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Greek lessons

Stephanie Flanders | 10:57 UK time, Wednesday, 11 May 2011

Here's what I learned from spending almost an entire day in Greece.

First, most Greeks I spoke to don't want the country to default on its obligations, and the average person there probably has a better idea of what a default would mean for the country in the short-term than some of the outsiders who blithely recommend it.

Of course, that's especially true of anyone close to the financial system. But reformers - inside and outside the government - suspect the political cost of default could be equally high. To their mind, the debt crisis has forced a once in a generation opportunity to push through long overdue reforms. As and when the debt burden is lifted, they worry that this great window of reform opportunity will close as well.

That may explain why - as I mentioned on the Today programme this morning - the government is still, amazingly, a little ahead in the opinion polls. Austerity has few fans, but so far the opposition has not persuaded the voters that there is a better alternative.

But all of this is about the short-term. Another observation from my brief time in Greece is that even the most committed optimists question whether the government can get to the end of the IMF programme without some form of debt restructuring. Put simply, no country has ever achieved the fiscal and economic turnaround the government has committed itself to without either a default or a currency devaluation. Usually both (though I wouldn't lay bets on Greece leaving the euro).

The fact that everyone - inside and outside Greece - expects a debt restructuring in the future is precisely why the Germans and some others are keen to see voluntary "re-profiling" of privately held Greek debt this year. They don't want most of the private bondholders - holding debt that matures in the next year or so - to get out, leaving mainly governments and official institutions bearing the brunt of a default after 2012.

But of course, it is that same logic that will make it hard to persuade private investors and institutions to take on longer term debt "voluntarily". They want out as much as the governments want them in.

If Greece does have to go down the re-profiling road, Greek bankers are terrified that the ratings agencies will consider it a "selective default", and they will no longer be able to use Greek debt as collateral for funds from the European Central Bank. A lot of energy - inside and outside Greece - is now being devoted to establishing whether this can be avoided.

Meanwhile, the underlying drumbeat in Athens seems much the same as it is elsewhere - "Lord gives us a Greek default, but not yet."

Update 14:39: I hoped my ironic reference to being in Greece "an entire day" would suggest humility - and act as a health warning for what followed. But it appears that many of you took it literally.

To be clear: I do think there's a limit to what anyone can discover about a country in a single day. I do not think 24 hours is a long time.

Comments

  • Comment number 1.

    Stephanie - reading your article I believe you have cut to the nub of the problem - reform. As you say "the debt crisis has forced a once in a generation opportunity to push through long overdue reforms" as without these there is little or no focus on any future recovery. If the fat cat bankers perceive a "selective default" to be against their interests, so be it. Reform NOW and DEEP is the only logical way towards a better future for the vast majority of over-burdened Greek citizens.

  • Comment number 2.

    So you spent 1 day! in Greece talking to a few economists while no doubt quaffing wine and living well and you think this gives you a sense of the Greek people. A people who today are on general strike.

    Breathtaking arrogance and delusion.

  • Comment number 3.

    "After spending almost an entire day in Greece." (!)

    Is that one level of research up or one level down from: "Spending almost an entire evening in the Parthenon Restaurant, Bromley"?

    After spending almost an entire fortnight in Greece, not speaking to Greeks, my picture is based on the numbers of large blue signs announcing how many million Euros were spent rebuilding its road system, throwing up hospitals and municipal buildings or sticking wind turbines on rocky crags.

    They can't possibly, suddenly, discover a way to pay back all this German largesse -with interest, in hard currency. For the good of their society, surely they must throw in the towel, the sooner the better. Maybe the landesbanks would take a 5% levy on the price of package holidays for 50 years as a token offering.

  • Comment number 4.

    "Meanwhile, the underlying drumbeat in Athens seems much the same as it is elsewhere - "Lord gives us a Greek default, but not yet."

    What is the advantage of delaying the default? Every day the Greek debt mountain is growing and the prospect of them paying off the interest, let alone the capital, is receding. Surely by delaying the default, the shock waves to the financial system will be that much greater and that it would be better to default sonner rather than later.

    So what are the advantages of kicking the can further down the road by offering the Greeks more loans now?



  • Comment number 5.

    ship all the German jobs to Greece problem solved or Germany to pull out of the Euro and let the Euro be where it should be at around 4/5 Euro to the pound for the med countries.

  • Comment number 6.

    We live in fascinating times! Quite simply, can politics trump economics ? On several occasions, the EU has bludgeoned Irish, Dutch and French voters into "voting the right way" e.g on the Lisbon Treaty. Now once again, the Brussels will is threatened, e.g by Finnish voters while German and Austrian voters are restive, to put it mildly.
    Moving closer to home, if I were George Osborne, I would make plain that the UK economic predicament has been made worse by Alistair Darling, who, even as he knew Labour would be leaving office, signing up to additional UK contributions to the EU bail-out fund. Has anyone ever challenged Mr Darling on his reasons for this ? I believe he claims to have consulted the Conservative Party, but they deny this.

    I believe that the situation will soon become clear to all EU voters. Greece, unable to devalue and with Brussels & Frankfurt opposed to any form of default, selective or otherwise, will have to be subsidised for the foreseeable future. Simple question then - will voters tolerate this ? My guess, at least in some countries, is "No". So Plan B (or C, or D ?)

  • Comment number 7.

    Shouldn't we have a blog on German lessons? Or more accurately how we can learn to transform our economy on one as balanced as Germany's is.

  • Comment number 8.

    This is one Greek tragedy that someone should bring the curtain on. It is time for

    European banks and investors to face the facts, that they all about to take a hair-cut

    (and the quicker the better) then we can all move on.

  • Comment number 9.

    So what you're saying is that there is still a strong possibility of a haircut, as I blogged previously:

    http://zelo.tv/k64CNa

    Even after any reform package goes through, the debt burden will need more than iron discipline to bring down. Wasn't it Robert Peston who was thinking through the consequences for various banks - especially German ones?

  • Comment number 10.

    One day in Greece - that's investigative financial journalism?

    BTW, there appears to be no comments from 'ordinary' Greeks on the effect of the Euro?

    It's all a bit Monty Python - don't talk about the Euro?

  • Comment number 11.

    What is the austerity programme doing to the Greek economy - does not seem to be helping the deficit or the people of Greece. The answer appears to be - more austerity

  • Comment number 12.

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

  • Comment number 13.

    7. At 12:22pm 11th May 2011, United Dreamer wrote:
    Shouldn't we have a blog on German lessons? Or more accurately how we can learn to transform our economy on one as balanced as Germany's is.


    =======

    Short lesson.

    1. Avoid short termism
    2. Conscensus politics (i.e.coalition)
    3. Abolish private education

    No need to learn German
    With regard to conscensus politics, committee government, call it what you will, I accept it would be useful in fighting a Martian invasion, but hey in the real world good management / stewardship needs to be stable and consistent. The UK just swings from side to side. And goes nowhere.

  • Comment number 14.

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

  • Comment number 15.

    Nice dress Stefanie

  • Comment number 16.

    #13

    typo correction

    useful in fighting a Martian invasion

    should read

    useless in fighting a Martian invasion

  • Comment number 17.

    Steph,

    "Lord gives us a Greek default, but not yet."

    It is the short term bondholders playing for time (and calling the shots) - the default is inevitable.

    But it isn't Greece who will leave the Euro -it will be Germany (or at least re-introduce the Mark alongside the Euro) -makes more sense to me.

    PS There is no stigma to defaulting when everyone else is doing it.

    PPS Printing money is also defaulting.

  • Comment number 18.

    The Greeks are broke, so they either renege on their debts or get someone else to pay for them.

    I believe that this is called international aid. We gave it to India and China, no reason Germany can't give it to Greece. They can attach strings to it, which the Greeks will ignore in their own unique way.

  • Comment number 19.

    #4 Busby2

    So what are the advantages of kicking the can further down the road by offering the Greeks more loans now?

    It gives the German and French banks time to recaptilise, and the German and French economies time to put recession far enough behind them to stay out of contraction when the defaults happen. Having growing tax revenues makes that sort of problem far easier to deal with.

    Also, as hinted by Stephanie after her 1 day with the Greeks, the current position (facing default) is not new; many see this unpleasant period as a chance to push real reform through. But I'm sure that was what was said every time.

  • Comment number 20.

    Another Greek bailout is only a matter of weeks away.

    This crisis will not end until all the private investors in all the countries of the world are forced to take their losses on the chin. (Call it a haircut if you wish)

    Investment is supposed to be a risky business, not "heads I win, tails you lose!"

  • Comment number 21.

    Joining the Euro, as a currency, is a bit like a WHOLE country signing on for benefits, but so much worse?

  • Comment number 22.

    http://www.bbc.co.uk/blogs/seealso/2011/05/daily_view_what_now_for_greece.html


    In the Times Anatole Kaletsky explains why he thinks restructuring the debt is not going to happen:

    "Why do Europe's politicians and central bankers refuse even to think about debt restructuring and instead continue to lend money to Greece, Ireland and Portugal that simply goes to repay their private creditors?

    "Apart from the fear of triggering a Lehman-style banking meltdown - a threat that could easily be averted by creating a pan-European financial guarantee fund much smaller than the bailouts now under way - Europe's central bankers have a vested interest in spreading terror about the very idea of restructuring. The ECB itself is now by far the biggest holder of Greek, Irish and Portuguese bonds and would suffer enormous losses if their value were reduced. In addition to the €80 billion that it owns outright, the bank holds more than €500 billion of these toxic bonds as collateral against its loans to Irish, Greek and Portuguese banks. Since most of these banks would become insolvent in a big debt restructuring, the ECB would be left with hundreds of billions of euros of bust government bonds. With total capital of only 11 billion euros, the ECB itself would be bankrupt unless European governments provided a huge bailout."


    The Euro Zone has all the stability of a tower of playing cards. One default and it is game over for the Euro Zone.

  • Comment number 23.

    The bankers brought their rating agencies in during the 90's and told Greece that they should borrow more and that they would lend them the money. they lied...but of course they are bankers. Money is the crack cocaine of governments and the bankers are the dealers. Now they charge obscene interest rates that only make the schedule of repayment impossible. The bankers solution to the crisis they caused is to tax the people. Since it is more the appointed than the elected who are making these decisions and the appointed in the governmental finance positions are all in their positions because of support from the banking industry...insider trading...the likelihood of a solution that benefits anyone other than the bankers is slim. It is like the man who stole your money being upset that you don't have more. Once the Greeks sign over their first born the bankers may relent...a little.

  • Comment number 24.

    7. At 12:22pm 11th May 2011, United Dreamer wrote:

    Shouldn't we have a blog on German lessons? Or more accurately how we can learn to transform our economy on one as balanced as Germany's is.


    The main reason that the German economy is in much better shape than ours is that they are less inclined to ignore the consequenses of investing only into short-term profit. Yes, we can still do the hard stuff, but we're doing it for foreign companies. Yes, we produce some good engineers, but why invest in apprentices when you can hire technicians from Poland and CZ?
    Stephanie made a very good point when she said some Greeks want to see their crisis as an opportunity to reform. Good luck with that! I remember people here saying the same thing.

    I'm afraid we simply don't have the will to transform our economy, because we'd have to wait far too long to see a return. Perhaps even years.

  • Comment number 25.

    When they send Kate Adie to Greece instead of Stephanie, I'll cancel my holiday.

    Good question, yesterday, from the person who asked "how can you have a sovereign debt crisis without a sovereign currency?" Have yet to read an answer to that one that doesn't indicate that the single currency is the reason why Greece took a one-way ticket down this particular dead-end-street, and cannot recover.

    Not so much Acropolis as Necropolis (dead economy walking).

    Based on recent history, mushroom suspects that the delays and bailouts are almost certainly something to do with "socialising the losses". I know, let's give the private bond-holders enough time to sell, then haircut the ECB's holdings, do a deal with the landesbanken and make the rest of Europe pay the missing taxes.

    PS. Don't forget the 1953 London Agreement. If only the greeks had a recent history of military aggression, we might be more inclined to let them off the hook, just in case all that aggression and social unrest turned into an invasion of their neighbours.

  • Comment number 26.

    19. At 13:39pm 11th May 2011, D_I wrote:

    Also, as hinted by Stephanie after her 1 day with the Greeks, the current position (facing default) is not new; many see this unpleasant period as a chance to push real reform through.
    ++++++++++++++++++
    Ouch...that last bit sounds so like the manifesto of our current GB politicians, that it almost gave me a reality check. RP sais somethign similar yesterday, and that got commented on.

    So...its alright, or even good, to call for shrinking the public sector in other countries, but it would be bad for the UK? How does that work?

  • Comment number 27.

    Some has requested a comment from a Greek on the Euro so here it is.

    The Euro economies are fundamentally very different in nature os I believe that the single currency was not a case of one size fits all. Specifically Germany was used to having a strong Deutschmark which suited the already built heavy industry for export purposes and wanted a strong Euro to folow that. However the strong Euro was not suitable not only to economies such as Greece but also other developing and emerging economies in Europe.
    Regarding the issue of reforms and the debt in Greece what I did notice from recently visiting the country is that alot of the reforms are on paper. The government needs to reduce the publich sector employees from around 1.1 million to 300k. but this would means chaos. Instead they should aim in attracting private invetstement and offering 0% coprorate tax schemes to foreign investors for 5, 10 or more years so that private jobs would open up and absorb alot of the people that would have to be made redundant from the public sector. Every time the IMF gets involved they have one solution and those are austerity measures which I can somehow understand. But my view these people are simple accountants and what really is required as a solution is a more complete package when trying to rescue economies of reduction in public expenditure measures on one hand but also incentives for employment and growth in the private sector. And last but not least dealing with political corruption that has lead the country from scandal to scandal and allegations that politicians and officials in different parts of government have 00s of billions in foreign deposits.

  • Comment number 28.

    So the Greek "government is still, amazingly, a little ahead in the opinion polls. Austerity has few fans, but so far the opposition has not persuaded the voters that there is a better alternative", Stephanie writes.

    Perhaps, but another opinion poll commissioned by the private Mega TV station and published on Tuesday said that, apparently "71 percent of the public oppose the government's handling of the economic crisis, compared with 66 percent in February".

    Not to condone their findings, but yet another mainstream opinion poll, apparently, suggests that many Greeks feel even more strongly about the subject.

    http://www.occupiedlondon.org/blog/2011/04/24/558-mainstream-opinion-poll-finds-40-of-those-questioned-approve-of-recent-violent-attacks-against-politicians/

    Either way, it's clear that austerity is not working and, a year on, Greece is yet again in crisis. Any growth has been kyboshed by their spending cuts and tax increases, so that public debt levels are actually instead heading the opposite direction to where austerity was supposed to put them.

    As Osborne is often so keen to point out, there are indeed lessons to be learned from Greece.

    Certainly there are UK trade magazines that have not, perhaps, been ordinarily too adverse to or critical of current government economic policy, whose editorial opinion pages now suggest that Osborne slow down with his cuts strategy in light of the grim economic figures.

    http://www.constructionenquirer.com/2011/05/06/opinion-its-time-for-osborne-to-ease-off-the-cuts/

    Bearing in mind that much of the austerity cuts haven't yet been felt, this is probably just the start of changing views.

    It should be remembered that some medicines, far from being the cure, have actually been known to make things worse.

  • Comment number 29.

    25. At 13:58pm 11th May 2011, stillpuzzled wrote:

    It could all be a cunning plan by the Germany to control the rest of Europe through debt dependency.

    Greece and Portugal are both the size of the former East Germany and that has been absorbed.

    Vorsprung durch Bailout.

  • Comment number 30.

    23. At 13:49pm 11th May 2011, ghostofsichuan wrote:
    Money is the crack cocaine of governments and the bankers are the dealers.
    ---
    Like it!
    ---
    Can we cut the econobabble, Steph?
    1. "Re-profiling" = Default.
    2. "Once in a generation opportunity to push through long overdue reforms" = impoverish ordinary people.
    3. "First, most Greeks I spoke to don't want the country to default.." = same as in the UK, most people don't want the rich to pay their taxes?

  • Comment number 31.

    I spend much more time than one day in Athens in discussions with business men but I agree with Stephanie - up to a point. Things are actually worse than she realises - according to Greeks who I talk to. I don't think there is any chance of Greece meeting it's debt obligations and the current ECB strategy is 'death by a thousand cuts'. If Greece left the Eurozone it would be bad, very bad but then growth would return. There would be a haircut for lenders but that is going to happen anyhow. At least outside the Euro there is a future whilst inside there is default and still the problem of too strong a currency. Ditto Portugal!

  • Comment number 32.

    @United Dreamer
    Germans are no different to other people, they simply have a different history, a history that tought them lessons they are unlikely to forget. It is the fear of inflation that could turn to the hyperinflation they experienced twice last century.
    I am glad that Stephanie went to Grecce, if only for a day.
    One more point on Germany, Germany does not have a balanced economy, it relies overly on export, something that may rectify itself when Britain increases it's export performance on the way to rebalancing it's economy. One lives in hope!

  • Comment number 33.

    26. At 14:01pm 11th May 2011, stillpuzzled wrote:

    19. At 13:39pm 11th May 2011, D_I wrote:

    Also, as hinted by Stephanie after her 1 day with the Greeks, the current position (facing default) is not new; many see this unpleasant period as a chance to push real reform through.
    ++++++++++++++++++
    Ouch...that last bit sounds so like the manifesto of our current GB politicians, that it almost gave me a reality check. RP said something similar yesterday, and that got commented on.

    So...its alright, or even good, to call for shrinking the public sector in other countries, but it would be bad for the UK? How does that work?


    Yeah, it sounds callous to me also; please don't confuse a statement of observation as one of support.

    I can understand the idea that a country that continually runs deficits cannot use debt to finance this; that's clear. But the idea that any country experiencing the current recession that Greece is can run at anything close to surplus is crazy. There is a danger of the cure killing the patient at this point.

    Ultimately, Germany will have to understand that its exporting status requires some return transfer of wealth. You can't take it with you; it's more important that her people are productive, and feel rewarded for being so, than rich. Of all the European countries I believe the German people have the capability to understand this. I don't believe the current banking elite do; and would rather stand in a barren wilderness with their trousers stuffed full of paper notes than give something back.

  • Comment number 34.

    33. At 15:54pm 11th May 2011, D_I wrote:
    Ultimately, Germany will have to understand that its exporting status requires some return transfer of wealth.

    ========

    Socialism ?

    A way to make Germany responsible is to cede sovereignty.

    Amusing in a way. One of the original ideas behind the fore-runner to the EU was as a container to control Germany. It seems the 'contained' is controlling the 'container'.

    A side effect of the realite of the EU is to constrain Germany to growing larger without using the more traditional approach of invading other countries.

  • Comment number 35.

    34. At 16:49pm 11th May 2011, TheComingStorm wrote:

    Socialism ?

    A way to make Germany responsible is to cede sovereignty.

    ========

    Haha, an great post. But on the flip side, no one has been able to tell me what happens when someone "wins" at capitalism (not referring specifically to Germany here). I guess we can sit on our hands waiting for them to make a mistake, or feel the money burning a gun shaped hole in their pockets and hope they get too cocky. Or we play the waiting game hoping for a natural disaster to return the status quo, sweep the board clean and let everyone start again.

    Or, maybe, someone will put the little iron and boot and doggy back in the box; pile up the bank notes;look through the Chance cards that never got drawn; rescue the chewed-up little green houses from the cat and suggest a new game.

  • Comment number 36.

    The Greeks simply don't have a choice the markets are closed to them, Two year yields touch 25% and most of the current holders are only holding because they don't want to crystalise (and admit their losses). It's toxic and it won't be getting any better.

    The longer it drags on the more of this debt will be held involuntarily by the EU tax payer, through their central banks (who ultimately bank roll the ECB). This serves no-one except the zombie German and French banks who are still holding the debt.

  • Comment number 37.

    Those of us (Greek academics) who advocate restructuring and an exit from the euro know very well what we are talking about. The problem Greece has is not only how to service is debt and reform, but also how to return to growth. Even finding a way out of the debt spiral, in order for Greece to exit its recession it needs to make its few exports competitive. If it stays in the euro this can only be done via pushing down wages even further. If it exits the euro it can devalue and release some of the pressure from wages. The situation is apocalyptic and unresolvable unless we consider both a suspension of debt repayments and reassess the courtry's position inside the eurozone. The alternative of staying the current course will be default in the medium term anyway, plus a complete political disintegration. There are no good options left.

  • Comment number 38.

    "Here's what I learned from spending almost an entire day in Greece."
    ... unemployment from 7.5% to 15%
    ... Salaries cut off 10-20% (in private and public sector)
    ... taxes raised for all good including food
    ... gasoline costs 1.7euro per lit.
    ... consumption has fallen 20-30%
    Do you have to be an economist to see that recipe will kill the patient ? May be it will keep us (Greeks) as zombies until banks and investors save as much of their money as they can before they dump us. Today I was laid off after 11 years as an executive. I am 48 year old and I have no chance of finding a job because ... there are no jobs any more.
    So Stephanie most of the people you have talked with during the strike are public employees or unemployed since the rest of the Greeks, in the private sector, do not strike because they are afraid of losing their job (until when ?)
    This is not politics this is reality, a life that politicians and the "market ghosts" or "Fund player" have created for simple people.

  • Comment number 39.

    #20 Yagkos

    Devaluation of a currency does nothing to address the fundamental reasons for being uncompetitive. It can give breathing space, as do debts, for restructuring; but with the fake competitive advantage of being temporarily cheaper the Greek manufacturing industry would have no drive for improvement of something which is, fundamentally, uncompetitive. As a net importer, using devaluation to boost exports is a race to the bottom; it is not one your country would accept. The only solution is write off of debt and external investment. Hard to believe for the Germans, but having a healthy competitor would be good for both countries.

  • Comment number 40.

    Dear Ms Flanders,

    I have no problems with the BBC's ever increasing use of reporters and presenters who possess what are often described as regional accents. Having just watched your report from Greece on tonight's 10-o-clock News however, I feel I should point out that there is no such word as 'probberly'.

    The word is 'probably', and in a week when we hear that one in 5 teenagers leaves school illiterate, you would do well to take a little more care with your reports and presentations.

  • Comment number 41.

    Even though you only spent a day in Greece, your assertion that most Greeks don't want a default is largely correct. For years, the silent majority has wanted the Greek government to press ahead with reforms to confront the corruption, nepotism, bloated public sector, mafia unions, weak state and so on; but, for some reason, no Greek government, including this one, has had the gumption or vision to turn Greece around. Indeed, Greece will fail not because of the strictures of the troika but because the Greek government could only manage the easy slash and burn stuff; not the harder business of reforms. This once in a lifetime chance to reform Greece is being and will be scorned. Also, it's worth pointing out that these demonstrations and strikes in Athens, etc, attract just hardcore leftwing activists, the usual suspects, not more than 20,000 demonstrators in Athens yesterday, which is nothing by Greek standards. Another Greek government failure: allowing hardcore leftists to dominate discourse and challenge the state and undermine society without consequence. My prediction for Greece: descent into the abyss – and not because of the troika, the EU or the ratings agencies; but because of Greek society. A pity.

  • Comment number 42.

    Devaluation of a currency does nothing to address the fundamental reasons for being uncompetitive. It can give breathing space, as do debts, for restructuring; but with the fake competitive advantage of being temporarily cheaper the Greek manufacturing industry would have no drive for improvement of something which is, fundamentally, uncompetitive. As a net importer, using devaluation to boost exports is a race to the bottom; it is not one your country would accept. The only solution is write off of debt and external investment. Hard to believe for the Germans, but having a healthy competitor would be good for both countries.

    Devaluation does far more to help a country's competitiveness than you say. What it does is make imports more expensive and home produced goods more competitive, both at home and abroad, and it does so in a far quicker, more effective and cheaper way than trying to drive down unit wage costs by pay cuts.

    The fact is that the terms of trade are very much against the Greeks whilst they remain in the Euro. They desparately need to devalue to make their tourist industry competitive. Is it any wonder that Turkey is such a popular destination whilst Greece remains uncompetitive because they use the Euro?

    Writing off debt will do nothing to make Greece more competitive as it won't reduce unit costs but devaluation would make Greece reduce unit costs and make Greece more competitive. It is absolutley crippling for an economy to be saddled with an exchange rate that makes the country uncompetitive but that is what you are proposing.

    We in GB experienced the problem of an uncompetitive exchange rate when we went back onto the Gold Standard in the mid 1920s. That overvalued sterling and we found it very difficult to compete in world markets even before the Wall Street Crash. It was only when we were forced off the Gold Standard in 1931, ie when we devalued, that we were able to slowly recover.

  • Comment number 43.

    "...the government is still, amazingly, a little ahead in the opinion polls. Austerity has few fans, but so far the opposition has not persuaded the voters that there is a better alternative".

    Well that is hilarious...most certainly somewhat a Monty Python interpretation of reality. Having spent some time in Greece recently, conversing with a diverse section of citizens I can tell your readers such 'opinion polls' are not to be trusted and most Greeks are about ready for a full blown revolution...In fact I suspect most Greeks would like to see all their bankers, politicians and journalist hanging from lamp posts! And as for the Germans most hate and loathe the Euro and long for the return of the Mark.

  • Comment number 44.

    35. At 19:18pm 11th May 2011, D_I wrote:
    34. At 16:49pm 11th May 2011, TheComingStorm wrote:

    Socialism ?

    A way to make Germany responsible is to cede sovereignty.

    ========

    Haha, an great post. But on the flip side, no one has been able to tell me what happens when someone "wins" at capitalism (not referring specifically to Germany here).
    ----------------------------------------------

    You don't really believe there is any capitalism in our world do you? Nepotism, cronyism, moral bankruptcy, statism, aristocratic fascist elitism - but capitalism NO - not even close...now socialism - the little gangs of thugs like socialism...they can pervert socialism into a kind of corporate fascism that ensures the serfs never work it out! We have not had real capitalism for generations.

  • Comment number 45.

    28. At 14:46pm 11th May 2011, History Repeats wrote:

    Since you have a nice & fitting nickname let me tell you 1-2-3 things that others here should take lesson.

    """So the Greek "government is still, amazingly, a little ahead in the opinion polls. Austerity has few fans, but so far the opposition has not persuaded the voters that there is a better alternative", Stephanie writes. Perhaps, but another opinion poll commissioned by the private Mega TV station and published on Tuesday said that, apparently "71 percent of the public oppose the government's handling of the economic crisis, compared with 66 percent in February"."""

    Correct but you have to take into account that ALL these measures are artificial. First of all, this government never had any majority: not only polls were tricked to show them with higher percentages but also all elections since 2000 have been characterised by extensive fraud with extensive hand-outs of Greek citizenships to illegal immigrants who at a rate of 100% vote for PASOK party guaranteeing alongside the PASOK-fanatics (whose interests served by their party have not been touched even during this crisis). Back in 2000 the fraud was calculated at a rate of 100,000 illegal citizens (when PASOK had rose up to government with a difference of just 30,000 votes), in 2007 and 2009 there were made the double as that and PASOK continues to enroll scores of other illegal immigrants trying to keep them in the country so that it ensures a contoninues clientele of voters. PASOK is not a government, it IS a dictatorship in Greece. The Mega tv station you mention like about the 90% of the media in the country work for the PASOK system and even the the opposition party, ND, becomes simply the right hand (leader of ND was... Jeffrey Papandreou's roomate in uni-years... you get the picture) in a pre-sold system controlled by our "friends" and "allies", the USAians...

    """Either way, it's clear that austerity is not working and, a year on, Greece is yet again in crisis. Any growth has been kyboshed by their spending cuts and tax increases, so that public debt levels are actually instead heading the opposite direction to where austerity was supposed to put them."""

    But it was never meant to work. Don't you understand that Greece is a country that had the SAME debt level for more than 20 years now? Why not back then? Why today? Yes, the euro gave the last hit but it is not that the problem. The country is under geopolitical attack, that is for sure and it predates even the country's entry in the EEC. Europe too is under geopolitical attack. Time to realise and start thinking that way.

    I am fed up with people trying to make out something of all that mess purely with basic accountancy input. It just does not work that way.

  • Comment number 46.

    ... it is admirable though how nobody of all those who propose "out of euro", "devaluation", "default" etc. etc. goes out to suggest the evident:

    Fact 1: Out of all those loans that Greece took as a state, anything from 35% to 50% are more probably than not, completely illegal loans under both local and international legislation - attention, this is purely on legislation, not any ethical-moral considerations of "immoral loans" or other such leftish talk. We are talking about scandalously illegal loans taken by local people accepting presents under the table, loans hiddenly passing through private channels and returning to burden the state etc. etc.

    Fact 2: If Greeks opt for a national unity government to investigate, they then can punish the local responsibles, chase the international responsibles, and in that case of borrowers that borrowed both legal and illegal debt they can make an arrangement asking of course the return of all interests paid on illegal loans.

    Fact 3: Given the above, the country's REAL debt is not as high, it is still large but it is 100% payable without that much trouble.

    Does anyone has any objection to the above?

    Well if it is so obvious then why nobody does not propose it so? Because nobody wants in the first place Greece to get out of that. USA has designed it, Britain wished it strongly (Britain opposes Greece since WWII on every single issue), Germany does wish to contain any development in Greece so little Greece is meant to remain to that semi-dead state.

    Which means : stop talking on economic matters. It is pure loss of saliva. The game is elsewhere.

  • Comment number 47.

    "13. At 12:56pm 11th May 2011, TheComingStorm wrote:
    7. At 12:22pm 11th May 2011, United Dreamer wrote:
    Shouldn't we have a blog on German lessons? Or more accurately how we can learn to transform our economy on one as balanced as Germany's is.
    Short lesson.
    1. Avoid short termism
    2. Conscensus politics (i.e.coalition)
    3. Abolish private education"
    what has the funding route for education got to do with transforming the economy?? I Think it reveals a deal more about the poster


  • Comment number 48.

    #45. At 11:39am 12th May 2011, Nik wrote:

    ............Correct but you have to take into account that ALL these measures are artificial.........................................................I am fed up with people trying to make out something of all that mess purely with basic accountancy input. It just does not work that way.

    --------------------------------------------------------------------------------

    Nothing is simple, economic measures and political courses are generally set out upon by the elite, for the benefit of the few.

    Meanwhile, ordinary people suffer.

    However, this is an economics blog & my post was mainly to establish that 'austerity' doesn't work, as in the UK, it is completely anathema to growth.

    You may or may not agree with this but the likelyhood is, if the latter, that it's tentacles have not touched you?

  • Comment number 49.

    48. At 15:35pm 12th May 2011, History Repeats wrote:
    """However, this is an economics blog & my post was mainly to establish that 'austerity' doesn't work, as in the UK, it is completely anathema to growth."""

    100% on point.

    Austerity does not work for the simple reason that it kills the financial structure, it thus reduced development, generating less earnings and at the end reducing even more the country's ability to grow, make earnings and repay the creditor.

    But then here lies the question: do the creditors really want their money back? The answer is simple. They do not expect their money back from Greece's economy. They do make their money elsewhere by precisely suppressing Greece's (and every Greece's) economy and its ability to make earnings. And that is how we enter in the geopolitical side of this seemingly at first case of a state finances.

  • Comment number 50.

    Austerity measures in place at the moment go beyond what would be considered as fair in our society today. Certainly the issue of tax evasion needs to be dealt with and yes this is a window of opportunity, however the level of cuts that are seen in Greece are too extreme, a simple family will not cope. Unemployment on the rise combined with very slow money circulating in the economy are hitting the country very hard. The debt can be re-structured again and again but now one would like to admit that unfortunately. The future looks grim in Greece and this is just the beginning we are told.

  • Comment number 51.

    47. At 13:56pm 12th May 2011, ThisWorld wrote:

    "13. At 12:56pm 11th May 2011, TheComingStorm wrote:
    7. At 12:22pm 11th May 2011, United Dreamer wrote:
    Shouldn't we have a blog on German lessons? Or more accurately how we can learn to transform our economy on one as balanced as Germany's is.
    Short lesson.
    1. Avoid short termism
    2. Conscensus politics (i.e.coalition)
    3. Abolish private education"
    what has the funding route for education got to do with transforming the economy?? I Think it reveals a deal more about the poster

    ======================================

    What does it reveal about the poster ? A chip on the shoulder ? The usual weak argument of attacking the man rather than the argument.

    It is not just a 'funding route'

    It butresses privilege
    It takes away the most motivated pupil/parent core from the state sector thus undermining it.
    It creates a situation where c. 7% of children travel through education first class implying that 93% travel second class.
    Parents themselves admit that one of the main reasons they go private is that it opens doors.
    More privately educated children go to university than state educated children but they get poorer degrees.
    It is one of the main brakes on social mobility.

    Funding route indeed.

    Germany has been very clever about private education; it is protected by the constitution but there is no charitable status, and it is illegal to pay a teacher on the same grade more than a teacher in the state sector. As a consequence only eccentrics send their children there. Lets have the same here.

    The education system in Germany is a primary reason for German success.

    The education system in the UK is the primary reason for relative UK decline.

    Can you make an argument for private education ?

    I will help you get started. Individual freedom, people have a right to spend their money as they see fit, but......


 

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