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Greeks denying gifts

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Stephanie Flanders | 11:26 UK time, Friday, 29 January 2010

Davos: "We will help Greece if they really need it. Just don't tell the Greeks that." That's the message the European authorities would like to send the international bond markets. Alas, they can't. Which explains the conflicting signals coming out of Davos and Brussels in the past 24 hours on the subject of bailouts.

At this year's Davos, Greece has been rather like the small unattended package at the back of the hall. Everyone thinks it could be a big problem. But no-one wants to be the first to open it up.

George PapandreouAs I said on the Today programme this morning, the Greek prime minister has been forced on to the defensive by the markets, telling everyone who will listen here that Greece will fix its own problems without help from anyone else.

He gave that speech at a rather low-voltage public session on the Eurozone yesterday, sharing a stage with a typically tight-lipped ECB President Jean-Claude Trichet. But Prime Minister Papandreou added that he thought that Greece had been the victim of malign anti-Euro forces, picking on Greece as the weak link in the Eurozone chain.

Many have dismissed this as a typical "blame the speculator" move from leaders facing public debt crises - which, of course, it is. But I think he was also quietly reminding everyone in the room that the Eurozone was indeed only as strong as its weakest link. He would very much like Brussels and Frankfurt to see Greece and the Eurozone's fortunes as tightly intertwined.

The further falls in the Euro today have rather made his point. As things stand, the Euro will have fallen more than 2% against the dollar since the start of the year.

The likes of Axel Weber, the Bundesbank president, dearly wish it was not a collective problem. As I have explained before, the ECB has been giving back-door support to the likes of Greece, by allowing domestic banks across the Eurozone to post domestic government debt as collateral for nearly-free central bank cash.

Harder-liners such as Weber have not been very comfortable with even this. Thought of a proper, front-door bailout for fiscal miscreants like Greece makes them positively ill. Especially when there is supposedly a "no bail-out" clause in the Euro treaty, specifically written (by Germany) with Pigs (Portugal, Ireland, Greece and Spain) in mind.

But- as ever - that clause can be suspended in special situations. Last spring even Germany realised that the global financial crisis was a special situation, and European officials sent out a strong signal to the markets that desperate countries would, in fact, get support. That underpinned confidence in the thick of the crisis.

Now, from the standpoint of Frankfurt at least, the crisis has passed. In December, the ECB announced that normal service would soon be resumed - and the days of bucketfuls of cheap cash were coming to an end.

That's why the markets have been spooked. They also know the French and German want every country to take responsibility for fixing its own budget mess.

Greece has put forward such a plan - to cut borrowing from nearly 13% of GDP to just 3% by 2012. But few believe that the Greek population will put up with it. There's a general strike planned early next month.

So the question is being asked again: will Europe stand behind them? But, as we're seeing, "Europe", at times like this, does not speak with one voice.

The European commission president went for a positive-sounding fudge in his remarks yesterday - indicating that there would be a European solution to the crisis, if needed, but with studied ambiguity about whether it would be under the auspices of the Eurozone or the EU.

Given the bail-out clause, EU support would be a lot easier, constitutionally, but it's not entirely clear where the money would come from. Also, as we've already seen, the political obstacles are not small. This morning, the UK Chancellor, Alistair Darling, appeared to rule out EU support for Greece though that could change.

So we return to my opening thought: Eurozone officials would like a way to say yes to the bond markets, without appearing to let Greece off the hook. But it's not clear that such a path exists. And if they keep looking for one, they risk making the bailout they fear that much more likely.

The lesson of history - repeated again and again - is that uncertainty about the end-game only brings it closer. The more doubt there is about the Greek safety net, the higher the risk premium on Greek debt will go - the more likely it is that Greece will fall.

Update 15:00: I note that the French Finance Minister, Christine Lagarde, has now given her take on the Greek situation. Or should I say takes.

In a piece headlined "Lagarde says no eurozone bailouts", Reuters has her saying the following in an interview this morning:

"(The euro zone) is a monetary zone which holds us together. There's no way out. There's no bailout system and we have to deliver on the commitments that we made."

That seems pretty clear-cut. Except, it seems, to AFP. On the basis of the same interview, they report: "Lagarde said fellow eurozone member Greece would not be abandoned while it seeks to tame a runaway public deficit. 'Greece is not alone', Lagarde told CNBC television at the World Economic Forum in the Swiss mountain resort of Davos."

Apparently Ms Lagarde had left plenty of room for interpretation.

And to think I had accused European officials of sending mixed signals.

Comments

  • Comment number 1.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 2.

    Another side issue (but very important) is the CDS (Insurance against default) market for Greece.

    It turns out that Greek banks have been selling the CDS as FT alphaville puts it

    "Greek banks selling CDS would make some sense. It’s essentially a win-win bet. If Greece doesn’t default on its debt, protection-sellers will likely earn a nice profit. If it does, well, the Greek banks will probably be crushed anyway."

    http://ftalphaville.ft.com/blog/2010/01/29/137341/whos-selling-greek-cds/

    This shows the stupidity of the CDS market - you don't eliminate risk by buying insurance against default you just move your risk to the holder of the insurance! And they can go under (ie AIG)

    CDS have got to be banned as they increase systemic risk they do not reduce it if banks sell CDS it means they become 'too big to fail'. If you lend to a company or country the interest rate you get should already factor in any risk of default.

    Sorry to get on my soap box about the Credit Default Swaps but I think its a key issue and no one seems to want to tackle it.

  • Comment number 3.

    We need to find some positives out of all this and Portugal's Ireland's, Greece's and Spain's(the PIGS, love it) malaise is it. The more this weakens the Euro the less the BOE will need to raise interest rates to protect the pound, the longer we can hold on to lower interest rates the more likely we will return to robust growth. This is absolutely a good news story for the UK. The Eurozone is our largest trading partner, as soon as they start to raise interest rates we would have no choice but to follow, with these countries in the mess they are in (45% youth unemployment in Spain) the ECB cannot afford to raise rates any time soon. Long may it continue.

  • Comment number 4.

    I love it the Greeks blame "anti - Euro" forces rather than accepting that they got themselves into the hole.

    If Greece falls Ireland will not. For one simple reason. Ireland have implemented the necessary cuts the Greeks will not. Ireland will have an incredibly painful 3-5 years and see public spending slashed by 20%+ (UK could learn from that). By the time the markets have slaughted the Greeks, Ireland will have a track record of actually putting in place and running with the necessary fiscal discipline.

    I also loved the comment that the Greek population will not accept the necessary cuts. Sorry but the rest of the world does not owe then a living. They have two choices, accept it now or accept a worse version later. If I were a Greek businessman I would have moved my assets out the country years ago.

  • Comment number 5.

    I can’t see them letting Greece default on its debt.
    Because if the Greeks can do it, so can others.

    I don’t think they’d want to set a precedent like that, confidence in fiat currency and the value of debt could be shaken just a little too much.

    They’re going to have to bail them out, and hide it at the same time.

  • Comment number 6.

    Given the classical allusions, do you mean Pandora's box ? :-)

  • Comment number 7.

    Stephanie,

    "Davos: "We will help Greece if they really need it. Just don't tell the Greeks that."

    The one that really matters:

    "We will help the British if they really need it. Just don't tell the British that."

    signed

    IMF.

    Our economic condition is only marginally better than Greece, but there is no Euro to help us out! I suspect that the EU Eurozone will be less hard on Greece than the IMF will be on us!

  • Comment number 8.

    They won't allow cuts as the whole country will go on strike.

  • Comment number 9.

    Surely Greece is mostly to blame about the dear economic condition, but we can't forget that part of the problem has to do with the global crisis as well. The Greek economy depends on shipping and tourism and both sectors have been affected due to the global problem. Still the plan to recover is decent and it is just a matter of time to see whether the new government in greece can pull it through. I don't think there is an option to fail there. Still all this fuss from the financial times to spend so much time on greece and forget about other states that are much bigger (e.g. Spain) where unemployement rates are huge is a bit dark!!!

  • Comment number 10.

    Surely PIGS = Portugal, ITALY, Greece, Spain

    Thought the Irish version was PIIGS?

  • Comment number 11.

    Hi Stephanie

    I hope that you are enjoying Davos. Greece is certainly in a mess to which she has contributed a fair bit herself.I would be interested to know what you think her chances of a recovery are.

    Since Greece's problems began I have been following notayesmanseconomics updates on a recommendation and he seems clear about what they need to do and what he feels the EU will do in response.

  • Comment number 12.

    It's clear what she meant. Other Eurozone countries are not going to be bailed out of their obligation to bail Greece out.

  • Comment number 13.

    "So the question is being asked again: will Europe stand behind them? But, as we're seeing, "Europe", at times like this, does not speak with one voice."

    Yet again the weakness of the Eurozone is writ large. Laudable though the introduction of the Euro has been, I believe it has been too quick for many of the Club Med and Baltic countries to adjust to.

    It requires a lot of fiscal discipline on the part of member countries and, as in the case of Ireland and Spain, creates unintended bubbles in the economy. But, critically, it straitjackets countries in trouble who can't devalue their way out but have to undergo an extended period of austerity (bravo to Ireland for facing up to their problems).

    So if Germany or France aren't going to bail Greece out, are we going to get a two tier Euro or even a Euro of the strongest states? Perhaps that is what Germany wants. Don't forget West Germany has been subsidising East Germany for two decades. They won't want to subsidise the Club Med countries as well.

  • Comment number 14.

    The crisis caused by the international banking cabal is not over. The weaker economies are finally running out of options. The bankers, upset with how they are deservedly viewed by most and suffering low interest income because of national printing presses producing money in large qualities, want everyone to understand that they still control the money and any moves to regulate their gambling and bonuses will be met with restricted economic growth and therefore internal poltical problems. Current banking and financial services make the Medici's seem altruistic.

  • Comment number 15.

    Looks like the ECB is going to have print more money and give it Greece, then possibly Spain, followed by Portugal and Ireland maybe.

    It's a lot more sensible to print more money than see a country dissolve into chaos.

    It will devalue the Euro, but then so what, that's how banking works isn't it.

    Too many promises pay that can never be fulfilled, both at a national, corporate and individual level. You can let companies and individuals fail, but not nations. Print more money is the only sensible way out.

  • Comment number 16.

    At this year's Davos, Greece has been rather like the small unattended package at the back of the hall.

    I like the analogy, but tend to think of the situation being more like everyone at one of of the boat watching the other end sinking. For a short while your end is benefiting from being lifted up, but you are all going down in the end!

    On a more positive note, I do agree with earlier comments that the UK not being alone in financial troubles is bound to help our currency.

  • Comment number 17.

    Oh what a tangled web we weave
    When first we practice to deceive

    Greeks denying gifts or denying Greeks gifts? It hardly matters. How those in Brussels who see the current dilemma so clearly now must wish they'd had the chance to go back in time and keep the Growth and Stability Pact they were so eager to jettison when it suited their immediate purpose some years ago. That's the price of expediency over principle. The current crisis is merely the logical consequence of Europe financing a lavish social welfare state it doesn't have the productivity or comeptitiveness to support. Eventually "sumptin's gotta give." So, to create a sufficiently large enough political entity to "challenge" the United States as the architects of this monstrosity like deVillepin and Chirac put it, Europeans have created an massive economic incongruity so untennable, so unsustainable in the long term that its multiple fractures must inevitably crack it wide open like a raw egg.

    Will the EU back up Greek debt it cannot meet itself? Beyond the fact that there is no legal mechanism for it, a problem that has never bothered Europe in the past when push came to shove and it had to find answers it liked, if it does, the other "PIGS" (never heard that pejorative condescending acronym before) will demand the same. And if it doesn't, then default on Greek debt might precipitate the collapse of the entire Euroland financial house of cards. Damned if it does, damned if it doesn't. Now someone tell me again what the advantages of the UK being in the EU and adopting the Eruro are that couldn't be obtained equally with negotiating bilateral treaties. I seem to have forgotten them.

  • Comment number 18.

    "But I think he was also quietly reminding everyone in the room that the Eurozone was indeed only as strong as its weakest link."

    I've thought this for a number of years now. I think you are spot on there. Eurozone is a house of cards. I definitely think the linking of the economies through the Euro/ECB is a major mistake, and I expect it to unravel at some point. We've had a few tremors, but the full-blown earthquake is yet to come.

  • Comment number 19.

    Also totally agree with danj180 at #2. CDSs are EVIL!

  • Comment number 20.

    4. Justin150:

    "I also loved the comment that the Greek population will not accept the necessary cuts. Sorry but the rest of the world does not owe then a living."

    Very true. Likewise, no-one owes the UK a living either. Both countries have to emulate Ireland. But what I'm wondering is, what happens if the Greek public just goes on strike. Does Europe still bail them out? If it does, it's writing the Greek people a blank cheque. If it doesn't, what happens? How does Greece go bankrupt without severely damaging the Euro? Any thoughts much appreciated!

  • Comment number 21.

    Europeans wanted to have one big economy like the US. Now they have one. Saying Germany, France, and Britain are coming out of recession but Greece, Portugal, Spain aren't doesn't make any sense anymore. Not anymore sense than saying Texas and Florida are coming out of recession but Michigan and Wisconsin aren't. It's all one big happy family now. For better or worse, these economies are all in the same leaky rowboat together so if water is coming up at one end faster than those nearest it can bail it out, it won't do the others any good to sit around telling them to bail faster. I predict there will be an EU bail out of Greece even if it is one that's disguised insofar as that is possible. You'll know it happened when you hear the grumbling. Shorting the Euro against some stronger currency now might be a good play. How about the Swiss Franc or the Japanese Yen? I wouldn't bet on the US dollar though, it's got its own problems.

  • Comment number 22.

    Like a lot of people I would be interested to find out what would happen if that "small unattended package" went BANG!

    I will also be interested to see just how much the Irish economy will actually recover having taken 'the medicine'. Justin150 obviously feels that savage cuts are "a price worth paying". I'm not too sure that they do give a clear pathway to a brighter tomorrow.

    There are a lot of shocks left to come in the progress of this depression and the fate of the Euro will only be one of them. None of the obvious consequences from former recesions hold good anymore. We really are in unchartered waters.

  • Comment number 23.

    I don't see why a debt default by one Euro member should worry the other members very much. If Greece defaults, then EUR bonds issued by Greece will lose value - surely that's all that will happen?

    In the past, issuers of US dollar bonds have defaulted, but that hasn't threatened all the other issuers of US dollar bonds.

    What's the difference?

  • Comment number 24.

    #4 Justin150. Looks to me as though the Greeks are preparing to heed the call and fight the forces of international kleptocracy.

    There is a fair chance that just the threat of the Euro experiment being burned on a bonfire of cars and kebabs will be enough to force someone somewhere to bail them out.

    What then for the Irish?

    The big shoe to drop remains Spain - but they have seen dark times before and have no intention of returning to the darkness without lighting a few fires to guide their passage.

    Just because the British are too delusional, obese, drunk, and indoctrinated to resist the kleptocrats don´t assume that the same holds true throughout Europe.

  • Comment number 25.

    Fudge is a type of Western confectionery which is usually very sweet, extremely rich and frequently flavoured ; )

  • Comment number 26.

    22 foredecker

    Why do you think we are in uncharted waters then Dr Dave. It all looks pretty familiar to me. Thats the trouble with you yacht types, you only berth in marinas with the veeerrry best facilities. This is a middle class aspirant problem. Those at the top of the social structure are largely unaffected, those at the bottom have little to lose. It is the ones in the middle with their delusion of personal assets and wealth that will have their mind boggled and have the most trouble. That group has gained the most under NuConservativism, sorry correct typo - NuLabour, and the mob before ReallyBlu, they will lose the most.

  • Comment number 27.

    Having lived in Greece for the past 11 years, I have come to realise that during that time, no Greek government is to be considered serious in any way. They blame everyone else for their problems and never take responsibility for their actions and most importantly never enforce their laws. Just ask the likes of CEDEFOP in Thessaloniki, some of whose employess have been forced to pay a 'special contribution' tax eventhough the agreement with the Greek government and the EU states that the employees are exempt from Greek taxes. So if they won't even abide by this and other such agreements and force these persons to take them to court, why on earth should any EU tax payer be forced to foot the bill for their kleptocracy?

  • Comment number 28.

    K-69

    "So if they won't even abide by this and other such agreements and force these persons to take them to court, why on earth should any EU tax payer be forced to foot the bill for their kleptocracy?"

    Because of their contribution to the political power their membership gives the EU so that it can stand up to the big powers like the US and China. Wasn't that obvious in Copenhagen last month :-)

  • Comment number 29.

    #26 riverside,

    Oh how little you know about my seafaring preferences - give me 360 degrees of sea (preferably where I can sail in t shirt and shorts) :)

    Now you can hold hard to the 'old realities' if you wish. As this depression progresses it will become apparent that the rush for cash economy with its limited understanding of what national wealth actually is, is very limited.

    Society will demand a level of public sevices and that will have to be paid for by a mixture of both public and private enterprises. This will be the imperative overriding the demand for corporate and personal wealth.

  • Comment number 30.

    29 Dr Dave

    'Society will demand a level of public sevices'. Society will be taking an uncomfortable walk then will it not. There is no 'will have to'. In what way do you expect services to be provided beyond that can be funded. Those working have to do voluntary activities for those not working as well as paying tax? Anybody left working will say its not worth working, I'll just join the leisure and hospitality set. Perhaps as well as working and having to pay tax and undertake 'voluntary' work you also have to doff your hat to this new leisure and hospitality gentry set. Yes Milord, yes Milady, how would you like your subsidised lunch served. Sorry I'm late, I had problems at work and I had to stay otherwise I wouldnt have had the tax to subsidise your lunch.

  • Comment number 31.

    I wouldn't disregard the Greeks' claim of "malign anti-Euro forces" so easily. The news websites are full of Greece this and Greece that, and the putative collapse of the Euro. But consider:

    Greece = 2% of the total EU GDP (http://en.wikipedia.org/wiki/Economy_of_the_European_Union)
    California = 16% of total US GDP (http://en.wikipedia.org/wiki/List_of_U.S._states_by_GDP_(nominal))

    Greece *might* go bankrupt, and everybody has the vapors. California *is* bankrupt, and nobody cares. Except perhaps Governor Schwarzenegger, who publicly begged the federal government for a bailout, and was rebuffed. Imagine if the President of Greece publicly begged the EU for a bailout - the anti-EU brigade would be trumpeting the arrival of the apocalypse.

    Double standards in news coverage like this make me very suspicious. It wouldn't be the fist time that someone manipulated markets with an eye towards financial gain at some poor little country's expense, now, would it?

  • Comment number 32.

    So, according to Marcus AureliusII, it's ok to lie - apparently continuously, break international agreements, consistently fail to enforce laws, ignore their constitution and most importantly ignore the people which they are privaleged to govern and finally have the rest of the EU to pay for their corruption.

    If people are really of the opinion that this type of Greece really adds anything to Europe they are sadly mistaken. People do no want to pay for countries such as this and it's about time that the EU and in particular the population of Greece make it known to their government that they demand far more from what can best be described as an indecisive comic show.

  • Comment number 33.

    riverside,

    I'm sorry that you were kept late at work and I hope that your dinner wasn't subsequently a dried-out mess or in the dog!

    Now, if we look at the structure and philosophy of the French, German and to some degree Dutch economies we find a far closer association between both public and private enterprises. We find socities that demand high levels of public services and are prepared to pay for them. Now I'm no saying tht they have everything right - far from it. I am however saying that we too could benefit from arranging our affairs in a more similar way.

    Think for a moment about the upcoming election. All of the parties are commting themselves to cuts but not savage enough cuts to really make a difference. All of them have already ring-fenced certain parts of the public sector. Now why is that? The simple answer is that they know that the voters will not accept the Irish approach - irrespective of your 'rational' demands.

    There are very few people who understand the full level and implications of the UK debt. Most people in the street could not tell you how much it is, by how much it is growing or even how it was accumulated. They do know that vast sums were 'given' to the banks. They do know that bankers have been so aware that they have limited bonuses to ONLY £1 million. Can you blame them therefore for thinking that The City should be made to pay?

    Why should they expect their services to be cut when they have done nothing wrong? Why should they pay higher taxes so that somebodyelse can make a profit. Why shouldn't they be protected from the ever incresing fuel prices. Why should they be claiming JSA or other allowences because 'their' factories have been closed down?

    Now you can say that they and the government have borrowed money and that it must be paid back. I doubt you will get an argument. But keep telling people that, not only must unemployment increase, wages decrease and the level/quality of public services be reduced and you will soon find that you have a rebellion on your hands. Remeber the Irish cuts have only just been implemented, let's see how long it is before there is social unrest there.

    Most of the public are not interested in the machinations of the bankers, financiers and what armagediontimes calls the oligarchs. But when the cuts start to hurt them they will soon accuse those people. They will not be the meek unemployed of the 1930s - they have not been cowed by a world war.

  • Comment number 34.

    31

    On the 'corruption perceptions index' of 06 Greece came in at 54 out of 163. In the 'index of economic freedom' Greece stands 57 out of 157. Greece is also seen as one of the illegal immigration gateways to Europe. None of these attributes are exactly palatable. They are also quite high up the strike league. However arbitary the measurands are they do indicate something of a problem.
    '
    I find it difficult to take claims of concerted anti-Greek action seriously , it seems much of Greeces problems are homemade.

    The conflict between a public sector threatening disruptive action in the face of proposed cuts, and a government that basically has run out of money will be interesting.

    If voters vote against cuts, or workers strike against cuts, but there is not the money then they simply will not get paid, which is what has apparently happened in California with some public workers and public contracts.

  • Comment number 35.

    33 fdd

    Brown has nominated about 60 Billion in cuts against the running deficit which is 180 Billion pa. He is pinning his hopes on strong growth. I hope he is right but I doubt it happening.

    This will not be enough so it will be death by a 1000 further small cuts. It will not even be noticed by many, only by those who use the particular service. Means testing will be brought in on a wider scale. Unemployed will be pushed off into charity work to plug holes.

    Most services are not regarded as crucial by people not directly using them so cuts will occur piecemeal. In fact most services are not even seen as critical by people who know they will use them in two years time, they are only interested in today.

    For example - In the rural environment schools and school transport budgets and services are cut steadily. In one case when asked I arranged provisional funding for a bus purchase, to be owned by the local community, but to be run by them. Funding is fairly readily for this sort of thing, anybody can sort it out but the caveat is the community has to take over the running and operation and there has to be a properly structured business plan and a roster of responsiblity. Insufficent volunteer support could be arranged, in particular some people said - I would not need transport for this year, or for two more years. Like clockwork years later the same people where knocking on my door saying they needed transport where can I egt it. I said you did not support at the time, window shut. So - That is how it will go. All you are showing is your lack of experience of asking people to do things to help themselves following them asking for advice - 'a posse ad esse'. Your idea is just that, an idea, and it will not work. The first response generally of somebody recieving public money is to ask for more of it. The first response generally of somebody on some sort of benefit is to ask for somebody to arrange the supply of a service - free of charge. Thus both service provider and service consumer expand the public sector to the limits of available funding.

    I fail to understand your claim people in other EU developed countries are prepared to pay more as the last set of data I saw showed the total tax take - direct and indirect - was prety constant at approx 46 percent of GDP where high levels of social and welfare provision were made. The main difference is the way tax is collected varies, for example in France the equivalent of rates is set much much lower than in the UK.

  • Comment number 36.

    FK;

    "Imagine if the President of Greece publicly begged the EU for a bailout"

    I think it will be the other way around. I think the EU will beg Greece to let it bail them out only it will ask the Greek government to let it happen very quietly so that nobody notices. Otherwise the MEPs and their Eurocrat friends might be looking into an unknown abyss? Horror of horrors, an end to the EU? Say it isn't so Rumpoy. Say it isn't so Ascot. An end to unlimited expense accounts? And end to ruling a land without having to be accountable to auditors? Perish the thought.

    K-69

    "So, according to Marcus AureliusII, it's ok to lie - apparently continuously, break international agreements, consistently fail to enforce laws, ignore their constitution and most importantly ignore the people which they are privaleged to govern and finally have the rest of the EU to pay for their corruption."

    Well that seems to be how the EU is run. I didn't make the news, I'm just reporting it. It was OK when a tarrif free trade zone morphed into a superstate. It was OK when France and Germany decided the Growth and Stability Pact was obsolete and they shouldn't have to pay the billions of Euro fines they were supposed to. I didn't hear a huge uproar around Europe when these things keep happening.

    Calm down. Put a nice cd of Beethoven's ninth symphony in your CD player and enjoy the singing. What are the words again? Oh yeah, "Yes we'll all go together when we go...."

  • Comment number 37.

    #34 riverside. You should try and get out more. What is you do not understand about corruption?

    The more (successfully) corrupt you are the more you more you will interfere with corruption statistics. You will do this because you have leverage and influence over the compilers of such statistics. It is not hard to understand.

    So Southern Europe does not meet you puritan requirements. Consider the words of Filipe Gonzalez (you like quotes): "A certain amount of corruption is necessary, otherwise nothing could be achieved"

    Now consider the British and their wholesale slaughter of the foreign man. Consider if you will the institionalized corruption of such things as Section 106 Agreements. Take a look at the Environment Agency and compare and contrast the meaning of "Environment Agency" with the French Revolutionary Committee of Public Safety. Ask why the meaning of words has been so totally corrupted, and why you and others (perhaps all of us)are so complicit in the corruption of language.

    So public services are going to be slaughtered. Why? Because international finance demands that this must be the case. Who could argue with such logic? Maybe the Greeks, maybe others. Do not be confident that there will be no resistance to such logic.

    Remember history. Remember Guernica. Remember how Von Richthofen concluded that Guernica proved up his model for modern warfare, and remember how Stalingrad proved his model to be so much garbage, and how much blood had to be spilled to prove the point. A point that no one in the west ever wanted to learn from, and so like so many infants merely put their fingers in their ears.

    The world is both more complicated and more simple than we would like to believe.

    The Greeks will be bailed out, that is a mere precursor for the battle that is to be fought. Despite their demonsratation of power on the Casa de Campo the revolutionary forces were defeated, do not assume that their defeat was final.



  • Comment number 38.

    Oh well, the Euro is falling against the pound, the dollar is weak against the pound....so much for our brand new competitive currency that was to help us export ourselves into an era of economic prosperity. Quick Mervyn print some more money, what we need is a competitive devaluation eh?

  • Comment number 39.

    Well, the situation is more complex than it sounds, really. First of all, let me provide my input as a Greek myself, living in Athens and everything.

    It is totally understandable that the Greek State, from the time of its inception shortly after the last Revolution of 1821, has suffered many times in the hands of profiteers, and the so called "Allied Great Powers", that have included Britain, France, Germany, USA, and others. This is not an excuse, mind you, it is stark reality - The first loans carried out in order to establish the modern Greek state, and paid literally through the nose in interest and charges for decades, were finally paid off more than 150 years (in the 1980's) following their commencement. In the approximately 190 years the modern State exists, such non-privileged loans have existed many times, and of course are still not paid for, despite being initiated literally many decades ago.

    As such, this situation is nothing but new, meaning that the "relative weight" of a state can make things vastly different for its economy, its stature, or its power to negotiate. If France was in the shoes of Greece, I truly believe that there would be some international buzz, yes, but not 100 articles and coverage reports in all newspapers / TV channels / etc. Their "leverage" would keep things more restrained. I have closely monitored some international news sources in the past few weeks, and they seem to slowly but steadily spread... the impending doom scenarios about Greece with every single chance they get. To the point that things become just plain absurd / ridiculous.

    Sure, Greece has its fair share of problems, but then again so does the majority of the Eurozone and the EU. Huge deficits everywhere, much higher than "a puny 3%", yet negative publicity seems to focus in Greece and in Greece only (practically everyone has neglected even the PII(G)S acronym, despite several of the countries in it being in very close situations with one another).

    I do believe that the climate is a prime one for ruthless investors to gain more from the insecurity that exists. Greece made a bid for debt sale last Monday, less than 5 days ago, officially having come out to borrow 3-5 bn. EUR - The offers surpassed 25 billion, albeit with a pricey interest. Still, this is an offer level at least 5-8 times higher than it should be for the target to be met. Many people within the EU and elsewhere wanted to grab a slice of this sweet profit situation, with the high interest and all. Alright, Greece took "8 bn only" in that occasion, but the sheer abundance of offers should calm the markets down somewhat, no? Greece will not be defaulted, right?

    Wrong. Just when the current fiscal-related politicians and bureaucrats expressed their joy about the outcome, they make the fatal mistake to state the known fact, that they will ask for more loans in the form of debt sale in Greek bonds, soon.

    And suddenly (?) the spread of interest rates climbs to record levels, higher than the levels before Greece joined the Eurozone, and had to go around with its rather weak currency, the Drachma (!).

    For the love of god, if this doesn't scream "PROFIT WARMONGERS AND OR EUROSCEPTICS AROUND", I don't know what does.

    Finally, and because I have written too much and it's far too late at the moment for me to continue writing gigantic comments, I'd like non-Greeks to know this: Yes, several administrations and politicians, as well as a sick attitude found in (permanently installed, not able to be sacked under normal conditions) public servants mainly, are to blame for the country's woes.

    Yes, the past many years of the Greek state are not perfect in several areas, corruption included, and this is an undisputed fact. But no, neither Greece nor its residents (and the percentage of them that do NOT evade taxation, do NOT employ corruption techniques throughout their daily ordeals, and are NOT responsible for whatever the administration(s) have done in the past due to poor vision and other problems) can be held responsible for the world issues, the famine in Africa, H1N1 outbreaks worldwide, iPad's poor initial presentation, or whatnot.

    When fellow EU member states want to sell ridiculously overpriced (...billions of Euros...many many billions...) and not really needed arms, helicopters, ammo, tanks, etc, to Greece specifically, to "defend its borders from Turkey and others", we are all comrades in arms. Alright, so we should be comrades in arms in all aspects, then. You can't have your pie, and eat it too!

    To those reading my probably very, very large comment, a word of thanks. And now, fed up by today's stories portraying practically everyone, from the President to homeless people in the streets, residing in my country as the Devil reincarnate, I will sleep - and return tomorrow if you wish to discuss the fine points of this comment. Thanks, and good night for now!

  • Comment number 40.

    37 armagediontimes

    Southern Europe is nothing to do with my standards. I have referred to international measurands which are used to try and describe Greece amongst other countries. They have been created, not by me, for relative measurement purposes. Those measurands appear to be accepted internationally. They suggest a problem cultured in Greece, nothing to do with anybody else.

    I do not ask anybody to meet any standard. I ask myself to meet a standard I set myself and that is that. I do get slightly tired of your endless references to deeds undertaken by others, mainly historical but some contemporary. I do not control others. Usually I appear to have to take a hit because of the actions of others. However I certainly am not prepared to go on trial for the actions of others.

    A critical mass of unthinking people appear to create these problems. Very little, if anything, to do with me. That a mass of people consequentially have a downside and seek to blame somebodyelse is hardly surprising.

    You appear to constantly set yourself de facto up as a censor. I can dig a quote up about freedom of speech if you want, it goes along the lines that those who are most demanding about the freedom of speech are also most often those who are against the freedom of thought.

    I refer you to a report on this site which contains the quote - "It's like a French Revolution in reverse in which the workers come pouring down the street screaming more power to the aristocracy." http://news.bbc.co.uk/1/hi/world/americas/8474611.stm

    It seems to me the new aristo has to do little other than say something with no content wait for the mob to arrive and prostrate themselves. The trick it would appear is no content but a emotive tone.

    Most of the things you moan on about are a result of this phenomenom, aka as stupid people.

    Your response to my post appears to be to use emotive syntax not facts and to try and spread the issue to war crimes. With 6 degrees of freedom you can do this with anything so it is meaningless. For example it would not be hard to do this with ice cream. This must mean ice cream is evil. Sorry it is not. I therefore suggest you are at risk of using transference.

  • Comment number 41.

    33. foredeckdave wrote:
    "telling people that, not only must unemployment increase, wages decrease and the level/quality of public services be reduced and you will soon find that you have a rebellion on your hands."

    You may be right but I think the great unwashed are expecting that something should be done. We can go on borrowing like Japan and get to astronomic levels of debt by keeping interest rates low for 20 years but at what cost. The cost of bottling now is not ours but our kids future - they will be poorer for it.

    We survived lower levels of crisis in the past by biting the bullet and taking the medicine. It was brutal but we emerged stronger after a period. Fortunately, unlike Greece, we have more tools at our disposal, so we need a combination of targeted Public sector cuts and incentives for the Private Sector to get growth at more than 0.1%!

    After 7-8 years of unremitting Public Sector profligacy there are plenty of areas that could be pared back - Kwangos for one!

  • Comment number 42.

    #41 dontmakewaves,

    Now please, if you want to make a point, don't start on that emotive "our kids future" kick! Whatever we do or do not do, have done or have not done, it has always impacted on "our kids future" so the statement is merely emotive.

    Now our population has the benefit of a readily available media record as well as their own experience to refer to. Many have already experienced the Thatcher "price worth paying". They have the history programmes to refer to in terms of the Great Depression. They have the daily commentry upon the excesses of the global financial industry. So they are less and less likely to meekly accept cuts in their benefits and services to maintain a no-win economic strategy.

    Sure, I totally agree that there are savings to be made in the public sector. We should be looking for efficiencies and questioning the need for some projects (identity cards etc.). When the NHS is by far the largest organisation in the whole country WHY is it not managed by the BEST managers that we can find? The problem is that with all cost centred strategies you never know the true effects until you have cut too far - now that worries me.

    I doubt this argument will cut much ice with you so I'll match your Public Sector profligacy with what about the Private Sector selfishness with the money that they made out of selling-off our most profitable firms?

  • Comment number 43.

    It is good for exporting nations like Germany when the EURO falls a bit in comparison to the dollar because exports will rise and things get cheaper for the consumers.
    As for Greese, I´ve heard that it didn´t tell the truth percentage of debth of the public sector the required 3 % when entering the EURO zone.
    Perhaps the 2004 Summer Olympiad is a factor that Greece comes to this disastrous financial situation, Greece has stepped down in the top ranking of the financial agencies with only two stars now just like Spain and the United Kingdom.

  • Comment number 44.

    #43 voice_germany,

    Do you mean AAA from the rating agencies? If so then you are a little premature in relation to the UK.

  • Comment number 45.

    To Comment Nr. 44:
    The United Kingdom is at the very bottom of the AAA Triple rating at the moment, and there is a quarrel among analysts that "AAA" is no longer justified and that AA is more appropiate.
    According to the "Centre for Economics and Business Research" the UK was the 4th largest economy in 2005, but in 2015 it won´t be among the top ten according to this outlook.

  • Comment number 46.

    42 fdd

    Your problem Dave is that you find it uomfortable that the entire purpose of money is to ration access to goods and services. The money volume has dropped and therefore rationing will increase. All else is process. Post 45, if correct, sound ominous. You would not run your personal finances they way you are proposing the public secotr is run, because you almost certainly would not be allowed to by your loan provider. However big the UK is sooner or later it runs into the same problem and continually pushing th envelope is dangerous. You can see that Greece is facing higher interest rates because it has the wrong profile and does not show it can deal with the debt problem. The republic falls in the face of debt no matter what its size or what period it is in.

  • Comment number 47.

    #40 riverside. I am sure that Greece has caused plenty of problems for itself. However there is clearly an argument that extraneous forces have also played a role. Poster #39 who purports to be Greek refers to a number of claimed examples.

    A forensic analysis of the situation is less important than seeking to understand what people may believe. Their responses are likely to be conditioned by their beliefs.

    An understanding of historical deeds undertaken by others may assist with an understanding of the present.

    If we live in a representative democracy then it follows logically that we all share some responsibility for the policy actions of others, since those actions are being undertaken for and on our behalf and are legitimised by our right to vote.

    I have absolutely no wish to act as a censor either of speech or thought - I seek to test as to whether articulated positions are consistent with external observed realities. Sometimes I do this quite well and other times less so, but then I am only a person.

    Maybe my post did contain too much emotive syntax. I will address this issue.

    I did not use 6 degrees of freedom. I merely sought (although obviously failed) to demonstarate that people can arrive at a diferent view by examining the same information. This is important in seeking to understand the likely reaction of the populace of Greece and other Southern European countries. My personal view is that they are likely to resist public spending cuts through public demonstration, strikes, riots and possibly some form of insurection. This outcome appears less likely in the UK.

    I mentioned nothing at all about war crimes. Surely youn know that Nurnberg decreed that crimes were only those things undertaken by the vanquished and not the victors. Therefore carpet bombing of urban civilian populations is not a crime as all participants engaged in this action.

    Some people may draw conclusions from such examples as to exactly how much attention ruling elites pay to the needs of the "stupid people" you have identified. The ability to draw conclusions may go someway to explaining why some people are more likely to resist forthcoming budget cuts than others.

    The relevance to the UK is that if Greece (and perhaps other states) are "bought off" to quell civil unrest then the British may find themselves bearing a disproportionate share of the cuts.

    If they are not bought off and civil unrest spreads then this will have consequences for the UK - none of them likely to be good.

  • Comment number 48.

    47 armagediontimes

    I have tried to say before there is no point in trying to rationalise with the irrationale or to try to reason with the unreasonable. You have tried that and failed. And stupid is as stupid does. If people do things in full information and full knowledge and it is self harming that is pretty stupid. I am aware of the niceties of the judgement of the victors and the vanquished, victors write history. But - The idea that you live in a population group and you are responsible for so called democratic approved actions which you oppose is a bit rich. By this standard a conscientious objector who was shot in WW1 by his own side would be responsible for any act of assualt undertaken by the troops he was a member of that he was not involved in. The whole idea of crime is that you have to personally participate in it.

    Any buy-off of Greece, if it occurs is not going to be soft, real IMF type of deal is my guess. If unrest gets bad enough they will put troops on the street in any country, it isnt as though it has never happened before.

    The most likely option is the shattering of middle class security. Those at the top are above the dirt, those at the bottom in it. Its the ones in the middle that thought they had elevated themselves out of it that will be really browned off. The middle class know how to work the system and they will cause systemic implemetnation problems, they know the buttons to press.

    Never mind UK house prices are forecast to rise by 10 percent now.

  • Comment number 49.

    riverside,

    It would be easy to continue a it for tat exercise. I keep saying, and will continue to say that MONEY is not the end objective.

    The biggest reason for the world's present predicament is that, for the benefit of a few, money has been promoted as an end in itself. However, it cannot sustain itself as it is really only a transmition process. So you can continue to blind yourself if you wish but one day the blinds will lift and you will find that true wealth lies far beyond the zeros so cherrished by friedman et al.

  • Comment number 50.

    Germany should (and will) foot the bill. They still owe Greece money they stole during WWII. I'm sorry but it's true! They'll do it because a eurozone country going bankrupt will have bad consequences for all of them. It'll be like Lehman Bros in the US, only worse.

  • Comment number 51.

    49 fdd

    The fact that businesses have gone beyond national boundaries - and have bigger books than nations - and have abused that position. That further, governments, here and elswhere, have failed to regulate, does not mean that money is going to disappear, it is the basis of transactions. I have never said money is the end objective I have said it is a means of rationing access to goods and services. You are the one that has raised an issue of money for the sake of money. I haven't.

    If you fail to recognise the entire mechanism of trade you are only left with barter. Have you ever been involved with barter, I dont recommend it. Essentially somebody with no money wants you to take something they dont want and distribute it for them, so they, the person with no money can take something off you. The only advantage is under certain circumstances you do not incur tax liability. Why would anybody do a barter if they can sell for money.

    You have yet to propose a cogent argument as to how to deal with problems. In essence all you have said is that if you cut services you might damage, but that is irrelevent if there are not the funds. You have a government which cannot do anything other than spend. The latest thing is they are being told - by those that have to undertake the provision (LGAs) for the elderly, which incidentally I agree is badly needed - that the estimates made in Nov 2009 are wrong by a factor of two.

  • Comment number 52.

    #50 panagis. Yeah, I reckon Germany probably will foot the Greek bill. I am not sure it helps to search for a justification in history. What happened in the past dosn´t have much to do with the Germans of today.

    Maybe some Greek shipowners should consider making a contribution - just a thought.

    Whilst the unfolding Greek tragedy is pretty tough on the Greeks it is only a precursor of what is to come. The big shoe to drop is Spain. Germany cannot bail everyone out. The only question is whether Germany is prepared to destroy itself in a vain attempt to shoulder a burden that it cannot carry.

  • Comment number 53.

    The headline here is "Greece denying gifts" and Greece wants to manage its financial problems alone.
    Europe does not exist of Germany alone, Germany is the country that is paying by far the highest money to the EU, so it would be useful to think about why for example a rich country like the United Kingdom pays a relative low financial contribution to the EU.
    There is an financial imbalance within in the EU!
    If you think that Germany is paying the bill for your mistakes, you are wrong.

  • Comment number 54.

    Instead of PIGS or PIIGS which are highly offensive, may I suggest using the country names in their native language.

    PIEEE - Portugal, Italia, Eire, Ellas, Espana

  • Comment number 55.

    As a citizen of one of the so-called PIGS, I'm appalled that this this derogative and offensive term is being used by the bbc. Isn't there a better term to refer to those countries?

  • Comment number 56.

    #53 voice_germany. I think you will find that Germany is already subsidising the mistakes/lifestyle choices of Southern Europe.

    The British are not about to step up to the plate - most don´t even know where Europe is, and those that do have no money.

    It´s a tough world - even tougher when you need to accept that whilst you have done nothing wrong you are still going to get crushed.

  • Comment number 57.

    #53 voice_germany,

    If you mean by "paying the bill" you mean the Greek debt, then you will find that it is a Euro problem. It may have past your attention but the UK is not a memeber of the single currency.

    As for Germany picking up the bill for the EU and the UK not paying as much then look to your politicians as they negotiated and voted for the deals.

  • Comment number 58.

    The Eurozone is only as strong as it's weakest link,if the link breaks,the zone collapses.I think Greece is a true indicator of the economy in the Eurozone.Germany and France only hold on thanks to bailouts from the US....AIG bailout money to Germany and France anyone??? Don't worry about Greece ,we have been around for over 5000 years,Greeks around the world,will come to her aid.Now,we will see a true test for the Eurozone concept.Also think the Germans should pay their bills from WorldWar2 before they start acting like they own things.Reperations were never paid to the Greeks,2,5 million Greeks were butchered,Greek art was stolen and sits in private collections in Berlin,cologne,Paris,London, 1,4 million Greeks starved to death in 1945...now you tell me what a few billion dollars worth of debt can do to a country that has seen hell.....pretty much nothing, but the perpetrators will be judged.

  • Comment number 59.

    There seems to be some nervousness that leeds to an inappropiate overreaction. If a member of the EU is in serious financial troubles, it goes beyond the EURO zone to an affair of the EU.
    To claim that there is a direct connection between the current financial problems of Greece in 2010 on the level of the EURO zone with demands of reparations in the context of WWII is bit far fetched. You should not mix up this affairs that do have nothing in common. Sorry, no sense!

  • Comment number 60.

    voice-germany,

    As Greece is a member of the single currency, any financial failure will undoubtedly have a major inpact upon the currency itself. Contrary to your assertion a default would have to be handled by he memebers of the Euro zone as the EU itself is not allowed to take any action.

  • Comment number 61.

    It is firstly up to the IMF to decide whether Greece gets support for the budget management or not.
    Greece did not ask the Euro zone members for financial support.

  • Comment number 62.

    Greece doesn't need the IMF,the IMF does not create prosperity,having personally seen what it did in Zimbabwe in the early 90's,where the austerity measures placed on the population,resulted in total collapse of the economy,the degree of civil unrest would cause a total collapse the Greek economy and with that the Euro would almost certainly be affected,maybe even devalued.The EU needs to show what it is,either toothless,in which case you get gummy mush,or able to handle it's problems without begging America for money and help all the time.Show up man.
    g USA

 

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