Greece

[TLS Guy]

It's not the same, Jake. The US government controls its own monetary policy. For one example, the USG can print money (it actually doesn't print money, it just increases the size of the money supply by monetizing debt, but the metaphor is basically correct) to reduce debt. That causes inflation, and inflation has the interesting effect of reducing the relative amount of debt compared to the size of the economy, because debt doesn't inflate with prices and wages. Greece can't print Euros. If it could there wouldn't be a problem, at least not in Greece, but that is exactly what they're going to do with their own currency, and cause runaway inflation. That inflation will pare down debt and interest payments as a fraction of the Greek economy.

BTW, I just looked it up, and the interest on the federal debt is about $430 billion per year. While this is a grotesque amount, 63% of the defense budget, the entire federal budget is $3.8T, so interest expense isn't even close to being onerous yet. Interestingly, US Treasury auctions have generally been over-subscribed, since the USG is still considered to be far and away the safest place to stash huge sums of money in the world.

What you say is absolutely correct and goes to the heart of the problem.

The EU is a socialist/fascist creation and especially the Eurozone. People think of fascists as right wing, but this is one of the greatest lies of the left. Fascists are lefties and not right wing at all.

The President of the EU parliament is a particularly vile German socialist.

Expect oratorical fireworks in that chamber tomorrow, as Nigel Farage is on the docket. Expect Nigel to really excoriate this guy, who is someone for whom Nigel Farage has a particular loathing.

Here is what he had to say at his appointment.

 

[TLS Guy]

Oh I'm sure there's little snippets of side stories to add, but the heart of situation in Greece remains that it was a socialists utopian dream, right up until they ran out of other people's money to give to non producing people. Now reality is hitting them in the face.

You do not have the first clue about the problems the Eurozone has is and will create

 

[Hobbit]

This may be a little off subject, but I remember Feynman in "Surely You're Joking Mr. Feynman" writing about his time in Greece. What I recall is his comment about the Greeks obsessed with their past accomplishments but currently putting no effort into new innovation. Which I believe he viewed as a recipe for trouble. This book was published 30 years ago.

 

[Swerd]

This explains the differences in philosophy between Greece and Germany

 

[KEW]

Interestingly, US Treasury auctions have generally been over-subscribed, since the USG is still considered to be far and away the safest place to stash huge sums of money in the world.

Irv,
Is there a readily available reference for this? I am not doubting you, at all. Rather, I have friends who are nearing retirement in absolute fear that the US economy is on the brink of total collapse. It would be nice to alleviate their concerns (at least a little). The situation is not rosy, but nor is it in total crisis.

 

[KEW]

This may be a little off subject, but I remember Feynman in "Surely You're Joking Mr. Feynman" writing about his time in Greece. What I recall is his comment about the Greeks obsessed with their past accomplishments but currently putting no effort into new innovation. Which I believe he viewed as a recipe for trouble. This book was published 30 years ago.

I think that is valid. The Greeks "shot their wad" a little over 2,000 years ago.

 

[Irvrobinson]

Irv,
Is there a readily available reference for this? I am not doubting you, at all. Rather, I have friends who are nearing retirement in absolute fear that the US economy is on the brink of total collapse. It would be nice to alleviate their concerns (at least a little). The situation is not rosy, but nor is it in total crisis.

The Wall Street Journal often prints an update about the latest Treasury auction subscription rates (how much demand there is to buy newly issued debt instruments versus supply). The evidence that this is true is how low the effective interest rate currently is for 30-year US Treasury notes: just a smidgen over 3%. If demand were lower the auction prices would be lower, which would increase the effective interest rate.

Personally, I think your friend is being overly negative. Growth is not as robust as most economists would like to see, but overall the economy is in good condition compared to almost any other country. We aren't on the brink of collapse, but we do have some structural problems that need to be worked out, like wages, taxes, income distribution, and good-wage job creation, and I don't want to minimize those issues, but being on the "brink of collapse" does not appear to be the case.

 

[KEW]

Personally, I think your friend is being overly negative. Growth is not as robust as most economists would like to see, overall the economy is in good condition compared to almost any other country. We aren't on the brink of collapse, but we do have some structural problems that need to be worked out, like wages, taxes, income distribution, and good-wage job creation, and I don't want to minimize those issues, but being on the "brink of collapse" does not appear to be the case.

I agree, but it is not so much my friend being overly negative as the media she listens to.
Unfortunately, her sources are interested in inciting fear and discontent.

Thanks for the info!

 

[markw]

I agree, but it is not so much my friend being overly negative as the media she listens to.
Unfortunately, her sources are interested in inciting fear and discontent.

Unfortunately, most are. That's how they make their money. Fair and balanced is a thing that went out of fashion about the time Walter Cronkite died.

 

[TLS Guy]

The Wall Street Journal often prints an update about the latest Treasury auction subscription rates (how much demand there is to buy newly issued debt instruments versus supply). The evidence that this is true is how low the effective interest rate currently is for 30-year US Treasury notes: just a smidgen over 3%. If demand were lower the auction prices would be lower, which would increase the effective interest rate.

Personally, I think your friend is being overly negative. Growth is not as robust as most economists would like to see, overall the economy is in good condition compared to almost any other country. We aren't on the brink of collapse, but we do have some structural problems that need to be worked out, like wages, taxes, income distribution, and good-wage job creation, and I don't want to minimize those issues, but being on the "brink of collapse" does not appear to be the case.

I agree with this assessment. However, I think there is a general consensus that interest rates are too low. Attempts by the FED to raise them seem to stall the recovery especially for the BRICS. The FED has by far the biggest influence on the world economy, something the BRICS and China are trying to curb. That would be a bad thing.

The problem is that another recession is inevitable, they always come around and recovery always has occurred. Low interest rates persisting into the next recession will make it hard to deal with and leave the central banks pretty much out of ammunition.

 

[herbu]

They are secret and feather each others nests, especially in matters of business. All done "behind the scenes."

Ahhh... I see. It's always reassuring to hear the opinion of an expert on the matter.

It would be like prices for stable in Alabama being many, many time lower than in Illinois.

It's hard to imagine something costing less in Tuscaloosa than Chicago. But then, local governments can impose onerous taxes. That's why people buy cigarettes in NC and sell them black market in NY.

Big Jake explained the other side of the coin. Thanks, Jake. Now, having heard both perspectives, I can consider the veracity of each argument, and decide for myself.
Thank you both.

 

[Hobbit]

Personally, I think your friend is being overly negative. Growth is not as robust as most economists would like to see, overall the economy is in good condition compared to almost any other country. We aren't on the brink of collapse, but we do have some structural problems that need to be worked out, like wages, taxes, income distribution, and good-wage job creation, and I don't want to minimize those issues, but being on the "brink of collapse" does not appear to be the case.

Remembering the 70s, 80s, and even into the 90s, I often wonder how misguided our perception of the economy is? There were a couple of good, really too good, booms, the dot-com and housing, that people now perceive as being the norm. During the dot-com I was working for a company (dot com related) that was trading at an obscene p/e ratio. The housing market was a ponzi/pyramid scheme that bordered on ridiculous. There is no way either of these could have maintained the pace they were on.

I'm, or we are, much better off today than in the 70s, 80s, and 90s. I do agree their are issues that need to be addressed before they do cause havoc.

 

[Chu Gai]

About 25 years ago I worked with an elderly gentleman, Thanos, who was Greek. Although technically retired, he worked so that he could fund the construction of a house he was building to actually retire. Do some fishing, kick back, etc.

Every year he went back to oversee the construction. He told me he had to be there because it was the only way he could make sure things were being done according to his wishes. So, he'd do a portion at a time. One of the things he told me is that the only ay to get something done, was to bribe people and everyone had their hand out. You could make an appointment to have a phone installed, electricity, plumbing, but unless you greased them, good luck getting it done. and no one really wanted to work but everyone wanted to get paid. Under the table of course as no one was declaring the money.

 

[KEW]

Fair and balanced is a thing that went out of fashion about the time Walter Cronkite died.

I blame it on 24/7 "news". If you are trying to get people to watch your channel for more than the 1 hours a day of old news (for the typical home), one of the best ways is to get people to fear the world they live in.

 

[shadyJ]

The EU is a socialist/fascist creation and especially the Eurozone. People think of fascists as right wing, but this is one of the greatest lies of the left. Fascists are lefties and not right wing at all.

The is absolute nonsense. You have no notion of history or ideology if you think fascism is at all leftist. Fascism is purely right wing. You have a great deal of knowledge about audio science, and you might try to widen your horizons by reading a basic world history book or maybe an intro to political science text.

 

[TLS Guy]

The is absolute nonsense. You have no notion of history or ideology if you think fascism is at all leftist. Fascism is purely right wing. You have a great deal of knowledge about audio science, and you might try to widen your horizons by reading a basic world history book or maybe an intro to political science text.

Hitler's party was the Socialist workers party. You perpetuate the greatest lie of the left, right out of Orwell's 1984.

 

[Bizarro_Stormy]

Hitler's party was the Socialist workers party.

Yeah but... Hitler wasn't really a socialist...

He was just a dick...
a really big dick...

Like this guy:

who also happens to be a killer cyborg...

Was Hitler A killer cyborg...
I dunno...

 

[shadyJ]

Hitler's party was the Socialist workers party. You perpetuate the greatest lie of the left, right out of Orwell's 1984.

Ah yes, Hitler, that renowned leftist, friend of all marxists. I don't know where you get your bizarre version of history, but we will need to remedy this, so here is your reading assignment: The Rise and Fall of the Third Reich. Pay attention to the 'Rise' part for an illustration of what a model socialist Hitler was. It's strange you should cite Orwell to support your point, as Orwell really was a socialist who went to fight fascists in Spain- none of whom would describe themselves as remotely socialist.

In all seriousness, in the past I have heard some crazy right-wingers try out this talking point that the Nazi's were leftists just because they had the word 'socialism' in their name, and then even try to stretch that absurdity further by claiming since the Nazis were somehow socialists and also fascists that socialism is also fascism. This is a hilarious, desperate attempt to separate themselves from the most heinous political party in history, because they also lean in the same political direction: the right. It also exposes just about the deepest possible misunderstanding of the history of the twentieth century that can be had.

 

[herbu]

Back to Greece...
It looks like they borrowed money, now can't pay it back.

The debate seems to be about the integrity and motives of the lender. The lender was like a loan shark, or like a US bank making a home loan they knew would be a stretch for the borrower, or like the American Indian paycheck advance loan, (flooding TV advertisements for a while, exempt from federal laws, and charging 1000% interest), or just like a normal bank making a normal loan.

In my mind, that debate avoids the main issue. If you borrow money, it is YOUR responsibility to pay it back. Due Diligence and Caveat Emptor are also YOUR responsibility. If the lender is a dirty dog, don't do business with him. If you know there is a riot, don't go over there. If you know the stove is hot, don't put your hand on it. Once you choose to do one of these things, you can't blame somebody else when it goes bad.

Predictably, the liberals here blame the lenders, and the conservatives blame the borrower.

 

[Rickster71]

This is an interesting article for those interested:

http://www.cato.org/publications/commentary/think-greece-cant-happen-here-youre-wrong