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Germany and the Greek Crisis

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Re: Germany and the Greek Crisis

Postby Paphitis » Mon Jan 30, 2012 5:43 pm

Hermes wrote:Just to add to my previous post. There are other studies that also indicate the same pattern, i.e. that on average the Greeks work harder than their European counterparts. None of these studies were made by Greeks so any allegations of twisting the facts, is simply wrong. It is not how hard one works but rather what one does that results in productivity. Most Greeks work 2 to 3 jobs. Salaries are low, taxes are high, and most of the problem is due to poor productivity and an inefficient public sector.


Greeks work harder than Germans, Brits, French et al eh?

Well, they can't be very good performers!
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Re: Germany and the Greek Crisis

Postby Hermes » Mon Jan 30, 2012 5:48 pm

Paphitis wrote:
Hermes wrote:Just to add to my previous post. There are other studies that also indicate the same pattern, i.e. that on average the Greeks work harder than their European counterparts. None of these studies were made by Greeks so any allegations of twisting the facts, is simply wrong. It is not how hard one works but rather what one does that results in productivity. Most Greeks work 2 to 3 jobs. Salaries are low, taxes are high, and most of the problem is due to poor productivity and an inefficient public sector.


Greeks work harder than Germans, Brits, French et al eh?

Well, they can't be very good performers!


If you read the articles carefully then you'll find that the issue is poor productivity. It's not just the Greeks who work longer hours than Germans either. The Greeks, Spanish, Italians, Irish and Portuguese all work longer hours than their northern European counterparts. But it's not the length of hours worked that determines competitiveness. It's access to technology, efficiency and labour costs.
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Re: Germany and the Greek Crisis

Postby Paphitis » Mon Jan 30, 2012 6:04 pm

Hermes wrote:
Paphitis wrote:
Hermes wrote:Just to add to my previous post. There are other studies that also indicate the same pattern, i.e. that on average the Greeks work harder than their European counterparts. None of these studies were made by Greeks so any allegations of twisting the facts, is simply wrong. It is not how hard one works but rather what one does that results in productivity. Most Greeks work 2 to 3 jobs. Salaries are low, taxes are high, and most of the problem is due to poor productivity and an inefficient public sector.


Greeks work harder than Germans, Brits, French et al eh?

Well, they can't be very good performers!


If you read the articles carefully then you'll find that the issue is poor productivity. It's not just the Greeks who work longer hours than Germans either. The Greeks, Spanish, Italians, Irish and Portuguese all work longer hours than their northern European counterparts. But it's not the length of hours worked that determines competitiveness. It's access to technology, efficiency and labour costs.


So the Greeks have higher labour costs than the Germans do they?

We know about the efficiency and lack of technology etc but whose fault is that?
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Re: Germany and the Greek Crisis

Postby Hermes » Mon Jan 30, 2012 6:22 pm

Paphitis wrote:We know about the efficiency and lack of technology etc but whose fault is that?


No-one is arguing that successive Greek governments, vested interests and trade unions are free of blame. Greece's labour costs, like those in the rest of southern Europe, on average run at high levels. By contrast in the 1990s Germany set on a painful course of improving its competitiveness from within. Wages as well as prices were effectively frozen. The bottom line is that Greece is facing a necessary structural adjustment process – one that should have started a long time ago.
Last edited by Hermes on Mon Jan 30, 2012 6:25 pm, edited 1 time in total.
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Re: Germany and the Greek Crisis

Postby yialousa1971 » Mon Jan 30, 2012 6:25 pm

Did Germany sow the seeds of the eurozone debt crisis?

Who is to blame for starting the current crisis in the eurozone? Greece? Italy? The real answer may lie further north.

It was not the behaviour of the eurozone's southern members that first plunged the single currency into crisis.

There was, from the beginning, a way for the EU to police the economies of member states by following the rules that had been laid down for the single currency in the Maastricht Treaty.

It was called the Stability and Growth Pact, and it was not Italy or Greece that torpedoed it - it was Germany.

In 2003, France and Germany had both overspent, and their budget deficits had exceeded the 3% of GDP limit to which they were legally bound.

'Told to shut-up'

The Commission - then led by the former Italian Prime Minister Romano Prodi - had the power to fine them.

But the finance ministers of what was then the 15 eurozone member countries gathered in Brussels and voted the Commission down.

They voted to let France and Germany off.

They voted not to enforce the rules they had signed-up to and which were designed to protect the stability of the single currency.

Britain's then-Chancellor, Gordon Brown - still at this stage committing sterling to its love affair with prudence - voted with the French and German position.

The EU is often criticised for the power wielded by the unelected and allegedly unaccountable European Commission.

On this vital and, as it would turn out, pivotal occasion, the Commission ran up against something much more powerful - the combined will of the democratically elected governments.

"Clearly," Romano Prodi told me, "I had not enough power.

"I tried and they [the finance ministers] told me to shut up."

Jacques Lafitte was a young French finance ministry official seconded to Brussels in the 1990s to help construct the single currency.

He said the technocrats working on the project knew that some central mechanism was needed to make sure member governments complied with the rules.

"We made a number of suggestions to the member states at the time," says Mr Lafitte.

"But these were all rejected, because they would have involved transferring sovereignty from national governments to Brussels or maybe Frankfurt."

"We knew deep inside. Again we could not say so publicly.

"We were mere technocrats. We were supposed to shut up and listen to the member states who, almost by definition, knew better. I was convinced it was not enough."

Maastricht 'gravely undermined'

Sir John Grant was Britain's ambassador to the EU at the meeting of finance ministers.

"The credibility of the Commission and the readiness of the members states to accept the authority of the Commission as the independent enforcer of the Maastricht criteria was obviously gravely undermined," he says.

It was also a signal to everyone else in Europe.

"The view was that, ok, if the big boys won't adhere and impose discipline on themselves, they're going to be more relaxed in enforcing the treaty [on us]," recalls the former Deputy Finance Minister for Greece, Peter Doukas.

"I mean, no-one can impose sanctions on Germany and France. They are the European superpowers. So they won't adhere.

"The pressure was simply not there," Mr Doukas adds.

Europe is wise after the event. The power the nations retained to police their own budgets - which, as we now know, included the power, in some cases, to cook the books - is being stripped away.

Governments in the eurozone will, in future, be required to submit their budgets in advance to Brussels for approval.

But how long before national populations revolt, in the name of democracy?

From Helsinki to Athens revolt is already stirring - and often it is shot through with anti-German sentiment.

"Germany is the locomotive of pain for other people's problems," says Peter Doukas.

"It will ask to have a much bigger say in what's happening in Greece and Italy and Spain.

"The centre of gravity of Europe is rapidly moving towards Berlin," he added.

"In the fiscal union they will be the ones dictating the terms, with France as a junior partner."

The historical resonance of a powerful Germany throwing its weight around in Europe spooks the Germans themselves. They do not seek, and do not want, leadership in Europe.

But leadership has been thrust upon them.

In November, in a powerful speech in Berlin, Polish Foreign Minister Radoslaw Sikorski appealed to Germany to act.

"I will probably be the first Polish foreign minister in history to say so, but here it is," said Mr Sikorski.

"I fear German power less than I am beginning to fear German inactivity."

It was as though he was saying "we've got over the Nazi nightmare; so should you."

The unfolding paradox is this: that a process that was motivated 20 years ago by a desire to Europeanise Germany looks likely to have precisely the opposite effect.

Much of Europe will now be required to Germanise its economic governance.

http://www.bbc.co.uk/news/world-europe-16761087
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Re: Germany and the Greek Crisis

Postby Paphitis » Mon Jan 30, 2012 6:34 pm

Hermes wrote:
Paphitis wrote:We know about the efficiency and lack of technology etc but whose fault is that?


No-one is arguing that successive Greek governments, vested interests and trade unions are free of blame. Greece's labour costs, like those in the rest of southern Europe, on average run at high levels. By contrast in the 1990s Germany set on a painful course of improving its competitiveness from within. Wages as well as prices were effectively frozen. The bottom line is that Greece is facing a necessary structural adjustment process – one that should have started a long time ago.


Greece requires a complete transplant not just a restructure.

Work conditions in Germany are far better than in Greece, so a wage freeze there is not such a big deal in a country with high average incomes but Greek workers are lowly paid. There are efficiency issues, there is a lot of corruption, and the country has one of the largest public sectors per capita in the world. What do they all do?

You can come up with all kinds of excuses and even blame others, but the fact is you are talking about a very dysfunctional nation that only has itself to blame.

There is inefficiency in all countries but Greece is beyond that, from the grassroots right up to its Governments.
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Re: Germany and the Greek Crisis

Postby Hermes » Mon Jan 30, 2012 7:19 pm

Paphitis wrote:You can come up with all kinds of excuses and even blame others, but the fact is you are talking about a very dysfunctional nation that only has itself to blame.


You don't have to come up with excuses or even blame others, you just need a basic understanding of economics. No-one denies that Greece is uncompetitive because of extensive bureaucracy and rigid labour rules. Both are strangling Greece’s ability to compete in a global economy, whether in the shipping industry, tourism, or food exports. Also to blame is the power of the unions and the collective bargaining agreements struck over time. But that isn't why Greece, Italy, the UK and Spain are all in debt. What you have to understand, Paphitis, is that Greek/Italian/Spanish debt is but the mirror of German surplus. You can't have one without the other.

The Southern European countries have been awash with German consumer goods and credit. There are more Porsche 4x4s owned per capita in Larissa than anywhere else on earth. How did a poor agricultural town in Thessaly, become the biggest purchaser of Porsche SUVs per head than anywhere in the world?

The answer is that the Germans lent them the money and the euro made German goods cheap to buy. As a result German businesses and banks have gained from the euro and Greek borrowing and spending. Had the Greeks been behaving like Germans (paying their taxes, spending less individually and as a nation) then they would have been buying less Porsches, BMWs, Mercedes and German fridges and washing machines. Which would have resulted in less of them being sold, less income to German car manufacturers and Bosch, less profits, less German employees, less tax revenues for the German gov't.

Furthermore had the Euro not existed, the Drachma would have become devalued against the Deutschmark which would have resulted in the Porsches and other German goods becoming more difficult for the Greek citizen to purchase and hence, as less were sold, the profits to Porsche would have gone down etc.

Now the chickens have come home to roost for all concerned. Not just for the Southern Europeans but for the German banks which face huge losses on the back of their reckless lending. And the German businesses which need to sell their goods somewhere and now can't. And the German gov't whose policies have led to German tax-payers now having to "lend" billions of euros to Italy, Spain and Greece who in turn owe billions to German banks.

No-one is denying that Greece, Italy, Spain and Portugal don't have efficiency problems and suffer from a lack of long-term investment. But the Eurozone's debt problems are the outcome of failed European economic strategy. If I was a German tax-payer I'd be pretty angry and asking my gov't what exactly they have been doing to create this bloody mess...
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Re: Germany and the Greek Crisis

Postby Paphitis » Mon Jan 30, 2012 7:31 pm

Don't give me that shit Hermes and blame everything under the sun from unions and whatever else.

I live in one of the most unionized nations on earth, and Germany is also heavily unionized. And workers in both those countries are paid 5 times more than Greek workers. But they are efficient, there is a strong work ethic and both those countries strive for excellence in all facets.

The problem with Greece is its people! If you transplant Greeks into Australia and Australians to Greece, then I guarantee you that Greece will go from strength to strength while Australia collapses into a heap!
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Re: Germany and the Greek Crisis

Postby Hermes » Mon Jan 30, 2012 8:05 pm

Paphitis wrote:The problem with Greece is its people! If you transplant Greeks into Australia and Australians to Greece, then I guarantee you that Greece will go from strength to strength while Australia collapses into a heap!


That is a pathetic answer, Paphitis. Even by your lamentable standards of late. Greeks abroad do very well. Are they not Greeks then? Aren't Greek Americans successful? Greek Australians? Greeks in London? It's just sheer stupidity to blame the "Greek people" as if Greece's problems are the result of a genetic deficiency.

Wherever Greeks go they are successful, productive and creative. Also, are the Greeks to blame because Italy, Spain, the UK, Ireland and Portugal are all in debt and their economies struggling? Or are the Spanish, British, Italian and Portuguese people all equally deficient in your eyes? If the Australian economy goes tits up are we supposed to conclude that the Australians are a bunch of useless sheep-shaggers, convicts and runaways? What kind of nonsense is this?

The Greek state and economy has many issues and problems that stifle the Greek people and don't encourage them. Problems that also exist in other countries. To argue that the failings in the Greek and European economies are the result of a genetic flaw is just crass, stupid and vindictive. :roll:
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Re: Germany and the Greek Crisis

Postby kimon07 » Tue Jan 31, 2012 11:38 am

Did Germany sow the seeds of the eurozone debt crisis?

By Allan Little BBC News

Having to pay for its reunification after the fall of the Berlin wall, Germany broke the budget deficit rules in 2003 - did this set a bad example for the eurozone?
Who is to blame for starting the current crisis in the eurozone? Greece? Italy? The real answer may lie further north.
It was not the behaviour of the eurozone's southern members that first plunged the single currency into crisis.
There was, from the beginning, a way for the EU to police the economies of member states by following the rules that had been laid down for the single currency in the Maastricht Treaty.
It was called the Stability and Growth Pact, and it was not Italy or Greece that torpedoed it - it was Germany.
In 2003, France and Germany had both overspent, and their budget deficits had exceeded the 3% of GDP limit to which they were legally bound.
'Told to shut-up'
The Commission - then led by the former Italian Prime Minister Romano Prodi - had the power to fine them.
But the finance ministers of what was then the 15 eurozone member countries gathered in Brussels and voted the Commission down.
Romano Prodi says he was prevented from fining France and Germany for breaking euro rules
They voted to let France and Germany off.
They voted not to enforce the rules they had signed-up to and which were designed to protect the stability of the single currency.
Britain's then-Chancellor, Gordon Brown - still at this stage committing sterling to its love affair with prudence - voted with the French and German position.
The EU is often criticised for the power wielded by the unelected and allegedly unaccountable European Commission.
Continue reading the main story

http://www.bbc.co.uk/news/world-europe-16761087
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