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Crisis in Greece, the Euro Area and the European Union



 
 
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  #1  
Old May 9th, 2010, 6:07 pm
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Crisis in Greece, the Euro Area and the European Union

The Greek economy and the possibility of EU and IMF bailing out the country have made headlines for a time already. Political decisions always take time and now when finally both the Greek parliament has accepted the very harsh conditions for the bailout loan and the parliaments of the biggest Euro countries have approved giving a bailout loan of 110 billion , the crisis is already spreading outside the Euro area. And outside the EU too. Some experts have already claimed that this is the worst crisis the EU ever had to face. 110 billion seems not to be enough to save the situation. Today (May 9th) the finance ministers of the whole EU are meeting to see what can be done to stabilize the Euro and to prevent anything like this from happening again.

When Greece joined the Euro area in 2001 their government appears to have fiddled with their numbers and was thus accepted on false premises. Their economy hasn't improved since then and by now the national debt is too big for getting further loans with reasonable interest rates. As a member of the Euro area the classical way out of trouble by devaluation is closed for Greece. The planned bailout is, of course, not an act of altruism. It's purpose is to save the .

The markets seem to fear that both Spain and Portugal who both have quite big national debts too will follow soon.

The harsh conditions for the bailout includes among other things wage cuts for civil servants, huge tax increases and a huge increase in the retirement age which is the lowest in the entire EU. The people of Greece is of course not happy with that and the country has lately suffered some demonstrations, riots and strikes. A few days ago three people lost their lives in a fire started by throwing a Molotov cocktail through a window of a bank.

Some questions to start with:
  1. Do you think Greece should be kicked out of the area and left to sort out their problems themselves?
  2. If yes, what do you think would happen before they get enough new Drakhmas out in circulation?
  3. Do you think they should be left to sort it out themselves but not kicked out?
  4. Do you think bailing them out is the right thing to do?
  5. If so, do you think 110 billion is enough?
  6. What do you think will be the consequences of this crisis on a) The Euro area level, b) The European Union level, c) A global level?
  7. What do you think will be the consequences for the people of Greece? Widespread poverty? More riots and strikes? What else?
  8. Do you think that Spain and Portugal will follow soon?
  9. Do you think that Greece will ever be able to repay the loans?
A Reuters article with more links to further reading: http://uk.reuters.com/article/idUKTRE6461B920100508


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  #2  
Old May 9th, 2010, 10:17 pm
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Re: Crisis in Greece, the Euro Area and the European Union

  1. Do you think Greece should be kicked out of the € area and left to sort out their problems themselves?

    Economic wise it's a rather bad idea. Personally I wouldn't care about them being kicked out. It's partly their own fault and they should deal with the consequences.
  2. If yes, what do you think would happen before they get enough new Drakhmas out in circulation?

    They can still use the Euro as currency. It just shouldn't influence the other Euro States.
  3. Do you think they should be left to sort it out themselves but not kicked out?

    When it continues like this and the whole bailing out doesn't work out, then I'd prefer a kicking out.
  4. Do you think bailing them out is the right thing to do?

    Basically the reason why we are doing this is because companies and banks invested in the country. They're giving money, in hope that Greece stabalize themselve soon enough and are able to pay the money back. Not bailing them out also means that the Euro falls further, making the currency even weaker. They don't want that, so they try to "rescue" Greece.

    Is it going to help? Personally I don't believe so. Greece spent so many years throwing out money and mismanaged the country bankrupt. Us giving them so much money isn't going to improve that.
  5. If so, do you think 110 billion € is enough?

    It's not enough. It's too much.
  6. What do you think will be the consequences of this crisis on a) The Euro area level, b) The European Union level, c) A global level?

    As we can see is the Euro getting weaker and weaker compared to the US $. The cons is that imports are getting more expensive and travelling to America. But on the other hand, buying here gets cheaper. It can lead to a rise in export.

  7. What do you think will be the consequences for the people of Greece? Widespread poverty? More riots and strikes? What else?

    Can it get any worse? They should stop with those riots. It's not going to help at all. I do never approve of this kind of behaviour, it only shows what people are willing to do, when it doesn't go their way.

    They simply wasted too much money on silly things. Incredible high pensions, retirement with 50, etc.
  8. Do you think that Greece will ever be able to repay the loans?

    Never. To pay them back they need to take more credits and to pay those back they need even more credits. And who's going to lend them the money. Right, we other EU countries are. It's a catch-22 situation.


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  #3  
Old May 10th, 2010, 9:09 am
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Re: Crisis in Greece, the Euro Area and the European Union

Let me make it clear that I have little knowledge of these econoic matters. I try to keep up, but it's very difficult to understand, IMHO. Thus, whatever I am saying in these areas amounts to no more than a hunch. However, I have spent quite some time in Greece, and I care about the country and also know a bit about it. I wish we had somebody Greek here to give us a inside view because I am not entirely up to date, but I'll try to chip in for the moment.


  1. Do you think Greece should be kicked out of the € area and left to sort out their problems themselves?

    I don't think that this is feasible. Even if you don't think about the weelbeing of the Greeks (and they clearly have brought a lot of this on themselves), I think it would just drag down the Eurozone even further.

  2. If yes, what do you think would happen before they get enough new Drakhmas out in circulation?

    I don't think that re-introducing the Drakhma is feasible. It would cost even more, it would upset the economy and so forth. I know that there are countries which use the Euro without being in the Eurozone (just a some countries outside the US use the Euro). I don't know how one would technically demote Greece from a Eurozone country to a country that merey has the Euro in circulation, but if this is technically possible it would work without too much disruption.

  3. Do you think they should be left to sort it out themselves but not kicked out?

    No. They have reached a point where they can't sort themselves out without help. If they are in the Eurozone, this needs sorting out for the sake of everybody else (as I said above, leaving might not even be an option possible without disrupting the whole zone too much). So, IMHO, that bailout was probably needed. It seems so bad that Spain, Portugal Italy and perhaps even Britain might be dragged into it. I think it's worth doing everything possible to avoid that. And yes, I think that's worth a good deal of money. The alternatives seem a lot worse.

  4. Do you think bailing them out is the right thing to do?

    It's not a nice option, but see my previous answer. I assume that it's the least worst option.

  5. If so, do you think 110 billion € is enough?

    No idea. I assume that somebody tried to work out how much is needed. I would guess that they stayed on the lowest possible end of the scale to avoid even more anger among European electorates. Thus, I assume that if anything, it might not be enough. But really, I am guessing, and what I just said doesn't mean that I *want* more money to be put in.

  6. What do you think will be the consequences of this crisis on a) The Euro area level, b) The European Union level, c) A global level?

    No idea. I think they'll have to do everything in their power to keep the damage to the Euro as small as possible. The UK also has to be worried, it seems, although, again, I don't quite know how this works (didn't we stay out of the Euro to avoid this sort of thing?).

    In the long run, I'd hope that this will lead to much stricter controls of how the countries in the Eurozone handle their debt. Quite a few of them broke the rules at some point or other (I think this even includes Germany).

  7. What do you think will be the consequences for the people of Greece? Widespread poverty? More riots and strikes? What else?

    It's pretty bad.
    I worry about Greek civil society.

    Tenshi says 'they should stop with the riots'

    Well, it's not so easy. I hear (and can't remember the source) that 70% of Greeks understand why this is necessary and are prepared to do their best to work through it. But Greek society has always had extreme elements (right wing, left wing and anarchist) which have never gone away since the awful civil war of the late 1940s and early 1950s and the dictatorship (Junta 1967-1974). I am not sure whether these elements can be kept in check. It really worries me. I have no idea what might happen if they can't keep the riots and the strikes under control.

    The Greeks in general, as a people, will come through this. They are hard-working and most of them still remember being a lot poorer than they are now. I have known Greece since 1990 and I have to say, it is amazing how it has changed. This is true for the standard of life, but also how the country is run. COrruption is still an issue, but (purely based on observation over the years) I would say that corruption has considerably decreased with each government.

    For example, I remember a time when the only trace of EU money for infrastructure where big signs promising building works (e.g. major road building). Then, in the late 90s, suddenly there were actual building sites to go with those signs! In recent years, Greece seemed a much better country to work in than Italy!

    So I hope they'll get through this - they have made immense progress. We know now that some of it was on loans they couldn't afford, and that's bad -- but really, in terms of the progress society made, the money isn't the whole story. But I can't but wish Greece well. I am angry about what they did (I remember being furious when it turned out that they had cheated in order to get into the Euro!!), but I know the country too well to want them to be left to fall back into developing country status.

  8. Do you think that Spain and Portugal will follow soon?

    We should do out best to avoid that.
    Incidentally, I am *really* worried about Italy. I really think that Italy is a big nice-looking facade with a HUGE mess (no longer well) hidden behind it. It will no longer be workable at some stage, especially as lomg as they have the kind of governance they have been enjoying for decades (Berluscoi is just a symptom of a bad system). Italy really is 'too big to fail', but I don't even want to think o what might hapen there.

    It's odd - I know both countries, Greece and Italy, and have worked in both - and I think I recognise the signs of a corrupt economy that is made to look bigger than it is (which, to an extent, is what brought Greece down in the end). I always thought that this seemed to be a lot worse in Italy. They are lucky to have the prosperous North to drag the hopeless South along with it, but the North is ailing, not least because of an arcane business ethos which should have been left in the 19th century. There are lots of houses of cards there waiting to collapse... does anybody remember what happened to Parmalat?

  9. Do you think that Greece will ever be able to repay the loans?

    Probably not. But I have great confidence in the Greek people's ability to scrape a lot from not very much (Greece is a resource-poor country), if they manage to keep corruption at government level under control. But at this stage we can only hope that in, say, ten years' time the country hasn't collapsed economically and has a working civil society with a democratic government. Everything is at stake if the economy can't recover at least moderately.


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Last edited by Klio; May 10th, 2010 at 9:20 am.
  #4  
Old May 10th, 2010, 10:58 am
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Re: Crisis in Greece, the Euro Area and the European Union

Firstly, I think that Greece has just become the fall-guy for the failure of the European economy as a whole. Now if/when it goes down the tubes, everyone will just blame Greece, when it's actually a combination of many factors. The collapse of the banks in Iceland, the collective debt of the PIIGS (most of which is owed to other European countries, or to each other), and many other things that probably aren't publicised or that I don't know about.

It's a general problem with fiscal policy in Europe which I hope will be addressed once this whole thing is over. They seem to think they're in their own little bubble, but we rely on them too.

Do you think Greece should be kicked out of the € area and left to sort out their problems themselves?

I don't think this is even on the table. In the current economy, the entire of Europe is sitting on the edge of a knife, and the cutting of Greece from the Euro Zone will not fix any problems. If anything, it will throw Greece into further chaos and closer to the revolution that's been coming for the last 20 years, essentially sinking all chances of other European countries getting their loaned money back.

Europe is pretty much anchored together, and the fate of one has become the fate for all, which can be both a blessing and a curse. There was a lot of free flowing credit in the area which boosted all of their economies and led to Europe's economy taking leaps and bounds. But now that's all pretty much frozen over, which in ANY economic situation is bad news. Whether Greece is excluded or not, it does not lessen the Grecian national debt, it does not return the money Greece has borrowed internationally and it will not do a lot for the Euro anyway, because if Greece collapses, the rest of Europe will be affected negatively anyway.

Do you think they should be left to sort it out themselves but not kicked out?

No. It's an issue that effects everyone in Europe, if not the entire world, and we have a social obligation to help out.

Do you think bailing them out is the right thing to do?

Yes, I think it's the right thing to do for the global economy. However, I also think the political situation in Greece is just as pressing as the economic one, and serious reform is needed if they are going to survive for much longer as a democratic nation. The government has given away too many benefits they can't afford (100% pension?) and doesn't tax nearly enough to keep it going on a day-to-day basis, which, along with the GFC, is what led to the crisis today.

Is international intervention and breach of state sovereignty needed? Do we need to dissolve the Greek government and rebuild? Or will we just let them become a communist nation, which is where they seem to be heading now? These, I think, are more pressing questions.

If so, do you think 110 billion € is enough?

Hell no, but it's all the EU can afford, so it will have to do.

What do you think will be the consequences of this crisis on a) The Euro area level, b) The European Union level, c) A global level?

I think if this affects the Euro, it will affect the EU, and since the EU is such a huge power in the modern world, it will affect the whole world. A lot rides on Europe, and I think it's the equivalent to the American stock market crashing. So yes, if the situation in Greece cannot be salvaged, which I don't think it can be, it will most likely result in another global recession. Perhaps not to the same scale as the GFC, but pretty damn large.

What do you think will be the consequences for the people of Greece? Widespread poverty? More riots and strikes? What else?

As I mentioned before, I think revolution is in the air, most likely in favour of communism, if not just a re-establishment of a new form of socialist democracy. Revolution or not, the next few years will be hard for the Greeks, and I hope they pull through alright.

Do you think that Spain and Portugal will follow soon?

Yes, I also think Italy (who actually has far more debt than any other country in Europe at around US$1.3 trillion) and Ireland will follow suit as well. [EDIT: Klio also mentioned Italy, I'm glad I'm not alone!]

However, none of these countries have the huge political instability that Greece does, and their governments can handle the current crisis. So the damage will not be to the same extent.

However, Klio mentioned Italy had a corrupt government? I wasn't aware of this. Research time!

Do you think that Greece will ever be able to repay the loans?

I think it will be declared bankrupt before it even has a chance to.

Besides, no one will ever invest there again. If they do, it will be too late and the loans will be forgotten, and if they aren't forgotten, the seizure of that amount of money from a recovering economy would just send it straight back into a depression. We need to have some compassion here.


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Last edited by moogirl; May 10th, 2010 at 11:05 am.
  #5  
Old May 10th, 2010, 12:26 pm
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Re: Crisis in Greece, the Euro Area and the European Union

awesome post, moogirl.

However, I don't agree with this:

Quote:
Originally Posted by moogirl View Post
As I mentioned before, I think revolution is in the air, most likely in favour of communism, if not just a re-establishment of a new form of socialist democracy. Revolution or not, the next few years will be hard for the Greeks, and I hope they pull through alright.
The TV pictures look bad, but (based on my experience of Greece, reading Greek papers occasionally and knowing Greeks - all of which is anecdotal but I think pretty strong in this case) I don't think there is no mood for revolution. The people know what that would mean. And they still remember very well how different communist factions by their infighting and untenable policies drove large parts of Greece into famine in the 1950s!

I don't quite see on what basis you are suggesting that. Of course, you might have evidence which I haven't seen, but in that case, I'd like to see that, since Greece is a country I am interested in, and I'd like to be aware of its dangers.

I am worried about the stability of Greek society - but I am not thinking of anything like outright revolution. Rather the kind of resistance which makes a country unable to do anything constructive (but without actually aiming at overthrowing the democratic system).


Quote:
Originally Posted by moogirl View Post
However, Klio mentioned Italy had a corrupt government? I wasn't aware of this. Research time!

Oh my God.... happy researching. Have you really not heard of Berlusconi - the man who, in US terms, is something like Rupert Murdoch (controlling a large sector of the press), Bill Gates (wealthiest man in the country) and Barack Obama (leading politician, but arguably with more power than a US president) rolled into one? One might also say that in personality and ruthlessness he is a lot closer to Rupert Murdoch than to Gates or Obama.

You can research back all the way to the 1940s. I don't think Italy has ever had a government not entangled with various shady interests and oftan also the Mafia (sometimes quite overtly), whatever party was in power. If there *was* a government that wasn't as corrupt, it would be one of the ones that lasted only a few weeks or months (of which there are many in the last 50 years).


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Old May 10th, 2010, 2:10 pm
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Re: Crisis in Greece, the Euro Area and the European Union

Quote:
Originally Posted by Klio View Post
The TV pictures look bad, but (based on my experience of Greece, reading Greek papers occasionally and knowing Greeks - all of which is anecdotal but I think pretty strong in this case) I don't think there is no mood for revolution. The people know what that would mean. And they still remember very well how different communist factions by their infighting and untenable policies drove large parts of Greece into famine in the 1950s!

I don't quite see on what basis you are suggesting that. Of course, you might have evidence which I haven't seen, but in that case, I'd like to see that, since Greece is a country I am interested in, and I'd like to be aware of its dangers.

I am worried about the stability of Greek society - but I am not thinking of anything like outright revolution. Rather the kind of resistance which makes a country unable to do anything constructive (but without actually aiming at overthrowing the democratic system).
I'm mainly basing it on what I've heard from others and their various experiences with Greece and the Greeks - they don't tend to take corrupt/ineffective governments lying down, they get up and do something. Plus, the Communist and various other left-wing parties have always had big support in Greece. The current government itself is very leftist, and 3 of the five major parties are solidly in the left, with one of the remaining two being more centre than right. Most of the minor parties are also various forms of Communism or Union-based. Communism has always been in the forefront of Grecian politics, particularly after the heavy suppression of it during the military Junta and the widespread ill-feeling about right-wing politics post-70's. I'm just speculating that now may be the time for it to finally take over.

Of course, I'm probably just blowing the situation way out of proportion - but I don't think the current government will survive much longer. It seems the system of government there has just bogged everything down, and any new parties coming in would just face the same problems as the last. I can't see this problem being solved by just putting in a different party. If it can be, it would be wonderful, but I'm trying to be realistic.

Quote:
Originally Posted by Klio View Post
Oh my God.... happy researching. Have you really not heard of Berlusconi - the man who, in US terms, is something like Rupert Murdoch (controlling a large sector of the press), Bill Gates (wealthiest man in the country) and Barack Obama (leading politician, but arguably with more power than a US president) rolled into one? One might also say that in personality and ruthlessness he is a lot closer to Rupert Murdoch than to Gates or Obama.

You can research back all the way to the 1940s. I don't think Italy has ever had a government not entangled with various shady interests and oftan also the Mafia (sometimes quite overtly), whatever party was in power. If there *was* a government that wasn't as corrupt, it would be one of the ones that lasted only a few weeks or months (of which there are many in the last 50 years).
Woah, this Berlusconi dude is seriously dodgy! Lots more to look into - this is really interesting.


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  #7  
Old May 10th, 2010, 3:55 pm
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Re: Crisis in Greece, the Euro Area and the European Union

Quote:
Originally Posted by moogirl View Post
Of course, I'm probably just blowing the situation way out of proportion - but I don't think the current government will survive much longer. It seems the system of government there has just bogged everything down, and any new parties coming in would just face the same problems as the last. I can't see this problem being solved by just putting in a different party. If it can be, it would be wonderful, but I'm trying to be realistic.
IMHO you are blowing this WAY out of proportion. I wonder who you ahve been talking to, but expats don't always have a very clear view of present circumstances, and may be even more influenced by memories of the Civil War and the Junta - their own memories or those of their parents and grandparents. Greece has changed hugely in the last 20 years. I remember it having an really Levantine rather than western European air about it even back in 1990. I am sad to see that gone, but in many ways it really does feel like an organised EU country most of the time, and people have come to take that for granted, too. ANd since small-town corruption in the countryside is a very intimate measure of a country, I can tell you from experience with working with local officials in rural areas in Greece, Italy and Austria that Greece isn't perfect, but didn't seem outrageously corrupt or badly organised to this Austrian, while Italy did.

As far as I can tell, there has been a fairly reasonable succession of governments of the two sides (Nea Dhimokratia - moderately right and PASOK - moderately left), with slowly decreasing (but still relevant) corruption since I have been watching the situation (that would be c. 1992 or so). Now, I haven't been there for a year now, but I don't recognise your image of widespread radicalism *AT ALL*. Yes, there is scepticism about governments (which in Greece goes with a rather unfortunate and almost glorified tradition of tax evasion), but I haven't found it much worse than in other 'standard western' countries - such as Austria, for example.


What you need to understand is that while Greeks are grumbling about their government and might sometimes be passionate about some cause (occasionally extreme causes, too), they are hard-working people used to be on their own when it comes to fend for their prosperity, but even services such as education (I don't know any country where so many people pay for so much private tuition, particularly in foreign languages). They are, as far as one can generalise, above average enterprising and resourceful in my experience (perhaps because they have had to be for so long, I am not sure). Moreover, they are very patriotic, and mostly in a constructive way. Which means (I think at least) that a large majority is likely to be moved to action or at least a willingness to agree to whatever is necessary to save Greece before it comes to serious chaos. These are factors that can't be underestimated.


Moreover - I think you might be overestimating the radicalism of some leftish groups which call themselves Communist. There are plenty of countries in former 'Western' Europe where Communist parties survived the division of Europe into East and West. Not all these parties are radical - in some cases they have grown lately as a refuge for leftwingers for whom the new 'New Labour' style big left-wing parties had become too moderate. Thus, while I myself have voiced some disquiet about radicals in Greece I think you are blowing this way out of proportion.



Now Italy, on the other hand....


Quote:
Originally Posted by moogirl View Post
Woah, this Berlusconi dude is seriously dodgy! Lots more to look into - this is really interesting.
And go back a bit..... it gets worse in the 1970s and 1980s, with some seriously dodgy Mafia involement and political assassinations and all..... (I recommend the recent film 'Il Divo' as a great start on this).

I am sorry to say so, but IMHO by 'western' standards, Italy is (IMHO) quite the nutcase state, and has been for some time (with apologies to the Italians who vote for crazy politicians but tend to be, I don't know how, lovely and sensible people).

BTW - you also get Communists in Italy - and they are now pretty cuddly cultured lefties - at least the ones I have met, and to judge by their TV channel and newspapers. It wasn't always thus, of course (back in the 1950s things were pretty radical - the Don Camillo stories are a brilliant entertaining introduction to that period).


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Last edited by Klio; May 10th, 2010 at 4:05 pm.
  #8  
Old May 10th, 2010, 4:25 pm
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Re: Crisis in Greece, the Euro Area and the European Union

Do you think that Spain and Portugal will follow soon?

It hurts me to say this, for I'm Spanish, but I'm afraid that unless there's a miracle (including anticipated elections and defeat of the current government) we'll follow Greece.

Posted by moogirl
Quote:
However, none of these countries have the huge political instability that Greece does, and their governments can handle the current crisis. So the damage will not be to the same extent.
Maybe we're politically more stable than Greece, but that doesn't mean that our government can handle the crisis. I wish it would! But the only measures they've taken in the last two years have tended to increase expenses even more and they've not created employment.


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  #9  
Old May 10th, 2010, 7:23 pm
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Re: Crisis in Greece, the Euro Area and the European Union

While Silvio Berlusconi for sure is quite an extraordinary character for an European prime minister I don't think he fits within the scope of this thread. The economy of Italy as well as any other member state of the European Union is of course on topic here.

But feel free to discuss him here: General European politics.


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Last edited by Alastor; May 10th, 2010 at 8:58 pm.
  #10  
Old May 10th, 2010, 8:44 pm
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Re: Crisis in Greece, the Euro Area and the European Union

PIIGS is something I only started hearing regularly in the past few days- it was on the national news in Ireland, and featured in The Economist at the end of March, but I know where you're coming from. PIIGS refers to the economies of Portugal, Italy, Ireland, Greece and Spain, the five of them being considered the most troubled economies of the Eurozone at the present time. On occasion people add another G to fit Great Britain in there too. I guess that it allows national politicians and all members of the Eurozone, regardless of language or position, refer to the entire mess with a modicum of wit. It's either that or cry!

Greece is problematic for the Eurozone generally, and the threat to the Euro currency has reached terrifying proprtions at this stage. Today's agreement for a deal to protect the Euro allowed the Irish markets at least to surge by over 8%- but I don't know whether the same can be said of other Eurozone nations. The vast debt that's weighing down on my country is getting a little too much to bear. Even getting a part time job is nigh on impossible, and more and more students are dropping out of college because they just cannot keep up the rent on their apartments near campus. Some people are living in their cars, and yet there are empty houses all over the state which are newly built but unoccupied and left to rot. It's a shocking state of affairs, and I know that the rest of Europe is suffering too. I just think that Ireland is among the worst because of the infamous Celtic Tiger boom period we had between 1998(ish) to 2008, when the crash really started. I'm horrified to consider that in the next few years, I may be forced to emigrate. And emigrate to where? I may be a citizen of the EU- but with the rest of the EU in a similar situation, I'm not sure what I have to gain by staying within Europe at all. It's a hot mess.

ETA: Meant to paste this in- oops.

1. Do you think Greece should be kicked out of the € area and left to sort out their problems themselves?
- I don't think that that is economically viable, to be frank. As a euro country, I think it may be becoming clear that we are all very much so interlinked; perhaps too much so, in a time of crisis.

3. Do you think they should be left to sort it out themselves but not kicked out?
- Again, I don't think that is viable. If we leave them to sort it out themselves, Greece as a state with its own problems is likely to flounder economically. At least with backup there is a sense of support. I'm not happy with funds that are desperately needed in Ireland going to Greece, but nonetheless I think that is part of the price we must now pay for the years of the boom time under the Common Market and joining the Single Currency.

4. Do you think bailing them out is the right thing to do?
-I think it's the only thing we now can do. I can't agree that we should let them fall asunder; I know that Ireland without acceding to the EU in 1973 would never have seen the prosperity the state saw in the Celtic Tiger years. I know the strength the EU has offered in the past. I just think that along the way, they have become caught up too much in making new law and exerting supremacy over national law to remember that economic security was the basis of a Union that is now dying on its feet financially. I don't want to have to bail anyone out, to the detriment of my own state and additions to the national debt, but that's the name of the game and we all signed up for it.

5. If so, do you think 110 billion € is enough?
- I think if it's not enough, nothing can be. The time has come to operate with what we can stretch to operate with. Take and use what we have and use it to its best potential. We don't appear to be having much in the way of choices regarding giving more; enough is enough.

6. What do you think will be the consequences of this crisis on a) The Euro area level, b) The European Union level, c) A global level?
- I worry. I worry for Ireland in particular because I live here, and each passing day things get worse instead of better. There is no Exit sign at all in sight. I worry because the focus of the EU has gradually shifted from economics, and in the run of the shift sideways, we have lost ourselves a little and undermined the original purpose of the Union. Continual bailouts and "trouble funds" are not really the kind of thing I think should boost a market. The fact that these are there at all is a devastating blow to what was supposed to be a time of prosperity. Globally, I think the EU has lost a lot of respect. If 27 countries can't band together and sort out a mess, who can, at the end of the day?

7. What do you think will be the consequences for the people of Greece? Widespread poverty? More riots and strikes? What else?
I'm a vehement believer of the right to protest; riots are not acceptable. Times are hard enough all voer Europe without looking at that on the evening news. all citizens have to sit down and take a serious consideration of what their country is facing. Individual gain just won't fix this; it's gotta be everyone together, or the whole thing will fall flat on its face. Be angry all you want, give out all you want. Bur rioting serves no purpose other than to lower morale even more.

9. Do you think that Greece will ever be able to repay the loans?
- Frankly I don't believe so, no. And that's a price we all have to pay for horrific financial mismanagement over the past number of years. Hopefully it will represent a lesson learned for the future. Hopefully.


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  #11  
Old May 10th, 2010, 9:10 pm
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Re: Crisis in Greece, the Euro Area and the European Union

That acronym seems to have been coined as late as December last year. In international forums like CoS where a great part of the membership does not read their economy news in English, not everyone can be supposed to be familiar with the latest of economist jargon.


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  #12  
Old May 10th, 2010, 11:07 pm
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Re: Crisis in Greece, the Euro Area and the European Union

Well, to come back to question 5:
If so, do you think 110 billion € is enough?

Well, at the moment many business-y types seem to think so:

Shares and oil prices surge after EU loan deal (BBC report)

I am just not sure - is this loan deal the same thing as the bailout? because this is described as a deal of €750bn

Anyway - whatever it was, it seems o have reassured people for now.

I have no idea what it means, though.


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  #13  
Old May 11th, 2010, 5:58 am
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Re: Crisis in Greece, the Euro Area and the European Union

Obviously it's much more than the direct loan package we knew about before Monday morning. It also seems the European Central Bank (ECB) has stepped in and some national central banks too. It's evident that the EU finance ministers and ECB thought a 110 billion loan was not enough.

So, I guess question 5 is rather irrelevant already.


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Old May 11th, 2010, 8:54 am
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Re: Crisis in Greece, the Euro Area and the European Union

Well, I would say that question 5 isn't irrelevant, although the amount of money has changed. The question whether it was enough or too much still stands.

It is staggering what kinds of sums have to be thrown at this.

I still don't understand whether that factor they call 'the market' is a 'real indicator' of a real problem, or whether much of it is either hyped panic or malicious targetting of the weakest links in the world economy.

Is it possible to say?

It always seems, when these things are talked about, that 'the markets overreact' 'the markets panic' and so forth. But how does this dynamic come about behind the scenes?

If the markets worked as they should, being an almost natural reflection of the real value of things (including whole economies), then I'd understand it. But the commentary often makes it sound as if in these matters the market mechanism becomes counter-productive and overreacts, bringing down companies and whole countries which might have survived otherwise. So why does it go wrong?


Can anybody with some economic expertise comment on this? This is, frankly, something I just don't understand! It seemed OK when only companies were involved. But if that market mechanism can bring down whole countries now, it would be good to understand how it actually works (or didn't).


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  #15  
Old May 11th, 2010, 9:41 am
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Re: Crisis in Greece, the Euro Area and the European Union

Quote:
Originally Posted by Klio View Post
IMHO you are blowing this WAY out of proportion. I wonder who you ahve been talking to, but expats don't always have a very clear view of present circumstances, and may be even more influenced by memories of the Civil War and the Junta - their own memories or those of their parents and grandparents. Greece has changed hugely in the last 20 years. I remember it having an really Levantine rather than western European air about it even back in 1990. I am sad to see that gone, but in many ways it really does feel like an organised EU country most of the time, and people have come to take that for granted, too. ANd since small-town corruption in the countryside is a very intimate measure of a country, I can tell you from experience with working with local officials in rural areas in Greece, Italy and Austria that Greece isn't perfect, but didn't seem outrageously corrupt or badly organised to this Austrian, while Italy did.

As far as I can tell, there has been a fairly reasonable succession of governments of the two sides (Nea Dhimokratia - moderately right and PASOK - moderately left), with slowly decreasing (but still relevant) corruption since I have been watching the situation (that would be c. 1992 or so). Now, I haven't been there for a year now, but I don't recognise your image of widespread radicalism *AT ALL*. Yes, there is scepticism about governments (which in Greece goes with a rather unfortunate and almost glorified tradition of tax evasion), but I haven't found it much worse than in other 'standard western' countries - such as Austria, for example.


What you need to understand is that while Greeks are grumbling about their government and might sometimes be passionate about some cause (occasionally extreme causes, too), they are hard-working people used to be on their own when it comes to fend for their prosperity, but even services such as education (I don't know any country where so many people pay for so much private tuition, particularly in foreign languages). They are, as far as one can generalise, above average enterprising and resourceful in my experience (perhaps because they have had to be for so long, I am not sure). Moreover, they are very patriotic, and mostly in a constructive way. Which means (I think at least) that a large majority is likely to be moved to action or at least a willingness to agree to whatever is necessary to save Greece before it comes to serious chaos. These are factors that can't be underestimated.
Of course, I may be exaggerating as I said earlier, but I think you seem to be overlooking the cause of the riots themselves - the Greek people want to keep all their government benefits and their high public servant wages. Which, to me, implies that they aren't willing to give up their personal cash for the good of the country as a whole - contradicting what you're saying here about them being willing to do whatever it takes to get Greece back on track. Of course, some people (most probably in the private sector) want the rioters to get out of the way and let the government cut their wages and benefits, but they continue to riot, and these are the people who seem to represent the mass feeling in Greece. They feel they are being hard done by, despite the fact that all the measures that have been taken are fairly minor and lots more will need to be taken to get the country back on track. The government has essentially been backed into a corner.

Quote:
Originally Posted by Klio View Post
BTW - you also get Communists in Italy - and they are now pretty cuddly cultured lefties - at least the ones I have met, and to judge by their TV channel and newspapers. It wasn't always thus, of course (back in the 1950s things were pretty radical - the Don Camillo stories are a brilliant entertaining introduction to that period).
There are actually active communist parties in a lot of European countries, with France and Ireland having them as well as Greece and Italy.

Quote:
Originally Posted by MmeBergerac View Post
Maybe we're politically more stable than Greece, but that doesn't mean that our government can handle the crisis. I wish it would! But the only measures they've taken in the last two years have tended to increase expenses even more and they've not created employment.
I can only imagine what it would be like living in a place with 20% unemployment. We can only hope Portugal pays you back - they have a few hundred million US dollars borrowed from Spain.

--

I feel so sheltered reading all your horror stories about the GFC in Europe! It's really hard to comprehend from where I'm standing, because it didn't really have very much impact here thanks to our government's quick and effective stimulus package and China's stable economy. I guess I should just tell you all to move out here - we didn't even go into an official recession and have unemployment at around 5%, which is essentially as low as it goes. It was at around 4% pre-GFC, but we'd had a 15 year long boom to get it to there.

Quote:
Originally Posted by Klio
If the markets worked as they should, being an almost natural reflection of the real value of things (including whole economies), then I'd understand it. But the commentary often makes it sound as if in these matters the market mechanism becomes counter-productive and overreacts, bringing down companies and whole countries which might have survived otherwise. So why does it go wrong?

Can anybody with some economic expertise comment on this? This is, frankly, something I just don't understand! It seemed OK when only companies were involved. But if that market mechanism can bring down whole countries now, it would be good to understand how it actually works (or didn't).
If you want it the simple way, things are only worth what someone is willing to pay for it. So, "real value" does not actually exist in economics. Confusing, I know. As a result of this, we have speculation and the buying and selling of shares, which is (supposed to be) guesswork. Economics is a strange yet fascinating field.

By the "market overreacting", it probably is referring to a large withdrawal of investment funds, either by banks being unwilling to lend money to businesses to invest in capital, or stockholders selling their shares back to the company. When people/stockholders aren't willing to invest money in companies any more due to the economy being perceived to be fragile, which in turn makes it fragile because there in no longer any money for capital and businesses contract - it's a big circle. This big circle is what made the Great Depression in the 30's so bad, because the governments did not take ANY action, believing the market would right itself eventually. However, governments control quite a bit in an economy, mainly in the form of TAXATION and INVESTMENT/EXPENDITURE. They can withdraw money from the market in the form of tax (which controls inflation) or they can injection money into the economy in the form of government expenditure (which creates employment). Governments and businesses aren't as separate as you might think. Businesses receive benefits or subsidies if they do certain things as well as investment if they're in certain industries, and the government receives income in the form of tax. The two are interlinked. If business starts failing, then the government loses their income, and if the government has blown it's budget and cuts investment, businesses lose money needed for capital. Trying to separate the two when discussing the economy is not really doable.

Not sure if I answered your question, but I tried. If you want to ask something more specific I could discuss it with my Economics teacher if I don't already vaguely know.


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  #16  
Old May 11th, 2010, 9:54 am
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Re: Crisis in Greece, the Euro Area and the European Union

Quote:
Originally Posted by moogirl View Post
Of course, some people (most probably in the private sector) want the rioters to get out of the way and let the government cut their wages and benefits, but they continue to riot, and these are the people who seem to represent the mass feeling in Greece. They feel they are being hard done by, despite the fact that all the measures that have been taken are fairly minor and lots more will need to be taken to get the country back on track. The government has essentially been backed into a corner.
I don't know what proportion of the Greek people they represent but it is worth noting that the Police who were trying to stop them are subject to the same wage cuts etc. as the people protesting. I suspect most of the Greek people are pretty fed up with the situation but it's not a majority rioting.


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Old May 11th, 2010, 10:13 am
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Re: Crisis in Greece, the Euro Area and the European Union

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Originally Posted by Mundungus Fletc View Post
I don't know what proportion of the Greek people they represent but it is worth noting that the Police who were trying to stop them are subject to the same wage cuts etc. as the people protesting. I suspect most of the Greek people are pretty fed up with the situation but it's not a majority rioting.
Good point, dually noted.


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Old May 11th, 2010, 12:04 pm
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Re: Crisis in Greece, the Euro Area and the European Union

Thanks, moogirl - that was a useful economics lesson.

Reading it I realise that I have seen bits of this here and there, but never quite so nicely put together in a concise way.




I am with Mundungus - and the noises I hear privately out of Greece are that many people are very worried about the rioters - they *want* these reforms to succeed even though they know that it will hurt them personally, and they know that the riots might mean delays which Greece can't afford.

With all that stuff going on in the UK I haven't had time to read Greek newspapers (reading modern Greek takes me a lot longer than reading English or German), but from the little I have seen my impression is that a large majoity of the Greek peple are taking this with admirable calm.

I stick by my point that the radical element (though small) is worrying - but not because it might take the people with them in a revolution. IMHO the worrying factor is that they might just cause enough trouble to delay the necessary reforms. In a state on the brink that could be a problem.

Moreover, I worry whether bad TV pictures of rioting mobs burning stuff could have a bad influence, too (and note that the riot pictures in recent years almost always come from a very small part of Athens, but you wouldnt know that almost the whole country is calm from the pictures we are seeing outside Greece).


Quote:
Originally Posted by moogirl
I feel so sheltered reading all your horror stories about the GFC in Europe! It's really hard to comprehend from where I'm standing, because it didn't really have very much impact here thanks to our government's quick and effective stimulus package and China's stable economy. I guess I should just tell you all to move out here - we didn't even go into an official recession and have unemployment at around 5%, which is essentially as low as it goes. It was at around 4% pre-GFC, but we'd had a 15 year long boom to get it to there.
The weird thing is that here in Europe we hear all this news about how our economies are in a horrible state - but it also feels a bit as if this weren't quite so true. I think you have to understand that we aren't all going down in panic or poverty just yet - not from where I am sitting anyway. Yes, unemployment has risen, and those who are hit have a very tough time. I am not belittling the plight of those who have been directly hit. But the general mood isn't (yet?) one of doom and gloom - at least not in the countries I have recently been to (apart from the UK that would be N Italy, Austria, Germany, Belgium and Slovakia). I know of nothing like the sort of stuff you see happening in the US, with mass forclosures, and former middle class families needed food aid (!!!) in large numbers. I think the fairly robust social systems of most European states have helped to make the whole problem less harsh (or have they just made it less visible? I am not sure!).

I expect it to be a lot more painful once those deficits run up for stimulus packages and for keeping that social backup going through the crisis have to be paid back. I know that our new government (whatever it will be) will have to make awful cuts, which may even cost me my job. But somehow it doesn't quite feel like it just yet. However, I am assuming that they'll try their bst to make the cuts in a way that won't throw too many people into abject poverty. If running up that debt helps you to do that, I am OK with it. After all, less money in your pocket might mean the difference between having food and housing for the people at the low end of the scale, while further up it might just mean not being able to have a second car or a new flatscreen TV. If we can somehow manage to cut back by distributing the pain to avoid abject poverty as much as we can, then I shall be content.


I'd be curious to hear from people in those countries most affected (the fabled PIIGS - Portugal, Ireland, Italy, Greece and Spain) whether it is the same there..... that you *know* it's bad rationally, but it doesn't quite feel like it yet?


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  #19  
Old May 11th, 2010, 2:43 pm
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Re: Crisis in Greece, the Euro Area and the European Union

Posted by moogirl:
Quote:
I can only imagine what it would be like living in a place with 20% unemployment. We can only hope Portugal pays you back - they have a few hundred million US dollars borrowed from Spain.
I imagine that in any other country, 20% unemplyment would mean riots, general strikes and so. However, in Spain the labor unions don't work thanks to their members' fees, but to the money they receive from the government. So, when the government is ideaologically similar, they overlook things they would never accpet from a conservative government.

An example: I remember a general strike when I was 15 or 16 years old, while Spain was adapting its economy to enter the €. Unemployment in that moment was about 12%. Now, with 20%, labor unions have made just two demonstrations in the last 6 months: one against employers (many of which are struggling for not to close their companies and have to fire all the staff) and another supporting a famous judge accused of trying to prosecute the leaders of Franco's dictatorship when there's an amnesty law forbidding it. Nothing against the government that's provoked that rate of unemployment and tries to disguise it every month.


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  #20  
Old May 11th, 2010, 3:39 pm
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Re: Crisis in Greece, the Euro Area and the European Union

But you wouldn't expect unions to demonstrate against a government for running up debt, as long as that government doesn't do anything obvious against workers.

I know this might sound illogical to you, but that's not what a union is there to do.

The riots in Greece also haven't been against the government's bad financial politices, but against the cuts in social privileges and wages.



But, Mme Bergerac what is life like in Spain?
Do middle class people who *have* a job feel the impact of the econimic crisis in their personal lives? I'd be really interested to hear how this affects normal daily life in Spain, or whether it's relatively unobtrusive, as it has been (so far) in the UK....


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