So, I wonder what they’ve offered?June 22, 2015 Tim WorstallEuropean Union21 CommentsEU welcomes 11th-hour Greek proposals Give us more money or we’ll leave the euro? previousYou may be thinking a little too much of yourself RussellnextRobert Reich is such a card, isn’t he? 21 thoughts on “So, I wonder what they’ve offered?” So Much for Subtlety June 22, 2015 at 8:19 am These people have been selling carpets for thousands of year to a lot smarter people than the EU Big Cheeses. There is no way that the Greeks are not going to get what they want: Mr Tsipras’s leftist government showed a new willingness at the weekend to make concessions that would unlock frozen aid to avert default. So in other words, at the last minute, they promised to consider making a few reforms if the Europeans gave them lots of money. The Europeans will give them lots of money. The Greeks will promptly move it off shore where it is safe from devaluation and seizure. And then they won’t carry out any reforms. We will be back here the next time some money becomes due. So Much for Subtlety June 22, 2015 at 8:38 am Yes, the deal looks as bad as you would expect it to be: Ahead of an emergency summit today, EU leaders are said to be considering extending Greece’s bailout by six months. The move would give the debt-stricken country access to up to 18billion euros in rescue funds. In return, Greece’s Left-wing prime minister Alexis Tsipras would be expected to make concessions on fiscal targets, tax rises and pension cuts – which he has so far resisted. Last night, it was claimed that Mr Tsipras is finally willing to discuss pension reform, including the elimination of early retirement allowances. What are the central verbs in the second and last sentences? I would claim they are “give” and “discuss”. That is another 18 billion euros the Greeks will steal and move into some off shore bank account. They will do fine come what may. How do we end up with such fools running Europe? The Stigler June 22, 2015 at 8:40 am But this isn’t really going to fix things is it? A bit of frozen aid, a bit of juggling things around. Greece really needs to go to zero-based budgeting – you shut down the railways that no-one uses, you cut pensions to a level just above starvation etc. The real problem is that Greece needs a better electorate. You can’t be deep in the economic shit and keep voting to keep the spending up. The longer you leave it, the more likely that the end result will be even worse. So Much for Subtlety June 22, 2015 at 8:49 am The Stigler – “The real problem is that Greece needs a better electorate. You can’t be deep in the economic shit and keep voting to keep the spending up. The longer you leave it, the more likely that the end result will be even worse.” I am not sure the Greeks will be worse off. They borrowed huge amounts of money and went on a massive shopping spree. Come what may, they will still have all those new buildings, the Underground, all those Porsche Cayennes. They borrowed the money and now they don’t have to pay it back. At worst they have fond memories of their blow out. They were Ferris Bueller for a decade. If someone offered you a gold credit card and you spent way over the limit on hookers, cocaine and oysters (not that you would, I am sure. The squirrels would have to get some) before someone else picked up the tab, how would you be worse off? The problem with this sort of behaviour is that it is entirely economically rational. You spend and you don’t pay back. What is not rational is to be the sort of Puritan who works hard, saves his money and doesn’t go in for hookers and coke. The kind of person Ian B hates. bloke in france June 22, 2015 at 9:13 am The Greek republic is currently enjoying its longest ever period without default. So from the point of view of the greeks the euro is a tremendous success. bloke in spain June 22, 2015 at 9:20 am @SMfS As far as I can work out, any money Greece gets “given” will be a transfer from one set of creditors to another set of creditors to cover debts Greece already has. There’s be no lorry-loads of cash to be slipped over the border, headed for tax-havens fair. And yes, Athens had a fair old time on borrowed money. Now tell me the European nations that didn’t. It’s a very short list. They borrowed a lot of money because they were told to borrow a lot of money. That was the name of the game. If you want a credit card analogy, it’s the bank who – when the card holder maxes their credit limit – raises the limit & sends them a mail order catalogue in the same envelope. With a balance transfer invitation. I seem to remember that was UK banking practice, not so long ago. Having gotten my own envelope, with exactly that in it. It’s not as if the UK is in a much better financial position than the Greeks. It just has a better credit rating. For now. The Meissen Bison June 22, 2015 at 9:35 am The UK should do its bit to help and send Russell Brand and Charlotte Church to Athens. Bloke in Germany June 22, 2015 at 9:37 am Doesn’t Scotland basically make the same threat? i.e., in the union we somehow must preserve no matter what? JeremyT June 22, 2015 at 9:59 am I hope they’ve got a 50% write-down, with balance repayable over 30 years & and not to exceed 3% of export earnings. Mr Ecks June 22, 2015 at 10:39 am SMFS: There is a vast gulf between sound good sense/ thrift and puritanism. Thrift was the watchword of old because it kept you from having to look on hungers “livid face of woe”. In those days you were all you had. No Big Daddy waiting to help you out with stolen or counterfeit money. The Age of Handouts cannot endure and the Greeks and many others will have to re-discover the old virtues or starve. There are only a few short weeks or months between fat German burghers becoming thin and hungry. The Stigler June 22, 2015 at 11:02 am SMFS, “What is not rational is to be the sort of Puritan who works hard, saves his money and doesn’t go in for hookers and coke. The kind of person Ian B hates.” I’m not going to judge anyone for hookers and coke. It seems to me far more rational for a man to pay for a shag than to go and watch 22 men kick a ball around, which costs more money at the top level. But you have to pay for your own hookers and coke. The problem with just living off others is that one day, they can stop feeding you. And then you’ve got nothing. dearieme June 22, 2015 at 11:16 am I conclude that Greece remains a useful conduit for disguising the direction of taxpayers’ money to the rescue of German and French banks. Andrew M June 22, 2015 at 11:50 am Sure, they enjoyed the boom years; but does it make any sense for Greece to continue to tie itself to the euro, given the damage it’s now causing? Some Greeks will benefit from endless bailouts: primarily pensioners and civil servants; but I suspect the median voter is worse off for staying in the single currency. Bloke In Italy June 22, 2015 at 12:10 pm This is all most exciting watching from the outside – however it is seems inevitable that the EU “elites” (I use the word advisedly) will avert a short order Grexit by extending more loans, nearly all of which will be used to prevent losses to German and French banks, effectively transferring these losses to the taxpayers of Euroland (I hope not also the UK) who have no say whatever in the matter. Straightforward theft. There will be no write down of loans, no meaningful reform of the Greek economy, no prospect whatsoever of a lasting solution to the problem; just the usual rinse and repeat. Everybody knows that the best solution involves Greece leaving the Euro and a major debt write-off, but this is the least likely outcome. Here we see the EU’s inadequate politicians blundering around like drunken bulls in an unlit china shop; and demonstrating to the world (and hopefully the UK electorate) their utterly useless malevolent incompetence, and the ineptitude of the whole fucking project. Johnnydub June 22, 2015 at 12:14 pm BoI ” nearly all of which will be used to prevent losses to German and French banks, ” This already happened during the first bank bailout. What’s happening now is the avoidance of haircuts crystalising losses in the ECB and effectively the Germans paying up which is politically unacceptable. However we’ll be back here again in a few months. Jack C June 22, 2015 at 12:51 pm Just the Germans Johnnydub? There must be some non-German taxpayers within the Eurozone. John Davis June 22, 2015 at 4:11 pm When Iceland went up the spout, unemployment shot up as GDP dipped, but after the first year or so everything has been recovering steadily. Five years down the road they are nearly back on track. By contrast, five years after their “rescue” things are still getting worse in Greece. Thank you to the great kind & benevolent Euro. The Greeks have clearly decided that the status quo is actually the worst of all options. They will be better off if the bulk of the debt is effectively cancelled. They will also be better off if they default and return to the Drachma. I think the Europeans must realise this too, and will probably capitulate in order to save the “project”. Oh yes, and the Greeks are unprincipled robbers & theives, but we’re talking realpolitik here. Rob June 22, 2015 at 5:24 pm Looks like they are inventing a few new taxes for the ‘wealthy’ to evade. Tim Newman June 22, 2015 at 6:10 pm From the Beeb: Greece will not accept cuts to pension payments or public sector wages, saying two-thirds of pensioners are either below or near the poverty line Okay, but what about those in the public sector? *crickets* Rob June 22, 2015 at 7:05 pm Yes, a lovely half answer there. So Much for Subtlety June 22, 2015 at 11:22 pm bloke in spain – “As far as I can work out, any money Greece gets “given” will be a transfer from one set of creditors to another set of creditors to cover debts Greece already has.” The Greeks face repayments coming due of 1.6 billion Euros but the Europeans are offering them 18 billion. They need to support the domestic Greek banks too. “There’s be no lorry-loads of cash to be slipped over the border, headed for tax-havens fair.” A billion euros a day are moving out of Greece. So the Europeans are going to guarantee those banks, allowing them to lend even more money to Greeks who will then move it to Germany. It is a perfect bet – they win if Greece crashes out of the euro as their money is now worth a lot more. They draw if it doesn’t. “They borrowed a lot of money because they were told to borrow a lot of money. That was the name of the game.” Yeah. The feckless poor who behave fecklessly are not irrational. They are just feckless. An economic system designed by and for the fiscally prudent Puritans is not a good fit for the feckless south. In the same way that a British culture that encourages girls to go outside and explore is not going to get along well with a Muslim culture that says any girl on her own is fair game for gang rape. Mr Ecks – “There is a vast gulf between sound good sense/ thrift and puritanism. Thrift was the watchword of old because it kept you from having to look on hungers “livid face of woe”.” There is something to that. But actually most of the world’s poor who face a real chance of hunger do not save. Most of the world’s very rich are fiscally prudent. Because it is not hunger, it is delayed gratification. The Puritans taught people to put off the pleasures of the day. African cultures not so much. The Stigler – “But you have to pay for your own hookers and coke.” If the Germans are willing to treat you, why not? “The problem with just living off others is that one day, they can stop feeding you. And then you’ve got nothing.” But the Greeks have a great culture where you grab what you can while it is going. An opportunistic culture that has worked for them for the past 2500 years. Dependency is a problem if you are dependent. Just as British workers get fired and have no idea what to do because they have been institutionalised. I don’t think the Greeks have that problem. So the idiotic naive Northerners offer them free money. They seize it with both hands. When it stopped, they will go back to whatever hawking they were doing before. Leave a Reply Cancel replyYour email address will not be published. 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