Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Ha, austerity may or may not have been the right prescription, but the underlying problem remains and regardless of whether they inflate or tighten their way out of their mess, there will be plenty of pain regardless.
Austerity didn't cause their indebtedness.
An extremely low labor participation rates and productivity, combined with a completely dysfunctional, bureaucratic, over-spending government, where the vast majority of citizens evade taxes significantly, combined for this mess.
Regardless, eventually their creditors were going to say "enough is enough" and make them face reality.
clacy, you are going to need to read up more about this; lots of posts and links already, but while some of what you say is not wrong, it's not the story, really, and not what caused the mess.
Blame it on Goldman Sachs. Greece was not qualified to belong in the EU. Goldman Sachs devised a series of currency swaps to help Greece get around the EU Deficit rules.
To repeat postings (Krug) rather than just tell someone to go read up:
\\\ ... the Greek government should be ready, if necessary, to leave the euro. To understand why I say this, you need to realize that most — not all, but most — of what you’ve heard about Greek profligacy and irresponsibility is false. Yes, the Greek government was spending beyond its means in the late 2000s. But since then it has repeatedly slashed spending and raised taxes. Government employment has fallen more than 25 percent, and pensions (which were indeed much too generous) have been cut sharply. If you add up all the austerity measures, they have been more than enough to eliminate the original deficit and turn it into a large surplus. \\\ So why didn’t this happen? Because the Greek economy collapsed, largely as a result of those very austerity measures, dragging revenues down with it. \\\ And this collapse, in turn, had a lot to do with the euro, which trapped Greece in an economic straitjacket. Cases of successful austerity, in which countries rein in deficits without bringing on a depression, typically involve large currency devaluations that make their exports more competitive. This is what happened, for example, in Canada in the 1990s, and to an important extent it’s what happened in Iceland more recently. But Greece, without its own currency, didn’t have that option.
Several others have pointed out that Greece is being treated much more harshly than Germany ever was, at any point of debt crisis.
The EU and Euro currency seems to be set up for failure. How is it that German (and other) citizens will subsidize Greece ongoing who has a labor force participation rate around 53%? They won't. It's not politically feasible.
Greece will have to decide if they chose the pain that comes with austerity and reform (staying in the EU), or if they would rather leave and chose the pain that will come with inflating their way out of their mess.
Greece's employment rate has been at extreme low measures for decades now. In fact, it's higher today, than pre-EU.
They may be better off outside of the EU, IMO. Then they can work and spend as little or as much as they want. Their only constraint will be inflation.
There has ALWAYS been depressing news, but there is more of it now because of the stupid 24-hour 'news'. Truth to tell, there is not enough real news to fill 2-3 hours, so the rest consists of rehashing of the scariest items, over and over and over again. There are still a lot of 'investors' who have not gotten back in after bailing in early 2009 because they are still worried and depressed. I rarely watch national and world news any more on network or cable television. I still get a hard copy of the newspaper (yes, I know, dinosaur!). But I truly never watch CNBC and the rest of those 'expert money people'. Move on. Read a book. Garden. Take a walk. Play with your kids, grandkids. Anything besides television news.
An investment forum will be reengaged with this yesterday news insofar as it seriously affects the euro. Make up your mind whether or not you want pertinence. It is as though discussion have to meet your personal criteria, or something. Can it be?
Our house, for one; is observant regarding the Euro. We have investments which reflect its value and I choose to be informed about status changes affecting the Euro.
Otherwise, we would just go to sleep with a 50/50 split between VTI or similar and PIMIX.
Comments
Austerity didn't cause their indebtedness.
An extremely low labor participation rates and productivity, combined with a completely dysfunctional, bureaucratic, over-spending government, where the vast majority of citizens evade taxes significantly, combined for this mess.
Regardless, eventually their creditors were going to say "enough is enough" and make them face reality.
spiegel.de/international/europe/greek-debt-crisis-how-goldman-sachs-helped-greece-to-mask-its-true-debt-a-676634.html
\\\ ... the Greek government should be ready, if necessary, to leave the euro.
To understand why I say this, you need to realize that most — not all, but most — of what you’ve heard about Greek profligacy and irresponsibility is false. Yes, the Greek government was spending beyond its means in the late 2000s. But since then it has repeatedly slashed spending and raised taxes. Government employment has fallen more than 25 percent, and pensions (which were indeed much too generous) have been cut sharply. If you add up all the austerity measures, they have been more than enough to eliminate the original deficit and turn it into a large surplus.
\\\ So why didn’t this happen? Because the Greek economy collapsed, largely as a result of those very austerity measures, dragging revenues down with it.
\\\ And this collapse, in turn, had a lot to do with the euro, which trapped Greece in an economic straitjacket. Cases of successful austerity, in which countries rein in deficits without bringing on a depression, typically involve large currency devaluations that make their exports more competitive. This is what happened, for example, in Canada in the 1990s, and to an important extent it’s what happened in Iceland more recently. But Greece, without its own currency, didn’t have that option.
Several others have pointed out that Greece is being treated much more harshly than Germany ever was, at any point of debt crisis.
Greece will have to decide if they chose the pain that comes with austerity and reform (staying in the EU), or if they would rather leave and chose the pain that will come with inflating their way out of their mess.
Either way, the price will be paid.
They may be better off outside of the EU, IMO. Then they can work and spend as little or as much as they want. Their only constraint will be inflation.
Read the smart comments too.
Regards,
Ted
Agree..........
Our house, for one; is observant regarding the Euro. We have investments which reflect its value and I choose to be informed about status changes affecting the Euro.
Otherwise, we would just go to sleep with a 50/50 split between VTI or similar and PIMIX.
Some days, I enjoy the "game".
Take care,
Catch