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In the news media (e.g. NPR, BBC, CNN, etc.) there is a dominate consensus that Greece must eventually give in to demands to reduce pensions and make further cuts in government spending in exchange for a new loan to help pay off defaulted loans, even if acknowledging that the Greek people have high unemployment and a failing economy.
However, for those not yet exposed to an alternate perspective which is not generally aired in the news media, you might read this bit of a rant by Prof. William K. Black. William Kurt Black is an American lawyer, academic, author, and a former bank regulator. Black's expertise is in white-collar crime, public finance, regulation, and other topics in law and economics. He developed the concept of "control fraud", in which a business or national executive uses the entity he or she controls as a "weapon" to commit fraud. In this piece, William Black make ssome some interesting points about the Greek crisis, of which I cut and paste a few excerpted points:
1. That economists overwhelmingly believe on the basis of theory and experience that austerity in response to a Great Recession constitutes economic malpractice akin to bleeding a patient until it restores him to health.
2. That austerity has caused, as predicted, a human catastrophe in Greece
3. That austerity and the oxymoronic "labor reforms," by reducing wages and the safety net throughout the eurozone, the bailout of German banks, and the sale of Greek infrastructure and islands to wealthy Germans at fire sale prices are very much in the interests of the elite German corporate and banking CEOs that dominate domestic German politics, the Germany economy, and the troika
4. That when a debtor has unsustainable debts, the normal and desirable response is to negotiate a troubled debt restructuring (TDR) to reduce the debt to a level that can be repaid. Even the IMF, the mother of monstrous austerity, admits that the Greek debt is unsustainable.
5. That a TDR was done for German[y], which was essential to its economic recovery. (after WWII)
6. That the Greek "bailout" was a bailout of foreign EU banks, primarily French and German – not the Greek government or people. That bailout of the eurozone's largest banks is funded by eurozone taxpayers. The muted reaction of the commercial markets to the Greek "No" vote is largely attributable to the fact that the bailout of French and German banks by eurozone taxpayers has been completed. The remaining loss exposure of the large eurozone banks on the loans they made seven or more years ago to Greek banks is tiny. The reason EU elected officials are so apoplectic to the Greek "No" vote is that the eurozone taxpayers are on the hook because they bailed out the (primarily) French and German banks. If the eurozone taxpayers suffer losses in the range of one hundred billion euros those taxpayers might turn on those EU elected officials who represent the interests of elite bankers at the expense of the peoples of the eurozone. The NYT article ignores all this and, without any analysis, treats the bailout as if it were a bailout of the Greek people.
To me it this final point which resonates after witnessing the the U.S. bailout of to-big-to fail banks after making a number of risky (sometimes fraudulent) loans to homeowners.
(Score: 0) by Anonymous Coward on Friday July 10 2015, @01:16PM
Greece didn't have a recession, it had and still has a debt crisis. Like when people get a new credit card to pay off the old credit card debt. That kind of crisis. You don't solve that problem by approving yet another credit card. Folks, I know that Keynes has some alluring ideas, but this is not a situation where they're applicable. What you're suggesting is akin to using petrol in a fire engine. Greece's problems are not due to a lack of funding.
(Score: 0) by Anonymous Coward on Friday July 10 2015, @01:23PM
Greece's problem is a lack of liquidity. None of the solutions being offered at this point address the.
Sometimes you have to cut your losses short... I think in tech, we call it fail often but fail fast. Why can't the same be true in this case?
(Score: 0) by Anonymous Coward on Friday July 10 2015, @01:38PM
Greece's problem is a lack of liquidity.
No, it's not. Up until two weeks ago, they had all the liquidity they wanted - ECB floodgates wide open. The current lack of liquidity is a symptom, one that in turn causes other problems no doubt, but the cause of the crisis was that Greece consumed more than they could afford and that resulted in too much debt (by which I mean unsustainable debt, even at low interest rates).
There is absolutely no point in giving Greece more money or reducing their debt burden until the Greek government as well as the Greek people understand funding isn't the problem, but overspending and what they do with the money is. If they want to get private investors to buy their bonds again, which is the only realistic way that Greece can stay in the Eurozone, then they need to make their economy and their debt sustainable. That the US, which has geopolitical interests but won't invest a dime of their own in Greece, keeps telling them that everything will be alright if Europe would only keep giving them money is not helping at all.
(Score: 2) by cyrano on Friday July 10 2015, @03:34PM
Wow. Just wow! You get the prize for having the most oversimplified and dumbed down propaganda post of the week.
I hope you are well paid. A talent like yours to spin is rare.
Turning an international bank scam into a national problem is inventive. After all, we wouldn't want to blame Goldman Sachs or Deutsche Bank, would we?
And I must admit, it sounds good. Even out CFO would like it...
The quieter you become, the more you are able to hear. - Kali [kali.org]
(Score: 0) by Anonymous Coward on Friday July 10 2015, @04:40PM
Maybe the Trojan horse was the cause of it all. You can always look further back. Assuming that Greece had a chance inside the Eurozone, and I see no reason to deny that, the cause of their problems was their overspending, not anything that happened earlier. I don't think there is any debate about that. The statistics are very clear. Even if you subscribe to the "spend money to earn money" ideology, you can't ignore that there are limits to how much of your budget you can spend on interest payments before the debt blows up in your face.
It doesn't matter what you think about the fraud surrounding Greece's admission into the Eurozone: The Greeks could still have reformed their country. Cutting the budget deficit from 10% down to less than 3% would not have killed the Greek economy. If you don't believe that they could have done it then, they can't be expected to do it now, and must leave. Anyway, even after it became clear that Greece had cooked the books (had had their books cooked, whatever), they did not change their ways. Then the US mortgages caused the banking crisis and lit the fuse on Greece's debt, but even then, Greece did not reform. Years later, after haircuts and debt restructuring in return for promises of reforms, still nothing. At what point is it no longer someone else's fault?
(Score: 3, Informative) by ikanreed on Friday July 10 2015, @01:36PM
Yes, Greece did stupid shit to get into its current situation.
That doesn't mean doing stupid shit is the way to get out.