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  1. Standard member spruce112358
    Democracy Advocate
    15 Jun '11 11:13 / 1 edit
    Can they avoid it, or is it only a matter of when?

    One of the most pithy comments I have heard about Greece was: when someone is bankrupt, you don't start lending them more money at high rates of interest.

    It is interesting how short investment memory is. For example, suppose Greece defaults and a lot of people who loaned money lose their shirts. Fair enough -- that was their risk. But then whoever dares to step in and loans a little while after the default can demand a huge rate and may very well get it. As soon as that profit level becomes known -- suddenly everybody wants to lend the 'defaulter' money because they have 'learned their lesson' but still pay a high return.

    Perhaps the real risk to a country of defaulting is not that great -- which means that loaning money to a country with high levels of public spending is probably a BAD idea. Is there a lesson in that for the US?
  2. 15 Jun '11 11:58 / 1 edit
    Originally posted by spruce112358
    Can they avoid it, or is it only a matter of when?

    One of the most pithy comments I have heard about Greece was: when someone is bankrupt, you don't start lending them more money at high rates of interest.

    It is interesting how short investment memory is. For example, suppose Greece defaults and a lot of people who loaned money lose their shirts. igh levels of public spending is probably a BAD idea. Is there a lesson in that for the US?
    As Presient Obama would say, "Debt is our frined". After all, Obama must spend as many tax payer dollars as he can get his grubby little hands on to help fix the mess "W" got us into.
  3. Standard member wittywonka
    Chocolate Expert
    15 Jun '11 20:40
    Originally posted by whodey
    As Presient Obama would say, "Debt is our frined". After all, Obama must spend as many tax payer dollars as he can get his grubby little hands on to help fix the mess "W" got us into.
    Has Obama ever said "Debt is our frined"? Or even "Debt is our friend"?

    Do you disagree with the economic theory that when the economy is crashing--let alone struggling--the government should attempt to spur growth through investment?
  4. Standard member wittywonka
    Chocolate Expert
    15 Jun '11 20:44
    Originally posted by spruce112358
    Can they avoid it, or is it only a matter of when?

    One of the most pithy comments I have heard about Greece was: when someone is bankrupt, you don't start lending them more money at high rates of interest.

    It is interesting how short investment memory is. For example, suppose Greece defaults and a lot of people who loaned money lose their shirts. ...[text shortened]... igh levels of public spending is probably a BAD idea. Is there a lesson in that for the US?
    I don't think you're going to find anyone who wants the U.S. to default.

    Except for certain congressmen.
  5. Subscriber no1marauder
    It's Nice to Be Nice
    18 Jun '11 13:51
    Originally posted by spruce112358
    Can they avoid it, or is it only a matter of when?

    One of the most pithy comments I have heard about Greece was: when someone is bankrupt, you don't start lending them more money at high rates of interest.

    It is interesting how short investment memory is. For example, suppose Greece defaults and a lot of people who loaned money lose their shirts. ...[text shortened]... igh levels of public spending is probably a BAD idea. Is there a lesson in that for the US?
    This article http://www.msnbc.msn.com/id/43443426/ns/world_news-europe/gives an overview of how the Greek economy is worsening because of the austerity measures rammed down its government throat by the IMF and EU:

    Love and understanding were in short supply on the streets around Parliament, where protesters and police clashed this week, as well as within the walls of the prominent sand-colored building, where Greece's politicians failed to strike a deal to form a government of national unity to oversee the latest austerity measures the country has to adopt to qualify for more loans from the European Union and the International Monetary Fund.

    However, solidarity is a very relevant word in terms of Greece's plight 13 months after the EU and the IMF agreed to bail it out with 110 billion euros ($157 billion) in loans. Firstly, it's a word that's on people's minds because the government said it is introducing a "solidarity tax" that will lead to crisis-fatigued Greeks having between 1 percent and 4 percent of their incomes kept aside to help pay benefits for the rapidly growing number of unemployed.

    Story: Greek debt tsunami could reach US shores
    Maybe this does not seem such a big sacrifice to make to help those left without jobs as a result of the crisis. The problem, though, is that the "solidarity tax" is the latest in a series of new taxes or hikes that have been imposed since last year as the Greek government scrambles to gather more revenues to tackle its towering deficit and debt.

    The preferred method for raising more revenues was to increase value added tax (VAT). The top rate of VAT has increased twice since last year, rising from 19 percent to 23 percent. Duties on fuel, alcohol and tobacco have also increased substantially. So, a liter of gas in Greece now costs roughly 1.70 euros ($2.43), meaning it has gone from one of the cheapest countries in Europe to fill up your tank to one of the most expensive. Greece is now in the top three countries in the EU when it comes to VAT levels, fuel duty and social security contributions.

    Story: Political turmoil, financial markets in vicious cycle
    Greeks might have been able to put up with this if their jobs or salaries were not being threatened by the austerity measures and deteriorating economic conditions. Civil servants have had their wages slashed by 20 percent to 30 percent since last year. Pensioners have suffered similar cuts and wage reductions have already begun to hit the private sector. Consumption accounts for about 70 percent of Greece's economic output so the combination of tax hikes and wage cuts has had a devastating effect on businesses. Stores are feeling the impact of this downturn. Some 70,000 around Greece have shut down since last year but it's also estimated that 120,000 small to medium-sized enterprises will close by next year.

    With the Greek economy in its third year of recession and consumption drying up, job losses have inevitably followed. Figures published on Thursday showed that unemployment had soared to 15.9 percent in the first quarter of the year, up from 14.2 percent in the last three months of 2010. It's no surprise, therefore, that the government is trying to raise more funds to pay unemployment benefits. The problem is that the "solidarity tax" will result in only the bare minimum of support. The Greek state only pays a basic benefit of 500 euros ($715) a month for the first year that someone is out of a job. After that they're on their own. So much for solidarity.

    After a year of austerity measures and bailouts, Greece has a greater debt, a worsening economy, growing unemployment and no indication of how it will be able to create a sound basis for growth. It feels like a country that is being cut adrift. The EU and the IMF, which provided the financial support to prevent Greece defaulting on its debt, now appear caught between whether to step up their assistance or to cut their losses. The result is that there's no clear vision either from the Greek government or from its lenders on how to get out of this crisis.

    (Emphasis supplied)

    Wouldn't Greece be better off defaulting rather than accepting austerity measures that are causing depression era levels of unemployment with no clear prospects for improvement any time in the future?
  6. Donation rwingett
    Ming the Merciless
    18 Jun '11 14:06
    Originally posted by no1marauder
    This article http://www.msnbc.msn.com/id/43443426/ns/world_news-europe/gives an overview of how the Greek economy is worsening because of the austerity measures rammed down its government throat by the IMF and EU:

    Love and understanding were in short supply on the streets around Parliament, where protesters and police clashed this week, as well as wit ...[text shortened]... of unemployment with no clear prospects for improvement any time in the future?
    I agree. Greece should default and throw the system into tatters. Then it should drop out of the IMF and the EU.
  7. 18 Jun '11 14:25
    Originally posted by wittywonka
    Has Obama ever said "Debt is our frined"? Or even "Debt is our friend"?

    Do you disagree with the economic theory that when the economy is crashing--let alone struggling--the government should attempt to spur growth through investment?
    What did he invest in ? I thought it was shovel ready jobs ? The other day Obama laughed about it. Where are the jobs ? People need to go to work. A 830 billion dollar stimulus and we got a 9.1% unemployment rate. What good did it do ? I know what you are going to say, "It brought us back from the brink,yadda yadda yadda, It "saved" x-amount of jobs (which cant be proven). This economy is Obamas baby now and his first term is almost over and we seem worse off now than before. People are hurting in the private sector and we need jobs. Yesterday was the year anniversery of the "recovery of summer". It sure dont feel like it.Wheres the beef ?
  8. Subscriber no1marauder
    It's Nice to Be Nice
    18 Jun '11 14:29
    Originally posted by utherpendragon
    What did he invest in ? I thought it was shovel ready jobs ? The other day Obama laughed about it. Where are the jobs ? People need to go to work. A 830 billion dollar stimulus and we got a 9.1% unemployment rate. What good did it do ? I know what you are going to say, "It brought us back from the brink,yadda yadda yadda, It "saved" x-amount of jobs ( ...[text shortened]... year anniversery of the "recovery of summer". It sure dont feel like it.Wheres the beef ?
    This has what to do with Greece? Just because whodey decided (as always) to throw an off-topic anti-Obama rant into the thread doesn't mean it should be effectively hijacked.
  9. 18 Jun '11 14:40
    Originally posted by no1marauder
    This has what to do with Greece? Just because whodey decided (as always) to throw an off-topic anti-Obama rant into the thread doesn't mean it should be effectively hijacked.
    Talk about Greece then. I am not interfering with what you are saying to the other posters. My response is to wittywonka.
    And for the record ALL these discussions in this forum drift off topic,come back, then drift off again.
    You dont like what whodey,wittywonka,or myself are talking about ignore it.
    Its kinda funny coming from you complaining about hijacking threads or staying on topic.
  10. Standard member spruce112358
    Democracy Advocate
    18 Jun '11 17:10
    Originally posted by rwingett
    I agree. Greece should default and throw the system into tatters. Then it should drop out of the IMF and the EU.
    Let's all default. Once no one trusts governments enough to loan them money, they will have to begin spending within their means.
  11. Subscriber FMF
    a.k.a. John W Booth
    18 Jun '11 18:44
    Did any nation ever become prosperous because it paid it debts when it hurt to do so? Did any nation ever destitute itself because it defaulted?