By Peter Boone and Simon Johnson
Bubbles are back as a topic of serious discussion, as they were before the financial crisis. The questions are: (1) can you spot bubbles, (2) can policymakers do anything to deflate them gently, and (3) can anyone make money when bubbles get out of control?
Our answers are: Spotting pure equity bubbles may sometimes be hard, but we can always see unsustainable finances supported by cheap credit. But policymakers will not act because all great (and dangerous) bubbles build their own political support; bubbles are invincible, until they collapse. A few investors can do well by betting against such bubbles, but it’s harder than you might think because you have to get the timing right – and that’s much more about luck than skill.
Bubbles are usually associated with runaway real estate prices (think Japan in the 1980s and the US more recently) or emerging market booms (parts of Asia in the 1990s and, some begin to argue, China today) or just the stock market gone mad (remember pets.com?) But they are a much more general phenomenon – any time the actual market value for any asset diverges from a reasonable estimate of its “fundamental” value.
To think about this more specifically, consider the case of Greece today. It might seem odd to suggest there is a bubble in a country so evidently under financial pressure – and working hard to stave off collapse with the help of its neighbors – but the important thing about bubbles is: Don’t listen to the “market color” (otherwise known as ex post rationalization), just look at the numbers.
By the end of 2011 Greece’s debt will around 150% of GDP (the numbers here are based on the 2009 IMF Article IV assessment; we make some adjustments for the worsening economy and the restating of numbers since that time – for example, the fiscal deficit in 2009 will likely turn out to be about 8 percent, which is double what the IMF expected until recently). About 80 percent of this debt is foreign owned, and a large part of this is thought held by residents of France and Germany. Every 1 percentage point rise in interest rates means Greece needs to send an additional 1.2 percent of GDP abroad to those bondholders.
What if Greek interest rates rise to, say, 10% – a modest premium for a country which has the highest external public debt/GDP ratio in the world, which continues (under the so-called “austerity” program) to refinance even the interest on that debt without actually paying a centime out of its own pocket, and which is struggling to establish any sustained backing from the rest of Europe? Greece would need to send at total of 12% of GDP abroad per year, once they rollover the existing stock of debt to these new rates (nearly half of Greek debt will roll over within 3 years).
This is simply impossible and unheard of for any long period of history. German reparation payments were 2.4 percent of GNP during 1925-32, and in the years immediately after 1982, the net transfer of resources from Latin America was 3.5 percent of GDP (a fifth of its export earnings). Neither of these were good experiences.
On top of all this Greece’s debt, even under the IMF’s mild assumptions, is on a non-convergent path even with the perceived “austerity” measures. Bubble math is easy. Hide all the names and just look at the numbers. If debt looks like it will explode as a percent of GDP, then a spectacular collapse is in the cards.
Seen in this comparative perspective, Greece is bankrupt today without a great deal more European assistance or without a much more drastic austerity program. Probably they need both.
Given there’s a definite bubble in Greek debt, should we expect European politicians to help deflate this gradually? Definitely not – in fact, it is their misleading statements, supported in recent days (astonishingly) by the head of the International Monetary Fund, that keep the debt bubble going and set us all up for a greater crash later.
The French and Germans are apparently actually encouraging banks, pension funds, and individuals to buy these bonds – despite the fact senior politicians must surely know this is a Ponzi scheme, i.e., people can get out of Greek bonds only to the extent that new investors come in. At best, this does nothing more than postpone the crisis – in the business, it is known as “kicking the can down the road.” At worst, it encourages less informed people (including perhaps pension funds) to buy bonds as smarter people (and big banks, surely) take the opportunity to exit.
While the French and German leadership makes a great spectacle of wanting to end speculation, in fact they are instead encouraging it. The hypocrisy is horrifying – Mr. Sarkozy and Ms. Merkel are helping realistic speculators make money on the backs of those who take seriously misleading statements by European politicians. This is irresponsible.
What should be done?
1. The Greeks and the Europeans must decide: do they want to keep the euro, or not.
2. If they want to keep the euro in Greece, the Greeks need to come up with realistic plan to start paying back debt soon. Any Greek plan will not be credible for the first few years, so the Europeans must finance the Greeks fully. This does not mean 20bn euros, it means making available around 180bn euros – i.e., the full amount of refinancing that Greece needs during this period.
3. If they don’t want to keep the euro then they should start working now on a plan for Greece’s withdrawal. The northern Europeans will need to bail out their own banks, because Greek debt must fall substantially in value – euro denominated debt will need to be written down substantially or converted to drachmas so it will be partially inflated away. The Greeks can convert local contracts, and deposits at banks, into drachma. It will be a very messy, difficult transition, but the more the debt bubble persists, the more attractive this becomes as a “least awful” solution.
Regardless of the decision on whether Greece will keep the drachma or give it up , the IMF should be brought in to conduct the monitoring and burden share. The Europeans flagrant deception which we now observe – claiming the Greeks have made a big step and encouraging people to buy Greek bonds – proves they do not have the political capacity to be realistic about this situation. Who can now be believed on needs for Greek financial reform and what is truly a credible response? The only credible voice left with the capacity to act is the IMF – and even the Fund risks being compromised by the indiscreet statements of its top leadership as the bubble continues.
If such measures are not taken, we are clearly heading for a train wreck. The European politicians have been tested, and now we know the results: They are not careful, they are reckless.
An edited version of this post appeared this morning on the NYT’s Economix; it is used here with permission. If you would like to reproduce the entire post, please contact the New York Times.
The Baseline Scenario 
I wonder, have any modern economists theorized on controlling bubbles and other financial excesses by structuring lending and debt into formal cycles, as prescribed in Old Testament law wherein all debts are forgiven on certain years ? You can look it up by the word “Jubilee.” Do deeply orthodox Jews follow this practice today?
Euro = Gold Standard
Germany and France are creditors demanding they get their pound of flesh. Having made bad loans, they want to subject Greece to debt slavery, yet somehow continue to maintain their export surpluses… Yah, right.
Germany is doing to Greece what France did to Germany during the Interwar years. How ironic. The deep and abiding hatred in Greece for the rest of the EU will only grow worse.
I see no resolution. The domestic power of creditors in Germany/France refuses to permit any bailout that publicly admits a subsidy. Greece should just leave the Euro, which will make it persona-non-grata in the EU. It will need to get an IMF loan in non-Euros to manage immediate trade needs for the next 3 years, and accept a massive drop in consumption related imports.
Meanwhile, we have Weber still posturing at the ECB…
“Hell hath no fury like a creditor scorned”
It is my understanding that a very large part of the Greek economy is underground, off the books so to speak. This would seem to be very large part of the problem if taxes on income can’t be collected. How can the rest of Europe make Greece pay its taxes and thus its debt? Without this fundamental change, why would Europe want to bail them out?
I read somewhere that if you look around, you will see plenty of asset mispricing everywhere. That doesn’t mean there are that many bubbles. Leverage is essential for any bubble to form.
It might be a good idea to focus on the general problem in regard to the EMU. And I agree to your assessment on EU politicians et al.
But Greece. Come on! De Grauwe calculated to pay back the full amount of Greece debt would add about 3% to debt of each Eurozone country. Peanuts compared to government largess to banks yesterday.
Sometimes I’ve the impression your valid worries about finance and TBTF banks lead to some sort of alarmist view about almost everything. Calm down. Frequently a cold beer on the evening can really be helpful to put things into perspective!
despite the fact senior politicians must surely know this is a Ponzi scheme, i.e., people can get out of Greek bonds only to the extent that new investors come in.
This differs from other countries’ bonds how?
A greek bailout would force a domestic political price in Germany and France that is unpayable – particularly in light of Spain, Portugal, Italy, etc… The political stomach for bailouts is gone. Merkel, for example, has been an unqualified disaster for the German economy, and is suffering in the polls – a bailout would make her unpopular with her own party, without buying any support from the opposition. She’s locked in.
The lack of stomach is true in the US as well, which is precisely what makes the current situation so frightening. Not only has Obama spent so much political capital bailing out the banks, but he did so without actually setting the system on an even keel. We now know this is because, fundamentally, he either believes in the system he is defending, or thinks it all a sideshow that can be ‘managed’ with appropriate public relations. Probably some combination.
The next couple months will be critical – if there’s a spectacular world market implosion, we’re truly doomed this time.
If, however, the ship holds together for another 3 months, and the US _finally_ puts up some real job growth, this may spark enough confidence that Obama can “get past” health care and possibly launch some real reform.
If, that is, he really cares – which (based on his stalwart defense of Summers/Geithner, seems unlikely).
So, if we’re lucky, we may have one more chance to right the ship. If it doesn’t happen by summer, we’ll be in US elections, and then we’re probably doomed.
You are certainly correct that Greece’s debt is not a large percentage when looking at total EU economic numbers.
But Simon is correct when he says the EU countries do not appear to be willing to pay, and Greece can’t pay. Simon’s conclusion that the debts will not be paid in full is well founded, as is the concern for relatively unsophisticated creditors who will find themselves holding most of this debt when the music stops.
This is just another method by which the authorities are helping bankers build bubbles and then offload the risk onto pensioners and taxpayers.
Beware of Greeks daring tiffs.
I’ve replied to your original post above but it’s in moderation cause I’ve used some drastic wording ;-)
I’m living in Germany. And sentiment is indeed not very favorable for a Greek bailout to put it mildly. BUT they have established the EMU without regard to public opinion and they will keep it afloat beside official blame games to calm tabloid newspapers and voters.
And the popular story about Italy and Spain and … Italy is in debt since anno domini 0 but manages to keep the debt growth annually rather low (4%). This is not something which causes a bond buyer sleep. They will continue to buy made in Italy.
And Spain? Eventually Spain is one of the countries in the EU which has a debt/GDP ratio 57,2% still in line with the SGP limits. Germany (DE: 77,5%) and Austria (AT: 65,2%) better stop talking of SGP limits.
Nonetheless the SGP limits 3% (deficit) and 60% (debt) are economical nonsense.
Albrt, like said a lot of posturing and breast beating is going on here in the moment. But Simon’s assumption is beyond the point. He takes the official statements too serious.
My assumption is: first they will create an EMF to look really serious in the face of SGP violators. Next they will establish a common Euro-Bond market to contain this sort of speculation. Finally they will introduce some EU-Tax to fund an EU-Treasury for a system of risk-sharing, through fiscal transfers. (Robert Mundell told them so ;-)
Things are messy here in our lovely European Union. And the messier they get the more you can count on rational response.
Hear! Hear!
Today I read of more riots in the 10000+ size (union-organized, I believe,) in Athens. I don’t have first-hand information, but when I read about the austerity measures that Ireland has undertaken and the much more, eh, stoic approach the Irish have seem to have taken (less riots,) part of me says that my Helenic blood-brothers are too used to handouts and coddling by their governments. Wah-wah.
One more thing. Some note on the bond market. It’s one thing to mess with Greece. But it’s a very different thing to mess with bonds issued on behalf of the EU. The same is true for the US. And once Basel III is in place the bond market and banks will cry wolf if governments are not issuing enough bonds. Deutsche Bank in a recent paper is already worrying whether there will be enough bonds in the market to comply with Basel III as to put them in position to achieve their ridiculous target of 25% profit on capital.
Obviously, Greece will require a disguised but perpetual roll over of Greek debt to maintain even a pretense of the status quo.
I have a question. Are the present and near future political conditions such that a radical take down of the government is likely?
The Greek PM finally managed to land today back in Greece amid general strikes including that of air-traffic controllers (for a second there, I thought he would have to land in Turkey and take the ferry to Greece). His brain was full of “political support” and his pockets all empty. I could not agree more with this article. Once the excitement over support statements evaporates (give it till tomorrow), the scenarios for default risk will surface again, raising the spreads and placing Greece exactly where it was 2 weeks ago. The IMF looks like the only option for the country and it will come with demands that the Greeks cannot even imagine…they thought what they have seen is the austerity measures, wait till the IMF kicks in.
My Greek friends tell me no. There is a great deal of anger about the austerity plan, but most of that anger is coming from the unions and the civil servants. A significant portion of the population (perhaps even a majority) will not support these groups. There is not much solidarity between the rural and urban parts of the country and many feel the civil servants and union members have gotten more than they deserve. If it comes down to a conflict my friends tell me they doubt the radical elements of Greek society will be able to garner enough support to gain control over the government. However, they say open conflict (of the violent kind) is also very unlikely because the older generation still has painful memories of the Civil War they do not want to relive. Most of my friends predict a long drawn-out stalemate where the government gradually *tries* to reduce expenditures without offending powerful constituencies.
Personally, I don’t really know enough about the situation to make an informed judgment about my friends’ opinions. However, I’m pretty confident that any attempt to reduce the debt/GDP ratio through austerity measures is bound to fail. Unless exports increase substantially (which as StatsGuy has pointed out is highly unlikely, and in any case not a feasible option for every EU country) reduced government spending will only lead to further declines in aggregate demand. Then when the automatic stabilizers (reduced tax income and higher welfare payments) kick in the debt to GDP ratio is just going to rise no matter what discretionary actions the Greek government takes. There was a really nice two part post about this called “On Fiscal Correctness and Animal Sacrifices (Leading PIIGS to the Slaughter),” over at Yves Smith’s site a week or two ago.
Part I:
http://www.nakedcapitalism.com/2010/03/parenteau-on-fiscal-correctness-and-animal-sacrifices-leading-the-piigs-to-slaughter-part-1.html
Part II:
http://www.nakedcapitalism.com/2010/03/parenteau-leading-piigs-to-slaughter-part-2.html
mondo: To answer your last question, the answer is “yes and no.” The law is considered to be in effect, but there is a workaround. The owner of the debt turns it over to the court, which is not subject to the law (it only applies to individuals), in exchange for a lump sum or fixed payments. Look up Prozbul.
You can take the economist out of the IMF, but you can’t take the IMF out of the economist.
OK, I’ll bite: how will austerity measures restore the Greek economy to prosperity?
And while we’re at it: does this mean that Dr. Johnson is now recommending austerity measures for the USA, as well? Or is this a case of “it’s different when we do it”?
Excellent post and illuminating analysis that puts things in clear perspective. The “deny and delay” strategy is very widespread, and very aggravating. My guess is that unless the influential money is able to get out under cover of remarks by S and M (and to unload on unsavvy investors), then the burden will fall to European taxpayers, rather than the bond holders.
Stephan, 3% of existing Eurozone debt is a substantial number, especially since there are sure to be many free riders. Would you expect Spain, Portugal or Italy to pony up? And German taxpayers have already shown a disinclination to accept the burden.
(What happened to Iceland’s debt?)
Thanks ever so much N klein.
I have been saying that as well for some time.
It may differ to the extent that in other countries the percentage of foreign bondholders is far lower. Italy, which has this year some 10 times more bonds to be rolled over than Greece, has around 50% of bonds in foreign hands. That’s also a lot, but in the case of Greece the Ponzi scheme is in the hands of mainly Germany and France. It’s really interesting to see how the system works (or better it does not work): governments sell bonds to banks and then issue bonds to save those banks which are getting into trouble buying those same bonds. If then you run a cross-border Ponzi scheme giving money to German and French banks, saving them, which have then to save Greece which sold bonds to them, the winner is?
It’s not only a Ponzi scheme but also a Market for Lemons of sovereign debt.
http://mgiannini.blogspot.com/2010/02/sovereign-debts-markets-for-lemons-and.html
In my original proposal first you could start common issuance of EU bonds, then you launch a financial transaction tax to fund some issuances and EU budget and then you institutionalize the whole system with the creation of an EMF (whith different mandate and purposes from IMF, whose replication does not make sense).
http://mgiannini.blogspot.com/2010/03/stronger-case-of-eu-bonds-common.html
J:
I think SJ is on record as recommending inflation targeting, which will head off a deflationary spiral while allowing GDP growth, wages, and asset prices to gradually realign, all without requiring drastic austerity in public spending.
Greece, without control of its currency, doesn’t have that option.
Stats Guy gets it. €= Gold Standard. It has very similar effects to the arguments which accompanied the failed UK attempt to reimpose the Gold Standard in 1925. Keynes rightly shot down Churchill in a scathing paer – ” The economic consequences of Mr. Churchill”.
Banging on by MG about common issuance is a total waste of time I am afraid, the whole point is that the Eurozone countries are making distinctions between country bonds, the market certainly iis and rightly so – see the way the ECB sucks in Finnish Muni bonds and fails to distinguish between decent quality debt and junk- is this remotely sane. The € was hastily pushed into service without the necessary and sufficient conditions by over – zealous politicians. Greece is both a victim and a perpetrator of unsutainable policies. It does not help that 30% of the Greek economy is ” offshore” it is amply sufficient to bring the fiscal deficit into balance. Good post Simon
With specters like Peak Oil and unregulated derivatives still out there hanging over us, even if we make it through to job growth, what’s to prevent another spectacular flame out killing off the growth? Do you honestly think we’ll actually sustain growth, should we tip back over in to it in time?
A radical take down of the government does not seem likely right now. NKlein’s comment above sums it up well so I’ll just add a few notes about recent poll results.
The PM remains popular (above 50% approval ratings), although his ratings are on the decline (above 60% a few weeks ago). The major opposition party (the conservatives) is at the lowest point in it’s history (20%) after a humiliating defeat last October which left them crippled as they are considered to have the major responsibility for the economic debacle. The austerity measures are considered necessary albeit unfair as they seem to target middle class employees and not the tax evading self employed professionals (doctors, lawyers, construction engineers). The unpopular measures (above 70% negative views) are the VAT increase and the increase of the tax on fuel. The pay cuts for the civil servants are generally approved by the public (around 65% positive views) but not by the civil servants themselves (of course). The majority of the participants in Thursday’s strike were civil servants but they don’t seem to have much support by the general public.
Overall assessment: Middle class greeks feel they are paying the price of a crisis they had no responsibility in but they realize there is no other way to get out the mess. As this realization kicks in it’s not very likely that they will put up much of a fight.
Peter Boone and Simon Johnson wrote:
“Our answers are: Spotting pure equity bubbles may sometimes be hard, but we can always see unsustainable finances supported by cheap credit. But policymakers will not act because all great (and dangerous) bubbles build their own political support; bubbles are invincible, until they collapse. A few investors can do well by betting against such bubbles, but it’s harder than you might think because you have to get the timing right – and that’s much more about luck than skill.”
Sometimes you can make your own luck.
Cicero wrote:
“The wise are instructed by reason; ordinary minds by experience; the stupid, by necessity; and brutes by instinct.”
(106 BC – 43 BC)
I think that if we tip over into a couple of months of sustained job growth, this will provide a window of opportunity to implement some changes. That window will be brief, and expensive – bought with stimulus, debt, and future inflation. Hopefully they use it well; they’re running out of chances.
Thanks, engineer27. Reminds me a bit of the “corporation is (not) a person” trick.
I did find this, on wiki: “Economist Michael Hudson has maintained that the Biblical legislation of the Jubilee and Sabbatical years addressed the same problems encountered by these Babylonian kings, but the Biblical formulation of the laws presented a significant advance of justice and the rights of the people. This was due to the “clean slates” now being codified into law, rather than relying on the whim of the king. Furthermore the regular rhythm of the Jubilee and Sabbatical years meant that everyone would know just when the next release was due, thereby giving fairness and equity to both creditor and debtor. Hudson therefore maintains that not only was the Levitical legislation a significant advance over the prior attempts to deal with indebtedness, but this legislation was also eminently practical, in contradiction to many Biblical interpreters who are not economists and who have labeled it ‘utopian.'”
I find imposing a rhythm on financial activity a very interesting concept, because we are up against the limits of what our planet can bear, but capitalism seems chained to open-ended, perpetual growth. Could formal cycles be a way to resolve that problem — and to tame bubbles? Of course, right now we are stuck with this system — at least until it collapses (hopefully before Earth does) and then here and there maybe people can try some experiments.
Upon reflection, that workaround is like the banks vs the people, because in “fulfilling the law”, the creditor still gets his money, but the debtor doesn’t get his Jublilee forgiveness. Same ol same ol.
This sounds like a wake up call. Is there actually a safe bubble deflator for say a housing bubble?
Stephan, solution suggestions are attractive but a little like belling the cat. Enabling and implementing EMF will probably take at least 12 months even if the IMF is used as a template. I’m not sure current EU agreements allow a bond-marketing EMF to be created so political posturing time will be required. What is your understanding? Will this all happen in time to rescue Greece? What will happen in the interim?
Nouriel Roubini in Forbes.com 03.11.10, wrote:
“I expressed concern in a Financial Times op-ed about the risk of a double-dip recession, even if my benchmark scenario characterizes the risk of a W as still a low probability event (20% probability) as opposed to a 60% probability for a U-shaped recovery. Others worried about the double-dip risk also include David Rosenberg, Gary Shilling and John Makin.
Ed Hyman and I debated whether the recovery would be U- or V-shaped on a Feb. 22 conference call attended by over 2,200 listeners. Since that call, a slew of new U.S. macro data have come out. They have been almost uniformly poor, if not outright awful.”
http://tinyurl.com/y9ctckx
Good grief Brian. They are Mediterraneans, God love ’em.
What Greece must do is not become Germany but become … less Greece. In the short term, if Greece manages to endure until Spain becomes the weakest link (a couple of years at most), then there is hope because Europe and the ECB will have to come to their senses and realize that the Great European Depression that they are creating is not good for anyone.
The difficulty I see is that the Greek public sector is kaput, in fact it has been so for several years, and the government cannot fix that. The crisis has revealed the virtual collapse of the Greek state.
Thanks for a realistic assessment. I would only submit that the train wreck has already occurred. But rather than treat the wounded, politicians and financial types in the EU (and the US for that matter), are still trying to get their ‘indestructible’ train, moving again.
Secondly, whether they stay with the Euro or not and regardless of their ‘austerity’ program, the Greeks won’t be able to pay back all of the debt. As you point out the simple math doesn’t add up. They will need debt relief of 1/3 or more of the foreign debt and the sooner the better. And yes this will also mean a similar program for Spain and Portugal, (perhaps others).
And finally, the entire developed world needs to do a fundamental rethink of how we do business, or we will all be living through a “Japan scenario”, if not much worse.
Alarmist? No, just looking a bit beyond the end of our collective noses. Rocket science, it ain’t.
Is China a bubble? Do you think their accountants and managers are better than their folks who send us toxic products? Are those westerners charging to get into the Chinese market seriously evaluating risk and demanding high standards of accountability? Haven’t we seen these folks in action recently in another context? How did that end?
Think about it for a few minutes. Then be very, very afraid. Greece is small potatoes compared with what is coming.
Controlling bubbles? Can’t be done. It’s base human nature. The desire to believe in faeries…..
Spare us the stereotyping please. The average Greek civil servant takes home about half as much as his Irish counterpart (23k euro vs 45k), although the difference in GDP per capita is much smaller (31k vs 39). Greece has the lowest wages and the highest poverty rates in the eurozone. Don’t believe everything you read about the “profligacy” of the Greeks.
A bubble here, a bubble there. You socalled experts imagine that there can be any future without real change! Stupido!!! We are looking at a neverending doom loop of bubblebustbailout futures. Carryon parrots! Crime were, and are being committed. If crimes are tolerable, and acceptable – then you are complicit in fabricating a future of criminal activity. So in practical application there are no laws, but only crime, – and in world where there are no laws, and only crime – there are no laws and only crime for everyone predatorclass biiiaaatches!!!
I find it strange that nobody even considers the possibility of Greece defaulting WITHOUT leaving the Euro. I didn’t have the impression that Orange County seriously considered leaving the dollar.
Actually the size of the demostrators in Athens was something like 30.000 (in a 5 million city anyway).
The riots were meaningless, the usual 200 “professionals” that the police usually watch without acting.
Anyway, there are people that are doing 15K a year and will lose something from 1,5 to 2K annually. Paying more or less the same prices in many basic products than the rest of Eurozone countries. You cannot expect that they don’t even protest, at least now that the pay-cuts and the tax-reforms have just been announced. Not that it will make a difference.
It’s the least they can do when last September we were told that the deficit will be max 6% and it was actually more than double this.
Actually an ex-IMF chief economist suggests that only the IMF can save the situation, the moment he heard about a new European institution that would bypass the IMF and although such a plan will take ages to come in effect considering the amount of conversation, legislation and approvals that has to be done ;)
greece should default and let Germany & France with 120bn to make it wallpaper for their kitchen.
Also Greece should give a green card, $500 and a ticket to Frankfurt to every illegal emigrant arriving from the depths of Middle East and East Africa
You cannot guarantee the borders? you want to sell guns? Then you cope with 150,000 Somalians, Pakistanis, Afghans, Iraqis that keep on charging our borders.
I completely agree. It’s a problem that plagues this whole world credit mess. People lent money they shouldn’t have (and people borrowed money they shouldn’t have too). Now they want to deny the loss and keep playing games to try and force the borrowers to pay. However denying the loss exists does not mean it doesn’t. Eventually the loss will be recognized, its just how messy does it have to get before it’s recognized.
You do realize at this point that even hoping they’ll use it well qualifies you as one of the world’s most optimistic people, correct? ;-)
As a metaphore “bubbles” are, at best, simply reference to the elasticity of profitability over a period of time. Since Economists are nobel prize winning policy advisors, one would expect the basic “definition of terms” and methodology instead of the redundancy of bubble gum rhetoric. No where can I find an actual classification of types of bubbles. They are generally numbers in relationship to themselves. An ANEURYSM, however, is a bubble.
The joke here is that the entire colonial British Empire and Merchantile colonial expansion itself is one giant bubble.
Translating that into reality, can we please have a better picture of finance bubbles in real sciencific terms? Is the current state of bubblemania merely another term for asymmetrical inflation or finacial colonialism or monetary capture or distress loading or consensual rape?
The problem I have is that true monetary expansion is called growth, and growth should be sustained. Are we simply rhetorically coloring an acceptable picture of grossly repetitive ponzi schemes? I guess it is reasonable to speak of an elasticity of value but I thought that was called a spread?
Do we just use this language of a century old jargon to keep a framework that patterns the resulting ambiguity and distortion as normal. Is this just more Peter Peterson talk working through the wasted time of media attention going full circle to avoid the real issues and truthful disclosures of discovery? This is just more of the same B/S… (bubble sydrome).
There is no mystery here. The Greeks can’t pay their sovereign debt. What they can’t pay they won’t pay. This has nothing to do with the euro. They will never be able to sell drachma denominated debt externally.
Who will take the hit, how will it be packaged for public consumption and what precedents will be set for the rest of the PIIGS? These are the tough questions. Until they are resolved, Sarkozy and Merkel have to hid the pea. In the meantime, speculators will be speculating and the EU governments will be demonizing the speculators publicly and trying to game them behind the scenes.
The Greeks would be best served by defaulting, adopting more market oriented policies and sticking with the euro.
I must be in my manic phase, then.
Enviously, I have to concede to you Americans the ability do to an unsentimental and rational analysis of economic facts. Can’t find anything like your text in any German newspaper or blog.
I’m agreeing with Rudiger A: I, too, do not see any reason why Greece should not go bankrupt and stay within the Euro Zone. You wouldn’t expel California, if they went bankrupt, from the dollar zone, would you?
And you wouldn’t want to bailout California, would you? So don’t get the idea that us Germans are eager to render any such services to the Greeks, or any other PIGS-State and even less so under your assumption of close to 200 billion Euros rather than 20 billio.
However, I rather fear that the memory of the German (only German?) voter is not very long lasting.
But as far as I am concerned I can assure Angela Merkel:
Hell hath no fury like a taxpayer scorned!
Kyriakos-
Are most people in these protests peaceful? Are they violent? I don’t watch CNN (which may be a good thing.) The only stuff that makes the headlines I see are the photos of masked males torching an Audi. I’d rather know the truth than not.
Much thanks.
Greece is all but officially bankrupt. Iceland went bankrupt. Ireland, Portugal and Spain are essentially bankrupt. There are TBTF institutions (hiding?) toxic assets in the trillions. There are millions and millions of people barely able to pay off their mortgages and credit card debt while over-burdened by high fees.
This is completely dysfunctional financial system bordering on chaos.
Euro zone agrees bailout for Greece: report
Fri Mar 12, 2010 8:02pm EST – LONDON – Reuters – excerpt
(Reuters) – “The euro zone has agreed a multi-billion euro bailout for heavily indebted Greece as part of a package to support the euro, the Guardian newspaper reported on Saturday. The 16 euro zone members have agreed on “coordinated bilateral contributions” in the form of loans or loan guarantees to Greece if Athens is unable to refinance its debts and asks the European Union for help, the Guardian quoted a senior European Commission official as saying.”
http://www.reuters.com/article/idUSTRE62B14R20100313
axxicl Aug 07, 2009 4:58 PM
welcome to —————–www.goladymall.com Wholesale and retail all kinds of world brand shoes,jeans,t-shirts,bikini,beach pants,handbags,wallets,sunglasses,belt,caps,watches etc.. Free shipping!free return!lowest price! No any extra cost!
March 13, 2010 – The Times – excerpt
“But Wolfgang Schaeuble, the German finance minister, has been a key organiser of secret talks on a bailout plan that have taken place since EU leaders met for a one-day summit in Brussels on February 11, issuing a general guarantee of support.
This was felt to be needed because of fears of contagion in the bond markets to other weak economies, especially Portugal, Italy and Spain, which could have triggered a crisis in the euro itself.”
http://tinyurl.com/y86lt5d
Fortunately it was mostly peaceful. The reporters’ syndicate participated in the strike so there was no live coverage of the events, but reports in the following days confirm it was a peaceful protest.. There were some vandalisms like what you describe and 11 people were arrested but it was probably the few hundred ‘professionals’ that Dimos B mentions, some leftist youths who usually turn up in protests and throw stones at the police.
Excellent article. Greece’s situation is certainly not new. For a general background, see “This Time is Different: Eight Centuries of Financial Folly” by Carmen M. Reinhart and Kenneth Rogoff.
Greece is a serial defaulter and european union should have seen this going in …
It is not just the greek public sector wages vs the irish public sector wages, the issue is in the aggregates and % – like in California.
The bottomline is the size of the public sector vs the private sector. I’m not sure who said it but a balanced $2T government is worse than a $1T balanced.
Government spending crowds out private enterprises.
Whoops
“a balanced $2T government is worse than a $1T balanced.”
a balanced $2T government budget is worse than a $1T unbalanced budget.
Sorry
Why can’t Greece run a dual currency? This is not a new idea. In the pre-’89 days Eastern Europe did that, and Cuba still has a domestic Peso and one, of much different value, used by foreigners. With a dual currency the Drachma could change value in relation to the Euro as needed. – I suppose, though, selling Drachma bonds may be a challenge.
Every time I read those passages in Exodus that prescribe the sabbatitcal and jubilee laws, I wonder: doesn’t this give people an incredible incentive to run up huge debts in the year immediately before the sabbatical or jubilee?
I guess in a fully functioning capital market interest rates would rise precipitously in those years, tending towards infinity as the seconds tick away towards the “debt forgiveness moment”. And then they’d fall again afterwards.
Credit availability would totally dry up before the Jubilee year, it would seem, and/or interest rates would spike. But wasn’t usury forbidden by the Old Testament?
“as prescribed in Old Testament law wherein all debts are forgiven on certain years ?”
Yeah, sounds pretty neat, doesn’t it? Bet you’d think differently if, say, the bank were to declare your money deposit account a “debt” from them to you and cancel it, huh?
Or let’s say that Congress passed a law clearing out all debts in, say, 2020. What do you think are your chances of getting a 30-year mortgage on a house your growing family so desparately needs? Zippo. Everything would grind to a halt. I mean, really, who’s going to be stupid enough to lend you money if next year that debt would simply be discharged?
IIRC, one of the presidential candidates (I think maybe even a Republican) waxed poetic about that Biblical deal a few years back. I suspect his advisors set him straight in a hurry. There ain’t no such thing as a free lunch!
Over at Ambrose Evans-Pritchard’s list of columns I raised this: Greece contact its Balkan neighbours, and then going all the way north to the Baltic countries, and include Georgia, and anyone else who prefers more room than what Brussels is willing to give, that they have a common currency, a common defense policy and a common foreign policy – all the rest being home rule. His response was am I kidding, or is this some kind of cruel joke?
I side with the Euro skeptics, even though I am on the other side of the Pond, because Brussels is too involved in everything. So, more room for countries to deal with balance sheets being in the degree of disarray they are currently in.
So, will this fly?
The main reason bubbles can become so large and dangerous is regulatory failure. Since Central Banks can set interest rates across the entire national economy, they can power bubbles (or cause crashes, such as the 1929 crash which triggered the Great Depression).
The only practical way I can see to prevent bubbles from becoming all encompassing would be to remove the power of central banks to set interest rates, and indeed to eliminate central banks and go back to “free banking” where the availability of credit is dispersed among hundreds or thousands of individual institutions.
Bubbles are probably unavoidable in any market system, but if they were limited by the assets and liabilities of individual banks, they probably would also be limited in size, scope and duration. The American housing bubble would have been limited to California, Nevada and Florida, and only affect banks and investors there.
As for the PIIGS, California and the other insolvent nations like Iceland and Japan, perhaps the only practical way to solve the mess is to declare a default, take the pain of market readjustment, and then (once the markets have cleared) the various asset classes will reflect their “true” market values. The fact that some of these values will = 0 will be very painful, but resources will now be able to flow towards profitable investments and growth rather than tied up by political cronyism and “zombie” corporations and assets.
So, something along these lines: http://www.financialpost.com/opinion/story.html?id=2668775
EconRob, I was just trying to make the point that austerity will hit the Greeks much harder than the Irish as they have much lower wages although the output and the cost of living in the two economies is comparable.
I think the crowding out principle is too controversial to accept it as an axiom.
The greek public sector is not particuarly big. Check out this table from Eurostat
http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&init=1&language=en&pcode=tec00023&plugin=1
Greece’s total government expenditure as a percentage of GDP is slightly below EU average and the eurozone average and marginally higher than Germany’s.
Correction: public spending as a percentage of GDP _was_ lower than EU and eurozone averages and in fact lower than Germany’s until 2007. We have to thank our former (conservative) government for the spending spree that got us here.
This talk about Greece withdrawing from the euro misses the point. As soon as the market starts to think that Greece is seriously considering devaluing (and let’s not kid ourselves – the market will realise this weeks or months before the Greek parliament finishes debating such a big decision) there’ll be a system-wide wholesale run on the Greek banking sector (a la Argentina, 2001).
Unlike Argentina though, Greece is a member of the European Union. Four freedoms are enshrined in the Treaty of Rome: free movement of goods, free movement of services, free movement of people and – crucially here – free movement of capital. So unlike Argentina, Greece wouldn’t have the option to impose capital controls, unless they also chose to exit the EU.
So when we talk about Greece withdrawing from the euro, I think we’re really talking about Greece withdrawing from the EU. Is it conceivable they would ever opt to do this?
This is a country that has endured military dictatorships within living memory – and turned to Europe as the guarantor of its democracy. Further, remember that Greece spent much of the last half-millenium as an Ottoman colony: the Greeks in part joined the EU as a symbol of their ‘Europeanness’ and they continue to view EU membership as a massive source of pride for their country.
Therefore, I would find it extraordinary that Greek politicians might turn to option 3 as the “least awful” solution, given the massive scars (economic and political) it would leave on their country.
Within the EU, who is running trade surpluses? What size are they? For instance, how much trade between Germany and Greece? How much goes to Greece, and how much to Germany?
As long as the Germans are free to perpetuate trade surpluses with fellow EU members, free movement of goods is a canard.
You really can’t think about it from within the framework of our system. It would be a whole different animal. And it actually worked. That is what makes it so interesting.
Being Greek, i feel sorry to see the mess that has been caused by the politicians that have been governing Greece for the past 36 years. Nevertheless, the politicians are a by-product of our own mentality: Yes, the politician are rotten, but us Greeks keep voting for either of them and have kept those crooks in power all those years.
The simple truth is that us Greeks are a very hard people to govern. Each one of us likes rules -as long as they apply to the others and not us. And we like to live the good life, as long as we dont have to work hard for it. We try to “bend” the laws as much as possible, even break them, but when we get caught we like to put the blame on others.
The only way that Greece can be governed is thru a dictatorship. In fact, the only 2 periods in Greek history where this country has seen order (as opposed to today’s chaos) and real growth, were during the dictatorships (one just before WWII and the other from 1967-74).
If one looks at the state of the Greek economy in 1974, just after the fall of the military junta, one will notice that our debt was close to ZERO. During those 7 years, everyone worked… There were no strikes, no easy way around, and those who misused public finances or commited a crime were punished (unlike today where, in Greece, one can do whatever one wants but -even if caught- goes unpunished).
Then, the politicians came… and the results are known.
No matter how many austerity measures are implemented, no matter how many guarantees are given by the European Union, if this country wants to go forward, we will have to do something with our mentality… We must not tolerate the irrational things that are taking place: In Greece ANYONE who wants something can just go ahead and close a public road, or occupy a public building, a university etc. and this is perceived as being within their right to do so (although, legally, it isnt).
Here’s an example, very characteristic about how things work in Greece:
Last year a MAJOR strategic deal was signed between Greece and COSCO (China Ocean Shipping Company -i.e. China’s state maritime company) to sell the containter terminals of the port of Piraeus to the Chinese. Now, to give you a scale of how -potentially- huge this deal was, think of Greece in a few years time being the entry point of the Chinese to the EU… This is not something to be neglected. It would change Greek and perhaps European logistics the way we know them.
Nevertheless, there was one minor problem: the stevedores of the port had a very powerful union. A 1950s regulations stated that each stevedore can offload X cargo per day. Anything above that would be considered as overtime. THAT WAS WITH THE MEANS OF 1950!!! Using today’s means, a stevedore can offload 3 or 4 times as much during the course of the regular working hours. But, much to their interest, this hadn’t changed. They were still being paid overtime, even though they only worked the regular hours, resulting to each one of them getting paid up to 150,000 euro per year (these are port workers we are talking about)!!!
So naturally, when Cosco said it was coming over, these irrational benefits would have to be cut and the loading and unloading capacities would have to be adjusted accordingly. The union did not like that and decided to blockade our most significant port, thus crippling the economy even further.
Now, in any civilized country, when a group of 200 people blocks its single most significant port, and no products can enter or leave the country AND when the court rules that the strike/blockade is illegal, the police would intervene and kick them out! They want to protest, fine: use the sidewalk!!!
What happened in a country like Greece? NOTHING!!! And, eventually, the government had to cave into their blackmail and literally pay them off to free the port!
Sorry to bother you with this very long post, but the Greek case does not have to do with pure numbers. It is first and foremost a problem of mentality, which has to change in order for any austerity or other measures to be put to good use.
Thanks for reading.
Hmmm, very interesting. Return of the Generals then, yet again?
For, it has been said that people deserve the government
they get, and that government is a reflection of the people they govern, or rule.
So, the blind eye cast towards questionable ethics, over the decades, has exacted a very high price for Hellas, and ultimately everyone.
No need to apologize, for your display of candidness
is very welcome.
Kalimera!
Intriguing commentary David W. Lincoln. We are all responsible for allowing the predatorclass to enslave and oppress us. We, (the people) either standup and beheard, or we don’t. If we don’t – then nothing will change and the predatorclass will continue their rank abuses and criminal activity, and we (the people) will suffer grievously and have hell to pay. If we do – then the predatorclass is accountable and culpable, and there will and must, be a reckoning and a balancing.
How much abuse are we willing to tolerate before we strike out at oppressors and demand real change???
How much suffering,…how much pain,…how much loss are we willing to tolerate, hazard, and endure before we (the people) standup, and demand accountability from the predatorclass???
Crimes were and are being committed; grotesque violations of the peoples rights, freedoms, and protections. We either defend these rights, freedoms and protections, or we don’t. If we don’t – then nothing will change and that thing will call the Constitution will devolve into just a “goddamn piece of paper”, and the people will have no rights, freedoms, and protections. If we do, – then our arch enemies in the predatorclass will be held accountable and there will be blood, and a reckoning and a balancing. Something has to give. The people are already stressed and strained. It is the predatorclass that owns the liquidity, and illgotten booty that must give back, or pay – one way or another. Far toomuch has been given to remarkably toofew at the expense of way toomany.
We (the people) either work to right these terrible wrongs, or we don’t.
If we don’t – then woe to us, for we are headed for a real horrorshow future of enslavement and deprivation. If we do – then the predatorclass must pay it’s fair share and recompense for the damage they alone have conjured, cloaked, and profited wantonly from creating and prosecuting.
Buckleup predatorclass biiiiaaatches. Fasten your seatbelts, and put your trays in the upright and fixed position, – because we are about to enter some turbulence!
David & Tony, I’m sorry to break the news to you, but currently Greece IS a dictatorship!
Yes, you heard right. In the year of our Lord 2010, a group of -no more than 200- Greek farmers can block (for a whole month) the national road that connects the South and North of the country or the road that leads towards the Bulgarian border and prohibit transportation and commute for the remaining 10 million Greeks.
A group on no more than 50 ex-union workers of Olympic Airlines can block Panepistimiou Ave (Athens’ second most central road) as well as the Treasury Building for a whole week, thus making traffic in central Athens unbearable for the remaining 5 million Athenians and make inoperable the whole country’s accounting mechanism.
A small group of left-wing university students can take over their school, hitting and throwing out their Deans, with total disregard for the right to an education for the rest of the student body.
Two Decembers ago, Athens surrendered two small groups of anarchists and communists who were left free to roam about, destroy, burn and loot stores as the police was simply watching by because God forbid we make any arrests and violate their “democratic right to protest”.
Finally, when the Greek government passed the austerity measures, again a group of left-supported union workers, went and took over the offices of the Government Gazzette, so that the typical passing of the law would be delayed…
I can bring up literally tens of such examples… Wake up: the cradle of Democracy is itself a brilliant example of what happens when democracy overdoes it and crosses to the other side. The modern version of Greek democracy is nothing more than an oligarchy, when 1-2% of our citizens (coincidentally the most “militant” ones) can impose their will on the vast majority of the population and remain unpunished! An oligarchy where the left rules the media and their irrational ideas become rational… A country where a left party leader provides public support for anarchist groups and instead of just being ousted from political life by the media, he is given air time!
This is modern Greece. And yes, democracy for this country doesnt work, because in Greece democracy has become the worst kind of anarchy!
Utter moralistic nonsense. Fortunately junta admirers like Mr. Syrigos are a pitiful minority in Greece.
Dear Kyriakos,
I am not a junta admirer and, although i thank you for your pitty, i do not need it and certainly i do not appreciate it.
I have my opinion and -I suppose- so do you. I will respect yours, whatever it is, but I suppose you don’t respect mine (thus you refer to it as “Nonsense”). THIS EXACTLY is the problem with our democracy: Some opinions are not respected, as are some rights.
Do you agree, Kyriako, that if I go to any Greek University and (supposedly) say that I support a Junta regime (or even that I am just a Rightist or a Royalist) i will simply get beaten up?
Do you not agree that anyone can do anything he likes, without any regard for the rights of the rest of the population?
And, just because every 4 years we are given the right to vote (the same people and the same parties), is this a democracy?
I think you are missing the point of what democracy is and please -read this and my next post- and tell me: are you satisfied? Do we have a real democracy in Greece?
“The only way that Greece can be governed is thru a dictatorship.”
If you consider the military junta the only regime suitable for the Greeks I must assume you have at least some admiration for it. If you can’t come to terms with the fact that you are a junta admirer go see a therapist.
“THIS EXACTLY is the problem with our democracy: Some opinions are not respected, as are some rights.”
I said your opinion is nonsense, which it is, I did not try to stop you from saying it. It is not surprising that you can’t understand the difference. It’s because of democracy that I’m allowed to disrespect you and your nutcake opinions and, much to your dismay I’m sure, there’s nothing you can do about it.
You are an embarrassment to Greeks and I just wanted to let the people here know that opinions like yours are marginal, which is a fact not an opinion. Your kind is represented in the greek parliament by a political party which got 5,63% of the popular vote in the last election and which, much like you, publicly denounces it’s well known fascist political heritage.
I will not discuss with you any more, this discussion is not relevant to the issue of the post and I do not consider your opinions worthy of debate anyway.
Thank you for your insulting message, although it does have a lot of inconsistencies. However if you are not willing to discuss and -instead of providing valid arguments you simply wish to end our discussion (typical of a fascist behavior)- then that is fine also.
I am glad we got a chance to have the discussion we had so far, even though you abruptly disrupted it by calling my arguments “nonsense”.
p.s. One last thing: If that political party you are referring to is LAOS, note that i do not support it (in fact i don’t support any political parties, even though i tend to prefer right-wing politics in general). Nevertheless, just to set the record straight, i doubt that LAOS is a proponent of dictatorship. Furthermore, let me just add that, if i came forth and supported communism, would what i said be treated as “nonsense”? I beg to disagree… you see, in Greece, if someone belongs to the “right” he is a fascist. If he is a communist, he is just “liberal”. Your behavior is typical of this, and, quite frankly, it is sad…
Do you seriously expect me to debate whether Greeks deserve democracy or not? That’s not an argument, that’s racism. I don’t understand what you mean by “the discussion we had so far” as I never intended or tried to have a discussion with you. Read the p.s. of your last comment, you make the arguments and disagree with yourself, please don’t use me as a straw man. I just wanted to point out to your readers that, thankfully, racists like you are a minority in our country.
Heh??? “An argument like that is RACIST”???
First, i dont see how you debating the issue of democracy and whether it is fit for Greece or not is “racist”, seriously…
Second, if you keep posting in this forum, would you kindly refrain from insulting the other members? So far you’ve called me various names but, please, i never ONCE insulted you. If you think you cannot speak politely -even to persons that disagree with your opinions- my advise is not to write in fora. Most of all, it gives you a bad image…
Third, never once did you rebutt my arguments and never once did you answer a very simple question: do you REALLY think that in Greece today we have a democracy (a functional one, at least) ?
And finally, just to make things clear: I am neither stupid, nor racist. That’s just you saying those things and you dont even know me. Again, please keep such characterizations to yourself Kyriakos (sorry, i dont know your last name, you do know mine).
Sincerely,
Y.
And one more thing: You say “I never tried to have a discussion with you”.
If you read the postings, i posted something and you replied to it. I’m sorry, i may not know the meaning of “racist” as you imply it, but i do now what a discussion is like… :)
Saying that Greeks are not fit for democracy is making a sweeping, stereotypical assessment for an entire, by definition diverse population. That’s tantamount to racism, although I don’t expect you to understand why. Furthermore you directly claimed that the military junta was a good time for the country, although you afterwards tried to weasel out, which is typical of people like you who are, unsurprisingly, reluctant to admit their fascist beliefs.
You claimed I didn’t answer any of your “arguments”. I explained (several times) that I never tried as I simply wanted to show you for the racist you are and not give any credibility to your childish opinions by actually debating them. Don’t pretend we’re discussing, we’re not.
Yannis Syrigos wrote:
“I’m sorry to break the news to you, but currently Greece IS a dictatorship!”
“Since the restoration of democracy, the Greek two-party system is dominated by the liberal-conservative New Democracy (ND) and the social-democratic Panhellenic Socialist Movement (PASOK). Other significant parties include the Communist Party of Greece (KKE), the Coalition of the Radical Left (SYRIZA) and the Popular Orthodox Rally (LAOS). The current prime minister is George Papandreou, president of the PASOK, who on October 4, 2009, won with a majority in the Parliament of 160 out of 300 seats.”
http://en.wikipedia.org/wiki/Greece
Rick, the reality is very different, i’m afraid. See, the political life is dominated by 2 or 3 ruling families: Papandreou (both him, his father and grandfather have been prime ministers since the 50s), Karamanlis (him, his uncle -also as President, again since the 50s) and the Mitsotakis family.
Along with them, a clan of selected businessmen and media bosses virtually run the country, providing the people with the illusion of living in a Democracy. With a VERY short break, these 3 families have been ruling their respective parties (and therefore Greece) continuously since the 1950s.
But it’s not also that!
As i said in earlier postings, the “democracy” in Greece has crossed to the other side. If you lived in Athens for example, you’d get an idea of what i’m talking about: everyone can do whatever they want, without any repercussions at all. Small groups of protestors take to the streets EVERY DAY, thus creating chaos for the rest of us.
Recently farmers blocked all the main Greek highways for a month. For a month, the entire Greek population was not free to move about the country because a small minority of farmers would not allow us to. So, if you had urgent business in Thessaloniki, the farmers wouldn’t let you go (by car), just because they didnt want to. Of course no one did anything about it.
Did you know that there are anarchists in Athens, who storm the streets every day with hammers, breaking anything that is made of marble so that they can gather “ammunition” to throw to the police during riots? If you go outside the Grand Bretagne hotel, right across the Parliament, you will notice that some of the outside walls are bare, and you can see the plumbing pipes running through.
Recently 30-50 ex Olympic airlines employees had taken over the Accounting department of the Ministry of Finance and also blocked Panepistimiou Ave (the 2nd most central Athens street) in protest of something that was not even fair. The downtown area (where about 2-3 million people commute daily) was in a traffic chaos for a week, because of these 50 people.
And amidst that, the huge degree of corruption in literally every section of public life: from the tax collectors to the politicians, everyone who hold a public office is in for the money and the bribes!!! And if they get caught? Well, the members of the parliament enjoy parliamentary asylum, and the civil servants well… the most they can get is a fine, most of the cases dont even go to court. And who pays for this? The rest of the people, the majority!
So, thank you Rick… I knew that the constitution of Greece states that the country is a parliamentary Republic, but the reality is very, very different!!!
The Greek Orthodox priest, a while back, received a commentary on “The Abolition of Man” by C.S. Lewis. It was done by a former Anglican, who is now an Archpriest in British Columbia, who is part of the Orthodox Church in America.
Father John thanked me for it, and said that he is not
taking any side.
Seriously, am I correct that some Greeks are more easily persuaded than others that there is one standard for all? So, am I correct in concluding that
some are frankly incapable of undergoing that perestrokia to one standard for all?
I am glad that Hellenic, and Hellenistic, culture is around, but I can see the point by some that today’s Greece is resting on the laurels of Solon, Phidias, Socrates, and others before Alexander the Great who are truly worthy of respect.
Yes. I’ve heard so too. People say that the Greeks have a big problem with tax evasion. It is better for everyone that the PIIGS return to their currency standards if they cannot maintain the standards set for the Euro. Otherwise the whole thing will come crashing down on them.
“There ain’t no such thing as a free lunch!”
Really?
In the last 2 years, Wall Street just got the biggest one in known history.
What’s good for the goose…
They must be absolutely terrified of the consequences of a default. Logical, since the politicians derive their privileges and power from the established order. They darn well know that all bets would be off otherwise.
They can’t face up to reality. Well, reality will hit regardless and it could be very ugly.
Usury is completely forbidden in two references in Genesis; on the third, it allows interest to be charged on loans to gentiles. The ‘old Testament’ is however peppered with repeated injunctions against the charging of interest.
The ‘new Testament’ makes no reference to usury – other than Jesus’s violent expulsion with whip in hand of the moneylenders from the Temple. Ancient Christianity was virulently opposed to the moneylender. I believe Dante anticipated a special place in hell for them. His “Inferno” was however a truncated “Readers Digest” job on Islam, full of hatred for Semitism which has staunchly propagated strict, nay, true monotheism.
Islam forbids usury in any form. The banker, the lender, the lawyer who draws up the document, the witnesses who sign, all, ALL, are guilty of a major sin which is equivalent to 70 of the worst sins, the least of which is like having sex with your mother.
Turn to Islam, find nourishment in the noble Qur’an, which is the final Testament from God. You are waging war against that which can nourish and save you and you are seeking succour from the riba merchants, the usurers who have stolen your pension funds, looted your public coffers and have pursuaded you to commit genocide not just against Muslim semites, but against your own children, through wildfire abortion and by spending what should have been their inheritance. Turn to Islam before it is too late. There is none worthy of worship besides God and Muhammad (peace be unto him) is his last, final, and greatest prophet. He will be the first to enter heaven and will be closest of all creation to God. “The first shall be last and the last shall be first.”
Europe is not going to bail them out – it would be too much for their debt-stressed voters to handle. The whole of Europe is saying it’s up to the IMF to do the bailout, but the IMF doesn’t have any gold left to bail out anyone because the gold market has also been plundered by the same people who’ve stolen your pensions (see http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/3/30_Andrew_Maguire_&_Adrian_Douglass_files/Andrew%20Maguire%203:30:2010.mp3). The problem lies with the nuclear family model which resulted in declining populations, fewer productive workers, smaller local markets for manufactured goods, and imperative to export … but the large export markets are producing the goods you want to sell them cheaper than you can make them. So, you’re stuck with sky-rocketing healthcare costs and a greying, under-productive, sickly population. Basically, countries with extended-family networks are going to take over. It’s all in the maths.
The Euro is gone, the dollar is gone, old-style western democracy is gone. Westerners must get ready for the police state. Your only hope is your armies are the strongest, but also the most expensive. So Western global hegemony is also gone.
Your only hope is Islam. But you don’t know that yet. See you again in five years, my brothers and sisters-to-be, Inshallah.