Why do I feel bad for the Spaniards, but not the Greeks?

[Dinner]

where did you get those figures from oerdin? also any increase in deficit spending might have something to do with the collapse of the greek economy, tax revenues etc...

The Dutch interview linked above. I'm sure decreases in tax revenue increased the deficit but they still increased total government spending by 8% in the last year while this supposed crisis has been going on for 22 months while they haven't sold off any government owned land or assets or privatized much of anything. Their own former central banker said that. They need to fire at least half of their government workers if not 3/4ths because there is no reason for them to have four times as many teachers per student as Finland (who has the world's best schools) or double or triple the government workers per capita than just about every other country in Europe. They keep spending more because they believe no matter how terrible their finances are they'll still get bailed out. They haven't even tried any substantial cuts and instead just passed massive new spending. **** the Greeks.

[Egbert]

This doesn't affect America too much does it...?

Umh. It could finish up affecting America very much.

[Zoetstofzoetje]

Italy´s next up

[grumbler]

The Dutch interview linked above.

I didn't see a Dutch interview linked above. There was a claim that the Dutch Finance Ministry had declared a Greek default inevitable, but that was apparently based (there was no link, just an assertion) on a bogus story, as shown here: http://online.wsj.com/article/BT-CO-...13-711461.html

I'm sure decreases in tax revenue increased the deficit but they still increased total government spending by 8% in the last year while this supposed crisis has been going on for 22 months while they haven't sold off any government owned land or assets or privatized much of anything. Their own former central banker said that. They need to fire at least half of their government workers if not 3/4ths because there is no reason for them to have four times as many teachers per student as Finland (who has the world's best schools) or double or triple the government workers per capita than just about every other country in Europe. They keep spending more because they believe no matter how terrible their finances are they'll still get bailed out. They haven't even tried any substantial cuts and instead just passed massive new spending. **** the Greeks.

It is entirely unclear to me what the former Greek minister is talking about with the 8 percent (I only have Google translate, which is bad for Dutch). In any case, the trend of Greek government spending is clearly downward, both as a percentage of GDP and as an absolute value (spending cut by 11% since 2009, according to IMF: http://www.imf.org/external/pubs/ft/scr/2011/cr1168.pdf).

The problem is that revenues are sinking fast (6% since 2009, by my rough cut) so that spending cuts aren't having the hoped-for effect on debt levels. Stephanos Manos is almost certainly correct when he notes that there are many things the Greek government could do to hasten the end of indebtedness, like selling off unneeded assets (even if the timing is poor). Some of the things he says are (in Google translation) nothing short of goofy, though, like "In Greece there are four times as many teachers per pupil as in Finland, the country with allegedly the best school system in the world.'' The latest data I can find indicates the numbers are about 10 students per teacher in Greece and about 12 in Finland.

I'm not taking what the guy says as quantitatively authoritative at all.

[Zoetstofzoetje]

fundamentally, the issue is bureaucracy. see, it works a bit like this.

say that your bureaucrat peon X. you work at department Y by filling out forms Z.

one day, you are commended by your superior for your efficient form filing scheme. so you become ´head of the task force´

as such, you´re not just in command of a few drones, you can also change some of the procedures. now, the point is to become even more important. and above all, to be *indispensable*.

this is accomplished by changing the procedures to be more complex and more encompassing. allegedly to better serve the customer, whomever that might be. the customer is actually irrelevant. what´s important here is A) status B) indispensibility C) budget. each of these three has to be increased.

now, to accomplish this, what bureaucrat needs to do is to make the procedures as complex and arcane as possible. as a result of this complexity, peon X has just become a reviled EXPERT. this gives him STATUS and makes him less replaceable. such status is also increased indirectly, because of an increased BUDGET; complex procedures require lots of extra peons.

and the bureaucracy grows to meet the needs of the growing bureaucracy. what you end up with is a system that is not designed for public effectiveness, but to meet the needs of the workers. the prostitutes think they are pimps.

[Zoetstofzoetje]

http://frontpage.fok.nl/nieuws/463674/1/1/50/vs-doodsbang-voor-grieks-bankroet.html

News: Geithner pushing EU to keep supplying Greece with more loans, because if Greece goes bankrupt, AIG´s CDS insurance will have to be paid to investors (which it can´t, because it doesn´t have the funds), so that the US would have to support AIG again.

Meanwhile,

http://www.elsevier.nl/web/Nieuws/Politiek/316445/Ministerie-van-Financien-Griekenland-niet-meer-te-redden.htm?rss=true

Dutch FM reaffirms that Greece is insalvageable. He says, the only question is how the EU will procede to process the bankruptcy

[Dinner]

Grumbler: The dutch interview is linked in post 112 while the BBC report is linked in post 113.

[C0ckney]

thanks grumbler.

see oerdin this is the danger of taking one interview as the gospel without bothering to check any of the facts contained therein. greece's problem is essentially this. it cannot ever hope to pay back its debts. it is insolvent. the reasons for this are serious structural problems (the inability of the government to collect taxes and a large and too generously remunerated public sector), and simply that it has too much debt. this has been the situation since around 2009. the solution offered was a huge package of loans couple with austerity measures. now leaving aside the most glaring flaw (trying to resolve a solvency problem with liquidity), there were some other major issues. the banks lied about their financial positions, the government lied about its figures (carrying on with a long tradition here), and the troika (EU/ECB/IMF) accepted these figures with a nod and a wink (see also what happened when greece first entered the euro) and then based the plan to rescue greece on them. this 'rescue' fell apart in just over 12 months, as the unrealistic targets were missed, bond yields on greek debt went through the roof and the greek economy went into a severe recession (can we call it a depression yet?). meanwhile, other countries were dragged into the brown stuff. a new rescue was planned and announced recently. this rescue is already falling apart.

today the greek economy is shrinking fast, and tax revenues are going through the floor, necessitating further government borrowing. the government response, more tax increases (the latest tax announced by the government will be collected through electricity bills, which tells you all you need to know about the government's ability to collect taxes) and spending cuts. you don't need a phd in economics to see what this is going to do to the economy. greek 1 year bonds are now yielding over 100% (this is not a typo), which the markets saying "we don't believe you can pay this money back". it's a fustercluk of epic proportions.

[Dinner]

Please watch the video with the former Greek financial minister in post 112. It's in English.

[C0ckney]

now you might ask yourself why the troika acted in the way it did if the situation was so bad. well the answer is that the EU/ECB have two goals; to save the euro (and prevent any country leaving it) and to save the european banking system. once you view their actions through this prism, they make sense. i mean they've gone about it in the most wrong headed and incompetent way imaginable, but you can see what they were trying to do.

[C0ckney]

bah!

[C0ckney]

Please watch the video with the former Greek financial minister in post 112. It's in English.

please go and read some things about the greek crisis to educate yourself. you don't need to take my word for it, there's plenty of good material out there.

[Dinner]

I've read quite a lot, thank you. I also trust the former Greek Financial Minister when he says Greek spending in 2011 is up 8% over 2010.

[C0ckney]

and i've already explained some of the reasons for that. if you disagree with any of points i've made then feel free to explain why.

also, as grumbler has pointed out, some of the claims (like the schools one) are false, and it would appear that according to the IMF government spending has gone down.

[Dinner]

Please show that the teacher claim is false. There is a video linked here of the former Greek Financial Minister saying that there are three to four times as many teachers per capita in Greece then in Finland so I've named my source. Please name your source.