I think some of this is wrong.
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Originally Posted by Phone Booth
It's interesting how different the narratives are from the housing crisis in the US. Blaming the borrowers was a fringe right-wing narrative here while the banking system at large and regulatory and lending institutions in particular were largely blamed. This is a more reasonable response because blaming the powerless is living in the past - it offers no meaningful prescription for the future. Yet, this has largely been the populist response in Europe. They are too busy blaming Greece for its past actions even though they have nothing to do with the current leadership, nor the young poor Greeks that voted Syriza into power and have more to do with the systematic corruption that exists far beyond Greece and dominates European capitalism and politics.
Generally you get blamed for your own mess. So when banks go bankrupt they get blamed for that. When countries go bankrupt they get blamed for that. The exception is that ordinary people get a bit more leniency, especially from politicians that need their votes, so the Greek voters or ordinary homeowners in debt get off a little lightly and instead you see the political class being blamed.
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Imagine if America's response to the housing crisis was a full bailout of the banks with the federal government buying up all the mortages, making the lenders and investors whole, while the borrowers are still on the hook.
Investors havent really been made whole. Short term bonds have been paid out and I think others have been bought at face value in some of the ECB schemes. But private investors got a haircut as part of the 2012 bailout for an overall lose of around 75% or something like €150bn.
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This whole talk of reform is just a talking point - if it was that easy, they would have done it themselves years ago. Whether they lack the competence or the political will, not much can be changed. Europe has no ability to ensure that any "structural reforms" go as planned.
This isnt really true. The EU has been fairly successful in making reforms a rigorous part of the membership process.
https://en.wikipedia.org/wiki/Enlarg..._Union#Process
It has led to genuine improvements on a whole range issues in the countries applying for membership. In large parts the point is basically to put a finger on the scale and make it possible to take on special interest groups for the benefit of the population as a whole. It has also been part of bailouts elsewhere and generally been implemented. Even in Greece they've come pretty far in the process.
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Ultimately there's no free money and any "structural reform" that takes money away from people is just austerity in another name. Any further economic pain will lead to further erosion of public trust and make meaningful reforms increasingly more difficult.
The erosion of public trust is a real issue and makes things more difficult, but it's not true that there's no free money. Some countries are richer than others and it's not without reason or unchangeable. It's partly because of the structures in place and those can be changed.
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If Germany is so convinced that "reforms" yield free additional money, they should do more "reforms" and send some of the proceeds to Greece.
That is basically what is happening now. German unemployment has been falling since their own early 2000s structural reforms. It is in no small part what's behind the EU belief in structural reforms and it's what's making it possible to offer Greece some fairly generous terms.
Had German unemployment grown proportionately to French unemployment from 2005 onward then Europe as a whole would have been ****ed.
Last edited by daca; 07-08-2015 at 02:35 PM.