The Greek crisis: 9 questions you were too embarrassed to ask

[LiberalLovinLug]

http://www.vox.com/2015/6/30/8867939/greece-economic-crisis

Greece is falling apart. The unemployment rate is 25 percent — down from a peak of 28 — and four in ten children live in poverty. In the wintertime, Athens is overcome with smog as residents too poor to afford electricity burn everything and anything they can to stay warm. The income of the country's rich, once inflation and taxes are taken into account, is back where it was in 1985. The poor are back where they were in 1980. And this weekend, things hit a new low, as fear of a total financial meltdown grew so widespread that Greeks emptied over a third of the country's ATMs on Saturday in a desperate attempt to pull out as much money as possible before the banks collapse.

The crisis is at a pivotal moment now, but it has been brewing for years. Despite what you may have heard, it's not happening because the Greek government spent beyond its means and now is suffering the consequences. It's happening because Europe isn't sure whether it wants to be one country or many, and has in the meantime adopted policies that have created a humanitarian catastrophe for the Greek people.

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Every year in the US, richer states pay more in federal taxes than they get back in federal spending, and poorer states get more in federal spending than they paid in federal taxes. South Carolina, for example, gets $5.38 back in federal spending for every dollar it gets in taxes, according to a WalletHub analysis. Last year, it was $7.87. But we don't consider that money a bailout and we don't demand that South Carolina impose crushing austerity measures. The arrangement is quite stable; it's been well over 150 years since South Carolina last formally considered an exit from the union.

Now, the US is a political union as well as economic union, and the EU is only the latter. But the goal of European integration is to get it there, and one thing that entails is real fiscal union, including huge, unlimited, never-ending transfers from rich areas of the union to poor ones. It's politically tough to stomach, but that's the deal.

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For anyone else that is somewhat confused about just what is happening in Greece, I found this great piece. A nice concise video is included. And it also includes an interesting comparison/solution to the way the United States deals internally with indebted States.

[4139]

1. This story is BS.....

Greece fibbed its way into the EU by hiding debt, and in the 2000s Goldman Sachs help them hid it... The Olympics ran a $5 billion debt...

The author of the article should have done a lot more research

[dixiegrrrrl]

2. Also important to note

That Spain, Portugal, Italy and Ireland...the so called "PIIGS" if Greece is included..
those countries' debt is higher than Greece's, so they are most interested in the outcome of Greece
election.

But.....the real problem is not the PIIGS are in debt.
The real problem is that Germany has the majority of that debt, and any default will hit both Germany and the global bond market exceedingly hard.
Which is why Merkel is so often mentioned in news of the Greek situation.

[Igel]

3. It mixes facts with claims.

What is with what should be.

In the end, it answers some questions, but it answers them poorly. The reason that Greece is in the mess it's in has nothing to do with Greece; instead, it's everybody else's fault.

Greece accepted money because it had a goal in mind and agreed that the money was appropriate for reaching that goal. It accepted more. Then more. It didn't make the structural changes it should have, so now it's got a crappy economy, a corrupt electorate, and a corrupt political class. It didn't bargain in good faith in the past years, it appears to have not bargained in good faith in the last 6 months, and there's no reason to supposed it's going to bargain in good faith in the next month.

Under those conditions, you stop being flexible and you want your negotiating partner to implement his part of the bargain, whenever possible (not just convenient or expedient), immediately.