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You see Greek is like a household. The Greek household has many members, the ~old~ people who get allowances, the young who are unemployed, and a few working age adults that bring in the income to support household. Here is a simple analogy to explain what happened with Greek. 1. A new neighborhood association was created called the EU/EZ, this neighborhood had strict requirements to join. 2. The Greek people all voted for politicians who would allow them to move into the new neighborhood, since the Greek don't pay their bills they knew the corrupt uncle who had been running the family for 30 years. 3. In order to do so the corrupt uncle went to a bank called Goldman Sachs, to borrow a large amount of money every year for several years, this allowed the Greek to lie to the neighborhood association covering up the fact they were running a 15% deficit and not a 3% deficit. 4. The Greek was able to trick the EU/EZ into letting them in. 5. The Greek household was issued a new credit card with low low German rates, they immediately used this credit card to throw a big party called the Olympics, they then used it to get a big cash advance and pay off their old debts. 6. Unfortunately the Greek household kept using the credit card, the deficit never shrunk below 15%, and the households debt grew to be 125% of the value of the whole house and all the household's income. 7. What did the Greek spend the money on? Well they let some of the workers retire early, they gave them better allowances, they hired many family and friends to sit around and watch TV all day, everyone in the household forgot how to work, tend the garden or even do their own laundry. Most importantly many corrupt deals for the friends of the corrupt uncle were made to pay for things the Greek household didn't need like new cars and such. 8. The neighborhood economy had a crisis and the bank which issues the credit card to Greek realized that Greek would be unable to make the payments on the card as reliably as Germany. 9. The rate on the card went up and the Greek was now unable to use it at the pay day loan store to roll over all their old debts, let alone keep a 15% deficit going in the family budget. 10. Greek told his neighbors he would have to leave the association if they did not help him pay his bills, they responded with giving the Greek lots of money to help, in return the Greek had to make a few changes so the money the household earns would be enough to support the Greek household. 11. The Greek took the money but did not make the changes, so things got worse, another set of loans was needed, these loans were even better as they let the Greek lower his rates and extend the term on his old credit card bills. 12. Again the Greek did not make the changes needed to live on what he earns, in fact he chose new head of household specifically who would tell his neighbors that he demands free money and doesn't want to make any changes or he would burn down the neighborhood. 13. The neighbors offered another sensible loan with changes needed to allow Greek to live within his means, the Greek said no, then the whole household had a family meeting and they all voted no. 14. The Greek went to the bank to get monies, and his card didn't work, only now did the Greek realize that he should have been making changes to his lifestyle over the last 5 years so he could live within his means. 15. The Greek finally accepted a new loan from his friends to let have enough to eat, and promised to finally make the changes and get rid of the of the many corrupt uncles he had let come live in his house. 16. Will the Greek keep his word this time?
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Jul 19, 2015 23:38
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Pohl posted:This is a post, in video form. I realize it is an hour, but it is well worth that hour. He talks about a lot of poo poo even I don't understand, but he also talks about and explains a lot of the stuff I learned in school or picked up on my own time. Overall, unless you are willing to read books and books of information on this topic, this video should at least be a good primer. Thanks, i've seen bits of it before but at this point i'm pretty much obligated to see the whole thing to keep posting in good faith. I'll report back with my exciting "lovely goon who knows barely anything about economics" insights and criticism.
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Jul 19, 2015 23:57
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KingFisher posted:You see Greek is like a household. If you're comparing national economies to households you're already way outside of economic reality.
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Jul 20, 2015 00:01
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KingFisher posted:4. The Greek was able to trick the EU/EZ into letting them in. 4. With a nod and a wink, the EU/EZ let Greece in, knowing full well their finances weren't what they said they were. KingFisher posted:11. The Greek took the money but did not make the changes, so things got worse, another set of loans was needed, these loans were even better as they let the Greek lower his rates and extend the term on his old credit card bills. 11. Greece took the money and passed three austerity packaged in 2010, satisfying the EU/EZ requirements. It passed further austerity packages at it's creditors behest in June, 2011, February and October 2012, and July of 2013. A bit of reality kind of changes the tone there, a little, doesn't it? A bit less "Greece is bad with money and needs to pay up" and more "there are systemic problems in the EU/EZ and everyone is at fault".
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Jul 20, 2015 00:17
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Farmer Crack-rear end posted:The people who sincerely push austerity as necessary (instead of as a cynical ploy to get their money out or whatever) basically believe that the To avoid debt you do need to not spend too much and take in enough revenue. That's true everywhere all the time. This thread is horrible as far as people actually understanding what they're discussing.
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Jul 20, 2015 00:33
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Abner Cadaver II posted:If you're comparing national economies to households you're already way outside of economic reality. Correct me if I am wrong, but most of the reason the household analogy for governments is stupid is because governments control the money supply. If they don't, as in the case with the euro, does the analogy hold? If it does, what does this mean for economics?
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Jul 20, 2015 00:51
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KennyTheFish posted:Correct me if I am wrong, but most of the reason the household analogy for governments is stupid is because governments control the money supply. If they don't, as in the case with the euro, does the analogy hold? If it does, what does this mean for economics? If a government has borrowed too much money then it needs to save more money. It's that simple. The household analogy is useful there. The thing that's not simple is determining the best way for the government to save more money. Austerity is the direct route: spend less/save more. The problem with this, and one way the household analogy breaks down, is that there is a feedback effect where drastic changes in government spending cause problems due to disemployment and the initial disruption of the rapid change. When the government stops spending it may cause it to earn less in the future.
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Jul 20, 2015 01:02
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KennyTheFish posted:Correct me if I am wrong, but most of the reason the household analogy for governments is stupid is because governments control the money supply. If they don't, as in the case with the euro, does the analogy hold? If it does, what does this mean for economics? If a government stops spending money then it shrinks its economy. All government spending goes back into the economy, as a rule, and without the redistributive force of government then money accumulates at the top and the people at the bottom run out of it to spend. If an economy is built on government redistribution (most are, because surprisingly it doesn't happen reliably if you rely entirely on private self interest) then taking that away fucks it up. Capitalism doesn't create wealth, it just concentrates it. Human labour creates wealth and capitalism can serve as a motivation for that, but it doesn't directly create it, and is actively self destructive because it relies on constant expansion to maintain profit. Redistribution is what offsets that in the absence of expansion. Ideally it turns the whole economy into simply a very overcomplicated and masked system to make sure everyone has enough stuff, while still pandering to people's urge to hoard wealth. But back to the first point, austerity in a household analogy is sort of like saying "I've over spent this week, so I will sell the car. This will solve my debt problem." OwlFancier fucked around with this message at 01:11 on Jul 20, 2015 |
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Jul 20, 2015 01:03
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asdf32 posted:If a government has borrowed too much money then it needs to save more money. It's that simple. The household analogy is useful there. The household analogy is never useful, ever. Even if a gov. doesn't control their own money supply. Well, I guess it might be useful if we accept that a government owes so much in credit card debt and other assorted debts, with fees higher than the balance they borrowed, so they can never afford to repay those debts because they can't afford the fees. That might be a good household analogy. That means we better let those countries declare bankruptcy and get out of the endless cycle of debt destruction! (something no austerity advocate has ever said, ever). <<<I edited that. Pohl fucked around with this message at 01:29 on Jul 20, 2015 |
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Jul 20, 2015 01:18
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Still waiting for a few examples where austerity worked well and everyone came out healthy and happy. C'mon, there has to be a few examples out there..??
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Jul 20, 2015 01:21
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Pohl posted:Still waiting for a few examples where austerity worked well and everyone came out healthy and happy. C'mon, there has to be a few examples out there..?? Austerity in the sense of not spending too much money works well for every country that isn't in a debt crisis.
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Jul 20, 2015 01:41
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asdf32 posted:If a government has borrowed too much money then it needs to save more money. It's that simple. The household analogy is useful there. No, this is dumb. You'll end up with a fallacy of composition over and over again. Greece has suffered two rounds of austerity and their debt has gone up. Their GDP is in the poo poo. They can't even print their own money to inflate or other currency shenanigans because they gave that up to join the Euro. Berk Berkly fucked around with this message at 01:49 on Jul 20, 2015 |
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Jul 20, 2015 01:44
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asdf32 posted:Austerity in the sense of not spending too much money works well for every country that isn't in a debt crisis. That isn't austerity, try again.
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Jul 20, 2015 02:11
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That analogy is the stupidest loving thing because not only have successive greek governments done everything they've been asked to by their lenders, those things have actually hurt the economy. What Greece have been asked to do has never been about making the country financially sound enough to pay off it's debts. It's entirely been about forcing them to sell off state owned property at exceptionally low prices, and to keep the Greek economy as bad as physically possible in order to create a large body of impoverished people desperate for even the worst paid, most demeaning and inhumane work. The lenders certainly don't actually have anything to lose if the debt is never serviced; but they do have everything to gain by loving the Greek people. The actual Greek bourgeois who took part in the creation of this mess are safely insulated from any consequences anyway.
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Jul 20, 2015 02:31
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HorseLord posted:That analogy is the stupidest loving thing because not only have successive greek governments done everything they've been asked to by their lenders, those things have actually hurt the economy. The IMF says greek didn't do what was asked of it, let alone more: http://blog-imfdirect.imf.org/2015/07/09/greece-past-critiques-and-the-path-forward/ Critique 3: Growth-killing structural reforms, together with fiscal austerity, have led to an economic depression: *Given the dismal productivity growth record of Greece before the program, a number of structural reforms were seen as necessary, ranging from a reform of the tax administration, to reduced barriers to entry in many professions, to reforms of pensions, to reforms of collective bargaining, to reforms of the judicial system, etc. *Many of these reforms were either not implemented, or not implemented on a sufficient scale. Efforts to improve tax collection and the payment culture failed completely. There was fierce resistance to open closed sectors and professions. Only 5 of 12 planned IMF reviews under the current program were completed, and only one has been completed since mid-2013, because of the failure to implement reforms.
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Jul 20, 2015 02:41
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Pohl posted:Still waiting for a few examples where austerity worked well and everyone came out healthy and happy. C'mon, there has to be a few examples out there..??1 Germany, Netherlands, arguably UK, Ireland, Iceland and Latvia . I know that Iceland is retrospectively often presented as the alternative to austerity but that is not true, if you look at the coverage in 2009-2011 the same groups that now point to Iceland as the shining example of non-austerity options for greece called Iceland a hopeless bitch made IMF follower of austerity. (hyperbole, but not too much) https://www.wsws.org/en/articles/2009/07/icel-j14.html (World Socialist Website) https://www.wsws.org/en/articles/2009/07/icel-j14.html quote:The government has given way entirely to the dictates of the IMF. In total, the government will save 70 billion kronur (€390 million) through spending cutbacks and reorganisation over the next three years, while at the same time increasing income taxes and charges on everyday items such as soft drinks to meet a budget gap of 170 billion kronur over the next four years. The planned tax hikes will account for up to 58 billion kronur. What wikipedia has to say on the Iceland success: quote:A second important factor is the success of the IMF Stand-By-Arrangement in the country since November 2008. The SBA includes three pillars. The first pillar is a program of medium term fiscal consolidation, involving painful austerity measures and significant tax hikes. The result has been that central government debts have been stabilised at around 80–90 percent of GDP. quote:That isn't austerity, try again Simple Definition of Austerity: Austerity involves policies to reduce government spending and or higher taxes in order to try and reduce government budget deficits. This is something most countries have done and is easily recognizable as "sometimes pretty sensible". If we go back to greece, I dont think Pohl or others would argue that austerity in this sense and thereby a decrease in the defecit of greek spending after 1995 would have been a bad idea. As far as I know there is no discussion what so ever that the greek crisis is in large part the result of a government overspending borrowed money. Austerity =/= austrian economics. IAMNOTADOCTOR fucked around with this message at 03:02 on Jul 20, 2015 |
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Jul 20, 2015 02:45
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KingFisher posted:The IMF says greek didn't do what was asked of it, let alone more: That's funny: "IMF" in 2012 posted:. ... quote:So, instead, Blanchard did something more subtle. He studied the IMF's previous economic forecasts. If a country is already struggling for other reasons, the forecasters are likely to have taken that into account. And what Blanchard found was surprising: IMF forecasts have been consistently too optimistic for countries that pursued large austerity programs. This suggests that tax hikes and spending cuts have been doing more damage to those economies than policymakers expected. (Conversely, countries that engaged in stimulus, such as Germany and Austria, did better than expected.) http://www.washingtonpost.com/blogs/wonkblog/wp/2012/10/12/imf-austerity-is-much-worse-for-the-economy-than-we-thought/ IMF and the World Bank have both been wishy washy as gently caress on this matter, but they have both released reports showing that austerity is horrible and that it doesn't work. Those reports were ignored in large part by the Governing bodies. IMF and the World Bank have payed a ton of money to really smart people to analyze all of this and they are completely ignoring those findings at an executive level because those findings don't fit their agendas. Shocking. Pohl fucked around with this message at 02:52 on Jul 20, 2015 |
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Jul 20, 2015 02:50
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I disagree with you about the effects of austerity, but to say Greek has done everything that was asked of it and more is disingenuous. The latest bail out program wouldn't have many of the previous reforms as conditions if they had kept their word.
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Jul 20, 2015 02:57
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KingFisher posted:I disagree with you about the effects of austerity, but to say Greek has done everything that was asked of it and more is disingenuous. so why do you insist on using an adjective as a proper name is it because you're shockingly ignorant? i posit that this may be the case
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Jul 20, 2015 02:59
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V. Illych L. posted:so why do you insist on using an adjective as a proper name I am using it as pejorative, to demean the greek, they brought this on themselves, they are children unfit to govern themselves. They voted for the corrupt politicians, to maintain inefficiency in the economy and the system of clientelism. They lived high on the hog with easy credit and did nothing to improve their economy when given many opportunities to do so. They should reap what they sow, every last euro should be repaid. They voted for the good times, now they should pay the bill. (USER WAS PUT ON PROBATION FOR THIS POST)
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Jul 20, 2015 03:04
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KingFisher posted:I am using it as pejorative, to demean the greek, they brought this on themselves, they are children unfit to govern themselves. Is this "the greek" fellow named Zorba?
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Jul 20, 2015 03:35
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Berke Negri posted:Is this "the greek" fellow named Zorba? https://www.youtube.com/watch?v=gX8fkVSRC7k Terrible video quality, with a huge obnoxious watermark. But the quote is worth it.
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Jul 20, 2015 03:37
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Greece is like a household if the household is underwater in unpayable debt and like half of all total households are also in debt and all the banks are completely choked with the bad debt and if the household declares bankruptcy it will start a bank run and ruin the entire neighborhood economy.
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Jul 20, 2015 03:42
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Greece is a banana stand and the rest of Europe is the Bluth family.
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Jul 20, 2015 04:07
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KingFisher posted:I am using it as pejorative, to demean the greek, they brought this on themselves, they are children unfit to govern themselves. So even if we did live in your fantasy world of the Filthy Degenerate Greek - you think all the children who can't vote in that country deserve to suffer through "austerity"? Or all the Fiscally Responsible opposition voters?
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Jul 20, 2015 04:20
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Abner Cadaver II posted:So even if we did live in your fantasy world of the Filthy Degenerate Greek - you think all the children who can't vote in that country deserve to suffer through "austerity"? Or all the Fiscally Responsible opposition voters? The children do not "deserve" to suffer, but they do at the will of their parents, therefore any suffering a Greek child endures is at the direct will of their parents and the Greek nation. Likewise the responsible greeks while less guilty for the current situation are still culpable for the decades of corruption and clientielsim.
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Jul 20, 2015 04:43
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Well I'm sure that lots of flagellation will make that all better.
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Jul 20, 2015 04:45
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KingFisher posted:The children do not "deserve" to suffer, but they do at the will of their parents, therefore any suffering a Greek child endures is at the direct will of their parents and the Greek nation. When did this misanthropic fiction start to be the narrative?
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Jul 20, 2015 04:47
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OwlFancier posted:Well I'm sure that lots of flagellation will make that all better. flagellation won't help but there is a need for reforms, which politically the greek are unable or unwilling to complete in order to live within their means. It is wildly unacceptable that the greek demand a permanent system of transfers within the EU/EZ, the greek simply must learn to meet their own needs.
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Jul 20, 2015 04:52
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Berk Berkly posted:When did this misanthropic fiction start to be the narrative? Do you contest the basic fact that greek corruption, clientelism, inefficiency, profligate spending, and tax evasion coupled access to cheap credit was the cause of the crisis? The greek wouldn't be in this condition if they hadn't borrowed the money. The Germans didn't make them borrow those funds, the greek did this to themselves through the democratic process.
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Jul 20, 2015 04:53
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Which the current situation is proving splendidly efficacious at doing, of course.KingFisher posted:Do you contest the basic fact that greek corruption, clientelism, inefficiency, profligate spending, and tax evasion coupled access to cheap credit was the cause of the crisis? Wasn't it something to do with them being lent a bunch of money they couldn't pay back by people who really should have known better and now their creditors are basically demanding the sale of the country? I'm sure that was involved somewhere.
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Jul 20, 2015 04:54
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KingFisher posted:The greek wouldn't be in this condition if they hadn't borrowed the money. quote:The Germans didn't make them borrow those funds, the greek did this to themselves through the democratic process. False. KingFisher posted:It is wildly unacceptable that the greek demand a permanent system of transfers within the EU/EZ, the greek simply must learn to meet their own needs. Do you also support the fiscal abandonment of the South by the United States Federal Government?
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Jul 20, 2015 04:56
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KingFisher posted:access to cheap credit was the cause of the crisis? The EU/EZ wouldn't be in this condition if they were a proper monetary union rather than just a common currency; it's caused by structural problems in the EU/EZ rather than the retarded "Greek household budget" narrative that's being batted around. The problem that's happening with Greece was always going to happen to someone, Greece just got to the bottom first.
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Jul 20, 2015 05:00
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Smudgie Buggler posted:True, but they would also have been in roughly the same situation they are now fifteen years earlier if they hadn't. Oh? How did the big bad banks force the greek to keep taking loans? Did all those means EU banks point guns at the heads of the greek government and forces them to borrow? No all of the loans were taken out to pay for the waste, corruption, bribes, and lavish benefits the people demanded through the democratic process. If the Europeans wanted a transfer union and federal state then they are free to have one, since they have chosen not to have a fiscal, monetary, and political union it would behoove each state to behave accordingly. It would be just as foolish for the American south to behave like greek if it was in the same situation.
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Jul 20, 2015 05:01
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ductonius posted:The EU/EZ wouldn't be in this condition if they were a proper monetary union rather than just a common currency; it's caused by structural problems in the EU/EZ rather than the retarded "Greek household budget" narrative that's being batted around. The problem that's happening with Greece was always going to happen to someone, Greece just got to the bottom first. So explain to me how the "structural problems" of the EU/EZ forced the greek to borrow all that money? What I see is the greek people given access to cheap credit and greek government responding to the democratic inputs of wanting unlimited spending such that they could get away with it. What happened to greek is the natural consequences of a democracy on budgeting when given access to borrowing, greek is simply the first country in the EU/EZ to reach the point of failure first. The problem is the people/democracy not the EU/EZ.
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Jul 20, 2015 05:06
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KingFisher posted:If the Europeans wanted a transfer union and federal state then they are free to have one, since they have chosen not to have a fiscal, monetary, and political union it would behoove each state to behave accordingly. quote:It would be just as foolish for the American south to behave like greek if it was in the same situation. It was in a much worse position and was appropriately rescued by a non-psychopathic Union. Multiple times.
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Jul 20, 2015 05:06
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Look we can't expect banks and people who work in finance as their profession to be able to judge whether or not the well known perfidious Greek would be able to pay back their loans but we can drat well blame the Greek electorate for their cunning mass exploitation of the European banks!
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Jul 20, 2015 05:08
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Smudgie Buggler posted:Yeah man I'm 100% confident that Californians and New Yorkers would vote to keep propping up a mendicant Mississippi if it was taken to a plebiscite. I agree with you, and if the Europeans wanted the same system of unions and transfer payments they would put it in place. But they don't want it. The greek knew this and borrow anyway leading to ruin. So tell me how did the banks "force" the greek to borrow? How did the EU/EZ structure force the greek people to vote for the leaders who would borrow until they maxxed out the credit card?
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Jul 20, 2015 05:09
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Won't someone think of the poor oppressed bankers!
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Jul 20, 2015 05:10
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OwlFancier posted:Look we can't expect banks and people who work in finance as their profession to be able to judge whether or not the well known perfidious Greek would be able to pay back their loans but we can drat well blame the Greek electorate for their cunning mass exploitation of the European banks! Certainly, the greek took the loans, they knew what they could afford, they did this to themselves entirely through their democratic process demanding a standard of living they could not afford. The banks knew the risk just fine, and took them accordingly. Their action was entirely rational. So please won't someone tell me how the big bad banks forced the greek to take on all those loans?
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Jul 20, 2015 05:13
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