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Title: Greece: The Debtor that Roared
Source:
Naked Capitalism
URL Source: http://www.nakedcapitalism.com/2011 ... ce-the-debtor-that-roared.html
Published: Nov 2, 2011
Author: Yves Smith
Post Date: 2011-11-02 09:46:53 by lucysmom
Keywords: None
Views: 3600
Comments: 8
Greek Prime Minister George Papandreou has managed to put the European crisis game of financial fakery into turmoil. Pretty much no informed commentator expected the latest gimmick-larded rescue package to work; there were simply too many points of failure. And even if this program had miraculously come to fruition, a later train wreck was still inevitable, since Germany was persisting in wanting two contradictory outcomes: running trade surpluses in Europe, and not lending more to its trade parters. But no one anticipated that a long suffering debtor would revolt, which is what Papandreou’s announcement of a referendum on the punitive bailout amounts to. He’s publicly coded it in securing Greek support for the deal, but this is actually a clever form of brinksmanship. As Marshall Auerback and Rob Parenteau foresaw, Greece is engaging in a Samson-like gesture of pulling down a much bigger structure to end its misery. snip The goal of Papandreou’s move presumably is to renegotiate the terms of the deal imposed on Greece. To get the heretofore dictatorial Troika to take him seriously, he’s effectively threatened the nuclear option of blowing up the rescue package, which means default. And the disruption of a default suddenly changes the calculus of a Euro exit. The incremental short-term damage would not be that much worse, and the longer term benefit of regaining sovereignity, controlling its currency, and as a result, being able to depreciate the drachma would likely more than offset the costs. (Remember, the advantage of Greece staying in is to fund its budget deficit. But with the rescue packages so punitive that the Greek economy is shrinking faster than its debt levels are, the advantages of cooperation look to be illusory).
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#1. To: Not Badeye, A K A Stone, Fred Mertz, Godwinson, go65, war, no gnu taxes, Skip Intro, ferret mike, jwpegler, mininggold, brian s, mcgowanjm (#0)
If insanity is doing the same thing over again expecting a different result, then the IMF's (and US conservative) austerity prescription is insane.
#3. To: lucysmom (#1)
And this will continue world wide. It's the Law of Receding Horizons. Until only the FedREs with it's Unlimited Expanding Balance Sheet is left. Or until a Critical Mass of folks who can no longer be excluded riots...
They are trying to blame it on the fact that Greeks can retire earlier and at higher rates than most of us in the US. A bad, bad, bad, bad, thing according to 'experts'. Yet the banks still extended them credit.
Top • Page Up • Full Thread • Page Down • Bottom/LatestBut with the rescue packages so punitive that the Greek economy is shrinking faster than its debt levels are, the advantages of cooperation look to be illusory
Replies to Comment # 1. the Greek economy is shrinking faster than its debt
#5. To: lucysmom (#1)
If insanity is doing the same thing over again expecting a different result, then the IMF's (and US conservative) austerity prescription is insane.
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