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Once Again, It May All Start with a Small Balkan Nation

DIGEST (New York Times, Wall Street Journal, Washington Post)

As reported in the New York Times, long lines are forming at ATMs across Athens. Withdrawals per account are limited to 60 euros a day–about $66. The banks have been closed for a week now, and there’s no indication of when they might reopen. In fact, Greek banks may be afraid to open their doors because skittish depositors might try to withdraw everything they can, or risk losing it all (as many in nearby Cyprus did during its last bank crisis).

Businesses are feeling the impact, too. Customers are cleaning out stores of large appliances, which many Greeks feel may hold their value better than money. Citizens are forbidden from transferring money in and out of the country, companies are issuing IOUs and letting employees go, and tourists are leaving in droves and canceling plans.

What exactly is going on?

The Grexit

On July 20, Greece faces economic armageddon. That is the date it must make its next payment on billions of euro owed to the European Monetary Fund, or face de facto expulsion from the eurozone. Greece’s exit, dubbed the “Grexit,” would by then simply be a product of necessity. With no euros to pay its civil servants and pensioners, Greece would have no choice but to print its own currency, probably some new form of the old drachma. If it did so, it would place itself outside of the eurozone, with its own currency trading against the euro.

For a simplified view of Greece’s troubles within the eurozone, watch this video.

Having borrowed over 271 billion in “rescue” loans just to stay afloat, the Greek government now finds itself with only about 2 billion euros left, and according to a 10-page proposal released late last night, is asking for 50 billion more. As the Washington Post reported, the package includes billions of dollars in further austerity measures including taxes on cafes, bars and restaurants.

Without that additional aid, Greece most assuredly will miss its next payment. In fact, it already missed its most recent payment of 1.56 billion euros owed to the International

To read more, continue to the next page. 

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  • kacruz

    This very well written piece explains the “Grexit” issue completely and objectively. Well done, Jay Kuo.

  • DaveH

    The UK was smart enough to stay out the first time. Doubt they will join in 2017. Greece first, Portugal next?

    • Our UK referendum in 2017 isn’t to join the Eurozone, it’s to determine whether we stay within the European Union or go independent of it.

      • DaveH

        Thanks for the clarification, Josh. What way duo you see it going?

        • No problem.

          I think unless there’s a major change between now and then, we’ll opt to stay in the EU. It’s the result I’d personally want myself as well. I’m not interested in ever converting to the €uro, but I believe the EU is a force for good generally speaking. And I’d rather be involved and have a voice within the union, rather than sitting on the outside without a say at all. As someone who might be moving to Norway in the next few years for University, I’ve learned a lot about the challenges of being a European country outside of the EU, which still requires an awful lot of abiding of EU laws.

          That being said, I do believe it’s time to put it to the vote. We’ve been so busy squabbling about our own little union (what with the Scottish referendum, and the different laws between Great Britain and Northern Ireland) that we’ve not paid nearly enough attention to the bigger picture. All these issues with the Middle East, and Syrian refugees, and the Greek banking crisis… they’re what we need to be focusing on in the years ahead.

          • pelirrojo

            Refreshingly well-informed. Thanks for your comments.

    • Louie Hill

      The £ was, is and will likely continue to be stronger than the Euro, there’s no point in joining. Most of the countries who joined the Euro had a LOT weaker currency than the Euro offered, so it was a benefit to them.

      • peter

        Only for as long as the banking bubble continues to be the focus, at the point when UK decides it really cant support financial institutes and “does an Iceland” then the £ collapses. Where is our core agriculture, manufacturing, development ? 🙁 “Stimulation” by getting houses built isn’t wealth creation, it is moving debt into more hands so the banks can flourish 🙁

    • pelirrojo

      “The UK was smart enough to stay out the first time”

      After Britain shunned the opportunity to join the EU in the 1950s, the collapse in demand for British goods in Germany, France, Italy and the Benelux countries undermined and then destroyed Britain’s manufacturing base over a 20-year period. After ten years outside the EU, the British economy was weeks away from complete collapse, with the leadership of both the Labour and Tory parties desperate to join the EU. Within five years of doing so, the British economy was almost completely restored, due to the direct benefits of EU membership. If the UK were stupid enough to leave the EU, the UK’s financial services industry would go the same way as its manufacturing industries did two generations earlier.

      “Doubt they will join in 2017.” First, presuming you are referring to the UK here, the UK does not need to join the EU in 2017, it is already a member. Second, if you are referring to the UK remaining within the EU, all opinion polls whether conducted privately or whether official polls conducted by the UK government or the EU put overall support for remaining in the EU at about 65% across the whole country and at about 60% among those eligible to vote in a referendum. What do you base your doubt on?

      Finally: “Greece first, Portugal next?: what on earth would give you the idea that Portugal, of all countries, would leave the EU? Of all Western European countries, none has benefited more from EU membership than Portugal. Support for the EU is higher in Portugal than anywhere except Germany, the Netherlands and Luxembourg. After a brief recession due to the bursting of a property-based bubble, Portugal’s economy is now ell on its way to complete recovery and within three years it will be stronger than ever, according to even the most conservative of current projections.

      Seriously, where do you get your opinions from?

  • Carlo van Erp

    What a load of bullshit. First of all, tourists aren’t leaving Greece. As a matter of fact, tourism in Greece is still booming. Second, there is no Grexit and there will probably never be a Grexit.

    • L R

      Wishful thinking on the latter. It will happen without intervention.

  • Ellen Eubank Staley Henry

    This doesn’t sound like the other things I have read. Greece’s loans could be easily forgiven. if they have paid off a lot of what was borrowed,,but the compounding interest is eating them alive. Thid is about Big Banks trying to control the world. Even the banks stockholders wouldn’t even miss anything. Iceland did the right thing..they threw out the bankers and said”bullshit” to their “debts…took over their banks..They are doing fine. Their Prime Minister wrote a great piece about this whole Greek business..about the banks trying to take over democracy to establish fascism with the banks in control.

    • Azbekkiem

      The situation with Greece within the EU and the situation within only Iceland cannot be compared at all. Also, the interest is indeed small, but Greece’s financial politics is ridiculous. Tsirpas and Varoufakis are arrogant, self-involved ignoramuses who bait their countrymen and tell them lies, instead of increasing taxes on the richest in Greece and having politicians taking a pay cut.

      • Boater39

        Sounds like America, to me….

        • Tomas Landberg

          The entire world actually, with very few and far-between exceptions.

    • John Hillman

      The banks and credit card companies could “forgive” your debts. How many can they “forgive” before the people that make their payments no longer get any consideration?

    • Louie Hill

      The lesson here folks is; much like how you should behave as a person, don’t borrow money you don’t think you can pay back.

      But whatever, in Ellens world we should just spend all the money we don’t have and then expect the person we borrowed money from to “forgive” us. Actually yes, Ellen, can I borrow £1 Million? I pwomise I’ll pay it back, but it doesn’t matter if I don’t right?

      • Right-BrainedIndividual

        The lesson here is for the banks not to lend out money they don’t have based on the expectation that they’ll be repaid, and then charge interest on top of that to demand more money than there even is to begin with.

  • Mark Noneman

    This article tries to blame everyone except those primarily to blame: the Greek government and the Greek people. Although they “faced” austerity, they never experienced it.
    As Margaret Thatcher once said: “The problem with socialism is that eventually you run out of other people’s money.” Greece has run out of other people’s Euros!

    • DustinCa

      What an inane and stupid argument, and with a quote from the idiot Thatcher to boot. The problem with *capitalism* is that eventually you run out of other people’s money. The efforts of welfare capitalism are only an attempt to redistribute what capitalism distributes poorly.

      As for the Greek economic crisis: the banks played loose and reckless with others the money of other people and now the general population must once again line the pockets of the bankers, the super-wealthy, and the capitalists.

      • Walter Liddy

        lol – Whatever ‘welfare capitalism’ is, it isn’t capitalism. Funny how historically the freer and economy is, the more wealth is generated. Your delusions don’t match any kind of facts.

        • Tomas Landberg

          I don’t find it funny, considering that a large majority of that wealth is generated from exploitation of poor people in less developed nations. Extreme wealth isn’t “generated”, it’s simply reflective of the amount of people and eco-systems being screwed over to transform it into cash. Everything has it’s price.

          • BillyBobSpeaks

            I totally agree. A huge driving force of capitalism is exploiting cheap labor to maximize margin, leaving a bare few “producers” at the top end of wealth, and the “unproductive” in the mire of poverty. Many of those same “unproductive” people work just as hard, if not more so, but get nowhere because of the artificiality of the entire system. It is not a meritocracy; it is, rather, a system fueled by cronyism, graft, greed, and profiteering, open only to a select few, who “reap and keep”. Thus, (a) far and few between are the anecdotal instances of a business formed with the success of all in mind, and (b) the notion of “trickle-down” provides little more than (cheap, likely generic brand) beer money for 99% of the U.S. population and — maybe — a slice of bread and a cup of lukewarm sewer water in a third-world country. What is more, some in the U.S. link capitalism with fundamentalist, Bible-based views, which is just plain offensive; Jesus’s teachings were utterly to the contrary.

          • Nils Sens

            you guys are so right, it’s a pleasure to read!

        • Right-BrainedIndividual

          Wealth isn’t “Generated”. Money is debt, collected and earned and used as tender in place of another debt in order to facilitate easier trade. The amount and value needs to grow proportionately to the workforce population, and also based on the demand of products.

          Interest is the only issue in the situation. Asking for more money than there is as a means of incentivizing repayment. It patently doesn’t work, and only creates more debts than there actually are.

          • Jim Walters

            Wealth is most certainly generated, by some form of the manufacturing process where raw materials are converted into finished goods that have a higher value than the combined value of the components as determined by the use of free markets to establish price. This is why the developed world rose more than a century ago, and why the developing world is rising today. Socialism cannot create wealth, because at its heart it is simply redistributing it. A little socialism is a necessary evil (public education, police and fire protection, civil defense, state road, etc.) The trick is to balance the good of the many with the free market system so the redistribution of wealth from the achievers to the non-productive members does not exceed what the performers can achieve (the killing the goose that lays the golden egg argument). The trouble with Europe is they have long forgotten this and the US is heading down that rathole now.

          • peter

            Jim you clearly don’t understand “socialism” and best way to help you learn is to look at all those terrible “socialist” nations most of which are running better debt, better growth, better education , better health and better societies. You are right when you take the worst off it looks bad, problem is do that with capitalism and it equally looks terrible or is the US and UK debt mountain something to be proud of ? Right now we are relying on moving money and hedge fund betting to “grow” those economies. Which as you point out is NOT generating real wealth, manufacturing does and the best long term manufacturers operate socialist policies – workers voice on boards, pay parity , workers benefits etc etc 🙂

          • Wilbur Bottom

            Can Communism create wealth? Communism is a more extreme form of Socialism. The last time I looked the Chinese were Communist, and they’re creating wealth hand over fist.

            The point here is that labels are meaningless. Just like free-market Capitalism isn’t what it claims to be. If that were so, the banks that screwed us all over would have gone to the wall, and the likes of Jamie Dimon, Dick Fuld, Lloyd Blankfein et al would be hanging from lampposts. Those icons of capitalism created wealth for themselves and their cronies at the vast expense of every ordinary tax payer in the country, many of whom lost homes or jobs and saw the value of their retirement funds decimated. The managed Capitalism of the financial services industry is just as destructive of creative industry in society as you imagine Socialism to be.

    • Wilbur Bottom

      You haven’t understood the situation. No amount of austerity is going to get Greece out of debt: as was pointed out, they shouldn’t even be in the Euro because they can’t meet the debt-to-GDP and budgetary targets to remain in. They have been keeping themselves afloat by cheap loans but all that happens is the money flows directly out back to the banks. Greece was lied into EU membership by Goldman Sachs cooking the books (showing that the debt was lower than it actually was and the GDP higher at time of entry). Greece is a permanent debtor nation/state unless it can attract e.g. the city of London to relocate, or grow its software engineering base, or sell more vacations and export significantly more olive oil. Even then it would still profit from and likely require leaving the Euro and re-establishing its own currency in the short term, and once it leaves, the chances of it being readmitted are very low-to-zero. So taking massive personal expenditure cuts in an economy that is already failing and has depression-era unemployment is only going to exacerbate the situation, requiring more bailouts, and on it goes with no end in sight. The Greeks are screwed whatever they do, but leaving the Euro will at least give them some control over their own destiny. The rich nations don’t want to prop up the poor nations in perpetuity and make themselves poorer as a result. But that’s what economic union requires. The project as it now exists, cannot continue.

      • Walter Liddy

        You just restated what the OP did. “The rich nations don’t want to prop up the poor nations in perpetuity and make themselves poorer as a result. But that’s what economic union requires.” is just a rephrasing of the OP’s comment.

        • Wilbur Bottom

          No, the OP stated that the Greeks have not experienced austerity, i.e. that the way out of the situation is with more austerity, which it patently isn’t. More austerity requires belt-tightening by the already squeezed Greeks, and not more money from the rest of the Euro Zone. The Greeks need less austerity, not more. The only feasible alternative is to exit the Euro, unless the EU/ECB and IMF are willing to continue giving “loans” to Greece. But that will just pile interest payments on already unsustainable interest payment, so we get back to square one which is that Greece is broke. What’s the way out?

    • Amanda LaVone

      So the solution is the complete breakdown of Greece, complete with bloody revolts? Has history taught us nothing?

      • peter

        Revolution worked well fro the American states facing UK taxation 😉

        • Wilbur Bottom

          That works when you can declare independence from your oppressor. In this case the oppressor are the banks making loans and demanding untenable conditions.

          The American separatists knew what was up. As Thomas Jefferson himself said (referencing American banks, but applicable to all banks as an institution that is only interested in its own profit at the expense of everyone else):

          “If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered.”

        • Wilbur Bottom

          PS, I realise you were being ironic, but I felt it was a good opportunity to include that quote from Jefferson 🙂

          • peter

            Liked it 🙂
            Iceland did a good start of independence.for.nation from bank by letting them fail and jailing the worst corrupters. Now of only a few more nations would have the courage of convictions

    • Earth-Lion Waratah

      Austerity is about punishing the poor for the greedy decisions made by the rich.

      • pelirrojo

        Absolutely, not to mention that it is the perfect excuse for transferring what little wealth the poor have into the pockets of the rich.

      • Jim Walters

        BS. Austerity is about punishing the entire country, rich and poor alike for the poor decisions of the leadership. The problem is, SOMEONE has to bail everyone out of the hole, and the pain has to be shared or you will simply pull the rich into the same hole and all will starve together.

        • pelirrojo

          So please enlighten us all: How does your view square with the fact that in all countries operating under austerity economic conditions, the wealth of the top 10% of income earners has INCREASED at unprecedented rates since 2009?

          Looking forward to your response.

    • Tynam

      …this is the same Thatcher who stole the national infrastructure built with other people’s money and flogged it off for less than it was worth to her rich corporate buddies, sticking the rest of us with a bill we’re *still* paying off for their “services”?

      Or is it the Thatcher who presided over the biggest boom-and-bust bubble ever created by letting the banks write any law they wanted? (Until the current one, of course.)

      The article does, indeed, fail to blame those primarily to blame: the banks who caused the crash, who are the people that all the “rescue” loans went to.

      They failed to save the Greek economy because the IMF made sure the Greek economy never saw any of the money. It went to pay off the same bank scumbags who put us in this mess to start with. And then the Greek people were left with a hideous, economically illiterate austerity policy forced on them by the IMF, which expressly promised that doing everything they were told would put the economy to rights.

      They did everything they were told.

      They accepted all the austerity policies they were given.

      The economy crashed beyond repair.

      That’s because austerity is evil, wishful-thinking nonsense that doesn’t work, and that basically no economists still support.

    • Jean Plescha

      The Greek people are suffering and have suffered in the last 5 years. A month ago another suicide, a Mother aged 64 and her son aged 31 jumped off the 6th floor to end their misery. If you call that not experiencing Austerity you live in your own planet are are completely oblivious to the real situation.

      But go own spewing your ideological lessons and propaganda by all means.

  • Moordie

    This is ridiculous. Very few people are really naming the actual problem. Almost all of Greece’s population want to live off of the government without having to work. Very few in Greece pay taxes. Now, they expect the rest of Europe to pay for that. It’s about time someone told these spoiled, lazy dolts “no”. And those of you blaming the big evil banking system are idiots too.

    • KanedaGallon

      Don’t forget – the get a full pension at the ripe old age of 55 (?)

      • peter

        Rubbish ! Typical media headline grabbing poor journalists feeding the stupid masses 🙁 and the gullible taking it in. Lets have a FACT …. median age for retiring in Greece is 61,9, whereas in Germany is 61,5 .
        Now it DOES have a pension problem …. but lets not have FoxNews/DailyFail nonsense spread 🙁

    • gremlin

      that’s what i really wanted to say…also lets not forget this is a touristic country generating lots of revenue and also that statement from video were “Greece has a weaker economy than other EU countries” what can we say about Romania or Bulgaria and their economy. or the loan from IMF in 2009 signed by Romania, because of this VAT was increased at 24%, pensions and salaries were cut…pointing again at the video what is the problem of all EU countries using same currency, do we still need to be dependent on $$$ like some countries did before joining EU

    • Wilbur Bottom

      Nice stereotyping and scapegoating. Where are you getting your stats for “almost of all Greece’s population”? Greece does have problems with tax evasion and a bloated public sector, but that’s in part because there is massive unemployment and Keynsian economics has to come into play when so many in society are out of work. Normally the government could devalue and print as much money as it liked to get people back to work but when you have no control over your currency you can’t do that. And that’s why Greece is in so much debt with no way out. What is your solution other than more austerity, which won’t work? What would you do in their case, sell everything you own and sleep on the streets? An increasing number of Greeks are already doing that. Perhaps you can travel to Athens and set Tsipras and Tsakalotos on the right track with your economic expertise?

      • Moordie

        How can you possibly claim that austerity won’t work? What you mean is, it won’t work without massive amounts of pain. Pain is what’s needed. And yes, it’s time for the government to start having a yard sale. Start with the empty airport in Athens. That property is very valuable. But it’s tied up in the government abyss. A buyer tried to obtain it not long ago but had to give up after years of trying to work with government officials. The sad truth is, too many people had their hands out for bribes.

        Also, in case it’s not obvious, the US is heading straight down this same path. Medicare, medicaid, SS disability, obamacare, student loans, extending unemployment to crazy lengths, government handouts for food (Do you realize that the Dept. of Ag actually ADVERTISES for people to sign up??). We’re in for a world of hurt to come.

        • Wilbur Bottom

          What is the aim here? It is to get Greece to have a performant economy from which it can pay its obligations to public sector workers and retirees, pay off its creditors and invest in infrastructure and enable the private sector. Greece is technically bankrupt with a huge proportion of its workforce unemployed and no way to pay off its creditors without more loans. Its banks don’t even have money because the only way they can get it is from Troika loans or an insufficient and unreliable stream of tourist Euros; Greek productivity has been downgraded yet again because businesses can’t get loans and no-one outside Greece is willing to supply raw materials at the moment because they don’t believe they will get paid, which is understandable.

          What is increased austerity going to do? It’s going to reduce the amount of money pensioners have to live on, it’s going to increase the amount of taxes Greeks have to pay (again, there is a problem with tax avoidance particularly amongst the rich like everywhere else that the Greek government has to fix), further reducing already diminished disposable income, it is going to reduce the amount of money in circulation in the economy and it is going to induce Greeks to save money rather than spend it because they fear another downturn in the near future; this will lead to deflation and negative growth. All this does is depress economic activity, in an economy that is already at depression levels. Everyone, Greeks included, wants a first-world/Northern-Europe standard of living. If your economic outlook is depressed as far as you can see and you see yourself falling behind, what do you do? You look to get out. Rich Greeks have already been moving money out of the country – one of the reasons for capital controls and the 60 Euro a day withdrawal limit from ATMs – and there has been a sharp increase in requests for passports and passport renewals. Greece’s future, its young workers and educated professionals will simply move to other European countries: Germany and Britain are favourites; maybe they will try US, Canada and Australia too. We have already seen this happen with Ireland (twice!). There is no barrier to movement within the European Community thanks to the Schengen Agreement and Greece is still part of Europe. So all increased austerity and pain do is make life increasingly miserable for those who can’t get out, and forces those who can get out to seek a better life elsewhere. As a result your tax base is reduced even further, piling pain on pain and insult to injury. Austerity has been shown time and again not to work in situations of fiscal collapse: just look at America in 1931-33 for a salient example. Ben Bernanke, the Fed Chairman and famously a scholar of the Great Depression went full-scale into Keynsian economics, at least on the monetary side, and printed huge amounts of dollars and took trillions of bad debts from the private sector onto the Fed’s books. Why did the Fed not go down the austerity route as Britain did if it was such a great idea? The US was the first to emerge from the Great Recession in large part because the Fed opened the spigot. Savers got hosed and are still getting hosed but the economy didn’t become the 2nd Great Depression as it should have (and if we were truly in a free-market economy in which bad businesses, including banks, failed as a result of bad decisions and bad investments, it would have).

          Regarding the US, you have painted yourself as aligned with the Tea Party, and someone who seems to think that money is a finite commodity when it is just the opposite. You may not have noticed but all developed economies are in a race to the bottom in terms of borrowing, revenues and a beggar-thy-neighbour monetary policy. It’s not a good idea to pay down external debts when your competitors are running them up, in part because of rock-bottom interest rates, because those debts represent growth. Americans pay less taxes than they ought to in order to theoretically have more disposable income circulating in the economy and generating economic activity. If you stop borrowing and start paying down the principal on your debts then that money is no longer available for internal investment. How willing are you to balance the books on the backs of the already struggling middle class, and the definitely-not-struggling wealthy where most of the money is going (US corporations are sitting on over $2T of profits in overseas banks that they don’t repatriate and pay taxes on): the tax code is horribly skewed leading to less revenue from corporations and rich individuals; the middle class underpays tax too because it doesn’t earn enough (and takes advantage of tax relief on mortgages, e.g.). The US is the biggest economy in the world, at least until it gets surpassed by China, and will be the last one to fail, and it can never default on its debts because they are denominated in US currency. So while it might be a feel-good notion to pay down external debt, and while it might be a political hot potato for some on the right, smarter minds than you or I have determined that while money is cheap and while competitors are racking up debt too, the right thing to do is to keep borrowing. Paying off all the debt won’t achieve anything other than a pyrrhic victory: you will have ceded economic growth to your competitors at the expense of impoverishing plenty of American voters and neither political party is willing to do that so the music will continue until there is only one chair left.

          External debt doesn’t become a problem until it approaches around twice the GDP. USA is currently around the high 90s per cent). Bernanke (well, Yellen now) could fire up the printing presses right now and eliminate the nominal external debt but it would result in the American middle class becoming paupers. That’s probably going to happen anyway but at a slower rate as international labour competition results in further stagnation for the American middle class. At the end of the day the only way to improve the current account balance is to produce more and to consume less (see: Greece) and I’m pretty sure that both political parties have this as a goal (but the Republicans intend to do it faster in a slash-and-burn way). The rich will always be rich (and increasingly so) and will continue to be above the everyday fray of all the schemes you mentioned because they are rich enough not to need them, and sadly for the rest of us, smart enough to be able to get out of their obligations to pay their share for them.

          BTW, St. Ronnie (Reagan) & George HW were the most egregious in running up US national debt, followed by George W’s deficit spending for war, tax cuts in time of war and the Part D Medicare give-away. The debt has gone up significantly under Obama as a result of repairing the damage from the implosion caused by the financial collapse of 2008. Obama could have opted for austerity but America – and the rest of the developed world – would have had a second Great Depression. You might want to contemplate shrinking the Defense Department and getting involved in fewer wars but the opposite only seems to happen under right-wing administrations.

          • Moordie

            I can agree with almost every point you make. (Your stupid assumption that I align with the tea party aside). My disagreement is with a couple things though. First, we won’t know for a good while what the result of Bernanke’s policies will be. To assume that we are out of the downturn is a mistake. Second, I have a fundamental belief that debt is a bad thing. For anyone or any institution. There are only 2 outcomes to debt. It gets repaid, or it gets forgiven/defaulted. Which will the US do? It’s a forgone conclusion that Greece will do the latter.

          • Wilbur Bottom

            My apologies for accusing you of being aligned with the Tea Party, but you did trot out their favourite talking points regarding the debt and America going bankrupt from Medicare et al.

            We live in interesting times: I doubt that we’re ever going to get back to “normal”, at least in my lifetime, because the system is too unproductive and addicted to cheap money. Yellen keeps putting off the time at which rates are even nominally increased, and she constantly finds new excuses not to do so, rightly or wrongly.

            Debt is a bad thing when you can no longer service your debts. As I said previously, America’s external (and internal) debt is denominated in dollars and as we’ve seen, the Fed can print as many of those as it likes. The only question is whether Americans are willing to put up with unaffordable imports, even from China. The US is supposedly the consumerist engine of growth, proving a sink for the world’s productive capacity, so this isn’t going to happen any time soon. If the Chinese economy slows to such a point that they start consuming rather than producing, that’s when the tables will be turned. It’s very likely that production will have to return to America which means that American per-capita income will have to be lower than Chinese per-capita income. The American middle-class is stagnating by design, so this is probably likely to happen, robotics notwithstanding.

            Lastly, I don’t believe that debt works the same way when you get to the level of macroeconomics of the world’s largest countries, especially ones with the largest military, whose hegemony is spread across the globe.

            At some point the national debt is going to become a drag on the US economy, but maybe by that time the US will have been hollowed out and sold out by Wall St. and will be left to sink or swim. The middle class should start fighting for its future if it wants to have one.

          • Moordie

            All very good points. Couple things though. First, regarding macroeconomic debt being different, it’s going to take a very long time to know if you’re right or not. As you said, we’re in a new normal…..maybe.

            Second, regarding our military, I think we’ve come to a new normal here too. One where there is enormous pressure to NOT use our military. And with this our enemies are becoming more and more emboldened. Seems our military is more of a target these days than a weapon we could use in the way you suggest. I hope this changes soon.

          • Nils Sens

            a brilliant piece!

    • pelirrojo

      ” Almost all of Greece’s population want to live off of the government without having to work.”

      You would have to be extremely stupid to believe that. When was the last time you were in Greece?

      • Moordie

        2 months ago. Trying to liquidate family holdings as soon as possible… Property there is tied up in bureaucracy and red tape for years, stifling any possibility of growth. To say that the country leans towards Socialism is an understatement. As with most of southern Europe, the economy is rotten with bribes and handouts.

        • pelirrojo

          Right… first of all, yes Greece is mired in petty corruption, as is most of Southern Europe. Is anybody seriously going to argue with that?

          Second, red tape in Greece is at reasonable levels, but not particularly bad. But this is the result of a lack of reform. This has nothing to do with stifling economic growth. Only a moron would believe so.

          Third, Greek people are, generally speaking, very socially-minded people. This is one of the country’s great strengths. You may be aware that NATO overthrew the democratically elected socialist/communist country of Greece in the 1940s. Since that time, the population of Greece has been ruled against their will be arch-capitalist eiltes, and the greed of this tiny minority is how the current situation has emerged. This is a crisis of global capitalism, pure and simple.

          Finally, please provide non-anecdotal evidence, statistics or data to support your outrageous claim that “Almost all of Greece’s population want to live off of the government without having to work.”

          • Moordie

            You make a list of anecdotal evidence to support your assertion that this is a capitalism problem then ask me to provide stats to support my “outrageous claim”? Funny. That along with your degrading to the point of calling me names while stating that a certain level of corruption and red tape is reasonable and not the problem is enough for me to stop wasting my time on this debate.

            You’re right. Socialism works. It’s just that no one has done it right yet…..

          • pelirrojo

            You’re out of your depth here. Run away.

            Just to give you an idea of how far from the point you are, in response to your repetition of the trope that Greek people are lazy, verified research which proves that the Greeks work the longest hours of any country in Europe:

            http://i100.independent.co.uk/article/the-european-workers-who-work-the-longest-hours–xycGVDQ36g

  • Max

    That’s got to be the biggest pile of shit- article I have read about Greece and the crisis.. and that means something-being German myself- after all the Greece bashing going on *here* already. Tourists are leaving in droves..? Oh boy. Did you guys have a trainee excogitate this horseshit?

    • pelirrojo

      Listing all of the inaccuracies in this article and then debunking them one by one would take about two hours.

  • VerityHeld

    Bull. it’s all monopoly money anyway, banks lending out money they don’t have and demanding full repayment plus interest. As for the Greeks being thieves and lazy welfare recipients, that’s the typical myths spread by austeridiots and conservatives, extorting and blackmailing governments and peoples for the enrichment of a few. Austerity once imposed never ends, it’s like deficit and debt-fighting. It’s been going on for decades worldwide, and there’s never an end to it, all because it’s such a convenient and effective method to enrich a very few while damning billions to poverty and want.

  • Paul Gloor

    So its a case of over borrowing in order to supplement its economy. Having fewer resources itself results in a lower GDP and money flows in but not so much out.

    • pelirrojo

      No, this is not the case. It is a common misconception. The problem is a lot more complex. But in simple terms, the major error with your analysis there is that the borrowing was not undertaken to supplement the country’s economy, It was undertaken deliberately by super-rich Greek elites and a handful of large multinational banks with subsidiaries in Greece to line their pockets.

  • Patrick Casey

    If you can’t even be bothered to get the most basic fact correct – that Tsipras is the Prime Minister of Greece and not the President (as you wrote twice) – then why should anyone go along with the rest of your narrative. Very lazy writing.

  • disqus_JFPJw8IgZA

    Fuck off. Calling greece a small balkan nation.

    • pelirrojo

      It is the largest of the Balkan nations, but comparatively small within Europe. What’s your problem?

    • #VuppeForPresident

      Fuck off a tiny nation destroying the global economy.

  • Zeroangel

    The banks should just freeze the debt/interest they have with Greece. The banking institutions that own the debt would just have to take a bit of a loss but they’d still get most of what they’re owed.

    The EU could also offer to pay the debt at a slow rate (e.g. 5% a year), but under condition that the Greece is not allowed to borrow any more and that finances are audited on an ongoing basis, and the EU is allowed to make suggestions on how to improve the debt situation. Greece would hate that, because having external auditors come in would hurt their pride as a sovereign nation, but it could also save their butts in the long run.

  • Meagan Fasbender

    I highly doubt all the tight restrictions that were put into place helped any of this rolling shitball. Is it really right to let a whole nation starve to death and become less than a third world country? I highly doubt it. Someone just needs to bail these poor people out and get them on their feet. This isn’t just one company, or even a string of companies, this is a whole nation of people about to get relegated back to the dark ages…

    Whoever’s fault this is, the government, the banks, the people, or the people lending them money, this is MILLLIONS OF PEOPLE!!! Millions! Who will probably start to starve and without medical service many will die of perfectly preventable things. Seriously, where the hell is humanity if we don’t even feel the slightest bit of drive to help and can only snark how they deserve it!

    Here’s an Indiegogo someone started to help. If you are any kind of human being, if you have any soul, you will freaking donate if you can.

    https://www.indiegogo.com/projects/greek-crowdfund#/story

  • Earth-Lion Waratah

    Balkan nation? The author needs a lesson in geography.

    • pelirrojo

      The idea that the Balkans ends arbitrarily at the Greek border? Nonsense.

      Even part of Turkey is in the Balkans. The Balkans is bounded by the alps, the Danube and the coast of the Black Sea and the Mediterranean sea, with the Dardanelles its eastern most point.

  • cetude

    Fabulous! Let’s hope China goes bankrupt too–all those dog and cat meat eaters deserve it.

  • Roch J Mathiot

    I don’t understand how this is suppose to effect us here in the USA? Also wouldn’t them losing a country bring their Euro standings down?

  • Jeremy Alexander

    The best thing they can do is default, zero out the ledger, and start over. Global trade has been nothing but a disaster for everyone involved and make no mistake, this is just a preview for the rest of the western world, not an aberration.

  • Jean Plescha

    Hoe can I take this Video serious when they call Greeks “Grecians”…it shows such an ignorance. It is Greeks, Greek People or if you are more sophisticated it is Hellenes, Hellenic People, because the Country is called Hellas.

    As for socialism, I would like to point out that most Europe is Socialist, not only Greece.

  • Eric Baker

    As it’s been said for years, the NWO is upon us.

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