I was just reading now on LA times (
McManus: Europe's continental drift), and a phrase really captured my attention; The author, while describing how bad the situation is in Europe (especially the southern countries) goes as far as saying:
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Southern Europe is experiencing its worst drop in living standards since World War IITo anyone who has been
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Because they are unlikely to be able to pay back what they owe, folks are not all that eager to loan them more and more money. Because folks with extra money aren't willing to support their attempt to borrow their way out of debt, austerity is the only alternative. You can criticize the Germans for being too prescriptive about where cuts need to take place, but cuts need to be made somewhere. Of course, if you'd be willing to invest your money in Greek government bonds, knowing you probably won't get your money back, feel free. Criticizing those who aren't so willing to do so seems hypocritical unless you're willing to put your money up first.
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No, it's not the "only alternative." It's the only alternative supported by the lenders. Biiiiiiig difference.
If austerity continues, expect radical governments in the future and wars soon thereafter. When you leave the desperate no alternatives. . . .
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So the alternative would be for the Germans and other lenders to give the Greeks and Portuguese, and to a lesser extent, Italians and Spanish, more money that they can't pay back? You can see why this is the alternative supported by the lenders.
I guess you can also say it's also supported by the US and China as we are unwilling to loan them money they can't pay back either, so we're forcing austerity on them even more than the Germans. As a US taxpayer, I'm certainly in favor of Greek austerity over higher US taxes.
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Nope. I was thinking more along the lines of debt forgiveness and/or modification, not increasing the loan burden. As the money supply decreases, the chance that loans would be repaid decreases along with it.
You might enjoy Irving Fisher's After Reflation, What? from 1934, a book that deals with why any given economy gets screwed when the loan terms agreed upon in a time of plenty are not modified in times of scarcity.
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Of course, if all of Greece's debts were erased, the economy of Europe would take a big enough hit that Greece probably wouldn't be close to hitting a primary surplus for quite a while, with nobody to make up the gap.
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The fact that these loans may spill over into Europe as a whole shows how badly the whole Eurozone was formed, not how bad Greece alone is acting.
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Absolutely. It has boggled the brain for a while now, how a bank could look at Greece with its recent history of coups and destability and say "Oh, sure, give them money" without considering whether they'll get the bucks back. I'd say the answer was an automatic No.
Those who criticize the US government should take note. You may not have liked the FED/Treasury's plan, but it was decisive, it worked, and it really didn't cost taxpayers anything.
Neal Barofsky calls bullshit on that. I just finished his book. The "didn't cost taxpayers anything" bit you just fell for quoted was widely published but not challenged as to substance. Oh, the taxpayers enriched the banks, yes they did. It will cost us, big time.
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I thought I'd mix it up a bit. ;-) I heard about his book through that interview.
Previously, he's brought up that the Treasury is counting money that the FED actually made, which I'm not thinking is a big deal. The FED and Treasury were both working on TARP, so I'm not too concerned about who gets the money.
The details are in the book, yes, and I remember but a portion of them. Essentially, Treasury time and time again was shown to be supporting the banks in ways that SIGTARP Barofsky felt inappropriate. Treasury-especially Geitner-went so far as to interpret the Homeowner Loan Modification program in ways that allowed the banks, not the homeowners, to avoid losses. I did take notes on that section. Holy crap, it's bad ( ... )
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