Should the Greek government have continued lying?

[Gustaf]

1. Germany entered the euro with a too strong real exchange rate. Unless most other euro countries they took the responsible course of holding back wage increases thus increasing their competitiveness.

2. Who is Christine Lagarde and why should I care about her opinion?

3. How did they use the common currency to dominate markets? What does that mean?

4. It is odd to hold the Germans of today responsible for what the Nazis did 60 years ago. The Germans have suffered a lot from WWII and its aftermath and it is time to let it go. It is irrelevant and doesn't help anything.

5. I still don't see why Germany should pay for other countries who have mismanaged their economies. Over the last half-century Germany is, more or less, the only country in Western Europe to consistently look after their economy in a competent fashion. That shouldn't be rewarded by ridding them with the debts of other countries.

I don't have time now but I'll respond to one of your questions.

Christine Lagarde is the French Minister of Finance. So I guess that even you will concede that her opinion is somewhat important in EU.

No, I'm sorry...her opinion may be important for predicting what the EU will decide to do or what Germany will be forced to do. But it holds almost no value at all when it comes to analyzing whether Germany has actually gained from the euro or not. She is a politician, of course she will attack Germany. That's what everyone is doing right now.

[Franzl]

Someone asked me a while back why I wasn't intending to stay in Germany (or Europe) permanently....

Well.....you know, being forced to pay Greek debt.....doesn't exactly make you want to stay somewhere.

Thank God for the wonderful European Union that makes us all equal.....although some more equal than others!

[??????????]

This is why the EU is a terrible idea. If one of its' members lies, cheats or does something ethically wrong other member states have to pay the consequences. That's completely unfair to the people who have to foot the bill and will never ever get repaid in a fair manner. That's why the UN hurts more then it helps. Furthermore, this is why I stand for national sovereignty, so when things like this happen everyone doesn't get punished. I have no problems with countries voluntarily pitching in to bail Greece out but it's going to be forced in the end, which is at its' heart unfair.

That's why something like an American union would be a waste of time. Poorer nations in South America would leech off of larger nations like the US, Canada and Brazil.

[Landslide Lyndon]

1. Germany entered the euro with a too strong real exchange rate. Unless most other euro countries they took the responsible course of holding back wage increases thus increasing their competitiveness.

2. Who is Christine Lagarde and why should I care about her opinion?

3. How did they use the common currency to dominate markets? What does that mean?

4. It is odd to hold the Germans of today responsible for what the Nazis did 60 years ago. The Germans have suffered a lot from WWII and its aftermath and it is time to let it go. It is irrelevant and doesn't help anything.

5. I still don't see why Germany should pay for other countries who have mismanaged their economies. Over the last half-century Germany is, more or less, the only country in Western Europe to consistently look after their economy in a competent fashion. That shouldn't be rewarded by ridding them with the debts of other countries.

I don't have time now but I'll respond to one of your questions.

Christine Lagarde is the French Minister of Finance. So I guess that even you will concede that her opinion is somewhat important in EU.

No, I'm sorry...her opinion may be important for predicting what the EU will decide to do or what Germany will be forced to do. But it holds almost no value at all when it comes to analyzing whether Germany has actually gained from the euro or not. She is a politician, of course she will attack Germany. That's what everyone is doing right now.

Oh really? Perhaps then you could enlighten us why Germany hasn't benefitted from the Euro.
Util then here as an article that explains what you can't seem to understand:

http://www.economist.com/world/europe/displaystory.cfm?story_id=15829876

You must be logged in to read this quote.

As for your other points...

4)Excuse me but you are showing willful ignorance here. Nobody talked about war reparations. We are not asking money for the damages they inflicted on our country during WWII.
We are talking about the Germans repaying a loan they forcibly took from the Bank of Greece during the occupation and paying the wages they owe to the Greeks who were taken to camps and provided forced labor.
The european courts vindicated us, so it's not a matter of politics or playing the Nazi card as you continue to falsely claim.   

5)Nobody asked Germany, or any other country, to pay our debts. We are asking them to loan us in reasonable rates. Whatever money we take from Germany, we will return them with 5% interest.

If the european countries can't even do that to help a fellow member in distress, then the EU and the Eurozone really aren't worth a bucket of warm piss.

Someone asked me a while back why I wasn't intending to stay in Germany (or Europe) permanently....

Well.....you know, being forced to pay Greek debt.....doesn't exactly make you want to stay somewhere.

Thank God for the wonderful European Union that makes us all equal.....although some more equal than others!

I hope you understand now that you weren't going to pay our debt.
But again, in the US didn't the federal government bail out states like California, Illinois, Alaska, South Carolina and New York with the Stimulus?

If you want to be king, like Germany does, then you have to take care of your subjects. 

[Franzl]

I hope you understand now that you weren't going to pay our debt.
But again, in the US didn't the federal government bail out states like California, Illinois, Alaska, South Carolina and New York with the Stimulus?

If you want to be king, like Germany does, then you have to take care of your subjects. 

Sort of....but the individual states don't have the same degree of control over their fiscal policies that member countries of the EU have....but alright, even if we say it's the same thing, at least the money stays within our country. No offence to you or Greece....but I don't have the feeling just because it's the EU that I'm bailing out my fellow citizens.



What I haven't yet understood is what you mean by "want to be king". Does Germany "want to be king" because of all its exports? Is Germany king because other countries by our products? And is it not the consumer's own decision what products he wants to buy?

Or do you mean something else?

[Landslide Lyndon]

I hope you understand now that you weren't going to pay our debt.
But again, in the US didn't the federal government bail out states like California, Illinois, Alaska, South Carolina and New York with the Stimulus?

If you want to be king, like Germany does, then you have to take care of your subjects. 

Sort of....but the individual states don't have the same degree of control over their fiscal policies that member countries of the EU have....but alright, even if we say it's the same thing, at least the money stays within our country. No offence to you or Greece....but I don't have the feeling just because it's the EU that I'm bailing out my fellow citizens.



What I haven't yet understood is what you mean by "want to be king". Does Germany "want to be king" because of all its exports? Is Germany king because other countries by our products? And is it not the consumer's own decision what products he wants to buy?

Or do you mean something else?

The supposed goal of the EU is for us to become something like the United States of Europe. So the attitude you describe isn't really helpful if we want to achieve that goal.
And don't kid yourselves, after the introduction of Euro and the subsequent treaties we don't have that much control over our fiscal policies. If we had, then perhaps we would have handled this crisis with greater flexibility and efficacy.

Germany wants to be first among equals in the EU, that's no secret. Our crisis was a good chance for them to show that without their approval, nothing can be done in the union, even when all the other members are in agreement.
That's why France, Spain, Italy,  are so irritated: they believe that Germany tries to translate its economic hegemony into a political one where the German Chancellor becomes the de facto leader of Europe.

[Franzl]

You must be logged in to read this quote.

And I strongly oppose that goal, I don't want to have anything to do with giving up sovereign power to Brussels. In practice that translates to my opposition to most things that involve our money going to places outside of Germany.

You must be logged in to read this quote.

The other members are perfectly free to give Greece loans as they see fit....why should Germany allow itself to be pushed into something it doesn't want to do? France, Spain and Italy can give whatever amount of money they desire.

[Landslide Lyndon]

The other members are perfectly free to give Greece loans as they see fit....why should Germany allow itself to be pushed into something it doesn't want to do? France, Spain and Italy can give whatever amount of money they desire.

No they can't, it's forbidden by the Euro treaty.
They created this unique mechanism along with IMF in order to do so.

Here is an article from Spiegel which criticizes Merkel for her stance during the crisis. I agree with what it says. We are guilty as charged for our current predicament. But Germany instead of giving us a lifeline, threw us an anvil.


http://www.spiegel.de/wirtschaft/soziales/0,1518,691508,00.html

[Franzl]

No they can't, it's forbidden by the Euro treaty.
They created this unique mechanism along with IMF in order to do so.

I didn't know that. That's really terrible... Why shouldn't a country be allowed to do that independently?

You must be logged in to read this quote.

This may actually be correct...but I still don't agree with the prospect that we have any responsibility for bailing out other nations that fail due to their own reckless behavior.

Now it is entirely correct in one respect....that the EU would eventually pay money to Greece if necessary regardless of whether they wanted to or not. It was dishonest to suggest that we could avoid it somehow.

Still doesn't change my opinion about the EU and shared responsibility among member nations.


(BTW, px...do you speak and understand German?)

[phk]

You must be logged in to read this quote.

Link: http://www.nytimes.com/2010/04/29/business/global/29euro.html?hp

The general sentiment is that a growing number of investors suggest what is really needed is a “shock and awe” figure, enough to convince the markets that peripheral European economies will not be left to fail.

For better or worse, I do not expect such a figure is forthcoming.

I also do not see how such a figure would do more than postpone the basic problem, which is that several European economies have been pretending to be much wealthier than they really are and to take on additional risk and leverage in tandem which tends to magnify things al a Dubai.

[Sam Spade]

You must be logged in to read this quote.

Link: http://www.nytimes.com/2010/04/29/business/global/29euro.html?hp

The general sentiment is that a growing number of investors suggest what is really needed is a “shock and awe” figure, enough to convince the markets that peripheral European economies will not be left to fail.

For better or worse, I do not expect such a figure is forthcoming.

I also do not see how such a figure would do more than postpone the basic problem, which is that several European economies have been pretending to be much wealthier than they really are and to take on additional risk and leverage in tandem which tends to magnify things al a Dubai.

Although the 10-yr being that high is a problem, the fact that the 2yr is now in the 17% range is the much bigger problem. 

That's a classic yield inversion/pancaking of yields.  When that pancaking started appearing a couple of weeks ago at ranges above 6% for the 2yr with their debt-to-GDP ratio, the handwriting was on the wall.

Not to mention the CDS of Greek bonds, which are now higher than Lehman was before collapse.

[Landslide Lyndon]

No they can't, it's forbidden by the Euro treaty.
They created this unique mechanism along with IMF in order to do so.

I didn't know that. That's really terrible... Why shouldn't a country be allowed to do that independently?

I guess because the EU didn't want the big and rich countries like Germany and France giving unilateral financial help to the smaller members, thus creating spheres of influence within the Union.

This may actually be correct...but I still don't agree with the prospect that we have any responsibility for bailing out other nations that fail due to their own reckless behavior.

Now it is entirely correct in one respect....that the EU would eventually pay money to Greece if necessary regardless of whether they wanted to or not. It was dishonest to suggest that we could avoid it somehow.

Still doesn't change my opinion about the EU and shared responsibility among member nations.

Germany will loan us with a 5% rate, while at the same time she borrows with a 3% rate from the market. Does that seem like a bailout to you?

And if Greece went bankrupt, then the German taxpayer would lose a LOT more money just from the fact that Bundesbank is our biggest creditor.

[phk]

You must be logged in to read this quote.

After 1974, debt and deficits rose sharply as well, and later EU transfers helped postpone the necessary fiscal adjustments.  At this same time Greece was becoming more democratic, in part because the previous autocratic arrangements were collapsing.  The figure on p.150, representing the difference between the two periods, is a knockout.  And after 1974, the average rate of GDP growth goes from 7.1 percent to 2.1 percent.

http://alogoskoufisg.com/userfiles/file/publications/2008022905033.pdf

[Beet]

You must be logged in to read this quote.

After 1974, debt and deficits rose sharply as well, and later EU transfers helped postpone the necessary fiscal adjustments.  At this same time Greece was becoming more democratic, in part because the previous autocratic arrangements were collapsing.  The figure on p.150, representing the difference between the two periods, is a knockout.  And after 1974, the average rate of GDP growth goes from 7.1 percent to 2.1 percent.

http://alogoskoufisg.com/userfiles/file/publications/2008022905033.pdf

phknrocket1k,

Do you think this means that there is a casual relationship between transition to democratic government and dramatic slowdown in the long run trend growth in emerging countries, or vice versa?

[Derek]

They need to follow Plato's format and elect a philosopher king. Seriously though if we don't watch it we're going to become like them.

[Landslide Lyndon]

You must be logged in to read this quote.

After 1974, debt and deficits rose sharply as well, and later EU transfers helped postpone the necessary fiscal adjustments.  At this same time Greece was becoming more democratic, in part because the previous autocratic arrangements were collapsing.  The figure on p.150, representing the difference between the two periods, is a knockout.  And after 1974, the average rate of GDP growth goes from 7.1 percent to 2.1 percent.

http://alogoskoufisg.com/userfiles/file/publications/2008022905033.pdf

phknrocket1k,

Do you think this means that there is a casual relationship between transition to democratic government and dramatic slowdown in the long run trend growth in emerging countries, or vice versa?

LOL for taking seriously whatever nonsense Alogoskoufis writes.
He and Karamanlis are responsible more than anyone else about our predicament. They both are about as popular as the Ebola virus here.

[Gustaf]

1. Germany entered the euro with a too strong real exchange rate. Unless most other euro countries they took the responsible course of holding back wage increases thus increasing their competitiveness.

2. Who is Christine Lagarde and why should I care about her opinion?

3. How did they use the common currency to dominate markets? What does that mean?

4. It is odd to hold the Germans of today responsible for what the Nazis did 60 years ago. The Germans have suffered a lot from WWII and its aftermath and it is time to let it go. It is irrelevant and doesn't help anything.

5. I still don't see why Germany should pay for other countries who have mismanaged their economies. Over the last half-century Germany is, more or less, the only country in Western Europe to consistently look after their economy in a competent fashion. That shouldn't be rewarded by ridding them with the debts of other countries.

I don't have time now but I'll respond to one of your questions.

Christine Lagarde is the French Minister of Finance. So I guess that even you will concede that her opinion is somewhat important in EU.

No, I'm sorry...her opinion may be important for predicting what the EU will decide to do or what Germany will be forced to do. But it holds almost no value at all when it comes to analyzing whether Germany has actually gained from the euro or not. She is a politician, of course she will attack Germany. That's what everyone is doing right now.

Oh really? Perhaps then you could enlighten us why Germany hasn't benefitted from the Euro.
Util then here as an article that explains what you can't seem to understand:

http://www.economist.com/world/europe/displaystory.cfm?story_id=15829876

You must be logged in to read this quote.

As for your other points...

4)Excuse me but you are showing willful ignorance here. Nobody talked about war reparations. We are not asking money for the damages they inflicted on our country during WWII.
We are talking about the Germans repaying a loan they forcibly took from the Bank of Greece during the occupation and paying the wages they owe to the Greeks who were taken to camps and provided forced labor.
The european courts vindicated us, so it's not a matter of politics or playing the Nazi card as you continue to falsely claim.   

5)Nobody asked Germany, or any other country, to pay our debts. We are asking them to loan us in reasonable rates. Whatever money we take from Germany, we will return them with 5% interest.

If the european countries can't even do that to help a fellow member in distress, then the EU and the Eurozone really aren't worth a bucket of warm piss.

Someone asked me a while back why I wasn't intending to stay in Germany (or Europe) permanently....

Well.....you know, being forced to pay Greek debt.....doesn't exactly make you want to stay somewhere.

Thank God for the wonderful European Union that makes us all equal.....although some more equal than others!

I hope you understand now that you weren't going to pay our debt.
But again, in the US didn't the federal government bail out states like California, Illinois, Alaska, South Carolina and New York with the Stimulus?

If you want to be king, like Germany does, then you have to take care of your subjects. 

You didn't actually respond to all my points, but ok...the article you cite say basically what I did. Again, it doesn't explicitly say that Germany is to blame, it merely cites other countries attacking Germany. It also points out what I did - that Gemany entered with a high exchange rate and has done its best to compensate.

In fact, the euro was created against Germany's will because other countries like Greece wanted to piggy-back off of Germany's success. Blaming Germany for it now is rather irresponsible, imo.

What you say about WWII does not contradict any of the things I said so I take it you didn't really have a counter there.

Finally, if the deal of lending money to Greece is as good as you claim, then how come you cannot broker that deal on the market? Obviously, the expected value of lending money at that interest rate is too low, so it is a freebie.

And Germany is, understandably, sick of giving out freebies.

[Landslide Lyndon]

You didn't actually respond to all my points, but ok...the article you cite say basically what I did. Again, it doesn't explicitly say that Germany is to blame, it merely cites other countries attacking Germany. It also points out what I did - that Gemany entered with a high exchange rate and has done its best to compensate.

In fact, the euro was created against Germany's will because other countries like Greece wanted to piggy-back off of Germany's success. Blaming Germany for it now is rather irresponsible, imo.

What you say about WWII does not contradict any of the things I said so I take it you didn't really have a counter there.

Finally, if the deal of lending money to Greece is as good as you claim, then how come you cannot broker that deal on the market? Obviously, the expected value of lending money at that interest rate is too low, so it is a freebie.

And Germany is, understandably, sick of giving out freebies.

Whatever dude. I think whoever reads our posts can see who's the one that speaks in platitudes and aphorisms without really addressing the other person's points.

I stop here because I don't want to follow Einzinge's footsteps.

P.S. Your point about our lending shows a special kind of ignorance about our situation. Sorry but there was no nicer way to say it.

[Gustaf]

You didn't actually respond to all my points, but ok...the article you cite say basically what I did. Again, it doesn't explicitly say that Germany is to blame, it merely cites other countries attacking Germany. It also points out what I did - that Gemany entered with a high exchange rate and has done its best to compensate.

In fact, the euro was created against Germany's will because other countries like Greece wanted to piggy-back off of Germany's success. Blaming Germany for it now is rather irresponsible, imo.

What you say about WWII does not contradict any of the things I said so I take it you didn't really have a counter there.

Finally, if the deal of lending money to Greece is as good as you claim, then how come you cannot broker that deal on the market? Obviously, the expected value of lending money at that interest rate is too low, so it is a freebie.

And Germany is, understandably, sick of giving out freebies.

Whatever dude. I think whoever reads our posts can see who's the one that speaks in platitudes and aphorisms without really addressing the other person's points.

I stop here because I don't want to follow Einzinge's footsteps.

P.S. Your point about our lending shows a special kind of ignorance about our situation. Sorry but there was no nicer way to say it.

That is, indeed, a strong argument. I feel stupid now for not having thought about those issues that you just brought to light. I'm sorry, next time I will refrain from using vague aphorisms like "wanting to be King" "taking care of subjects" "seeking hegemony" etc.

I do apologize. Next time I will be more specific and explicitly state why I think Germany did not benefit from the euro, say, via a too high real exchange rate. 

And if you think Einzige was banned because I disliked him, then you have a very shallow understanding of that whole situation.

P.S. Your point about lending shows that you don't understand basic economics at all. There was a nicer way of saying it, namely my previous post, but I don't feel like being nice to you now, since you're being such an ass.

[Landslide Lyndon]

I do apologize. Next time I will be more specific and explicitly state why I think Germany did not benefit from the euro, say, via a too high real exchange rate. 

Apology accepted (as your Nemesis would say).

P.S. Your point about lending shows that you don't understand basic economics at all. There was a nicer way of saying it, namely my previous post, but I don't feel like being nice to you now, since you're being such an ass.

Basic Economics
Lending someone with 5% interest rate=Giving him a freebie

[Gustaf]

I do apologize. Next time I will be more specific and explicitly state why I think Germany did not benefit from the euro, say, via a too high real exchange rate. 

Apology accepted (as your Nemesis would say).

P.S. Your point about lending shows that you don't understand basic economics at all. There was a nicer way of saying it, namely my previous post, but I don't feel like being nice to you now, since you're being such an ass.

Basic Economics
Lending someone with 5% interest rate=Giving him a freebie

Ok, I will oblige you with a little basic economic theory. Here is how it works.

I lend a person a sum "X" now, in return for a sum "X+r" in the future, where r represents the interest I get. There are several reasons for r>0. One is that people typically prefer consumption now over consumption in the future, so you reward a lender for giving up present consumption. Linked to this is of course inflation compensation.

Then there is another reason, namely the risk of me not getting my money back. The most obvious reason for this happening is due to default risk of some kind.

So, let us assume that we have a situation where the lender has no discount rate as regards future consumption (that is, he is indifferent between future and present consumption) and let us furthermore assume that he is risk-neutral.

Let's say he can lend 100 to a country (let's call it Greece). In a year there is a 50% chance that they don't pay back. If they do pay back they pay him back X+r. In order to break even it must hold for the lender that (X+r)/2=100. Since X=100 we can solve for r, which turns out to be 100.

So, in this case the borrower would have to pay a 100% interest rate and in this case offering a 5% interest rate would be a freebie since the lender is taking enormous risk.

You cannot seriously be so dense as to think that lending money at rates well below market rates is not doing someone a favour? Do you know anything about economics? Risk-adjusted returns? Does it ring a bell at all? 

[Sam Spade]

So now Germany passes the bailout and Merkel has lost her majority (wow, like I couldn't have seen that one coming). 

Meanwhile, Britain won't contribute a dime (which seemed obvious to me) to the EU bailout fund, which is amusingly small to handle all of the problems in Europe, which go far beyond Greece.  Not to mention the rumors of currency swaps starting again between the US and European banks.

I kinda still think there's one more plug for a few months before the thing blows, but I'm not exactly willing to gamble on this for now.

Think it's kinda appropriate that I'm watching Duck Soup right now...

[Landslide Lyndon]

  Meanwhile, Britain won't contribute a dime (which seemed obvious to me) to the EU bailout fund, which is amusingly small to handle all of the problems in Europe, which go far beyond Greece.  Not to mention the rumors of currency swaps starting again between the US and European banks.

Yeah, only an economic mind of your magnitude could foresee the fact that a non-Eurozone country would contribute nothing to save a Eurozone country.

[Landslide Lyndon]

http://wonkroom.thinkprogress.org/2010/05/08/greece-conservative/

[Sam Spade]

  Meanwhile, Britain won't contribute a dime (which seemed obvious to me) to the EU bailout fund, which is amusingly small to handle all of the problems in Europe, which go far beyond Greece.  Not to mention the rumors of currency swaps starting again between the US and European banks.

Yeah, only an economic mind of your magnitude could foresee the fact that a non-Eurozone country would contribute nothing to save a Eurozone country.

Your reading skills need improvement.  Just because I said that "it seems obvious to me" doesn't mean that it wouldn't be obvious to anyone else either with a brain.