Results of the Greek Elections and the Future of the Euro Zone
http://thedianerehmshow.org/shows/2012-06-18/results-greek-elections-and-future-euro-zone
Greek voters gave tepid approval yesterday to the conservative political party that supports austerity measures to address the nation's economic meltdown. Euro zone leaders welcomed the New Democracy party's win, expressing hope it can put Greece back on a path of growth. And financial markets surged briefly after months of dismal news from Athens. But the party's narrow victory means hard work is still ahead. Many say it's unlikely New Democracy will be able to pull together a coalition to form a new government. Guest host Susan Page and her panel discuss what it all means for Greece, the euro zone and the U.S. economy.
Guests
Markus Ziener
U.S. correspondent for Handelsblatt, a leading German-language business newspaper.
Zanny Minton Beddoes
economics editor, The Economist; formerly, economist at the International Monetary Fund.
Nicholas Karambelas
legal counsel for the American Hellenic Institute.
Comments
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June 16, 2012 "The euro rose 1 percent to $1.2638 this week in New York trading, after gaining 0.7 percent last week"
It defies logic that the euro is not tanking in light of so many euro zone countries in such serious financial trouble. Logic dictates there is an artificial support mechanism in place to support the euro. Could this mechanism be the Federal Reserve using the full faith and credit of the United States and the American taxpayer for a behind the scenes insurance scheme to prop up the euro through the International Monetary Fund? If true we could be on the hook for billions if not trillions and not even know it.
Arkus:
It is more likely that the support is coming from private sector banks that are on the hook for the European sovereign debt. That being said, the Euro could stand to deflate a bit. It launched at $1.12, then settled in at roughly parity for a long stretch. An artificially high Euro hurts US exports to the EU, made more difficult during a time of economic slow down.
The Greeks have the same problems with human nature that the rest of the world has. Human nature has always been the problem, and it always will. There is no solution to it. Apart from eliminating the human race, of course.
Just looking at the record of history, it seems that we are in fact trying to eliminate ourselves. We certainly have the means to do so.
But as far as economics is concerned, no one should be surprised that the whole world can't function indefinitely on credit. Bills have to be paid eventually, or bankruptcy becomes the only choice.
It's a fine mess we are in, isn't it!
How can the euro and the European Union survive if Germany preaches austerity to Greece, Portugal, Ireland, Spain, Italy, etc.? We don´t do that to states in our union that run into trouble. We have, actually, given money to states many times without the draconian terms Germany imposes on EU members -- because we are a United States. Germany is rich for reasons that have to do with luck, geography, The Marshall Plan. Just as New York is richer than Alabama or New Mexico. We´re all in it together but Germany clearly doesn´t feel that way about its relationship with Europe.
Interesting theory, Arkus.
Very difficult to pull off, however. Something that big would get leaked - I think.
I think Greece,Italy, and Spain are already baked in the cake and that's why you're not seeing big movement. If it extends beyond those then you could see further decline.
I was a little surprised that the markets didn't pop today with the outcome of the election. I thought everybody was expecting the socialist to win.
As for gark k's comment, I agree. The piper must be paid and the IOU's have been rolling up for a generation or two. The end is not pretty. It means a lot of hurt for a lot of people who are completely innocent in the whole thing. It is also the ideal climate for a dictator to arise - someone who will look good, speak smoothly, and be able to allay people's fears.
Markus Ziener is a pro - he stays calm and makes cogent observations that are reasonable. Zanny, however, seems to be having a hard time today. Sounds like she's a little frustrated and unable to deliver her message. Germany's generosity and lenience with the free-spending (loading) Greeks has been remarkable. You can't eat more as a way of losing weight and a government isn't going to shed debt by borrowing more. What's so hard about that?
julieann wrote:
"Germany is rich for reasons that have to do with luck, geography, "
Simply not true. Germany is (relatively) rich because they live within their means and work hard.
The idea that Europe should mimmick the U.S. because they share a currency is ludicrous. The states of the United States have much more in common than just currency; they share a Constitution, a central government, armed forces, and many other things. States can do some stupid things, but in general, they are constrained by our shared electoral system and the fact that local and state governments intertwine (e.g. states send representatives to the FG).
It is a very different relationship from the states of the E.U. The bottom line is, the attempt to link the states of the E.U. simply through currency was doomed to failure for just the reasons that have played out - there was no mechanism in place to keep members from being profligate. And there were plenty of people to point that out at the time. It's what kept Great Britain out. They were smart.
Anybody familiar with European history from the 19th century to our day realizes that Germany's goal is to dominate Europe. They tried several times militarily which caused the deaths of millions of people. They succeeded when they conned the rest of Europe into creating a political and economic union that they would dominate. Instead of military disasters, they now have economic disaster.
But Germany is still on top, and thinks they will stay there. So it's going to take an economic disaster to put them where they belong. Meaning no better off than anyone else.
But the whole world will have to pay as well.
What a mess!
All of this will definitely make the Germany vs. Greece European Cup matchup this week much more interesting!!
Gary's view is highly prejudicial and ignores reality. Germany doesn't have any more innate desire to control the rest of Europe than any other country; in fact Germany was not a united country until 1870 and was occupied by the French for far longer than the Germans occupied France. Germany's 19th century military rise was propelled by war with France. Germany's expansion and quest for territory was comparable to America's "manifest destiny" and westward expansion at the expense of both the natives and Spain and Mexico. Germans mainly want to be good neighbors, especially with France. And by the way, European economic unity was very much supported by the US government to avoid conditions that lead to WWII.
unhommedumonde wrote:
Well I was going to take Gary k's argument apart piece by piece but you have done an excellent job. There have been two individuals who have risen to power in Germany who sought to dominate Europe - that doesn't mean Merkel is a third. Gary, you also ingore the fact that Germany is now a parliamentary democracy. Germany wants to do what is good for Germany ... in the long run. That doesn't mean they want to "dominate Europe".
gary k wrote:
"So it's going to take an economic disaster to put them where they belong. Meaning no better off than anyone else."
Spoken like a true socialist, gary. Nice going. Hey, I give you credit for at least admitting it.
ecgberht: likewise, your response to Julieann is a useful lesson. She fails to realize that Germany and the other members of the EU are sovereign nations while US states are members of one nation. A fundamental difference.
First, it is not clear that German citizens work more than Greek citizens. If measured by hours per person per year, Greeks work more hours. If measured by productive output, German workers create more value. see OECD figures
* http://www.oecd-ilibrary.org/economics/country-statistical-profile-greec...
* http://www.oecd-ilibrary.org/economics/country-statistical-profile-germa...
German citizens pay much higher taxes than in Greece (see OECD #s). Often the higher wages for labour that German workers help improve productivity ( see http://www.forbes.com/sites/frederickallen/2011/12/21/germany-builds-twi... ).
Europe was moving to having a constitution, which was derailed in part by "no" votes in some countries ( http://en.wikipedia.org/wiki/Dutch_European_Constitution_referendum,_2005 ). Just because the United States now has a constitution, that is because the confederation was not working. A similar process is going on in Europe. The EU is not destined to fail as political and monetary/fiscal union nor is it predestined to succeed. Rather it is a tough process, different, but contentious as was our own.
And although Germany is not planning to take over, neither is it wise to equate other struggles for empire with the genocidal effort made by the Germans during World War 2. And thanks to United States and allies, Germany was required to become a pacifist nation that has helped them politically, economically and socially.
Facts backed by valid references would help this discussion.
Forbes - 5 hours ago
The euro sank 0.07% against the dollar to $1.2628.
The Euro, like almost all economic parameters is all over the place, Day by Day, Second by Second.
And is it up or down relative to the Buck??
Monte Haun mchaun@hotmail.com
cc:
"First, it is not clear that German citizens work more than Greek citizens."
No one said that. What I said was,
"Germany is (relatively) rich because they live within their means and work hard". No comparison with Greek workers or work ethic was made - you did that.
Still, you are correct about productivity and that is an important distinction. Generally, the harder and smarter one works, the more productive one becomes. And that is borne out in these numbers. Germans seem to be doing that better than Greeks, pick whatever reason you want, whether social or genetic, who knows.
"Just because the United States now has a constitution, that is because the confederation was not working. A similar process is going on in Europe. The EU is not destined to fail as political and monetary/fiscal union nor is it predestined to succeed. Rather it is a tough process, different, but contentious as was our own."
A fair point. But the U.S. union STARTED with a constitution, of which was born a common currency, not the other way around.
In Cabaret, Sally Bowles sings "Money makes the world go around". That was true, it is true today, and it will always be true. Which is why it was so important to have the constitutional agreement and commitment FIRST rather than having the tail wagging the dog as is happening in Europe. That is not to say that currencies in the United States did not exist before the dollar - they did, but a UNIFIED currency came into existence commensurate with UNIFIED states under the Constitution.
"Atlanta GA wrote
As a German Citizen living in the US I resent any Suggestiones
that German taxpayers are obligated to,pick up the bill caused
by Greece because the country lived for many years beyond its
means and constantly had to borrow more money to keep going.
March 10, 2012 at 1:10 p.m."
Nor were we obligated to pick up the bill caused by the German
Lemmings who followed their Mad Leader into and through the most
Barbaric and insane adventure in the History of the World, but
we did anyhow.
And we did it at the expense of our Allies, like the Soviets,
who suffered horribly in the fight to save the World from even
more slaughter.
If one believes that the Peoples of the World are responsible
for the Sins of their Leaders, then what would be a fitting
punishment for your People??
Nuclear Armageddon, slaughter of every German Man, Woman, child,
Horse, poisoning every well, burning every Home, Barn, Forest
and Factory and finally sowing salt into the Earth would be
insufficient punishment to avenge the Millions who suffered at
your Hands, but would be a step in the right direction.
The arrogance of the Germans and their allies, the Japanese,
have cost the World told and untold misery and in less than one
Generation, their insufferable, overbearing and fancied
superiority was back worse than ever."
Monte Haun mchaun@hotmail.com
"unhommedumonde wrote:
"Germany's expansion and quest for territory was comparable to America's "manifest destiny" and westward expansion at the expense of both the natives and Spain and Mexico." {And Russia, and France.}
"And by the way, European economic unity was very much supported by the US government to avoid conditions that lead to WWII."
You mean like stripping away of the Buffer SSRs that the Russians used to protect themselves from Centuries of German and other's brutal attempts to subjugate them?
And the German Good Neighbors have refused to renounce their claims to Ethnic German enclaves in Poland.
Monte Haun mchaun@hotmail.com
mchaun wrote:
"If one believes that the Peoples of the World are responsible for the Sins of their Leaders, then what would be a fitting punishment for your People?? Nuclear Armageddon, slaughter of every German Man, Woman, child, Horse, poisoning every well, burning every Home, Barn, Forest and Factory and finally sowing salt into the Earth would be insufficient punishment to avenge the Millions who suffered at your Hands, but would be a step in the right direction."
So, since I can only assume you don't believe that it is fitting punishment for the INNOCENTS in Germany who weren't even BORN in WWII, you would also believe that punishing innocent Greeks who have sucked from the public teat until the well ran dry is just or not? The difference is, Greek citizens are NOT innocent in this. They've been the beneficiaries of excesses of the Greek government. As I said, the piper must be paid. And the payment should start in Greece.
By the way, I have nothing against Greeks. I loved seeing the country and its history a few years ago. But they've been running up the tab for the past decade or two and now the maitre 'd is coming with the bill.
Punishing the peoples of the world for the Sins of their Leaders (when they are beneficiaries of those sins) is different than punishing the descendants of the sinners who weren't even born. You have a twisted sense of justice, mchaun.
Jeremiah 31:29,30 "29 In those days people will no longer say, ‘The fathers have eaten sour grapes, and the children’s teeth are set on edge.’
30Instead, everyone will die for his own sin; whoever eats sour grapes—his own teeth will be set on edge.
ecgberht wrote:
Blah, blah, blah. Blather, blather. Balogna, boloney, bedewed bulls_it.
June 18, 2012 - 5:35 pm
KMAYDSOB!! I'm not going to explain my comment, it speaks for itself.
Monte Haun mchaun@hotmail.com
What is to be done, the day after, tomorrow? Without losing a beat, immediately negotiations must be entered for a grand unity government of consensus and salvation composed of pro-Europe, pro-Euro adherents. Three parties qualify: New Democracy, Pasok, and the Democratic Left. In a country in need of strong leadership, the absence of heroic figures is palpable. Yet, here are a few who may yet rise to the task: the aforementioned Avramopoulos, Andreas Loverdos, Prokopis Pavlopoulos, Evangelos Venizelos, along with technocrats and former interim prime ministers Lucas Papademos and the current Panayotis Pikrammenos (his name means "embittered," with the election results giving a modicum of hope for him to smile). Then, let the Greeks go to the inviting Europeans, including the Germans, now under the more positive influence of new French President Francois Hollande, himself the impressive victor today of parliamentary elections, to seek an extension of repayment obligations.
Prof. Asher J. Matathias
Woodmere, NY-USA
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