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Greece

I wasn't following Greece's travails very closely and now it seems almost too late. So I'll refer you over to Felix Salmon and Paul Krugman, both of whom have informed and pessimistic takes on the matter. Things look grim, and not just for Greece.

By Ezra Klein  |  April 29, 2010; 7:51 AM ET
 
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Comments

nice to see you mention this Ezra. Sad that we see 37 comments on the "kentucky derby filibuster" talk and don't expect much here.


Heard this morning that it could take $290+ billion to get Greece out of its debt issues. From my limited knowledge of the EU its as if Massachussetts was asked to bail out Nebraska for example but they had no real ties to each other. How willing is Germany (who is more responsible with their finances) going to be to bail out Greece?


Good thing that we're talking about the deficit commission because Greece's debt service is $90 billion. In 10 years ours is projected to be 10x that although admittedly our economy is much larger than Greece's to make up for it.

I'd suggest them to add a VAT but oops they already have that. How much more can they tax? I have a feeling "austerity" is going to be the buzzword of the 2010's and 2020's.

Posted by: visionbrkr | April 29, 2010 9:49 AM | Report abuse

Ezra, you have become part of the Media 'elite' who ignore Greece and EU crisis. American Media coverage of that whole issue is pathetic (the same way Obama eulogy of miners killed get more prominence than the oil leak disaster unfolding in Gulf of Mexico along with 'no' photos / names of those 11 workers who are missing.... any ways I digress.)

The reason ignoring Greece mess is wrong because fundamentally it is a 'political problem' with profound implications for global power structure. All pretensions of rest of the European countries 'clubbed together' with power house Germany will be gone and essentially Germany will break away from Europe in that sense. It is all about German awakening (not in any bad sense) since their 'export machine' will continue to find good demand in China, India, USA and rest of the globe regardless of whether there is Euro or Mark comes back.

So you are symptom of the problem - not informing Americans when they need to know so much more on this topic. (And of course you do not take cognizance of prescriptions of Martin Wolf in FT and evaluation of Dodd Bill vs those prescriptions. What good those periodic 'homilies to your readers' are when basic requests about more information are thrown to the dustbin?)

Posted by: umesh409 | April 29, 2010 10:14 AM | Report abuse

Ugh. I have to disappoint visionbrkr. I want to go back to talking about Super Mario Crossover. I love Super Mario.

Greece just makes me feel the same way talking about how the Super Volcano at Yellowstone could destroy half the United States. I just don't want to think about it. ;)

Posted by: Kevin_Willis | April 29, 2010 10:21 AM | Report abuse

"Sad that we see 37 comments on the "kentucky derby filibuster" talk and don't expect much here."

Most of thos comments were stream of consciousness ranting from FastEddieO007, so one needs to allow a significant adjustment.

I agree that Greece & Portugal and the potential crisis for the Euro is a huge story, and it is too bad that it is being crowded out by so many other current events, because I'd like to see a lot more information and analysis about how Europe can successfully get through this quagmire.

With FinReg, the oil spill, the tensions between North & South Korea, the unfolding political crisis in Iraq, etc., there is a lot to think about right now.

Posted by: Patrick_M | April 29, 2010 10:22 AM | Report abuse

Patrick,

ya i saw that after i clicked on the link. Sorry you can't stop loons from posting.

Kevin,

hmm. We all love a little SuperMario and I'm sure my 6 year old will be playing that online soon but is anyone even considering how far behind the government is? I'd expect we'll be seeing in about 6-12 months how Goldman Sachs' is affecting this much in the same way George Soros brought down the English pound.

The point is we need to take this seriously and now before it becomes a mess. We've already seen stalling for the last month because Germany doesn't want to pay for Greece's excesses (and i can't blame them) but how much more will be paid because of the stalling? May 7th is the vote in Germany from my understanding. Will another week cost $10 billion? $100 billion? MORE?

Umesh,

Sadly I too have to go to FT and Time magazine to get any semblance of reporting on the subject. My thoughts are that if its reviewed clearly it'll show that a VAT doesn't work when spending is reckless as it is in Greece. We need to be responsible when it comes to taxes but we also need to be responsible when it comes to spending. I hope the deficit commission is successful but after watching the conference that Ezra was at yesterday I saw hints of politicization of the topic which cannot be allowed from either the left or the right. Obama's right. EVERYTHING must be on the table.

Posted by: visionbrkr | April 29, 2010 10:38 AM | Report abuse

Matthew Yglesias has a blog post on the subject this morning, looking at Frankfurt's arguably unhealthy dominance of policy on the Euro:

http://yglesias.thinkprogress.org/archives/2010/04/today-in-greece-wonkery.php

Posted by: Patrick_M | April 29, 2010 10:49 AM | Report abuse

I hope when Obama is saying 'everything is on the table' he is not soft for VAT.

I have a feeling that VAT is not the route we want to go. Instinctively anything which makes State to collect 'taxes easily from folks'; we should be reluctant. Hopefully recent Reuters news shows that Volcker himself may be guarded with VAT.

With VAT - I want to be with Tea Party and GOP; don't get that sucker on our soil at all. Let us figure out whatever else it takes to control our deficit; including all 'clippings' on our entitlement and 'death panels' (so much for the comradeship with Tea Party...).

Posted by: umesh409 | April 29, 2010 10:54 AM | Report abuse

290 billion? The total of Greek debt is 270 billion euros, and as the euro is now deflating against the dollar, I'd say a service of 290 billion is not required.

The Greek GDP alone is 250 billion, and government budget is 105 billion...so, whoever said they need 290 billion is off. Give Greece 290 billion and that money goes straight to European banks, and Greece has money left over.

Posted by: Dan25 | April 29, 2010 11:35 AM | Report abuse

I'd imagine it would be tough for Obama to sign a bill enacting a VAT, given that would raise taxes tremendously on those who make less $200k/$250k. Maybe he'd do it in his 2nd term, I dunno.

Anyway, I think the real issue is to control spending, although incremental revenue might be useful given that there's only so much we can hope for on the spending side. As Ezra has pointed out, a majority of the budget is basically on autopilot (heading straight into the ground).

Greece is a good wake up call. Right now, watching Greece is a way of peering into our future.

Posted by: justin84 | April 29, 2010 12:14 PM | Report abuse

The core of the problem is not really the amount. The larger figures are future projections. The core issue is that no entity wants to lend Greece money at cheap rates until they change the structure of their budget, and the political structure in Greece, where some people qualify for partial retirement age at 50.

I was googling this a little and came across an AP story from 2005 that seems almost impossibly prescient.

"The European Union has warned Greece that within five years it will face a problem due to increased aging of its population. With one of the lowest birthrates in the EU, its population of 10 million is rapidly aging. Experts say Greece must begin dealing with the problem before 2010, when costs for pension are expected to skyrocket. Under the current system, the basic retirement age for men is 65 and for women it is 60."
http://www.independent.co.uk/news/world/politics/a-look-at-pensions-plans-worldwide-517579.html

How many warnings are we now getting that we need to seriously cut Medicare, Social Security, and Defense spending to get our budget under control? The result for Greece, higher borrowing costs from which there is no escape except for massive cuts, is what awaits us.

Meanwhile, Greek immigrants here work very hard. Could it be that the rewards of working hard are more direct in the USA, and some of the hardest working Greeks moved here to make their way in the world?
"Karras also thanks the country he came to 55 years ago. 'This is a good country if you like to work. I cannot say enough, God bless America.'"
http://www.wkyc.com/news/news_article.aspx?storyid=131917

Posted by: staticvars | April 29, 2010 12:25 PM | Report abuse

Dan25,

I heard it on CNN this morning. Maybe i heard wrong, not 100% sure. The point is I believe they also said that with their downgrade their effective interest rate is about 11%. Its a horrible spiral and Justin's right, we need to see this as the wake up call it is for us all.

Posted by: visionbrkr | April 29, 2010 1:49 PM | Report abuse

here's the latest from CNN.

They're asking for $160 billion.

The debt is $394 billion (greater than their economy) and experts expect it to reach 120% of their economy later this year.

http://www.cnn.com/2010/BUSINESS/04/29/greece.aid.deal/index.html?hpt=T2


They'll have to accept VERY STRICT austerity guidelines that are massive compared to the ones proposed earlier this year that resulted in near riots.

Posted by: visionbrkr | April 29, 2010 4:31 PM | Report abuse

Greece is the only the tip of the Iceberg.
Europe is going to spend about 200 billion
dollars to save it. It remains to be seen if
it can be saved. Will the Greeks decide to
work for once and tighten their belts or will they take to the streets in defiance ?
If the Greeks accept the austerity plan it will still take years of hard work to pay the loan, Or will Greece default on its debt ? At this stage I would say it is any one's bet. But the real problem is that Portugal,Italy,Spain Ireland are next !!!
Europe is going down the drain . No wonder.
For decades these countries have lived much above their means. Weak governments have bulged before syndicates and all sorts of public demands for for more and more assistance . Result: Enormous deficits , lack of competitivity on world markets. A rout like it or not. I reckononly Germany and possibly Britain will stay on course. All other countries face a financial crisis of m ajor proportions. All will have to take measures to red uce their deficits. And all
populations will have to reduce their quality of life. There is simply no other wvayh out. Meanwhile China teaches a lesson to the world. 12% growth. A major
player in world affairs . A major creditor
of the U.S. A military superpower. And all
this in only 60 years.

Posted by: jeanpierregamet | April 30, 2010 10:17 PM | Report abuse

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