But didn't they get a bailout package approved after the elections, with all those crippling austerity sanctions?
Greece is more heavily in debt that it was at the beginning of the first austerity package and "bailout". The got some money to pay off some of the older debts, therefore the bailout was a bailout of the banks that got their exposure reduced at the expense of the European tax payers. Greece itself is in even deeper hole than they were 1.5 years ago
Whatever may happen, it is just a restructuring of the debt, it goes nowhere.
It goes to the debt heaven when you do a reasonable restructuring (writing off) of the debt based on the fact that the party that borrowed the money is bankrupt.
A circular cycle which would never break unless the Greeks produce the money themselves and pay it off.
Well, they will need their own currency anyway to regain competitiveness. That is what they need, getting people back to work and debt's written off to a level that is manageable. They are getting neither in this bailout regime.
Rip wrote:They have plenty to blame on their own behaviour, but for nothing more than for the decision to join this ill-conceived currency union in the first place. Currency union that is trimmed to serve German interests...
What about the unbridled spending sprees successive governments went on after adopting the Euro? It kinda got to their head, didn't it? This debt didn't accumulate overnight. It took years of overspending and brushing the problem under the carpet.
Goverment of Greece did plenty of bad things itself, but with an own floating currency the interest rates in 2000's would not have been in those for them ridiculously low levels as they were, and changes in exchange rates would have automatically brought more balance to the economy (relatvie wage levels, current account etc.). Both the boom and bust would have been much more muted.
Besides, in the big Euro crisis picture, Greece is only a small part. If it were question of only Greece this Frankestein's creation could still survive, but it is not. In Spain and Ireland prior to 2008 they maintained the rules of the old "stability pact" better than they did in Germany itself.
I can totally empathize with the German taxpayers' revolt at the whole mess. Why should their hard earned money be used to rescue other people?
As I said, they are really rescuing their own banks.
How do the Finns feel about having their earnings sustain people from other nations?
Especially to keep the bonuses to bankers roll on? If I say that considerably better people than our current prime minister have been shot for treason in this country, do I make myself clear enough?
Rip wrote:You are right Germany would suffer from hypeinflation if the Euro was abandoned or the Germans were to leave it voluntary, as some economists are now suggesting.
Hyperinflation? No, I do not definitely think so. (Which economists by the way, probably some who have been forecasting consistently poorly for past few years at least?). Germany leaving euro would see at least initial strengthening of the new Deutsch Mark, and the corresponding dampening of their own economy.
I reckon it is them who should leave Euro for the greater good. They can cope with reintroducing the Deutsche Mark, other weaker states can't.
Well, the weaker states can't cope with the current regime. But I tend to agree, that the transition could be more orderly if the stronger countries, like Germany and Finland, left euro first. Greece should have debt write off's anyway, most of the other "olive countries" could probably then deflate themselves from the current mess.