the Greek economy experienced years of growth, a healthy commercial
activity spree, and like today, a stark increase in (less-leveraged)
bank loans to finance it. When the Depression struck, banks and local
businesses faced unpayable loans and declining asset values. (Stop me
when this sounds familiar).Credit constricted immediately, choking
internal economic activity. In 1928, the Greek Drachma was tied to
the gold standard, but pegged to the British pound. When Britain
devalued its pound in 1931, the Greek government responded by raising
public investments and pegging the Drachma to the US dollar.
But by early 1932, central bank reserves had fallen so much that they
only backed 40% of Greek bonds. Even without the slow drip of rating
agency downgrades to highlight this leveraged debt situation (which is
nothing compared to say, today's US reserves vs. debt leverage), the
lack of reserves caused foreign speculators to fleece the Drachma/
dollar exchange rate. Bond yields blew out. Borrowing costs shot up.
So in March 1932, the League of Nations (the precursor bank bailout
entity to the ECB/IMF) agreed to provide a loan to service Greece's
debt in return for – wait for it - austerity measures. Unlike today,
the government said 'hell no.' Instead, in April, 1932, it floated the
Drachma - which devalued quickly. It also declared a public debt
moratorium, and increased infrastructure spending to strengthen its
economy. It negotiated repayment terms with creditors for overdue
interest. By 1934, agriculture and industrial production rose, the
currency was more stable, employment increased, and the budget
balanced.
Greece would have faired better if it had got out of this by default.
Don's point on the frustration we aren't doing enough generally is
what scares me. UK GDP has actually fallen more than that of Greece
since 2009! But what scares me is that I believe banks essentially
caused WW1 and its replay and seem even more in control now.
On Feb 24, 1:19 am, archytas <nwte...@gmail.com> wrote:
> Back to the Greeks, it appears they are being bailed out, but as far
> as I can see the money is going much like a version of TARP to
> European banks. Somewhere in all this some mighty big crooks have had
> the original cash and we should be chasing them.
> I don't believe manufacturing can bring the jobs back though anything
> is welcome. We need new thinking on work and reward - though in the
> meantime we could introduce international service at decent wages to
> soak up the young and unemployed.
>
> On Feb 24, 1:08 am, archytas <nwte...@gmail.com> wrote:
>
>
>
>
>
>
>
> > What the banks did was lend money they didn't have - which perhaps
> > weirdly isn't wrong in-itself - if the demand for loans for productive
> > purpose is there then why not make the loans in due diligence - we all
> > benefit from the increased productive capacity produced. The snag
> > was fraud and the banks were clearly incapable of resisting this and
> > bribed politicians of all kinds to deregulate (the UK is worse than
> > the US on this) and allow massive leverage through fractional
> > banking. This happened everywhere once the ball started to roll. It
> > all works if most of the investment is sound - but there is no Black-
> > Scoles equation behind any of this. The problem with leverage was
> > well-known - the more fractional your capital (less of it in ratio
> > with what you lend) the more likely you end up insolvent if anything
> > goes wrong. A few bad deals screw up your whole company. This is the
> > truth - the rest is fraudulent accounting.
> > The idea stems from a business practice called 'discounting cashflow'
> > - which is largely about talents story from the bible - you don't just
> > bury your talents but employ them to purpose - good as far as it goes
> > - but the ultimate source of 'talents' is the tax-payer and they
> > started to deploy our talents without asking. Indeed this was a dodge
> > used to goldsmiths who lent money on the basis of other people's gold
> > kept in their vaults. Fine as long as you never hit trouble and have
> > to hand over the gold (tax-payers' money). At the micro-level I can
> > tell you about companies so dumb they didn't bank money overnight and
> > thus missed the interest this gleans. But all this went beyond good
> > housekeeping.
> > The story would take a couple of pages to write even at this level -
> > so I won't go on. At the heart if it banks were betting with out
> > money - the question we should now ask is who should own them - and I
> > don't just mean the ones we directly bailed out.
>
> > On Feb 23, 12:29 pm, Molly <mollyb...@gmail.com> wrote:
>
> > > Sounds right to me. It is the current economic strategy in the
> > > Detroit region. Along with auto, there are medical, IT and
> > > alternative energy (won't mention defense) technologies being
> > > developed and manufactured. More and more of it. We have a long way
> > > to go to come back but it has begun. going the distance will be the
> > > challenge. A hall of fame basketball star for a mayor helps foster
> > > that spirit.
>
> > > On Feb 23, 2:49 am, Allan H <allanh1...@gmail.com> wrote:
>
> > > > Am listening to the news, and have been thinking about china an apple and
> > > > their claim saying they own the IPad name or what ever .. but I listen to
> > > > a friend talk when he was employed by a chinese company was just how
> > > > dishonest they were in all areas.. Actually this claim by china could
> > > > possibly really show this dishonesty and the effect or fall out could be
> > > > bringing back manufacturing to out countries.
>
> > > > A manufacturing based economy can put the unemployed back to work. and the
> > > > unemployed working and buying national made products would make for a
> > > > healthy economy. I am probably saying this wrong.
> > > > Allan
>
> > > > On Thu, Feb 23, 2012 at 8:39 AM, Allan H <allanh1...@gmail.com> wrote:
> > > > > I do think there is revolution in the air as people, some one is going to
> > > > > overcome banking dilemma,, I do believe that the bail out is just how to
> > > > > rip as much money out of Greece as possible,
> > > > > Allan
>
> > > > > On Thu, Feb 23, 2012 at 4:28 AM, Don Johnson <daj...@gmail.com> wrote:
>
> > > > >> Reminds me of an old Heavy Metal quote.
>
> > > > >> "He's nothing but a low-down, double-dealing, backstabbing, larcenous
> > > > >> perverted worm! Hanging's too good for him. Burning's too good for him! He
> > > > >> should be torn into little bitsy pieces and buried alive!"
>
> > > > >> -Hanover Fiste
>
> > > > >> We share frustrations Neil. What little being done is either wrong or
> > > > >> inadequate. You have a much broader understanding of the banking bail outs
> > > > >> than I do. I resent having to bail them out as a tax payer while at the
> > > > >> same time not being able to profit from buying property at a much
> > > > >> discounted price because the bailouts are keeping prices up artificially.
> > > > >> Seems there should be some reward to conservative investing when the shit
> > > > >> hits the fan. Clearly; there isn't. Those folks that bought more then they
> > > > >> could afford and borrowed more then they could afford shouldn't be bailed
> > > > >> out. Those banks that loaned money to these people shouldn't be bailed out.
> > > > >> I hate always being the one to pay the Piper exspecially when there are so
> > > > >> damn many of them. Pipers I mean. Hell, I didn't even book the show!
>
> > > > >> dj
>
> > > > >> On Tue, Feb 21, 2012 at 7:43 PM, archytas <nwte...@gmail.com> wrote:
>
> > > > >>> We'd pay you to take Maggie Don! What I can't take is the shallow
> > > > >>> reporting. We get turkeys telling us the stock market is up on 'good
> > > > >>> news', down on 'bad news' and no mention that central banks doubled
> > > > >>> 'money' in five years and have done it again in the last four - god
> > > > >>> knows what stock is really worth if we deflate it against all this
> > > > >>> printing. We're told the Greeks are getting £130 billion but really
> > > > >>> this is another bank bailout. What gets me really pissed Don is there
> > > > >>> is no talk of working our way out of it or where the massive
> > > > >>> productivity gains have gone. Orn said something ages ago about how
> > > > >>> loads of decent paying jobs were around when we were younger. The
> > > > >>> basic problem is they've gone.
> > > > >>> In old calculations we used to reckon the public sector should be
> > > > >>> about 40% of the economy - but productivity on farms and in
> > > > >>> manufacturing has risen massively - enough to service more health
> > > > >>> care, education and the rest. I don't really care who runs what - if
> > > > >>> there's genuine competition and protection of quality of work life the
> > > > >>> private sector is best. We're better at doing more or less everything
> > > > >>> these days so why's it all turned so sour? I expected my kids to have
> > > > >>> things better than me - but in the main they haven't. I don't really
> > > > >>> do politics as Labour-Tory Democrat-GOP seems meaningless. Our
> > > > >>> Liberals are sharing power now - they looked OK until they were part
> > > > >>> of government and now look standard turds.
> > > > >>> I saw a nutter on your side of the pond blasting welfare - he was so
> > > > >>> dumb he didn't realise his kids were signed up for free meals and he
> > > > >>> gets several thousand in tax credits! We need a New Deal - and also
> > > > >>> to remember even that didn't end the depression. I remember when
> > > > >>> human resource management meant ensuring your firm's pay and
> > > > >>> conditions were the best to attract the right labour - now it's all
> > > > >>> bull to cover up dire conditions.
> > > > >>> One thing in the Greek situation is that their bonds are supposedly
> > > > >>> insured by Credit Derivative Swaps - but everyone thinks if they do
> > > > >>> try this switch we'll discover there is no insurance and the system
> > > > >>> will collapse. Selling dud insurance is a crime. I'd like to see
> > > > >>> some arrests. I regard sending our production to China and the like
> > > > >>> as tantamount to 'selling whiskey and guns to the Indians'. Hanging
> > > > >>> some traitors would be a GOOD START!
>
> > > > >>> On Feb 21, 3:42 am, Don Johnson <daj...@gmail.com> wrote:
> > > > >>> > It's a Catch-22 situation. No solution looks good to me they're all
> > > > >>> pretty
> > > > >>> > sucky. At this point it's the on going never ending uncertainty that's
> > > > >>> > making me nervous more then anything. I wish we could pick a solution
> > > > >>> > that's not too terribly drastic and then commit. To me that means raise
> > > > >>> > taxes on us all; including the have-nots in our respective well-to-do
> > > > >>> > countries. I mean raise taxes and cut spending on the big offenders.
> > > > >>> Social
> > > > >>> > programs. Welfare. The up-coming Obama-Care. We do all that and reform
> > > > >>> > Medicaid and Medicare and it will be messy; it will be hard and people
> > > > >>> that
> > > > >>> > don't deserve it will suffer. But. But a lot less people will be
> > > > >>> raping the
> > > > >>> > System. The Rich will pay more and the more reasonable among them won't
> > > > >>> > mind as much because they'll be seeing the rest of us huddled masses
> > > > >>> paying
> > > > >>> > as well. We are going to have to pass a Consumption Tax in this
> > > > >>> country. I
> > > > >>> > hate it but we have to. It's the only way to start paying down this
> > > > >>> > ridiculous debt the last two presidents have saddled us with. I would
> > > > >>> never
> > > > >>> > agree to it unless it's combined with rock-solid cuts in entitlements.
> > > > >>> Not
> > > > >>> > BS crap promises of debt 'ceilings' that always get raised.
>
> > > > >>> > I have zero faith in this Congress and very little hope for the next
> > > > >>> one.
> > > > >>> > I'm disappointed in my available choices for the next
>
> ...
>
> read more »
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