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Old Feb 4th 2015, 03:59 AM
Tom Palven Tom Palven is offline
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Default Why Greece must declare Bankruptcy

Why Greece must go bankrupt:

http://www.lewrockwell.com/2015/02/d...ankster-debts/
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Old Feb 5th 2015, 05:35 AM
Tom Palven Tom Palven is offline
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Default Re: Why Greece must declare Bankruptcy

The first thing most elected politicians try to do is line their own pockets with cash from somewhere, anywhere.

Secondly they begin their re-election efforts.

A fellow at another forum described what is going on in Greece at the moment as "Delay and Decay," while the politicians attend to their priorities.
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Old Feb 5th 2015, 09:33 AM
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Default Re: Why Greece must declare Bankruptcy

I'm no economist, but I'm inclined to think that Stockman is waving away some massive problems in his proposed scheme. Or rather, he's choosing to ignore them because his focus isn't actually on restoring fiscal stability to Greece but sticking it to the European financiers; he notably spends more space explaining why they are bad and should experience losses than he does detailing how Greece would actually survive a bankruptcy.

For example, from the article:

Quote:
"And notwithstanding the tough choices that would have confronted a new post-bankruptcy government, the resulting period of austerity and fiscal self-discipline would have had a therapeutic purpose. That is, to enable the Greek state to function without new borrowings and to eventually restore its credit in the international capital markets."

"Moreover, after a 2-3 year debt service suspension needed to stabilize its economy and public finances, it can live with a modest primary budget surplus for years to come..."
That's a stupendously vague and optimistic vision of how Greece would get out of its hole after it went bankrupt. Here are just a few problems that leap out at me:

1) Stockman seems to believe that the Greek people are remarkably patient and long suffering and will happily elect fiscally responsible representatives who will impose the necessary internal austerity to create a budget surplus and not engage in inflationary policies. The history of Greek finances suggests that this is not the case. It seems much more likely that, once Greece is in charge of its own currency again, and has the option of solving its problems by printing more money, it will be unable to resist the temptation to do so. Or rather, that any government that refuses to do so and thus imposes brutal short-term austerity on the people in the hopes of long-term stability will promptly be replaced by a government promising to ease the pain by printing money. Maybe the Greeks are, as a people, sufficiently focused on the long term and willing to suffer in the short term...but it seems doubtful.

2) Stockman says nothing about the impact renouncing the Euro will have on international investment. I suggest that European companies would flee the country like rats off a sinking ship, fearing the seemingly inevitable inflation that would follow a bankrupt country, with no credit, suddenly given the power to print money. It would probably be the end of new foreign investment as well, at least for the foreseeable future. Corporate tax revenues would plummet, making even more difficult to create a balanced budget, raising personal taxes and imposing even greater austerity.

3) Stockman suggests that Greece will "eventually restore its credit in the international capital markets." He does not suggest when that "eventually" will be. Even if everything else went as Stockman proposes, I can only image it will be a cold day in hell before the international capital markets risk any substantial money investing in a country that so prominently said "Screw You!" to its last set of creditors and then changed its currency.

4) Finally, Stockman seems to assume that the creditors will quietly accept the sudden loss of billions of dollars when Greek repudiates its debts. It seems more likely that they will use their considerable influence on their own governments to pressure Greece into a more moderate settlement, either by trade sanctions (which would be much easier to impose once Greece left the Euro) or the seizure of Greek assets.

Some of those objections may have more merit than others, but in general I suggest that Stockman's vision of a bankrupt Greece becoming a shining example of fiscally responsible democracy is far-fetched. An equally likely scenario, to my mind, is that his proposal results in massive over-inflation of the drachma, followed by the economic isolation of Greece and a plummeting quality of life, followed by the collapse of democratic government as the desperate people embrace an authoritarian solution.
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Old Feb 5th 2015, 06:36 PM
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Default Re: Why Greece must declare Bankruptcy

Quote:
Originally Posted by Tom Palven View Post
A fellow at another forum described what is going on in Greece at the moment as "Delay and Decay," while the politicians attend to their priorities.
This appears to be a valid description of the political priorities in just about every western country these days, not just Greece.
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Old Feb 5th 2015, 06:50 PM
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Default Re: Why Greece must declare Bankruptcy

Quote:
Originally Posted by dilettante View Post
I'm no economist, but I'm inclined to think that Stockman is waving away some massive problems in his proposed scheme. Or rather, he's choosing to ignore them because his focus isn't actually on restoring fiscal stability to Greece but sticking it to the European financiers; he notably spends more space explaining why they are bad and should experience losses than he does detailing how Greece would actually survive a bankruptcy.

For example, from the article:
Indeed. A formal Greek bankruptcy serves the interest only of those who believe that German-French banks deserve to be punished for their sins - since it grates on people that the big US banks managed to avoid being punished after their sins. From a political perspective, financially punishing the big banks in a brutal way is a necessary and long overdue priority if the whole enterprise of western liberalism is to survive.

But it should be realized that such a policy might not necessarily serve the interests of the Greek people.

Quote:
Originally Posted by dilettante View Post
That's a stupendously vague and optimistic vision of how Greece would get out of its hole after it went bankrupt. Here are just a few problems that leap out at me:

1) Stockman seems to believe that the Greek people are remarkably patient and long suffering and will happily elect fiscally responsible representatives who will impose the necessary internal austerity to create a budget surplus and not engage in inflationary policies. The history of Greek finances suggests that this is not the case. It seems much more likely that, once Greece is in charge of its own currency again, and has the option of solving its problems by printing more money, it will be unable to resist the temptation to do so. Or rather, that any government that refuses to do so and thus imposes brutal short-term austerity on the people in the hopes of long-term stability will promptly be replaced by a government promising to ease the pain by printing money. Maybe the Greeks are, as a people, sufficiently focused on the long term and willing to suffer in the short term...but it seems doubtful.

2) Stockman says nothing about the impact renouncing the Euro will have on international investment. I suggest that European companies would flee the country like rats off a sinking ship, fearing the seemingly inevitable inflation that would follow a bankrupt country, with no credit, suddenly given the power to print money. It would probably be the end of new foreign investment as well, at least for the foreseeable future. Corporate tax revenues would plummet, making even more difficult to create a balanced budget, raising personal taxes and imposing even greater austerity.

3) Stockman suggests that Greece will "eventually restore its credit in the international capital markets." He does not suggest when that "eventually" will be. Even if everything else went as Stockman proposes, I can only image it will be a cold day in hell before the international capital markets risk any substantial money investing in a country that so prominently said "Screw You!" to its last set of creditors and then changed its currency.

4) Finally, Stockman seems to assume that the creditors will quietly accept the sudden loss of billions of dollars when Greek repudiates its debts. It seems more likely that they will use their considerable influence on their own governments to pressure Greece into a more moderate settlement, either by trade sanctions (which would be much easier to impose once Greece left the Euro) or the seizure of Greek assets.

Some of those objections may have more merit than others, but in general I suggest that Stockman's vision of a bankrupt Greece becoming a shining example of fiscally responsible democracy is far-fetched. An equally likely scenario, to my mind, is that his proposal results in massive over-inflation of the drachma, followed by the economic isolation of Greece and a plummeting quality of life, followed by the collapse of democratic government as the desperate people embrace an authoritarian solution.
I'm a bit agnostic on this issue. On the one hand, I certainly would like to see a formal Greek bankruptcy that really screws the big French-German banks that definitely deserve it. But we all know that isn't going to happen. The IMF and the World Bank exist to serve the interests of western bankers and financial elites, not Greek people. So any default by the Greeks is just going to produce another bailout/reward for the western banks anyway, because the whole Euro-economy will be spooked by it. The short-sellers will have a field-day.

On the other hand, there is the example of Argentina. They have defaulted and bankrupted several times. The evil financial armageddon that everyone always predicts, never comes to pass for Argentina. They struggle for a few years and then settle down again.

Either way, as I've said all along, Greek solvency is ultimately more important to European bankers than it is to Greek people. That's the real politics here and that's something the ruling elites need to come to grips with.

And it is hard to have sympathy for Greece. They are a poor country and always have been. They've never had the dilligence or industriousness (or economic blessings) to support the wealthy western lifestyle they've grown accustomed to - and in this they are not alone. The shit is hitting the fan, Greece is just one of the early casualties. The problem here is way bigger than Greece.

All that being said, I believe that they'll patch it up and muddle through. The Eurocrats must if the project of Europe is to survive. They'll just keep playing the same old bailout games because to do otherwise is to face an abyss that no one understands.
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Old Feb 16th 2015, 07:27 PM
Tom Palven Tom Palven is offline
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Default Re: Why Greece must declare Bankruptcy

It looks like it might boil down to Magical Mystery Bonds, the kind that kept Detroit politicians in fat city for awhile.
http://www.bbc.com/news/business-31485073
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Old Feb 17th 2015, 08:54 AM
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Default Re: Why Greece must declare Bankruptcy

Let's put that Greek debt in perspective shall we.

http://www.bbc.com/news/business-31016446

Apple alone, just one company, is sitting on $158 billion (89% of (142+35), see article) in off-shore accounts which they literally don't know what to do with. None of that has ever been taxed and it's not likely it ever will.

http://www.forbes.com/sites/frederic...re-study-says/

A very conservative estimate indicates that all together at least $21 trillion is sitting in what is essentially a criminal circuit. Now, if this were Joe Average's money all of it would be confiscated and Joe would pay a 200% indemnity on top of it (rate may vary according to local legislation) for tax dodging.

But let's be generous with the mega corporations, the monarchs, the hedge fund managers and other assorted scum and only apply a flat rate of 30%. Now, that would return $6 trillion (and probably a lot more as the estimate is almost certainly far too low) to society. Scrapping Greece's 'debt' would barely make a dent in it.

Problem solved.
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Old Feb 17th 2015, 10:43 AM
Tom Palven Tom Palven is offline
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Default Re: Why Greece must declare Bankruptcy

Quote:
Originally Posted by Dominick View Post
Let's put that Greek debt in perspective shall we.

http://www.bbc.com/news/business-31016446

Apple alone, just one company, is sitting on $158 billion (89% of (142+35), see article) in off-shore accounts which they literally don't know what to do with. None of that has ever been taxed and it's not likely it ever will.

http://www.forbes.com/sites/frederic...re-study-says/

A very conservative estimate indicates that all together at least $21 trillion is sitting in what is essentially a criminal circuit. Now, if this were Joe Average's money all of it would be confiscated and Joe would pay a 200% indemnity on top of it (rate may vary according to local legislation) for tax dodging.

But let's be generous with the mega corporations, the monarchs, the hedge fund managers and other assorted scum and only apply a flat rate of 30%. Now, that would return $6 trillion (and probably a lot more as the estimate is almost certainly far too low) to society. Scrapping Greece's 'debt' would barely make a dent in it.

Problem solved.
So you're saying that taxpaying workers in France, which is the biggest lender to Greece, and others, should just forgive the Greek debts, and maybe lend the powers-that-be in Greece more money, so that they can continue their profligate ways?

France has its own debts. Its almost like the US, $18 trillion in debt, giving $1.3 billion in military aid to Egypt last year. Lucky that the US is a "consumer-based economy" and needs to spend more than it earns.
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Old Feb 17th 2015, 02:30 PM
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Default Re: Why Greece must declare Bankruptcy

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Originally Posted by Tom Palven View Post
So you're saying that taxpaying workers in France, which is the biggest lender to Greece, and others, should just forgive the Greek debts, and maybe lend the powers-that-be in Greece more money, so that they can continue their profligate ways?
This isn't about countries, it's about the self-proclaimed financial elite vs. every one else. Those who benefited from the Greek 'debt', i.e. the Greek oligarchs, are the very same type of people who hold the offshore accounts. It's ordinary people who pay for this massive global theft. The taxpayers anywhere don't have to contribute a thing, the offshore account holders do, whatever their nationality.
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Old Feb 17th 2015, 07:11 PM
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Default Re: Why Greece must declare Bankruptcy

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Problem solved.
That would of course depend upon who is defining 'the problem'.

Debt is the financial instrument that makes our modern world go round. It is addictive and destructive - but highly profitable.
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