Are you watching Greece implode?

[werepossum]

One thing I have started to wonder about as this recession drags on and unemployment remains high is whether 10% (or even 8%, or 7%) U3 will become the new "normal", and businesses will learn to adapt and be profitable in this new environment.

I worry about that too. The socialist European countries tend to have relatively high unemployment and relatively low job mobility - kind of an economically imposed Peter Principle. As we become more socialist as well, I expect we will see a decline in employment and in living standards. We're already close to Europe in terms of government spending versus GDP, we just don't seem to get as much bang for our buck.

 

[lsquare]

I worry about that too. The socialist European countries tend to have relatively high unemployment and relatively low job mobility - kind of an economically imposed Peter Principle. As we become more socialist as well, I expect we will see a decline in employment and in living standards. We're already close to Europe in terms of government spending versus GDP, we just don't seem to get as much bang for our buck.

Are you serious here? Taxes in the US is much lower than in the EU. Low taxes ain't the solution either to US economic woes. There needs to be a balance here. It's amazing how the Republican Party has convinced some people that lower taxes is the solution here. It ain't and if it was the solution, then surely during GWB's era, there would have been a surplus.

Don't get me wrong here, I certainly don't advocate the kind of socialist policies that's prevalent in Europe. It's no wonder why they grow much slower than North America. Everything is also more expensive there than in North America, heck, I would argue that it's cheaper to live in Canada than in Europe.

We don't get much bang for our buck because tax revenue is being wasted on lots of worthless programs. Not to mention that health care spending is rising out of control. I could go on and on about this. US economic decline ain't inevitable here. Economic growth is rather cyclical here. There are good and bad times. It's just how things work. You can't possibly expect an economy to grow indefinitely. Sooner or later something just has to give. This is what's happening here.

 

[Modelworks]

I'm waiting for the CNN breaking news announcement that the USA is going to bail out Greece because they are too big to fail.

 

[werepossum]

I worry about that too. The socialist European countries tend to have relatively high unemployment and relatively low job mobility - kind of an economically imposed Peter Principle. As we become more socialist as well, I expect we will see a decline in employment and in living standards. We're already close to Europe in terms of government spending versus GDP, we just don't seem to get as much bang for our buck.

Are you serious here? Taxes in the US is much lower than in the EU. Low taxes ain't the solution either to US economic woes. There needs to be a balance here. It's amazing how the Republican Party has convinced some people that lower taxes is the solution here. It ain't and if it was the solution, then surely during GWB's era, there would have been a surplus.

Don't get me wrong here, I certainly don't advocate the kind of socialist policies that's prevalent in Europe. It's no wonder why they grow much slower than North America. Everything is also more expensive there than in North America, heck, I would argue that it's cheaper to live in Canada than in Europe.

We don't get much bang for our buck because tax revenue is being wasted on lots of worthless programs. Not to mention that health care spending is rising out of control. I could go on and on about this. US economic decline ain't inevitable here. Economic growth is rather cyclical here. There are good and bad times. It's just how things work. You can't possibly expect an economy to grow indefinitely. Sooner or later something just has to give. This is what's happening here.

Reading comprehension for the win. Google "budget deficit" for the difference, grasshopper.

LOL Modelworks, good (if scary) point.

 

[StageLeft]

Germany has agreed in principle to help Greece, hence the rally today.

 

[bfdd]

Can we get a list of countries without debt?

 

[woolfe9999]

Proving my point earlier in the thread - that news of foreign nations in debt has a violent short term impact on our markets - debt fears for Greece "eased" today, and the DOW is presently up by 220.

- wolf

 

[StageLeft]

Can we get a list of countries without debt?

I think it would be quite short. Some of the middle eastern ones don't have any, I believe.

 

[jhu]

Can we get a list of countries without debt?

List of countries by debt:GDP ratio. Damn, Japan's quite in the hole. Why hasn't their economy imploded yet???

 

[StageLeft]

List of countries by debt:GDP ratio. Damn, Japan's quite in the hole. Why hasn't their economy imploded yet???

They've basically been "hanging on" for two decades now. Their economy has never had a brisk pace of growth since their real estate crash twenty years ago. They simply continue to get more and more debt.

 

[lothar]

Greece’s outstanding debt totals 254 billion euros, compared with Russia’s 51 billion euros before it defaulted in 1998 and Argentina’s 57.2 billion euros when it missed payments in 2001.

It would be interesting to see if their plan actually works.
Greece is just a blip on the radar compared to what could happen to spain the next few years.

 

[Slew Foot]

They've basically been "hanging on" for two decades now. Their economy has never had a brisk pace of growth since their real estate crash twenty years ago. They simply continue to get more and more debt.

Take notes, thatll be us in a few years.

 

[Zorkorist]

We've still got the Grand Canyon... all they had is te Acropolis.

-John

 

[juiio]

Take notes, thatll be us in a few years.

The difference between Japan and the US is that almost all of Japan's debt is held domestically. Their debt is still terrible, obviously, but the debt being held domestically lets them teeter on the edge longer than they would have otherwise.

 

[JEDI]

http://finance.yahoo.com/news/Greek...9.html?x=0&sec=topStories&pos=3&asset=&ccode=



Customs are going to strike 48 hours which will lock up imports other than fuel and drugs. Truckers have been choking off the border for a few weeks, too.

http://www.telegraph.co.uk/finance/...re-but-for-the-grace-of-God-goes-Britain.html



Some are saying Greece is in a debt spiral now and has reached that critical point at which they cannot get out, the only proper way out a gift--not a new loan--of money to relieve some of this debt.

I don't know the details of the "austerity plan" beyond what has been said in these articles but a fuel tax, public servant pay freezes, and expanding retirement age to me sound like very practical and fair ways to deal with an imploding economy.

The US is not Greece but parallels will be drawn, though even if valid I think many will ignore them.

http://www.cnn.com/2010/BUSINESS/02/10/greek.debt.qanda/index.html?hpt=C2

1) Years of unrestrained spending... fiddled statistics to reveal debt levels and deficits that exceeded limits set by the Eurozone.

No auditors? And how will Greece be punished for violating Euro rules?

2) hiked taxes on fuel, tobacco and alcohol, raised the retirement age by two years, imposed public sector pay cuts
---> resistance from various sectors of society

Yup, this does sound like the US!


I say let Greece implode, so that US politicians can show their constituents "Look what happened to Greece..." and get unpopular debt management policies passed

 

[StageLeft]

I say let Greece implode, so that US politicians can show their constituents "Look what happened to Greece..." and get unpopular debt management policies passed

Even if this was US decision, would it help? Greeks are literally in the middle of this and STILL don't want to face the music. They will cry their way to bankruptcy.

 

[Jaskalas]

Even if this was US decision, would it help? Greeks are literally in the middle of this and STILL don't want to face the music. They will cry their way to bankruptcy.

I'm confident that we won't face the music either.

 

[StageLeft]

I'm confident that we won't face the music either.

Certainly not. The structure of the system doesn't encourage it. Already the US has not. In recent decades I think there has been a surplus only for a few years and these deficits are not being used for money-making investments but maintaining quality of life. So already the US is not facing the music, it's just not loud yet like in Greece.

 

[zephyrprime]

What the Greek situation illustrates is how screwed the entire world is. This isn't just a US problem. It is a worldwide problem.

Austerity measures never work.

The whole problem with austerity programs is that they decrease the economic activity in a country. This is an inevitable consequence of the fact that with fractional reserve fiduciary money, repayment of debt is deflationary which is economically depressing. So what happens during austerity programs in light of this fact? Debt to GDP ratio actually rises as GDP shrinks faster than outstanding debt. The amount of money available for early repayment of debt then decreases. Austerity programs work for individual people because an individual's income doesn't decrease if he/she decides to pay down some credit card debt. Austerity programs don't work for countries because their income actually decreases due to the austerity program

On the other hand, continuing fiscal profligacy will only make problems worse although it will kick the can down the road a bit.

The problem with all the bailouts that have gone on so far is that they rely upon taking on more debt. Doing so is making the underlying problem worse although it is forestalling the inevitable for a while. The higher the debt level reaches, the more unstable the system becomes.

A worldwide default/devaluation combination is inevitable. Dragging things out like japan did yields more pain in the long run. We are all unfortunate to be living during the second Great Depression.

 

[alphatarget1]

It would be interesting to see if their plan actually works.
Greece is just a blip on the radar compared to what could happen to spain the next few years.

Does that mean I should go short on EUR?

 

[bfdd]

List of countries by debt:GDP ratio. Damn, Japan's quite in the hole. Why hasn't their economy imploded yet???

so every country in the world has debt? then who has the surplus?

 

[HumblePie]

so every country in the world has debt? then who has the surplus?

Uhh... no one? That's why it is sorta silly this global economy. It's similar to if I loan you $100 and you loan me $100 as well. You didn't pay back my $100, you loaned it to me. So we both owe each other $100. You'd think it would cancel out but it doesn't until we make a "payment" to each others debt. Which we do. We make payments of $10 each, but then we each taken another $100 loan from each other. See how silly this gets?

Anyhow, one of the reasons behind this is by having debt, we show we are willing to work with another country. It gives governments of countries a sense of leverage even if it is just an illusion.

 

[bfdd]

Uhh... no one? That's why it is sorta silly this global economy. It's similar to if I loan you $100 and you loan me $100 as well. You didn't pay back my $100, you loaned it to me. So we both owe each other $100. You'd think it would cancel out but it doesn't until we make a "payment" to each others debt. Which we do. We make payments of $10 each, but then we each taken another $100 loan from each other. See how silly this gets?

Anyhow, one of the reasons behind this is by having debt, we show we are willing to work with another country. It gives governments of countries a sense of leverage even if it is just an illusion.

Actually it's more like you loan me 100 then you need 200 and I loan you 200, but then I need 400 so you loan me 400 etc etc. I don't understand it and it should be a complete zero sum system. If you have -100 dollars I should have +100 dollars. It's all fictional bullshit, I wish some country would just say "nah I'm good on that peace"

 

[zephyrprime]

so every country in the world has debt? then who has the surplus?

Here is a list of all the nationally held foreign reserves held by various countries:
http://en.wikipedia.org/wiki/List_of_countries_by_foreign_exchange_reserves
Notice that the total is $9T (this is all public)

Here is a list of all the foreign national debts owed by various countries:
http://en.wikipedia.org/wiki/List_of_countries_by_external_debt
Notice that the total is $56T (which includes public and private debt. I couldn't find just public debt)

 

[bfdd]

Here is a list of all the nationally held foreign reserves held by various countries:
http://en.wikipedia.org/wiki/List_of_countries_by_foreign_exchange_reserves
Notice that the total is $9T (this is all public)

Here is a list of all the foreign national debts owed by various countries:
http://en.wikipedia.org/wiki/List_of_countries_by_external_debt
Notice that the total is $56T (which includes public and private debt. I couldn't find just public debt)

That's cool they have 9 trillion in reserves.... except Japan is still in debt up to their eyes so what the fuck are they doing with so much reserve? Also, reserve isn't exactly surplus it's more like putting 100 away in your wallet in case of an emergency yet you still have 10,000 in credit card debt that you're scrapping by tooth and nail to try and pay down.