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Eurozone warns Greece to stop wasting time on reforms plan

17 Comments
By ELENA BECATOROS and LORNE COOK

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17 Comments
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The longer the Grexit is postponed, the bigger the damage will be. The Euro common currency project had to lead to this disaster, which was predicted exactly by the Euro critics from the start. Only the political elite in Europe is hell-bent on continuing this misguided project.

0 ( +2 / -2 )

lender that lends to known looser deserves to lose its investment. Gamblers take a risk by their own choice. Greece should ask for write off since most of the loans money left Greece quicker than it came in. Government and bankers passed it on their oligarch cronies and they took it back to London and New York banks.

-3 ( +2 / -5 )

Greece should ask for write off

Greece could ask for a write-off, but that also means they can't ask for any more loans.

0 ( +0 / -0 )

Why the rush? Making decent and fair reforms that mostly impact the lives of middle and lower-class citizens should be done with humane care and consideration. The elite banksters and investors won't suffer at all if this process takes longer.

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Greece CAN NOT turn itself into Germany by means of "reforms". The idea is ludicrious. It is a different society with different instititutions, traditions, mentality. Greece is an agriculture and tourism based economy which can never match German or Dutch productivity levels. That is no problem as long as it has its own currency with its own value and its own interest rates reflecting the strength of the economy. Currencies are like clothes -- they need to fit the wearer.

It is the Euro system which forces Greece and Germany into the same dress, which fits no-one. The Euro is too weak for the northern industrial countries and too strong for the PIIG economies.

This problem is a direct result of the Euro system, and can not be fixed within the Euro system. The Greek problems are the symptoms, the Euro is the cause. And nothing of this should be news -- what is happening is EXACTLY what Euro-critical economists like Milton Friedman, William Haig, Martin Feldstein, Max Otte, or Lord Rolf Dahrendorf predicted from the start. Anyone who is "surprised" now did not pay attention.

Bankers? Of course they are bankers. They take advantages where they see them. When money is to be made by giving zero-risk loans to Greece because they know that Germany will pay them since Greece does not, then of course Goldman-Sachs does that. The people who blame bankers try to blame wolfes for being wolfes.

Without a return to the Drachma, at least as a parallel currency, there IS NO SOLUTION. Most economists agree on that, it is the politicos who are hell-bent on continuing in the wrong direction.

3 ( +3 / -0 )

The Greek defense and foreign ministers have threatened to give entry visas to refugees at the Turkish border if the eurozone doesn't capitulate. Maybe Greece should be kicked out of Schengen as well; after all, they only want to play by European rules when it benefits them.

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WilliB, Agree with you 100%. Milton Friedman is the man.

Still surprised that Germany agreed to the whole EU thing since most countries would be and have been pulling them down. Germany has been very resilient in spite of countries like Greece, Italy, Spain, and Portugal. Left to their own, these country's currency exchange rates would reflect the inequities of the their government's fiscal policies.

Now, the Greek government is trying to pull historical WWII excuses for poorly managing their own country. Nice try.

The counter argument is that the EU as a whole is more productive because of competitive advantages are accentuated, less barriers to trade, etc. Therefore, the EU should bear the costs of a member state's failed fiscal policies, or turn the EU into even more of a federation. These are not realistic solutions at this stage. So, Germany is resorting to the main power it has, the fiscal or spending power, to effectuate a federation of those countries that fail to manage their fiscal policies.

1 ( +2 / -1 )

Why the rush? Making decent and fair reforms that mostly impact the lives of middle and lower-class citizens should be done with humane care and consideration. The elite banksters and investors won't suffer at all if this process takes longer.

Nearly 80% of Greece's debt is intergovernmental - either IMF/EU or direct bilateral loans. The investors in this case are every taxpayer in every eurozone country, with some like Portugal and Spain in as dire a situation, with the expectation that Greece would reform itself and pay back this European solidarity.

Now, after years of not really trying to reform, Greece has said 'we're not ever going to pay it back' converting the debt to perpetual bonds) and saying 'we want more' (in the form of direct fiscal stimulus). And then they say, 'or else.'

The truth is that Greece doesn't want to reform; that even if they were, they are now incapable of reform; and that the eurozone nations are never going to get their money back. Time and patience have nothing to do with it.

2 ( +2 / -0 )

They believe paying taxes is unpatriotic in Greece oh and retiring at 60 is a must while the only jobs in that country used to be government jobs and tourism no wonder why they are 240 bln€ in the hole

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Kevin:

They would be OK if they had the Drachma. Greece would be a cheap tourist destination as it used to be, and interest rates would be set according to Drachma situation, also as it used to be. Floating currencies are a natural adjustment mechanism, and with the Euro, the dreamers in Brussels threw that out of the window, ignoring all warnings.

1 ( +1 / -0 )

Floating currencies are a natural adjustment mechanism, and with the Euro, the dreamers in Brussels threw that out of the window, ignoring all warnings.

Nonsense. Greece made a commitment when adopting the euro and when getting into heavy borrowing and now they face the music, but they are stalling in honoring their repeated promises. It's not about dreamers in Brussels but about the dream of the Greek nation which turned into a nightmare they can't end

0 ( +1 / -1 )

presto:

" Nonsense. Greece made a commitment when adopting the euro and when getting into heavy borrowing and now they face the music, but they are stalling in honoring their repeated promises. It's not about dreamers in Brussels but about the dream of the Greek nation which turned into a nightmare they can't end "

Where is the nonsense? Greece made a commitment and promptly proceeded to break it. As predicted by the Eurosceptics. Without a bailout and stuck with a common currency, the only natural result could have been national bankruptcy. That is precisely the reason why the "no bailout" clause was written into Mastricht treaty. The Northern countries were NOT ALLOWED to bail out Greece according to the treaty they had signed, yet they promptly proceeded to do exactly this. Again, as predicted by the Eurocritics,

With its own currency, this could have never happened, of course. Simply put, Greece could print the money needed, devaluating the currency in turn..... the way it had always done.

It is absolutely the dreamers in Brussels who believed that Greece could be turned into Germany by "reforms".

And by the way, this is not the first time this happened. Read up on the Latin Monetary Union and how Greece fared with that. All nonsense, eh?

-1 ( +0 / -1 )

It is the Euro system which forces Greece and Germany into the same dress, which fits no-one. The Euro is too weak for the northern industrial countries and too strong for the PIIG economies.

Couldn't one argue the exact same point about the the dollar in terms of the productivity between California vs North Dakota? Or the yen in Tokyo vs Hokkaido? It's not convincing when you take it to its logical conclusion. The point of the Euro was to facilitate trade within the internal market, it's done that quite well. The fact that Greece was allowed to take advantage of lower interest rates to borrow unlimited amounts that they could never repay can be solved by just one more step towards further integration of the Eurozone rather than a dramatic leap backwards.

0 ( +1 / -1 )

M3M3:

" Couldn't one argue the exact same point about the the dollar in terms of the productivity between California vs North Dakota? "

No, one could not. The US is a political union, with comparable/compatible laws, institutions, languages, traditions, etc., so a common currency makes sense. If you are not familiar with the term, read up on the concept of "optimal currency area". This is a really basic question that has been answered countless times by economists.

The EU never made the required political integration; they choose to the the "easy" thing with a monetary union, hoping that putting the horse before the cart is a viable option...

For that matter, please note that China correctly chose to keep a separate currency for Hong Kong when it absorbed the colony, precisely because HK has a different economy which should be reflected in a different currency.

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The fact that Greece was allowed to take advantage of lower interest rates to borrow unlimited amounts that they could never repay can be solved by just one more step towards further integration of the Eurozone rather than a dramatic leap backwards.

I've heard some people say EMU was a Machiavellian scheme designed to do just that - set up a crisis that would force political union. The sheer tragedy of the whole thing makes that idea preposterous.

The problem is that Germany won't tolerate surrendering their wealth for fiscal transfers or debt collectivization without EU control of member state budgets. And equally intolerable is the idea that a democratic government could have such an integral component of sovereignty as their budget vetoed by foreign bureaucrats.

Editor Ambrose Evans-Pritchard of the Telegraph has repeatedly called EMU an 'infernal machine,' designed to lock reunified Germany into Europe but ironically creating German dominion over it.

1 ( +1 / -0 )

Is the Eurozone still better than the alternative?

1 ( +1 / -0 )

SuperLib:

No, it is not, but try to tell that to the Euro politicians. They are hell-bent on doubling down in the wrong direction.

0 ( +1 / -1 )

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