What will happen to Greece?

[midlifebear]

I promise this is not a joke.

In Athens the prostitutes have gone on strike.

Greek prostitutes are unionised and regulated and have agreed wages. They are protesting unfair competition from unregulated East European migrants who are undercutting them.

This sounds like good old-fashioned collective bargaining to me. What a better world we'd have if ALL sex workers were unionized -- and legal.

I fail to understand what this has to do with Greece's fiscal policies. :smile:

 

[pinspotter10]

Jason - thank you for your analyses, much appreciated and very interesting!

 

[B_nyvin]

It was mainly the USA and to a much lesser extent the UK and Spain that caused the reccession. Most of the countries in the EU had no part in making it. Just because the reccession caused other side effects doesn't mean the blame should be placed on them. It's the same as saying Iceland being independent was one of the worst ideas they ever had.

Besides, without the EU, european countries by themselves are rather meek and tiny little nations nowadays...they can't really project themselves alone

 

[Drifterwood]

I promise this is not a joke.

In Athens the prostitutes have gone on strike..

I have to mention Lysistrata. Mr. Els would not forgive me otherwise.

The situation of the PIGS is very different to that of the UK, but the effect is the same, namely an unaffordable economy for far too many people.

This is not domesday for the EU. Greece needs to get it's fiscal house in order. Their tax people need to collect for the Government and not for themselves. True, trust me on that one. They can not continue to operate with perhaps 35% of their economy in the grey zone. These problems are solveable and then we need to accept that a coffee in a hut on a beach in Naxos should not cost the same as at the George V.

The UK has relied upon an unsustainable notional value for property against which people have borrowed to be able to live as well as they wished. It is not sustainable to have an affordability index of 5.7 (the median house price divided by the median household income). The US is now below 3 again (the buy point for investors) and is still dropping. The UK on the other hand is talking itself into maintaining an index of 5.2 and rising.

This is utter madness. The effect is that the average household spends more than 66% of it's income on tax and housing. And that does not include indirect taxes. Gordon Brown is such a fucking cunt of a liar that he is trying to tell people to spend their way out of the recession. Well how the hell are we supposed to do that you miserable piece of shit when you take so much and the property market which you helped to engineer up, takes most of the rest?

 

[D_Tully Tunnelrat]

I promise this is not a joke.

In Athens the prostitutes have gone on strike.

Greek prostitutes are unionised and regulated and have agreed wages. They are protesting unfair competition from unregulated East European migrants who are undercutting them.

This is great. Now while everyone is getting phucked, no one will be. Perhaps the prostitutes should replace the elected whores in government office. There's a party you can vote for.

 

[798686]

I have to mention Lysistrata. Mr. Els would not forgive me otherwise.

The situation of the PIGS is very different to that of the UK, but the effect is the same, namely an unaffordable economy for far too many people.

This is not domesday for the EU. Greece needs to get it's fiscal house in order. Their tax people need to collect for the Government and not for themselves. True, trust me on that one. They can not continue to operate with perhaps 35% of their economy in the grey zone. These problems are solveable and then we need to accept that a coffee in a hut on a beach in Naxos should not cost the same as at the George V.

The UK has relied upon an unsustainable notional value for property against which people have borrowed to be able to live as well as they wished. It is not sustainable to have an affordability index of 5.7 (the median house price divided by the median household income). The US is now below 3 again (the buy point for investors) and is still dropping. The UK on the other hand is talking itself into maintaining an index of 5.2 and rising.

This is utter madness. The effect is that the average household spends more than 66% of it's income on tax and housing. And that does not include indirect taxes. Gordon Brown is such a fucking cunt of a liar that he is trying to tell people to spend their way out of the recession. Well how the hell are we supposed to do that you miserable piece of shit when you take so much and the property market which you helped to engineer up, takes most of the rest?

Good points on the housing market, Drifter. Houses costing nearly 6x (if I've read it correctly?) annual income is a ridiculous situation. Plus shitloads of tax, etc.

I also totally disagreed with the removal of the 10% tax band a couple of years back. Improving things for people on £15k+ a year (22% tax band down to 20%), but doubling the tax burden on those who can least afford it (including pensioners), seems perverse. I know there's always a certain amount of personal allowance before tax (£6,475?), but still...

Also, Gordon's methods worked much better when he stuck to his prudence concept b4 2001. If you need to save - do it, and ppl will actually feel more confident knowing things are being sensibly and sustainably run (the markets seem to have given Ireland the benefit for now, after realistic budget plans).

 

[vince]

It was mainly the USA and to a much lesser extent the UK and Spain that caused the reccession. Most of the countries in the EU had no part in making it. Just because the reccession caused other side effects doesn't mean the blame should be placed on them. It's the same as saying Iceland being independent was one of the worst ideas they ever had.

Besides, without the EU, european countries by themselves are rather meek and tiny little nations nowadays...they can't really project themselves alone

You can lay blame at the American door for much of the current worldwide economic crisis, but that does not let countries like Greece off the hook for mismanaging their own books. Greece has run huge deficits for years (13% of GDP), has external debt amounting to 170% of national income and has increased the govt. budget from 47% to 52% of GDP in the last two years.

The Greeks seem to think they are as wealthy as Germany and can have all the social perks that the Germans and Danes and Dutch et al can afford. Well, sorry they aren't and they need to live within their means. It's going to be tough on them and they should have to bear the brunt of their own folly. But I think they will expect someone to bail them out again.

Kenneth Rogoff has called them "serial defaulters". Here is a link an article by him.
Can Greece Avoid the Lion? - Project Syndicate

 

[Drifterwood]

Maybe if Turkey paid for that part of Cyprus they stole......:biggrin1:

The thing about Keynesian economics Joll is that you have to save when you can and spend constructively when you have to. Brown has done neither.

New Labour does not represent its traditional supporters. They represent those on hand outs, tax credits and the public sector. The "working man" is as fucked as anyone else.

 

[Jason]

The thing about Keynesian economics Joll is that you have to save when you can and spend constructively when you have to. Brown has done neither.

New Labour does not represent its traditional supporters. They represent those on hand outs, tax credits and the public sector. The "working man" is as fucked as anyone else.

Agreed. Brown spent and borrowed through the good times to buy electoral popularity for Labour. It worked. They're still in power. And every day they risk the future of the British economy to cling to power. And it is quite possible that they will get a hung parliament and continue to inflict their odious policies on the people of Britain. Under Labour we've seen a loss of free university education, great increases in social inequality, development of a benefits dependency culture of despair, an illegal war fought to increase Labour's popularity and a disregard of the fundamentals of economics to buy votes. Plus their betrayal of the British people over the Lisbon treaty. Plus a stench of corruption around illegal donations and cash for peerage, and now it is 3 Labour MPs being tried for theft (a peer, the Conservative, isn't quite the same thing as an MP). And who killed David Kelly? The sadness is they might even manage a hung parliament.

The UK economy is in a mess, but it isn't like Greece. We do have a massive overspend, but most of that has gone to buy bank shares which are an asset which one day can be sold. Even Labour has a luke-warm plan to bring the defecit down, and Conservatives can convince the markets they can do more. We can devalue and doubtless will. We have a legacy of good behaviour which is keeping the credit rankings right. I'm very far from complacent - we're ever so vulnerable - but at least I can see a way through this mess, basically if we can avoid an upset in the next few months. With Greece (and Portugal and to some extent Spain and Italy) I really can't see a way through unless they leave the Euro.

Yes Greece should solve its grey economy. But it won't, at least not in the next few weeks. Yes Greece should start an Ireland style austerity policy, but it won't make it stick. An inspirational leader of Greece would lead Greece out of the Euro and the EU, default on debt, devalue, give people the salary rises they want, work with the Greek system of corruption and popular dissent, go on an export drive - and do it all wrapped in the Greek flag and singing patriotic songs. It would work and Greeks would be happy.

 

[Jason]

Good points on the housing market, Drifter. Houses costing nearly 6x (if I've read it correctly?) annual income is a ridiculous situation.

6x is a UK average. In London and the SE in many areas it is 10x. The fundamental problem is that the supply is static (very little building right now and planning restrictions make it hard to see any big change hapening) while demand is rocketing up. I don't see there being any falling off in prices. Indeed prices didn't come down much on average in the recession (I know some areas saw falls, but others didn't) and they are now going up. Our property stock is adequate for just under 50m people. And our population is 62m (or more). I don't think the earnings to price multiplier applies when the imbalance is this great and rising. If our population goes up to 70m then property prices in today's values will need to almost double. :frown1:

 

[Sergeant_Torpedo]

Greece has been pushed around for over a hundred years by Britain and now, by proxy, the US. Of course the EU will bail the economy out - the bankers have too much to lose. And unelected commissioners and politicians in Europe always have the ear of the movers and shakers. Greeks are probably the most hospitable and honest people in Europe. As we move away from democracy to a new form of feudalsim I know it will be the Greeks who man the ramparts in defense of turds like Blair, Brown and those calculating hard hearted Germans. They have done it before.

 

[Drifterwood]

If our population goes up to 70m then property prices in today's values will need to almost double. :frown1:

There is plenty of housing in the UK if only people were allowed to redevlop and we had a sensible policy of infrastructure investment outside the fucking South East.

It is complete lunacy even to consider an affordability index of 10x. This can only happen in places like Vancouver where people move in with very high levels of equity. The average younger person faces a lifetime of crippling debt, economic shackles that will restrict them having children and no possibility of saving or of building a pension for retirement.

This is Brown's legacy. Incidentally, they have just cut their affordable housing programme by more than half.

I am sorry to say to those Daily Mail readers, but the average UK house price needs to come down by 40% if we are to have a sustainable recovery in the real economy and a quality of life worth having.

 

[vince]

Maybe if Turkey paid for that part of Cyprus they stole......:biggrin1:

:biggrin: It'll be a cold day in hell.

 

[Jason]

I am sorry to say to those Daily Mail readers, but the average UK house price needs to come down by 40% if we are to have a sustainable recovery in the real economy and a quality of life worth having.

Agreed they NEED to come down. But they are going up and will continue to go up. Yes we could and should do more to get uninhabited property back into the system and yes we need to break through some of the planning deadlocks, but in real terms this is going to lead to quite a small change to prices, and thats if we even tackle these problems.

Basically we have said no to building on green-field sites, so there is now no more space in the UK. But we have more single person and small family households than ever before, and an open doors policy to migrants from the EU and elsewhere. The migration issue is a complex one, but if our population goes up even to 70m property prices will go mad. At 80m we would have getting on for twice the number of people we can comfortably accommodate. No government intervention can hope to tackle prices by an affordable housing policy. We are certainly looking at an average in the UK of around the present London/SE level of 10x, and in London and the SE I cannot imagine how to project the curve. In Bournemouth (Sandbanks) of all unremarkable places we already have the world's fourth most expensive real estate area.

This is Labour's legacy - the greatest inequality in wealth the UK has seen since before the 2WW. And as you point out it is not conducive to a real economy recovery.

Maybe we should all migrate from Britain to Greece. In Athens you can buy a 1 bed flat for E30,000. Similar size in my area of UK, not a capital city, costs minimum £200,000.

 

[D_Tully Tunnelrat]

Maybe we should all migrate from Britain to Greece. In Athens you can buy a 1 bed flat for E30,000. Similar size in my area of UK, not a capital city, costs minimum £200,000.

Besides the weather and food are better in Greece. I hear you can easily get a job working for the government...

 

[Elmer Gantry]

The bankers have too much to gain.

Greece will be bailed out by the ECB, the talks have already happened. The head of the ECB even bailed out early of a central bankers meeting here in Sydney this week to run back and address the situation.

I wouldn't mind betting that the usual IMF austerity policies will be forced upon them, and any other EEC country that defaults. I.e. gutting social security and other programs, cutting public spending, etc.

 

[Drifterwood]

The migration issue is a complex one, but if our population goes up even to 70m property prices will go mad. At 80m we would have getting on for twice the number of people we can comfortably accommodate. No government intervention can hope to tackle prices by an affordable housing policy.

Ironically, unaffordable housing has in part led to a reproduction level of 1.6 and this will drop further. The population will halve in fourty years and you won't need the houses. Anyone under 40 investing everything they have to afford a property now, may well be wasting their money.

 

[Jason]

Proposals for a bail out are being looked at on Thursday, and the markets seem to be taking comfort in this. But what is actually being talked about is pretty small scale and anyway it is going to be a hard sell to get EU nations to agree. My own view is that a bail out (if it happens) will be just a token gesture - and if it is perceived as this by the markets then that is also a disaster. Hence the concern right now to talk down expectations.

Van Rompuy is also talking of a proposed "economic government", which seems to mean that the EU would have the power to agree or veto all aspects of budgets by all EU states. This would be a de facto end of the nation states. There's also talk about the present crisis being a time for boldness, and speculation on how far the Lisbon Treaty allows the EU to go. It is likely that right now the governments of the nation states are being told just how close we are to economic meltdown and being told that they have no alternative but to agree as the EU forces through an "economic government". I think there is little doubt that the intention is to try to force through something on these lines with the outlines announced very soon. I also think there are real doubts as to whether it can be done right now.

The EU likes to use crises to move forward. But from an EU point of view Lisbon was too little, too late, and Greece is too much, too soon. I don't see that anything could actually be in place before May, and I don't see anything working without all four of the big economies behind it. Therefore the UK election is likely to have impact well beyond the UK.

 

[Drifterwood]

The EU likes to use crises to move forward. But from an EU point of view Lisbon was too little, too late, and Greece is too much, too soon. I don't see that anything could actually be in place before May, and I don't see anything working without all four of the big economies behind it. Therefore the UK election is likely to have impact well beyond the UK.

At least you understnd the politics, Jason, but you are still a very long way from understanding financial markets. The Central Bankers and Politicians don't however.

 

[swordfishME]

Maybe if Turkey paid for that part of Cyprus they stole......:biggrin1:

Assuming a broader meaning to what you are saying I hope that you are not actually suggesting that Turkey have a role in assisting the EU in this financial crisis when the bastards refuse to let them in