Morality in the Greek crisis

I know I keep saying that economics is not a morality play. But when it comes to Greece, I can find no other satisfactory explanation for what is going on. 

The harsh treatment meted out to Greece over the last five years makes no economic sense whatsover. It has driven Greece into a deep depression that not only makes its government budget unsustainable but renders its debt unpayable: it has not only caused poverty and distress among Greece's population, but it has driven businesses into bankruptcy and done serious damage to the supply side of Greece's economy. And yet creditors want more.

I might agree that reforms to pensions are a good idea. I might also agree with widening the tax base. But not, emphatically not, in an economy as depressed as this. What is needed is debt relief, FIRST. Then real reforms, and help to restore the wanton destruction caused to the economy through ill-considered and frankly vindictive austerity measures.

But debt relief is not on the agenda. The IMF has previously expressed concern about the sustainability of Greece's debt: but now, returning to the fray after a brief absence, it has compromised its own objectives in order to present a united front with the EU. The Greek side is still asking for debt relief, though not for debt reduction. But its pleas are falling on deaf ears. The reunited Troika continues to insist on austerity measures as a condition of releasing the bailout funds previously agreed.

I've reminded everyone before about Irving Fisher's famous observation: "The more the debtors pay, the more they owe". In 2012, Michael Hudson developed this idea further. "Debts that can't be paid, won't be", he said. And he went on:
Today’s financial trend threatens to reverse this pro-debtor reform tendency. Without acknowledging the economic and social consequences, the “business as usual” approach is a euphemism for sacrificing economies to creditors. It seeks to legitimize the disproportionate gains of banks and their rentier partners who have monopolized the past generation’s surplus...... The aim in practice is to impose austerity and economic shrinkage on the private sector, while the public sector sells off its assets in a voluntary pre-bankruptcy.
The internal contradiction in this policy is that austerity makes the debts even harder to pay. A shrinking economy yields less tax revenue and has less ability to create a surplus out of which to pay creditors. Debt repayment is not available for spending on current goods and services. So markets shrink more.
If what you want is debts paid back, austerity is bad medicine.

But I said this was a morality play. The standard story goes that lazy, ne'er-do-well Greeks borrowed and spent excessively to support a lavish lifestyle well beyond their means. And to make matters worse they lied about their true financial position in order to gain admission to the Euro club. Unsuspecting German and French banks lent to them believing they were financially in better shape than they actually were. And when the Greeks finally admitted they couldn't actually pay the money back, hard-working thrifty Germans had to bail them out. Now the Greeks are complaining about the reforms that the virtuous Germans and saintly official creditors are requiring of them. But they are only pretending to do reforms, In reality they are still shirking. No wonder the creditors' patience has run out. The Greeks just can't be trusted.

I hear this story a lot. But it's not true.  And even if it were, it would not be helpful. It could equally be argued that Greece was sold a lie by the promoters of the Euro, since it was led to believe that Euro membership was the path to future prosperity. How was it to know that the abject failure of France, Germany and the UK to control their banks meant that naive Greeks would be at the mercy of predatory lenders? See, it looks different framed like that, doesn't it? And it is a bit rich to regard the official creditors as "saintly", too. They lent foolishly, in contravention of their own rules, to banks that had lent profligately and gained disproportionately. In so doing, they became what Hudson describes as "rentier partners" to those banks. Why should they not now take the losses that they should have inflicted on the banks in 2010?

The constant presentation of Greeks as intrinsically untrustworthy is profoundly damaging to the social cohesion of Europe. Unpayable debts do not arise from moral defect: Greeks are no more untrustworthy than anyone else. I do wish Germans would remember their own history. It is not so long since Germans were regarded in much the same way as Greeks are now. This is Keynes describing the attitude of the French statesman Clemenceau to Germans:
He was a foremost believer in the view of German psychology that the German understands and can understand nothing but intimidation, that he is without generosity or remorse in negotiation, that there is no advantage he will not take of you, and no extent to which he will not demean himself for profit, that he is without honour, pride or mercy. Therefore you must never negotiate with a German, or conciliate him; you must dictate to him. On no other terms will he respect you, or will you prevent him from cheating you.
The Economic Consequences of the Peace, III.7 
Germany was loaded with unpayable reparations after World War I partly because of attitudes like these...... and we all know where that led, don't we?

Brian Lucey reminds us that after World War II, Germany was forgiven the majority of its debt. It also received aid from the US to restore its economy - the Marshall plan. Yet now it refuses to consider further debt relief for Greece, let alone aid. Instead, it insists on harsh austerity measures, even though they make it even less likely that Greece will pay its debts. This, coupled with the disparaging language that is routinely used about Greeks and the wilful ignoring of their terrible economic plight, smacks of a desire to inflict punishment rather than any genuine interest in reform.

But punishing people - or nations - for running up unpayable debts actually doesn't sit well with a moral stance, particularly one that is supposedly founded on Christian values. Jesus has quite a bit to say on unpayable debts:
The kingdom of heaven is like a king who wanted to settle accounts with his servants. As he began the settlement, a man who owed him ten thousand bags of gold was brought to him. Since he was not able to pay, the master ordered that he and his wife and his children and all that he had be sold to repay the debt. At this the servant fell on his knees before him. 'Be patient with me,' he begged, 'and I will pay back everything.' The servant's master took pity on him, cancelled the debt and let him go.
But when that servant went out, he found one of his fellow servants who owed him a hundred silver coins. He grabbed him and began to choke him. 'Pay back what you owe me!' he demanded. His fellow servant fell to his knees and begged him, 'Be patient with me, and I will pay it back.' But he refused. Instead, he had the man thrown into prison until he could pay the debt. 
When the other servants saw what had happened, they were outraged. They went and told their master everything that had happened. Then the master called the servant in. 'You wicked servant,' he said. 'I cancelled all that debt of yours because you begged me to. Shouldn't you have had mercy on your fellow servant just as I had on you?' In anger his master handed him over to the jailers to be tortured, until he should pay back all he owed.
Matthew 18:21-35, NIV 
 I'm not at all sure what Jesus would have to say about the treatment of Greece by its creditors. Whatever happened to forgiveness?


  1. So, based upon the above, the successive Greek governments have no responsibility whatsoever for what has been happening. What about the billions Greece has received in cohesion funds after it joined the EU? What about the entrenched clientelist system, corruption, fraud, dysfunctionality of institutions etc. Larry Summers calls Greece a failed state.

    Yes, the 2010 bailout package was wrong, the primary surplus targets are still too high. Greece would have needed a haircut right away. But was this package forced upon Greece? Was Germany – where the elite had been dreaming about the “no-bail-out clause” - keen to lend any money? Papandreou came begging to the EU summits in early 2010, threatening that an imminent Greek default would bring down the whole euro zone.

    On reforms, there cannot be much leniency. If you assume that the period of easy money will not come back to euro zone peripherals, how can Greece become a moderately performing economy without implementing the most basic stuff?

    Also, this is not about Germany vs Greece. Countries with a lower GDP per capita have contributed to the bail-out packages. It is politically very difficult to sell the merits of Greek debt to their electorates.

    I am afraid this view is as biased as the common storyline about Greece.

    1. You really should read things more carefully, you know. Larry Summers said Greece would become a failed state if it left the Euro. He did not say it was already a failed state. And I did not say that Greece bore no responsibility. Far from it. I suggested that forgiveness would be a moral course of action for its creditors. That implies that there is something to forgive.

    2. C Hummes. Think harder. Read more carefully.

    3. Hummes, I agree. Why to pit all moral culprigth on EU? That shock me a lot. Right, the euro is a complete disaster. So, why Greece resists the exit? the truth is that Greece don't have to enter the euro never. In any case, much of macroeconomists don't introduce the peculiarity of this government in this case. It is a special one: communist summed up with nazi party. Is not that sufficient to doubt about who was moral or immoral in this sade story? I think that all these economist that I admire so much live regrettably in a ivory Tower. If they look at more short distance at Spain, for example, they could get a strong immersion of the reality of the emergence of a communist party. Not at all irrelevant, believe me.
      All this is the fault of the euro? Surely. But in this case, the best solution is Grexit.

    4. I think you should study the political system of Greece more carefully. There is a Communist Party and a nazi party in parliament, but they are both not members of the current government coalition.

    5. People insist on discussing who´s fault it was when the milk has already been spilled.
      We need to stop talking about the past and concentrate on what is at hand, as both sides, Greece and the creditors, have shared responsibilities on this disaster. And right now, what is at hand is the failure and fall of the euro.
      Leaders should put their heads and efforts on resolving this issue and not on saving the face of Germany and their allies in this matter.
      Much more is at stake here, then just the moral conundrum of debtors versus creditors. This could have very bad repercussions on world economy. Failing to see the bigger picture is exactly what lead europe into past disasters...are we repeating history? Have we not learn anything from it?

  2. Frances,

    Your claim that “harsh treatment” is being imposed on Greece is not consistent with your previous post which claims that Greece would be better off out of the EZ. Quite right: they’re free to leave any time, and rid themselves of the alleged horrors of the EZ.

    However, a recent survey found that most Greeks actually PREFER extreme austerity plus the Euro to reverting to the Drachma. And certainly there’s much to be said for borrowing money from others, then crying wolf when they want their money back. For those who are into self-pity and masochism that has big attractions.

    1. Maybe they could print off all the money they want when they return to the Drachma.

    2. Indeed Ralph but this is mainly due to propaganda on the alleged horrors of Grexit.
      Not that the current idiots in charge of Greece could handle Grexit...

    3. Indeed Ralph but this is mainly due to propaganda on the alleged horrors of Grexit.
      Not that the current idiots in charge of Greece could handle Grexit...

  3. They are in the trap. Declare bankruptcy and return to the Drachma. Let the EU be damned.

  4. Here is a thought: Declare bankruptcy but don't leave the Eurozone. What are the rules in EU for doing this?

    1. The EU swapped for currency exit is a slippery slope argument. It looks like lots of propaganda.

      Yet, if Greece has negative representation in the EU bureaucratic thingamajig system maybe they should consider that too. I'm not advocating the action but the consideration.

  5. This needed to be said, and it was said well. The Greek bailouts are not righteous, merely self-righteous.

    It takes two to make a bad debt, the borrower and the lender. The German and French people should shame their banks for making loans to an economy with historically bad credit. But more importantly, the IMF and Madame Lagarde should be shamed because they almost certainly know better.

  6. The moral of this piece: Time to bring out the iron fetters and torture Yanis??
    Byzantine techniques or Ottoman techniques??

  7. "I hear this story a lot. But it's not true."

    Isn't the big part of "this story" about pre-2007 lead up to the crisis?

    Granted some of it is about misrepresentation of true post-2007 progress in "reform responsiveness".

    But two different things, no?

    1. Like all myths, it contains elements of truth. For example, Greece did conceal the size of its deficit. But its 100% debt/GDP was known. It was allowed into the Euro despite being far over Maastricht limits. We don't hear so much about that.

    2. That's right. So, the entry of Greece was a big mistake.

    3. Yes, the poor state of the Greek economy was well known in Brussels, but the euro-project has never been about economy but about politics. The acceptance of Greece into the eurozone was just one of many events where politics was allowed to override sensible economics. I am sorry the following links are in German, but hopefully most readers of this excellent blog will be able to understand. In any case they are worth the extra work:

    4. This comment has been removed by the author.

    5. PS: It was already, expressed so clearly in these lines (and later performed beautifully by the resident blogger):

      Don't you love farce?
      Whose fault? It's clear:
      We all colluded and winked,
      Now Greeks they pay dear.

      Just goes to show that one should always do proper background reading before commenting.

  8. Frances, I don't understand your moral sentimentalism in favor of Greece. You should rethink your position.

    1. I don't see why, Greece has done many wrongs but does it deserve what is an ongoing tragedy of it's people, with some ending their life. There were better ways to deal with this but high and mighty principles at the top have kept to one path of near destruction of a nation. It's high time for Greece to be pushed out of the EU to save itself because I greatly fear the people will not do it themselves.

    2. I do believe that Frances' position is based on what would make economic sense: debt reduction/restructuring, returning the Greek economy to growth, and making the Greek state function more efficiently. This is what she means by the saying the economics is not a morality play, but if the goal is to punish for past profligacy then you're probably not going to get good outcomes. You could as the same question about the creditors an then 'moral sentimentalism".

  9. And your mention ad hoc of the Godspell is holistic. Not very accurate for the case.

  10. Anonymous: if is a tragedy, is the destiny. But I think that's is simply a case of misguided government during ver much time. What if this government are elected by its people?

    1. Agree on destiny, 'What if this government are elected by its people?' More of the same if the reports are anything to go by, the Greeks do not want to leave the EU.

    2. "if is a tragedy, is the destiny"
      There is absolutely no need to introduce "tragedy" ANYWHERE. Recessions can always be solved, it may take longer for supply side problems.
      That position is morally akin to seeing a train going to hit a child and not telling him to get out the way.
      We can solve poverty, have full employment (Job Guarantee) we have surpluses of everything.
      I can't see the anti-sadists winning any time soon though.
      Totally mad world we live in.


    That is all you need to know about the Germans and the Greeks - the Germans have to find a justification why they will lose a lot of money in Greece, if they keep going with Troika led policies.

    They could not be more stupid - not the first time in German history.

    The tabloid BILD loves it, and the ZEIT is not much better. That is what they call Syriza:


    It is about regime change, nothing else. Even if the the whole of Europe lose 450 bn with a Grexit. The Germans could just about be stupid enough to do just that!

  12. I don't find the moral take very convincing. In my view it's more likely a combination of institutional inertia and some people who still genuinely believe austerity works. And Germans being misunderstood.

    I've posted a fuller response here:

  13. Francis,

    This post is rooted in avoidance. Avoidance of consideration of the root cause of the Greek monetary crisis. The crisis is occurring because growth dependent upon monetary expansion is growth dependent upon one person receiving benefits at the expense of a second person.

    In the past, you have masterfully pointed out that the money supply is expanded when new debt is incurred. What you have not pointed out is that the new money is used to purchase property made by others. Why is this important? It is important because in the final analysis, property has been exchanged for debt, not money.

    What am I trying to say? When money is exchanged for debt, the person receiving the debt is receiving nothing but a promise to repay. On the other hand, the person receiving the money is receiving the right to purchase any property that can be traded for money. The borrower ends up with property, the lender ends up with a promise to repay.

    The lender has given his property to the borrower.

    Obviously, a lender can lend successively year-after-year. This has happened between Greece and the remainder of the EU.

    A problem will arise when a pattern of year-after-year lending is no longer acceptable. Both lender and borrower will necessarily change their spending and working patterns. Greece wants to continue borrowing; the remainder of the EU wants to stop lending.

    Actual repayment of the existing debt is a red-herring issue. The real issue is that the borrowing must stop.

    1. That's the crux of the matter.

      Does Frances expect official lenders to
      1. write off their debts (which will inevitably happen) but also
      2. pump further money into greece in the hope of spurring economic growth?

      And if that's not what Frances is proposing, where does she expect funding to come from to spur growth/kick start the economy? Does look like it'll be internally generated as their tax system still doesn't work, 5 years after their economy hitting a wall.

    2. Did you mean?

      The seller has sold his property to the borrower.

  14. Excellent addition to the growing litany expounded by every literate economist on the web. What's really interesting is that even the euro-skeptic Keynesians have changed their tune, albeit warblingly, to "Greece must stay in the Euro." I would can chalk this up as due to the return in country of the exiled Greek economists, whose fortitude built over languished decades in tree-ridden New York, and desert Australia choirs is now being tested.

    One must recast your parable to get things right.

    The new servant of the greatest debt is called to the Master's Hall. The Master says, "Your house, upon whose troubles I have visited the greatest sharks, has proven incapable of relieving its burdens. Therefore, go forth and waken the slaves of your house. Upbraid them and take from their purses. Impose on them greater fees. Loan them to mercenary houses, until finally their penance is concluded."

    The servant went forth, and wakened his House's slaves. "The Master is confused in blood-lust, and wishes us shackled in penury to draw closer the other Masters in sacrifice. Let us confound their circle. Go to the slaves of the other masters. Tell them these wishes, remind them of our common travails, so they will overthrow their own cruel masters."

    On hearing such rumors, the Masters sought audience with the Queen, who went unto the servant and told him, "You are behaving as a child, who does not recognize his estranged parents' debts, so we must affix the lampreys to your vitals."

    The servant called the slaves together, and said, "The Queen is mad with blood-lust and has been whipping her own servants to get them to agree. That is why they are called "staff." Will we all agree to have these lampreys affixed, so the Queen's staff are no longer crucified?"

    At least it's my guess they'll choose to prolong the Masters' agony, until at last it rains in Spain.

  15. Spot-on, Frances. I for one am very weary of the amateurish economic claims made by the Troika and their supporters, when the economic logic for indebted countries is very clear. From the very outset, the German economists were pushing a Protestant morality tale, and failing to talk about economics. In particular, I recall one early tv debate involving Varoufakis and Sinn, which was absolutely shocking. Sinn had nothing intelligent to say at all within the realm of economics. and persisted aggressively with the morality tale. Can you imagine the Pope (for example) appearing on a discussion panel, refusing to talk about religion and making all of his arguments in terms of neoclassical economic theory?

    Europe has degenerated into a political talking shop, with competing ideological and cultural paradigms fighting it out instead of politicians addressing economic failures. This is a guaranteed recipe for disaster for the entire European project, yet the Germans in particular seem to be unable to grasp this simple reality. The most shameful thing consists of economists (like the idiot Sinn) who put politics, nationalist ideology and possibly personal gain before the honourable practice of their profession.

  16. In Germany debt and guilt/blame means this same...

  17. Well said. As Stiglitz has written today:

    ***A yes vote would mean depression almost without end.***

    And that is why economics should not be a morality play.
    And the Eurogroup insistence in making it so and teaching the public of Germany and other nations to treat it so is culpable in creating a failed state. Indeed, when the spotlight turns to Portugal and Italy and Spain, as it will, the Eurogroup's actions will lead to the end of the Euro.

  18. Will Greeks have deposit protection?

  19. European banks should be banned from taking on any sovereign loans in this system. That might prevent some of the banking problems.

    Examples outside of Greece, MF Global, and Cyprus.

  20. I think your claims that the German's see this all in terms of morality is probably a bit simplistic. I suspect actually they are more frustrated than anything else. They are frustrated because: -
    - They still see an economy that is dysfunctional reliant on government spending and is unable to collect much tax to pay for it.
    - They still hear about very over generous pensions and remember the difficult reforms that they had to go through after reunification
    - Then whatever generosity they offer gets thrown back in their faces (often with xenophobic diatribes coming SYRIZA and their supporters)

    ... Finally they are also aware that: -
    - Most of their east European neighbour's have lower GDP/capita than Greece but don't complain about it
    - Leaving the EURO would probably send Greece into a death spiral and hence all the posturing from Greece is based on empty rhetoric from populists firebrands will ultimately either need to give way or deliberately take their country over the precipice.

    Indeed I would say the the German attitude to the Greeks is probably most similar to the English attitude to the Scottish (post referendum and SNP victory). In both bellicose nationalists have managed to create a strong counter reaction. In the UK this came in the form of a Tory victory in England in the last election. In the Eurozone its a hardening of attitudes to the Greeks.

    Morality isn't just one sided affair....

  21. As a Greek I have this to say:

    If Greece focused less on asking for debt reduction and more on making it's economy more productive, things would be a lot better for her.

    How uncompetitive is Greece? Tremendously much. Before the crisis Greece had huge current-account deficits, and when these shrunk after the crisis hit unemployment skyrocketed to 28%. That's how much.

    And yet Greek politicians still focus on clientelism (reopening of ERT, rehiring of public servants) and little else.

    So hear me out Frances when I say that you don't do Greece any service when you join in the chorus asking for debt reduction.

    Simply put, Greece doesn't deserve it.

    1. You continue with the morality nonsense. Economics does not consider whether a country "deserves" debt restructuring: it is a necessity for any hope of economic recovery. It is a necessary but insufficient condition.

      Of course, you can argue that this restructuring and any loans should be conditional on Greece making appropriate changes to improve the economy. Maybe. But the result of the Troika's reforms was that they were not reforms but a means to extort money.

    2. Give me a break, Xenos. Debt isn't hampering Greece's recovery, since maturities are long-term and interest rates are low. The flawed structures of the Greek economy are hampering recovery, namely it's excessive reliance on imports and it's anemic exports.

      So let's cut the crap. When you parade for debt reduction you parade for more deficit spending, more credit expansion (look where that led us) and more clientelism.

      So no. First Greece reforms it's economy and society, and then it gets it's debt reduction.

    3. Hasn't Greece been dependent on Western European aid for most of its post-Ottoman history? It is an essentially Third World economy that is subsidized by the West because of its strategic position in the Eastern Mediterranean, and because of "cradle of Western civilization" sentimentalism.

    4. No, Jim. Greece has not been permitted to reform. The Memoranda consisted primarily of extraction of money to service debt repayments, and massive economic contraction of 25% GDP in 5 years. You do NOT insist on budget surpluses with an economy in severe depression in order to reform it: this is just nonsense. The Troika insisted on massive budget surpluses (4% at one point) in order to extract moneys. Nothing else. They have no interest in enabling Greece to get back on its feet, improve competitive and exports, and loosely speaking modernise.

      You are the victim of Troika propaganda. What you have stated is not economics: it is morality and the politics of power.

    5. Greece never achieved anything more than a modest primary surplus, so all you say simply isn't true.

      But anyway, tell me, what exactly stopped the Greek governments from reforming the economy? What exactly stopped the Greek governments from coming up with a plan to boost productivity and exports and battle corruption (what happened to the McKinsey report and the OECD reforms)? The memoranda? Oh please. All your arguments are null and void because even at this point all Greek governments really care about is clientelism.. The Syriza government is rehiring corrupt public servants, for crying out loud. The true story of modern Greece, that people like Frances are unaware of, is one big case of moral hazard. Even the actual issue of non-performing loans has been massively spoiled by moral hazard (pretty much like the Syriza government's tax liability arrangement).

      And I've told you before Xenos. You don't live in Greece anymore, you don't have your money in Greece anymore. We are the ones who stand to lose everything, not you.

    6. I fail to see why economic arguments are predicated on where one lives. This is just political argumentation. Even when I lived in Greece I did not have a vote, so your comments are just a personal attack.

      If you are referring to the failure of Pasok and ND to modernise the Greek economy, you have a sort of point. The main opportunities were in the period 2001-2009, of course, and they did nothing. No disagreement there. If you are referring to the Troika memoranda period, this less clear -- since the Troika insisted on stupid reforms that achieved little or nothing but damaged GDP. Frances has already written extensively on this issue -- go and read her article here. If you are referring to the current government, then the situation is much clearer. They came into power with a terrible mess to manage: declining tax receipts, declining employment, collapsed demand, sustained current account problems, lack of investment, and emigration of skilled personnel. What exactly do you think any country can do without the means to finance useful reform? There is no free lunch, as you right wingers like to say.

      And i stand by my previous comments: you do not run an economy into the ground in order to reform it. This is sheer stupidity. No, the Troika chose to do this to extract its pound of flesh. This is not economics, it is a morality tale straight from Shakespeare.

    7. Like I said, Greece only achieved one small primary surplus. So basically what you ask for is for someone to finance the government deficits of Greece (in the absence of private debt expansion, because that worked so well). Greece didn't have access to the markets, so that someone had to be the Europeans. Unsurprisingly, the Europeans didn't feel like doing that. Why should they? All the money would eventually be spent on imports, or maybe domestic bubbles (like the once mighty, now deceased, housing market). So better sort your priorities. First Greece makes sure that money doesn't escape it's economy (by modernizing it), then it gets it's financing. Otherwise it's pointless.

      Btw, your description of the state of the economy during the period of Syriza governance simply isn't accurate. The economy had stabilized, and then it declined considerably once Syriza came to power.

    8. Yes, Guest(xenos), Greece was permitted to reform, but it refused:

      It did not introduce an effective way of collecting taxes. It still doesn't have a land register to protect property rights (although there were plans ever since 1830).

      The resistance of Greece to reform seems to be its main contribution to modern history.

    9. @Anonymous. I am afraid that economic analysis does not consist of merely stating your opinion. Jim has posted all sorts of confused comments that ignore economic reality, and now you state two not very relevant facts which you obviously think make an argument. They do not. The issue is how to encourage or allow Greece to reform its economy, and specifically (in this post) why the German position is more about morality than about economics.

      All of your comments replying to me support Frances' position, by making complaints about Greece's moral conduct, dressed up as economic-speak.

    10. Guest(xenos)4 July 2015 at 04:50

      You made a statement of fact: Greece was not permitted to reform. I deny that statement. Since it is surprising, you are expected to furnish evidence for it, which you don't.

      If you think an effective way of collecting taxes and a dependable land register are not very relevant, I am tempted to ask whether that is an opinion current in Greece. If so, that explains a lot about its inability to reform its economy.

      Those are opinions of fact, and I am ready to accept contrary evidence. You avoid that by claiming I am moralising. That's what a lawyer does when he knows his client is guilty.
      Instead you accuse me of moralising. That is incorrect. If Greece had been indeed prevented from reforming, I would be on your side.

      But I now have even more reason to question your judgement if you consider


    11. Anonymous4 July 2015 at 21:49

      Guest(xenos)4 July 2015 at 04:50

      Sorry, my comment was scrambled. The correct version:

      You made a statement of fact: Greece was not permitted to reform. I deny that statement. Since it is surprising, you are expected to furnish evidence for it, which you don't.

      But I now have even more reason to question your judgement. If you think an effective way of collecting taxes and a dependable land register are not very relevant, I am tempted to ask whether that is an opinion current in Greece. If so, that explains a lot about its inability to reform its economy.

      Those are opinions of fact, and I am ready to accept contrary evidence. You avoid that by claiming I am moralising. That's what a lawyer does when he knows his client is guilty.

      If Greece had been indeed prevented from reforming, I would be on your side. But you have no proof for your extravagant statement.

    12. @Anonymous: go and read Frances's excellent post here on that topic of reform, and all the discussion following it. I cannot improve on that. It should answer your questions.

    13. Here is the link (it was not easy to find):

  22. The Greeks have a lot of cash in their system, but it is easier to live off of someone else's work and not rely on one's own cash. Borrow it from someone else and don't pay it back - eventually it catches up. Because they obviously cannot administrate their own funds, Greece should not have been given the money to dig the hole it has now dug - that is the mistake of the lenders. But, the hole should now hopefully be at its bottom. They can start digging at a different angle to get themselves back out. First reform and then reduction. And don't give them any more money.

    1. Um no. The Greeks do not have a lot of cash in their banks. To be precise, they have almost no cash in their banks. If by your ambiguous wording (always a hint of dishonest argument) you mean that a lot of cash is held by the public, then yes. Ever since the Troika started its games with Greece, the population has been terrified of the risk to savings in banks. The rich moved their money to Germany and Switzerland; the less rich took out their money in cash; and most recently everyone took out as much as they could in cash. This has been a bank run in very slow motion, caused by the uncertainty that the eurogroup and the ECB deliberately created -- notwithstanding Draghi's dubious statement that "we will do whatever it takes [to protect the eurozone].

      And I have no idea what your analogy with holes and digging is about. This has nothing to do with economics -- and again seems to be some weird sort of morality being imposed.

  23. Someone needs to come up with a Plan C - which would be to dismantle the EMU such that it causes minimum harm to the greatest number of people.

    The Eurozone will never function effectively without robust Banking, Fiscal and Transfer Unions; and I am not sure that they could be done without a Political Union. I doubt there's stomach for that with the EZ electorate.

  24. Wall Street gangster ratings agencies are responsible for every penny of distress to Greece and other parts of Europe.

  25. In my position as unqualified observer this whole situation seems like economic warfare designed to remove a legitimately elected government which has views contrary to the accepted propaganda so beloved of the bankers who already own our politicians and are protecting their own bonuses! not much impressed with EU at the moment as they all seem to be politicians with not a Leader amongst them


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