Germany and France decide to throw more taxpayers money down the Greek black hole

[sasguru]

No bank tax in Franco-German deal on Greece | Reuters

Like that's going to be a long term solution

[sasguru]

Oh and if you work in Germany prepare for a tax rise soon (similar to the reunification tax). Someone's got to pay.

[Old Greg]

It's almost as if government is an arm of Capital.

[DimPrawn]

If the Germans and French had any sense they would buy up all the property in Wandsworth, wait 12 months, sell it all off and then pay all the PIIGS debts off in one go with the profit. Then they could spend the rest building a giant space station near Pluto for their holidays.

[sasguru]

If the Germans and French had any sense they would buy up all the property in Wandsworth, wait 12 months, sell it all off and then pay all the PIIGS debts off in one go with the profit. Then they could spend the rest building a giant space station near Pluto for their holidays.

Quite. With 3 buyers waiting for every property they couldn't go wrong.

[sasguru]

It's almost as if government is an arm of Capital.

Explain why that Socialist Worker cliche applies in this case?

[Old Greg]

Explain why that Socialist Worker cliche applies in this case?

If Greece cannot pay their debt, then banks (many of them French and German - but also counterparties to Credit Default Swaps) will suffer substantial losses, which is as things should be. this bail-out is using public funds to trasfer a large part of the banks' risk to taxpayers. It's hard to see that is in the public interest and in a true democracy the public interest should be all that matters. However, what we are seeing is the government actring against the public interest and in the interest of the banks.

What should happen is:

- Greece leaves the Euro and re-introduces the new drachma.
- Existing deposits held in Greek banks continue to be held in Euros.
- Greece pays futue bills (public sector wages etc.) in new drachma
- Greece passes a law denominating all debt in new drachmas (a soft defualt).
- Greece prints money to pay its debts, creating inflation to inflate debt away, and devaluing the currency to restore competitiveness.

This is the classical way out of a sovereign debt crisis and is unavailable to a country stuck in the Euro.

[DodgyAgent]

If Greece cannot pay their debt, then banks (many of them French and German - but also counterparties to Credit Default Swaps) will suffer substantial losses, which is as things should be. this bail-out is using public funds to trasfer a large part of the banks' risk to taxpayers. It's hard to see that is in the public interest and in a true democracy the public interest should be all that matters. However, what we are seeing is the government actring against the public interest and in the interest of the banks.

What should happen is:

- Greece leaves the Euro and re-introduces the new drachma.
- Existing deposits held in Greek banks continue to be held in Euros.
- Greece pays futue bills (public sector wages etc.) in new drachma
- Greece passes a law denominating all debt in new drachmas (a soft defualt).
- Greece prints money to pay its debts, creating inflation to inflate debt away, and devaluing the currency to restore competitiveness.

This is the classical way out of a sovereign debt crisis and is unavailable to a country stuck in the Euro.

OG You are in the wrong job!

[Old Greg]

OG You are in the wrong job!

What have you got for me?

[sasguru]

If Greece cannot pay their debt, then banks (many of them French and German - but also counterparties to Credit Default Swaps) will suffer substantial losses, which is as things should be. this bail-out is using public funds to trasfer a large part of the banks' risk to taxpayers. It's hard to see that is in the public interest and in a true democracy the public interest should be all that matters. However, what we are seeing is the government actring against the public interest and in the interest of the banks.

What should happen is:

- Greece leaves the Euro and re-introduces the new drachma.
- Existing deposits held in Greek banks continue to be held in Euros.
- Greece pays futue bills (public sector wages etc.) in new drachma
- Greece passes a law denominating all debt in new drachmas (a soft defualt).
- Greece prints money to pay its debts, creating inflation to inflate debt away, and devaluing the currency to restore competitiveness.

This is the classical way out of a sovereign debt crisis and is unavailable to a country stuck in the Euro.

I disagree with that analysis, in the sense of politicians' motivation.
I agree with your economic analysis that Greece leaving the Euro is the best way out of this impasse for everyone.
But the polticians won't allow that, not because they're sucking up to the banks, but because of the political dream of Europe: the French in particular would never countenance, if they can help it, the breakup of the European idea.
The bank tax that was proposed was largely accepted by the banks and would have been a better idea.