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The Drachma

Postby Adriana » 20 May 2012, 09:19

The bit the whole austerity thing missed is that if people are out of work and/or broke they can't spend money so more businesses close and more people are out of work/broke... Anyone with any sense would have realised that putting up VAT and cutting wages would result in less liquidity, not more money in government coffers.

I'm not sure that cutting the pay cheques of the tax inspectors made them less corruptible either!
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Postby Joe Le Taxi » 20 May 2012, 11:27

D and E,
yes I'm a proud Weegie although living a stones throw from Hampden Park,yesterday felt rather strange being surrounded by Edinburghers.
On the subject of dialects,maybe you could enlighten our non Scots friends on the phrase "twa peys please,a plen an, an an inginin ana".And I thought Greek was difficult to master!

10 sleeps to go.
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Postby David » 21 May 2012, 12:03

So the answer is to carry on borrowing, run up a debt the size of the Americans, with absolutely no chance of repaying it is it? We're in this pile of poop because we all, individuals and governments, thought the good times would never end, unfortunately they did!
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Postby snoopy2 » 21 May 2012, 17:37

1. Did i blink and miss it - i don't remember good times. Maybe being a pensioner and lower down the rankings has something to do with it. Austerity policies not working so get out of the poop by creating jobs, motivating spending.
2. Quite right Adriana - of course if people are squeezed until the pips squeak then no spending, therefore no manufacturing, a stale building industry, non-existant movement on the property market etc etc will follow - Got to be some balance between austerity and investment.
3 Two pies a plain one and an onion one as well.
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Postby D and E » 22 May 2012, 09:01

I am with Adriana and the Keynsian approach to recovery. All those I encounter who believe in austerity measures are normally those with plenty of money and who are not forced to borrow. And as for being in "the poop" it hasn't stopped UK spending billions on lost causes like Iraq and Afghanistan and only today UK Govt. talking about committing �20bn to replace nuclear submarines (probably built in Germany) against a backdrop of reducing benefits to the blind, disabled and other vulnerable citizens. Anyway enough of the doom and gloom - packing the cases now and then set off for Manchester Airport and will be in Symi tomorrow evening.
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Postby David » 22 May 2012, 12:23

Well I am neither rich nor am I destitute. You're right there has to be balance between austerity and job creation, but I don't care what anyone says we could not carry on borrowing and increasing our public work force to create a false situation. I could go on but I feel like I'm pushing water uphill!
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Postby Kojak » 26 May 2012, 10:31

I had a hard struggle with my patio but got it built at last! :D
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Postby snoopy2 » 27 May 2012, 00:05

:o I have ducklings all over my patio and they left a heap of - well just let us say they were lovely and small and feathery!! :|
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Postby MacDuff » 29 May 2012, 08:56

I have to support Davids view. Living next door to the States and tuning in to some of their news programmes doesn't indicate that the US has turned the corner. Whole cities going bankrupt and areas being razed. Obama put on a brave face for the G8 which he hosted, but that's politics. We in Canada had a short period of very substantial economic stimulus following the crash - which our banks avoided due to Canadian government regulations and having achieved it, have entered into some tough austerity. The government paying off thousands of civil servants but the private sector is creating more jobs than government is losing. What I don't understand is exactly who is going to supply the cash for the hoped for Keynsian spending spree by those countries already drowning in debt :?: David is again correct in saying that both individuals and countries "blew it" when times were good. Greece borrowed billions, Berlusconi :geek: similarly increased Italian debt, Spain built over 5 million FIVE MILLION :o houses for those seeking the sun and Spanish banks financed them. Can't blame Germany for Greece entering the Euro - the Greek Government elected by the Greek people applied to do so - no use passing the buck! The June election results will illustrate whether heads remain buried in the sand. Whatever happens, life sadly is going to be very tough for the Greeks - and other countries would be well advised to learn from their profligate errors.
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Postby David » 29 May 2012, 14:11

MacDuff I agree with most of what you say the, exception being that you can't blame Germany for Greece entering the Euro, unfortunately you can. Germany and France changed the rules which facilitated Greece's entry. They needed them as much if not more than Greeks needed the Euro. This also applied to Italy, Spain, Ireland and Portugal, to a lesser or greater extent.
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Postby Kojak » 29 May 2012, 15:40

Very true. The economic entry conditions were fiddled to allow countries to join. France and Germany wanted a "club" which they could be in charge of. Now it's come back to bite them on the backside, It was foolish to think that so many countries could instantly bring their economys together.
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Postby Colette » 29 May 2012, 22:44

I take it that the public service jobs that have been replaced by private sector ones are in Canada, because it sure ain't happening here in UK.
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Postby snoopy2 » 30 May 2012, 12:15

The E.U became a joke and untenable when they started to allow eastern bloc countries to join where their economy had not a hope in the deep down place of ever shaping up to the west. Worse they allowed countries in who's human rights records were, and still are, appalling. A lot of Greeks did not want to enter the eurozone knowing there would be trouble ahead and boy were they right. Bit like this U.K. Government at the moment - too interested in hot pasties instead of listening to the man in the street. (Could be of course they don't know the man in the street exists!!)
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Postby D and E » 30 May 2012, 13:48

Just to answer MacDuff's question about funding a demand led economic recovery. Imagine you have debt. Your options to pay this off are -
1. Don't spend you earnings and pay the debt off. By not spending you get economic stagnation which is a vicious downward spiral that no one benefits from except your creditor and then only in he short term.
2. Take a second job (if there is one) and use the earnings from first job to spend and earnings from second to pay off debt. This assumes full employment.
3. Reschedule your debt over a longer period paying more but allowing you to continue spending some of your earnings thus stimulating economic activity.
4. Declare yourself bankrupt and sod the creditors leading to meltdown if done on a global scale.
1 is clearly not working; 2 only works if Govt. or private sector creates jobs and neither sector is doing so; so 3 is the better option.
Kojak is spot on about how Greece was coerced into Eurozone.
And a fundamental problem that exists in a global market based economy is that over the recent past it has become fashionable to speculate on economies failing rather than succeeding so as the people of most of Europe suffer some speculators :twisted: are making billions - how can this be right ? :evil: :evil: :evil:
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Postby Kon » 30 May 2012, 14:25

It's hard to believe that it took this long to realize that small economies such as Greece could not sustain a viable economy under the euro ,it has a large percentage of unemployment ,it imports 76% of its goods and relies on one industry for its living ,tourism.
I agree with what the Germans in saying for Greece to exit the euro but lets look at it in a different way,if Greece leaves the euro and starts with the drachma again ,where is all the money going to come from to pay for pensions ,unemployment ,and commodities such as fuel.Fuel needs to be paid in cash and before delivery ,there is no 30,60,90 day accounts.
They cant survive going back to the Drachma .And if Greece folds the domino effect will have a catastrophic effect on the world economy.
My anger in all this apart from the pollies in Greece which invented corruption is the German banks knew of Greece demise from the start and they also profited in the squllions from the money burrowed ,so why keep lending or why keep pouring fuel to the fire .
China at the moment is the other worry with the majority of it's money investments (bonds)being in Euros .
My advice is visit Greece enjoy her beauty and her people ,and if your in Symi you will be well looked after. 8-)
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Postby David » 30 May 2012, 14:57

The last few things that have been written are all relevant and true. Just a couple of things to add. If you think it was only German Banks that profited read a book called " The Greatest Trade Ever". It's scares the living day lights out of you, to see how these people can make nothing tangible yet can make billions of Pounds/Dollars/Euros at others expense. They create money making schemes just to milk more out of it. In answer to Snoopy2, If they weren't listening to the man on the street they wouldn't have done a 'U' turn on the pasty tax and on the static caravan tax. In response to D and E; 2 will work, IF but only IF the private sector can create enough jobs. We know what happens when the public sector workforce becomes too big. Finally Kon the world did not come to the end when Argentina defaulted it's debt, it wasn't as big and it wasn't tied to something like the euro. And finally, finally if you get a chance read Adriana's posting from ekathimerini. The bottom line being out of the 1st 142 billion bailout all but 44 million has gone to pay back loans etc!
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Postby snoopy2 » 30 May 2012, 16:20

Ah well David - we all know what happens when the fat man waters the workers' beer and dares to put up the price of his pasty and his caraven costs. Pity the mass voice didn't rise more often!
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Postby MacDuff » 31 May 2012, 07:11

I agree that if the original Euro group had stuck to their rules several of the other countries would not have gained entry to the Euro zone. The position however is as it now is and the question remains for those who would pursue Keynsian economics, who is going to supply even more money to those wallowing in debt? The Canadian private sector is in general doing fairly well - reasons include reduction of corporate taxation which has encouraged investment and growth, coupled with a healthy banking sector - Canada did not have to bail out a single bank thanks to regulations and our banks are recording profits.
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Postby D and E » 01 Jun 2012, 08:09

Well MacDuff I am sure you agree there is plenty of money out there - as you say Canada is doing well, as are other emerging economies, especially those with improving access to scarce natural resources. Perhaps what is needed is a more philanthrepatic approach rather than the greed ridden approach of the outright capitalist philosophies so beloved of the financial institutions. Profit is not the only motive in this life and I am pleased to see a growing awareness of this throughout the world., especially in the younger generations. We can but hope.
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Postby D and E » 04 Jun 2012, 09:43

It seems the views in this string that tend towards a demand led recovery are supported by no less than George Soros - for those that can, check out today's article on the BBC online site.
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