Playing Chicken In The Eurozone
Things are truly going on, out there in whatever you consider the Big World to be. And, dogs do pay attention to these things.
Yes; we know -- you think all we're interested in is food, elimination of bodily waste -- squirrel! -- your attention; food; other Dogs -- hey! another squirrel! -- being left outside the store; food; and dry-humping an available leg. So wrong.
Greece has apparently said Γαμώτο λιτότητας. As we've noted many times in the past (like, 2010, and in 2011 and also 2012), since The Crash of 2008, Greece has suffered through a tragedy worthy of Sophocles.
It's economy was overextended when the Bankster class (led by America -- USA! USA!) set up the Crash. Greece's national debt was roughly 175% of GDP, where it remains today. It had, like any country, sold bonds as investments -- and without loans from the EU (primarily, German banks), the European Central Bank (ECB) and the IMF, the country might default on payments when the bonds came due.
Worse, they might default on paying the bailout loans -- and as the graphic below indicates, that default action would be Sehr Schlecht for banks in France and Germany.
So Greece was provided a series of four IMF/ECB loans -- "bailouts" -- but as a condition of receiving the money had to accept forced austerity measures to reduce the country's deficits and pay down their public debt.
The EU state in the best shape, financially, after 2008 was Germany -- and principal among EU leaders who supported austerity was Die Eisen Kanzellerin Angela Merkel. Many European nations, Angela said, had been profligate and spent above their means; it had taken an American-led financial crisis to show the cracks in Europe's financial foundations.
To correct that, nations like Spain, Portugal, Ireland, and Greece, would have to reduce public spending until the pips squeaked. This meant reductions in public services, massive layoffs of government workers, and cuts in pension payments to retirees. Without promises to do so -- no soup for you! and no loans from Germany's banks.
So, Greece's economy contracted by one-quarter after 2008, and Greece's unemployment rate climbed steadily to 25% and has remained there. The lack of jobs meant few people had much discretionary spending power -- they were too busy trying to figure out how they would feed their families.
Greece's public electricity utility is state-owned -- so it was negotiated away to be sold to a "private consortium" (Read: Oligarchs), along with Piraeus, the country's largest port and shipping facility. There was even talk of selling some of Greece's national art treasures to museums and "private collectors". The country was holding a Fire Sale: Our Misfortune Could Be Your Fortune! Everything Must Go!
Fortunately, Greece's cultural heritage remained in its museums. However, private individuals had to drain their savings accounts, and sell any private assets they had for whatever they could get -- art, land, jewelry; businesses. "Private investors" (Read: Vultures) in Russia, Europe, and China all swooped down to pick up a few bargains. The wealthy were able to weather the storm, but by 2013 the majority of Greece's population was declared by the BBC to be "living in poverty".
None of this could have happened without thecollusion active support of the Greek government, led by Center/Right politicians, who negotiated loans from the EU and tried to convince the Greek populous that austerity today would mean prosperity and security down the road.
The problem was that austerity is a complete failure. Forcing a nation into high rates of unemployment doesn't stimulate economies; exactly the opposite -- though even a brain-dead chimpanzee would have known that), one bailout loan was followed by Greek inabilty to meet its loan payments, meaning another loan... which the EU, ECB and IMF would not provide without even more austerity measures.
So it went for three years. The belt-tightening continued; strikes and riots occurred across the country. There were several changes of governments -- which involved penalties for anyone not supporting austerity (in February of 2012, members of Greece's parliament who voted against accepting the ECB/IMF's financing terms were thrown out of their political parties). The Center-Rightists always managed to maintain just enough of a majority in Greece's parliament to be the party forming a government, and maintaining control... until this past weekend.
The election of a majority of Leftist Syriza party candidates for the Greek Parliament placed it in control of the Greek government -- which has announced it would 'renegotiate' the country's $240 Billion-Euro debt, shelved plans to sell its state utility and the port of Piraeus, and declared the 'era of humiliation' was over.
This sent a shiver through Brussels. It was, possibly, the beginning of a worst-case scenario which some peripheral EU nation has threatened to deliver for over five years -- and if not Greece, then Portugal, or Spain; Italy; even France. Martin Schulz, President of the European Parliament, said he will meet with Greece's new Prime Minister, Alexis Tsipras, next week, for some "straight talking".
New Prime Minister Tsipras stated earlier this week that the new government did not plan a "Grexit" from the EU or the Euro -- that Greece intends to honor its debt obligations and not default. However, he was clear that the terms of repayment would be theirs, and not the debtholders' -- that demands for austerity wouldn't continue.
The new plan would be to renegotiate terms of Greece's debt with the individual EU countries which had provided money for their loans -- something like renegotiating the terms of your auto loan with the depositors whose money was used, instead of your bank.
Today, the Eurogroup finance chief and Dutch politician, Jeroen Dijsselbloem, met with the new Syriza party Greek Finance Minister, Yanis Varoufakis, to discuss how Greece's new government planned to meet its loan obligations to the "troika" (EU banks, ECB and IMF). Dijsselbloem represented the troika, and finance ministers of the core EU states most at risk from a default; he appeared in typical business suit and tie, but his eyebrows shot up when Varoufakis arrived wearing a shirt without a tie, and not even tucked into his trousers. Things kind of went downhill from there.
After meeting privately for two hours, the men held a brief press conference. Varoufakis said flatly that Greece would no longer negotiate with the "troika", but with the individual EU countries involved in the loans. Dijsselbloem appeared surprised (so, what did they talk about for two hours?), and said he was disappointed.
After less than ten minutes, the men stood up -- Dijsselbloem shook hands with Varoufakis and whispered something in his ear, then walked off without looking back (It was reported that Dijsselbloem had said, "You just killed the troika," and that Varoufakis simply responded, "Wow"). Dijsselbloem clearly felt dissed.
Why is any of this important? If the Troika of lenders and the new Greek government can't reach an agreement on repaying the loans they already have, there will be trouble -- European finances are tight, and if some lenders aren't repaid on time ( It's been noted already that the Greek debt most at risk is in loans from German banks), it can unbalance a whole house of cards.
And, there's always the worst-case: Greece pulls out of the EU or removes itself from the Euro, which would send financial markets into a nose-dive. That probably won't happen -- and Paul Krugman, Very Smart Human (smarter than you and me; that's for sure), will explain it all for you here.
Of course, if he's wrong, we'll have our own brand of Fun in the not-too-distant future:
Some men see things as they are and ask, "Why?"
I see the same stuff and say, "Yeah, yeah; whatever:"
Bender Bender Bender / Bender Bender Bender...
-- Bender
I see the same stuff and say, "Yeah, yeah; whatever:"
Bender Bender Bender / Bender Bender Bender...
-- Bender
Things are truly going on, out there in whatever you consider the Big World to be. And, dogs do pay attention to these things.
Yes; we know -- you think all we're interested in is food, elimination of bodily waste -- squirrel! -- your attention; food; other Dogs -- hey! another squirrel! -- being left outside the store; food; and dry-humping an available leg. So wrong.
Greece has apparently said Γαμώτο λιτότητας. As we've noted many times in the past (like, 2010, and in 2011 and also 2012), since The Crash of 2008, Greece has suffered through a tragedy worthy of Sophocles.
It's economy was overextended when the Bankster class (led by America -- USA! USA!) set up the Crash. Greece's national debt was roughly 175% of GDP, where it remains today. It had, like any country, sold bonds as investments -- and without loans from the EU (primarily, German banks), the European Central Bank (ECB) and the IMF, the country might default on payments when the bonds came due.
Worse, they might default on paying the bailout loans -- and as the graphic below indicates, that default action would be Sehr Schlecht for banks in France and Germany.
Circa 2012: Why Greek Debt Matters For Europe
(Click On Image To Enlarge: It's Easy and Fun!)
So Greece was provided a series of four IMF/ECB loans -- "bailouts" -- but as a condition of receiving the money had to accept forced austerity measures to reduce the country's deficits and pay down their public debt.
The EU state in the best shape, financially, after 2008 was Germany -- and principal among EU leaders who supported austerity was Die Eisen Kanzellerin Angela Merkel. Many European nations, Angela said, had been profligate and spent above their means; it had taken an American-led financial crisis to show the cracks in Europe's financial foundations.
To correct that, nations like Spain, Portugal, Ireland, and Greece, would have to reduce public spending until the pips squeaked. This meant reductions in public services, massive layoffs of government workers, and cuts in pension payments to retirees. Without promises to do so -- no soup for you! and no loans from Germany's banks.
So, Greece's economy contracted by one-quarter after 2008, and Greece's unemployment rate climbed steadily to 25% and has remained there. The lack of jobs meant few people had much discretionary spending power -- they were too busy trying to figure out how they would feed their families.
Greece's public electricity utility is state-owned -- so it was negotiated away to be sold to a "private consortium" (Read: Oligarchs), along with Piraeus, the country's largest port and shipping facility. There was even talk of selling some of Greece's national art treasures to museums and "private collectors". The country was holding a Fire Sale: Our Misfortune Could Be Your Fortune! Everything Must Go!
Fortunately, Greece's cultural heritage remained in its museums. However, private individuals had to drain their savings accounts, and sell any private assets they had for whatever they could get -- art, land, jewelry; businesses. "Private investors" (Read: Vultures) in Russia, Europe, and China all swooped down to pick up a few bargains. The wealthy were able to weather the storm, but by 2013 the majority of Greece's population was declared by the BBC to be "living in poverty".
None of this could have happened without the
The problem was that austerity is a complete failure. Forcing a nation into high rates of unemployment doesn't stimulate economies; exactly the opposite -- though even a brain-dead chimpanzee would have known that), one bailout loan was followed by Greek inabilty to meet its loan payments, meaning another loan... which the EU, ECB and IMF would not provide without even more austerity measures.
2012, Athens: Happy Greeks Enthusiastically Embrace Austerity
To Assist European Allies By Vowing To Live On Dog Food For
The Next Ten Years (Photo: Guardian UK / Milos Bicanski)
The Next Ten Years (Photo: Guardian UK / Milos Bicanski)
So it went for three years. The belt-tightening continued; strikes and riots occurred across the country. There were several changes of governments -- which involved penalties for anyone not supporting austerity (in February of 2012, members of Greece's parliament who voted against accepting the ECB/IMF's financing terms were thrown out of their political parties). The Center-Rightists always managed to maintain just enough of a majority in Greece's parliament to be the party forming a government, and maintaining control... until this past weekend.
The election of a majority of Leftist Syriza party candidates for the Greek Parliament placed it in control of the Greek government -- which has announced it would 'renegotiate' the country's $240 Billion-Euro debt, shelved plans to sell its state utility and the port of Piraeus, and declared the 'era of humiliation' was over.
This sent a shiver through Brussels. It was, possibly, the beginning of a worst-case scenario which some peripheral EU nation has threatened to deliver for over five years -- and if not Greece, then Portugal, or Spain; Italy; even France. Martin Schulz, President of the European Parliament, said he will meet with Greece's new Prime Minister, Alexis Tsipras, next week, for some "straight talking".
New Prime Minister Tsipras stated earlier this week that the new government did not plan a "Grexit" from the EU or the Euro -- that Greece intends to honor its debt obligations and not default. However, he was clear that the terms of repayment would be theirs, and not the debtholders' -- that demands for austerity wouldn't continue.
The new plan would be to renegotiate terms of Greece's debt with the individual EU countries which had provided money for their loans -- something like renegotiating the terms of your auto loan with the depositors whose money was used, instead of your bank.
Today, the Eurogroup finance chief and Dutch politician, Jeroen Dijsselbloem, met with the new Syriza party Greek Finance Minister, Yanis Varoufakis, to discuss how Greece's new government planned to meet its loan obligations to the "troika" (EU banks, ECB and IMF). Dijsselbloem represented the troika, and finance ministers of the core EU states most at risk from a default; he appeared in typical business suit and tie, but his eyebrows shot up when Varoufakis arrived wearing a shirt without a tie, and not even tucked into his trousers. Things kind of went downhill from there.
After meeting privately for two hours, the men held a brief press conference. Varoufakis said flatly that Greece would no longer negotiate with the "troika", but with the individual EU countries involved in the loans. Dijsselbloem appeared surprised (so, what did they talk about for two hours?), and said he was disappointed.
After less than ten minutes, the men stood up -- Dijsselbloem shook hands with Varoufakis and whispered something in his ear, then walked off without looking back (It was reported that Dijsselbloem had said, "You just killed the troika," and that Varoufakis simply responded, "Wow"). Dijsselbloem clearly felt dissed.
Why is any of this important? If the Troika of lenders and the new Greek government can't reach an agreement on repaying the loans they already have, there will be trouble -- European finances are tight, and if some lenders aren't repaid on time ( It's been noted already that the Greek debt most at risk is in loans from German banks), it can unbalance a whole house of cards.
And, there's always the worst-case: Greece pulls out of the EU or removes itself from the Euro, which would send financial markets into a nose-dive. That probably won't happen -- and Paul Krugman, Very Smart Human (smarter than you and me; that's for sure), will explain it all for you here.
Of course, if he's wrong, we'll have our own brand of Fun in the not-too-distant future:
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