Living in Greece has become incredibly tough right now... :-(

[mrstickball]

Lostplanet22 said:

kowenicki said:

NJ5 said:

kowenicki said:
I feel for the people of Greece...

But it was almost inevitable when you have a government that creates jobs out of nothing... I read somewhere that 40% of the greek working population work for the government... thats insane

The people of greece really should have kicked against this earlier though through their election system

It seems that people were happy to turn a blind eye while the 'smooth' EU subsidies rolled in, but now the 'rough' has come all hell breaks loose.

As I said... this is understandable but it was always going to happen with such a dumb idea as the common fiscal policy of the EU. Thank god we arent in it.

What does the common fiscal policy has to do with this disaster? The deficits Greece has are not that different from that of the US or UK (or other EU countries...).

It's like a bunch of people running towards a precipice, and all of them making fun of the ones that have already fallen...

 

You are very wrong here.

The US and the UK control their own destiny.  Simply put, Greece is part of a single currency and is stuck with a single interest rate that is dictated by the EU... this interest rate and currency value may suit Germany and France right now, but there is no way in hell it suits Greece, Spain and Portugal.

Importantly the deficit is similar yes, but as a proportion of GDP it is VERY different otherwise you would have also seen the UK and other countries downgraded to junk bond status as Greece has been.

Greek debt is over 100% of GDP, the UK for instance is 56%.   the UK could devalue its currency too which could help.  How could Greece do this?  they cant!  They are puppets in the greater Eu... its failed.. and it will fail again.

The UK is now 68% of GDP.

:https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html?countryName=United%20Kingdom&countryCode=uk&regionCode=eu&rank=22#uk

I know you are going to say it is an estimate on that site but it is already confirmed by the UK:

http://www.statistics.gov.uk/cci/nugget.asp?id=277

Kind of shocked to read that btw...the year before it was 51%

Anyway doesn't mean much if countries like Japan, Singapore, Belgium are in the top ten and everything their is financialy kind of okay.

Greece can go back to drachma if they wanted to but they choose the EURO....

Although some of these countries do have very high debt...It does not mean they are in great shape. Others, have good ways of dealing with it.

• Japan is considering quantitative easing to lower their debt...To the tune of devaluing the Yen by 30%. They are worried that Japan may experience horriffic hyperinflation soon, and crash the country. Japan is essentially at the tipping point of being forced to do something drastic to fix their massive public sector debts...And it won't look good. The reason that Japan's debt is so high, yet it hasn't had to go the Greek route is due to the yield on Japanese bonds. In Greece, it's 7%, as their status is junk. In Japan, it is 1.6%. That means that Japan can borrow roughly 4 times as much money, for the same cost of interest.
• Speaking of bond prices, Portugal is about 5% now, which is an underlying issue of their crisis.
• Singapore has 0% of its debt financed by foreign investors. Also, despite its massive amount of debt, it ironically has massive on-hand foreign cash reserves, so the debt is grossly overstated.
• Belgium has had a massive amount of its public debt financed domestically as well. They also have one of the highest tax rates in the world, at 57.3% after social security.

Essentially, public debt's problem is the interest rate at which it needs payed back. For example, if the US bond rate is 3.5% (and I own a bit of US public debt via my stock investments, FYI), then it means that the US would need to finance about ~$350 billion/yr for interest repayments. However, if we as bad as Greece, and got dropped to junk status, that debt may require twice the interest rate, making it $700 billion/yr for interest repayments. That has to be balanced in some way, so then the US begins austerity measures, and we revolt ala the Greeks.

 

Ultimately, Keynesian economics has failed the world at a horrific rate. Keynes forgot to take one thing into consideration: politicians are human. That is, they like to make themselves look good by promising great things backed by Keynesian promises that the debt will never be outstanding for a long time, but in reality, they leave repayment to their predicessors. Eventually, every country with large debts will have to pay the piper, and it won't be pretty.

I know its politically suicidal to mention it all the time on the boards, but the simple fact is that the government cannot fund all of the social services that it provides. Many countries use a pay-go system for social security and health care which is a dangerous practice, as the money isn't actually saved and invested to ensure it is there for those that paid in....When our baby boomers retire en-masse, it will destroy our system...Simply because the money isn't there.