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Why bail-outs?
So, Greece has a multi billion pound bailout. Presumably this comes from sources such as the European Central Bank and the IMF, but aren't they the sort of institutions Greece was in debt to in the first place? It looks to me like loans to pay off loans - or is a bailout a gift? What would be so dreadful if Greece did go bankrupt? I don't understand the complexity of all this and am getting bored with it. Can anyone help clarify some of these points please?
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Yes Agentina went Bankrupt and the result at the time was devestating to them.
If Greece defaulted they would run out of money in weeks - nobody in the public sector, Bin men to Police comissioners would get paid.
Private sector firms were badly affected in Argentina - after all many private sector companies sell to the public sector or public sector employees.
State pensions might not get paid again affecting the immediate economy as well as the individuals
You'd have a flood of emmigration - The UK would be a popular destination because of the English language.
Is that enough for now?
If Greece defaulted they would run out of money in weeks - nobody in the public sector, Bin men to Police comissioners would get paid.
Private sector firms were badly affected in Argentina - after all many private sector companies sell to the public sector or public sector employees.
State pensions might not get paid again affecting the immediate economy as well as the individuals
You'd have a flood of emmigration - The UK would be a popular destination because of the English language.
Is that enough for now?
merkozy et al will not and cannot be seen letting the whole eu political project go pear shaped on their watch.
they will do whatever they have to at just about any cost to keep it afloat and stumbling along.
If they can keep greece in with these bailouts/loans the hope will be that in years to come they will get their money back and then start to bleed them dry like they do with the uk to the tune of £50million a day every day of the year.
they will do whatever they have to at just about any cost to keep it afloat and stumbling along.
If they can keep greece in with these bailouts/loans the hope will be that in years to come they will get their money back and then start to bleed them dry like they do with the uk to the tune of £50million a day every day of the year.
The bailout is not the cure. It is a sticking plaster to stem the bleeding temporarily. But the injuries sustained by Greece need more than a plaster. A permanent repair will only be achieved by Greece ditching the Euro and resuming control over its fiscal affairs. The Eurocrats see this as an absolute failure of their most prized project, the Single Currency, and will not countenance it. The fact the project was doomed to fail from its inception and it has only been kept intact by throwing other people’s money at it seems to have passed them by.
Eventually that money (or the patience of the “other people”) will run out. What is needed is an orderly plan to see Greece leave the Euro. Nobody in Euroland seems to have the nous to accept this and get on with it. But that’s what happens when you let arrogant politicians take decisions, against the advice of experts, concerning matters about which many of them haven’t the first clue.
This latest plan may come under pressure as early as tomorrow when the G20 meets and has to agree to make their bit of funding available for the IMF to pay out. But even if it survives tomorrow Greece will eventually default and leave the Euro. The quicker this is accepted and proper plans put in place, the better.
Eventually that money (or the patience of the “other people”) will run out. What is needed is an orderly plan to see Greece leave the Euro. Nobody in Euroland seems to have the nous to accept this and get on with it. But that’s what happens when you let arrogant politicians take decisions, against the advice of experts, concerning matters about which many of them haven’t the first clue.
This latest plan may come under pressure as early as tomorrow when the G20 meets and has to agree to make their bit of funding available for the IMF to pay out. But even if it survives tomorrow Greece will eventually default and leave the Euro. The quicker this is accepted and proper plans put in place, the better.
I had to laugh when I read Jake's post. Take out the words "If Greece defaulted they would run out of money in weeks - " and it's a pretty accurate description of the situation as it is right now.
Just one example: our neighbour worked for the local council. After 4 months without any pay at all, she left and got a job at a local school. Guess what? She hasn't been paid for the last two months.
This is why I believe that Greece would have been better off if she had defaulted and left the Euro 18 months ago. As Jake rightly says, Argentina's bankruptcy was devastating at the time, but it did give them a chance at recovery.
The devastation I am seeing here in Greece is probably not much better than it was in Argentina after the default, but all Greece can look forward to at the moment is ever increasing debt due to the fact that the very measures forced on her by the troika have resulted in a constantly deepening recession.
What some people call "the Greek rescue package" should be named for what it really is: "The Euro prop-up package".
Just one example: our neighbour worked for the local council. After 4 months without any pay at all, she left and got a job at a local school. Guess what? She hasn't been paid for the last two months.
This is why I believe that Greece would have been better off if she had defaulted and left the Euro 18 months ago. As Jake rightly says, Argentina's bankruptcy was devastating at the time, but it did give them a chance at recovery.
The devastation I am seeing here in Greece is probably not much better than it was in Argentina after the default, but all Greece can look forward to at the moment is ever increasing debt due to the fact that the very measures forced on her by the troika have resulted in a constantly deepening recession.
What some people call "the Greek rescue package" should be named for what it really is: "The Euro prop-up package".
Bazwillrun. I've been reading through these answers again and am curious about what you say - "If they can keep greece in with these bailouts/loans the hope will be that in years to come they will get their money back and then start to bleed them dry like they do with the uk to the tune of £50million a day every day of the year."
That's incredible, costing the UK £50million every day!? I'd like to know more about it. Are there any references to explain it please?
That's incredible, costing the UK £50million every day!? I'd like to know more about it. Are there any references to explain it please?
If the Greek Gov. got the wealthy Greeks (ship owners , etc. they have enough of them ) to pay upthey would clear their debts in no time .Same as Italy how can a country that sports Gucci etc need aid from us ???!!!
Charity begins at home , there are plenty of people here who could do with help to get work and a home , we should invest in our own soceity first.
Charity begins at home , there are plenty of people here who could do with help to get work and a home , we should invest in our own soceity first.
The amount it costs the UK as a result of membership varies enormously, coldicote, according to who is doing the adding up. Anti-EU organisatioons such as UKIP obviously enhance the figures as much as possible. Those in favour of our membership massage them downwards. However there is no doubt about our net direct contribution (that is how much we write a cheque for to go towards the cost of officials decamping from Brussels to Strasbourg for a week each month) which is around £7bn – about £20m a day.
However, this report:
http://www.th-eu-nit....mpendiumSixtyFive.pdf
Gives a bit more information. Tellingly. One of its passages reads thus:
“In October 2005 Gordon Brown [Chancellor at the time] published a Treasury paper under his own signature, titled Global Europe, full employment Europe. His estimates of the costs of EU membership were as follows:-
EU Protectionism 7% of GDP
Competition gap with US 12% of GDP
EU Over-regulation 6% of GDP
Transatlantic barriers to trade 3% of GDP
Those add up to 28% of GDP. Mr Brown did not say whether there might be some degree of overlap in those four categories. Even if the total of 28% were to be divided by, say, four, to eliminate the effects – if any – of overlap, that still puts the annual cost of EU membership at 7% of GDP, or £ 98 billion at 2009 prices.”
This amounts to about £270m a day.
So the figure of £50m a day is by no means outrageous. There is no doubt that the cost to the UK is significant. Quite what we gain from such huge expenditure (which we would not otherwise gain if we were not members) is not quite clear to me.
However, this report:
http://www.th-eu-nit....mpendiumSixtyFive.pdf
Gives a bit more information. Tellingly. One of its passages reads thus:
“In October 2005 Gordon Brown [Chancellor at the time] published a Treasury paper under his own signature, titled Global Europe, full employment Europe. His estimates of the costs of EU membership were as follows:-
EU Protectionism 7% of GDP
Competition gap with US 12% of GDP
EU Over-regulation 6% of GDP
Transatlantic barriers to trade 3% of GDP
Those add up to 28% of GDP. Mr Brown did not say whether there might be some degree of overlap in those four categories. Even if the total of 28% were to be divided by, say, four, to eliminate the effects – if any – of overlap, that still puts the annual cost of EU membership at 7% of GDP, or £ 98 billion at 2009 prices.”
This amounts to about £270m a day.
So the figure of £50m a day is by no means outrageous. There is no doubt that the cost to the UK is significant. Quite what we gain from such huge expenditure (which we would not otherwise gain if we were not members) is not quite clear to me.
Perhaps I've found the answer! The European Union was set up with the aim of ending the 'frequent and bloody wars' between neighbours, which culminated in the Second World War: http://europa.eu/abou...-history/index_en.htm
Coldicote, that's right. The specific aim was to get Germany and France so interdependent economically that they would simply be unable to go to war again. (WW1 and WW2 were's the only times they had done it in the preceding century). German industry and French agriculture got special attention. Other countries joined in hoping that stability would be good for them too.
From that point of view, you wouldn't compare the cost of living with the EU to the cost of living without it, but to the cost of a few years' war.
From that point of view, you wouldn't compare the cost of living with the EU to the cost of living without it, but to the cost of a few years' war.
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