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I am from Greece.As most of u know about Crisis
The Coutry tries to find a way to solve this problem!!!!!!
Lets hope we will have a government to solve this F****** problems
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I sure as hell hope you guys don't vote in more Golden Dawn nincompoops. An economic crisis is bad enough without stirring the xenophobic pot and portraying all migrants as evil and parasitic.
Increasing government debt. Members of the European Union signed the Maastricht Treaty in 1992, under which they pledged to limit their deficit spending and debt levels. However, this was always not the case because, The Greeks and Italians were able to mask their credit levels; i.e the debt their governments had accumulated through vast expenditure, in the Greeks case, on huge welfare largesse and military spending.
For example, a daughter of a Greek civil worker, if she is not married, can continue to withdraw his pension even after he is dead. Which is excessive and idiotic fiscal irresponsibility. US economist Paul Krugman named Greece as the only country where fiscal irresponsibility is at the heart of the crisis.
Also, a rising trade deficit caused by importing far more than exporting to other countries; this can be due to the the loss of competitiveness in Europe, such as the vast subsidies given to farmers. Also, the high wages compared to low wages in other countries, would relocate plants overseas, and lower your exports, since your production has moved away. This, in the defense of low cost countries, is not their fault; much of Greece, Italy, Spain etc, also capitalized on low wages vis a vis the US and more developed European states in the 1960s-1970s.
Structural problems within the EU. The EU dictates a common monetary policy, which means the supply of Euros is controlled by the EU, however each government can decide their own fiscal policy, i.e whether to deliberately increase/decrease government expenditure and increase/decrease tax when they are needed. This feature brought fiscal free riding of peripheral economies, especially represented by Greece, as it is hard to control and regulate national financial institutions.
Bad financial loans. There was easy credit in the early 2000s that encouraged high-risk lending and borrowing practices by banks that were actually structurally weak, and by investors who were not sound.
Lastly, loss of confidence as the crisis worsens, essentially a self-fulfilling prophecy.
Explanation on what fiscal free-riding is, Italicised chunks are my own elaborations:
Each member state of the Euro-zone is caught between two alternatives: to engage in fiscal free-riding or to be the sucker, the victim of free riding by the others. The reason is easy to grasp. When a country has its own currency, fiscal profligacy when expansionary fiscal policy/excessive government spending is carried out, carries its own punishment. Interest on the national debt rises more than proportionately to the debt, both because the country's own capital market gets overstretched, and because the risk attaching to its currency increases. Default on the debt and devaluation of the currency (coming after a flight into inflation to water down the debt), though perhaps still remote, start looking less improbable as the whole zone uses the same currency, hence the effects are distributed, rather than having say the Greek drachma taking a hit if the Greek government did not accept the Euro. The repercussions of a fiscal policy where each government uses their own national currency, rather than a regional currency renders a loose fiscal posture more and more difficult to hold, and in due course tend to impose some discipline on the government.
As a member of the Euro-zone, the same government running a large deficit is spared most of these disciplinary consequences. No member country, with the possible exception of Germany, is big enough in the zone as a whole, for its deficit financing to represent a significant strain on the zone's capital market. Currency risk subsists only relative to currencies outside the zone, in practice only the dollar and the yen, but it is eliminated within the zone; there is no Greek Euro and no Spanish Euro, so one cannot weaken relative to the other. Fiscal irresponsibility by one country still has adverse consequences for the zone as a whole, but only a small fraction of them is borne by the irresponsible country in question, with the bulk spread over all the other member countries. This is the classic breeding ground for free riding.
Under these circumstances, fiscal vice is not punished but fiscal virtue is. This is not to say that budget deficits are always evil if some of their negative consequences are shifted to other countries, as they in fact are in the Euro-zone. In the short run, occasional deficits may be justifiedâ"or would be if they were not habit-forming. However, Greece has been overspending for years, and this causes a problem.
Thanks de Jasay.
Greece as the only country where fiscal irresponsibility is at the heart of the crisis.
greece and iceland that is =)
and lower your exports, since your production has moved away.
i just want to say that this is a possitive point for the netherlands because we have now more import and export then befor.
were even working on growing the rotterdam harbor wich already is the largest in the world.
Bad financial loans. There was easy credit in the early 2000s that encouraged high-risk lending and borrowing practices by banks that were actually structurally weak, and by investors who were not sound.
this isn't europe only it worked that way world wide. and in 2009 and 2010 people went against it the loans have been lowered. but since 2011 it seems like nothing has changed from befor 2009. everything is back to normal again it seems and it's just waiting for another crisis like this.
No member country, with the possible exception of Germany
-germany
-finland
-sweden
-netherlands
-france
these 5 countrys are about 75% of the european financials.
for example, greece is only 2%
(but i had little problems reading your 2nd post. not sure this is even relevant to your point.)
Sweden doesn't use the Euro.
It was explaining what fiscal free riding, i.e what Greece does.
ah yea i always switch those scandinavian countries up.
i know it are only 2 of the 3 but always forget witch 1 hasn't the euro. then i ment norway and finland =)
i know it are only 2 of the 3 but always forget witch 1 hasn't the euro. then i ment norway and finland =)
Norway isn't even in the European Union. The only Scandinavian country that has the Euro is Finland.
In a nut shell:
Too generous, government, infrugal spending by public,trade unions BS,and risky investments brought greeks down
Norway isn't even in the European Union. The only Scandinavian country that has the Euro is Finland.
gimme a few days to find the source back, i guess it wasn't euro based but economicly based then. as i'm sure 2 of the 3 countrys belong in the list. carry on in the meanwhile.
In a nut shell:
Too generous, government, infrugal spending by public,trade unions BS,and risky investments brought greeks down
in a nutshell i would say: the government didn't show the right numbers. they had far less then they thought. and now we are trying to safe them but they refuse to pay us back sometime. and when there seems to finaly be a agreement then they instandly drop it all. then they need a new government but are unable to make 1. meanwhile we are giving them money we will never see back again.
well if you ask me then they are just not willing. and we should kick them out. their just 2% we can miss that. not that i don't like greece. it's a nice country whit good people. but their not good whit getting things done in time. or come to a agreement.
in a nutshell i would say: the government didn't show the right numbers. they had far less then they thought. and now we are trying to safe them but they refuse to pay us back sometime. and when there seems to finaly be a agreement then they instandly drop it all. then they need a new government but are unable to make 1. meanwhile we are giving them money we will never see back again.
Yes, but which Greek government would dare to cut back on union benefits and such public spending largesse? Everyone is at fault to a certain degree; once you open the can of worms that is such generosity, no one would like to cut back on it and be seen as an electoral villain. Just look at those protests marches today at austerity. Unfortunately, the standard of living was artificially inflated in Greece and proved to be unsustainable. It was not founded on substance.
well if you ask me then they are just not willing. and we should kick them out. their just 2% we can miss that. not that i don't like greece. it's a nice country whit good people. but their not good whit getting things done in time. or come to a agreement.
No, don't kick them out. You risk much more than that. Greece itself would go through a period of hyperinflation. And the woes would almost certainly spread.
Also, sorry Goumas if anything I said about Greece is factually wrong and offends you.
This is actually helping me revise for my econs papers....
Members of the European Union signed the Maastricht Treaty in 1992, under which they pledged to limit their deficit spending and debt levels. However, this was always not the case because, The Greeks and Italians were able to mask their credit levels
Frankly, let's not be innocent, pretty much all European countries cooked their numbers, one way or another, to meet the 3% standard. A very interesting fact is that Spain was one of the few "honest" countries.
As a matter of fact, both Germany and France, did not meet the 3 percent standard and claimed exemption from retaliation measures because, so the German finance minister Hans Eichel argued, the German government was already applying a restrictive policy.
Therefore, we can safely assume that the E.U. allowed -or tolerated- the masking of the credit levels, everyone knew what was going on and now they are just feigning ignorance.
Thus, I believe that we shouldn't blame only Italy and Greece, for their deception, they are just the ones that got caught with the hand in the cookie jar.
By the way, the only Eurozone country that meets those criteria today is Finland.
Bottom line: the 3% standard was 100% smoke and mirrors. It was a complete and utter joke. So, I think that it does not lead us to a reliable conclusion about what caused the crisis.
Everyone is at fault to a certain degree; once you open the can of worms that is such generosity, no one would like to cut back on it and be seen as an electoral villain.
I strongly object to the word "generosity". It makes it sound like the government did everything out of the goodness of their heart, which is just not the case. The Greek politicians weren't generous, they were corrupt. It was quid pro quo.
I give you a "benefit" and you give me something in return.
So, to paraphrase you Nicho, the standard of living of the politicians and their buddies was artificially inflated in Greece and proved to be unsustainable
Anyway, let me give you a personal example:
My grandfather had a stroke and he became a paraplegic. His whole life he had paid his taxes, actually he had literally paid millions to the Greek state.
You know, paraplegic people in Greece get some public assistance, 200 Euros or something, so a doctor comes to visit my grandfather, to see if he really is paraplegic. The doctor does a couple of tests and concludes that he does not need assistance, because he can move one finger.
Let me give you an other example, I pay 8,000 Euros in taxes, even though I barely earn 11,000. **** yeah, I am going to protest against austerity!
The same Greek politicians that ***** and pillaged the state, now talk about "sacrifices" and austerity! For crying out loud, this is madness!
If austerity means raping and pillaging the *honest and law-abiding* taxpayers -again-, in order for the corrupt politicians to remain in power, austerity can go screw itself for all I care!
Also, sorry Goumas if anything I said about Greece is factually wrong and offends you.
It's cool. I know you mean well.
Anyway, I got a bit worked up towards the end and I truly apologize for that.
As a matter of fact, both Germany and France, did not meet the 3 percent standard and claimed exemption from retaliation measures because, so the German finance minister Hans Eichel argued, the German government was already applying a restrictive policy.
Well yes, but unlike the Greeks, the Germans have a massive trade surplus, vs a huge trade deficit. It has shrunk, but it would naturally, since people in a crisis import less.
Nor is Greece competitive. The cheap loans that the euro brought the country artificially raised prices and wages â" and the country has to come back down from this high level.
If austerity means raping and pillaging the *honest and law-abiding* taxpayers -again-, in order for the corrupt politicians to remain in power, austerity can go screw itself for all I care!
Eager to borrow their country to prosperity, Greek political parties racked up enormous debts while presiding over a dramatic loss of competitiveness and, thus, growth potential. Some even sought to be highly economical with the truth, failing to disclose the true extent of their budgetary slippages and indebtedness.
I wouldn't say they're all corrupt, but bought too much into the cheap cash flowing around, spent too much, and generally managed the economy badly. Far too much. The Greek military has a ridiculous few thousand tanks for example.
I strongly object to the word "generosity". It makes it sound like the government did everything out of the goodness of their heart, which is just not the case. The Greek politicians weren't generous, they were corrupt. It was quid pro quo.
I give you a "benefit" and you give me something in return.
Don't call it generosity then, call it politics, and the bid to win voters. Populist measures.
Also, it would still be unfair to blame just the government as well. According to a remarkable presentation that a member of Greece's central bank gave last fall, the gap between what Greek taxpayers owed last year and what they paid was about a third of total tax revenue, roughly the size of the country's budget deficit. The shadow economy'â"business that's legal but off the booksâ"is larger in Greece than in almost any other European country, accounting for an estimated 27.5 per cent of its G.D.P. (In the United States, by contrast, that number is closer to nine per cent.) And the culture of evasion has negative consequences beyond the current crisis. It means that the revenue burden falls too heavily on honest taxpayers. It makes the system unduly regressive, since the rich cheat more. And it's wasteful: it forces the government to spend extra money on collection (relative to G.D.P., Greece spends four times as much collecting income taxes as the U.S. does), even as evaders are devoting plenty of time and energy to hiding their income.
Greece, it seems, has struggled with the first rule of a healthy tax system: enforce the law. People are more likely to be honest if they feel there's a reasonable chance that dishonesty will be detected and punished. But Greek tax officials were notoriously easy to bribe with a fakelaki (small envelope) of cash. There was little political pressure for tougher enforcement. On the contrary: a recent study showed that enforcement of the tax laws loosened in the months leading up to elections, because incumbents didnât want to annoy voters and contributors. Even when the system did track down evaders, it was next to impossible to get them to pay up, because the tax courts typically took seven to ten years to resolve a case. As of last February, they had a backlog of three hundred thousand cases.
Not to mention that certain groups get favourable tax rates, whilst other Greek workers have to fork out more cash to cover such shortfalls.
It might not be you Goumas, but Greece on the whole spends far too much, including as I said before, its ridiculous military, at 900 pounds per person, one of the highest in the world. It spends too much on welfare, gives too generous welfare benefits to the civil, public service.
Well yes, but unlike the Greeks, the Germans have a massive trade surplus, vs a huge trade deficit. It has shrunk, but it would naturally, since people in a crisis import less.
Nor is Greece competitive. The cheap loans that the euro brought the country artificially raised prices and wages and the country has to come back down from this high level.
I completely agree. Greece is still one of the most expensive countires in Europe and obviously the prices -of most products- need to be lowered. Then we can without causing such huge disruption, lower the wages.
Continuing having incredibly high prices, while at the same time the wages get lowered is a recipy for disaster.
Greek political parties racked up enormous debts while presiding over a dramatic loss of competitiveness and, thus, growth potential. Some even sought to be highly economical with the truth, failing to disclose the true extent of their budgetary slippages and indebtedness.
Seconded.
I wouldn't say they're all corrupt, but bought too much into the cheap cash flowing around, spent too much, and generally managed the economy badly.
Frankly, the mismanagement in Greece was borderline criminal. These persons need to be held accountable and be punished financially and politically. They just shouldn't get away with the mess they caused scot-free!
Also, it would still be unfair to blame just the government as well. According to a remarkable presentation that a member of Greece's central bank gave last fall, the gap between what Greek taxpayers owed last year and what they paid was about a third of total tax revenue, roughly the size of the country's budget deficit.
Of course, many, actually, dare I say most citizens are not blameless. Every person that exploited the state's corruption and inefficiency is personally responsible for the situation. They should obviously be likewise punished for their wrongdoings. In the end all the sinners have to pay haha ...
Personally, I was always of the opinion that tax-evasion is a plague and that it needs to be fixed urgently. The Public sector could easily -enormously- increase it's revenue by simply reducing tax-evasion and avoidance. Thus, I don't agree with tax increases, because they tend to lower the GDP and generally the State's revenues, since as you said the revenue burden falls too heavily on honest taxpayers.
Anyway, the solution to this issue is quite simple: enforce the tax laws. It's that simple.
but Greece on the whole spends far too much, including as I said before, its ridiculous military, at 900 pounds per person, one of the highest in the world
For sure, Greece spends way too much, especially on useless things.
Again, I always said that Greece's military budget needs to be at least halved. As a matter of fact, if the European Union guarantees the Greek borders with Turkey, like they should, the country can bring down military spending to 2.2%. This weapons equipment charade needs to end.
Anyway, Greece buys pretty much every piece of equipment three times! One from the USA, one from the E.U. and one from Russia. That's just ridiculous.
lol honestly, I concur with most of the things you said, so ... yea.
So, to put it simply:
Step 1: Enforce tax laws
Step 2: Cut military spending
Step 3: Profit of at least 10-15 billions.
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