Greece would not necessarily make a formal request for help.
STOP PRESS: Alex Brummer of “The Daily Mail” makes a very serious charge here in relation to Goldman Sachs and Greece’s financial status before entering the euro.
STOP PRESS TWO: The BBC are reporting that Greece has formally asked for the dosh!
By Chris Snuggs