That you do not grasp that the cause of massive unemployment world wide was the recession is beyond my ability to teach. I am reminded of a Samuel Johnson quote "I have found you an argument. I am not obliged to find you understanding".
What does unemployment have to do with cutting Government spending? Your argument is ridiculous. It's hilarious the hoops people will jump through to protect a failed ideology rather than just trying to understand things logically. Making excuses for why Greece started their austerity measures does not change the fact that they reduced the size of their government by cutting government spending and public sector employment. Those are facts that cannot be argued against, lol. And by doing so really discredits pretty much anything else you say. It's just pure dishonesty.
Your use of 'facts' reminds me of another similar use... he also had a unique way of stretching the truth while indignantly pretending it was not so...
I disagree with Paul Krugman: It's what happens when a country(Greece) is too dependent on government(public sector) spending anyway. Actually, the entire world is more dependent on the public than private sector. Hence, why it's a national debt economy(as Aki points out). However, this truly isn't sustainable for the long run as eventually we won't have the capital to pay off the debt. Which is what happened in Greece. Greece's economic output did not match its intake. The economic solution may not necessarily be Austerity in of itself, but rather ways in which we can increase economic production, while paying down the debt in a safe, responsible manner so that it's not a ticking time bomb. Particularly here in the US, every child is born to at least $50,000 in debt. We can't afford that.
You have to be a legit crazy person to see this graph and pretend Greece did not reduce government spending. I mean, legit crazy!! - - - Updated - - - We will always have the capital to pay off our debt. We are nothing like Greece. Greece is more like South Dakota in our system. Just a dependent state, whereas the US is not dependent on anyone and can always pay back it's made up debt.
Greece has run out of lemons. Liberal logic is what did them in. And right on schedule, they blame everyone else for not giving them more money. I wouldn't give Greece a single dime.
So they succeeded when they had lemons but failed when they didn't. What a shocker. You guys seem really intelligent!
Greece certainly did not decrease spending because of any decision it made. The world economy forced it.
What's odd in this thread is that "now", Greece is in crisis since years and years ago. What EU has done wrong has been to sustain that crisis. Merkel wanted to enlarge the German sphere of influence and Greece was vulnerable to external pressures. Now [in this case now for real], we risk to generate a precedent: debts have to be payed, there are no other possibilities. So, to avoid that, it's necessary to find a way to make Greece pay, without killing its economy in a while. The referendum has said that the conditions imposed by EU were unacceptable for Greek people [let's leave a part all the consideration regarding the opportunity of that referendum]. Ok, let's negotiate different conditions ... Or let's leave Greece follow its destiny ...
Horse(*)(*)(*)(*). The condition of bankruptcy has legal status in just about every country in the whole entire world. And personally, I make it an iron-clad policy to never repay anyone who tried to screw me. You can ask anyone, I am well known for telling my creditors to "go straight to hell" under those circumstances. Once a bank refused to give me 20 dollars for a tank of gas, when my son swallowed an earring and I had to race to San Francisco (from LA) to get to the hospital. Halfway there I realized I'd forgotten my wallet on the way out the door, and all I had was the credit card in the glove box. I tried using the card at the pump, and it got denied. So I called the bank (this was on a Sunday night, but I got through on their 24-hour customer service line), and I explained the situation, and they refused to help. In spite of the fact that I had over two hundred thousand dollars on deposit in another account with that very same bank. Well, that refusal cost the bank 2800 dollars. And they ding'd my credit for a year or so, but I don't care. I will never do business with that bank ever again, as long as I live, and I badmouth their name to all my friends and neighbors, I tell such horror stories that no one will open an account there. They're screwed for life, because they made me pay for the privilege of doing business with them, and when I really needed help they were nowhere to be found. Such "Creditors" can go straight to hell, as far as I'm concerned. And no judge on the planet is going to throw me in jail once I explain (and prove) the situation. Sorry, there are no absolutes in this world, for debt or for anything else. ROFL! Are you German? "Make Greece pay?" You must be German.... Too late. You had your chance. Bingo. That would be the smart move.
May be I get you wrong ... I you saying that Greece can refuse to pay its debts because they had generated by a bankruptcy? It's like to say that if a society faces bankruptcy, the new administration getting loans to make the society restart [in Italy it would be a different society, bankruptcy means end of original society, usually] can say to creditors: "it wasn't my fault I needed that money, I won't give it back to you". Is this your opinion?
It's more than just my "opinion". It's an institutionalized financial system, recognized by every country in the world. Are you not familiar with the concept of "credit default swaps"? These are traded on the open market, they are backed mostly by insurance companies, and they're basically bets on whether a country (or corporation) will go belly up. In the case of countries, they're called "sovereign" credit default swaps. They assume that there is a non-zero probability that any country in the world may become insolvent at any given moment. In fact, the CDS rates are used as an indicator of the stability of the country and the likelihood of political upheaval. https://en.wikipedia.org/wiki/Credit_default_swap All I'm telling you is, I make it a personal policy never to repay anyone who screws me. My m.o. is: if you screw with me, I'm going to screw back - and twice as hard. And, on the flip side of the coin, I am meticulous about paying back the people whose loans fulfill their intended purposes, and who've been straight with me all the way down the line. You can ask anyone, my reputation is sterling and I have no problem getting money any time I need it. You can not "force" a country to pay, it just can't be done. There's no international court to hear the case, no international judge to rule on it. And, countries create their own currencies, they don't just go "bankrupt", they do different things like "restructure" and "redevelop" and so on. Really, the issue is not "why you needed the money", that is of no consequence.
People just have a difficult time differentiating between running a country vs running a lemonade stand or running a household. The debt that is being incurred is through banks and governments. It's the people that are dependent on money to be able to produce and consume within a society that get destroyed by austerity. The real economy is what gets destroyed by austerity. The whole debt thing is simply a battle between banks and governments. But at the end of the day, a country needs money and you have a system in the EU where to get money you have to borrow it. It completely destroys the weaker countries and it will always destroy them as the more productive countries will acquire more of the money. To some this might seem logical as survival of the fittest type approach, like the best lemonade stand. But to others this is illogical because it is an unnecessary restraint on an entire society. People need money, having a limited amount where competition ensues between different societies is ludicrous. The weaker ones will always be destroyed as they cannot compete with the countries that have more resources. It would be like having California compete against Kansas. California would win that battle every time simply because it's mass resources. The US doesn't have that problem though since we have one unified monetary system and states do not have to compete for some "limited funds". It's what separates the US from the EU and something the EU will have to consider in the future. There is no reason to have countries battling for "money", money should be provided as necessary to increase productivity. As seen in the EU, they do not have a great track record with having all these losers and one real big winner. America would be destroyed if states like California and New York were in competition with the weaker states. They'd have no chance. This is absolutely nothing like business or lemonade stands. This is a higher level of organization that is necessary. People need money available to produce. It's just how it works. And since our systems are set up to introduce money through debt, debt is simply a necessity for money to be available. There is no similarities between Greece and the US. There are no similarities between a monetary system and a lemonade stand. Until people understand that, they will never understand why austerity destroys countries or why debt is necessary.
The point is just to avoid that ... if Greece won't pay back its creditors, the consequences will be quite easy to predict: economical troubles for the mentioned creditors [they will loose their credits] and the interruption of the flux of Euro from BCE to Athens [it has already happened, substantially]. This will simply mean that Greece will issue its own money again. No one can force Greece to pay, like Greek people cannot force the other EU members to give Euros as a present ...
Debt between countries isn't even real debt, it's more like a "trade imbalance". You've heard that "we owe China a lot of money", well.... if you check the listings you'll find that China owes us a lot of money too! Countries buy each others' notes, and there's no metric that lists "net" debt, only the amount actually owed. The stinger on these debts is that the interest has to be paid in cash (ie in the currency of the country holding the note). So, if you're having cash flow problems, you're probably going to have to borrow more anyway, even if you have plenty of assets. This is why we get provision in international loans, which state that creditors can "take the property" of the country, and in reality this is somewhat nonsensical because no country will let another country take its national parks or its monuments (or at least there'll usually be a war first). And when it comes to a bank taking a country's property, fuggetaboutit. The country's new leaders will do exactly what I do, which is tell the creditors to go to hell and start over.
It's kind of weird that you find it so amusing that you don't pay your debts back. You are not the keeper of a society and should not act like one. With that said, EU country debts are not the same as other countries. Other countries are not having problems paying back debts like Greece and Spain. Completely different monetary systems. The US will never have to tell another country that it does not have enough of its made up money to pay them back.
I think one of the biggest problems people have is understanding the difference between a monetary system and a business. The key thing to understand that separates the two is a monetary system is not in competition for resources. It is pretty much a form of "infrastructure". It's basically management and organization to effectively maximize the use of resources and labor. So people think the government is in competition with the private sector. As much as conservatives hate to say it, the government is above the private sector when it comes to the monetary system as it can take on debt with itself to infinity. They have the ability to manage the monetary system through this debt. It is completely different form of debt than the private sector. The private sector is the ones in competition for this money and resources. Just like Greece is in competition with other members in the EU. Greece has absolutely no similarities to the US and it's monetary system. It is a member of the system competing for the systems resources. The US does not have any competition for its money. It owns its money, just like China, Japan, Australia, Canada, etc. There is no problems with those countries paying off debts denominated in their own made up currencies. So people keep acting like Greece is an example of what happens when you have too much debt. Greece is an example of what happens when you are a competitor within a system, just like a household, lemonade stand, etc. They basically agreed to screw themselves by restricting their ability to produce based on how competitive they are within their system. This is the flaw of the EU and it will continue to be until they organize themselves like the US. But that probably will never happen because their countries will never agree to behave like our states.
Reading comprehension? It's not amusing, it's a policy. Maybe you could go back and read my post again? Excuse me? Hell YES I'm the keeper of a society. I have a wife and two kids. That's woefully optimistic and highly delusional.
MOD EDIT - Rule 3 When life hands you lemons, you make lemonade. What did Greece make out of their situation?
Monetary systems are out of your league. Stick to lemonade stands. Something you can handle. - - - Updated - - - Not delusional at all. Just a basic understanding of economics. You should just ask questions. And you being so proud of not paying your debts back is very creepy.
A whine fest....and a temper tantrum...as I type the DOW is down 175 pts...Some of that might be do the the Chinese meltdown, not being reported here at all.
Most people don't like to admit that they created their own catastrophe. And it is the sign of a true idiot to double down on what caused the problem in the first place. And to go even further, to whine, blame and throw a temper tantrum when the tit is put back under the shirt, it shows how it is the time to grow up. MOD EDIT - Rule 2
http://www.wsws.org/en/articles/2010/07/arms-j15.html "In the past few days, press reports have revealed that with the aid money to Greece, Germany and France were not only seeking to save their own banks. They used these loans as a means to pressure Greece into agreeing to huge arms deals. While in the foreground Merkel and Sarkozy argued about the correct policy prescription for Greece, demanding the Greek population accept massive social cutbacks, behind the scenes they sought to satisfy the interests of their respective defence industries. According to press reports, the arms deals were one of the informal conditions in order for the EU and the IMF to grant loans to Greece." By Johannes Stern 15 July 2010
