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So the very country that invented democracy, is now denied the benefit of it. The banks of France and Germany have successfully stopped the referendum on Greece to allow austerity to proceed. Troika will

layoff 30.000 employees in the public sector this year and 120.000 more until 2014, 20% cut for the pensions that are more than 1.200 euros per month and 40% for the pensioners that are under the age of 55(mostly women) and a new series of taxes which affect even people that live in the official level of poverty and earn about 350 euros per month.

Every Greek is obliged to pay forever a new poll tax- a new property tax according to the region that their house, apartment or shop belongs and a new tax on revenue taxes already paid...

The collective agreements are de facto abolished in most sectors and the workers are forced to sign a private agreement, with the minimum basic salary of 751 euros-20% lower for the young people under the age of 25.Hundreds of employees are working overtime without being paid while others work for 5 or 6 hours with wages of 200-300 euros. --CADTM

And to what end? They predict a lost decade of high unemployment and recession. I think that is utopian thinking. It is likely to be much worse and last longer than the prediction.

The unemployment is officially up to 16% and the IMF foresees a further increase to 18, 5% in 2012 with negative growth -2%(-5% this year). The number of homeless has increased at about 20-25% during the past two years. In the private sector hundreds of businesses are closing, the salaries are continuously decreasing, while many companies delay the salary payments for many months.

And despite all these hard austerity measures, the public debt will achieve in 2012, 189% of GDP, according the latest IMF’s report, from 172% that the international organization foresaw in June.--CADTM

All of this to prevent Greece from default. But what would happen if Greece had been allowed to democratically choose default? Would they be kicked out of the Eurozone. Yes. Back to the Drachma. Probably. Then what.

Ask Argentina. They did just that in 2002.

Lessons from Argentina

In the 70's and 80's Argentina was plagued by a serious of dictatorships interspersed with brief and ineffective democracies.  Neoliberals descended on the country pumping money into useless huge projects for the benefit of foreign investors. By 1983 unemployment was at 18%. Democracy was back in vogue and with the new president came a new currency—the Austral. But the government had severe debt from the previous corrupt governments and, in 1989, Argentina could not repay the debt. Inflation rose to 5000% making the currency essentially useless. The president fled the country and Carlos Menem took office. He eventually restored the peso and fixed its value to the US dollar, guaranteeing that the peso could be exchanged for the dollar at any bank. He did this by keeping a reserve of US dollars in the Central Bank. This stabilized the currency allowing Argentina to recover.

But Argentina still had this enormous debt and Menem kept borrowing more. Stabilizing the currency lowered inflation and encouraged imports into the country. Dollars in turn left the country with purchase of goods.  Menem had to keep getting loans to keep a supply of  US dollars in banks. Additionally, as wages stabilized, industry slowly leached out of the country seeking greener low wage pastures in other countries. Factories began to close and unemployment rose.

Menem's government was famous for corruption, tax evasion by the rich and money laundering.  Public debt rose precipitously under his watch. Yet, perhaps because he was friends with the Bushes, the IMF did not flinch, they continued to loan Argentina money.

By the end of Menem's rule in 1999, the dollar's value had dropped, Argentina's trade problems had spread to Mexico and Brazil, and state industries that had been privatized were being abandoned. Unemployment was back to critical levels and the economy stagnated. Yet the IMF insisted on maintaining the PEG to the US dollar and demanded austerity.

In a statement released this week, a group of unions opposed to Menem issued a statement noting that during his 10 years in office beginning in 1989, the IMF “looked the other way when waste, corruption and the introduction of mafias into the state constituted the aims of this administration, which left the country in 1999 with a fiscal deficit of more than $11 billion, with its industrial base and agriculture destroyed, with the greatest unemployment in its history, poverty reaching levels never before seen and a currency fictitiously attached to the dollar.” The statement likewise recalled that Menem maintained “carnal relations” with the US—a phrase coined by his foreign minister—and later cemented both a personal friendship and business ties with the Bush family.

Meanwhile, IMF officials have reportedly insisted that the Argentine Congress issue a public declaration promising not to pass legislation extending the moratorium on mortgage foreclosures and not to amend a newly enacted bankruptcy law. This politically humiliating demand is a measure of the agency’s lack of confidence that any government will be able to enforce the conditions it is imposing in Argentina.--WSWS

By 2002 unemployment was at 20%, rioting had broken out and people were quite literally dieing of starvation.

Argentina’s gross domestic product has fallen 20 percent compared to four years ago. Salaries have remained frozen while the cost of living has climbed 60 percent. Unemployment has soared to an official rate of 20 percent, and fully half of the country’s households have fallen below the official poverty line, unable to afford minimum food, shelter and clothing.

In recent weeks Argentina, once among South America’s most prosperous nations and a food exporter to the world, has been rocked by reports that up to half a million children are in danger of starving. The country’s newspapers have carried stories of children eating dirt together with pictures reminiscent of Biafra. In the impoverished northern province of Tucumán, four children starved to death in the space of two weeks.--WSWS

While the IMF insisted that austerity was necessary to fix Argentina's financial woes, Argeninians lost faith in political leaders seen as taking the well being of foreign industry and bankers over the well being of the nation's people. The call came for a change in government.

Among the most persistent demands being made by the IMF in recent weeks are political guarantees that the Argentine government will comply with any agreement that is signed. Duhalde has seen his popular approval ratings fall to single digits. He was appointed by the Legislative Assembly at the beginning of this year to fill out the remainder of the term of Radical party president Fernando de la Rua, who was forced out by a popular uprising.

Duhalde pledged to call early elections in March and turn over power to a newly elected government in May. While the IMF had pushed for the early vote, it has said little about the issue in recent months, while sections of the Argentine ruling elite are pressing for a return to the scheduled date next October.

No candidate has emerged within any of the traditional parties enjoying any degree of support. “Que se vayan todos,” or kick them all out, the slogan of the mass demonstrations of last December, remains the popular sentiment towards the country’s politicians. Former Peronist President Carlos Menem, whose corruption, sweeping privatizations and close ties to the US are blamed by most Argentines for the country’s current crisis, has indicated that he will be a candidate. --WSWS

The Default

In October of 2002, Argentina could take no more. Owing $16 billion over a 14 month period, she defaulted on her first billion dollar loan. The president attempted to restructure the loan with the IMF but the Fund insisted on further austerity and reversal of any meager measures Argentina had taken to help its people.

In particular, the IMF has objected to Duhalde’s announcement of a reduction in the Argentine sales tax from 21 to 19 percent. It has also demanded that the government raise public utility rates and move ahead aggressively in foreclosing on a quarter of a million mortgages that are now in default. Driving tens of thousands of families from their homes is seen by the agency as a necessary measure to restore investor confidence. --WSWS

Sound sort of familiar so far?

Unwilling to continue the same methods to “restore investor confidence” that the IMF had insisted on for years, the Argentine government announced its intent to stop payment.

"We're not saying the blame for what's wrong should be pinned on the fund (IMF)," Mr Atanasof said.
"We assume the responsibility as a country... but what we are saying is the bureaucracy at the Fund has promoted the policies that put us in this situation." --BBC

The immediate aftermath was severe. The remaining foreign investors fled the country shutting down almost all industry. Argentina was isolated from the rest of world financially. For six months the country suffered with essentially no national currency. Fortunately for the people of Argentina, years of currency instability created a multitude of local currencies which survived the collapse.

Then a minor economic miracle occurred. The people took charge.

During the economic collapse, many business owners and foreign investors drew all of their money out of the Argentine economy and sent it overseas. As a result, many small and medium enterprises closed due to lack of capital, thereby exacerbating unemployment. Many workers at these enterprises, faced with a sudden loss of employment and no source of income, decided to reopen businesses on their own, without the presence of the owners and their capital, as self-managed cooperatives.

Worker managed cooperative businesses range from ceramics factory Zanon (FaSinPat), to the four-star Hotel Bauen, to suit factory Brukman, to printing press Chilavert, and many others. In some cases, former owners sent police to remove workers out of these workplaces; this was sometimes successful but in other cases workers defended occupied workplaces against the state, the police, and the bosses.

A survey by an Argentina newspaper in the capital found that around 1/3 of the population had participated in general assemblies. The assemblies used to take place in street corners and public spaces, and generally gathered to discuss ways of helping each other in the face of eviction, or organizing around issues like health care, collective food buying, or conducting free food distribution programs. Some assemblies started to create new structures of health care and schooling, to replace the old ones that were not working. Neighborhood assemblies met once a week in a large assembly to discuss issues affecting the larger community. In 2004, Avi Lewis and Naomi Klein (author of No Logo) released the documentary The Take, about these events.

Some businesses have now been legally purchased by the workers for nominal fees, others remain 'occupied' by workers who have no legal standing with the state (and in some cases reject negotiation with the state on the grounds that working productively is its own justification). The Argentine government is considering a Law of Expropriation that would transfer some occupied businesses to their worker-managers.--Wiki

The result was pure economic magic:

Argentina has managed to return to growth with surprising strength; the GDP jumped 8.8% in 2003, 9.0% in 2004, 9.2% in 2005, 8.5% in 2006 and 8.7% in 2007. Though average wages have increased 17% annually since 2002 (jumping 25% in the year to May 2008),[21] consumer prices have partly accompanied this surge; though not comparable to the levels of former crises, the inflation rate was 12.5% in 2005, 10% in 2006 and is believed by private economists to have approached 15% in 2007 and to exceed 20% during 2008[citation needed](even if the Ministry of Economy refuses to acknowledge inflation greater than 10%). This has prompted the government to increase tariffs for exporters and to pressure retailers into one price truce after another in a bid to stabilize prices, so far with little effect.

While unemployment has been considerably reduced (it has been hovering around 8.5% since 2006), Argentina has so far failed to reach an equitable distribution of income (the wealthiest 10% of the population receives 31 times more income than the poorest 10%). This disparity, nevertheless, compares quite favorably to levels seen in most of Latin America.--Wiki

Poverty in Argentina

Date of
measurement
Extreme
poverty
Under
poverty
line
May 2001 11.6% 35.9%
October 2001 13.6% 38.3%
May 2002 24.8% 53.0%
October 2002 27.5% 57.5%
May 2003 26.3% 54.7%
2nd sem 2003 20.5% 47.8%
1st sem 2004 17.0% 44.3%
2nd sem 2004 15.0% 40.2%
1st sem 2005 13.6% 38.5%
2nd sem 2005 12.2% 33.8%
1st sem 2006 11.2% 31.4%
2nd sem 2006 8.7% 26.4%
2nd sem 2007 5.9% 20.6%
1st sem 2008 5.1% 17.8%
2nd sem 2008 4.4% 15.3%
The table...shows statistics of poverty in Argentina, in percent of the population. The first column shows the date of the measurement (note that the method and time changed in 2003; poverty is now measured each semester). Extreme poverty is here defined as not having enough money to eat properly. The poverty line is set higher: it is the minimum income needed for basic needs including food, clothing, shelter, and studies.--Wiki

But what about the debt?

The Argentine government kept a firm stance, and finally got a deal in 2005 by which 76% of the defaulted bonds were exchanged by others, of a much lower nominal value (25–35% of the original) and at longer terms. In 2008, President Cristina Fernández de Kirchner announced she was studying a reopening of the 2005 swap to gain adhesion from the remaining 24% of the so-called "holdouts", and thereby fully exit the default with private investors.

In 2005, as a large and consistently growing fiscal surplus made it possible, Argentina shifted to a policy of "disindebtment" towards the IMF: paying the IMF in schedule, with no negotiation whenever possible, with the intention of gaining independence from it. On December 15, 2005, following a similar action by Brazil, President Kirchner suddenly announced that Argentina would pay the whole debt to the IMF. The debt payments, totaling 9.810 billion USD, were previously scheduled as installments until 2008. Argentina paid it with the central bank's foreign currency reserves.--Wiki

That's right---Argentina defaulted and said it wouldn't pay a dime of the debt until the terms were rewritten. They stood firm. Not only did they survive, but they flourished, and the banks caved. The debt was made reasonable and payable and Argentina got out of debt making its government and its economy its own again.

Got that Greece? How about you Italy? England? Oh and what do ya say, USA?

Originally posted to Anti-Capitalist Chat on Thu Nov 17, 2011 at 12:52 PM PST.

Also republished by America Latina and Community Spotlight.

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Comment Preferences

  •  I agree that Argentina is a big success story (9+ / 0-)

    They had it much easier though, in that they never gave up their currency.  I don't know how a developed country can start a currency from scratch.  How did Slovakia do it?

    But nobody's buying flowers from the flower lady.

    by Rich in PA on Thu Nov 17, 2011 at 01:01:11 PM PST

    •  As an addendum... (7+ / 0-)

      ....I should also note that Argentina was very, very lucky.  It rode a commodities boom, starting with feed grains, pretty much from 2003 onward.  

      But nobody's buying flowers from the flower lady.

      by Rich in PA on Thu Nov 17, 2011 at 01:07:12 PM PST

      [ Parent ]

    •  That is the one problem, but... (6+ / 0-)

      It need not be that difficult. Early in their history Argentina did this with the Austral when the Peso was essentially defunct. Of course they PEGed it to the US dollar but that need not be a prerequisite. They only need to give the currency some value.

      For example, you can pay taxes with it. That is the easiest way to give currency value. If a person owns a nice slice a of land and a home on the Greek coast or near the Acropolis, then they need to get a hold of the new currency to pay the taxes to keep the property. That means they have to trade in the new currency.

      This can't happen immediately, but even Argentina had to suffer for 6 months before they were able to right their economy. Compare that against suffering for 10 yrs or more.

      De air is de air. What can be done?

      by TPau on Thu Nov 17, 2011 at 01:11:41 PM PST

      [ Parent ]

      •  That would be a zero-foreign-trade situation. (4+ / 0-)
        Recommended by:
        Shockwave, erush1345, Sparhawk, Pozzo

        I don't think Greece is ready for that!  The peso had lost most of its value but it wasn't literally worthless, and that may be a significant difference.

        But nobody's buying flowers from the flower lady.

        by Rich in PA on Thu Nov 17, 2011 at 01:15:35 PM PST

        [ Parent ]

        •  Argentina was isolated in the short run... (6+ / 0-)

          and so would Greece. But what are the options? A decade, at least, of suffering with no exit strategy at all. No guarantee of recover EVER.

          If Greece defaults, what would happen? Italy and Spain would follow and would likely not shirk trade with Greece. Also, Latin America would likely still be interested in trade. Possibly Africa and China.

          De air is de air. What can be done?

          by TPau on Thu Nov 17, 2011 at 01:24:21 PM PST

          [ Parent ]

          •  They could probably get oil from Chavez (3+ / 0-)
            Recommended by:
            ColoTim, J M F, DamselleFly

            They could easily convince him they deserve it; all they have to say is, "We just blew up capitalism."

            •  Iran (2+ / 0-)
              Recommended by:
              expatjourno, J M F

              has become their primary supplier.

              BTW, Greece has oil and gas deposits which can and should be exploited. Combine that with the vast amounts of natural gas currently being exploited by Cyprus and Israel in the Mediterranean and the subsequent plans to built a pipeline to Europe thru Greece in the next 7 years and that would make Greece a very important player in the energy supply line to Europe for the next half century or more.
              Of course, things will definitely go well if their sovereignty lasts that long. That fact should make people think twice on why many others would like Greece to turned to ashes now.

          •  Italy and Spain (1+ / 0-)
            Recommended by:
            PatriciaVa

            might get away with exiting the euro without defaulting. At least nominally. They could simply redenominate their debts in their own currency. Unfortunately for politicians right now that is just too unthinkable.

            "It is, it seems, politically impossible to organize expenditure on the scale necessary to prove my case -- except in war conditions."--JM Keynes, 1940

            by randomfacts on Fri Nov 18, 2011 at 12:39:13 AM PST

            [ Parent ]

    •  But most contracts were in US dollars (3+ / 0-)
      Recommended by:
      Shockwave, erush1345, TPau

      And many economists, especially Domingo Cavallo, argued that Argentina would enter a long term depression if it left the dollar peg.  Cavallo, of course, was one of the architects of the currency board.

      That's one of the major problems I have with Europeans who continue to claim that the world will enter a depression if the EuroZone falls apart.  Many of them were not only key architects of the euro but have become very well paid Eurocrats.

      Of course they're going to argue for their paycheck.

      Learn about Centrist Economics, learn about Robert Rubin's Hamilton Project. http://www1.hamiltonproject.org/es/hamilton/hamilton_hp.htm

      by PatriciaVa on Thu Nov 17, 2011 at 06:09:55 PM PST

      [ Parent ]

      •  If you stop paying current debts (1+ / 0-)
        Recommended by:
        PatriciaVa

        You cannot borrow more money, but any country that actually is running a current surplus (taxes less spending without concern for debt and interest payment), can do just fine while they renegotiate their liabilities. It's roughly the same as a corporation going into chapter 11 reorganization.

        The GOP is the party of mammon. They mock what Jesus taught.

        by freelunch on Fri Nov 18, 2011 at 10:41:46 AM PST

        [ Parent ]

  •  Tpau, I don't know you, it's reciprocal. No (0+ / 1-)
    Recommended by:
    Hidden by:
    Rich in PA

    Surprise, honesty is always the best policy?  I'm not confident TPau that you agree.  I've told the internet world where I stand.  Have you done so?  

  •  Really excellent riposte (13+ / 0-)

    to the oft repeated nonsense about default resulting in "utter chaos". See also Iceland.

    "If I pay a man enough money to buy my car, he'll buy my car." Henry Ford

    by johnmorris on Thu Nov 17, 2011 at 01:10:53 PM PST

  •  The economies of European countries and (3+ / 0-)
    Recommended by:
    TPau, cynndara, Grabber by the Heel

    the U.S. need to be decoupled from the international financial institutions.

  •  I was thinking your opening line (1+ / 0-)
    Recommended by:
    TPau

    while listening to NPR this evening...

    'Give away to the rich and punish the poor for the extravagance.....crazy' --LaFeminista

    by MsGrin on Thu Nov 17, 2011 at 03:28:15 PM PST

  •  Thanks for an interesting diary, and (4+ / 0-)

    Links to the refreshing WSWS.

  •  Big difference between Greece and Argentina (8+ / 0-)

    By joining the Euro Zone, Greece willingly ceded some of its fiscal sovereignty to the larger whole.  That may have been a bad choice, but it's the choice they made.  Maybe they would have been better served not to have done so.  I certainly don't pretend to be an expert on international economics, but as I understand it one of the reasons Sweden was able to stave off a similar disaster in recent years is because they were not part of the Euro Zone and thus retained control over their own currency.  Things always look clearer in retrospect, of course.  But I don't think it's fair to blame all of Greece's woes on their EU partners.

    "We must move forward, not backward, upward not forward, and always twirling, twirling, twirling towards freedom." - Kodos

    by Jon Stafford on Thu Nov 17, 2011 at 06:35:10 PM PST

    •  Agreed. (7+ / 0-)

      The Greek economy is a mess, not just because foreigners lent them money, but because the Greeks hate paying taxes and there is little social trust.

      Even if Greece defaulted it would not solve the problems they have. They need major fundamental reform of the economy (something that even the IMF/EU has yet to fully require. So far it is just one check after another. No real change.

      Greece got into trouble because in the past, with the drachma it had to pay higher interest rates and so could not borrow as much. In addition foreigners were wary of lending to a country that kept depreciating its currency.

      Along came the Euro and the Greeks went on a borrowing binge ... because with lower rates they could afford to borrow more, or so they thought. It is essentially the same dynamic as US homeowners had. Lower rates meant people could buy bigger houses or make equity withdrawals (as long as they only looked at the cost of servicing the debt, not repaying it).

      The Greeks have had their party and now they will have the hangover. A default is probably the best option ... but it will still be brutal for a while. There will be a massive fall in the standard of living and many of the best and brightest will leave the country (as many already have). It will be ugly.

      "I can live with doubt and uncertainty and not knowing. I think it's much more interesting to live not knowing than to have answers which might be wrong". Feynman

      by taonow on Thu Nov 17, 2011 at 06:44:29 PM PST

      [ Parent ]

      •  Spot on (5+ / 0-)

        And why were they borrowing so much money? Frankly, their social welfare state was one of the most generous in the world without the economy to support it. The Euro brought huge investment, especially in real estate, in Greece, all of which didn't pan out because of the global recession.

      •  Don't blame all Greeks for the greed of their 1% (4+ / 0-)
        Recommended by:
        TPau, Euroliberal, miningcityguy, Matt Z

        It's the same there as here- socialism for the rich, austerity for the poor.

      •  Hate to lay this on you all but... (5+ / 0-)

        while you are feeling superior to the Greeks, I might point out that I know another country that doesn't like to pay it's taxes, has a large burden of debt, invested in real estate that didn't pan out, has a hugely overdeveloped military and constantly at war somewhere. Since none of you are typing in Greek, I think you might be familiar with that country.

        The truth is all the developed nations are guilty of the same crime together. They all couldn't find a political way to raise taxes on their wealth base and so borrowed the money from them instead. That led to wealth and power accumulating at the top. Now, few of these countries have the courage to tell the wealthy and the powerful "no".

        Argentina had all the things you describe as "a mess" in the Greek nation. Huge debt, inflation, increasing interest rates, etc. Yet they defaulted and it did work out for them.

        The one difference is that Argentina got into debt feeding foreign companies instead of their own citizens. At least Greece did the right thing by their citizens for all those years. In fact, one might ask why your nation never did those things for you. They clearly could have afforded it if they hadn't given tax breaks to multinational corps. and banks.

        De air is de air. What can be done?

        by TPau on Fri Nov 18, 2011 at 12:48:53 AM PST

        [ Parent ]

        •  Well Greece's problems stem from its currency (4+ / 0-)

          It's not really Greece's debt. In fact Japan has twice as much debt as Greece and it is seen as a safe haven. The problem is that Greece does not have the power to print money to back its own sovereign debt, because it had given up some of its sovereignty when it gave up control over its money supply. The same goes to Argentina.

          The US, fair or not, is privileged in that respect. World nations hold several trillion dollars in US reserves, so the Federal Reserve can print a trillion dollars, and within a year or so, it will be snapped up by the likes of China, Japan, Russia, Brazil, India, OPEC, etc etc etc So long as that is the case, the US will be privileged and spoiled, and be able to live beyond its means.

          "It is, it seems, politically impossible to organize expenditure on the scale necessary to prove my case -- except in war conditions."--JM Keynes, 1940

          by randomfacts on Fri Nov 18, 2011 at 12:56:09 AM PST

          [ Parent ]

          •  This is absolutely true... (1+ / 0-)
            Recommended by:
            PatriciaVa

            The US is in a privileged and unique spot--oil is traded in US currency making it the go to currency for the world. That allows the US to print as much as it wants. No doubt one of the many reasons we went to war with Iraq. Saddam threatened to start trading oil in the Euro instead of the dollar.

            That puts the dollar in a unique spot but it is still somewhat subject to inflation. If the dollar is ever abandoned as the world's currency (i.e. oil is traded in another currency) watch out. The dollar is set up for Argentine style hyperinflation.

            Argentina had similar currency problems in their past. Hyperinflation essentially destroyed their currency and they had to reintroduce another currency several times. It can be done, and quickly if necessary.

            De air is de air. What can be done?

            by TPau on Fri Nov 18, 2011 at 01:07:28 AM PST

            [ Parent ]

          •  The ECB (1+ / 0-)
            Recommended by:
            shaharazade

            has the power to print money but it won't. Germany says no.
            It's not Greece's or Spain's or Italy's falt then.

          •  The other problem. (2+ / 0-)
            Recommended by:
            Sparhawk, randomfacts

            Japan funds its debt internally. Its people are savers and they lend to the government. Japan does not have to access international bond markets. ... or at least it hasn't had to ... but that is now changing as demographics start to work against it. Japan is in for a world of hurt over the next couple of years.

            Too much debt will always get you into trouble. It may not happen right away, but it will happen.

            "I can live with doubt and uncertainty and not knowing. I think it's much more interesting to live not knowing than to have answers which might be wrong". Feynman

            by taonow on Fri Nov 18, 2011 at 04:12:01 AM PST

            [ Parent ]

            •  In the EU (0+ / 0-)
              Japan funds its debt internally. Its people are savers and they lend to the government.

              at least the countries I've lived in or studied, made it a policy to discourage savings being invested in Public debt.
              Treasuries were not even sold to individual investors and bonds paid less than 50% of what governments were willing to pay foreign capitals.
              The banks were not willing to underwrite these operations because their commissions were much lower and were happy to "invest" the savings left to them as deposits in high-yielding junk which obviously proved to be toxic and caused this meltdown in the first place.

            •  That is true (0+ / 0-)

              Japan has a big demographic problem. I agree that they have to be wary of their debt level and start adjusting as soon as possible. The factors I mentioned give them more time than Europe has,but it does not give them forever. Neither does the US have forever.

              "It is, it seems, politically impossible to organize expenditure on the scale necessary to prove my case -- except in war conditions."--JM Keynes, 1940

              by randomfacts on Fri Nov 18, 2011 at 05:07:21 PM PST

              [ Parent ]

      •  are you serious? (1+ / 0-)
        Recommended by:
        miningcityguy
        because the Greeks hate paying taxes

        are we on the Reagan wagon blaming a single "welfare Queen" for the demise of the American economy?

        Sorry pal, but this is an ignorant comment.

        Greece joined the euro with close to 100% debt/GDP ratio. Ten years later, the IMF intervened with the ratio at 117%. Two years later, it's at 161% now and projected to rise to 182% in less than 2 years.
        Do.The.Math. and see if any of the arguments you made stand up.

        •  They stand up! (0+ / 0-)

          Greece lied to get into the Euro. It has been fudging its numbers ever since.

          Not paying taxes is the Greek national sport (especially for the rich). The anecdotal evidence is simply brutal.

          "I can live with doubt and uncertainty and not knowing. I think it's much more interesting to live not knowing than to have answers which might be wrong". Feynman

          by taonow on Fri Nov 18, 2011 at 04:16:53 AM PST

          [ Parent ]

          •  are you buying (1+ / 0-)
            Recommended by:
            miningcityguy

            your facts at the corner store?

            Greece lied to get into the Euro. It has been fudging its numbers ever since.

            No, it did not. Former PM Simitis explained all this in a recent op-ed in LeMonde.

            75% of Greeks receive a paycheck. Those paychecks are brutally taxed before any worker gets to put a single penny in their pockets.

            Using anecdotal evidence is so reality-based...!

            •  The problem (0+ / 0-)

              The problem is that facts are hard to get (the numbers are/were fudged) so I have to look at anecdotal evidence from what I read, from my Greek friends, and from time spent in Greece.

              In the same way I do not trust a single number coming out of China. I have been there and seen how the economy operates. It's a mess.

              As a rule I want facts and hard numbers, but if these numbers are made-up they are of no use (as an accountant I know how to make numbers up as well).

              "I can live with doubt and uncertainty and not knowing. I think it's much more interesting to live not knowing than to have answers which might be wrong". Feynman

              by taonow on Fri Nov 18, 2011 at 01:42:48 PM PST

              [ Parent ]

    •  Default will likely get them kicked out of the E.Z (0+ / 0-)

      De air is de air. What can be done?

      by TPau on Fri Nov 18, 2011 at 12:38:09 AM PST

      [ Parent ]

      •  Blame the Bundesbank (1+ / 0-)
        Recommended by:
        Euroliberal

        If the Bundesbank and its sock puppet the ECB didn't insist on making all of its economic decisions for Germany without regard to the effect it has on other nations, we would not have this problem. The euro appears to be a failure and Germany, not Greece or Italy is the cause of the failure.

        The GOP is the party of mammon. They mock what Jesus taught.

        by freelunch on Fri Nov 18, 2011 at 10:45:16 AM PST

        [ Parent ]

  •  Some good points and (5+ / 0-)
    Recommended by:
    taonow, ybruti, erush1345, Uncle Cosmo, Matt Z

    some similarities. But also, some big differences.

    Argentina is a huge exporter of agricultural products and has an abundance of natural resources. Greece, not so much. Argentina has a trade surplus, Greece a trade deficit. If Greece dumped the Euro and went to the drachma, they still need to import/buy food from other Euro countries and those countries will insist on payment in Euros. While Greece is a relatively poor country today, under the new drachma, it would be catastrophically poor. Be careful what you wish for.

    At default, Argentina's fiscal deficit was 3.2% of GDP and its debt 150% of GDP, Greece's fiscal deficit was 10.5% of GDP and its debt was 54% of GDP.

    And, as you point out, default is never a clean slate. Argentina, to this very day, is shut out from the global credit markets. Debtors will eventually be paid, albeit on Argentina's terms. However, lets not kid ourselves that its the "big French and German banks" that will get hurt. In Argentina's case, a huge amount of the debt was funded by Italian, Japanese and American pension funds who lost 2/3 of their investment. That isn't big banks losing money, thats American workers.

    •  Argintina is an exporter now, but then... (2+ / 0-)
      Recommended by:
      Euroliberal, Calgacus

      Remember, when they defaulted they were in the midst of food riots. People were quite literally starving to death. (Documented cases.) Trade was completely shut down in the short term. It was painful--very painful.

      The question is whether decades of austerity would be less painful--or even work. And will it prevent losses to the pension funds? Every place that has already been tried (South America) it has only deepened the economic woes.

      Like I said above, default is not a magic wand--it will not resolve all the pain. It is the better of the two options, though, and it is likely to actually work, where austerity is likely to fail.

      De air is de air. What can be done?

      by TPau on Fri Nov 18, 2011 at 12:57:29 AM PST

      [ Parent ]

  •  Different (5+ / 0-)
    Recommended by:
    Sparhawk, erush1345, randomfacts, Matt Z, Pozzo
    Got that Greece? How about you Italy? England? Oh and what do ya say, USA?

    The US and the UK have their own currencies. They do not have to default, they can always print more money to pay the bills.

    What will happen in the US is that money printing will continue and inflation will ultimately follow. As a result you will get your promised Social Security check ... it just won't buy anywhere near what you had hoped it would. Basically a stealth default through inflation.

    Greece will default and likely will eventually leave the Euro, though not the EU. Greece will not recover quickly. There are too many societal and structural problems to fix in short order. The problem is much much deeper than that faced by Argentina.

    "I can live with doubt and uncertainty and not knowing. I think it's much more interesting to live not knowing than to have answers which might be wrong". Feynman

    by taonow on Thu Nov 17, 2011 at 06:48:59 PM PST

    •  I doubt that... (1+ / 0-)
      Recommended by:
      Calgacus

      Argentina looks relatively stable now, but that makes it easy to forget how unstable they were back then. They were in the midst of food riots, documented starvation, crumbling manufacturing structure and completely corrupted political system. Yet they recovered from all that.

      Greece might have it bad, but it doesn't look like mass starvation is going on in the country right now. Overall, they look more stable than Argentina did when the default actually occurred.

      De air is de air. What can be done?

      by TPau on Fri Nov 18, 2011 at 01:11:28 AM PST

      [ Parent ]

    •  If this was easy (1+ / 0-)
      Recommended by:
      taonow

      for Germany, they would have facilitated Greece's exit which would have benefited Greece but not necessarily Germany.

      Greece will default and likely will eventually leave the Euro, though not the EU. Greece will not recover quickly.

      Germany and some other Euro countries are more invested in keeping Greece "hostage" that Greece itself. Because.... because the crisis is systemic and way bigger than the so-called Greek problem.

      It's a game of CYA and find somebody to blame.

  •  Victims of "Austrian Economics"? (4+ / 0-)
    Recommended by:
    randomfacts, TPau, Euroliberal, Calgacus

    Greece and, now, the other PIGS are being ordered by German overlords to undertake severe austerity.  Germany's economy is booming, but it wants the poorer countries to get a hell of a lot poorer.

    Of course anyone who has a shred of sense understands the Keynsian dictate, that a depressed economy needs stimulus, not austerity.  Merkel is imposing what our own Banana Republicans call "Austrian Economics", the Hayek notion that government can't help depressions, and must wait for the market fairy to magically end them.  She can get away with it because she's elected by a country that doesn't have to put up with the effect.  It's German punishment of other countries.

    Default would be a problem for Greece, but so's living under the German jackboot.  They need to go back to the drachma.  Then they could at least try to run an economy of their own.

  •  Just got back from Greece (5+ / 0-)

    The Greek people are in a state of shock over state of their economy.  They are embarrassed by the negative publicity - they are a proud people with a rich history and heritage so they are determined to get out of this mess.  The rich are not paying taxes so the burden falls on the wage earners (who have their salaries taxes automatically).  The family unit is very strong in Greece so many people are moving in with their parents, children, etc so you don't really see poverty in the streets.  The shops, cafes, restaurants, clubs, bars are still buzzing - but people are definitely spending less.  Most people feel like their politicians have let them down, but also understand they are also responsible for enabling corruption, tax evasion, etc.  It was really interesting visiting the country as you felt you were witnessing history.  

  •  What a plan the banksters have (2+ / 0-)
    Recommended by:
    TPau, shaharazade

    Strangle one country after another, what's the endgame?

    •  No endgame in short-term-profits-land (0+ / 0-)

      It's all just blind, gut-lead behavior.  All they care about is getting paid right now, so they demand one short-term patch after another.

    •  I think there is an endgame... (1+ / 0-)
      Recommended by:
      shaharazade

      The banks are ending up with a large amount of real estate and commodities. They are making the governments get the tax payers to pay all the bad debt on it. In the end, paper money really isn't worth anything. If the debt all unwinds through hyperinflation of multiple currencies we all are very much at a disadvantage. The banks, on the other hand, are gaining a huge amount of control over real things.

      It is as though we are being set up for a neo-fuedalism.

      De air is de air. What can be done?

      by TPau on Fri Nov 18, 2011 at 01:19:18 AM PST

      [ Parent ]

  •  Greece's problem, like Argentina's (3+ / 0-)
    Recommended by:
    RanDomino, PatriciaVa, Calgacus

    is that their currency is overvalued. When Argentina defaulted, it also saw an 80% depreciation in its currency with the combined exchange rate devaluation & the double-digit inflation that they went through.

    The reality though is that no-one cares about Greece. From day 1 of the whole Greek crisis it was all about contagion. The real problems now are Italy, Spain, France, Portugal, Ireland, Belgium, and the entire euro zone outside of Germany.

    "It is, it seems, politically impossible to organize expenditure on the scale necessary to prove my case -- except in war conditions."--JM Keynes, 1940

    by randomfacts on Fri Nov 18, 2011 at 12:36:30 AM PST

    •  the aid hasn't been to save greece, but france (3+ / 0-)
      Recommended by:
      TPau, PatriciaVa, Calgacus

      specifically, french banks.  and now we see how that's turning out- in their urgency to make sure every debt payment is made, they've increased the size of the debt payments while reducing the ability of greece to pay, causing it to need more debt just to service its existing debt!

    •  The question is what does "save" them mean. (6+ / 0-)

      In the context of Greek austerity, "saving" these countries means preventing their default to the international banks. It has little to do with actually helping the people within those countries.

      I would suggest "saving" the people and cultures within those countries. Allowing this banking system to fall so there is room for a more stable and sustainable system to develop.  This would mean pain in the short run, but it would also mean a brighter future in the long run. I would look at the Mondragon Banking system for guidance on what a future banking system should aspire to.

      De air is de air. What can be done?

      by TPau on Fri Nov 18, 2011 at 01:26:38 AM PST

      [ Parent ]

      •  indeed, the real goal of any "debt package" is to (4+ / 0-)

        protect the CREDITORS, not the debtors.  Nobody with power gives a flying fuck what happens to the debtors.  (shrug)

      •  But what makes you think that if (1+ / 0-)
        Recommended by:
        Euroliberal

        the banking system were to fall, it would lead to a brighter future in the long run, or that the people and cultures of these countries would be preserved? Most people are already blaming the crisis on "socialism". If the European economy failed (meaning the banks), it would be blamed on a failure of socialism and the welfare state. The replacement would not be the system that the Spanish and Italians chose but it would be a very neo-liberal place with very few worker protections or people's rights, for the sake of "competitiveness". Also, there would be a lot of socio-economic turmoil, and far right wing parties are best positioned to benefit from this in Europe right now. In the end you would have a poorer, more right-wing Europe saddled with the false narrative that only free market capitalism was responsible for its recovery.

        "It is, it seems, politically impossible to organize expenditure on the scale necessary to prove my case -- except in war conditions."--JM Keynes, 1940

        by randomfacts on Fri Nov 18, 2011 at 05:04:04 PM PST

        [ Parent ]

  •  IMF debt (0+ / 0-)

    argentina was able to pay off the bulk of that debt. how? by placing a tariff on imports. raised something like 7 or 9 billion dolllars.

    somehow hiking tariffs didn't spark a "trade war" as is usually fearmongered.

    our one demand? return what was stolen.

    by stolen water on Fri Nov 18, 2011 at 09:10:38 AM PST

  •  There's no pleasant option (0+ / 0-)

    Either way, Greece is in for years of pain. Comparisons to Argentina are of limited value, due to the vast differences in their economies, the era that it happened and the fact that Argentina was not part of a monetary union.

  •  What has happened in/to Greece (2+ / 0-)
    Recommended by:
    shaharazade, Euroliberal

    is a travesty. The average Greek citizen is being punished for massive government corruption and tax evasion/fraud on the part of their 1%. ... Pretty much the same for all countries forced to adopt austerity measures.

    And to think our own beloved Goldman Sachs was front-and-center helping the Greek government lie and defraud its way into the eurozone to begin with. Rrrrrrrr.

    Just because it's made up doesn't mean it isn't true.—Plan 10 from Outer Space

    by mofembot on Fri Nov 18, 2011 at 10:51:26 AM PST

  •  Whatever (2+ / 0-)
    Recommended by:
    Calgacus, Euroliberal

    the IMF wants, always do the opposite!

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