Worried Greeks Fear Collapse of Middle Class Welfare State

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    Sep 26, 2011 2:51 PM GMT
    Things that aren't sustainable eventually come to an end.

    http://www.nytimes.com/2011/09/25/world/europe/as-welfare-state-collapses-greeks-suffer-and-fear-future.html?_r=1&hp=&pagewanted=all

    ATHENS — Sitting in the modest living room of the home she shares with her parents, husband and two teenage children, Stella Firigou fretted about how the family would cope with the uncertainties of an economy crashing all around them. But she was adamant about one thing: she would not pay a new property tax that was the centerpiece of a new austerity package announced this month by the Greek government.

    “I’m not going to pay it,” Ms. Firigou, 50, said matter-of-factly, as she lighted a cigarette and checked her ringing cellphone to avoid calls from her bank about late payments on a loan. “I can’t afford to pay it. They can take me to jail.”

    While banks and European leaders hold abstract talks in foreign capitals about the impact of a potential Greek default on the euro and the world economy, something frighteningly concrete is under way in Greece: the dismantling of a middle-class welfare state in real time — with nothing to replace it.

    Since 2010, the government has raised taxes and slashed pensions and state salaries across the board, in an effort to rein in the bloated public sector that today employs one in five Greeks. Last week, the government announced it would put 30,000 workers on reduced pay as a precursor to possible termination and would cut pensions again for nearly half a million public-sector retirees.
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    Sep 26, 2011 3:17 PM GMT
    jprichva saidI'm surprised that you of all people posted this.
    What the article demonstrates is that the austerity measures and debt-reduction measures being pushed by the right are actually counter-productive. Rather than creating a climate whereby revenues can be raised, they accelerate the downward spiral since with more people unemployed, fewer taxes are collected, leading to a worsening debt situation in the government's budget, leading to further austerity measures, more unemployment, less revenue, and eventually the collapse of an entire country's economy.

    Is this the scenario the right really wants to see here? Because it could happen.


    It's a horrible situation for the Greeks - and something they could have dealt with a lot sooner which is what I think is most instructive. The Greeks however don't have a choice beyond austerity.

    Spending by governments is a bandaid solution to begin with. What I would like to see some country adopt is to have a negative income - or minimum income for all but do away with minimum wage and other social programs (it would probably be far cheaper). I think government has its place, but defining industrial policy is not one of them.
  • coolarmydude

    Posts: 9190

    Sep 26, 2011 6:11 PM GMT
    This is what happens when you are no longer, in the general sense, a producer nation.

    On the flip-side, look at Germany.
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    Sep 26, 2011 6:29 PM GMT
    riddler78 saidSpending by governments is a bandaid solution to begin with. What I would like to see some country adopt is to have a negative income - or minimum income for all but do away with minimum wage and other social programs (it would probably be far cheaper). I think government has its place, but defining industrial policy is not one of them.


    I don't get what minimum wage has to do with this discussion. The government doesn't subsidize minimum wage. It's in the same sentence as "social programs" with the conjunction "and" between them. Explain.
  • dancedancekj

    Posts: 1761

    Sep 26, 2011 6:34 PM GMT
    riddler78 said
    Spending by governments is a bandaid solution to begin with.


    I agree with you there. The government stimulus or spending of any sort should be there just as an impetus, for things to get some momentum. I think that
    most of what the democrats are pushing for is simply a temporary fix at best.

    riddler78 said
    I think government has its place, but defining industrial policy is not one of them.


    I think government should have a role in defining industrial policy. Right now, the industries have been able to do as they please, and have locked us into an archaic economic structure and an outdated market. I think a role of the government should be to invest in future job and technological and research innovation to keep the United States relevant and a leader in the world economy. The examples of the auto industry, energy industry, and agricultural industries are dinosaurs that need to go extinct or evolve in my opinion.

    While I don't necessarily trust politicians, I trust corporations far less. Although I suppose they are one and the same these days.
  • rustoleum

    Posts: 52

    Sep 26, 2011 6:35 PM GMT
    riddler78I think government has its place, but defining industrial policy is not one of them.


    Triangle Shirtwaist Factory. Deepwater Horizon.

    I think government exists, in part, to define industrial policy. When policy is left to business owners to set, profit is a much higher priority than, say, keeping the employees alive and still attached to all their limbs.

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    Sep 26, 2011 6:42 PM GMT
    rustoleum said
    riddler78I think government has its place, but defining industrial policy is not one of them.

    Triangle Shirtwaist Factory. Deepwater Horizon.

    I think government exists, in part, to define industrial policy. When policy is left to business owners to set, profit is a much higher priority than, say, keeping the employees alive and still attached to all their limbs.

    Industry regulating itself and directing government fiscal policy is part of the textbook & historical definition of Fascism. Despite what ignorant Teabaggers mouth against Democrats, as written for them by their big-business sponsors & handlers.
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    Sep 26, 2011 6:48 PM GMT
    If the GOPers and the TeaBaggers want no taxes or government regulation, might I suggest they move to Somalia!

    There is no government there to burden you with all the terrible things like clean air to breathe, drinkable water, a functioning road system, a postal system (if you still use it) banking regulations, public education, minimum wage laws, workplace safety laws, etc.

    Might I also suggest you watch out for the pirates, the Islamic insurgency that will try to kill you and make sure you bring your DEET as the malaria mosquitoes are a bitch pretty much year round.


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    Sep 26, 2011 7:03 PM GMT
    riddlerThe Greeks however don't have a choice beyond austerity.


    Yes there is. It's called leaving the Euro, unless the Euro is weakened enough for them to stick with it.
    Further austerity will just worsen the deflation and economic contraction.

    http://www.forbes.com/sites/afontevecchia/2011/09/19/roubini-greece-should-default-leave-the-euro-and-reinstate-the-drachma/
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    Sep 26, 2011 7:16 PM GMT
    Inostrankan saidIf the GOPers and the TeaBaggers want no taxes or government regulation, might I suggest they move to Somalia!

    There is no government there to burden you with all the terrible things like clean air to breathe, drinkable water, a functioning road system, a postal system (if you still use it) banking regulations, public education, minimum wage laws, workplace safety laws, etc.

    Might I also suggest you watch out for the pirates, the Islamic insurgency that will try to kill you and make sure you bring your DEET as the malaria mosquitoes are a bitch pretty much year round.


    Laissez-Faire capitalism is a by-product of anarchy, being that if there's no government to rule the poeple, then what government will there be to rule businesses? I merely agree because there is no pure laissez-faire system in the world if there is government. The easiest place to do business (which apparently has the most amount of economic freedom) is Hong Kong, and I'm pretty sure that even they have a regulated set of rules set forth by their government.
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    Sep 26, 2011 7:18 PM GMT
    q1w2e3 said
    riddlerThe Greeks however don't have a choice beyond austerity.


    Yes there is. It's called leaving the Euro, unless the Euro is weakened enough for them to stick with it.
    Further austerity will just worsen the deflation and economic contraction.

    http://www.forbes.com/sites/afontevecchia/2011/09/19/roubini-greece-should-default-leave-the-euro-and-reinstate-the-drachma/


    Ah are you saying that by leaving the Euro, they wouldn't need austerity? Who precisely do you believe that the Greeks will borrow money from in order to sustain their social spending after they default?
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    Sep 26, 2011 7:20 PM GMT
    dancedancekj said
    riddler78 said
    Spending by governments is a bandaid solution to begin with.


    I agree with you there. The government stimulus or spending of any sort should be there just as an impetus, for things to get some momentum. I think that
    most of what the democrats are pushing for is simply a temporary fix at best.

    riddler78 said
    I think government has its place, but defining industrial policy is not one of them.


    I think government should have a role in defining industrial policy. Right now, the industries have been able to do as they please, and have locked us into an archaic economic structure and an outdated market. I think a role of the government should be to invest in future job and technological and research innovation to keep the United States relevant and a leader in the world economy. The examples of the auto industry, energy industry, and agricultural industries are dinosaurs that need to go extinct or evolve in my opinion.

    While I don't necessarily trust politicians, I trust corporations far less. Although I suppose they are one and the same these days.


    I trust markets where competition exists - given that there is far more accountability - and that accountability is far more "real time" than governments. The irony of course is that in each of the cases that you cite as being dinosaurs, it's governments that have sustained them.
  • coolarmydude

    Posts: 9190

    Sep 26, 2011 7:26 PM GMT
    Inostrankan saidIf the GOPers and the TeaBaggers want no taxes or government regulation, might I suggest they move to Somalia!

    There is no government there to burden you with all the terrible things like clean air to breathe, drinkable water, a functioning road system, a postal system (if you still use it) banking regulations, public education, minimum wage laws, workplace safety laws, etc.

    Might I also suggest you watch out for the pirates, the Islamic insurgency that will try to kill you and make sure you bring your DEET as the malaria mosquitoes are a bitch pretty much year round.


    Muahahahhaa....I saw that on facebook for the first time today. Spot on too!
  • dancedancekj

    Posts: 1761

    Sep 26, 2011 7:52 PM GMT
    riddler78 said
    I trust markets where competition exists - given that there is far more accountability - and that accountability is far more "real time" than governments. The irony of course is that in each of the cases that you cite as being dinosaurs, it's governments that have sustained them.


    Fair enough about the government sustaining businesses. I would have been happy to let the auto industries have gone under for the sole reason of holding them accountable.

    Yet I think that corporations, left to their own, will fuck over people with the intent of increasing their bottom line. Citizens United was a bad move.

    Competition, accountability, and reward for success must be balanced against greed, immorality, and monopolies of course. I feel we used to have it correct, but no we are swinging out of balance again. I just wish there was a way to spur the same growth of industries without having it swing way out of balance.
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    Sep 26, 2011 9:00 PM GMT
    dancedancekj said
    riddler78 said
    I trust markets where competition exists - given that there is far more accountability - and that accountability is far more "real time" than governments. The irony of course is that in each of the cases that you cite as being dinosaurs, it's governments that have sustained them.


    Fair enough about the government sustaining businesses. I would have been happy to let the auto industries have gone under for the sole reason of holding them accountable.

    Yet I think that corporations, left to their own, will fuck over people with the intent of increasing their bottom line. Citizens United was a bad move.

    Competition, accountability, and reward for success must be balanced against greed, immorality, and monopolies of course. I feel we used to have it correct, but no we are swinging out of balance again. I just wish there was a way to spur the same growth of industries without having it swing way out of balance.


    I personally think Citizens United was a good move. Why for instance should journalists have a greater voice than say someone else who can pay for it? Look at McCain Feingold and their attempted regulation/muzzling of free speech - what's happened is quite the reverse - there's even more money today in campaigns than before.

    Corporations may in fact "fuck over people" but that's why competition is what drives accountability. Governments may choose to regulate/force transparency as a short cut. But there's another form of accountability - customers. There are always at least two parties to a transaction.

    Besides, where you get "fucked over" is where corporations collude with governments by regulation. Look at the reactionary legislation in the last few decades - financial "reform" for instance. It's made the biggest banks even bigger without even fixing the underlying problems. Even Adam Smith was no fan of business people - but it was the markets that he believed that would result in the greater good.

    As for stimulating growth in certain industries... are you familiar with a little company called Solyndra?
  • dancedancekj

    Posts: 1761

    Sep 26, 2011 9:07 PM GMT
    But then what is the alternative? Letting corporations act as they always have has led us to where we are currently. Jobs exported overseas, decreased investment in the education system, decreased talent, ability, and education of Americans while the rest of the world leaves us behind.
    Yes, there have been some successes, but right now it isn't going in the direction that America needs, as shown by our flagging economy, and our future displacement by China and India for our current industries. What is the answer? To keep going as we were? That's not sustainable...
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    Sep 26, 2011 9:59 PM GMT
    riddler78 saidThings that aren't sustainable eventually come to an end.


    Truthfully spoken.
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    Sep 26, 2011 11:31 PM GMT
    jprichva said
    riddler78 said
    q1w2e3 said
    riddlerThe Greeks however don't have a choice beyond austerity.


    Yes there is. It's called leaving the Euro, unless the Euro is weakened enough for them to stick with it.
    Further austerity will just worsen the deflation and economic contraction.

    http://www.forbes.com/sites/afontevecchia/2011/09/19/roubini-greece-should-default-leave-the-euro-and-reinstate-the-drachma/


    Ah are you saying that by leaving the Euro, they wouldn't need austerity? Who precisely do you believe that the Greeks will borrow money from in order to sustain their social spending after they default?

    Not so much a question of borrowing money, Riddler. It's a question of permitting a re-introduced drachma to float against other currencies and effectively devalue itself. This increases trade, which increases revenue.


    The problem is that they would still have massive deficits to fund, no? Further, as I'm sure you're aware, the export focused approach as often advocated by the IMF/World Bank throughout the developing world has had limited success to put it mildly.
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    Sep 26, 2011 11:45 PM GMT
    dancedancekj saidBut then what is the alternative? Letting corporations act as they always have has led us to where we are currently. Jobs exported overseas, decreased investment in the education system, decreased talent, ability, and education of Americans while the rest of the world leaves us behind.
    Yes, there have been some successes, but right now it isn't going in the direction that America needs, as shown by our flagging economy, and our future displacement by China and India for our current industries. What is the answer? To keep going as we were? That's not sustainable...


    You seem to have a somewhat dystopian view of the world that I think is far better than you paint it. Here's something that might cheer you up:
    http://finance.yahoo.com/banking-budgeting/article/113562/5-ways-america-still-on-top-cnnmoney

    As for the issue that we are in currently, again - you can place some of the blame on American firms, but look at how much more blame you could place on the government institutions that created the incentives for them. You can also blame the underinvestment in education (assuming there is one). on the rapidly rising costs driven by increasing costs of administration and that includes bloated pension systems within education. Education for instance is far more expensive today than it's ever been - and you can bet that other countries like India and China spend far less per capita to educate their people than the US.

    To keep going as we were? I think you need to clarify what you see as where we were.
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    Sep 26, 2011 11:48 PM GMT
    riddler78 saidI personally think Citizens United was a good move. Why for instance should journalists have a greater voice than say someone else who can pay for it? Look at McCain Feingold and their attempted regulation/muzzling of free speech - what's happened is quite the reverse - there's even more money today in campaigns than before.

    Corporations may in fact "fuck over people" but that's why competition is what drives accountability. Governments may choose to regulate/force transparency as a short cut. But there's another form of accountability - customers. There are always at least two parties to a transaction.

    Besides, where you get "fucked over" is where corporations collude with governments by regulation. Look at the reactionary legislation in the last few decades - financial "reform" for instance. It's made the biggest banks even bigger without even fixing the underlying problems. Even Adam Smith was no fan of business people - but it was the markets that he believed that would result in the greater good.


    This first paragraph contradicts this third paragraph. Money goes in from corporations, corporations "write" laws, government colludes with corporations. The problem with Citizen's United decision was that cash was equated with speech, and those with the most cash have the most speech. Not good, and if you personally think it was a good move you have no idea what's good for this country.

    And about competition driving accountability: utter bullshit. It has yet to happen in the real world. What competitor of a coal mine will force the mining corporation to be more accountable?
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    Sep 27, 2011 12:11 AM GMT
    mocktwinkie said
    riddler78 saidThings that aren't sustainable eventually come to an end.


    Truthfully spoken.


    Nothing is sustainable as entropy increases.

  • barriehomeboy

    Posts: 2475

    Sep 27, 2011 12:12 AM GMT
    Are you insane? Every wealthy person in the USA should be worried.

    The overfilled bathtub is ready to overflow. A twitch or spasm in any part of the body in the financial tub is going to start a cascade over the side.
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    Sep 27, 2011 12:17 AM GMT
    barriehomeboy saidAre you insane? Every wealthy person in the USA should be worried.

    The overfilled bathtub is ready to overflow. A twitch or spasm in any part of the body in the financial tub is going to start a cascade over the side.


    I agree, but it's going to hit the middle class way harder.
    Kinda horrifying what the mindset of traders is nowadays:

    http://www.huffingtonpost.com/2011/09/26/trader-to-bbc-goldman-sachs-goldman-sachs-rules-the-world_n_981658.htmlGoldman Sachs rules the world and the Euro zone is poised to crash, according to trader Alessio Rastani.

    "This is not a time right now for wishful thinking that governments are going to sort things out," Rastani said on an interview with BBC on Monday morning. "The governments don't rule the world, Goldman Sachs rules the world."

    The statement came towards the end of an almost three and a half minute interview in which Rastani warned viewers to "get prepared" for the inevitable: "The savings of millions of people are going to vanish" in less than a year, he said.

    "This economic crisis is like a cancer, if you just wait and wait thinking this will go away, just like a cancer it's going to grow and it's going to be too late," he continued.'
    ...
    But the crash will be good news for traders, Rastani told the stunned BBC anchors.

    "For most traders we don't really care about having a fixed economy, having a fixed situation, our job is to make money from it," he said. "Personally, I've been dreaming of this moment for three years. I go to bed every night and I dream of another recession."

    Rastani said traders aren't the only ones who can benefit from the crisis.

    "When the market crashes... if you know what to do, if you have the right plan set up, you can make a lot of money from this."
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    Sep 27, 2011 12:52 PM GMT
    q1w2e3 said
    barriehomeboy saidAre you insane? Every wealthy person in the USA should be worried.

    The overfilled bathtub is ready to overflow. A twitch or spasm in any part of the body in the financial tub is going to start a cascade over the side.


    I agree, but it's going to hit the middle class way harder.
    Kinda horrifying what the mindset of traders is nowadays:

    http://www.huffingtonpost.com/2011/09/26/trader-to-bbc-goldman-sachs-goldman-sachs-rules-the-world_n_981658.htmlGoldman Sachs rules the world and the Euro zone is poised to crash, according to trader Alessio Rastani.

    "This is not a time right now for wishful thinking that governments are going to sort things out," Rastani said on an interview with BBC on Monday morning. "The governments don't rule the world, Goldman Sachs rules the world."

    The statement came towards the end of an almost three and a half minute interview in which Rastani warned viewers to "get prepared" for the inevitable: "The savings of millions of people are going to vanish" in less than a year, he said.

    "This economic crisis is like a cancer, if you just wait and wait thinking this will go away, just like a cancer it's going to grow and it's going to be too late," he continued.'
    ...
    But the crash will be good news for traders, Rastani told the stunned BBC anchors.

    "For most traders we don't really care about having a fixed economy, having a fixed situation, our job is to make money from it," he said. "Personally, I've been dreaming of this moment for three years. I go to bed every night and I dream of another recession."

    Rastani said traders aren't the only ones who can benefit from the crisis.

    "When the market crashes... if you know what to do, if you have the right plan set up, you can make a lot of money from this."


    Given your earlier belief that leaving the Euro would solve Greece's problems, to say that you are putting too much weight on one trader's comments would be a gross understatement. Traders tend to make far more in up markets but they can also make money in down markets - but the same people who win aren't generally the ones who lose... familiar with what happened to UBS?
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    Sep 29, 2011 12:54 PM GMT
    Truly stunning... but also an example of why other countries in the EU don't want to bail out Greece. I don't expect China to either.

    http://www.washingtontimes.com/news/2011/sep/28/eurozone-debt-debacle/

    That precarious position reflects the urgency of the Greek problem for the EU. With a debt burden expected to reach 160 percent of gross domestic product (GDP) next year, coddled and heavily subsidized public workers have burst into violent protest at the mere suggestion of slowing down the gravy train. So $43 billion in cuts promised over three years in return for the first $23.7 billion bailout haven’t really happened. There are still 730,000 government employees for a population of 10.8 million, and public-sector enterprises haven’t been privatized. The latest attempt to raise revenues is a deeply unpopular property tax, which is currently expected to be levied for three years and raise about $2.7 billion.