Socialism In Greece Threatens World Financial Stability

Who didn't see this coming? Socialism leads nowhere, but ruin:

http://news.yahoo.com/greek-turmoil-sends-us-world-markets-lower-153718933.html

 

My limited understanding of the situation in Greece can be summarized as a country with a large, maxed-out credit-card refusing to pay the balance. I'd say they need to pay up and cut up their credit-card afterward, but it's not that easy.

 

No, it certainly isn't easy. Especially when you've had the population sucking on the proverbial teet of the government and then have it taken away because the milk has dried up. I can't really blame the populace of Greece because they've been treated like sheep for so long. They were led into a false sense of security by their government and now are having to face the cold, hard facts of life without handouts.

Let's hope the Socialist debacle of Greece doesn't cause a domino effect throughout Europe and, eventually, the U.S. (but, it's not looking good...).

 

Funny how the article you link to does not mention one word about socialism and you haven't bothered to provide any proof that socialism was the underlying cause of Greece's financial problems, so I will prove the exact opposite is true and that it was capitalism that caused this mess in Greece. Thank you pinnacle of capitalism Goldman Sachs!

Goldman Sachs helped the Greek government to mask the true extent of its deficit with the help of a derivatives deal that legally circumvented the EU Maastricht deficit rules. At some point the so-called cross currency swaps will mature, and swell the country's already bloated deficit.


Greeks aren't very welcome in the Rue Alphones Weicker in Luxembourg. It's home to Eurostat, the European Union's statistical office. The number crunchers there are deeply annoyed with Athens. Investigative reports state that important data "cannot be confirmed" or has been requested but "not received."



Creative accounting took priority when it came to totting up government debt. Since 1999, the Maastricht rules threaten to slap hefty fines on euro member countries that exceed the budget deficit limit of three percent of gross domestic product. Total government debt mustn't exceed 60 percent.

The Greeks have never managed to stick to the 60 percent debt limit, and they only adhered to the three percent deficit ceiling with the help of blatant balance sheet cosmetics. One time, gigantic military expenditures were left out, and another time billions in hospital debt. After recalculating the figures, the experts at Eurostat consistently came up with the same results: In truth, the deficit each year has been far greater than the three percent limit. In 2009, it exploded to over 12 percent.
Now, though, it looks like the Greek figure jugglers have been even more brazen than was previously thought. "Around 2002 in particular, various investment banks offered complex financial products with which governments could push part of their liabilities into the future," one insider recalled, adding that Mediterranean countries had snapped up such products.
Greece's debt managers agreed a huge deal with the savvy bankers of US investment bank Goldman Sachs at the start of 2002. The deal involved so-called cross-currency swaps in which government debt issued in dollars and yen was swapped for euro debt for a certain period -- to be exchanged back into the original currencies at a later date.
Fictional Exchange Rates
Such transactions are part of normal government refinancing. Europe's governments obtain funds from investors around the world by issuing bonds in yen, dollar or Swiss francs. But they need euros to pay their daily bills. Years later the bonds are repaid in the original foreign denominations.
But in the Greek case the US bankers devised a special kind of swap with fictional exchange rates. That enabled Greece to receive a far higher sum than the actual euro market value of 10 billion dollars or yen. In that way Goldman Sachs secretly arranged additional credit of up to $1 billion for the Greeks.
This credit disguised as a swap didn't show up in the Greek debt statistics. Eurostat's reporting rules don't comprehensively record transactions involving financial derivatives. "The Maastricht rules can be circumvented quite legally through swaps," says a German derivatives dealer.



In previous years, Italy used a similar trick to mask its true debt with the help of a different US bank. In 2002 the Greek deficit amounted to 1.2 percent of GDP. After Eurostat reviewed the data in September 2004, the ratio had to be revised up to 3.7 percent. According to today's records, it stands at 5.2 percent.

At some point Greece will have to pay up for its swap transactions, and that will impact its deficit. The bond maturities range between 10 and 15 years. Goldman Sachs charged a hefty commission for the deal and sold the swaps on to a Greek bank in 2005.
The bank declined to comment on the controversial deal. The Greek Finance Ministry did not respond to a written request for comment.

 

http://news.yahoo.com/waves-austerity-weaken-greek-socialists-073635443.html

ATHENS, Greece (AP) — Politicians hate yielding power. But in recession-hit Greece, more governing Socialists are choosing to do so rather than back Prime Minister George Papandreou's deeply hated austerity measures.

In growing numbers, Socialist lawmakers are calling for an end to their single-party government, unable to face their angry constituents after two years of punishing tax hikes and slashed pensions, jobs and salaries.

Pressed hard by Papandreou, parliament this week approved some of the harshest cuts since the financial crisis began in order to appease international creditors and keep Greece solvent.

But for many, it was a step too far: Two days of rioting outside parliament left one man dead and nearly 200 wounded. Unions staged a 48-hour general strike that shut down schools, shops, offices and transportation around the country and occupied ministry buildings.

"Papandreou now has large sections of society against him," said Spyros Tritsas, chief editor of the weekly current affairs magazine Epikaira, which has been critical of Papandreou's handling of the crisis.
The Socialists themselves showed increasing signs of discontent, as popular support for their party continues to fall dramatically.

Greeks are heading into a fourth year of recession with 16.5 percent unemployment and a rapidly expanding class of poor. Now they face yet more emergency tax hikes, pension cuts, and steep levies on their homes.

One prominent government deputy choked back tears before voting for the tough new measures Thursday, and promised it was the last time she would bow to leadership pressure. Others said they had simply had enough.
"At this point, we have reached our limit ... No (party) can carry this burden alone. There must be an emergency government that will be in power for as long as is required," Socialist deputy Nikos Salagiannis said.

 

Here. Enlighten yourself:

http://dailycapitalist.com/2011/10/19/greece-the-problem-with-socialism/

http://www.humanevents.com/article.php?id=44302

http://nationalinterest.org/blog/jacob-heilbrunn/the-end-socialist-greece-5497

http://www.ibtimes.com/articles/21942/20100503/greece-braces-for-violent-modernization.htm

http://townhall.com/tipsheet/erikaj...ds_a_fiscal_babysitter,_say_some_eu_countries

http://frontpagemag.com/2011/06/20/greek-socialism-crumbles/

http://www.hurriyetdailynews.com/n.php?n=more-socialism-will-not-save-greece-2010-05-14

http://capitolcommentary.com/2011/07/01/greece-socialism-gone-wild/

http://www.horowitzfreedomcenter.org/2011/10/13/greeces-socialist-education/

 

http://news.yahoo.com/blogs/lookout/could-greece-troubles-wreck-american-economy-200122503.html

From the article:

How did we get to this point?
The Greek government's excessive public spending (socialism - emphasis mine), combined with a culture of tax evasion and the global economic downturn (not to mention a helping hand from Goldman Sachs), created a public debt so high that investors began to lose confidence the country could repay its creditors. That made it much more expensive for Greece to finance new borrowing, further reducing its ability to repay the original debt.

 

I would have "liked" your comment except for that one word I highlighted above.

I agree, and see why you'd call it Socialism... but I can't agree that Socialism was the cause. It may have been an effect, but the cause, IMO, was the stupidity of the many countries that encouraged Greece's bad behavior.

 

Thanks for the info, I can literally say it's all Greek to me...

 

I didn't read any of the links but I do recall watching a 60 Minutes piece several years ago that basically forecasted this meltdown. If I remember correctly, the retirement age in Greece was 55 with the gov't picking up the tab for monthly benefits & insurance. Workers were allowed 5 or 6 weeks vacation each year at taxpayer expense. The theme of the article was along the lines of "how long can it last".

 

Again, what do you think this proves? Just about any country in Europe has a Socialist Party as part of their government. When do you think Greece's problems started? Well before 2009 is the right answer. When do you think the first time the Socialist Party of Greece won a majority in that country? Here let me show you...

The Panhellenic Socialist Movement (Greek: Πανελλήνιο Σοσιαλιστικό Κίνημα, IPA: [panelˈlinio sosialistiˈko ˈcinima]), known mostly by its acronym PASOK (Greek: ΠΑΣΟΚ, pronounced [paˈsok]), is one of the two major political parties in Greece. Founded on 3 September 1974 by Andreas Papandreou,[2] in 1981 PASOK became Greece's first social democratic party to win a majority in parliament.[3]
The party self-identifies as a socialist party,[4] but this has come under scrutiny by a portion of the Greek public and media in recent years, as they criticize PASOK for abandoning its original socialist principles; various factions within PASOK, such as the trade union PASKE and the student union PASP are strongly against the current PASOK government[5][6][7][8][9][10] In the 2009 elections PASOK won a majority in parliament of 160 seats,[11] and it currently holds a slim majority of 152 seats.[12] It also holds 8 seats in the European Parliament.[11] The current president of PASOK is George Papandreou, who is also the Prime Minister of Greece and the president of Socialist International.

Now lets see if you can counter the Goldman Sachs information I posted. So it seems that it was actually capitalism that actually crashed the Greek financial system and not the Socialists after all. Nice try though.

 

Well before the Greek Socialist party won control of the country. Hum?

 

Yes, I know what RW'ers have been pushing not only because you are pushing it too but because the fact is Greece was well into trouble long before the Socialist Party ever gained a slim majority in 2009. Righties have been pushing this nonsense for years but the truth is that Goldman Sachs helped the Greek government to mask the true extent of its deficit with the help of a derivatives deal that legally circumvented the EU Maastricht deficit rules.

Then we have, "Around 2002 (long before the Socialists took control) in particular, various investment banks offered complex financial products with which governments could push part of their liabilities into the future,"

Then the currency swaps began long before the Socialists took power, Greece's debt managers agreed a huge deal with the savvy bankers of US investment bank Goldman Sachs at the start of 2002. The deal involved so-called cross-currency swaps in which government debt issued in dollars and yen was swapped for euro debt for a certain period -- to be exchanged back into the original currencies at a later date.

Then of course there was this Socialist scheme...

Fictional Exchange Rates
Such transactions are part of normal government refinancing. Europe's governments obtain funds from investors around the world by issuing bonds in yen, dollar or Swiss francs. But they need euros to pay their daily bills. Years later the bonds are repaid in the original foreign denominations.
But in the Greek case the US bankers devised a special kind of swap with fictional exchange rates. That enabled Greece to receive a far higher sum than the actual euro market value of 10 billion dollars or yen. In that way Goldman Sachs secretly arranged additional credit of up to $1 billion for the Greeks.

Not the only country US banks "helped"...In previous years, Italy used a similar trick to mask its true debt with the help of a different US bank.

And how did Goldman Sachs do in this deal? Goldman Sachs charged a hefty commission for the deal and sold the swaps on to a Greek bank in 2005.

Again, all before the Socialists ever took control in 2009 but let's not get bogged down in pesky facts because there is just too great a need on your part to see capitalism and predatory capitalism as next to Godliness....For some strange reason.

 

But, the bad behavior WAS socialism...

 

Capitalism plain and simple.

 

Try again:

Greek socialism
The Panhellenic Socialist Movement (PASOK) won an absolute majority in parliament in the 1981 general election. Its leader, Andreas Papandreou, became Greece's first socialist prime minister. PASOK had been elected on a radical socialist platform, which included withdrawal from the EC, the removal of US military bases, and a programme of domestic reform. Important social changes, such as lowering the voting age to 18, the legalization of civil marriage and divorce, and an overhaul of the universities and the army, were carried out; but instead of withdrawing from Europe, Papandreou was content to obtain a modification of the terms of entry, and, rather than close US bases, he signed a five-year agreement on military and economic cooperation. In 1983 he also signed a ten-year economic-cooperation agreement with the USSR.

Despite introducing austerity measures to deal with rising inflation, PASOK won a comfortable majority in the 1985 elections. Criticism of Papandreou grew during 1989 when close aides were implicated in a banking scandal. He lost the general elections in 1989 and Tzanis Tzannetakis, an ND backbencher, formed Greece's first all-party government for 15 years. However, this soon broke up, and after months of negotiation Xenophon Zolotas (PASOK) put together a government of unity, comprising communists, socialists, conservatives, and nonpolitical figures.

Constantine Mitsotakis of the ND was sworn in as premier in April 1990 and formed a new all-party government after his party failed to win an outright majority in the elections. In June Karamanlis was again elected president. Papandreou was cleared of all corruption charges in January 1992. In September 1993 Mitsotakis dissolved parliament after the ND lost its overall majority (three of its members had defected to the newly formed left-of-centre Political Spring party). PASOK won an outright majority in the October 1993 elections and Papandreou was returned as prime minister. In March 1995 Costis Stephanopoulos, PASOK's candidate, was elected president. Papandreou, his health rapidly deteriorating, resigned in January 1996, and Costas Simitis became prime minister. Simitis appointed the pro-Europe Theodoros Pangalos as foreign minister. Papandreou was declared well and released from hospital in March, but died in June. In September 1996 PASOK was returned to power with 41.4% of the vote, signifying a slightly reduced majority.

 

So once again, you make an irrelevant point. The Socialist were in the opposition party during the financial shenanigans....

Electoral performance in parliamentary elections since 1974


YearParty LeaderNumber of votesPercentage of votesNumber of members in the Hellenic ParliamentPosition in Parliament
1974 Andreas Papandreou 666,413 13.6% 12 Minor opposition party
1977 Andreas Papandreou 1,300,025 25.3% 93 Main opposition party
1981 Andreas Papandreou 2,726,309 48.1% 172 Government
1985 Andreas Papandreou 2,916,735 45.8% 161 Government
1989-I Andreas Papandreou 2,551,518 39.1% 125 Main opposition party
1989-II Andreas Papandreou 2,724,334 40.7% 128 Member of an all-party coalition government
1990 Andreas Papandreou 2,543,042 38.6% 123 Main opposition party
1993 Andreas Papandreou 3,234,777 46.9% 170 Government
1996 Costas Simitis 2,813,245 41.5% 162 Government
2000 Costas Simitis 3,007,596 43.8% 158 Government
2004 George A. Papandreou 3,002,531 40.6% 117 Main opposition party
2007 George A. Papandreou 2,727,853 38.10% 102 Main opposition party
2009 George A. Papandreou 3,012,373 43.92% 160 (now 152) Government

 

In one sense yes, in another no. I know that's contradictory, but we are talking about a major meldown of a country here so it's inevitably more complicated than saying Socialism did it, or even Capitalism (as Moen mentioned above). Greed, stupidity, laziness... they all have something to do with the collapse. The greed of Goldman's Sack (sorry, couldn't resist), the stupidity of the Grecian (is that right? eh, whatever) government, the laziness of the people there (a nod to David) who retire younger than they should... which is in part Socialism (a nod to you).

I'm far more inclined to believe Moen's evidence, as I have seen it elsewhere also, and often, than to accept the idea that this is a case of Socialism gone bad.

 

You notice how he can't seem to explain HOW Socialism was responsible? I have explained exactly what US banks did in very finanical terms but all he can say is that it was the Socialists. He do love those unsupported talking points he do.

 

I've proven my point. There's no need to keep rubbing your nose in it. The members here can read for themselves and make decisions for themselves (well, all except your lap dog).