Help on Greece debt crisis removes immediate threat to EU economy

[Electric Monk]

Source: The Globe And Mail

Help on Greece debt crisis removes immediate threat to EU economy

EU says it will help the country reduce its ballooning debt, but Greece must still do the heavy lifting

(snip)

This morning, a day after a civil servants' strike shut down schools, airports and other public offices across Greece, EU president Herman Van Rompuy and his European Commission counterpart, Jose Barroso, announced a deal had been reached to help Greece overcome its debt problems.

No details were released Thursday and may not be released until euro zone finance ministers meet on Monday. The euro zone is made up of the 16 EU countries, including Greece, that use the euro.

Read more: http://www.theglobeandmail.com/report-on-business/help-on-greece-debt-crisis-removes-immediate-threat-to-eu-economy/article1464340/

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BBC http://www.bbc.co.uk/worldservice/news/2010/02/100211_greek_troubles.shtml

[Joanne98]

1. But Spain's broke too.

[nyy1998]

2. And Ireland (and I think Portugal is too)

[DJ13]

3. And Ireland

Which is where they got the "pigs" euphemism.

P ortugal
I reland
G reece
S pain

[WriteDown]

4. So I guess Germany can prop them all up.

:)

[DJ13]

6. Nah, they'll just force severe reductions on entitlements

As is typical in this screwed up world, those least able to afford to subsidize government spending will be forced into even more poverty just to keep the wealthy from paying their share.

Little real money will need to be spent by Germany.

[WriteDown]

7. The wealthy are leaving Greece in droves....

and taking their money with you as is often the case. Germany may have to step up eventually.

[nyy1998]

9. And France.

[liberation]

5. No they are not broke...

... the US has a higher level of debt than any of those countries.

The Southern EU countries can no longer leverage as much debt against the Euro, simply because the ECB does not want to mess with the interest rates right now which would slow down the Northern Euro zone... which right now is providing the economic engine. Just as during the earlier part of the past decade it was the Southern Euro countries which provided the engine while Germany and France's economies were slowing down.

The US and the UK have far more insane debt levels put against their respective currencies.

Compounding the situation is the fact that both Spain and Greece have had awful government teams for the past 4/5 years, and I am sure this is the way the other members of the Euro zone telling them to start getting their act together. The Spanish Socialist party is especially awful in their handling of most aspects of their government... incompetence, it seems, it not something reserved solely for the conservative side.

[DJ13]

8. Thats not true when debt is measured against GDP

Our debt load is still far lower than much of the industrialized world based on GDP.

Sure you'll hear the conservatives spout the raw number in dollars, but thats just PR to try and con the American people into supporting the conservative ideal of severely reducing all entitlement programs and/or turning them over to the corporations by privatizing them.

[liberation]

10. Yes and No

It depends on what you define as "debt." The metric you use is the one that makes us look less bad, when in fact one of our major export (if not the largest during the past decade) has been financial packages which is pretty much bundled debt. In fact, debt makes a huge part of our GDP.


The issue I agree is that conservatives tend to consider only "public debt" when the bigger issue is that for the most part conservatives are running their own "private" enterprises pretty much as debt generating machines. In fact the derivative-fueled market they dreamed up during the past couple of decades is as large (or even larger) than our country's GDP. Which is something we conveniently ignore.... Their MO tends to be focusing on those "evil" welfare queens while conveniently ignore the orders of magnitude larger problem which are the entitlement programs for private industry (esp. military contractors) which offer much less in terms of value proposition (from a social and economic point of view). There is little return from buying a cruise missile... if we compare it to the return we would get if we spent the same million of dollars the glorified military suppository cost, in education/research or public services instead.

The US is very clever in our accounting approaches, that is why we keep the costs of the wars out of our books. And we put most of the obligations, even though they are backed by the government, invested in the bailout on the Fed... which also helps put all that off the public books. If you start to add all of those elements (totaling almost 2 trillion dollars) our debt starts to look far far different. Instead with accounting creative enough, most of the debt is then made to look as part of our GDP so indeed, we don't look as bad.


Not that the EU is any better, since this whole thing is just a big smoke and mirrors game at the end of the day. Greece will have to swallow a pretty sour pill, and so will Spain... whose government thought they could ride the "housing bubble" gravy train indefinitely. Spain is overly dependent on tourism from the EU as their economic engine, and it makes sense that they got caught with their asses up in the air when the crisis hit Northern Europe, and those German tourists decided to stay home or head for cheaper places. The incompetence of their current government is making things worse for sure.


My point is that neither of those countries are broke, in the same sense that neither are we. Europeans could make the same argument, that our biggest economy California has been dancing at the edge of economic collapse for a while now. And if the ECB decided to dump the dollar reserves they had to swallow during 07/08, we would be in a world of pain similar or worse than Spain, Greece, Portugal or Italy.

Frankly, I'd like to see us evolve from this silly economic system we decided to make our entire existence revolve around... at a global scale.