Ongoing European Debt Crisis

And Portugal is so small and Iberian that no one cares.

Yeah, that's actually somewhat true. The thing about Portugal and Greece is their economies are so small that if need be Europe could carry them. It's just that they see no reason why. Nobody wants to pay forever, after all, that's just natural and valid.

Italy, on the other hand - nobody could save such a large economy. Nobody. You couldn't bail out Italy. Couldn't be done.

This is the big problem here. No one save China has enough money to save Italy, and they're hardly going to do it. Italy is something like 4 times the size of Greece in terms of funds needed, and the bailout fund is being pushed to help Greece.

Greece is a loss no one wants but which can still happen without the entire Eurozone collapsing (theoretically, at least). Italy fails - there is no failsafe or comeback.

And, that keeps my nightmares warm at night... <shudders>

edited 17th Feb '12 3:12:29 PM by whaleofyournightmare

Ouch! All that for the hardship of wearing silly robes and a necklace that never fits? I'm in awe, almost.

Compare and contrast UK standard MP's average salery: ~€6,598.69. Mayor of London: ~€14,445.49.

Hmmm...

edited 17th Feb '12 3:35:13 PM by Euodiachloris

This is one of the most informative -- and fun -- looks at the Greek debt crisis I have come across.

Worse punctuation ever. What is that? 5 thousand or 5 million?

Its 5 thousand, thats how people on the European continent denote a thousand IIRC, not with a comma but a full stop

Yeah, it's basically the other way round than English. In an English language article it is just wrong, though.

My source was some Greek dude

Don't worry, I got it: I grew up with the decimal comma at school. Got the shock of my life coming back the UK.

this link is showing me how little I know about anything regarding this crisis

The German finance ministry is actively pushing for Greece to declare itself bankrupt and to agree a "haircut" on the bulk of its debts held by banks, a move that would be classed as a default by financial markets.

Ballsy, also it was my understanding that Merkel domestically has very little space to manoeuvre.

She might be able to gather support now because she agreed to back a very popular candidate to become the next President of Germany. Let me just say many Germans are really happy right now.

edited 19th Feb '12 4:52:48 PM by Zarastro

I'm not. Gauck is way overrated. But that's not the topic of this thread.

Merkel actually has a considerable political powerbase in her government. There are no internal competitors in her party at all (which is a good thing, because at the end of the day she is very much a moderate), and her junior coalition partner would not even parliament again if there were elections today. The problem is her governance style: Since she is all about her public image, she never actually intervenes in conflicts and arguments in the coalition, so as to appear all aloof... which leads to the problem that this coalition so far has hardly gotten anything done so far except internal squabbling.

I mean let's remember: Even the now much maligned Euro strategy of the German government only came about after weeks of complaints from other European governments about Germany doing nothing at all. And then Germany did make own proposals together with France, and everybody still complained...

Octo, people like the British government complained because we felt that the Merkozy proposal offered no solution to the problems that the Euro is facing right now which are many but mostly structural.

Instead, the position here is that its pandering to some kind of pseudo Calvinist thinking of the only way to cure a problem is sacrifice more and its made Keynesian economics illegal on a European level

@Octo I agree with you, he might be a good choice but he simply won't be able to fulfill all those expectations. It would be interesting to know what Gauck is thinking about the euro crisis. Sure the president doesn't have much political power, but he could use his position to change the opinion of the german people regarding Germany's role in this situation.

Greece agrees a new bailout package that fucks them over

edited 21st Feb '12 4:33:08 AM by whaleofyournightmare

Not that, right now, they felt that had much choice. I know it just kicks the problems further down the road, but it appears to be path they're taking...

Krugman is of the opinion that the only two workable options for Greece are "sustained aid" (although I'm not sure precisely what he means — presumably fiscal aid to help them recover from their recession) or a Euro exit.

edited 21st Feb '12 9:20:44 AM by Fighteer

I'd like to hear some pro/con on Greece divorcing from the euro.

• They are no longer tied to the Eurozone's rules and will have sovereign control over fiscal policy.
• Therefore, they can fix their balance of payments crisis through internal devaluation without suffering punishing austerity.
• Therefore, they stand a snowball's chance of actually fixing their debt-to-GDP ratio in the foreseeable future.

Cons:

• It's politically unacceptable to the rest of the EU, who will likely withdraw all international aid if they try it.
• It's equivalent to defaulting from the standpoint of Greece's creditors, so Greece won't be able to sell bonds at sustainable rates for a long time.
• It has the potential to start a bank run and/or hyperinflationary cycle.

Caveats:

• Greece has a critical problem with corruption and tax evasion. Even assuming a Euro exit, they still must repair their own cultural problems to have any chance of lasting economic success.

edited 21st Feb '12 11:38:32 AM by Fighteer

That last caveat is a somewhat worrisome issue that's faced regardless of what happens. It's something that at all levels of Greek society needs to be owned up to and dealt with, but that's like Scotland dealing with its alcohol or knife-crime culture - some things are almost too deeply embedded into the culture to be easily excised.

Difficulty changes nothing, however. The people do need to work towards removing the corruption and tax evasion that have had a serious economic impact on the nation, and that's not something other nations can do for them even if they wanted to.

According to one estimate I saw, Greece's economy would shrink by more than half if it left the Euro. It's pretty much the worst case scenario.