It doesn't matter what Greece wants. That's the whole point. The money will never be paid back. It's just math.
Alexis Tsipras' "open letter" to German citizens
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It doesn't matter what Greece wants. That's the whole point. The money will never be paid back. It's just math.
Even more ironic is the fact that countries like Estonia participated in the Greek bailout. Poorer and hard-working, bailing out Greeks who just took too many holidays and bought too many Porsches.
Austerity is the only way for Greece, some people will emigrate and many will face hardship but the alternative of other countries keeping Greece afloat isn't a possibility.
Note that many Greeks who were protesting over their salary cuts simply didn't want a more economically realistic lifestyle, it's not like they would've starved with those reduced salaries. It's just the continuation of the "I deserve" mentality.
From Mish's blog:
http://globaleconomicanalysis.blogspot.com/2015/01/greek-payback-math-at-0-interest.html
Payback of Greek Debt
Greece has something like €315 billion of public debt.
Forget about that. Instead focus on liabilities as presented in Revised Greek Default Scenario: Liabilities Shifted to German and French Taxpayers; Bluff of the Day Revisited.
The above total is a "modest" €256 billion to be paid back over time.
Point 5 is derived from points 3 and 4. The numbers seem to vary a bit depending on the source, but they should be close enough for this exercise.
Payback Math at 0% Interest
Let's assume that Greece can run a 3% current account surplus for as long as it takes to pay back €256 billion.
3% of €178 billion is €5.35 billion. To pay back €256 billion it would take about 48 years. That assumes 0% interest and a 3% current account surplus every year for 48 years!
Those calculations ignore rising GDP. But they also ignore a huge burden on Greek citizens for 48 years.
Let's be honest: Greece is not going to run current account surpluses of 3% per year for perpetuity.
http://globaleconomicanalysis.blogspot.com/2015/01/greek-payback-math-at-0-interest.html
Payback of Greek Debt
Greece has something like €315 billion of public debt.
Forget about that. Instead focus on liabilities as presented in Revised Greek Default Scenario: Liabilities Shifted to German and French Taxpayers; Bluff of the Day Revisited.
The above total is a "modest" €256 billion to be paid back over time.
- Assume 0% interest
- Assume a Current Account Surplus of 3% of GDP
- Assume Greek Debt-to-GDP is 176%
- Assume Greek Debt €312 billion
- Assume Greek GDP is €178 billion
Point 5 is derived from points 3 and 4. The numbers seem to vary a bit depending on the source, but they should be close enough for this exercise.
Payback Math at 0% Interest
Let's assume that Greece can run a 3% current account surplus for as long as it takes to pay back €256 billion.
3% of €178 billion is €5.35 billion. To pay back €256 billion it would take about 48 years. That assumes 0% interest and a 3% current account surplus every year for 48 years!
Those calculations ignore rising GDP. But they also ignore a huge burden on Greek citizens for 48 years.
Let's be honest: Greece is not going to run current account surpluses of 3% per year for perpetuity.
If you don't pay back a loan to the bank, the bank will sell all your assets.
Europe will tell what Greece should do. Greece can choose: follow the rules or become a third world country like african countries.
European politicians can not sell anything else to their European voters if they want to keep their job.
Just curious, what factual information do you base your "it's not like they would've starved with those reduced salaries"?
You'll never get the people to accept austerity on that level. Ever. See the math post I just made.
Austerity isn't the only way for Greece - leaving the EMU is the only way. And it's going to happen. The only question is how much pain comes with it.
Greece wasn't a third world country before the EU, and it won't be after the EU. Sure, leaving the EMU will cause a lot of near term pain, but Greeks are used to inflation. They lived with it forever. They have a massive underground economy. They ignore taxes (1/3 of them, by last estimates). In no time, people outside Greece will begin to find cheep holiday deals in Greece and they'll come back because their currency will go a long way. The Greeks will be back on the road to prosperity faster than most think.
People used to talk about how Iceland would pay, too. But they're not all that bad considering they told everyone to go to hell.
The EU can't seize Greek sovereign assets. All they have is a bluff. "Pay us or you're out." But if getting "out" means it's better for Greeks, how is that a threat?
Some dock workers were offered 600 euros per month, with Greek prices that salary is enough to survive, instead they chose to boycott and to my knowledge the company folded. Mind you in Estonia, many people survive on much less while living in a more expensive country and their tax euros went to bail out Greece. The Greeks on the streets replying along the lines of "well, they're eastern European and don't deserve more" when interviewed.
Do you understand how this can cause dislike of the Greeks?
To my knowledge, Greece was very poor prior to joining the EU, definitely not on par with Northern Europe as it was from 2000-2008.
I don't have any issue accepting that non-Greeks can look at Greece and be disgusted by it's citizenry. None at all. All the more reason for them to leave the EU. But you could say the same thing for the French. They'd rather strike than give in as well, and they do it all the time. They're used to the government making it all but impossible to fire striking workers.
But there are a lot of examples where regular Greeks can't make ends meet. I'm not suggesting it's not their fault (the Greek people). I'm just saying they're not all driving BMWs and living large like some in this thread suggest.
Greece's GDP growth was no worse or better than countries like France, Denmark, etc.
http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?page=5
Unless you're referring to poor in some other manner. Please describe what you mean by poor.
Greece had high inflation, defaulted on their debt every so often (every decade or two) and was just fine with that. They had a booming tourism industry and a cheap currency that helped exports.
Life went on in Greece as it did for millennia, and the Greeks were happy about it.