Article

2012-05-30 Europe

Greek Euro Exit Would Mean 55% Income Drop, National Bank Says

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Posted by Fred 2012-05-30 00:00|| || Front Page|| [8 views ] Top

#1 If the Greeks stayed with the Euro, the austerity measures would mean a significant cut in income, too. So exit the Euro, get your independence (and responsibility) again, and learn to live without the Big Brother EUnik on your neck. A earning win-win.....

Posted by Alaska Paul 2012-05-30 01:36|| 2012-05-30 01:36|| Front Page Top

#2 But, but ... I thought exiting the EU would be free! I thought someone else was going to pay! Let's vote in someone else!

Posted by Bobby (the Greek) 2012-05-30 05:41|| 2012-05-30 05:41|| Front Page Top

#3 If I was a betting man and I don't mind a flutter every now and then, these are the bets I would be grabbing:
Nothing will happen in Greece until after the Nov election. Obama will keep Greece going even if he has to get The Bernak or the taxpayer to pay out of their own pocket to keep the Kabuki Theater going till then. No rocking the boat.
Ditto for Syria
Ditto for Iran.

Posted by tipper 2012-05-30 06:19|| 2012-05-30 06:19|| Front Page Top

#4 Greeks 55% overpaid whatever happens.

Posted by Bright Pebbles 2012-05-30 07:15|| 2012-05-30 07:15|| Front Page Top

#5 Greeks might have to start working for a living.

Posted by Ebbang Uluque6305 2012-05-30 11:44|| 2012-05-30 11:44|| Front Page Top

#6 Greeks might have to start working for a living.
But...but...but, wot about this report:
Are Greeks the hardest workers in Europe?

Posted by tipper 2012-05-30 13:08|| 2012-05-30 13:08|| Front Page Top

#7 tipper: that is not a bet I would take. No one outside of the EU has any control over this. Very few within the EU have any control over it.

Posted by RandomJD 2012-05-30 13:13|| 2012-05-30 13:13|| Front Page Top

#8 Other than as an indicator of what is to come for Spain and whomever else has gone down the socialist road farther than they ought, what do I or anyone else care about an economy not much larger than a medium-sized city? What is the last big thing to come out of Greece? What is the last thing I bought from them? They just seem to subsist, and that is all.

I can't figure out what all the fuss is about, unless someone out there is paying people to make it.

Posted by gorb 2012-05-30 13:45|| 2012-05-30 13:45|| Front Page Top

#9 gorb: the Big Deal is the European Project itself. Whether Greece stays in the EMU or returns to the drachma, aims at the very core and purpose of the EU's existence.

The EU was incubated as the ECSC (European Coal and Steel Community) shortly after WWII. First it was industry. Then it expanded to labor, goods, capital, and services. Then it began expanding in membership, as it expanded to political, social, and foreign policy objectives. Then came monetary union (EMU) - the common currency.

Only about half of EU member states use the euro (are part of EMU). Tellingly, there are no exit mechanisms from any of the EU treaties, because, like the Mafia, there was never supposed to be any way to leave. In the 1980s, Greenland signed up and left just as quickly, but no one cared or noticed, because like, what, ten people live there.

So if Greece exits the euro - which is "not heard of" - the implications are huge. First, EMU. If Greece returns to the drachma, it will be traded on international FOREX markets, and devalue faster than Facebook stock. In the near-term, this will suck. But in 2-3+ years, Greece will be much better off. Other "at-risk" eurozone countries (Spain, Italy, Portugal, Ireland) will observe this, and say yeah, F this euro stuff, we want our devalued, free-trading national currencies back too.

A common currency would no longer unify the EU, and then member states may/will/already are questioning if there is any point to the rest of the "Project." A Greek exit threatens to unravel all of the post-WWII efforts to unite Europe, so that Nothing Bad Would Ever Happen Again.

I, and many Euroskeptics say, this was a totally predictable - indeed, inevitable - outcome. There were three previous attempts to unify Europe: Charlemagne, Napoleon, and Hitler. All the same rivalries and cultural differences that thwarted those attempts are in play now, and attempting to regulate "nationalism" out of existence didn't change a thing.

Long story short, events and simple math are proving critics of the EU correct.

/short version, trying not to be smug, rant off

Posted by RandomJD 2012-05-30 15:35|| 2012-05-30 15:35|| Front Page Top

#10 we can hope that the faceless EUCrats that enforced the petty rules and regs are put to the pike - pour encourager les autres

Posted by Frank G 2012-05-30 15:48|| 2012-05-30 15:48|| Front Page Top

#11 I sympathize, Frank, and I don't have an alternate proposal. But each unification attempt has been stupider than the last. Makes me wonder if all the periodic purges and migrations diminish the European gene pool a little more each time.

Posted by RandomJD 2012-05-30 16:10|| 2012-05-30 16:10|| Front Page Top

#12 gorb, an addendum to why there's such a fuss over Greece in particular. When the European Monetary Union (EMU = the euro currency) was set up in the 1990s, quantified standards were set for EU member states wishing to join. E.g., annual deficits could be no higher than X% of revenues, national debt could be no higher than X% of GDP, etc.

This is because EMU was unaccompanied by any kind of fiscal union - i.e., no EU-level controls on internal budgets and spending. So, if a country could plausibly cook its books and squeak over the line = in like Flynn, and then free to go hog-wild.

Yes, there were check-ups to be sure no one was breaking the rules. But with no exit mechanism - no way to voluntarily leave, and no way to be thrown out - there has never been any meaningful way to enforce those rules. This created a huge free-rider problem.

Like telling a college kid who prefers partying over studying: "get As for one semester, then you can use my credit card. On the honor system." That's just asking for trouble.

In the case of Greece, the Greek government almost certainly fudged the numbers to get into the euro - and were subsequently assisted, aided, and abetted by EU officials who sought to keep the books cooked, so as not to discredit or delay further European integration.

So there is ample culpability on both sides. Europeans are pissed at those freeloading Greeks, yes, but they're also pissed at the Eurocrats who contributed to the charade and allowed it to continue, simply to advance a pointless and unsustainable political agenda.

This is why a Greek exit from the euro is viewed the first domino to fall. The whole mess completely undermines the credibility of the EU as a whole.

Posted by RandomJD 2012-05-30 16:45|| 2012-05-30 16:45|| Front Page Top

#13 Thanks for the crash course, RandomJD. It makes a lot more sense now to look at it as an indicator of where the EU will be going vs. how Greece itself will affect the EU.

Lots of legislation has this problem of lack of penalties, punishments, exit strategies, clear definitions of red lines, etc., and I think it is because if they include it nobody will vote for it. Perhaps it is time that all legislation includes these things. We have the same problem getting rid of the likes of Eric Holder or Charlie Rangel because there is no firm way to deal with those who flout the law over here in some cases. The best we can do is come up with some kind of "censure" vote, which is nothing worse than wearing some kind of badge of shame to work, which nobody seems to notice really.

Posted by gorb 2012-05-30 17:16|| 2012-05-30 17:16|| Front Page Top

#14 Sure thing, gorb. Greece will hurt for a while, but life will go on. The EU and its outrageously expensive, suffocating regulatory apparatus, on the other hand . . .

Lots of legislation has this problem of lack of penalties, punishments, exit strategies, clear definitions of red lines, etc., and I think it is because if they include it nobody will vote for it.

Absolutely. The EU has invested enormous effort in making sure no one - including national governments - really knows what they signed on for.

Example: a few years ago, I taught a seminar on the EU (for American students in Europe). While researching a topic, I came across a citation to a document that I REALLY wanted to see. After exhausting my capabilities, I offered an instant A for the whole course to any student who could dig it up. As a class, we figured out that the only way to access it was to have EU credentials and physically retrieve it from the EU library in Brussels. No students, researchers, journalists, nuthin. It was a policy memo relating to "transparency" and "streamlining democracy" - and the friggin thing was effectively classified.

I think what you're talking about is individual corruption. Individuals breaking laws, that we expect compliance with, that can be enforced. The only thing lacking is the will. In contrast, corruption in the EU is institutionalized. No one really knows what the rules are, so enforcement mechanisms are spotty to nonexistent, because compliance is not genuinely expected. This is because the only way to sustain a cradle-to-grave regulatory welfare state is by fakery and deceit. You'd think they'd know this, having lived next door to the Soviets, and seeing the rot first hand.

I'm hesitant to compare a Greek exit to the fall of the Berlin Wall. For all its evils, the "EUSSR" has never systemically exterminated its own citizens. Only stifled their freedoms, in the name of promoting them. But the significance is comparable.

In the near-term, I think events in France will impact the US even more. Specifically, Sarkozy left a nice little shit sandwich for Hollande, that is on track to splat on Wall Street - and Obama - this fall. Heh. The French piss me off too - the EU was all their idea, to keep Germany down - but every now and then they make me smile.

Posted by RandomJD 2012-05-30 18:22|| 2012-05-30 18:22|| Front Page Top

#15 The EU has invested enormous effort in making sure no one - including national governments - really knows what they signed on for.
Sounds like the Pelosi system at work - "You have to pass it to see what's in it."

Posted by Glenmore 2012-05-30 18:41|| 2012-05-30 18:41|| Front Page Top

#16 Sounds like the Pelosi system at work - "You have to pass it to see what's in it."

Worse. Any member state that votes "incorrectly" must vote again and again until they get the "correct" answer. No such thing as FOIA, so many details remain concealed. Plus, Europeans rarely get to directly vote on anything, except for European Parliament representatives, which is for the sake of appearance only, because the EP's power is advisory only, not an actual legislature. It's very feudal. Europeans are still serfs ruled by an aristocracy.

I could go on and on. Sorry - I obviously get fired up about this topic. :)

Posted by RandomJD 2012-05-30 19:27|| 2012-05-30 19:27|| Front Page Top

#17 If anyone is interested, here's the EU's "Kid's Corner" - official agitprop for the kiddies. Creepy.

/promise I'll shut up now

Posted by RandomJD 2012-05-30 19:41|| 2012-05-30 19:41|| Front Page Top

#18 /promise I'll shut up now

Do go on. Not many times we get a crash course on Euro economics.

Posted by badanov 2012-05-30 20:31|| http://www.freefirezone.org 2012-05-30 20:31|| Front Page Top

#19 Can't disagree at all RandomJD.

Posted by swksvolFF 2012-05-30 21:05|| 2012-05-30 21:05|| Front Page Top

#20 Well, it is certainly not the most exciting subject! But anytime I get depressed about things in the US, I just consider Europe. Our system is structured to minimize the damage done by would-be tyrants. The EU was designed by the tyrants.

Another related development is covered on the Burg today: tomorrow's Irish referendum on the EU Fiscal Compact (a.k.a. The FU Treaty). Basically Irish citizens are being asked for authorization to bail out private banks with taxpayer money. Banks which are in trouble because they bought into the EU agitprop and took huge risks on the euro project, which, to any outside observer, was a losing bet from day 1. The point of the FU treaty is to force the peasants to pay for banks' and governments' bad decisions, in which they had almost no meaningful participation. That's bullshit.

Sinn Fein has been leading the charge against it, and while they may be a bunch of commies, at least they are Irish commies, who are adamantly against shifting the moral hazard onto the backs of Irish taxpayers. I happen to completely agree. If Ireland is going face financial ruin, Sinn Fein thinks that right belongs to Irish commies, not continental ones. I'm ok with that. They still believe in the nation-state - the obliteration of which has been the EU's overarching and stupid goal. (Core EU doctrine is that nation-states caused WWII. Same fallacy as lefties who insist that guns kill people.)

Unfortunately, tomorrow's Irish vote won't mean much. Unlike all previous treaties (which are mostly ratified by parliaments, not by voters), the FU Treaty does not require unanimity to go into effect. Eurocrats lowered the bar for this one - only 12 of the 17 euro countries must ratify it, in order to shift the risk of bad bets from banks to taxpayers. They always rig the system to get the answer they want.

So even if Irish voters say no, 5 more countries would have to say no, which is unlikely. This is because ratification of the FU Treaty in all other 16 states is by parliamentary vote. Just as in the US, it's very easy for legislatures to give away OPM (other people's money). The Greek parliament said yes, which is what Greeks are so pissed about. Lazy tax-evaders or not, I don't blame them for being resentful. Textbook lesson in the damage governments do when they interfere in people's lives.

What disgusts me most is how much coercion exists, at every level. No "mainstream" national official wants himself or his country to be blamed for sinking the euro or the whole EU. They'd rather shift burdens, dodge responsibility, kick the can down the road, and ruin their own citizenry. That's how the creeping tyranny has gotten so far, and it's why Sinn Fein sounds like Ron Paul ranting about the Federal Reserve.

Whew. Bedtime! Hope it's helpful.

Posted by RandomJD 2012-05-30 22:46|| 2012-05-30 22:46|| Front Page Top

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