Europe’s Misbegotten Cousin

Greece appears to be on the brink of electing a far-left government which is promising its voters and end to the “austerity” that the incumbent center-right (by Greek standards; it’d still be to the left of the DFL) government imposed after the Greek economy, driven by decades of suffocating goverment spending that drove the government into crippling debt, crashed.

Greece currently has nearly 30% unemployment; it’s nearly 50% among younger people. And it was rescued from “worse” only by a massive bailout from the parts of Europe that work – mainly center-right Germany.

And now, their response seems to be to tell the Germans “screw you, give us more money”.

Here’s the piece from NPR’s “Marketplace”:

Listen to the Greek government “economic advisor”, Janos Milios (at around 4:42 on the audio):

Europe is a continent of democracy.  When the people of one country decide to change course, change policy, this is something that has to be respected by all parties”.

Respected?  If they’re paying their own bills and not surviving by pilfering the the wallets of the responsible countries, maybe.

This pretty much embodied the old criticism of democracy; “it can only survive until 51% of the people discover they can live off the other 49%”.

But the worst, most noxious quote is yet to come.  Among the left’s most bilious conceits is that society is a “family” – with, naturally, government serving as a gender-neutral parent to keep all the unruly kids in line.

That was the line taken by Dimitrius Papadimitriotis, an Athens psychiatrist (at around  3:30):

We believe it has to be shared among our European partners.  Being part of the “European Family” means taking care of each other, being there for each other.  And this is what “family” is all about.

Government – least of all extranational associations of governments – is not a “family”.

And if it were, then it’d be time to take the snotty spendthrift teenager to the garage and have a word with her about nagging mom and dad to pay off her credit card debts.

If I were a German taxpayer, I’d be demanding my government cut the Greeks off completely.

17 thoughts on “Europe’s Misbegotten Cousin

  1. So Dr. Papadimitriotis is a psychiatrist? I’d definitely want him present at my intervention.

  2. Some perspective:
    There are about as many people in Ohio as there are in Greece. The state domestic product of Ohio is about twice the GDP of Greece. Put another way, the average Buckeye is twice as wealthy as the average Greek.
    The Greeks owe their European family about $25k per person. This is about equal to per capita GDP.
    If ending austerity was easy, we’d all do it. Wouldn’t you like to live a less austere lifestyle? The money has to come from somewhere, though.
    Devaluing the currency would help, but you can’t do that if your currency is the euro. The standard, pre-euro remedy would be to devalue and inflate. Currently the Greeks are experiencing deflation.
    BTW, the Greek gini coefficient (a measure of income inequality) is much lower than the US (more equal). So what’s the problem?

  3. Ever notice the every time anything is collectivized the lowest common denominators always rise to the top and demand an inordinate amount of resources?

  4. kel, Russians already own Cyprus.

    We are about to find out whether the old saying “running out of other people’s money is true”. If Germany refuses to support Greece, Greece’s collpase will hasten dissolution of Euro (see Switzerland’s latest money moves) and then Germany will plunge into a recession as nobody will be able to afford to buy their wares. Catch 22 if there ever was one. Regardless, whatever Germany decides to do, US$ will stengthen – for all the wrong reasons – and rest of the world will start to panic. We are in for some interesting times – none of them good.

  5. I’m looking at some numbers, here.
    I am beginning to believe that the problem isn’t the interest payments on the $250 billion the Greeks to to Eurozone countries. That rate isn’t too bad, like 3% of GDP.
    The austerity is not a result of having to service the debt, it is a result of not being able to borrow what they were used to borrowing.

  6. One possible way of dealing with huge debt is to “work”. Maybe someone in Greece needs to figure out how to encourage that?

  7. Germany should remember that Europe forgave 50% of its debt after WWII, and that their unresolved debt burden after WWI gave rise not only to inflation but to fascist extremism. Short memories in the Eurozone. Write down the debts of Greece, Ireland etc. and build something.

  8. Emery,
    “Germany should remember that Europe forgave 50% of its debt after WWII,”
    Those responsible for incurring that debt who remained alive after the cessation of hostilities were hanged or imprisoned for serious sentences (Spandau, Werl). Who do you suggest we hang in Greece? Who should we imprison?

  9. What the deficit hawks also forget is that a deficit is what supplies sovereign bonds to the world. Decrease the supply in the face of rising demand and the price goes up, yields down. If the austerity crowd keeps deferring non–defense investment in the US and total lack of investment in the EU, the economy will structurally get a lot worse, and the yields will keep going down.

  10. As I wrote, I am beginning to think the Greek austerity problem is not a matter of servicing the existing debt, it is their inability to borrow more money at pre-2008 rates. If half of the existing debt was forgiven today, and their borrowing costs dropped, they would just borrow more money.
    If there is one thing that Krugman and I agree on, it is that European monetary union w/o European political union is a disaster.
    If another Europe-wide war is possible, it’s hard to believe something as fragile as a monetary union would prevent it.

  11. Yep, that $130 billion train to nowhere is a great investment, Emery. You get this junk from the Economist, I bet.
    I know! The government can write everyone in the US a check for a million dollars! They’ll have to sell lots of bonds with a high return to finance that! Everyone wins!

  12. EmeryTheUSAHater’s logic: write down everybody’s debt, nobody owes anyone anything, everybody wins! Utopia ensues and unicorns descend from heaven to delight the children! What an idiot!

    Europe-wide war is not that far fetched. You cannot fathom how bad the situation is in Russia and their sentiment toward the West.

  13. If the Euros start selling massive amounts of bonds, the yield will increase (as Emery states), but of course American bonds will have to increase their yield as well or no one will buy them. Then we start looking at doubling or tripling the cost of servicing US debt. The government has to either cut back spending or increase taxes, either of which will slow growth.

  14. Sovereign debt is Good Debt because it’s backed by the full faith and credit of the government. That’s why it pays such a low interest rate, because it can never default. Well, except for . . . .

    I can understand why German taxpayers would be unimpressed with Greek demands that Germans pay higher taxes to subsidize Greek profligacy.

  15. Americans are more generous than our European counterparts. The U.S. would have written off Greece’s debt…period. But it should have been done 5 years ago…now if the debt is written off you have Syriza, a Chavez like leftist ready to irresponsibly spend spend spend. What a mess. Fasten your seat belts….

  16. Emery is referring to the London agreement, by which half of Versailles Treaty debts were discharged. I would argue that that was just not because of economics, but rather because all the nations of Europe had rushed into WWI, not just Germany and Austria-Hungary, and because the BRD was two governments separated from the one which had incurred the debts.

    But that said, the Germans (unlike the other big nation that started WWII on the other side of Poland) also paid massive reparations for WWII, and they also got the short end of the Marshall Plan–Germany got equipment & food, the rest of Western Europe got monetary aid as well.

    Now; in which nation did the Wirtschaftwunder occur? Austere BRD, mostly bombed out by the Allies, or the recipients of German money, which were far less damaged by the war?

    I agree that the Greeks are likely to get some concessions, but truth be told, they are likely to regret that help. It’s worth noting as well that running the printing press like nobody’s business to support government spending didn’t work out to well in Weimar Germany, either.

    Get a job, Greeks. Sorry, party’s over. Put the ouzo away and start sweeping and mopping up the mess you made.

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