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elipson
1st May 10, 03:57 PM
How the fuck is it possible that people in Greece still want to hang on to their rediculously expensive pensions and over-priced public wages? The EU should let them burn in the bed they made for themselves. Too bad they are part of the Euro. Guess they should have set the bar a little higher.

I can't help but think of California when I read stuff like this, or the US as a whole for that matter.

http://www.cbc.ca/world/story/2010/05/01/greece-austerity-protests.html


Hundreds of youths rioted in Athens on Saturday, throwing Molotov cocktails and stones at police who responded with tear gas at a large May Day rally against austerity measures needed to secure loans for near-bankrupt Greece.

Responding to calls from the country's two main labour unions, several thousand people marched in major cities against anticipated spending cuts and consumer tax hikes.

In Athens, groups of black-clad anarchists in hoods and motorcycle helmets left the main demonstration and burned a TV van, smashed shop windows and set up barricades of flaming trash bins.

Some 17,000 people took part in the march, according to police estimates.

Police said 10 suspected rioters were arrested, while no severe injuries were reported.

The government is set to announce more sweeping spending cuts through 2012 to win support for an international loan package worth $60 billion this year alone.

The cabinet was to meet Sunday morning to finalize the measures, with Finance Minister George Papaconstantinou expected to announce them at noon and then immediately fly to Brussels for an emergency meeting of eurozone finance ministers.

The International Monetary Fund has said it will provide the money over three years, along with Greece's partners in the group of countries using the euro common currency. Talks with IMF and EU negotiators began in Athens on April 21 and continued through Friday.

French Finance Minister Christine Lagarde said Saturday that she was confident eurozone finance ministers would approve the package by the end of the weekend. Governments are discussing a package worth up to $159 billion over three years, she said.

Greece's additional austerity measures are likely to include raising consumer taxes while docking pensions and public service pay. Unions are furious.

"These measures are death," said Nikos Diamantopoulos, participating in a rally organized by unions. "How people are going to live tomorrow, how they're going to survive, I do not understand."

Union members held a peaceful march to the Athens offices of the European Union and on to the U.S. Embassy.

In the northern Greek city of Thessaloniki, where more than 5,000 people demonstrated, anarchists briefly clashed with police and smashed a few storefronts and bank machines.

Conservative opposition party New Democracy and the right-wing populist LAOS have been critical of the government but are seen as likely to support the package of measures. Left-wing parties have vowed to escalate protests.

"The Greek people do not owe anything to anybody," Left coalition leader Alexis Tsipras told reporters at one of the Athens rallies, assailing "those who have brazenly robbed public money and pension funds."

Virginia Kalapotharakou, an accountant who joined striking seamen and dockworkers rallying in the port of Piraeus, called the potential measures "very reactionary."

"They're trying to do away with all the rights we gained through struggles in previous years," she said.
Euro ripple effect feared

A debt default would be a serious blow to the euro currency and could ravage Greek and European banks that invested in Greek government bonds. The bailout is designed to prevent that and to keep the Greek crisis from spreading to other countries that use the euro.

German Chancellor Angela Merkel said Berlin is pushing for changes to the rules governing the eurozone, including the possibility of suspending voting rights for nations that do not uphold their commitments.

Merkel told the Bild am Sonntag weekly in comments released Saturday that European Union finance ministers would meet in May to discuss changes to the bylaws for the 16-nation eurozone.

The chancellor said the common currency has been one of the greatest European success stories but changes are needed to ensure its stability.

Greece spent freely for years and ran up public debts equal to 115 per cent of the country's total annual economic output. It has been effectively shut out of bond markets to refinance its debt pile because investors fear default and are demanding high rates of interest the government says it cannot pay.

Signs that help would soon be approved have calmed markets, which previously pushed Greece's cost of borrowing to untenably high levels as EU and German officials showed little urgency in addressing the problem. On Friday the interest rate gap between Greek 10-year bonds and their German equivalent narrowed to 6.20 percentage points, from a staggering 10-point spread on Wednesday.
Banks downgraded

But Athens was in for more bad news as credit agency Moody's Investors Service downgraded the debt rating of nine Greek banks: National Bank of Greece, EFG Eurobank Ergasias, Alpha Bank, Piraeus Bank, Emporiki Bank of Greece, Agricultural Bank of Greece, General Bank of Greece, Marfin Egnatia Bank and Attica Bank. Moody's said the banks might face further downgrades — alongside an ongoing review of the country's sovereign debt rating.

The agency said Thursday it was waiting to see details of the EU-IMF rescue package, but a "multi-notch downgrade" of Greece's credit rating remained likely.

EuropIan
1st May 10, 04:09 PM
Mediterranean countries are corrupt.

HappyOldGuy
1st May 10, 04:11 PM
I can't help but think of California when I read stuff like this, or the US as a whole for that matterl (http://www.cbc.ca/world/story/2010/05/01/greece-austerity-protests.html)

So you're saying that greece is the most successfull economy on the planet?

HappyOldGuy
1st May 10, 04:14 PM
Oh, and

MPXGRD3A6FY

EuropIan
1st May 10, 04:15 PM
I think he's saying the government is being bankrupted by its populace.

Cullion
1st May 10, 04:37 PM
Whilst there are reasons to keep an eye on California and US public finances at the moment, Greek public financial problems due to corruption and stupidly generous entitlements are on a whole different level.

It's not uncommon in Greece for people to receive a monthly paycheck for a public sector job they don't actually turn up to, whilst working another job, or tending the family farm (whilst drawing EU agricultural subsidies on that too).

Their pension arrangements, Christmas bonus system (you get two paychecks at the end of the year) etc.. are all way beyond what you'd consider 'generous' for equivalent jobs in North America or Northern Europe.

It's a whole culture that's basically been on a really generous form of welfare for years (paid for by them running up enormous public debts which they've employed completely fraudulent accounting tricks to hide, and subsidy from EU nations with more of a work ethic).

And at the same time, tax evasion is basically a national sport.

Here's an article by a brit who plays in an orchestra over there and has lived there for 20 years

http://www.dailymail.co.uk/news/article-1269679/GREECE-DEBT-CRISIS-My-20-year-love-affair-thats-turning-nightmare.html

The views he expresses here have also been echoed by a greek guy I worked with for a couple of years.

I'm extremely glad the UK isn't in the Euro at the moment.

elipson
1st May 10, 04:40 PM
I think he's saying the government is being bankrupted by its populace.

This.

I'm actually very pessimistic about the US economy as a whole over the next decade, and California in particular. The way that nobody really seems to care that they are bankrupt is shocking.

What scares me about US federal finances is the void of political will to actually cut the big spending items that they love (Defense spending, NASA, etc...), the rhetoric being spewed when the T word is even mentioned by the administration, and the difficulty Obama had passing a reform bill that will save tens of billions of dollars each year (medical reform).

The US love of defense spending and their insistence on maintaing their global hegemony (ala Sarah Palin, lol) will be what breaks the bank.

Cullion
1st May 10, 04:43 PM
Like I say, there's reason to be concerned, but until over 50% of the American workforce is essentially employed in a debt-funded public sector role that doesn't even require them to turn up most of the time, comparisons with Greece aren't needed.

The UK is in more trouble than the US and if any G7 country snaps I suspect it would be us first.

EuropIan
1st May 10, 04:44 PM
Yeah but, as Cullion has pointed out, Mediterranean countries are in a league of their own when it comes to embezzlement and political subterfuge.

You can't win that war.

And you won't go down that path.

HappyOldGuy
1st May 10, 04:50 PM
This.

I'm actually very pessimistic about the US economy as a whole over the next decade, and California in particular. The way that nobody really seems to care that they are bankrupt is shocking.

What scares me about US federal finances is the void of political will to actually cut the big spending items that they love (Defense spending, NASA, etc...), the rhetoric being spewed when the T word is even mentioned by the administration, and the difficulty Obama had passing a reform bill that will save tens of billions of dollars each year (medical reform).

The US love of defense spending and their insistence on maintaing their global hegemony (ala Sarah Palin, lol) will be what breaks the bank.
Because we're not. US Public debt as a percentage of GDP is lower than Canada, the UK, Germany, and most of the industrialized world. And it's nowhere near our highest point. Our debt is high in absolute terms, and it's higher than it should be. But seriously dude. Deal with that fucking beam in your own eye before you worry about our mote.

Cullion
1st May 10, 04:50 PM
If Americans collapse their economy they'll do it whilst working really hard at something pointless trying to keep their banking executives in cocaine. They won't all just go on a 10 year holiday whilst voting themselves massive welfare spending.

bob
1st May 10, 04:58 PM
How much of the Greek economy is subsidised by remits from expats?

sochin101
1st May 10, 05:00 PM
Re: Riots
Greece still has compulsory national service.
Conscripts get paid nothing, almost literally.
This explains, in part, the young Greeks' willingness to kick off at the drop of a hat.
The youth are massively discontent.
See the 2008 riots, also, for the depth of anti-establishment feeling.

And, lest we forget, Sparta.

Cullion
1st May 10, 05:10 PM
How much of the Greek economy is subsidised by remits from expats?

I can't find any figures for it. One of the features of Greece is that getting reliable financial data of any sort out of the country is difficult. There's no way the average greek is going to report gifts received from relatives out of the country to their government.

The country's entire exports for a year are roughly equal in value to one good financial quarter for Microsoft.

Their public sector's current annual deficit is almost triple the value of Greece's entire export output, and they only have about 3 billion in foreign reserves.

Their current outstanding external debt is about the same size as the US annual defence budget.

On a human scale, Greece is a man who earns $20,000 a year trying to service a multi-million dollar mortgage using other people's credit cards.

Keith
1st May 10, 05:16 PM
Hopefully this will devalue the Euro enough that a European vacation will be a good deal in the near future. I've wanted to go back for a while since my last tour funded by Uncle Sam's Big Gray Yacht Club.

I feel sorry for the common people getting screwed over by this.

Cullion
1st May 10, 05:27 PM
This is what happens when people start pretending there's such a thing as a free lunch.

elipson
1st May 10, 05:32 PM
Because we're not. US Public debt as a percentage of GDP is lower than Canada, the UK, Germany, and most of the industrialized world. And it's nowhere near our highest point. Our debt is high in absolute terms, and it's higher than it should be. But seriously dude. Deal with that fucking beam in your own eye before you worry about our mote.

Don't get your fuckin panties in a knot. I didn't say you're all going to hell for being loosers.

And FWIW, Canada has a lower unemployment rate than the US and has started growing again.

Cullion
1st May 10, 05:34 PM
Australia and New Zealand are the 'western' countries I expect to come out of this credit trouble in the best shape.

HappyOldGuy
1st May 10, 05:34 PM
Greece though they could buy low unemployment too.


Australia and New Zealand are the countries I expect to come out of this credit trouble in the best shape.

They're obviously in the best shape of the anglophone countries, and the UK is the worst, but I don't think any are in likely trouble.

Cullion
1st May 10, 05:36 PM
Greece thought Germany and the UK could buy low unemployment for them.

OZZ
1st May 10, 11:05 PM
HOG you are a fucking spaz...You should change your screen name to UNHAPPY ADOLESCENT.

HappyOldGuy
1st May 10, 11:47 PM
Yeah, it's that adolescent obsession with facts. Get's me every time.

Kein Haar
2nd May 10, 06:26 AM
See, I wouldn't have expected that.

Greek-Americans are these insular, aggressive, shameless, entreprenuers.

Cullion
2nd May 10, 07:46 AM
They're obviously in the best shape of the anglophone countries, and the UK is the worst, but I don't think any are in likely trouble.

The UK is at substantial risk of having it's credit rating downgraded from AAA status, and even within the AAA band our government now pays a higher risk premium on it's borrowing than McDonald's corporation.

Cullion
2nd May 10, 07:50 AM
See, I wouldn't have expected that.

Greek-Americans are these insular, aggressive, shameless, entreprenuers.

Would you expect a shameless entrepeneur to turn down free money ?

Decentralised, mild, democratic socialism can be made to work with a population of scrupulously honest, calm-tempered, hard-working Scandanavians. In the hands of selfish, dishonest and irrational people it's like giving dynamite to a baby.

Plus, there's selection bias. People who emigrate to a country like the US are going to be less likely to be looking for a cosy free-ride. They're likely to be self-selecting entrepeneurial types who are willing to work hard in the hope of hitting the big-time.

Consciously choosing American working culture over chilling out in the mediterranean sun collecting generous welfare checks says something about a person.

sochin101
2nd May 10, 11:04 AM
If you want the real Greek take on this, you'd could always ask someone from Melbourne...


Australia and New Zealand are the 'western' countries I expect to come out of this credit trouble in the best shape.I haz agreementz with the Earl.
Australia has some pretty weird ideas (like the Stimulus payment: here, have $900... go spend it in Aussie shops), but they're also sat on a shitload of natural resources. When we all run out of gasoline and natural gas, Australia will be LOLing at everyone, in their special not-really-giving-a-shit-unless-you're-too-brown way.

Cullion
2nd May 10, 11:13 AM
This is why I think Australia and New Zealand will come out of it the best out of the anglophone countries:-

i) They make stuff people actually need and will still stump up the cash for even when they're broke, or close to it (i.e. they have a substantially natural resource- based economies). There's a lot to be said from making your living from concrete, real stuff when times are hard.

ii) They've got good geographic trade links with the asian economies which I also believe have handled their finances better than the rest of us (e.g. China, Singapore, India, amongst others). They can make a good living selling minerals and food to them.

iii) I think stimulus packages are a bad idea as a general rule, but if you're going to do them, spreading out cash to ordinary working people actually makes more economic sense to me than pumping them into the boardrooms of priviledged service businesses that perform a fairly questionable and abstract economic function (i.e. the $900 stimulus checks to people having trouble with debts makes more sense than trillion dollar checks to multinational banks).

iv) Australia doesn't favour financial asset trading over real goods production in its tax system. They tax capital gains at the same percentage as they tax income from a regular job. I believe this to be an important cultural, as well as economically practical, sign that they aren't prepared to let the financial services coke-heads get out of control.

In summary, I'm a working class capitalist.

bob
2nd May 10, 11:04 PM
I spent my $900 on Philipino prostitutes.

Cullion, you are largely correct. Whether this all holds true in 10-15 years is the question.

Yiktin Voxbane
2nd May 10, 11:26 PM
Mine went on bills largely .

That in turn allowed me to enjoy a better style of life for sometime , only now am I getting to the stage where each pension cheque there's 1 bill that remains on the fridge awaiting payment .

For me that means cheaper meals (veg + pasta is wonderfully filling) and I think it might just be time to abandon the selfish and self-indulgent habit that is smoking ciggies . Which in turn will in theory allow for a healthier life with less strain upon the medical system .... not that I get sick, is a decade + since I last frequented a doctor .

KO'd N DOA
3rd May 10, 04:25 PM
Will the Greek youth, now spread across Europe in caravans plastered with White and Blue, to get jobs, education, skills...or are they wondering what the melons and cucumbers tasted like under the Turks.

Cullion
3rd May 10, 04:30 PM
Most of them probably think this is America's fault.

I'm serious.

Kein Haar
3rd May 10, 04:37 PM
Hey, at least we party like civilized humans when vacationing there.

Cullion
3rd May 10, 04:40 PM
No you don't.

Kein Haar
3rd May 10, 04:42 PM
As if you've had a vacation in recent memory.

Cullion
3rd May 10, 04:42 PM
What do you mean ?

Kein Haar
3rd May 10, 04:45 PM
The family.

They are keeping a lid on your rock star status.

MEGA JESUS-SAMA
3rd May 10, 04:47 PM
Then why is he always buying so much cocaine from me?

Cullion
3rd May 10, 05:01 PM
The family.

They are keeping a lid on your rock star status.

Last time I took them overseas was to the South of France, I'm too bling-bling for Greece these days. (okay, that was 2 years ago).

Anyway, here's a big colourful chart about how much trouble our financially chaotic Mediterranean friends are in, and how the trouble could spread:-

http://graphics8.nytimes.com/images/2010/05/02/weekinreview/02marsh-image/02marsh-image-custom1.jpg

Kein Haar
3rd May 10, 05:01 PM
MJS,

That reinforces my point.

He does that shit all by himself...in his car...after work....a block from his house.

Kein Haar
3rd May 10, 05:02 PM
Italy owes France money. Wow.

Cullion
3rd May 10, 05:04 PM
And Germany. The Germans will collect payment in gold teeth if they have to.

Cullion
3rd May 10, 05:10 PM
well, yes.

EuropIan
3rd May 10, 06:59 PM
Most of them probably think this is America's fault.

I'm serious.
This is true.
Greece has a strong anarchist/anti-authoritarian movement.

America hating comes with the territory.

Vieux Normand
3rd May 10, 07:49 PM
Italy owes France money. Wow.

France had any money to lend anyone...as in all the debtor nations on that chart.

Wow.

Considering the sense of entitlement rife in la république (as obnoxious as anything found elsewhere along the jolly Mediterranean), that France has any economy at all--let alone enough to be a lender--is just astonishing.

EDIT: Must be the international armaments sales (of varying degrees of legality). Some forms of Mediterranean corruption do manage to result in actual profit...

jkdbuck76
3rd May 10, 08:19 PM
This is true.
Greece as a strong anarchist/anti-authoritarian movement.

America hating comes with the territory

Anti-government folks who want MORE guhment titty money?

I showed this thread to my boss who is married to a Greek.
He said of the Greeks "They are all crazy."

EuropIan
3rd May 10, 09:04 PM
Anti-government folks who want MORE guhment titty money?

I showed this thread to my boss who is married to a Greek.
He said of the Greeks "They are all crazy."
This cognitive dissonance is common in Europe.

Ajamil
4th May 10, 04:47 AM
They should've turned the general shape of the graph around. And then added pitchforks and flames. Why don't debts between two countries cancel out? If Italy owes France, and France owes Italy...or is this not between the govts. and is a general understanding of GDP?

Cullion
4th May 10, 05:31 AM
Anti-government folks who want MORE guhment titty money?

Greece has swung backwards and forwards between verging-on-communism and right-wing military dictatorship since WWII. 'Anarchism' for most Europeans is basically a very left-wing movement with Marxist roots.

They don't see it as government titty money, they see it as forcing a rich and evil class of international capitalists (mostly backed by the US) to share the loot. You see, it was really their money all along, and you stole it from them with your unfair competition and inhumane work ethic.

They managed to win it back for a while after the glorious victory of the Papandreaou crime family socialist political dynasty, and now you're trying to steal it from them again.

danno
4th May 10, 09:12 AM
Decentralised, mild, democratic socialism can be made to work with a population of scrupulously honest, calm-tempered, hard-working Scandanavians. In the hands of selfish, dishonest and irrational people it's like giving dynamite to a baby.

i've been thinking about writing an article on australian democratic socialism and how it was a natural choice for us culturally, but you keep distracting me with the bloody climate stuff.

KO'd N DOA
4th May 10, 10:13 AM
Usually when you lend to someone you put up a security. Is it the Acropolis, the women, an Island, off shore oil, another Musical, feta? What will be taken?

Cullion
4th May 10, 10:56 AM
When you lend to a country you secure it against the future labour of its citizens and charge an interest rate based in part on how likely you think they are to deliver on the promise.

Cullion
4th May 10, 12:25 PM
i've been thinking about writing an article on australian democratic socialism and how it was a natural choice for us culturally, but you keep distracting me with the bloody climate stuff.

It would all go away if you just admitted I was right.

danno
4th May 10, 08:25 PM
the problem with that is you aren't actually right...

Cullion
5th May 10, 01:12 PM
The rioters killed a few people today in Athens. They set fire to a bank in the city centre, amongst other things.

Vieux Normand
5th May 10, 02:50 PM
The rioters killed a few people today in Athens. They set fire to a bank in the city centre, amongst other things.

Wait...doesn't that require effort?

Cullion
5th May 10, 02:53 PM
Not exactly, I think the rioters were probably enjoying it.

HappyOldGuy
5th May 10, 02:55 PM
If riots aren't fun, you aren't doing them right.

Cullion
5th May 10, 03:02 PM
If you can organise something to burn down the Federal Reserve building in Washington I will hire, and fly out, Technoviking himself to DJ at your 50th birthday party.

Ajamil
5th May 10, 03:38 PM
Saw some footage on the news. People were throwing molotovs and trying to use poles/wooden beams to smack cops off their cycles. Messed up.

Cullion
5th May 10, 03:40 PM
Once you give people 'free' money, it's very hard to take it back. Especially when they've had decades to start feeling entitled to it.

jkdbuck76
5th May 10, 04:06 PM
Sad to see the people who invented western thought end up this way.


Edit: What I mean to say is that it is sad to see them all latched to the guhment titty like that. I mean, latching onto a titty is fine, just as long as it isn't the guhment titty.

Feryk
5th May 10, 05:34 PM
I feel sympathy for the Greek people. Imagine being told one day, 'oh, and because we are so far in debt, all public services are going to come to a grinding halt, health care is going to suck for you, and retiring at 50? Nope. Not you. Not ever.'

It's easy to see it from the outside, but the average Greek citizen didn't understand that this could happen. Basically, their entire standard of living is going to go in the toilet for decades over this.

Hopefully, this anger translates into demanding transparency from their government and a reduction in corruption. Then, they might have a chance. Otherwise, they are fucked for the next 40 years.

Cullion
5th May 10, 05:46 PM
They really were so brave against the Axis in WWII. That's part of why they feel this sense of entitlement. In a sense, the pre-WWII communist-vs-fascist struggle in their society was never fully resolved.

I've been to Athens once, about 8 years ago. It was a strange but interesting place. There was thick yellow smog every morning, and everybody smoked like it was the 1950s.

I saw a lot of political slogans sprayed on walls (more than a few hammer and sickles), ruined byzantine churches, and people selling home crafts to the tourists.

A strange old lady who spoke excellent English stopped me in the street to try and sell me some pottery, and then lectured me for a while about how England should return the Elgin Marbles, how Athens should return to a system where the resources of the state were shared amongst the citizens and how the old gods should be worshipped again once they had the marbles back.

I was polite and said 'okay, as long as the Turks pay us for the marbles. we did pay for them you know, but I understand they weren't really the Turks' to sell'. This made her laugh and pinch my cheek.

The food was alright though, and there were some delicious women.

Spade: The Real Snake
5th May 10, 06:04 PM
Once you give people 'free' money, it's very hard to take it back. Especially when they've had decades to start feeling entitled to it.

well since it is "free money" they can just print more, right?

that is "the plan" isn't it?


just print more?









right?

Cullion
5th May 10, 06:10 PM
Sure, I don't see why not.

Spade: The Real Snake
5th May 10, 06:15 PM
See, problem solved.
Greeks are happy, rioting stopped and Germany is screwed.

Everyone wins.

Cullion
5th May 10, 06:17 PM
Oh, there's one problem.

It's probably not a good idea to let the Germans just start printing money again.

They get kind of.. carried away, you know ?

Spade: The Real Snake
5th May 10, 06:44 PM
Oh, there's one problem.

It's probably not a good idea to let the Germans just start printing money again.

They get kind of.. carried away, you know ?

Just humor them, wait 'till they are done and have the rest of the Euros go "LOL WE'RE USING NEUVO-ERUOS NOW! DIDN'T U GET THE MEMO?"

jkdbuck76
5th May 10, 08:20 PM
This made her laugh and pinch my cheek.


Your ass cheek? I've always heard that Greek women were saucy.

Feryk, I wonder if the same thing will happen in the USA when they finally say "Sorry folks, but Social Security is totally out of money. Thanks for paying into all those years, but its all gone."

I mean, at some point, the over-spending of governments has to stop. I was reading the other day that one of the reasons foreigners supported the White Army in Russia was that the Czar had amassed lots of debt and the nations who loaned the money knew the Reds wouldn't pay it back. But I digress and never make a point as I am wont to do.

It just galls that shit out of me to see the birthplace of democracy be reduced to what it is now. Let THAT be a lesson to all countries.

HappyOldGuy
5th May 10, 08:47 PM
The US controls it's own currency, so it actually can just print more money.

The inflationary effect is effectively a tax on fixed value assets including debts, and pensions. It's pretty well targetted actually.

As long as you're not a pensioner of course.

Ajamil
5th May 10, 10:23 PM
Pfft, just start printing other countries' money. What'll they do? Send in a raid?

elipson
6th May 10, 01:10 AM
The inflationary effect is effectively a tax on fixed value assets including debts, and pensions. It's pretty well targetted actually.

As long as you're not a pensioner of course.

It's a good thing wages respond so effectively to rising inflation.

Oh wait.....

Yiktin Voxbane
6th May 10, 01:38 AM
It amazes me that the Greek populace can rise up in cohesive unity to battle the Authorities , yet cannot muster the same Verve to actually help their country .

The people fear the Weaning process .

Cullion
6th May 10, 02:47 AM
The US controls it's own currency, so it actually can just print more money.

The inflationary effect is effectively a tax on fixed value assets including debts, and pensions. It's pretty well targetted actually.

As long as you're not a pensioner of course.

The effect is to redistribute real wealth towards people who get their hands on the new money soonest.

It hurts most people like you and I, as well.

HappyOldGuy
6th May 10, 10:57 AM
It's a good thing wages respond so effectively to rising inflation.

Oh wait.....
Better than they do to rising income taxes.


The effect is to redistribute real wealth towards people who get their hands on the new money soonest.

It hurts most people like you and I, as well.

No, the first tier banks slice remains essentially untouched. They make more dollars but the dollars are worth less. There is no redistribution effect at all.

It hurts people on fixed incomes, and people with fixed value assets.

Feryk
6th May 10, 11:26 AM
Feryk, I wonder if the same thing will happen in the USA when they finally say "Sorry folks, but Social Security is totally out of money. Thanks for paying into all those years, but its all gone."

I mean, at some point, the over-spending of governments has to stop.

This COULD happen, but I believe that Obama will prop up Social Security by doubling the premiums, reducing the benefits, and hacking the shit out of the Military budget. His legacy will be to leave Social Security in the same shit it's in now for the next 20 years, instead of having it collapse.

I think some societal changes will help too. When I first started as a financial planner, all anyone could talk about was retiring at 55.

Now, no one does. 55 is too young to stop working. ALL of my clients who have retired at 55 have gone back to work (I have several hundred clients, so I think this is a trend). Most don't need the money, they just want to contribute, need to get out of the house...and some extra money doesn't hurt. People will be taking Social Security later...and claiming less.

In fact, they are going to make you...if you were born after 1960 you don't get full benefits until age 67 now.

http://www.ssa.gov/OACT/ProgData/nra.html

Also, expect some sort of clawback to occur at some point. If, for example, your company pension pays you $70,000/year, then you start to lose the amount of PIA you are entitled to...if your total income exceeds $150,000 you lose it all.

Because people in general are taking better care of themselves, most of my 60+ year old clients are still healthy and active. Sitting at home, or golfing every day gets old fast. Most of you can look forward to working late into your 60's. Enjoy :)

Feryk
6th May 10, 11:28 AM
It hurts people on fixed incomes, and people with fixed value assets.

Or anyone who doesn't have a wage tied to the inflation rate. Or anyone who is in an industry that is supported mainly by retirees or lower income families. Or anyone who notices a drop in their discretionary spending ability due to rising prices and diluted asset values.

I think if you look at your above statement and add the word 'first' at the end, it would be more accurate.

HappyOldGuy
6th May 10, 11:32 AM
Or anyone who doesn't have a wage tied to the inflation rate. Or anyone who is in an industry that is supported mainly by retirees or lower income families. Or anyone who notices a drop in their discretionary spending ability due to rising prices and diluted asset values.

I think if you look at your above statement and add the word 'first' at the end, it would be more accurate.

All taxes hurt someone. That's assumed.

Reasonable currency inflation is just another tax. People have been sold a bill of goods that it is some sort of apocalyptic event. It is a tax with fairly predictable winners and losers.

Feryk
6th May 10, 11:37 AM
Only that inflation isn't under the direct control of the government. They can stimulate it, or depress it, but it's a beast with a mind of it's own...and that makes it difficult to predict.

HappyOldGuy
6th May 10, 11:38 AM
Only that inflation isn't under the direct control of the government. They can stimulate it, or depress it, but it's a beast with a mind of it's own...and that makes it difficult to predict.

Currency inflation is 100% in their control. Price inflation is a different beast.

Feryk
6th May 10, 11:43 AM
Surely you realizes that one influences the other and vice versa. Yes, they can control how much currency is in circulation (somewhat), but that in turn affects the price of goods, etc.

HappyOldGuy
6th May 10, 11:49 AM
Surely you realizes that one influences the other and vice versa. Yes, they can control how much currency is in circulation (somewhat), but that in turn affects the price of goods, etc.
Yes, but the inflationary effect of increasing the money supply is fairly distributed and independent of the other factors that contribute to CPI type inflation measurements. So it doesn't make CPI inflation any harder to predict.

Cullion
6th May 10, 12:43 PM
No, the first tier banks slice remains essentially untouched. They make more dollars but the dollars are worth less. There is no redistribution effect at all.

That's not true, because prices don't adjust immediately and completely the moment that the new money comes into existence, there's a time delay. Prices change for a particular asset as the money is spent on that asset. The person who is given the new money first has the opportunity to invest it at prices which have not yet completely adjusted.

If the inflation occurred the very moment it was created, then the US would already be experiencing something like hyperinflation, but it's not, because all the new money I'm about to show you is being hoarded by the top-tier banks.

Here's your monetary base over time:-

http://www.drorism.com/blog/Monetary%20Base%20.png

Nice spike at the end.

CPI inflation isn't the only index to track to look at the effect of the new money, you see, because the effect on asset inflation (which the CPI doesn't track very well at all, and isn't meant to) is where a lot of the real wealth transfer happens.

The only way for a normal person to get in on this action is to carefully study all this stuff and then when they feel confident that the new money is about to find a home in the value of a particular asset, they take a substantial risk (usually with a lot of leveraging) before, or at the beginning of the boom. This is what the early property speculators who managed to get out in time managed to pull off.

But over time, the beneficiaries are the people who get the money first.
Which in the US case, are the banks receiving new money from the Fed.

Currency inflation is barely under US govt control at all, it's under Fed control, and the Fed isn't a government department and the appointment mechanism only allows the president to appoint somebody from a shortlist drawn up by representatives of private banks. And the president appoints the Fed governor for much longer than 2 presidential terms.

HappyOldGuy
6th May 10, 01:34 PM
But the banks don't own the assets. The asset inflation is actually money moving away from banks. Because their loans are for fixed values.

And the government has exactly as much control over the fed as it wants to take.

elipson
6th May 10, 01:53 PM
Better than they do to rising income taxes.

Taxes don't rise exponentially like inflation does.
Taxes are also directly controled by the government, where Inflation is a much more difficult beast to wrangle. (Damnit Feryk! Beat me to it)

Your argument is full of fail.

HappyOldGuy
6th May 10, 02:06 PM
Your argument is full of fail.
My argument is only full of fail to people who don't know that there is more than one type of inflation. Or to people who don't understand that Hyperinflation is not caused by printing too much money.

elipson
6th May 10, 02:40 PM
OK i'll bite.

Please explain the causes of hyperinflation.

Be sure to include references.

Feryk
6th May 10, 02:46 PM
http://en.wikipedia.org/wiki/Hyperinflation#Root_causes_of_hyperinflation

In summary, Hyperinflation is caused by a massive increase in money supply without a corresponding increase in the amount of goods and services available. Sorry, HOG.

HappyOldGuy
6th May 10, 02:49 PM
OK i'll bite.

Please explain the causes of hyperinflation.

Be sure to include references.
Hyperinflation is caused by economic collapse. The collapse is the underlying cause, causing a loss of faith in the currency and a preference for spending rather than saving it. Governments printing money can exacerbate the problem (sometimes ridiculously), but I can't think of a single example in history where they caused it.

I may be wrong, but I need to see an example. And I have looked. Germany=war debts and worldwide depression, zimbabwe=collapse of agricultural sector, etc.

Feryk, you should actually read your cites. It gives three different theories (really schools of theories) for the root cause and says that there is no consensus.

Feryk
6th May 10, 02:58 PM
HoG with all due respect, that is a semantic arguement. Of course hyperinflation is a symptom of economic collapse. Why else would the government start printing money like it is going out of style? There is always an underlying issue.

The underlying issue can be different each time, however, the solution to debts you cannot pay is the same in all the examples you named: Inflate away the currency.

However, it can be like letting a genie out of a bottle. Inflation causes an erosion in confidence in your currency, and that causes people to funnel their money out of your country as fast as possible. This leaves those in your country without any kind of buying power, either internally or externally. The last two parts are beyond the governments ability to control, but history shows that when these things happen, they happen very quickly.

Eventually, in order to revalue their economy, the government will return to a hard currency (backed by real assets) -- but only after all of their debt has been retired, written off, or revalued at 10% on the original dollar.

HappyOldGuy
6th May 10, 03:00 PM
It's not a semantic argument. It's the core point to this argument. Because people are arguing that hyperinflation is an inherent risk of inflationary spending in an otherwise healthy economy.

Feryk
6th May 10, 03:23 PM
I'm sorry, who is arguing that? And who's economy is otherwise healthy that is under discussion? Greece? the US?

You lost me.

HappyOldGuy
6th May 10, 03:27 PM
I'm sorry, who is arguing that? And who's economy is otherwise healthy that is under discussion? Greece? the US?

You lost me.

Elipson said we should avoid inflationary spending in general because it can explode into hyperinflation. Not only do I not believe that to be true, I believe it to be a myth that has been used by folks with a vested interest to pursue policies that result in inflated dollar values which help financial institutions at the expense of other sectors of the economy (specifically US, although I think you could make a similar case in several countries).

Feryk
6th May 10, 03:45 PM
What Ellipson said was that inflation can move beyond the control of the government. I also said that. It wasn't necessarily a reference to hyperinflation. At least, that's what I took from his last several posts.

The idea of raising the spectre of INFLATION to pursue other political/economic agendas is not new, nor limited to the US. I think we would all agree that those forces exist in almost every free economy.

The idea that the US economy is 'otherwise healthy' is a subject of much debate currently. I wouldn't call it that. I'd say that it is unhealthy with a reasonable prognosis of recovery. But you guys have to be very careful for the next few years, or you will have a major problem.

elipson
6th May 10, 04:54 PM
Elipson said we should avoid inflationary spending in general because it can explode into hyperinflation.
Um, excuse me. When did I say that?

I made a comment about inflation rising exponentially (in that if you have 4% inflation for two years, the actual inflation for the second year is 104 x 4%=108.16, and so on and so forth for the following years), whereas income taxes do not behave in this way. Perhaps exponentially was a poor choice of wording. Compounding may have been less confusing.

I then pointed out that taxes are DIRECTLY controlled by the government, while inflation at the very best is merely influenced by government.

Cullion
6th May 10, 05:43 PM
But the banks don't own the assets.

At which point in time ?


The asset inflation is actually money moving away from banks. Because their loans are for fixed values.

I believe the asset inflation occurs at the point where the banks start spending their funds on the open market.



And the government has exactly as much control over the fed as it wants to take.

I don't agree on this. I'm not sure if we need a different thread for it.

Let me make one thing clear: I absolutely consider this to be too important a point to conduct a flame war over. I will not troll you on this. This, IMHO, is way beyond a left-vs-right issue.

Please ask me detailed questions where you think I'm wrong. But I promise you not to go 'sports-team' over this.

HappyOldGuy
6th May 10, 05:49 PM
Feel free to start another thread. Although this might be a good time to mention that I start a new job next week at a company that actually has an internet use policy.

You're gonna miss me after you recover from your celebration induced hangovers.

Cullion
6th May 10, 05:55 PM
Okay. My specific point here is a kind of technical one.

"Does monetary inflation hurt people who are still working?"

My contention will be "Yes, but it's a gradual process via the mechanism I described"

I'll get this done.

Cullion
6th May 10, 07:52 PM
But the banks don't own the assets.

Yes they do, the assets are on their balance sheets and they're earning interest from them.



The asset inflation is actually money moving away from banks. Because their loans are for fixed values.

The banks have had notional treasury bonds, created out of nothing, given to them which they were allowed to 'buy' with rotten commercial loans. They've been allowed to swap tanking usurious IOUs that they didn't want for bond-options on the future value of your labour enforced by law via the IRS. I'm amazed you can't see this.



And the government has exactly as much control over the fed as it wants to take.

It doesn't even have the power to audit it yet, it doesn't even have as much power as it has over McDonalds. I just don't think you realise how little control your elected representatives have over the Fed.

jkdbuck76
6th May 10, 09:54 PM
Cullion,

Can Greece recover? What and how long would it take for them to eliminate their debt?

Cullion
7th May 10, 05:45 AM
Greece can recover and it will recover. Even Zimbabwe will eventually recover. It's a question of how bad they are willing to let things get before they realise that the 'gimme free money' approach just makes things worse for them.

Recovery basically starts when they accept this, make the painful and necessary cuts and all the unemployment this will cause has bottomed out. With the political will, based on my understanding of other countries' history with such problems, the recovery could be underway in 18 months, but it would certainly be a painful 18 months.

If they refuse to accept reality they can lock themselves into a shambolically low standard of living, presided over by con-man after con-man promising the unreal for as long as they want.

Vieux Normand
7th May 10, 09:16 AM
Greece can recover and it will recover. Even Zimbabwe will eventually recover. It's a question of how bad they are willing to let things get before they realise that the 'gimme free money' approach just makes things worse for them.

Those who try to deal with this will be battling a billion-year old instinct shared by all organisms: the urge to get the maximum possible return for the minimum possible expenditure and risk. It's why predators go for the weakest members of a herd and why those herbivores search for the most accessible possible pasture which fit their needs.

If the return equals the effort, survival continues (you "break even"). If the former exceeds the latter, possibilities such as reproduction can result from the extra energy thus obtained ("profit"). All organisms will behave in ways that ensure continuity of any situation wherein they received much results from little effort.

In human societies, companies and their investors will favour concerns which result in maximum dividends from minimal-as-possible inputs such as labour costs. Labourers, wishing maximum wages and benefits from as few work-hours as possible, will do what they can to achieve this goal. Politicians in democracies, seeing these competing interests, will try to guess which side will give them the most votes, the most contributions for their (re-)election campaigns, as so on. The buy-low-sell-high mantra of stock-trading is also a reflection of this basic logic-of-survival.

Many or most--in Greece and elsewhere--who managed to get a sweet-deal existence whereby they got the "good life," while doing as little as possible to earn it, will inevitably fight to keep things that way if this sense of homeostasis is threatened. Matters such as mounting debts, and purported virtues such as a work-ethic, will come across as little more than abstractions, in their view, when compared with the basic, ancient "get-as-much-for-as-little" instinct shared by all lifeforms.

On a planet where more and more people are competing for fewer and fewer resources, those folk---anywhere--who have become used to getting much for little effort are in for a rough ride if they think that will continue.

Now, about those fat baby-boomer pensions...

Feryk
7th May 10, 02:37 PM
Fewer resources? Like what?

Ajamil
7th May 10, 08:03 PM
Fresh water.

jkdbuck76
7th May 10, 08:07 PM
Land area. Fossil fuels. People who are smart enough to pour water out of a boot even if the instructions are written on the bottom of the heel.

Kiko
8th May 10, 05:56 AM
Sweden 'fully prepared' for Greek fall out : Borg (http://www.thelocal.se/26522/20100507/)

Sweden's Finance Minister Anders Borg has declared that Sweden is fully prepared for any emergency resulting from the debt crisis in the euro zone, as the Stockholm stock market continued its slide on Friday.

"We have a difficult situation on the international financial markets rooted in the problems and troubles not only in Greece, but also further influenced by the situations in Spain and Portugal," said Anders Borg, adding that Sweden is fully prepared for any worsening of the situation.

"The Financial Supervisory Authority [Finansinspektionen - FI] and the Riksdag [Sweden's central bank] have stated that we have limited exposure to the relevant countries. Swedish banks are well capitalized and have an emergency preparedness that is resilient," he said.

European investors breathed a sigh of relief after Germany's parliament, the Bundestag, approved as much as 22.4 billion euros ($28.6 billion) in loans to Greece on Friday.

The Ministry of Finance has been in close contact with the Financial Supervisory Authority and the Riksbank in recent days. According to Borg, the responsible authorities have all the capabilities they need to address an emergency.

"The Riksbank has concluded that the market is functioning today, but has everything in place to ensure liquidity in the Swedish financial system, as it did a year ago," said Borg.

Robert Bergqvist, chief economist at SEB, believes that many small investors will continue to quit the stock market during the day.

"It is the most likely scenario when you had so sharp movements in the U.S. yesterday and we had a big event in recent days," said Bergqvist. "I cannot see anyone in this situation who would go in and take the opportunity to buy shares. As the situation stands, I think many will sit on the sidelines of the stock market today."

While European investors breathed a sigh of relief after Germany's parliament, the Bundestag, approved as much as 22.4 billion euros ($28.6 billion) in loans to Greece on Friday, the sells off of assets linked to the debt crisis in the euro zone continued. Share prices dropped across the board and foreign exchange markets reeled as investor fled to gold and the US$.

On the credit default swap (CDS) market, in which the protection buyer of the CDS makes a series of payments to the protection seller and, in exchange, receives a payoff if a credit instrument goes into default, risk premiums for Greece, Portugal and Spain continued to rise. In order to insure against Greece cancelling payments, one can pay 9.5 percent of the loan in insurance on the CDS market, 0.17 percentage points higher than on Thursday.

Prime Minister Fredrik Reinfeldt said that Sweden will continue to closely follow developments in Greece. TT/The Local
*************

I haven't been following this event/story/thread, but figured you'd all be interested. If only because of his name.

bob
8th May 10, 06:17 AM
Which bit? "Anders" or "Borg"?

Kiko
8th May 10, 06:25 AM
I was guessing either, but both has to count for something!

Ajamil
8th May 10, 07:18 AM
He must've been assimilated, then since he was so Anders the collective "queen" put him in charge and bent over for the inevitable salute.

Oh, and Germany gave Greece their loan, huh? Did Sweden basically say we're ready to sell everything to pay back Greece's loans?

Feryk
10th May 10, 11:28 AM
Nope. They said they have enough set aside that if the market tips sideways, they can buy a bunch of stuff really cheap.