Way to get it wrong Aditya

Nearly every discussion of the Greek fiasco is based on a morality play. Call it Naughty Greece versus Noble Europe. Those troublesome Greeks never belonged in the euro, runs this story. Once inside, they got themselves into a big fat mess – and now it’s up to Europe to sort it all out.

Those are the basics all Wise Folk agree on. Then those on the right go on to say feckless Greece must either accept Europe’s deal or get out of the single currency.

The people who have actually been right all along are the euro sceptics (as opposed to the eurosceptics). The people who were saying that the eurozone simply was not an optimal currency area and thus would not work.

You know, people like me, who were saying this on this ‘ere internet when you were still at Oxford studying history. Given that we’ve been proven right would be nice to be acknowledged.

78 thoughts on “Way to get it wrong Aditya”

  1. And I’ve still never seen an argument as to why a country prepared to live within its means can’t only survive but prosper within the euro. Ireland, for example? Could have gone Greece’s way? In fact a few years ago the euro sceptics were telling us that the PIIGS were going to all crash out – that’s Portugal, Ireland, Italy, Greece and Spain.

    Didn’t quite happen, did it?

    So who is better off in the long run? Those who adapt at least somewhat to the fiscal straitjacket, or those that want to run eternal deficits? And (leave aside for the moment that a huge default is essential for Greece) on what planet is Greece better off going back to printing its own money? Sure, your being in as opposed to out is going to shunt the economy one way or another on parliamentary timescales, but if you are competently managing your finances won’t make a huge difference long term.

    So – yes – Greece has to default big time – but why is it better off leaving the euro, not reforming, and printing Drachma forever as opposed to reforming its economy and running a tight ship thereafter?

  2. Now that even the lefties have to acknowledge that the euro is a disaster the rewriting of history will begin. The EU and euro will have been a big neo-liberal plot that the lefties had sussed from the start and it was them all along warning us against it.

    And they will even believe it themselves.

  3. The true underlying argument is not about this crisis, nor government spending, nor deficits and debt.

    That true argument is that over a large area, over time, there will by asymmetric shocks. External shocks (either supply or demand) that affect different areas differently (that’s the asymmetric part). Given the different effects of the same change (say, an oil producing area will have a different reaction to a change in the price of oil than an oil consuming area) we should appropriately have different monetary policy in those different areas.

    With a single currency we cannot. And we also do not have fiscal union which is the other possible policy answer. So, the actual argument about why the euro is a bad idea is simply that it covers too large an area. Too many different economies with different reactions to the same stimuli.

    It’s not an optimal currency area.

  4. @Tim,

    So why is Liverpool in Sterling? It had its asymmetric shock in about 1850. Manchester had its slightly more gradually over the following 100 years. Neither city has really ever recovered, despite that fiscal union. Is that the fault of Sterling? Should they set up a cheaper currency to become competitive?

    Should Aberdeen (being an oil-producing area) ever have been in Sterling? Shouldn’t they have a paper currency called “Brent Crude”?

    How come essentially fixed exchange rates weren’t a problem for the 10,000 years until 1971 but since then we’ve come to see them as a problem?

  5. Yes, that is the standard criticism of sterling. And fiscal policy makes up for it a bit but not enough. Which is why those northern cities haven’t rebounded.

  6. And what asymmetric shock has hit Greece? Did global olive prices crash? Were trade sanctions imposed on feta? Did it come out that Jimmy Savile once took a holiday on Corfu? Or did the government borrow and spend all the money it could while the market turned a blind eye assuming (sorta correctly) that the rest of Europe would pay the bill?

  7. Also, swathes of Yugoslavia adopted the Deutsche Mark during and after the wars, even I am old enough to remember the Mark was painfully expensive back then. Bosnia still does, basically, use the DMark, Montenegro and Kosovo are euro-ised and have never issued their own currency. Swathes of Africa are pegged to the Euro via (historically) the French Franc. Poor Panama and rich Hong Kong both peg the dollar without fiscal transfers from or to the USA. It seems you have to try quite hard to ruin your economy with a strong currency (as Greece have managed) whereas it’s quite easy to do that, and hide the fact from your population, with a weak and depreciating currency.

  8. It’s not a shock, exactly, but one assymetry seems to consist in the fact that Germans pay their taxes and live in a system which is generally uncorrupt, wheras Greeks don’t pay their taxes and live in a system which is generally corrupt.

    It used to be accepted as self-evident (because it is) that Greeks are different people to Germans and that they would therefore behave differently.

    But then along came the SJWs insisting that there is no essential difference between the two of them (or any other two groups of people), and in the process of trying to prove this they pretty much took control of the entire continent and its economy, and we are where we are.

  9. It’s blindingly obvious that what Greece needs is to go full on free market and rule of law (with swingeing punishments for genuine corruption), go back to the drachma, and focus on its strengths (lovely people who live in a wonderful country built for tourism and olive oil production).

    It would take a generation (optimistically) but they could become a great little nation again. Instead of being in thrall to a highly corrupt class of political liars, and all expecting to be able to live off each other (or the Germans, if necessary).

  10. As for Liverpool, I propose a Krugmanite approach – bomb it to the ground in order to make work for builders. If we’re being generous we can even give the Scousers a little notice.

  11. Bloke in Germany,

    One basic argument against common currencies is that even if a country runs what you call a “tight ship”, i.e. keeps inflation at or below the 2% target, it can still lose competitiveness realtive to other countries. And in that case it has to endure a period of excess unemployment and austerity (maybe lasting years) in order to get its costs down. That’s what’s called “internal devaluation” which is wasteful (in terms of lost output) compared to normal devaluation.

    But obviously that argument can’t be taken too far: i.e. the Liverpool Lira wouldn’t make sense. And possibly Greece is too small and irresponsible to have its own currency.

  12. @ BiG – while it may be true that the Greeks have in part been responsible for their situation as a result of tolerating decades of corrupt incompetent government and a self evidently unsustainable welfare state; however you cannot possibly argue that it was right for the troika to load them up with additional debt in order to pay off the German and French banks in effect, and as we now know quite deliberately, transferring the liability from the bondholders to taxpayers who were not consulted on the issue. To then continue to insist on trying to micromanage (disastrously badly) the economy while insisting on full repayment is causing huge pain to the Greek population while not making eventual repayment of the debt any more likely.

    It is absurd to argue that continued Greek euro membership under these conditions can be in anyone’s interest certainly not the Greeks’ nor the beleagured taxpayers of the rest of europe.

    You might as well accept that this is the Euro’s Stalingrad moment. Your overreach, hubris and ambition have come unstuck and it is all downhill from here.

    The sooner you realise that the better for everybody.

  13. @Bloke in Germany
    “How come essentially fixed exchange rates weren’t a problem for the 10,000 years until 1971 but since then we’ve come to see them as a problem?”
    Britain came off the gold standard in the 1930s, fixed exchange rates were a problem then.

  14. @Tim Worstall
    “Yes, that is the standard criticism of sterling. And fiscal policy makes up for it a bit but not enough. Which is why those northern cities haven’t rebounded.”
    Could the problem be that the money from central Government did not help because it wasn’t spent by locally accountable people.

  15. The € has been very successful-not for the ordinary men and women of Europe but for the empire builders. Financial coup d’état in Italy and Greece, debt bondage in Ireland…, are examples of this powerful weapon in action against the populace
    Even now there is almost complete silence on the nature of the EU: a set of imperial adventurers-but dwarfs rather than giants- plaguing the continent as did Napoleon the Kaiser and Hitler.

  16. As for Liverpool, I propose a Krugmanite approach – bomb it to the ground in order to make work for builders. If we’re being generous we can even give the Scousers a little notice.

    Jeez, I had you down as a pretty good bloke until now. I mean, why the hell would we give the Scousers any notice?

  17. The inclusion of weak economies in the Euro is a feature, not a bug. It replaces the strong DMark with a weaker currency that sustains the German export-led economy. The Greek’s problem is that the Germans don’t want to pay for this.

  18. Well said TimW. The “feckless Greeks” line trotted out by SMfS among others is basically an endorsement of the Euro.
    The real problem of the Euro is; it has the Germans in it. Absent them it’d be closer to an optimal currency area.

  19. Wittering about the EU not being an optimal currency area is rather silly. There will never be such a thing in reality: “optimal” is an ideal (unless maybe Singapore counts). “Optimal” is just too demanding a test – ‘usefully good’ is a more practical test. The euro zone wasn’t a crap idea because it was non-optimal, but because of how far from optimal it was. As some of us shouted loudly at the time. To summarise: “It’s a stupid fucking idea, why can’t you see it?” and “Currency unions have repeatedly failed before, why will this one be any different?”

    I was an academic at the time: my views were very unfashionable. Alarmingly, economists were among those who seemed incapable of following my argument. (Maybe they were all Kingsmen, of course. Keynes would have been spinning in his grave, etc, etc.)

  20. @Dearieme

    Optimal doesn’t mean perfect, it just means best under the circumstances.

    (Other than that I agree with you of course.)

  21. What dearieme says. Attacking the euro as not optimal at the time didn’t hit the core of the problem. No big currency area including the UK, US or Canada is “optimal”. Hell, not even Belgium. The key is common taxation powers, and the willingness or duty to transfer revenues from rich bits to poorer bits as they boom and bust for whatever reason. “Good enough” or optimal is a zone where the efficiencies of a single currency outweigh the costs of subsidising the losers, and the opportunity costs of common interest rates and exchange rates. Which also means “optimal” will look different if you are in a rich bit or a poor bit at the time you assess.

  22. Wouldn’t Greece still have tax evasion, a cossal public sector and corruption under any other currency? The only difference would be their ability to print more money, but this isn’t likely to solve any of those problems. The opposite, in fact.

  23. The key is common taxation powers, and the willingness or duty to transfer revenues from rich bits to poorer bits as they boom and bust for whatever reason.

    That’s correct. When it comes down to it, Texans are willing to pay for the idiocy of their fellow Americans in Detroit. But Germans are not willing to pay for their fellow Europeans in Greece. It’s almost as if those national boundaries mean something.

  24. Wouldn’t Greece still have tax evasion, a cossal public sector and corruption under any other currency? The only difference would be their ability to print more money, but this isn’t likely to solve any of those problems. The opposite, in fact.

    It wouldn’t solve the problem at the higher-level, but it would mean that farmers could sell their products cheaply abroad and hotels, restaurants, etc. would be cheap for foreign tourists. Both of these would ensure hard currency is at least coming into those who are doing some work: the Euro enabled the hard currency to line the pockets of those who don’t at the expense of those who do.

  25. So Much for Subtlety

    JeremyT – “The inclusion of weak economies in the Euro is a feature, not a bug.”

    I remember when the Euro was introduced and everyone agreed that fiscal policy had to converge or it would fail. Or more to the point, the Euroskeptics said it would fail and the pro-Euro camp said of course it would and when it did, they would demand more federalism. So you are right, it is not a bug. This is a crisis that was knowingly planned.

    bloke in spain – “The “feckless Greeks” line trotted out by SMfS among others is basically an endorsement of the Euro.”

    How the f**k does that count as an endorsement of the euro? No one here has been a louder or longer critic of the euro than me. I loath the thing to the point of trying to avoid using it. Which is hard in France I can tell you.

    “The real problem of the Euro is; it has the Germans in it. Absent them it’d be closer to an optimal currency area.”

    No it wouldn’t. But three feckless economies are more likely to make a better fit than a feckless one with a fiscally responsible one. It is not as if we have not all been here before:

    By treaty dated 23 December 1865,[2] France, Belgium, Italy, and Switzerland formed the Latin Monetary Union and agreed to change their national currencies to a standard of 4.5 grams of silver or 0.290322 gram of gold (a ratio of 15.5 to 1) and make them freely interchangeable.
    ….
    Following the International Monetary Conference of 1867, the original four nations were joined by Greece on April 10, 1867.
    ….
    According to Financial Times, another major problem of the LMU was that it failed to outlaw the printing of paper money based on the bimetallic currency. A weakness which was exploited by France and Italy that printed banknotes to fund their own endeavours, effectively “forcing other members of the union to bear some of the cost of its fiscal extravagance by issuing notes backed by their currency”.[18] Greece also caused problems. According to the BBC, “its chronically weak economy meant successive Greek governments responded by decreasing the amount of gold in their coins,[19] thereby debasing their currency in relation to those of other nations in the union and in violation of the original agreement”. Greece was formally expelled from the Latin Monetary Union in 1908. It was readmitted in 1910, however.

    The Germans did not join the LMU. Nor did the British. They were all feckless together. Even the Peruvians. Still didn’t work. Although some 62 years is not bad.

  26. @Bloke in Italy,

    I don’t know how much clearer I can make it that I think Greece should default. Should have done it properly last time as well.

    Everyone wants a world that simply isn’t on offer. Syriza wants a world where Greece is in the euro, and the market is still lending it money so can carry on eating everyone else’s lunch indefinitely, whereas it’s obvious to all of us that it has to pick one of the two.

    The anti-euro types, by comparison, want a world in which Greece has its own currency and the market is still lending it money so they can continue eating everyone else’s lunch. That isn’t on offer either, at least for many years after Greece redenominates its debts.

    Yes, Greece should default on the entire lot, and the rest of us should let them do so (and suffer the financial hit) in return for Greece starting to run an economy worthy of a modern country. In or out of the euro really isn’t an important question – what the Greek government does from now on is the important question.

  27. So Much for Subtlety

    Bloke in Germany – “In or out of the euro really isn’t an important question – what the Greek government does from now on is the important question.”

    The Europeans have basically forgiven the Greek debt. There is no serious person who thinks they will pay any of it back. They have written a lot down and they will write the rest off in the end.

    The problem has always been the Greek’s refusal to reform or to spend roughly what they take in taxes. This is where we were last year. This is where we are today. Even under the previous government, the Greeks were not taking reform seriously.

    So devaluation is really the only option on the table. I think the Greeks ought to be fiscally responsible. But they aren’t and they aren’t going to become so. If the Greeks remain in the euro they will just do this all over again. So the sensible solution remains Greece leaving. It really is the only sensible option on the table.

  28. “Syriza wants a world where Greece is in the euro, and the market is still lending it money so can carry on eating everyone else’s lunch indefinitely” Not just Syriza – it seems to be what the Greek electorate wants.

  29. Read that article with my mouth open this morning – it was this phrase that leapt out at me: “Whatever the founding ideals of the eurozone, they don’t match up to the grim reality in 2015. This is Thatcher’s revolution, or Reagan’s”

    That’s right, it’s failing because it’s a right-wing construct and the right-wing Eurosceptics were behind it along, like some Scooby Doo villain in a Delors mask. The glorious socialist dawn of cooperation that was a slap in the face for swivel-eyed little Englanders everywhere is now nothing to do with the left at all.

    Jeez. This is like Goebbels claiming the Allies instigated the Nuremburg rallies

  30. =¦ bloke in spain – “The “feckless Greeks” line trotted out by SMfS among others is basically an endorsement of the Euro.”

    How the f**k does that count as an endorsement of the euro? ¦=

    Because absent the Euro, the fecklessness of Greeks isn’t a matter for SMfS to worry his tiny mind about. It’s a purely Greek concern. So, if it bothers you, you must be in favour of the €uro project.

  31. So Much for Subtlety

    dearieme – “Not just Syriza – it seems to be what the Greek electorate wants.”

    Greece’s debt was slated to hit about 200% of GDP in 2012.

    Since then the IMF and the EU gave them a €110 billion bailout loan in May 2010. That was followed by a €130 billion second bailout loan for Greece in October 2011. There has been a third bailout but it is impossible to work out how much has been handed out.

    The Greeks are not going to pay any of that back.

    There are only 10 million Greeks. So the first two bailouts work out at giving each Greek €24,000 per head of population. Of course they love it.

  32. D’y know. It does occur. Half the people who are so vociferously against the Euro would be perfectly happy if Europe had adopted the pound. probably prefer them to drive on the left, as well.

  33. Texans are willing to pay for the idiocy of their fellow Americans in Detroit. But Germans are not willing to pay for their fellow Europeans in Greece. It’s almost as if those national boundaries mean something.

    Here‘s a paper looking at transfers within the USA, with some reference to the eurozone.

    Texas and Michigan are both substantial net contributors. The biggest net recipient is Mississippi, a Republican state which is particularly keen on “states rights”.

  34. @bis, that was actually monster raving loony policy for some time. It’s perfectly true of course.

    My gast is flabbered at the number of liberal/tarians who believe market price adjustment goes out the window the minute you are in a currency union. And that somehow a change in competitiveness in one part of the economy is to be compensated not by changed prices there but changed prices for everyone, via re/devaluation. Yes, sticky wages, but that’s the case everywhere.

  35. And once more for emphasis, Greece should default, unilaterally, on every penny of its debts, and then make some hard choices.

  36. I do agree with the article on one point: this morality tale is simply pointless. So ‘feckless’, ‘live within means’, even ‘PIGS’, all pointless and silly.Nothing is ever.solved by listening to arseholes like Interested.

    The argument made at the very beginning of the project, as outlined by Tim, was that the absence of a monetary response shifted the impact into other markets, notably the labour market.

    So BinG, the PIGS may not have spun out of the Euro. That, however, is their very great misfortune. Instead they have 50% youth unemployment and a wasted generation. There are some pretty waitresses in the restaurants round.my way though.

  37. @Ironman,

    Spain et al also had high unemployment before the euro, before they were in the EU, in some cases even while they were dictatorships.

  38. “D’y know. It does occur. Half the people who are so vociferously against the Euro would be perfectly happy if Europe had adopted the pound. probably prefer them to drive on the left, as well.”

    What the inhabitants of Europe decide to do is their business. Or rather what Europe’s political/bureaucratic shite decide to do. What is needed is for us to ensure that they are deciding 100% nothing for us over here. And that all of their stooges over here are destroyed to the degree that they can never again threaten to enrol us in any more tinpot empires.

    Then we can get started handing out punishment to our own wannabe emperors.

  39. Well yes, MrX. But when I read Ironman & SMfS & their obsession with a Kite Marked age of consent & the fecklessness of Latins I’m seeing people to whom the problem with Europeans is they ain’t tight assed Brits. They’d have been a lot happier if Wellington had painted the map pink after Waterloo it & it was bobbies in helmets & warm beer from the Atlantic to the Urals.

  40. @Blokein Spain

    What have j said sbout.tge age of cndrbf? You.seem to have.a problem understanding quite basic concepts you Thick.Prick.

  41. @ BiG: “And once more for emphasis, Greece should default, unilaterally, on every penny of its debts, and then make some hard choices.”

    Now you’re talking.

    That might have some unpleasant consequences in Deutschland as Deutsche bank goes tits up, but hey ho.

    There was never going to be any good endings.

  42. Tim Newman

    “That’s correct. When it comes down to it, Texans are willing to pay for the idiocy of their fellow Americans in Detroit. But Germans are not willing to pay for their fellow Europeans in Greece. It’s almost as if those national boundaries mean something.”

    Precisely.

  43. I don’t follow your point BiS. We don’t have to like the rest of Europe so long as they are minding and getting on with their own business and not trying to mind ours. That is all that is needed. They may not be English but that does not matter. They can be who they like so long as they are not trying to be our masters. Not sticking their nose in over here.

  44. @Bloke in Italy,

    I think most of the debt is now held by the institutions. Any commercial bank that’s still holding enough to go broke in the event frankly deserves to go bust.

    That’s also why we (should) have a central bank – to keep a functional payment system alive should major banks get into trouble. And moral hazard? Well here’s a suggestion – how about not allowing banks to set up with limited liability? Deutsche goes under, the ECB keeps it on life-support, and winds it up. Sets up Deutsche II and sells it. The shareholders then get sued for the difference. That would concentrate the mind a little, wouldn’t it? Might keep some of the recent shit from happening again.

  45. Deutsche Bank is not much exposed to Greek default. Government loans aside, the big hit in Germany would be taken by KfW, which is state owned (it’s been funding Greek imports).

    Greek banks are another matter. The only way they could possibly survive a disorderly Greek default would be for the government to redenominate their liabilities into a new currency.

  46. I understood the concern surrounding Deutsche bank regards the value of the collateral relating to an awful lot of derivatives positions which will likely be negatively affected by the contagion which would very likely follow a Greek default. Counterparty risk and all that stuff, to which I gather Deutsche Bank has a 70 trillion exposure. Of course this figure is gross not net.

    However I am just a casual reader of apocalyptic blogs on zero hedge so that quite possibly may not be the case, and the netting calculations will not be affected by this event.

  47. “Deutsche Bank is not much exposed to Greek default. Government loans aside, the big hit in Germany would be taken by KfW, which is state owned (it’s been funding Greek imports).”

    This was the point of previous bailouts – to transfer the liabilities from private banks to the ECB. Of course if Greece defaults, the ECB and by extension German taxpayers will take the hit and right now that’s politically unacceptable.

    Hence round and round we go…

  48. Ironman, isn’t your Scooter of Justice (tm Me) due a service? Please be a good chap and bugger off will you?

  49. Johnnydub:
    “the ECB and by extension German taxpayers will take the hit”

    I’ll ask again. Are there only German taxpayers in the EU?

  50. So Much for Subtlety

    bloke in spain – “They’d have been a lot happier if Wellington had painted the map pink after Waterloo it & it was bobbies in helmets & warm beer from the Atlantic to the Urals.”

    You know, I know there must be some logic behind this attempt at humour. Which usually presupposes a higher level of intelligence than the person being mocked. But I don’t see it.

    What wrong with the idea of bobbies in blue helmets all the way to the Urals? Shall we ask some Polish Jews or some Belorussian peasants whether they would have preferred that to what they got.

    Gibraltar is a nice place to live. Certainly had a better 20th century than the rest of Spain.

    I have no idea what you think but I expect that both of us are using the Greeks as a proxy for something else. A dislike of the Left’s assumption that people are basically the same in my case. A rationalisation of your dislike of British women and preference for some foreign strange in yours, I would guess. I wouldn’t take it so personally.

  51. So Much for Subtlety

    bloke in spain – “Because absent the Euro, the fecklessness of Greeks isn’t a matter for SMfS to worry his tiny mind about. It’s a purely Greek concern. So, if it bothers you, you must be in favour of the €uro project.”

    If a squatter moves into my spare bedroom, keeps his smelly shoes in the kitchen, puts his feet up at my dinner table while we are trying to eat, and I object, ever so mildly, this objection is proof I like the squatter moving in?

    Logic is not your strong suit old bean.

    It is purely a Greek concern right up to the point the rest of us have to pay for it. Let’s abolish the euro and then I can go back to not giving a flying monkey’s how feckless the Greeks are. As I don’t about Brazilians.

  52. “Given that we’ve been proven right would be nice to be acknowledged.”

    I look forward to your acknowledgement that Gordon Brown and Ed Balls were the economists whose actions actually achieved the most for Britain ever. (You were, with respect, just a shouty loon, even if right.) Go on, say it; “I love Gordon and Ed, who actually achieved something.”

  53. Luke,
    That’s a bit random and a bit vague.

    What were these great achievements? You can’t just claim Brown and Balls were the greatest ever for no particular reason.

  54. “It is purely a Greek concern right up to the point the rest of us have to pay for it.”

    I wasn’t aware you were a German taxpayer SMFS?

  55. BiI: zero hedge does have its fun. DB is not the healthiest bank, but the gross derivatives exposure number need not mean very much.

    I’ll ask again. Are there only German taxpayers in the EU?
    The French and Italian governments between them have contributed more to loans to Greece than the German government. (The largest loser as a percentage of GDP would be Slovenia.)

    …feckless Greece …
    The Greek government has make massive cuts, and has been running a primary surplus for the last two years. (Well, there may be some creative accountancy in there, but it’s at least been close enough to surplus to make that possible.) As a result of the cuts, it experienced a prolonged recession, sending unemployment above 25%, where it remains. It’s not true that the Greeks have fecklessly carried on spending other people’s money.

  56. Yes, quite.

    This use of “German” as a synonym for “European Union” is odd.

    Besides, the German economy has had the benefit of Germany dictating Eurozone policy. Her taxpayers should be at the back of any queue for sympathy.

  57. @Jack C

    “This use of “German” as a synonym for “European Union” is odd.”

    I think you answered your own question:

    “Germany dictating Eurozone policy”

  58. Bloke in North Dorset

    Jack C,

    “I’ll ask again. Are there only German taxpayers in the EU?”

    I know its a rhetorical question…..

    … but to answer it anyway, I read somewhere, and I can’t remember where and didn’t archive it, that each EZ country is exposed to a Greek default by an average of 2% of GDP.

    That’s why the smaller EZ countries who have been through their own austerity are taking the hardest lines.

  59. So Much for Subtlety

    Jack C – “I wasn’t aware you were a German taxpayer SMFS?”

    A lot of things you are not aware of. Germany is not the only net contributor to the EU.

    Social Justice Warrior – “The Greek government has make massive cuts, and has been running a primary surplus for the last two years. (Well, there may be some creative accountancy in there, but it’s at least been close enough to surplus to make that possible.)”

    The previous Greek government folded to European pressure and made cuts. Well, they slowed the rate of growth in spending. The Greeks responded by voting them out. Even though economic growth had started again. The Greeks had a solution before them and they did not like it. They voted for the feckless solution.

    “As a result of the cuts, it experienced a prolonged recession, sending unemployment above 25%, where it remains.”

    Unemployment in the feckless south has always been high. Because working is not central to men’s lives. They are feckless.

    “It’s not true that the Greeks have fecklessly carried on spending other people’s money.”

    Yes it. The fact that they have achieved a structural surplus on the basis of what are almost certainly faked figures doesn’t mean they are not continuing to spend other people’s money. They are.

  60. This was the point of previous bailouts – to transfer the liabilities from private banks to the ECB. Of course if Greece defaults, the ECB and by extension German taxpayers will take the hit and right now that’s politically unacceptable.

    I did hear that, having had their own liabilities taken on by the ECB (i.e. European taxpayer), the French banks proceeded to throw more money at the Greeks and could once again be in trouble should Greece default. If this is true, I hope those guillotines they have in the museums will be put to use once again.

  61. Well this morning, Jeremy Warner (doom-monger Evans-Pritchard’s water carrier) has advocated that Greece leave the euro. And then peg their currency to the euro.

    You couldn’t make it up. These antis have no fucking idea what they want.

  62. Luke

    Your comment re: Brown (more than Balls) and Blair reminds me of attempts to make excuses for the Nazis on the grounds of their opposition to smoking or support for organic farming. One swallow does not make a summer and although we owe them acknowledgement for not putting Britain in the Euro the verdict of history on the overall regime, which is now pretty much conclusive I think, is that they were the worst government the UK has had since probably at least the Civil War, if not prior to that.

  63. I thought Blair wanted in the euro quite desperately (and did so even after the crisis started) but Brown said no mostly to spite him.

  64. Gibraltar is a nice place to live.

    Relative to what?
    Maybe, if you can afford the high cost of living, a residence in the less crowded districts (population density is double London’s) and out of the horribly smelly wind that occasionally blows across the bay from the industrial areas in Spain. But there are much nicer places to live for the same money, some only a few km from the border and you could still get the Brit essentials from Morrisons.

  65. If we’re going to credit Brown for obstructing Blair, shouldn’t Major be congratulated for arranging the opt-out in the first place? Or is my memory playing tricks?

  66. Me: As a result of the cuts, [Greece] experienced a prolonged recession, sending unemployment above 25%, where it remains.

    SMFS: Unemployment in the feckless south has always been high. Because working is not central to men’s lives. They are feckless.

    You’re reporting your prejudices rather than reality. In the real world, unemployment in Greece in 1980, before it joined the EU, was 2.7%. In 2007, before the financial crisis hit, it was 8.3%. Now it’s 25.6%.

    SMFS: The previous Greek government folded to European pressure and made cuts. Well, they slowed the rate of growth in spending.

    No, they made deep cuts, despite rising unemployment.

  67. Re: ironman

    “Great contribution. Interested will be proud of you.”

    Good. He’s a good bloke and you’re a nob.

  68. “unemployment in Greece in 1980, before it joined the EU, was 2.7%. In 2007, before the financial crisis hit, it was 8.3%. Now it’s 25.6%.”

    Well I’d say the solution was clear – leave the EU sharpish.

    Which won’t happen of course, because the truth is, poor countries don’t have unemployment (in the welfare sense) because they can’t afford to fund people to do nothing. In 1980 Greece was dirt poor, and everyone had to work, or starve. Now, thanks to the rest of the EU allowing them to spend beyond their means, they can afford to have mass unemployment.

    Of course they don’t want to leave, it would mean going back to the old days of having to work or starve.

  69. “Pretty sure a big portion of that 25% would rather have a nice well paid government job that they can’t be sacked from than scrape by on welfare.”

    Fixed your comment for you.

  70. “Pretty sure a big portion of that 25% would rather have a nice well paid government job that they can’t be sacked from than scrape by on welfare.”

    The devils!

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