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  1. #1
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    The Greeks must be rueing the day they whacked the drachma

    If Hellenic pride is currently at a low ebb, just wait until the EU steps in, says Boris Johnson.


    By Boris Johnson
    Published: 6:22AM GMT 15 Feb 2010
    Comments 56 | Comment on this article

    No friend of the Greeks: the euro, symbolised in front of Frankfurt's Eurotower. Photo: AFP


    It was late last night and I was rifling through the sock drawers for euros to fund the annual half-term skiing. There were all sorts of useless coins – Uzbek som, Iraqi dinars, 2d bits – and there it was, like a sudden Proustian blast from our childhood. It was a 50-drachma piece, with Homer on one side and a boat on the other. It was dull and scuffed and technically as worthless as all the other coins in my hoard. But as I turned it over in my hand it seemed to glow like a pirate's doubloon, radioactive with political meaning. This coin was more than just a memento of beach holidays when 50 drachmas was five ice creams. This was the history of Greece in the palm of my hand. When Socrates asked Crito to buy a cock and kill it for Asclepius; when Sappho bought her Lesbian girlfriend a Lydian hat; when his listeners rewarded old, blind Homer for chanting by the fire – how did they all pay?
    They paid in drachmas, a currency that served the people of Greece for at least 3,100 years, until they junked it for the euro. And the object I had in my hand, therefore, was a symbol of the economic freedom the Greeks gave away for the sake of national prestige. When they whacked that drach, they thought they were showing a new economic maturity. They thought they were sitting down at the top table. They thought that by merely using the same currency as the Germans they would somehow imbibe Teutonic habits of thrift and fiscal rigour. Or at least that was what they pretended at the time. By fudging their debt figures and adding income from the black market and prostitution on to their GDP the Greeks brilliantly limbo-danced under the Maastricht criteria – and then got on with borrowing and spending in the time-honoured Greek fashion, blissfully protected by euro membership from the penalty of higher interest rates.


    By October last year the deficit had risen to 12.7 per cent of GDP, and the gig was up. The free-riding came to an end. It wasn't enough to be a member of the eurozone. The markets stopped believing that the Greeks were good for their $419 billion debts, and they started charging them extra; and the higher the cost of borrowing, the more dreadful the Greek fiscal position became – until people started warning that the Greeks might actually default, and bilk their creditors. And that, more or less, is where we are now – with other European countries wondering how to throw Greece a lifeline without being pulled under.
    There are several possible endings, none of them good. The first is that Greece could simply go bust. Athens could come Acropolis, as they say, and the financial tsunami would move into its second phase. Having taken out the weakest of the banks, the short-sellers would take out the weakest of the states that bailed out the banks, with horrific consequences. Onward the tide of destruction would roll, engulfing not just other heavily indebted eurozone countries – Portugal, Italy, Spain: the group now known as "Pigs".
    Do not think Britain would escape. How could we, when British banks have such vast loans outstanding to Greece?
    Alternatively, the Greeks could take radical action, slashing spending and raising taxes in so fierce a way that the markets were convinced the budget was really being brought under control. Would that work, or would it send the Greek economy into
    a further tailspin? Look at the seething mob on the streets of Athens. Could the government of George Papandreou really make such savage cuts? Could any government?
    The final possibility – and the most likely – is that there will be some sort of effort to bail out the Greeks, either by the other EU countries or the IMF or a combination of both. Greece will become a kind of Northern Rock, rescued with vast subsidies from elsewhere in order to stop a general collapse of the system. If and when this rescue happens, we will be in new and extraordinary political territory. By scrapping the Maastricht rules against bail-outs, the EU will have set up a hideous moral hazard.
    Profligate countries will have an incentive to be profligate, in the knowledge that they stand to be supported by Uncle Sugar in Brussels. Those who have taken huge pain to cut their own deficits – such as the Irish – will wonder why they bothered. Above all, this bail-out will come at a serious political price. It is absurd to expect the Germans to write out a colossal cheque for Greece, without giving Berlin some say over how that money is spent. I am not saying we are going back to 1941, with German gauleiters in the Athenian finance ministry.
    I do not say that there will be some vast German towel all over the Greek beach. But already the EU commission is talking about an "economic government of Europe", and be in no doubt what that means. It means diluting the ability of Greek politicians to set tax and spending priorities. It means the end of the myth that you can have monetary without political union; and at a time of growing electoral disillusion, it means a further erosion of democracy.
    There is, finally, one option that will not be pursued. Even though it would give them a vital chance to devalue, even though it is the obvious way to regain competitiveness, the Greeks will not leave the euro. For Athens it would be too big a blow to their pride; for the other euro countries, it would be too big a shock for the still-young single currency. My drachmas will remain in the sock drawer, an unused escape hatch and a reminder of the days when Greece was free. What do we feel in Britain, as we watch this Greek tragedy?
    We feel the correct Aristotelian emotions of pity and fear. There but for the grace of God goes Britain, which also has a 13 per cent deficit. Every day that this crisis endures we should give thanks that we avoided that awful Procrustean bed of pain. Thank heavens we stayed out of the euro.

    The Greeks must be rueing the day they whacked the drachma - Telegraph

    This is a huge problem thats not going to go away and as 2010 proceeds will fester away at European recovery unless drastic action is taken by the Greeks themselves, which given recent events there seems very unlikely. Hats of to the Irish for at least trying to put their house in order.

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    Goldman Sachs played a central role in hiding Greece's debt, creating sophisticated loan instruments masked as currency trades. The importance of this goes way beyond Greece. If Goldman can help cover up the debts of an entire EU country, how many other countries and corporations are sitting on power kegs of debt due to Goldman's financial trickery?

    Wall St. Helped Greece to Mask Debt Fueling Europe’s Crisis - NYTimes.com

    Simon Johnson, a former IMF Chief Economist, offers this analysis:

    "A single rogue trader can bring down a bank – remember the case of Barings. But a single rogue bank can bring down the world’s financial system. ...Goldman will probably be blacklisted from working with eurozone governments for the foreseeable future; as was the case with Salomon Brothers 20 years ago, Goldman may be on its way to be banned from some government securities markets altogether. If it is to be allowed back into this arena, it will have to address the inherent conflicts of interest between advising a government on how to put (deceptive levels of) lipstick on a pig and cajoling investors into buying livestock at inflated prices."

    Goldman Goes Rogue ? Special European Audit To Follow The Baseline Scenario

  3. #3
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    Quote Originally Posted by Bangyai
    Thank heavens we stayed out of the euro
    That's about the only thing the Labour party has ever done right. Although that twat Mandleson still keeps talking of joining.

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    Does anyone here actually think that Greece would have been better off keeping the Drachma and staying out of the Euro-zone? By the same token, does anyone here really believe that the UK would have been better off outside the Euro zone?

    If so . . . then dream on. National pride means sweet fuck all in the world of economics and Boris should write for the Sun

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    As some minor entries to the EU have learned already, It's not all it was promised to be.

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    Quote Originally Posted by panama hat View Post
    Does anyone here actually think that Greece would have been better off keeping the Drachma and staying out of the Euro-zone? By the same token, does anyone here really believe that the UK would have been better off outside the Euro zone?

    If so . . . then dream on. National pride means sweet fuck all in the world of economics and Boris should write for the Sun
    Yes, Greece would have been better off because the Drachma would have inflated, bringing down real wages, increasing exports by lowering the prices of Greek goods and increasing tourism because of a devalued Drachma. It's good old-fashioned capitalism and it's happened to the Greek economy in the last half of the 20th century. When you have irresponsible governments like Greece, a common currency like the Euro can bring down the entire the economy of Western Europe instead of allowing a small country like Greece to suffer the consequences and adjust by itself the way it used to.
    Last edited by GooMaiRoo; 15-02-2010 at 11:30 PM.

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    The EU is going to crash soon enough, they reckoned on it being a 'one size fits all' currency when the southern regions of Euroland are a different ball-park.
    As soon as I heard the Euro was coming in ten years ago I figured it was a bit too fanciful.

    The Greeks weren't keen on the Euro to start with as it sounds close to a toilet-word (in their lingo)

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    Quote Originally Posted by panama hat View Post
    Does anyone here actually think that Greece would have been better off keeping the Drachma and staying out of the Euro-zone? By the same token, does anyone here really believe that the UK would have been better off outside the Euro zone?

    If so . . . then dream on. National pride means sweet fuck all in the world of economics and Boris should write for the Sun
    Well Norway, Switzerland, Sweden, Denmark and others are doing ok without the monopoly money )

    I suppose you agree with the bs mindset of asset stripping a nations manufacturing industry to overseas lands and endorsing Asia as the workshop of the world while the west is left a hollowed out shell.
    Economics in your book would see the rich get richer and the poor get screwed over.

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    Quote Originally Posted by Slipstream View Post

    I suppose you agree with the bs mindset of asset stripping a nations manufacturing industry to overseas lands and endorsing Asia as the workshop of the world while the west is left a hollowed out shell.
    Economics in your book would see the rich get richer and the poor get screwed over.
    As that is exactly what has happened to the UK which is not in the Euro zone, I don't see how your arguement has any value.

  10. #10
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    Good old Boris "I'm a conservative euro-sceptic" Johnson.

    A nice unbiased piece, from a nice unbiased source.



    The nationalistic/fascist anti-europe retards are having a field day.

  11. #11
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    Quote Originally Posted by GooMaiRoo
    Goldman Sachs played a central role in hiding Greece's debt, creating sophisticated loan instruments masked as currency trades. The importance of this goes way beyond Greece. If Goldman can help cover up the debts of an entire EU country, how many other countries and corporations are sitting on power kegs of debt due to Goldman's financial trickery?
    that's an interesting twist, could explain how some countries could make it despite being in serious trouble already before joining the EURO

    They are already speaking of a 2 core separation within the EU, eventually we will have no choice or the whole thing will collapse.

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    apparently it seems to be standard practice and acceptable,

    Basically Greece was raising short-term cash,vs the sale of long term revenue streams,then using the cash to reduce their debt.Versus Greece’s total debt,this represented a tiny, tiny fraction.This was surely studied very, very carefully to be sure that it was compliant.But the bigger issues are political

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    Quote Originally Posted by Orroz View Post
    Quote Originally Posted by Bangyai
    Thank heavens we stayed out of the euro
    That's about the only thing the Labour party has ever done right. Although that twat Mandleson still keeps talking of joining.

    as if you need help to devaluate a currency.

  14. #14
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    Quote Originally Posted by Butterfly
    could explain how some countries could make it despite being in serious trouble already before joining the EURO
    I read that the Greek government recently declared that less than 15,000 people in the country were paying tax on salaries in excess of 100,000 Euro's per year.

    Just think about all the shipping magnates, hoteliers that are there, tax revenues must be pitiful there. No wonder they are broke.

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    Quote Originally Posted by Slipstream View Post
    The EU is going to crash soon enough, they reckoned on it being a 'one size fits all' currency when the southern regions of Euroland are a different ball-park.
    Do you think Maryland and Mississippi play in the same league ?

    It seems we will agree on the fact that the USA was a big mistake from the very beginning .

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    2d Bit??

    I know I am getting old, and my memory isn't what it was, but could some one remind me what the heck a 2d bit is??? (see Boris's first lines)

    What a Wanker.

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    What Bullshit ! It should be reading:


    The germans must be rueing the day they whacked the deutsche mark !

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    FREE ANTROBERTSON !!!! SunTzu's Avatar
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    Quote Originally Posted by Slipstream View Post

    Well Norway, Switzerland, Sweden, Denmark and others are doing ok without the monopoly money )
    switzerland not part of the EU.

    As Begbie mentioned, can you remind us of how much the british pound has gotten down exactly ?

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    Quote Originally Posted by SunTzu View Post
    Quote Originally Posted by Slipstream View Post

    Well Norway, Switzerland, Sweden, Denmark and others are doing ok without the monopoly money )
    switzerland not part of the EU.

    As Begbie mentioned, can you remind us of how much the british pound has gotten down exactly ?
    Rather not work it out!! Got about 64 bht to the pound 18 months ago,now getting about 51.

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    Quote Originally Posted by StrontiumDog View Post

    The nationalistic/fascist anti-europe retards are having a field day.
    I love our unified currency. It really helps my country, and it makes a lot of sense. Europe needs to be united.

    That said, countries like Italy and Greece should not and cannot be part of the Euro. They're too different from the rest. I used to spend all my childhood in Greece - it was nice and cheap. With the Euro it got expensive - but none of the economic circumstances had changed. The Greeks just don't like to work very much. You are not going to see a German work mentality there, ever. They're a bit like the Thais - not saying this is bad, it makes it a pretty laid back country, perfect for a vacation.

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    EU orders Greece to cut deeper

    Brussels has given Greece two weeks to answer allegations that it used complex derivatives earlier this decade to mask its public debt, and called for even tougher austerity measures to bring its budget deficit under control.



    By Ambrose-Evans-Pritchard, International Business Editor
    Published: 10:53PM GMT 15 Feb 2010
    Comments 5 | Comment on this article

    Public sector strike in Athens - EU orders Greece to cut deeper Photo: Sipa Press / Rex Features


    The escalating demands came as Greek finance minister George Papaconstantinou bared his soul in Brussels, confessing that public finances were out of control. "We are trying to change the course of the Titanic, it cannot be done in a day," he said.
    Ollie Rehn, the EU's economics commissioner, said Greece must brace itself for yet more retrenchment, despite the risk of pushing Greek society to snapping point. "There is a clear case for additional measures," he said.


    EU officials doubt whether cuts announced so far can reduce the deficit from 12.7pc to 8.7pc of GDP this year, especially after fresh data showing a sharper economic contraction last year than expected.
    A briefing note by the European Central Bank for EU ministers meeting last night calls for a rise in VAT, fuel duties, and luxury taxes, as well as extra spending cuts. Jean-Claude Trichet, the ECB's president, said the whole Greek nation must understand that the country has been on an "aberrant trajectory".
    However, there is a risk that too much fiscal tightening could prove self-defeating. "Greece needs to adjust, but the starting point is awful and truly threatens an economic collapse," said Kevin Gaynor, head of credit at RBS.
    Mr Papaconstantinou said last week's show of support by EU leaders was not enough to "stop markets attacking Greece". He called for a clear rescue mechanism, though EU finance ministers and officials seemed unwilling on Monday to offer more than tough love.
    While Greece's PASOK government still enjoys sympathy, this has begun to erode after premier George Papandreou lashed out at Brussels last week. He said his country had become a "guinea pig", and that Europe's own credibility was on the line.
    The mood has been soured further by claims in the New York Times that Greece used currency swaps and sold off future fees from airports, roads, and the lottery to mask liabilities. Some transactions – mostly in 2001, but also later – were organised by Goldman Sachs. While legal, they may not have been revealed to the EU's data office Eurostat.
    Volcker Wissing, finance committee chief in Germany's Bundestag, called the deals a grave breach of trust. The affair may make it less likely that the Bundestag will endorse a debt guarantee or loan package for Greece. Germany's Constitutional Court has already issued rulings that prohibit – or complicate – any bail-out for EMU states. "German opinion polls suggest that any government-led bailout would be political suicide, " said BNP Paribas.
    The bank said the EU is incubating a "deflationary shock" for all Europe by forcing Club Med to tighten fiscal policy in a slump without enough monetary stimulus to offset the effect. There is an eery parallel with the early 1930s.

  22. #22
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    Quote Originally Posted by Bangyai
    already the EU commission is talking about an "economic government of Europe",
    If individual states cannot be fiscally responsible, it's probably a good idea to get other people to run their economies.

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    Quote Originally Posted by Bangyai View Post
    .

    "German opinion polls suggest that any government-led bailout would be political suicide, ".
    Damned if you do, damned if you don't .In any event, someone better do something soon or Greece will be the first down the plughole , likely followed by at least one of the other ' pigs '. Then the next weakest states will be sucked closer to the vortex of doom and things will look even bleaker.

    If the Greeks can't or won't take the drastic and painful measures needed to stabilise their own economy they will soon find someone else doing it for them, like it or not.

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    Quote Originally Posted by nikster View Post
    The Greeks just don't like to work very much. You are not going to see a German work mentality there, ever. They're a bit like the Thais - not saying this is bad, it makes it a pretty laid back country, perfect for a vacation.
    I'm not sure if you were in Greece long enough to understand their mentality. Corruption and tax evasion are why Greece is broke, not laziness. Greeks work harder than anyone when they work for themselves and get to keep their own money. That's why there are so many prosperous Greeks owning small businesses in the West. Greeks are a bit lazy only when they work for others. This is because they're not stupid.

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    Quote Originally Posted by GooMaiRoo View Post
    Goldman Sachs played a central role in hiding Greece's debt, creating sophisticated loan instruments masked as currency trades. The importance of this goes way beyond Greece. If Goldman can help cover up the debts of an entire EU country, how many other countries and corporations are sitting on power kegs of debt due to Goldman's financial trickery?
    This is very disturbing.

    Yes, GooMaiRoo,

    how much of what Goldman Sachs does, is not known by the public?

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