Greece, the gloves are off

[GGT]

Well, my theory on life is "why choose if you don't have to?"

So, do both! Just... uh, don't get the two mixed up. Things get really messy if you try to neuter your pills, and swallow your cats with a glass of water.

Thanks, I needed that.

That's not true. Yes, I can. This goes back to the whole you not quite getting what libertarianism is. (And, just for the record, I'm libertarian with a small 'l, not a big 'L'.)

OMG that is soo like uncanny because before I typed the word, it flashed in my mind, is he a small l or a big L, and like wow! it's like we had this uncanny random connection, before we even knew it, isn't that cool?



/sarcasm but it also made me laugh

Come to think of it, are you sure we don't know each other in real life? Because I made fun of someone for trying to "take care of herself" by investing in Hydro electricity in Iran. "600% ROI, no way it's a scam!!!! So what about Iran having oceans of oil... they still need electricity, right? Yes, legitimate investing firms *do* contact people with mass emails." And then she said pretty much the same thing you just did. She was also surprised when she lost her entire $10,000 "investment."

OMFG was that YOU?

Yes, understanding patterns - not inventing patterns.

OMG was that you that invented that like really awesome gaussian algorithm I read about? That is soooo cool, I don't even understand it, but here let me give you ten grand, I trust you. You're so smart. Are you married?

Actually, preferably, they don't take the pill, and thus, insist on taking it up the butt as their form of birth control.

See, vapid anal sluts recognize "patterns" too.

I've been trying to tell you for ages, it's okay to come out of the closet, cupcake. The only way to be 100% safe from pregnancy is to be with other men. But you just won't listen to me. I don't know why!

I detect a pattern here.

[LittleFuzzy]

r shooting the meatloaf.

Is that what you kids are calling it these days?

[Hazir]

In what I read about the present crisis I read two main streams. One is that the euro is at risk of breaking up, which has been around in certain circles since 1992 I think. The other is that quite to the contrary, this crisis is forcing the EMU to turn itself into the type of union that is needed in order for it to have a common currency.

I personally have said long ago that the Growth and Stability Pact wasn't important and that the markets would enforce the kind of behaviour that is needed for the project 'euro' to continue. I will admit that I never expected the discipline of the markets to be quite as brutal as they are showing themselves these last few weeks, but here you have it. I see governments doing the unthinkable; whipping out something that amounts to the establishment of an EMF over the weekend. Governments not just being censored but actually being forced into draconic action. Talk about constitutional rules against deficits. When you try to think about it it's mind boggling and it really almost amounts to a take over of the EU by the EMU and its allies and the UK isolating itself in staunch euroscepticism (which re-creates that old dichotomy of the rest of Europe vs UK).

A UK that believes it's a great thing if you 'can devalue' your currency, where the truth of that meme of course is that you don't devalue your currency. The truth being that your currency gets devalued by market forces, for no other reason than that those market forces have no trust in the way you do things.

We're living in interesting times again.

[RandBlade]

In what I read about the present crisis I read two main streams. One is that the euro is at risk of breaking up, which has been around in certain circles since 1992 I think. The other is that quite to the contrary, this crisis is forcing the EMU to turn itself into the type of union that is needed in order for it to have a common currency.

These two are the two sides of the same coin, they're not at all that contradictory. They are both saying that the status quo is not right, either you need a more integrated union that can cope with a single currency, or to break up. Either way its a change from the status quo, the directions may be opposite but the need for change is not at all contradictory.

In road parlance, you are at a T-junction. You can go either direction, but continuing straight on isn't advisable.

I personally have said long ago that the Growth and Stability Pact wasn't important and that the markets would enforce the kind of behaviour that is needed for the project 'euro' to continue. I will admit that I never expected the discipline of the markets to be quite as brutal as they are showing themselves these last few weeks, but here you have it. I see governments doing the unthinkable; whipping out something that amounts to the establishment of an EMF over the weekend. Governments not just being censored but actually being forced into draconic action. Talk about constitutional rules against deficits. When you try to think about it it's mind boggling and it really almost amounts to a take over of the EU by the EMU and its allies and the UK isolating itself in staunch euroscepticism (which re-creates that old dichotomy of the rest of Europe vs UK).

OTOH the UK has insulated itself from the current crisis by being outside of the EMU.

It appears that the eurosceptics (which I am not one of) who feared introduction of a single currency would ultimately lead to more integration have been proven correct.

A UK that believes it's a great thing if you 'can devalue' your currency, where the truth of that meme of course is that you don't devalue your currency. The truth being that your currency gets devalued by market forces, for no other reason than that those market forces have no trust in the way you do things.

We're living in interesting times again.

Who said the UK believes you can devalue your currency? The truth is that the market forces devalued our currency because the previous government was incompetent, the government did not deliberately devalue the currency. Now we have a newly elected government fixing the mess. All outside of the EMU. Of course had we been in the EMU, our previous government would have been just as incompetent but without market forces correcting the value of the currency we'd have been in a far deeper mess.

[Hazir]

Really? I think you're in the same mess, with no 'devaluation-bonus' in your main trade relations

[RandBlade]

How are we in the EMU mess? Have we contributed to the €80bn Eurozone fund for Greece (as opposed to the €30bn one by the IMF)?

We're in a mess of Brown's making, not of the Greeks. It's bad enough dealing with Brown's mess, at least we don't have to deal with both

It's worth noting, as I suspected, that since the new government came in Sterling has started to climb back up and gilts are going in our favour, because the new government has shown serious intent of dealing with Brown's mess.

[Hazir]

You're in the mess of having an unsustainable deficit, humongous sovereign debt, a demised secundairy sector and you seem to be unable to benefit from your lower valued currency. The only thing you've got going for you is that you have long term debts which give you a bit extra time to restructure.

Oh yeah, and unlike your silly governments nobody else thinks you could afford a Greek default

[RandBlade]

Unsustainable deficit? "Brown's mess"
Humongous sovereign debt? "Brown's mess"
"demised secundairy sector" - what?
"unable to benefit from your lower valued currency" - What do you mean?
"a bit extra time to restructure." - Which we are doing.

So what's your point? I said that we have Brown's mess, which the new government is fixing. Do you disagree? We are not in the EMU mess, you had said we are in the "same mess"

[Hazir]

There is no 'Brown's mess', it's YOUR mess now. Your balance of trade hasn't improved even after your currency losing a lot of it's value.

[RandBlade]

It's our mess, created by Brown, being dealt with now. Your word games don't change anything.

Our balance of trade hasn't worsened after the currency losing a lot of its value

[Hazir]

It's our mess, created by Brown, being dealt with now. Your word games don't change anything.

Our balance of trade hasn't worsened after the currency losing a lot of its value

If 25% isn't going to do the trick, what is ?

[RandBlade]

The UK has come out of recession. Cutting state spending now will do the trick.

[Hazir]

The UK has come out of recession. Cutting state spending now will do the trick.

No, that will just improve your budget and debt situation. It will not improve your competitiveness.

[RandBlade]

Our budget and debt situation are the problem we have.

[Hazir]

Our budget and debt situation are the problem we have.

And how will you solve them without serious growth of the economy? You may think you can cut spending without repercussions, I think nobody who matters does.

[RandBlade]

And how will you solve them without serious growth of the economy? You may think you can cut spending without repercussions, I think nobody who matters does.

We will have serious growth in the economy.

Are you implying we shouldn't cut spending? And that "nobody who matters" thinks we should? Because that's not true at all, everyone who matters unanimously says that we need to cut public spending. Both governing parties have said it, the Bank of England has said it, all fiscal think tanks have said it.

Of course there will be consequences, but its necessary.

[Hazir]

I"m not implying anything besides stating the obvious; you're in a horrible mess and basically half hanging over the abyss. Congratulations on your 3.7% inflation by the way. I wonder what's it going to be, a run on the bank or strangling the economy with high interest.

[wiggin]

No, that will just improve your budget and debt situation. It will not improve your competitiveness.

Sorry, this is just incredible. Someone in the eurozone is lecturing about competitiveness?!

Look, Hazir, no one denies that the UK has a fiscal crisis (and a potential sovereign debt crisis in the future) that needs addressing. But Rand's right on this one - the UK's problems are independent of the mess in the eurozone. The eurozone has a lot of built-in imbalances that include profligate, poorly run economies, and tight-fisted exporters. Something had to give eventually, and it has. This issue is not tied to structural problems in the UK budget and their (fairly high) debt-to-GDP ratio.

It seems likely that the UK can weather the current crisis and emerge with decent (though not amazing) growth and debt levels trending downwards without too much of an adjustment. The eurozone is another story altogether, and it's going to require some serious changes in the way the EMU and her member country's economies are run.

[RandBlade]

Thanks wiggin

Looks like the euromess could be getting much, much worse. The US Senate has virtually vetoed the IMF bailout voting 94-0 against the IMF bailing out countries that 'are beyond the point of no return'. The USA, as the biggest contributer to the IMF by far, has a veto which so far its never used against any IMF bailouts. So if they do eventually vote against it, the money isn't there for Greece.

Greece even with the bailouts will have a public debt ratio of 150% of GDP and the new IMF voting rules the Senate has voted for would apply to nations with 100% debts or greater.

[Hazir]

Sorry, this is just incredible. Someone in the eurozone is lecturing about competitiveness?!

Look, Hazir, no one denies that the UK has a fiscal crisis (and a potential sovereign debt crisis in the future) that needs addressing. But Rand's right on this one - the UK's problems are independent of the mess in the eurozone. The eurozone has a lot of built-in imbalances that include profligate, poorly run economies, and tight-fisted exporters. Something had to give eventually, and it has. This issue is not tied to structural problems in the UK budget and their (fairly high) debt-to-GDP ratio.

It seems likely that the UK can weather the current crisis and emerge with decent (though not amazing) growth and debt levels trending downwards without too much of an adjustment. The eurozone is another story altogether, and it's going to require some serious changes in the way the EMU and her member country's economies are run.

Dear Wiggin, since I am from Holland I feel entirely entitled to lecture a Brit on competitiveness.

The total fuck up the UK economy is is 'the mess' I have been talking about all the time. Randblade just never quite got that. That they can't pull themselves out of that mess as long as 'we' in the eurozone have this little crisis is also a certainty. Your assertion about the EMU members I won't take with a grain of salt because it will need a full kilo; there is no uniformity in they way how these countries run their business. That also means there is no one solution, some countries don't need any solution at all.

Thinking that the UK can weather its crisis without much of an adjustment is laughable.

[Hazir]

Thanks wiggin

Looks like the euromess could be getting much, much worse. The US Senate has virtually vetoed the IMF bailout voting 94-0 against the IMF bailing out countries that 'are beyond the point of no return'. The USA, as the biggest contributer to the IMF by far, has a veto which so far its never used against any IMF bailouts. So if they do eventually vote against it, the money isn't there for Greece.

Greece even with the bailouts will have a public debt ratio of 150% of GDP and the new IMF voting rules the Senate has voted for would apply to nations with 100% debts or greater.

The US can afford a default of Greece just as little as the EU can. Stupid votes in the Senate aren't going to change that.

[RandBlade]

Dear Wiggin, since I am from Holland I feel entirely entitled to lecture a Brit on competitiveness.

The total fuck up the UK economy is is 'the mess' I have been talking about all the time. Randblade just never quite got that. That they can't pull themselves out of that mess as long as 'we' in the eurozone have this little crisis is also a certainty. Your assertion about the EMU members I won't take with a grain of salt because it will need a full kilo; there is no uniformity in they way how these countries run their business. That also means there is no one solution, some countries don't need any solution at all.

Thinking that the UK can weather its crisis without much of an adjustment is laughable.

You send so much time looking at the mote in Britain's eye, that you don't pay any regard to the plank in the eurozones.

The UK entered this crisis with a debt-GDP ratio of about 40% and even under Labour's plans it was going to peak out at 75% - but the government now isn't following Labour's plans so it won't be so bad.
Greece currently has a debt-GDP ratio of about 130% and even under the optimistic restructuring plans with the bailout would exceed 150%

The other eurozone PIIGS nations are around about 100% of GDP too.

The idea that the UK is at all worse off than the eurozone is laughable. The UK has weathered this crisis and is now sensibly paying down its deficit.

[Hazir]

LOL, who do you think you're fooling? "paying off" you don't even bloody know what your sovereign debt actually is, and the known debt is already on a par with the worst

[wiggin]

Dear Wiggin, since I am from Holland I feel entirely entitled to lecture a Brit on competitiveness.

Uhm, the point is that your economy is tied to the rest of the eurozone's, for better or worse (in this case worse). The entire eurozone's competitiveness and growth is going to be seriously stunted for the foreseeable future due to both structural issues and the current sovereign debt crises.

The total fuck up the UK economy is is 'the mess' I have been talking about all the time. Randblade just never quite got that. That they can't pull themselves out of that mess as long as 'we' in the eurozone have this little crisis is also a certainty.

I have no doubt that continuing issues in the eurozone will drag on UK exports, which will hamper a serious recovery. But given that the UK has an independent monetary policy and a fairly reasonable and fiscally responsible government, I find it likely that their problems will be less pronounced than the eurozone's, which is being dragged down by serious economic imbalances that can't be fixed by austerity regimes.

Your assertion about the EMU members I won't take with a grain of salt because it will need a full kilo; there is no uniformity in they way how these countries run their business. That also means there is no one solution, some countries don't need any solution at all.

(emphasis added)

That's the point. There is zero uniformity in how different economies in the eurozone function, and that seriously undermines the single monetary policy. The huge difference in the German model compared to, say, the Greek or Portuguese model is what's tearing the euro apart. I think that what was previously couched as 'suggestions' about debt-to-GDP limits, deficit size, economic reforms, labor markets, etc. is now going to have to be enforced and standardized across the entire eurozone. The Greeks enjoyed comfort and cheap borrowing costs on the euro that they never would have had on their own, but now the underlying structural issues with the Greek economy is dragging down the rest of the euro (despite its relatively small size in comparison to big players that were more careful).

My guess is that the eurozone isn't going to fall apart - instead there will be much more centralization and tighter control of member economies. It's not the end of the world, but it is a major shift in the power and role of the EMU in individual economies, and will require far more wrangling than a UK budget cut.

Thinking that the UK can weather its crisis without much of an adjustment is laughable.

There's no question there will be an adjustment as in all of the rich countries. I doubt it will lead to long-term stagnant growth as what's looking likely for the eurozone right now. Obviously this is all WAGs since so many factors will contribute to a recovery. But establishing singular political will for reforms is far easier in one country (even in a coalition government) than in the entire EMU.

The US can afford a default of Greece just as little as the EU can. Stupid votes in the Senate aren't going to change that.

I agree with you on this one. The vote doesn't mean anything - it just is essentially an advisory note to the IMF rep that means we can choose to block the IMF bailout if we feel it's necessary. Given the impact on eurozone economies I find it unlikely the US will actually carry out the threat.

[Hazir]

Uhm, the point is that your economy is tied to the rest of the eurozone's, for better or worse (in this case worse). The entire eurozone's competitiveness and growth is going to be seriously stunted for the foreseeable future due to both structural issues and the current sovereign debt crises.

The economy of the UK is not going anywhere independent of the Eurozone or the rest of the EU. The rest of your comment is a bunch of hogwash. You clearly have no idea what you're talking about. FYI, the rest of the EU is not just Greece.

I have no doubt that continuing issues in the eurozone will drag on UK exports, which will hamper a serious recovery. But given that the UK has an independent monetary policy and a fairly reasonable and fiscally responsible government, I find it likely that their problems will be less pronounced than the eurozone's, which is being dragged down by serious economic imbalances that can't be fixed by austerity regimes.

The UK had up to a week ago one of the most fiscally irresponsable governments in the world. The new government hasn't got a clue even about how bad it actually is. What you find 'likely' counts for shit, because you don't know what you're talking about. The UK is closer to California and Greece than to any other major EU country, with the added 'benefit' of having a teetering banking sector that's too big for the country and a currency that might collapse any moment. For example if the George Osborne is going to come out with the real numbers rather than the cooked ones. George in Athens can tell him how much fun that is.

(emphasis added)

That's the point. There is zero uniformity in how different economies in the eurozone function, and that seriously undermines the single monetary policy. The huge difference in the German model compared to, say, the Greek or Portuguese model is what's tearing the euro apart. I think that what was previously couched as 'suggestions' about debt-to-GDP limits, deficit size, economic reforms, labor markets, etc. is now going to have to be enforced and standardized across the entire eurozone. The Greeks enjoyed comfort and cheap borrowing costs on the euro that they never would have had on their own, but now the underlying structural issues with the Greek economy is dragging down the rest of the euro (despite its relatively small size in comparison to big players that were more careful).

THAT is totally irrelevant to the question on how competitive a country is, which was the point where you felt you needed to bud in by putting your foot in your mouth. As for what is putting a huge stress on the eurozone at the moment; that would be the unrealistic positive ratings Greece got when it was building up its debts. If those ratings would have been a bit closer to realistic then Greece would never have been in a position to run up its present debts.

My guess is that the eurozone isn't going to fall apart - instead there will be much more centralization and tighter control of member economies. It's not the end of the world, but it is a major shift in the power and role of the EMU in individual economies, and will require far more wrangling than a UK budget cut.

I never said something to the opposite. And does it really matter when it's really the markets forcing these adjustments?

There's no question there will be an adjustment as in all of the rich countries. I doubt it will lead to long-term stagnant growth as what's looking likely for the eurozone right now. Obviously this is all WAGs since so many factors will contribute to a recovery. But establishing singular political will for reforms is far easier in one country (even in a coalition government) than in the entire EMU.

Obviously NOT, the events, the adjustments are driven by market demands, not by policy choices.

I agree with you on this one. The vote doesn't mean anything - it just is essentially an advisory note to the IMF rep that means we can choose to block the IMF bailout if we feel it's necessary. Given the impact on eurozone economies I find it unlikely the US will actually carry out the threat.

The impact on the US economy would be just as severe.

[wiggin]

I don't have time to respond to much, but one quick question: What do you think is California's debt-to-GDP ratio? I find it interesting that you lump Greece with California. Methinks it's you who doesn't know what he's talking about.

[Hazir]

I don't have time to respond to much, but one quick question: What do you think is California's debt-to-GDP ratio? I find it interesting that you lump Greece with California. Methinks it's you who doesn't know what he's talking about.

Short memory indeed. Which state was paying with IOU's recently ? Or in more direct words, it doesn't fucking matter what your debt ratio is if you can't pay your debt.

[wiggin]

They can't monetize their debt or change fiscal policy, so they paid with IOUs instead.

The point is that California's problems have nothing to do with Greece's problems. They could pay off their entire debt in a year if need be; the issue is that they have a dysfunctional political system that hamstrings the fiscal policy of the government. Economically, though, they're doing fine. They don't have an overwhelming structural deficit or a problem securing debt.

[Hazir]

Exactly like Greece, where one of their main problems is that they don't have a functional tax collector. They could be out of trouble tomorrow if they had the resolve to tackle tax dodging.

[RandBlade]

The economy of the UK is not going anywhere independent of the Eurozone or the rest of the EU. The rest of your comment is a bunch of hogwash. You clearly have no idea what you're talking about. FYI, the rest of the EU is not just Greece.

The economy of the UK is not totally independent of the Eurozone or the EU of course. Then again neither is America's. We trade a heck of a lot more than they do with the rest of the EU, and follow the same standards etc on a lot of issues, but it would be hogwash to pretend now we're as integrated as the Eurozone.

Like it or lump it, this eurozone crisis has finally ensured a "2-speed Europe" has to come to pass. The Eurozone can't and won't wait for the rest of the EU to join before continuing deeper integration.

The UK had up to a week ago one of the most fiscally irresponsable governments in the world.

Which polled its worst electoral result since 1931 as a result and is now out of power for a minimum of 5 years, most likely 10 at least. Isn't democracy grand

The new government hasn't got a clue even about how bad it actually is. What you find 'likely' counts for shit, because you don't know what you're talking about. The UK is closer to California and Greece than to any other major EU country, with the added 'benefit' of having a teetering banking sector that's too big for the country and a currency that might collapse any moment. For example if the George Osborne is going to come out with the real numbers rather than the cooked ones. George in Athens can tell him how much fun that is.

Indeed the problem is worse than Labour admitted, we all already knew that. PFI, unfunded pensions etc - there's plenty of "off balance-sheet" debts that need servicing. But that's no shock.

Nor is the new government going to brush it under the carpet. The new government is already publicising skeletons - and it makes both political and economic sense to do so. Politically getting all the skeletons out in the open ensures they get pinned on Labour, rightly. Economically it is succeeding too as what the government needs is not deception, but credibility. By appearing both credible and serious at wanting and being able to tackle the problem it ensures that the gilt rates improve . . . which makes it easier to service the problem in the first place. Greece has suffered a malevolent circle of being untrusted, punished by the markets, finding it harder, getting punished more etc - we are doing the opposite. Providing trust, accountability and responsibility is already making the task easier. The markets have responded positively to George and co. publicising openly Labour's "crazy spending".

Even the Civil Service has come out this week and said they so opposed much of Labour's final spending that they enacted the "Nuclear Option" of getting minister's to sign off that they were spending the money against advice. But publicising all this isn't mere point-scoring, accepting you have a problem is always the first step to tackling it.

----------------

Greece is well past the point of needing just a functional tax collector. Even if the dodging stopped tomorrow, they still have to service a debt well over 100% of GDP. Interest alone must be providing more spending as a percentage of GDP than California owes total as a percentage!