Just how much of a mess is Greece in, and what will happen?

[RegisterMe]

http://www.economist.com/node/21555916 - Europe’s choice: super-state or breakup
http://www.economist.com/node/21555927 - Briefing on “an ever deeper democratic deficit” (or why a super-state might be hard to swallow)
http://www.economist.com/node/21555923 - Cutting up rough (the cost of a Greek exit)
http://www.economist.com/node/21555972 - Spanish banks: The Corralito Risk
http://www.economist.com/node/21555566 - Charlemagne on Hollande / Merkel
http://www.economist.com/node/21555931 - Europe in limbo (the worsening credit crunch)
http://www.economist.com/node/21555936 - Buttonwood on the nationalisation of markets (banks, government debt, the ECB, lack of non-public finance, and the effects this is having on markets)

You'll only be able to read a limited number of these without a subscription (not sure when the paywall cuts in).....

[Gavrushka]

Read the first article; it is excellent... - I'd not really considered the impact on a bank's balance sheet purely down to the revaluation of assets/liabilities from leaving a common currency... - That could be one huge mountain of straw crushing the camel to a bloodied pulp by itself!

Superstate would be my vote, and has been for a long, long time.

[silenced]

If nothing else a new Deutsche Mark would rocket in value massively damaging Germany's export reliant economy.

It wouldn't. They would simply lower the wages even more and all is fine again. You never hurt the industry in Germany, only those that work there.

But you can't feed a country on export only.

Those articles look like nice reads, maybe I got some time on evening shift tomorrow. Time to go home in a few.

[amtct]

. . . Except this time they really don't WANT the rest of Europe . . .

Nor internet ,Windows 7 ,unsurvailed mobile phones ....
Germany is not a threat ,but stupidity is.If needed I'll make a list but if you don't want my list check IMF's site

As for who profits from the Europe's stupidity ....well ,that is IMF not Germany.I don't remember any country borrowing money from Germany .

[Aye Capn]

If the value of German currency becomes uncomfortably high (deflates?) couldn't they stabilize the value of the DM by printing more money?

I know Germans frown on that as a general rule, but if it keeps the price of the currency stable wouldn't printing money in that situation be a good thing?

[Gavrushka]

@Aye Capn


I understand that Germany relies on cheap European imports of raw materials and low tech stuff to fuel its factories. - Devaluing the Deutschmark would make such imports relatively more expensive WHEREAS Germany exports a lot outside of the EU...

FAR more complicated than this but, as Spain Italy, Greece and the rest of the EU adopt their own currencies and devalue, they make it far cheaper for Germany to buy their input materials, and produce for less whilst Merkel's machine shifts even more emphasis to distant markets.

In other words, they are far more likely to come out of this smelling of roses and, from what Silenced (?) said the German labour market is fairly laissez faire, and they'll just reduce wage input costs too (although unemployment is so low in Germany, I'm unsure of the truth or wisdom of this)

[RegisterMe]

Not really Gav. Germany's export success isn't based on cheap imports. Far from it in fact. It's based on expensive exports. In BMW, Mercedes and Volkswagen it has the three most profitable and successful car companies globally. Siemens is in the top two or three engineering companies globally. RWE is one of the most successful power companies in the world (or at least was before Angela put the lid on nuclear power). Deutchesbank is probably one of the top two European banks. Etc.

But more important than the above is the "Mittlestand", or small and medium enterprises, often privately owned or held by a family. They're world beaters. In their individual niches they manufacture better products more cheaply than any of their competitors globally.

Think "everything made in China is dependent on products made by the Mittlestand" and you won't be far off the mark.

Add in a dose of cheap labout (German reunification), constructive labour relations over the long term, and fiscal and monetary discipline and you're there.

[Gavrushka]

'Relies' was the wrong word - They are an exporter... - Europe, I understood, had formed a slave sub-economy feeding German industry- There success, I agree is based on high tech exports but there markets are global whereas their imports (industrial) are more European... - Thus a devaluation of European currencies would have a net positive effect on Germany against the rest of Europe (note I say net- this could mean a comparatively less worse effect IF Europe imploded).

Germany could well become far more dominant in the years to come.

Luckily, I speak German; 'Wie Komme ich am besten zur klo bitte, ich habe durchfall... Oh oh, zu spat; verzeihung...'

Sorry for the dreadful grammar, it is OVER thirty years since I studied it... So can I be an honorary German now?

[Aye Capn]

So the breakup of the EU is a disaster for Germany how exactly?

They import stuff, they value-add the heck out of it, they export finished stuff, and rake in the profits. If Germany bails from the EU and the EU slides into an abyss of inflation and depression, a lot of German creditors lose their shirts, I get that much at least. Is that enough to wipe out the fundamental strength of the German economy, or am I missing something else?

It seems like whatever the Eurozone does Germany still imports, value-adds, and exports. So where does the "disaster" part come in?

[Gavrushka]

I think it still would be a disaster, just not on the scale of the rest of Europe... - I have the impression that the Euro was a currency of convenience more for Germany than any other nation. It fits the German economy, but was shoehorned across other European nations.

If any nation suddenly sees a huge reduction in demand for its products throughout Europe, even if they were just 1/4 or a 1/3 of the nation's output, then it would still see a mini-implosion - PLUS you must remember that Germany has many financial interests across Europe too, and will see a massive erosion of its balance sheet both on a Governmental level and an industrial/financial sector level.

You know, I wonder if the Euro would have been better served as a common currency for just three nations - Germany, France and the UK... The rest of Europe could have worn a secondary currency, the groat, and doffed their caps to the unholy trinity.

Looking at the eratic stock market movements, I am pretty sure someone, somewhere is doing immensely well out of this discord.

[pjknibbs]

It seems like whatever the Eurozone does Germany still imports, value-adds, and exports. So where does the "disaster" part come in?

A large proportion of those imports and exports are to other countries in the EU. If the whole pack of cards collapses, those imports and exports probably disappear (or are massively cut back) along with it.

[Aye Capn]

It would be interesting to see Germany's actual export numbers. "German exports drop," is a problem whose severity is a quantitative measure.

And how can you get rich in the first place loaning money to Europeans to buy your stuff if they never pay the money back? Unless you can get other people to loan the money that buys your stuff ... and I think I'm beginning to understand a little better ...

Germany should want Britain and even the United States to fork over big chunks of bailout cash, shouldn't it?

[RegisterMe]

It does, both directly in Britain's case (as a member of the EU), and indirectly in the case of the UK and the US as a result of their membership of the IMF.

[Dragoongfa]

Minority governments and how they destroyed and now will completely annihilate a nation:

So we have Greece, which is in a mess caused by the Greeks with some help from the outside.

Greece is, as the constitution says, a "Presidential, parliamentary democracy." Which means that the base of the government is the parliament with a President that can Veto the parliament's decisions only once.

The parliament has 300 seats, in order for a party to have a majority it needs 151 seats.

It all sounds reasonable, right?

Its because the reasonable stuff end right there because as a matter of fact Greece has been ruled by minority governments for a good two decades.

See, the election law states that the party that comes first in the election gets a bonus of 50 seats (used to be 40), that means that a political party that would normally get 101 seats, with lets say 38% of the total votes would get 151 seats and thus they could start a government.

That ain't so bad someone may say but if someone counts the abstainers who stand at around 30% the past decade we have a government of 26.6%.

The reasons of those who abstain are many but the most common one is that 'No one is convincing them'. Well said you idiot but now that you didn't vote you let the idiots who you don't trust the at the lightest form a government. Why didn't you vote for a fringe parliamentary party? Or even a fringe non parliamentary party?

There are plenty of idiots who only submit for the elections just for the laugh of it, vote them so that the minority can't form a government.

Now there is a repeat election at the 17th of June and the abstainers will be more than 40%, that means that a party that gets 38% will be the representative of 22.8% of the population.

I write this because a fringe far left party which had 4.5% four years ago (a party with a history of violence and instigation of terrorist acts) will probably get more than 30% in these elections. The policies of this party are schizophrenic to say the least and some of their members have even admitted it. While the only reason people are voting them is because the are angry with the two previous main parties and that the leader of the far left party looks good on camera.

Ah yes, the far rights will probably get an increase from 7% from last month's election to god knows what.

I find it fitting that the country that gave birth to democracy will be the main example of why democracy doesn't work.

[Aye Capn]

@RegisterMe:
Hey, score one for me! I've watched my own government enough if a mystery can be explained by greed, buck-passing, and procrastination I'm a regular Sherlock Holmes.

@Dragoon:
You've got Communists and Nazis both winning seats in Parliament. That just seems so crazy, even by the low standard of sanity set by politics in general. I don't know enough to say whether or not your diagnosis is right, but something is definitely wrong.

So what do you think of our American 3-branch, 2-party system?

For that matter how different is the Greek system from Britain? British politics don't seem quite so crazy as yours, either, despite their Parliamentary government seeming on the surface at least to be very similar.

Do you have some ideas, something that might fix some of your country's problems?

[pjknibbs]

What sounds odd to me is this fifty seat bonus for winning the election. To my mind that's fundamentally undemocratic, because it means the people who voted for the winning party end up effectively having more than one vote apiece! I'd be the first to say the first past the post system we use in the UK throws up odd results (it's also possible to get a party with overall control of parliament without them having achieved a majority of the people who voted), but at least every MP was voted for on a one man, one vote system.

[Gavrushka]

The additional 50 seats is purely in a re-run election when no coalition Government can be formed otherwise...

...It avoids the potential permanent limbo that would ensue otherwise...

As has been said many times, democracy sucks big style, but is still the best we have, as flawed and 'undemocratic' as it is.

[Moonrat]

As has been said many times, democracy sucks big style, but is still the best we have, as flawed and 'undemocratic' as it is.

This still holds to be true, even 65 years later, me thinks...

"Many forms of Government have been tried and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time." - Winston Churchill (May 14, 1947)

[Dragoongfa]

You've got Communists and Nazis both winning seats in Parliament. That just seems so crazy, even by the low standard of sanity set by politics in general. I don't know enough to say whether or not your diagnosis is right, but something is definitely wrong.

Communists in the form of the hardcore Stalinist KKE (Communist party of Greece) we have had them for a good 30 years in the parliament. They used to be banned because of the civil war but they were made legal again at the 80s. Oddly enough these ones are mostly harmless when they aren't instigating strikes on every factory that opens up. Their political speech is stale and without any connection to reality. Their main voting strength comes from old hardcore communists who worshiped the USSR and literally brainwashed youths.

The far left party I am more worried about is Syriza (which stands for Coalition of root breaking left), they are a coalition of 12 minor far left parties and a somewhat larger moderate left party. These ones are the one who came second at the previous elections and they are the most dangerous. Members of this party openly instigate violence against their rivals, they support terrorists and terrorist acts and they generally are so far detached from reality to make them dangerous.

Their voting base used to be very small, just the far lefts who weren't pleased with the communists and the various wackjobs. At the previous election they had gathered 4.5% of the votes and this was the voting power of the moderate party that is the core of the coalition. Now they got a good 13% at the previous election, coming second, the main reason for this is their party leader who I admit is very charismatic (if young and in my opinion completely entrenched in the cycle of corrupt politicians), their rhetoric is completely detached from reality and their main voting base now comes from those who are completely pissed of at the previous big center left party. Because of its sudden rise this party has become the rally point for every leftist that is angry in the country.

Now the Golden Dawn far rights, I have seen them coming for years, their anti crime and anti immigration rhetoric are its main strength, as well as their constant positions in all matters. Their voting base is weird, first we have their members who are an extreme minority, then we have those who admit that right now Golden Dawn is doing the job that the police doesn't and then we have those who voted Golden Dawn in order for them to do what Golden Dawn does best.

Beat the crap out of everyone else.

They took a solid 7% at the last vote and now they might as well come third.

There are two more moderate right/far right parties but these ones are the loose cannons.

All in all Greeks are schizophrenic right now, there is no other explanation.

So what do you think of our American 3-branch, 2-party system?

Better but not suited for a small country and generally speaking the top tier of earners is over represented.

Do you have some ideas, something that might fix some of your country's problems?

As crazy as it sounds, I believe that the solution is pretty simple and somewhat straightforward.

Greeks have always been at each others throats but they always rallied behind a strong charismatic leader with vision. This leader is what is needed right now and the problem is that we can't find him at the moment.

As for how to fix the system...

I have always being a proponent of directly voting the government in office and not the MPs. Each party should propose a government and their respective policies, who would be a minister, what goals he would have and etc.

The government is the one that is running the country in the day to day bases, they are the ones who should be voted in office and not the MPs. In Greece we had the crazy phenomenon of party members getting a ministry without any knowledge of the subject matter. We had a lawyer in the ministry of economics for God's sake, in the middle of the economic crisis.

As a side note, the interim government we have right now may be the best government we had in years. The ministers actually know what to do and how to do it.

The MPs on the other hand, they should be the voice of the people, they shouldn't be hindered by political parties and ideologies, its the government's job to convince them for the proposed laws.

As such each MP should be decided by Lottery from the voting base of the nation. Completely random and for a small amount of time (lets say six months) the MPs with such a system should be completely detached from petty politics focusing exclusively on the welfare of the nation.

[Lion Around]

....so has Greece collapsed into anarchy yet?