Who’s next to unpeg?

[FlyerInHi]

Apparently Slovakians who are also in the Eurozone resent the high living in Greece.

Some interesting data. Seems like poverty wages. We should be grateful to live in USA.

Average retirement:
Slovakia 380 euros
Greece 882 euros

Minimum salary
Slovakia 380 euros
Greece 583 euros

[FlyerInHi]

I’m going to go on a limb and predict a Greexit. They are running a primary deficit and who knows when they’ll get out. So If Greece stays in the euro, Europe will have to keep lending more and more.

[Hatfield]

The crazy thing is that everybody knew at the time that Greece joined the Eurozone, that they’d cooked the books in order to meet the fiscal policy requirements. They’ve NEVER met the requirements. I remember reading about it at the time in The Economist, so it’s not like it’s a state secret. But it was boom times and I guess everyone figured it would all work out.

I think the only path forward is for Greece to default, exit the Euro, and inflate their way out of this mess. Greece is a tiny portion of the Eurozone GDP. The problem is when Italy, Portugal, Spain, and possibly Ireland all decide to follow suit, and I don’t see how that can be prevented one Greece establishes a precedent.

I really don’t see the Euro surviving, long-term.

[livinincali]

[quote=Hatfield]
I think the only path forward is for Greece to default, exit the Euro, and inflate their way out of this mess. Greece is a tiny portion of the Eurozone GDP. The problem is when Italy, Portugal, Spain, and possibly Ireland all decide to follow suit, and I don’t see how that can be prevented one Greece establishes a precedent.

I really don’t see the Euro surviving, long-term.[/quote]

How do you inflate your way out of this mess? Why do people think oh we can just inflate this debt away, easy peazy? Do you have an example of a nation that inflated away it’s debt problems? I know of nations that have defaulted but none that just inflated the problem away.

The Greek government has to stop spending more than they take in revenue. Deficit spending via issuing new currency has the same effect on peoples purchasing power as just cutting the benefits. Maybe it’s easier from a legal perspective to pay pensions in Dracmas even though they don’t buy as much. The end result is the same.

Greece has already defaulted. Yeah maybe Germany and the rest of the EU members decide to kick the can again but any money they continue to give Greece isn’t going to be paid back. At this point any loans given to Greece should be treated as gifts.

[The-Shoveler]

You are about to see it happen here.

[FlyerInHi]

Sure, you can inflate away debt denominated in your own currency.
We did it and so did France after WWII.
http://www.nber.org/papers/w15562

livin, inflation is psychologically easier than deflation. Plus inflation boosts consumer spending which is very good for the economy.

With Greece, it’s somewhat unclear at this point, but the problem is that they are running a primary deficit which doesn’t allow them to service their debt. So the debt will keep growing as long as the EU keeps on lending.

As long as the primary deficit continues, even debt reduction is of no use.

[livinincali]

[quote=FlyerInHi]Sure, you can inflate away debt denominated in your own currency.
We did it and so did France after WWII.
http://www.nber.org/papers/w15562
[/quote]

From 1946 to 1956 the economy grew 45% (1.96 trillion to 2.84 trillion). The net deficit for all 10 years was a negligible 4.8 billion. So for 10 years we added almost zero debt and grew at about 4% per year. CPI from 1946 to 1956 was 39% or about 3% per year. So while inflation helped reduce the GDP/debt ratio, it looks like real growth and the lack of incurring additional deficits were far more important to shrinking the debt/GDP ratio. Of course we bombed the rest of the world industrial capacity to nothing at the time and had no globalization to impact domestic wages then, so we had a massive competitive advantage for growth.

In the end though, we didn’t inflate the debt away we grew and stopped taking on additional debt. Inflation added a bit of a boost.

[The-Shoveler]

The united states is not greece, so there is not a lot of meaningful comparisons that can be made, sort of like Iceland,

it’s probably easier to compare Iceland to the politics and economy of say, Temecual, or maybe San Fernando than the U.S.A.

[Hatfield]

Greece has too much government overhead, but that issue aside, I don’t think they’re ever going to get from out behind the eight ball as long as they’re shackled to the Euro.

[joec]

Exactly…Since Greece cannot just print more Euros to pay off the debt, converting to Dracmas won’t lower their Euro debt since Dracmas will be worth nothing.

The US can inflate their way out since they can just print more dollars or find ways to flood the system with dollars so since the debt is still the same, it’s easy to avoid having that control.

This seems to be a common problem with having someone else control your currency while you also happen to do business in another currency.

I think it’d just be “interesting” to see a country exit the Euro since most people assume they will work out some last minute deal or kick the can further down the road. Simply put, the Greeks don’t have the money to pay back and never will have the money so any changes seem like a waste of time. The money is also already gone.

Funny how I read/saw that Germany had debts forgiven after WW2 and now, they say they can’t forgive other countries debt.

[Hatfield]

No, there’s no paying back these loans, they’re going to have to default. Or pay them off pennies on the dollar, at best.

[FlyerInHi]

The corruption of the Greek government over the years is pretty scandalous. They flaunted EU and Euro rules all along.

Other poor countries such as Latvia, Slovakia, etc.. reformed because they really wanted to come into Europe.

Greece, however, feels like they are core Europeans. They joined the EU in 1981 and the Euro in 2001.

Without explicitly saying it, Greece is arguing: “yeah, we’re the poor cousins; but as European citizens, we deserve a minimum standard of living. So consider the debt like transfer payments we should have received (like poor states in USA get). BTW, we still have problems but it’s Europe’s responsibility to continue to assist us.

It’s not a bad argument. But that requires political union which doesn’t exist now. If Europe had a US like Federal system to take care of the military, social security, healthcare, highways, etc…, Greece could be a tourist state like Florida.

[The-Shoveler]

Florida actually has quite a bit of high tech down in Fort Lauderdale area, not to mention agriculture.

I would not mind living on the inter-coastal like a few of my colleagues do.

[FlyerInHi]

Greece is a not a bad place to live either, maybe nicer and better weather than Florida.

I think what they mean by European solidarity is richer countries helping the poorer countries get richer. In the long run, it’s a good thing because it will create a larger market for goods and services. And a stronger union will translate into political power on the international stage. They need political union and a United States of Europe achieve that.

States bickering among each other was very common back in our early history, even after Independence and until after the Civil War. The Civil War solidified the Federal government and resolved many issues for us.

On a personal level, I wouldn’t mind casting off the South or any state that wants to leave the Union. haha.

[Coronita]

So looks like Greece is asking for $50billion euros. And put in place austerity measures? So what was the point of the referendum? Lol
https://www.washingtonpost.com/world/greek-government-finalizes-details-on-last-ditch-request-for-bailout/2015/07/09/f7871f18-25ba-11e5-b621-b55e495e9b78_story.html

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