Greek general election 2012

anandus said:

lol, and Syriza will also make wine run from the taps and caviar rain from the clouds?

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Instead of exploiting the confidence created by the Euro to borrow more, they'll now hold our currency hostage to get transfers. Benevolent people are even suggesting they should unilaterally print more money. All the while those whose money is drained without their consent by these actions are told that there's no place for them in the EU.

I dont get why the anti-austerity parties dont just say they want to leave the EU. If you dont like the EU's plan or how they operate, then it probably isnt the place for you. This idea that "oh well we dont like your rules or your methods but we still want in" is silly. Surely the EU has SOME method of ejecting a member?

I used to think it was the answer too, but if they did leave the Euro there would be some issues:

Greece or Portugal would lose up to 50% of their national income if they quit the euro, according to research by analysts at Swiss investment bank UBS.

A eurozone country with a more robust economy, such as France or the Netherlands, would see 20% to 25% of national income disappear if they went back to operating their own currency.

For Greece the loss would be $165bn (£100bn) from its $330bn annual gross domestic product, while France would suffer a loss of $660bn from its $2.65 trillion annual GDP.

The stark warning to eurozone members that a breakup of the euro currency club will cost them dear follows several speeches by policymakers and economists that the status quo is untenable.

German chancellor Angela Merkel has dismissed talk of a breakup, but has struggled to articulate a coherent alternative currency union that would include Greece and Portugal, the two ailing countries most likely to face eviction.

In Brussels, commission staff are busy working on plans for a closer fiscal and monetary union built around eurozone members, with stricter limits on borrowing and tighter banking regulations.

However, the slow pace of reforms in Greece and determined resistance in Italy to further austerity, has undermined moves for a closer union.

UBS said: "Under the current structure and with the current membership, the euro does not work. Either the current structure will have to change, or the current membership will have to change.

"If Germany were to leave, we believe the cost to be around €6,000 (£5,250) to €8,000 for every German adult and child in the first year, and a range of €3,500 to €4,500 per person per year thereafter. That is the equivalent of 20% to 25% of GDP in the first year. In comparison, the cost of bailing out Greece, Ireland and Portugal entirely in the wake of the default of those countries would be a little over €1,000 per person, in a single hit.

UBS analysts Paul Donovan and Stephen Deo also fear wider political ramifications.

"There are also political costs to consider. Europe's 'soft power' influence internationally would cease. We note that almost no modern fiat currency monetary unions have broken up without some form of authoritarian or military government, or civil war."

The economist Nouriel Roubini has long argued the costs of forcing ailing countries to maintain their membership of the euro could have even higher costs. Greece, Portugal and Italy could face a decade-long depression and political upheaval inside the euro, while the costs of a swift exit could be wiped out by strong growth with an independent currency.

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I have no idea how they came up with these figures or checked their methodology, but if it is to be believed then the Eurozone is f*cked.

I feel most sorry for Angela Merkel. She has been thrust into a leadership role that she is conspicuously incapable of fulfilling. It must be rather distressing to be so far out of your depth for so long.

Quackers said:

I have no idea how they came up with these figures or checked their methodology, but if it is to be believed then the Eurozone is f*cked.

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Weird article. They start off claiming that various countries would lose 20-50 % of their GDP if they quit. Then they turn to Germany but don't say how much output would decline but rather by how much government debt would rise.

Golden Dawn seems to be very popular among police officers: http://greece.greekreporter.com/201...-of-police-officers-voted-for-neo-nazi-party/

Kaiserguard said:

Actually, such is explicitly forbidden by the ECB. For instance, the Dutch Central Bank (De Nederlandsche Bank) occasionally printed money to fill up slight budget deficits in the Dutch treasury until 1999.

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No, they can't just print money to hand over to the state, or to buy state debt themselves. But they can still lend to banks, taking from them as collateral state bonds! Someone from Germany may be better informed, because there was some guy making a fuss about this there, but I think this is the way things go. This doesn't count as creating money, but as "guaranteeing liquidity in the financial system" which is an obligation of the central banks. The creation part would have been (technically) done by the bank's action of buying the new debt.

In practice this means that, so long as one bank is willing to cooperate with the state, the state can create unlimited debt ultimately backed by its central bank.

kronic said:

I don't think Greece is going to replicate Iceland once it exits and defaults. These are very different economies and societies. Iceland was wealthy and successful, something Greece in pre-Euro times never was. The Euro enabled Greece to enjoy a boom for some years (low cost of new debt being the primary reason), only to crash even faster over the past few years. Make no mistake. I've been saying for a long time (certainly longer than you) that Greece needs to get out because it has better prospects out of the Eurozone than in it. But there will be a lot of pain. I'm afraid that living standards in Greece will continue to fall for a while before they can rise again, with or without the Euro.

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Well, Iceland's default and devaluation has not been any bed of roses either. Iceland, as Greece, was (is) heavily dependent on imports for many kinds of goods. It has little diversity by way of natural resources to export.
An exit by Greece will be hard. It's just that at least it'll allow the freedom for new policies aimed at a recovery, something that now seems totally blocked.

Leoreth said:

Yeah, but you can also vote for Syriza who want to have the Euro without austerity, by getting other nations to fund them perpetually.

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I don't know what aims those people in Syriza have, but what I've been seeing from economists connected to other "left parties" in Europe is not quite that. They recognize that such a deal would be unsustainable, and they aim instead at creating conditions where the countries with "undervalued" currencies (those with current accountants surpluses) would leave the Euro, leaving the remaining countries in the Euro free to devalue it. Their rationale is that the costs of leaving the Euro are very big for countries having to devalue a national currency (bankruptcy of the whole financial sector, bank runs, likely some period of political anarchy with an uncertain outcome), but would be barely noticeable for those countries which left in order to revalue a national currency up (no bank runs, no immediate political fallout, etc).

This "the euro without austerity" is just a strategy to try to get a more "orderly" breakup of the Euro, not any serious attempt at avoiding it. The big unknown for them is in which side of the line will France choose to be in such a scenario. With Sarkozy's defeat they may be hoping that the "weak Euro" outcome can be achieved, with French aid. Or at least a two-way split, a "weak euro" and a "strong euro". But that, imho, is unrealistic.

Quackers said:

I have no idea how they came up with these figures or checked their methodology, but if it is to be believed then the Eurozone is f*cked.

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I absolutely don't believe it. Let's speak plainly: the Euro project was a banker's project, for the benefit of the (continental, as the UK refused to get on board) european banks. It may have had also some political inspiration, but it was the big banks, the ones aiming at "internationalization", that quickly got on board and pushed it along. The "architecture" of the Euro as a strong currency was designed to serve their interests, enabling them to go on a buying spree around the world. They have so much as stake in it now (their continued existence, in many cases) that you can only expect such dire predictions - it's scaremongering.

Having said why I don't trust any guesses coming from the major banks, I must admit that - depending on how the Euro ends - there is a possibility for some big economic collapses, and they can last for a few years if the political aspects get bad enough. But I'm guessing a rather quick recovery after a default, perhaps one-two years of confusion before a reorganization and quick recovery.

Mise said:

I feel most sorry for Angela Merkel. She has been thrust into a leadership role that she is conspicuously incapable of fulfilling. It must be rather distressing to be so far out of your depth for so long.

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I am sure your glorious leadership would be most appreciated. Why don't you run for office in Germany?

(Seriously, how do you propose to prepare a politicians who is elected mostly on the basis of domestic policy for a situation of these proportions? I haven't seen a single one who knows exactly what to do, how, and when. They all learn as they go.)

kronic said:

Golden Dawn seems to be very popular among police officers: http://greece.greekreporter.com/201...-of-police-officers-voted-for-neo-nazi-party/

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Maybe the Greek minister who talked about civil war on radio was right after all.

1) Grexit
2) Full default/bank run/economic collapse
3) Army/police steps in to "restore order" when anarchist bands start burning shops again
4) Bye democracy, you can't stay in cradle forever.

Then the EU will have to suspend Greece's membership somehow, we can't really have a member country that's not democratic. Seems like in the end, the other Balkan nations will have the last laugh.

Winner said:

[...] bank run [...]

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There's already a slow motion bank run in progress.
Last tuesday the Greek president already said that since the may 6th elections already 900 million euro has been withdrawn from the Greek banks.
(So one can expect it to be far far more).

I can't blame them, if I were a Greek I'd have put my money on a bank abroad in a stable eurocountry a long, long time ago.

Winner said:

I am sure your glorious leadership would be most appreciated. Why don't you run for office in Germany?

(Seriously, how do you propose to prepare a politicians who is elected mostly on the basis of domestic policy for a situation of these proportions? I haven't seen a single one who knows exactly what to do, how, and when. They all learn as they go.)

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Americans do it all the time, maybe you should ask them. It's high time that we in Europe elected leaders not solely on their domestic policies or their managerial skill, but also on their ability to show leadership on a world stage. Americans criticise their leaders on their inability to make peace in the Middle East or over diplomatic blunders with China or the USSR when that was around, but how often do European politicians' leadership abilities get questioned? This Euro crisis, characterised by a failure of leadership on all sides, from the ECB to the heads of governments of all European nations, has convinced me that it's time we started electing world-class leaders rather than constituency politicians.

Brown coulda sorted out the Eurozone crisis like a baws IMO.

innonimatu said:

I don't know what aims those people in Syriza have, but what I've been seeing from economists connected to other "left parties" in Europe is not quite that.

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I know, there's a reason I have singled out Syriza.

The new elections will be held on the 17th of june.
So that's about four weeks.

(For me, personally, it'll be exciting, I'm on holiday in Greece from the 12th to the 19th, so I'll hope there won't be a total shutdown of the country before the 19th
Also I hope I won't be beaten up because I'm Dutch but I'm not too fearful of that ).

Quackers said:

Brown coulda sorted out the Eurozone crisis like a baws IMO.

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Yeah, first he ended boom and bust, and then he went on saving the world. That's the fellow we need!

He has saved the world as you say, so the Eurozone should be a doddle for him

Rumours are that the ECB is cutting off support to some Greek banks. While member countries cannot force Greece out of the Eurozone, the ECB probably can.

Yeah, I get the sense that it's another crunch time for the Eurozone... My prediction is that the Eurozone will draw tighter together, so that Germany et al can have more direct control over Greece et al's budgets, in exchange for some sort of collectivisation of Greek debt.

Mise said:

Yeah, I get the sense that it's another crunch time for the Eurozone... My prediction is that the Eurozone will draw tighter together, so that Germany et al can have more direct control over Greece et al's budgets, in exchange for some sort of collectivisation of Greek debt.

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Do you think the Greek public and/or a government led by Syriza will accept that? I have my doubts.

kronic said:

Do you think the Greek public and/or a government led by Syriza will accept that? I have my doubts.

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If they want to stay within the euro they don't really have a choice I suppose.

Europe has been very patient with Greece for the last two years, but patience is running out ...