Greek spending has actually been rising

[CARLHAYDEN]

Beet and Gustav,

From what I have seen, you both have some good points.

It seems to me that the Greek government is engaged in a massive farce to extract as much in subsidies from the rest of Europe before they go bankrupt.  The pretended 'austerity' in Greece is just a farce.

The sad thing is that it seems that Portugal, Ireland, Italy and Spain my end up getting screwed by the bad behavior of the Greeks.

The European community would be better off to isolate Greece and instead concentrate on helping the other countries in financial straights that are at least making some real efforts to deal with their problems.

[CARLHAYDEN]

The European community would be better off to isolate Greece and instead concentrate on helping the other countries in financial straights that are at least making some real efforts to deal with their problems.

I agree with this.

I agree with this as well. Greece should be suspended from the Eurozone as long as they have their budget and foreign debt consolidated and implemented several reforms, such as imposing a tax/budget discipline similar to the German/Austrian/Swiss/Dutch/Swedish etc. one, cracking down hard on corruption and work loopholes, cutting their military expenditures to 1% of GDP instead of 6% like it is now, strong reforms in their school/university system that's completely inefficient and incompetent and producing 50% youth unemployment. Further, they should sell their islands and government property to repay the debt to other countries and reform their pension system that favors big bonuses for government workers and even pays out pensions to dead people.

A very good analysis, with excellent recommendations.

What I am afraid of is that Portugal, Ireland, Italy and Spain may be unfairly punished for the antics of Greece.

[CARLHAYDEN]

The European community would be better off to isolate Greece and instead concentrate on helping the other countries in financial straights that are at least making some real efforts to deal with their problems.

I agree with this... Greece should be suspended from the Eurozone as long as they have their budget and foreign debt consolidated and implemented several reforms, such as imposing a tax/budget discipline similar to the German/Austrian/Swiss/Dutch/Swedish etc. one, cracking down hard on corruption and work loopholes, cutting their military expenditures to 1% of GDP instead of 6% like it is now, strong reforms in their school/university system that's completely inefficient and incompetent and producing 50% youth unemployment. Further, they should sell their islands and government property to repay the debt to other countries and reform their pension system that favors big bonuses for government workers and even pays out pensions to dead people.

Um, why would they do all that stuff if they're not going to be bailed out?  The incentive to do all that draconian counter-productive stuff is the bail-out.  If you aren't going to be bailed out and are going to be suspended from the Euro, you just default.  Christ it would be stupid to sell off things you own to pay a debt you can simply repudiate.

Opebo,

The simple truth is that what is going on in Greece is a farce.

The Greek government is NOT taking real steps to deal with their fiscal irresponsibility.

They are just play-acting.

[CARLHAYDEN]

Lyndon,

You raise a number of interesting points.

First, I want to thank you for being honest about the "unwillingness of certain parts of the administration to tighten their belts."  Actually, I would say almost all of the government in my estimation is unwilling to engage in belt tightening.

Second, you are very correct that after a lengthy period of profligacy, it isn't easy to adopt reasonable economic policies.  In the United States we're going through a similar problem with people like Obama refusing to accept reality, and engaging in demagoguery.

Third, if the Greek government were to act in good faith it would amend the constitution to remove the provision making government employees "permanent" who "can't be fired."

Fourth, its not that people want to stop subsidizing Greece because they have falling "in difficult times," but rather that the Greek government is NOT taking the necessary steps to address their financial predicament, while other governments in Europe with similar problems are taking those steps.  The simple principle is that if you refuse to help yourself, there is NO reason others should try to help you.

Fifth, you are quite correct that Greece can and should significantly cut military expenditures.

Sixth, yes the Germans made some big mistakes themselves in believing they would seduce other countries to act like Germans.  When Greek goes bankrupt, a number of German banks will take a hit for the stupid loans they made to Greece.

[CARLHAYDEN]

Our constitution was amended during the 2006-08 period and can be amended again only 10 years after its last modification(2016). Even so, I highly doubt that any government would dare to change that particular article.

Thank you for that information.

However, I fail to see why the rest of Europe should pay for such a policy.

[CARLHAYDEN]

Everyone practicising wage restraint and having a high savings ratio has never actually been tried, except perhaps during the Great Depression. All the major countries that do that in capitalism have a big trade surplus. It is a very supply side view to say that the slack of aggregate demand in such an economy would not be a problem.

The effect of Germany practicing wage restraint has not been good for the euro, because it is undercutting its neighbors. Without Germany, the euro would massively devalue, and this would help the PIGS, obviously. Some have even proposed that one solution to the problem is to have Germany leave the euro by itself.

I still disagree that the main problem for mismanaged euro countries is that other countries have been doing well. Of course, if everyone else also sucked they'd be doing relatively better but it remains a weird approach, imo.

Again, though, the fact that Germany and Southern Europe are not in step economically is of course the reason why the euro was a poor idea to begin with. So I agree with that part.

The demand point is relevant, but I still think that productivity increases is what drives demand in the long run. Wages will eventually have to follow productivity which is why the German way beats the Greek in this case.

I agree that productivity drives increased demand (in the long run), but I think that the sole driver of productivity in the long run is technology, not wages. Increasing productivity by reducing or suppressing wages is a political question of distribution, not an economic question.

Certainly technology has been a major driver of productivity increases over the past several decades, but, in many cases the organization of an enterprise (or reorganization if you will) can have major impacts on improving productivity.

[CARLHAYDEN]

Why not let Greece default, and just kick them out of the EU? Just asking.

Tiny Greece seems to be holding everyone hostage as it were, and it's annoying. They need to get a memo that the penalties will be severe. Just cut them loose is my visceral reaction, so tell me why that is unwise. It may well be, but I want to start a discussion on this. I want to get educated. Thanks.

Goddamn, you're an elitist authoritarian.

Actually, surveys in a number of EU countries indicate that the voters are opposed to continuing the Greek bailout,

Its the supporters of the bailouts who have ignored the voters who are the arrogant elitists.

[CARLHAYDEN]

Why not let Greece default, and just kick them out of the EU? Just asking.

Tiny Greece seems to be holding everyone hostage as it were, and it's annoying. They need to get a memo that the penalties will be severe. Just cut them loose is my visceral reaction, so tell me why that is unwise. It may well be, but I want to start a discussion on this. I want to get educated. Thanks.

Goddamn, you're an elitist authoritarian.

Actually, surveys in a number of EU countries indicate that the voters are opposed to continuing the Greek bailout,

Its the supporters of the bailouts who have ignored the voters who are the arrogant elitists.

This is quite true. Even Spaniards criticize the idea of giving more money to Greece.

This is understandable.

Greece is unique among the PIIGS in failing to make reasonable efforts to curtail spending.