1 million refugees in Germany

December 10th, 2015 at 1:51:23 PM permalink
Canyonero
Member since: Oct 31, 2015
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Quote: Wizard
Can you expand on that? Seems to me that Greece needed some tough love to live within their means.


A lot of people see it this way, and that there was / is need for reform is evident.

However, who should be the ones to pay for those reforms? Pensioners with loss of their retirement pay? Or banks that loanded money to Greece knowing full well that Greece by itself would never be able to pay the money back? (Yeah, those idiot governments that based their budget on accumulating more and more debt are to blame as well, but those guys now have their villas and their yachts and their offshore bank account).

I vote for the banks. But of course even when they loaned the money, Angela had already told them at dinner that she would not let a bankruptcy happen, so they could charge high interest with low risk. And of course, even Germany got a big piece of that cake, loanig 89 billion to Greece at a healthy interest rate (that they admittedly reduced later on) and making 100 billion on top of that selling bonds at zero to negative interest, because money was fleeing into Germany because of the crisis.

http://www.zeit.de/wirtschaft/2015-08/griechenland-deutschland-spart-milliarden-studie

Basically, things come down to bad credit, same as the worldwide financial crisis.

Of course, a bankruptcy would have had unforseeable consequences and almost certainly have hurt the people of Greece a lot as well. So, most economists recommended a debt haircut for Greece, which would have prevented bankruptcy and would have gotten Greece back on their feet. But that would have hit the banks, they would have suffered a significant loss on their investment. And Germany, against opposition from inside the EU, prevented the haircut from happening.
Instead, most of the 89 billion in bailout money went directly or indirectly to banks.

http://uk.businessinsider.com/merkel-no-haircut-for-greece-debt-2015-7?IR=T

Now, a lot of Greek pensioners have been thrown into poverty. In the EU, retirement pay used to be something you could count upon. You work all your life, you pay into the pension funds, you will maintain a decent standard of living when you retire until you die. This trust has now been broken.

These were just broad strokes and there are many different aspects to all of this. And by no means do I claim that my view is the only valid one. The thing that pissed me off was that Germany made a huge profit off of the crisis, it just seems wrong to me. Germany is the big winner of the EU expansion of the last decades, and many countries were accepted with only the short term profits in mind, knowing full well that those countries would almost certainly be unable to meet the budget and stability requirements in the long run. Now the system has failed and the fingerpointing only goes in one direction.
December 10th, 2015 at 2:18:00 PM permalink
Wizard
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Thank you very much for your opinion.

I would love to see the banks that made bad loans to Greece see some justice -- preferably starting with the Laiki Bank in Cyprus (very sore subject of mine).

To really boil this down, it sounds to me like most of the bailout money Germany has given Greece has come right back to Germany. My cousin's wife also said that the Germany itself saw a lot of the benefit to bailing out Greece.

My follow up question is are there hard-working middle-class people in Germany, who don't have big bank accounts, who resent taxpayer money essentially going to the banks. Basically, the same sentiment that happened here -- after the financial crisis we bailed out the banks in the trillions of dollars -- and they were the ones who largely caused the mess.
Knowledge is Good -- Emil Faber
December 10th, 2015 at 2:31:05 PM permalink
AZDuffman
Member since: Oct 24, 2012
Threads: 101
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Quote: Wizard


My follow up question is are there hard-working middle-class people in Germany, who don't have big bank accounts, who resent taxpayer money essentially going to the banks. Basically, the same sentiment that happened here -- after the financial crisis we bailed out the banks in the trillions of dollars -- and they were the ones who largely caused the mess.


The problem with Greece is that they really do not belong in the same economic union as Germany and other EU states. The people work too little, retire too early, and are just not near as productive as the Germans are. When Greece could borrow in their own currency it was not so bad, they could create more money from thin air. It caused inflation and lowered living standards, but it made the place cheap for tourists.

But when they got on the Euro they gave up the printing press. Like a person putting life on credit cards, it worked for a few years. But now that Euros must be paid back, they have to generate Euros. Greece exports little. So a crisis happened.

As to "bank bailouts" at least in the USA, do not think they were free. The Feds got their money back with interest in most cases. Some banks did not want TARP funds but had to take them. Others had to take over weaker banks, their CEOs called to a room and told their signatures or their brains would be on takeover contracts for weak banks.
The man who damns money has obtained it dishonorably; the man who respects it has earned it
December 10th, 2015 at 6:37:39 PM permalink
Wizard
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Quote: AZDuffman
As to "bank bailouts" at least in the USA, do not think they were free. The Feds got their money back with interest in most cases. Some banks did not want TARP funds but had to take them. Others had to take over weaker banks, their CEOs called to a room and told their signatures or their brains would be on takeover contracts for weak banks.


I was more-so referring to investment banks like Goldman Sachs.
Knowledge is Good -- Emil Faber
December 10th, 2015 at 7:03:41 PM permalink
petroglyph
Member since: Aug 3, 2014
Threads: 12
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Quote: Wizard
I was more-so referring to investment banks like Goldman Sachs.


Goldman Sachs is a big shareholder in the FRB. http://www.globalresearch.ca/the-federal-reserve-cartel-the-eight-families/25080
Everyone gets thrown from the plane to maintain altitude
December 11th, 2015 at 3:43:39 AM permalink
AZDuffman
Member since: Oct 24, 2012
Threads: 101
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Quote: Wizard
I was more-so referring to investment banks like Goldman Sachs.


Same deal. Bear Sterns shareholders got almost totally wiped out here. Goldman Sachs paid every dime back plus 23% interest.

https://web.archive.org/web/20090918094658/http://www2.goldmansachs.com:80/our-firm/press/press-releases/current/july-22-release.html

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Fed money is never free.
The man who damns money has obtained it dishonorably; the man who respects it has earned it
December 11th, 2015 at 7:29:38 AM permalink
Wizard
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Quote: AZDuffman
Same deal. Bear Sterns shareholders got almost totally wiped out here. Goldman Sachs paid every dime back plus 23% interest.


Hmmm. Perhaps I was wrong.

Quote:
Fed money is never free.


Never? What about when it overpaid for General Motors stock to bail them out? The taxpayers lost 11.2 billion on that deal. -source.
Knowledge is Good -- Emil Faber
December 11th, 2015 at 9:08:11 AM permalink
petroglyph
Member since: Aug 3, 2014
Threads: 12
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Quote: AZDuffman
Fed money is never free.
Where did the fed get the money to loan and where did the 23% go?

edit: who owns the fed?
Everyone gets thrown from the plane to maintain altitude
December 11th, 2015 at 7:31:16 PM permalink
AZDuffman
Member since: Oct 24, 2012
Threads: 101
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Quote: Wizard

Never? What about when it overpaid for General Motors stock to bail them out? The taxpayers lost 11.2 billion on that deal.


Taxpayers did lose there. However, the GM Common holders were wiped out, as were many bondholders who would usually have gotten at least something back. The Feds might have broken even if they had waited to sell. There was much political pressure to dump the shares as well as GM itself probably pressing for it as they doubtlessly lost tens to hundreds of thousands of car sales by people who refused to buy a Government Motors vehicle.

So yes, the feds can lose. But you had better believe they make sure everyone else loses more.
The man who damns money has obtained it dishonorably; the man who respects it has earned it
December 11th, 2015 at 7:36:45 PM permalink
AZDuffman
Member since: Oct 24, 2012
Threads: 101
Posts: 6444
Quote: petroglyph
Where did the fed get the money to loan and where did the 23% go?

edit: who owns the fed?


The Fed can just invent money. Called "running the printing press" as they used to do that they now just make ledger entries. I made a few posts on how this all works years ago I think here but might even be at WoV.

The Fed is owned by member banks but the POTUS appoints the chairman. The power it has is amazing. Realizing what is really going on can scare you to death as you know it has to all blow up sooner or later. If I had the attention-span I would make my own site explaining economics in basic terms as the average person in the USA is blind to it all.
The man who damns money has obtained it dishonorably; the man who respects it has earned it