EXPIRED Gov Bankruptcies & Is P. Krugman As Dumb As He Seems

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Click here to view possible topics for future meetings. Participants of each monthly meeting vote for the topic of the next monthly meeting.

If you would like to suggest a topic, it is requested as a courtesy that your suggestion be posted here at least 24 hours in advance so that others will have time to give it proper consideration.

EXPIRATION. We have always had a rule that a Possible Topic remains active so long as it receives at least one vote every six meetings. However, if a possible-topic proposal contains a wealth of information that is worth preserving but has not received a vote for six consecutive meetings, it is retained but listed as “Expired."

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SHORT-FUSE NOTICE

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EXPLANATION

Occasionally, a Proposed Topic for Future Meetings has a SHORT-TIME FUSE because a governmental unit is soliciting PUBLIC COMMENTS for a limited time period with a SPECIFIED DEADLINE.

Exhibit A would be the 8/5/2016 Proposed Topic entitled “Clone Rights -- Involuntary Soldiers, Sex Slaves, Human Lab Rats, Etc.”

We had already focused on this topic for our 4/9/2008 meeting more than 8 years ago when the PBS Newshour interviewed a Yale U. Biology Professor who had already created a “Chimaera” with 25% Human DNA and 75% Chimp DNA (Chimps are the animals that share the most DNA with humans).

The Yale U. Biology Professor stated that he was then (2008) in the process of creating a “Chimaera” with 50% Human DNA and 50% Chimp DNA, and that he planned to create in the near future (2008 et seq.) a “Chimaera” with 75% Human DNA and 25% Chimp DNA.

As our 4/9/2008 meeting materials posted on http://www.ReadingLiberally-SaltLake.org disclose, Gwen Ifill who conducted the interview, was oblivious to the issue of the Nazi’s definition of a Jew based on the percentage of Jewish heritage and the Ante-Bellum American South’s definition of African-American based on the percentage of Sub-Saharan-African heritage.

But, even more appallingly, Gwen Ifill failed to ask the obvious question = What happens if the 50%-50% “Chimaera” then already being created happens to exhibit as DOMINANT TRAITS 100% Human DNA and as RECESSIVE TRAITS 100% Chimp DNA!!! Which, of course, would mean that Yale U. was treating as a lab rat a “Chimaera” that is 100% Human!!!

Unfortunately, the 8/5/2016 Proposed Topic was prompted by a Proposal from the National Institute of Health (NIH) which appeared in The Federal Register of 8/5/2016 and which had a 9/6/2016 deadline for public comments!!!

So our 9/14/2016 meeting, which was the first for which our focus had not already been determined as of 8/5/2016 under our normal rules, was too late.

So the reason for inaugurating this Short-Fuse Notice Section is to provide a Special Heads Up that a Proposed Topic has a Public-Comment Deadline that will occur before the first regular meeting date at which the topic can be discussed -- so that any of our readers who want to comply with the Public-Comment Deadline can contact the Proposer of the Topic in order to confer with anyone else who may be considering comments by the deadline.

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PENDING SHORT-FUSE PROPOSALS

1. Re “Clone Rights -- Involuntary Soldiers, Sex Slaves, Human Lab Rats, Etc.” (proposed 8/5/2016), although the 9/6/2016 public-comment deadline of the National Institute of Health (NIH) has passed, this Topic Proposal is still active. PLEASE NOTE ATTACHED TO THIS PROPOSAL THE 1/29/2017 UPDATE ENTITLED0 “HUMAN-PIG CHIMERAS -- DECENT BEHAVIOR DESPITE OPEN BARN DOOR.”

2. Re “Destroying Great Salt Lake To Grow Low-Profit Hay For China” (proposed 9/27/2016), there is a 10/24/2016 public-comment deadline that will occur before our first possible regular meeting (11/16/2016) at which this Proposed Topic could be considered.
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johnkarls
Posts: 2033
Joined: Fri Jun 29, 2007 8:43 pm

EXPIRED Gov Bankruptcies & Is P. Krugman As Dumb As He Seems

Post by johnkarls »

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Reading Liberally 8/10/2015 Editorial Note --

“When Money Dies: The Nightmare of Deficit Spending, Devaluation, and Hyperinflation in Weimar Germany” by Adam Fergusson ($11.55 + shipping or $9.99 Kindle from Amazon.com – 288 pages) was originally proposed 7/6/2015 at the height of the recent Greek debt crisis.

The original subject for the proposal (limited to 60 characters) was Greece, Gov Bankruptcies & Is P.Krugman As Dumb As He Seems? -- with Gov Bankruptcies in the subject to suggest that the topic is broader than the Greek debt crisis because it, in many ways, is a preview of the U.S. debt crisis.

As we have studied several times in the past, U.S. governmental debt exceeds the annual Gross Domestic Product (GDP) of the American Economy.

Accordingly, as a practical matter The Federal Reserve is forced to tolerate high levels of unemployment in the U.S. because if unemployment ever came down to the level at which inflation begins to pick up, the higher interest rates necessary to prevent Weimar-Germany-Style Hyperinflation would be a disaster.

Few of us are old enough to remember that by the end of President Jimmy Carter’s single term in office, the Prime Rate had reached 21.5% in order to prevent Weimar-Germany-Style Hyperinflation!!! If The Federal Reserve was forced to do that again, interest on the U.S. governmental debt WOULD EXCEED 100% of current U.S. governmental expenditures!!! And we would have to raise taxes to pay for anything else!!!

[Because nobody would be stupid enough to continue making loans to cover our current governmental deficits.]

Accordingly, since the Greeks have decided to knuckle under to austerity demands rather than leave the Euro Zone (which presumably would also have meant leaving the much-larger European Union), the proposed book remains the same but the focus will shift more to the coming U.S. debt crisis.

The text of the original proposal and replies thereto follow below.

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We have often remarked that when a country’s currency becomes worthless (such as 1920’s Germany trying to run on the British Pound Sterling and 1990’s Post-Soviet Russia trying to run on the U.S. Dollar) there are tremendous economic dislocations during the transition as non-farmers try to grow food in their back yards to avoid starvation and/or hope they are related to a sufficiently attractive young woman who can barter sexual favors for food.

And we have often remarked that a country’s currency is nothing more than zero-coupon infinite-maturity debt obligations of the issuing country.

So when Paul Krugman argues in his NY Times OpEd column (the text appears below) that the continuing Greek debt crisis should not be countered with austerity, is he really as dumb as he sounds???

He argues that if the lenders do not turn on the spigots once more, Greece will be forced to “start paying wages and pensions with i.o.u.s, which will de facto be a parallel currency -- and which might soon turn into the new drachma.”

And that if Greece had never adopted the Euro and still had its old currency, the drachma, it could simply devalue the drachma in order to solve everything.

However, since Greek debt today is worthless, the sad truth is that Greece looks more like the modern-day equivalent of Germany’s Weimar Republic whose currency went from 320 to the dollar in mid-1922 to 4,210,500,000,000 to the dollar 18 months later.

So Krugman thinks the Greek government can issue IOU’s??? And then begin issuing “new drachmas”???

Who would accept them???

Yes, governmental workers and pensioners might be forced to accept them!!!

But could they, in turn, exchange them for anything at all, such as food???

The answer, of course, is that NOBODY will accept the New Drachma, even if Greece’s ENTIRE accumulated debt is wiped clean, until Greece begins to operate at least close to a balanced budget.

Until then, anyone in their right minds will refuse to accept its debt, including its zero-coupon, infinite-maturity debt known as New Drachmas.

Bringing its budget into line sufficiently so that its currency will be accepted -- in order to avoid the mass starvation accompanying a barter economy in which food is king -- is known as “austerity.”

The same definition faced by any human household that has maxed out its credit cards.

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Accordingly, I propose that we read “When Money Dies: The Nightmare of Deficit Spending, Devaluation, and Hyperinflation in Weimar Germany” by Adam Fergusson ($11.55 + shipping or $9.99 Kindle from Amazon.com – 288 pages).

Originally published in 1975, “When Money Dies” became a cult classic following the 2007-2010 financial crisis -- selling for $1,000 on eBay until it was re-printed in 2010. The amazon.com description --

“This book tells the story of the hyperinflation in Weimar Germany and its aftermath (1919-1926) and, to some extent, the ensuing rise of Hitler's Nazi Germany. It is a story which is so complex and convoluted that it takes a historian to even begin to do it justice. Fortunately, this book's author is not only an accomplished historian, well versed in his subject, but also a gifted writer. The result is a remarkable book about an almost indescribable and incomprehensible period in the world's history. So, if you've ever wondered about the hyperinflation in Germany following the Great War (WWI), and by extension what the REAL consequences of inflation, hyperinflation, deflation and depression might be, this is the book you've been looking for."

johnkarls
Posts: 2033
Joined: Fri Jun 29, 2007 8:43 pm

Text of Krugman’s OpEd Article

Post by johnkarls »

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New York Times – Op Ed – 7/5/2014


Ending Greece’s Bleeding
By Paul Krugman


Europe dodged a bullet on Sunday. Confounding many predictions, Greek voters strongly supported their government’s rejection of creditor demands. And even the most ardent supporters of European union should be breathing a sigh of relief.

Of course, that’s not the way the creditors would have you see it. Their story, echoed by many in the business press, is that the failure of their attempt to bully Greece into acquiescence was a triumph of irrationality and irresponsibility over sound technocratic advice.

But the campaign of bullying — the attempt to terrify Greeks by cutting off bank financing and threatening general chaos, all with the almost open goal of pushing the current leftist government out of office — was a shameful moment in a Europe that claims to believe in democratic principles. It would have set a terrible precedent if that campaign had succeeded, even if the creditors were making sense.

What’s more, they weren’t. The truth is that Europe’s self-styled technocrats are like medieval doctors who insisted on bleeding their patients — and when their treatment made the patients sicker, demanded even more bleeding. A “yes” vote in Greece would have condemned the country to years more of suffering under policies that haven’t worked and in fact, given the arithmetic, can’t work: austerity probably shrinks the economy faster than it reduces debt, so that all the suffering serves no purpose. The landslide victory of the “no” side offers at least a chance for an escape from this trap.

But how can such an escape be managed? Is there any way for Greece to remain in the euro? And is this desirable in any case?

The most immediate question involves Greek banks. In advance of the referendum, the European Central Bank cut off their access to additional funds, helping to precipitate panic and force the government to impose a bank holiday and capital controls. The central bank now faces an awkward choice: if it resumes normal financing it will as much as admit that the previous freeze was political, but if it doesn’t it will effectively force Greece into introducing a new currency.

Specifically, if the money doesn’t start flowing from Frankfurt (the headquarters of the central bank), Greece will have no choice but to start paying wages and pensions with i.o.u.s, which will de facto be a parallel currency — and which might soon turn into the new drachma.

Suppose, on the other hand, that the central bank does resume normal lending, and the banking crisis eases. That still leaves the question of how to restore economic growth.

In the failed negotiations that led up to Sunday’s referendum, the central sticking point was Greece’s demand for permanent debt relief, to remove the cloud hanging over its economy. The troika — the institutions representing creditor interests — refused, even though we now know that one member of the troika, the International Monetary Fund, had concluded independently that Greece’s debt cannot be paid. But will they reconsider now that the attempt to drive the governing leftist coalition from office has failed?

I have no idea — and in any case there is now a strong argument that Greek exit from the euro is the best of bad options.

Imagine, for a moment, that Greece had never adopted the euro, that it had merely fixed the value of the drachma in terms of euros. What would basic economic analysis say it should do now? The answer, overwhelmingly, would be that it should devalue — let the drachma’s value drop, both to encourage exports and to break out of the cycle of deflation.

Of course, Greece no longer has its own currency, and many analysts used to claim that adopting the euro was an irreversible move — after all, any hint of euro exit would set off devastating bank runs and a financial crisis. But at this point that financial crisis has already happened, so that the biggest costs of euro exit have been paid. Why, then, not go for the benefits?

Would Greek exit from the euro work as well as Iceland’s highly successful devaluation in 2008-09, or Argentina’s abandonment of its one-peso-one-dollar policy in 2001-02? Maybe not — but consider the alternatives. Unless Greece receives really major debt relief, and possibly even then, leaving the euro offers the only plausible escape route from its endless economic nightmare.

And let’s be clear: if Greece ends up leaving the euro, it won’t mean that the Greeks are bad Europeans. Greece’s debt problem reflected irresponsible lending as well as irresponsible borrowing, and in any case the Greeks have paid for their government’s sins many times over. If they can’t make a go of Europe’s common currency, it’s because that common currency offers no respite for countries in trouble. The important thing now is to do whatever it takes to end the bleeding.

solutions
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Posts: 212
Joined: Fri Jul 13, 2007 8:38 pm

Krugman's Claim Re Devaluing Currency If A Country Has One

Post by solutions »

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---------------------------- Original Message ----------------------------
Subject: What About Krugman’s Claim That Devaluing A Counrty’s Currency (If It Has One) Will Stimulate Its Economy By Reducing Imports and Increasing Exports?
From: Solutions
Date: Tue, July 07, 2015 2:14 pm - MDT
To: ReadingLiberally-SaltLake@johnkarls.com
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Dear John,

You claim in your Suggested Topic about Greece and Governmental Bankruptcies that Greece would not be able to issue a new currency of its own successfully because Greece looks more like the modern-day equivalent of Germany’s Weimar Republic whose currency went from 320 to the dollar in mid-1922 to 4,210,500,000,000 to the dollar 18 months later.

But if Greece were able to issue a new currency of its own successfully, what about Krugman’s claim that devaluing a country’s currency (if it has one) will stimulate its economy by reducing imports and increasing exports?

Your friend,

Solutions


---------------------------- Original Message ----------------------------
Subject: Re: What About Krugman’s Claim That Devaluing A Counrty’s Currency (If It Has One) Will Stimulate Its Economy By Reducing Imports and Increasing Exports?
From: ReadingLiberally-SaltLake@johnkarls.com
Date: Tue, July 07, 2015 4:57 pm - MDT
To: Solutions
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Dear Solutions,

As you correctly recognize (but Krugman does not), whether a country is running a trade surplus or a trade deficit is a different issue than whether a country is able to borrow, including issuing zero-coupon infinite-maturity debt obligations called currency.

Many countries do NOT have their own currencies but are either forced or choose to operate their economies using the currency of another country.

Each of them is free (subject to any free-trade treaties to which they may have agreed, including joining the World Trade Organization’s multi-national agreement governing trade) to restrict imports or even ban them entirely. And to take whatever steps it wants to stimulate or even subsidize exports.

And yes, Keynesian Economics recognizes that running a foreign trade surplus of exports over imports has the same stimulative effect on a nation’s economy as its government running a debt-financed governmental deficit.

For example, if Country X’s economy running at full tilt could produce $3.0 trillion per year, but is operating at 15% below capacity ($2.55 trillion per year) because the workers and owners of capital are only willing to purchase $2.55 trillion per year of goods and services, Keynesian Economics 101 would say that the Country X government should begin spending $0.45 trillion more than it earns in taxes, etc., and borrow the $0.45 trillion that the workers and owners of capital will earn but be unwilling to spend.

Alternatively using the same example, Country X’s government could take steps to increase exports and curtail imports by a combined total of $0.45 trillion. This will have the same effect on the Country X economy except that instead of the $0.45 trillion taking the form of an increase in borrowing from Country X workers and owners of capital by its government, the $0.45 trillion will be taking the form of an increase in “borrowing” from Country X workers and owners of capital by foreigners in the form of an increase in foreign currency (or whatever the foreign currency might be invested in such as foreign securities).

To accomplish the former Keynesian-Economics stimulation, the Country X government must be credit worthy enough that lenders are willing to make loans to it (including loans in the form of holding its zero-coupon infinite-maturity debt obligations known as currency).

However, the latter form of Keynesian-Economics stimulation can be accomplished even if Country X does NOT have its own currency by, for example, simply decreeing import controls or banning imports altogether.

This, of course, would be incompatible with Greece’s current free-trade obligations as a member of the WTO and, on top of that, as a member of the European Union free-trade area.

So what is the bottom line???

Greece is like a spendthrift who is going through bankruptcy but is nonetheless incapable of resisting spending every last cent that anyone will lend him if he can find anyone stupid enough to lend him anything.

Accordingly, when he emerges from bankruptcy and finds that nobody will loan him a cent either in the form of debt obligations or in the form of currency (if you think that individuals can’t issue currency, many in fact did in ancient days when currency consisted of a precious metal bearing an imprimatur certifying its purity and weight) --

-- he will only be able to spend what he earns.

This is what happened to Germany’s Weimar Republic in which Germany was only able to import whatever it could buy with the foreign currency it was earning on a current basis from exports. And much of Germany’s internal economy was being conducted on a barter basis. And Germany’s economy was operating far below capacity because its government could not borrow, including anyone accepting its zero-coupon infinite-maturity debt obligations known as currency.

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Monetary Theory

As a fellow holder of a degree in economics, you also undoubtedly recognize that Paul Krugman appears in his writings to be an un-reconstructed Keynesian who only pays lip service to monetary theory.

But even monetarists who believe in economic stimulation by increasing the money supply, or in reducing interest rates, or in taking steps to increase the velocity of money (which has the same effect as an increase in the money supply), are dependent upon a country’s ability to issue zero-coupon infinite-maturity debt obligations called currency since all monetary-policy tools are dependent upon money and being able to issue money that will be accepted.

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Conclusions

So no, I do NOT believe I have been too harsh with Krugman.

But the way things are going, we will probably soon see whether Greece’s government is able to issue IOU’s or to issue a new currency of its own.

Would you like to bet that it can???

I still say that based on its current debt being close to worthless and the inability of its government to curtail its deficits, there will be no takers for Greek IOU’s or a new Greek currency (other than Greek government workers and pensioners who can be forced to accept it) because there will be precious little that can be purchased with the Greek IOU’s or new Greek currency.

Please let me know ASAP if you would like to bet.

Your friend,

John K.

PS -

BTW, I think our discussion does point the way forward for Greece. Even if Greece is expelled from the Euro Zone, there is nothing anyone can do to prevent Greece’s tourist industry and whatever is left of Greece’s export industries from earning foreign currencies including Euros.

But the sine qua non would be Greece’s leaving the EU free-trade zone itself and probably even the WTO free-trade zone so that it can regulate the use of the foreign currencies earned by its tourist industry and export industries (or even ban imports entirely). This would stimulate the Greek economy.

However, funding Greek governmental expenditures including salaries and pensions is another matter. And without any borrowing power or ability to issue currency that anyone will accept, the Greek government will be reduced to spending only what it can take in by way of taxes and other revenue.

solutions
Site Admin
Posts: 212
Joined: Fri Jul 13, 2007 8:38 pm

Financing The Greek Gov If Greece Leaves The EU and The WTO

Post by solutions »

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---------------------------- Original Message ----------------------------
Subject: Financing The Greek Gov If Greece Leaves The EU and The WTO
From: ReadingLiberally-SaltLake@johnkarls.com
Date: Tue, July 07, 2015 8:32 pm - MDT
To: Solutions
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Dear Solutions.

Thank you for your e-mail of this afternoon which provoked quite a bit of thought.

Including the PS about the way forward if Greece leaves the European Union AND the World Trade Organization.

Under such circumstances it would be free to restrict or even ban imports. And it could stimulate or subsidize exports. Both of which should pump up the Greek economy.

The reason for this e-mail???

The last paragraph of my PS said that “funding Greek governmental expenditures including salaries and pensions is another matter. And without any borrowing power or ability to issue currency that anyone will accept, the Greek government will be reduced to spending only what it can take in by way of taxes and other revenue.”

And on further thought I have a solution to that from history!!!

Many Greek export industries/companies will survive Greece’s departure from the European Union AND the World Trade Organization.

And, if nothing else, tourists such as you and I will continue to visit Greece, bringing along our U.S. Dollars, Euros and other foreign currencies to finance our fun.

Both the Greek exports and the foreign tourists will bring foreign currency to Greece.

All Greece has to do is to pass a law prohibiting the use of foreign currency inside Greece and dictating that anyone with foreign currency in Greece (including tourists) must immediately exchange their foreign currency for The New Greek Drachmas at the official exchange rate.

If enforced, such foreign-currency laws would enable the Greek Government to pay its workers and pensioners WITHOUT collecting any taxes (as is virtually the current state of affairs since tax avoidance/evasion seems to be Greece’s favorite national pastime!!!)!!!

Because the Greek Government would now be running an expansionist economy based on its own New Greek Drachmas which everyone is forced to accept -- even tourists!!!

In economic theory, the Greek Government is financing itself, not from raising taxes per se, but by confiscating foreign currency in exchange for relatively-less-valuable New Greek Drachmas!!!

Even if no Greek export industries/companies survive these new arrangements, the Greek Government can still finance itself in this fashion to the extent that foreign currencies brought in by tourists exceed in value the New Greek Drachmas that the Greek Government pays its workers and pensioners!!!

And, as previously discussed, the Greek economy is humming along at full tilt because of the expansionist policies, both Keynesian and monetarist, being employed by the Greek Government with its New Greek Drachmas!!!

A CAVEAT!!!

The Greek Government will have to be ruthless in enforcing its new foreign-currency laws in order to try to prevent a “black market” from developing in which foreign currency can be traded for many more New Greek Drachmas than if the holder of the foreign currency meekly submits to the Official Exchange Rate!!!

And it would remain to be seen whether the Greek Government, which is incapable of enforcing its tax laws, would be capable of enforcing its new foreign-currency laws.

Please let me know what you think!!!

Your friend,

John K.

solutions
Site Admin
Posts: 212
Joined: Fri Jul 13, 2007 8:38 pm

One Last Point About Financing The Greek Gov

Post by solutions »

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---------------------------- Original Message ----------------------------
Subject: One Last Point About Financing The Greek Gov
From: ReadingLiberally-SaltLake@johnkarls.com
Date: Wed, July 08, 2015 11:13 am - MDT
To: Solutions
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Dear Solutions,

Just to be clear, although an insular economy with strict foreign-exchange controls and foreign-currency restrictions would enable the Greek Government to finance itself without imposing/collecting any taxes and would be compatible with “the Greek economy is humming along at full tilt,” I did NOT mean to imply that the Greek Gross Domestic Product (GDP) would not suffer.

International economic theory on the macro level, just like specialization-of-labor theory on the micro level, indicates that combined output can be maximized by free trade at the macro level or labor specialization at the micro level.

And there are many historical examples of insular economies with strict FX controls and foreign-currency restrictions, particularly the old Stalinist regimes around the world, that had dismal results compared to their potential.

However, that does not necessarily need to be the case for modern-day Greece, because it is currently under-achieving by such a wide margin that it is theoretically possible (and perhaps even probable) that an insular economy with FX controls and foreign-currency restrictions might even produce an increase in national output.

At least the full employment that would be achievable with such an economy would probably reduce overall misery and overall unfairness, compared to the high unemployment levels currently existing in the Greek economy!!!

Though, of course, the FX controls and foreign-currency restrictions would probably mean that Greeks would not be permitted much foreign travel.

And wouldn’t be able to afford much foreign travel with their relatively-worthless New Greek Drachmas even if foreign travel is permitted.

I think that exhausts, finally, everything I am able to say about this topic.

[I am assuming that as a fellow economics-degree holder, you were already aware of these implications, but it doesn’t hurt to spell them out for the sake of clarity.]

Your friend,

John K.

solutions
Site Admin
Posts: 212
Joined: Fri Jul 13, 2007 8:38 pm

Meeting on Greece Debt Breaks Up With No Deal

Post by solutions »

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New York Times – 7/11/2015

Meeting on Greece Debt Breaks Up With No Deal
By James Kanter

BRUSSELS — A meeting of European finance ministers broke up late Saturday with no agreement on whether Greece should be granted its third bailout since 2010, reflecting deep divides over whether the Athens government can be trusted to repay huge new loans and leaving the Continent hours from what could be a historic rupture.

The finance ministers planned to reconvene on Sunday, just before European national leaders are scheduled to meet in Brussels for what they have said would be a final decision on whether Greece should qualify for a new aid package, a step aimed at determining whether the country can remain in the euro currency union.

The failure by the finance ministers to reach an agreement, after nearly nine hours of talks, belied the optimism that followed the approval early Saturday by the Greek Parliament of a package of pension cuts, higher taxes and other policy changes long sought by Greece’s international creditors. In a remarkable turnabout, Prime Minister Alexis Tsipras had pushed the package through the legislature despite having led his country into a referendum six days earlier that overwhelmingly rejected much the same terms.

Despite Greece’s capitulation on those terms, many countries came into this weekend’s final round of negotiations skeptical of the Tsipras government’s commitment to seeing through the changes and putting his country on firmer financial footing — and weary of the constant brinkmanship that has characterized the months of negotiations over Greece’s latest crisis.

Instead of working through the night to hammer out a statement on requirements for Greece, as had been expected, the meeting was suddenly called off shortly before midnight, and ministers left without even holding a formal news conference.

“The issue of credibility and trust was discussed, and also of course the financial issues involved,” Jeroen Dijsselbloem of the Netherlands, the head of the so-called Eurogroup of ministers, told reporters. “It is still very difficult. but work is still in progress,” he said, adding that discussions would continue later Sunday morning.

From the start, it was clear that Mr. Tsipras’s gambit had not entirely won over Germany and other countries that have been skeptical about giving a new round of loans to Greece after years in which successive governments in Athens have struggled to carry out changes that creditors have demanded as a condition of the bailouts.

“We will have exceptionally difficult negotiations,” Wolfgang Schäuble, the hard-nosed German finance minister, said on Saturday before the meeting. “We won’t be able to rely on promises.”

His prediction proved accurate, as he and fellow ministers wrangled with little apparent progress, seeking more assurances from Greece that it was committed to changing its ways, and weighing the desires of France and Italy for a deal against the more skeptical stance of Germany and the possibility of outright opposition from Finland.

During their talks, the finance ministers called on their Greek counterpart, Euclid Tsakalotos, to put the package proposed by his government into swift effect to prove its willingness to make deep and lasting changes to the nation’s faltering economy. Greece, in turn, continued to seek some assurance that it would win the right to renegotiate the terms of its debt repayment.

It was not clear that the finance ministers’ meeting on Sunday morning would yield a consensus about how to proceed, increasing the possibility that they would leave final decisions to their national leaders, who are to gather in Brussels in the afternoon.

“I am still hopeful,” Pierre Moscovici, the European commissioner for economic affairs, told reporters as he left the Eurogroup meeting.

In an apparent effort to raise the pressure on Greece, some officials earlier in the day were informally passing around a one-page position paper, reportedly drawn up by the German finance ministry as a possible option for the negotiations, saying the Greek proposal fell short and suggesting options that included ideas like having the country leave the eurozone for five years and reapply for membership.

The idea of a break from the euro was not openly discussed at the meeting, according to one of the officials with direct knowledge of the talks, who like others spoke on the condition of anonymity because the discussions were private.

Mr. Schäuble, however, referred repeatedly to a plan drafted by German officials that would require Athens to transfer state assets into a trust fund to pay down its debt in order to stay in the eurozone, according to two people with direct knowledge of the discussions. Mr. Schäuble did not refer explicitly to the idea of a temporary Greek departure from the eurozone, these people said. But the tough approach by the German minister, they said, appeared designed to make clear that he now favors a Greek exit.

The European leaders have set this weekend as a deadline for settling the issue of whether to keep Greece solvent or cut off further aid, a step that would almost certainly result in forcing Athens to abandon the euro.

An exit by Greece would be a blow to Europe’s goal of ever-closer integration.

Greece’s banks are teetering on insolvency, the government is running out of cash to meet day-to-day obligations, and without an infusion, additional payments to international creditors will be missed in coming weeks.

Experts who reviewed Greece’s request for a third bailout program informed Eurogroup ministers that about €74 billion is needed to cover its financing needs for the next three years, according to a person with direct knowledge of the experts’ findings. That is far more than the €53.5 billion, or about $59 billion, that Athens has requested.

If loans for Greece are eventually approved, the majority will probably be covered by a new loan from the European Stability Mechanism, the European bailout fund. Other sources could include loans from the International Monetary Fund, funds raised through Greek government revenue and, eventually, new debt issued by Greece.

That discrepancy between what Greece had requested and the new estimate of its bailout needs may have further reinforced the doubts of those who wonder if the Greek government has a handle on its finances and will be able to carry out promised changes.

“Many governments — mine, too — have serious concerns about the commitment of the Greek government,” the Dutch state secretary for finance, Eric Wiebes, told reporters in Brussels before Saturday’s meeting. “After all, we are discussing a proposal from the Greek government that was fiercely rejected less than a week ago, and that is a serious concern.”

While no signed bailout deal was expected this weekend, the question is whether Europe will decide to continue negotiating a rescue with Greece, or leave its banks to collapse and its virtually bankrupt government to default. European leaders have said their Sunday evening meeting could be used to reach that decision.

The fear of Greece and its supporters, which include the French government, is that without an agreement to continue negotiations, Greek banks could collapse next week, raising the prospect that the country would quickly have to abandon the euro.

Mr. Moscovici, the European economic affairs commissioner who is a former finance minister of France, said as he entered Saturday’s meeting that the “Greek government has made significant gestures.” He said the Greek proposals form “a basis for a new program” of loans.

Before the meeting, the finance ministers received assessments of the Tsipras plan by experts representing the creditors.

“The papers of the Greek authorities contain positive elements, issues where clarification is needed, and some issues where the institutions wish to see stronger commitment to reform,” said a person with direct knowledge of experts’ findings. But this person also warned: “Negotiations will be tough. The chances for a deal are 50-50.”

The Eurogroup, with its 19 eurozone finance ministers, has some outspoken critics of Greece, irritated by the Tsipras government’s negotiating style and Mr. Tsipras’s decision the week before last to break off negotiations and call for the referendum. Mr. Tsipras surprised many in his own country and party on Thursday when he presented a plan containing many of the elements — including austerity measures — that the voters had just rejected by a wide margin.

The creditors now want strong evidence that Greece will honor its latest set of economic promises if it gets the new loans it is seeking, and an agreement to ease the burden of its current debt, which at €317 billion is equivalent to 177 percent of the country’s gross domestic product. By that measure, only Japan’s debt, at 245 percent, is higher among the world’s economies.

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Meeting Cancelled Of 28 EU Countries vs. 19 Eurozone Members

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Greece debt crisis: EU summit cancelled as talks continue
BBC – 7/12/2015

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Reading Liberally Editorial Note –

The Saturday 7/11/2015 meeting described in the NY Times article already posted had been a meeting of the Finance Ministers of Eurozone countries.

The Eurozone consists of 19 members of the E.U. = Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.

The other 9 members of the European Union (which is a free-trade association) continue to use their own national currencies. They are The U.K., Sweden, Poland, The Czech Republic, Hungary, Romania, Poland, Slovenia and Croatia.

The Sunday 7/12/2015 meeting described in the following release from the BBC was a meeting of the entire European Union, not just its 19 Eurozone countries.

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A summit of all European Union members planned for Sunday has been cancelled as "very difficult" talks over a third bailout deal for Greece continue.

Eurozone finance ministers resumed talks that began on Saturday afternoon.

Leaders of the Eurogroup countries are now gathering in Brussels. European Council president Donald Tusk said the meeting would "last until we conclude talks on Greece".

Without a deal, it is feared Greece could crash out of the euro.

Arriving for the meeting, Greece's PM Alexis Tsipras said he was looking for an "honest compromise".

"We can reach an agreement tonight if all parties want it."

Eurogroup leader Jeroen Dijsselbloem has described the negotiations as "very difficult".

"We have had an in-depth discussion of the Greek proposals, the issue of credibility and trust was discussed and also of course financial issues involved," Mr Dijsselbloem told reporters after Saturday's talks ended.

"It is still very difficult but work is in progress."

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Analysis: Chris Morris, BBC News, Brussels

Frustrated and fatigued, finance ministers have gathered for a second day to try and resolve the clear divisions within the eurozone over Greece.

France and others are pushing for a deal with Greece, while a group of sceptical countries led by Germany harbour grave reservations.

But there are still influential players pushing for an announcement today that negotiations on a third bailout with Greece can begin.

That should be enough to allow the European Central Bank to intervene once again, and prevent Greek banks going out of business.

The fact that a meeting of all 28 EU leaders has been cancelled suggests that the focus is still on finding a deal within the eurozone, rather than looking at the consequences of a Greek exit.

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Robert Peston: Could euro survive a temporary Greek exit?

The ministers have reportedly discussed in detail the option of easing Greece's debt burden as long as Athens enacts legislation immediately to reform taxation, pensions and administration. There will be no write-down of debt.

But the talks remain complex and European Commission Vice President Valdis Dombrovskis said it was "utterly unlikely" a mandate would be achieved in Sunday's meeting to start formal negotiations on the third bailout.

Slovakian Finance Minister Peter Kazimir was similarly downbeat, saying: "It's not possible to reach a deal today. We can agree on certain recommendations for the heads of state. That's all. The breach of trust... it's so big, it's not possible to achieve the deal."

And a draft statement from finance ministers, seen by Reuters, suggests a breakthrough on Sunday is unlikely.

The statement says Greece must pass laws to change its VAT and pension systems and take other measures before negotiations for a third bailout can begin.

The draft, which will be presented to the Eurogroup, says "there is not yet the basis to start the negotiations on a new programme," Reuters quotes it as saying.

Reports on Saturday suggested that German ministers were drawing up a plan that would allow Greece to exit the eurozone temporarily if this weekend's talks fail - something Athens says it is not aware of.

Dimitrios Papadimoulis, vice-president of the European Parliament and a member of Greece's ruling Syriza party, reacted angrily to the eurozone's approach in the talks so far.

"What is at play here is an attempt to humiliate Greece and Greeks, or to overthrow the [Alexis] Tsipras government," he said.

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The measures submitted in the latest Greek document include:

· tax rise on shipping companies
· unifying VAT rates at standard 23%, including restaurants and catering
· phasing out solidarity grant for pensioners by 2019
· €300m ($332m; £216m) defence spending cuts by 2016
· privatisation of ports and sell-off of remaining shares in telecoms giant OTE
· scrapping 30% tax break for wealthiest islands

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Referendum

Greece is asking creditors for €53.5bn ($59.47bn; £38.4bn) to cover its debts until 2018.

However, the amount of the new bailout could reach €74bn as Greece seeks a restructuring of its massive debt, which it says is unsustainable.

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Links to other BBC blogs

Why did Greece hold a referendum?
Did Greeks really fail to pay 89.5% of taxes?

Final comments

Of the €74bn, €58bn could come from the EU's bailout fund, the European Stability Mechanism, with €16bn from the IMF, sources have said.

The Greek government this week set out a new list of austerity measures to try to secure the bailout - many of which had been rejected by the Greek people in a referendum last Sunday.

Greek Finance Minister Euclid Tsakalotos is attending the talks in Brussels, trying to convince his counterparts that his government can be trusted to push through its economic reform plan.

As the talks drag on, Greece's financial situation is close to collapse.

Greece fell into arrears on an International Monetary Fund repayment on 20 June and faces a €3bn payment to the European Central Bank on 20 July.

Banks have been closed for two weeks and a €60 daily limit on cash machine withdrawals, imposed on 28 June, remains in force for Greek citizens.

Economy Minister Giorgos Stathakis told the BBC that if there was a deal, banks could reopen within the week, but he admitted it could take a "few months" to remove capital controls.

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Administrative Post

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This is an administrative posting in order to maneuver Governmental Bankruptcies past the Sanctuary Cities proposal which expired 12/16/2015.

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