Archive for the ‘Welfare State’ Category
Monday, June 22nd, 2015
The economic collapse of Greece is unfolding pretty much exactly as observers predicted it would: “Greek banks have imposed an unofficial ceiling of €3,000 on walk-in withdrawals, the commercial banker added.”
More capital controls are most likely coming, especially since bank runs have meant that Greek banks “will soon exhaust eligible assets they can pledge to the Bank of Greece for cash under the Emergency Liquidity Assistance (ELA) scheme.” The ECB backstopping of Greeek banks has been extended for today only. And today’s Eurozone talks have already broken off.
Despite that, Greece’s feckless ruling Syriza Party is still insisting on ignoring reality: “I repeat: The deal will either be compatible with the basic lines of Syriza’s election manifesto, or there will be no deal.”
Translation: “Europe must continue to throw money down the rat-hole of our bankrupt welfare state, or else!” What the “or else” might be when the country is already too bankrupt to pay pensions and keeps the lights on remains a mystery. The problem with holding a gun to your own head is that eventually someone will call your bluff.
Greece is finally finished with the “gradually” phase of their bankruptcy and is now in the “suddenly” phase…
Tags:bank run, Budget, capital controls, European Central Bank, European Debt Crisis, Eurozone, Greece, grexit, Syriza, Welfare State
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Saturday, June 20th, 2015
The bank runs have started in Greece. Why the Greek peeople would even keep their money in banks, having the example of Cyprus’s bank “bail-ins” before them, would keep any but the most minimal amout of cash in a Greek bank is a mystery.
Given that Greek banks are insolvent without the European Central Bank’s backstop, one wonders why Greek PM Alexis Tsipras thinks he can continue to bluff the EU caving on reform demands. It’s tough to bluff when you have no hole cards…
There’s talk of a “new” Greek proposal, which could mean Tsipras and Syriza are finally coming to their senses and giving in to EU demands, or it could be just another smokescreen. I mean, we’ve only seen about a dozen “new” Greek proposals this year that didn’t offer meaningful reform. What’s one more?
Stay tuned…
Tags:Alexis Tsipras, bank run, Budget, Economics, European Central Bank, European Debt Crisis, Foreign Policy, Greece, Syriza, Welfare State
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Thursday, June 18th, 2015
Stop me if you’ve heard this before, but Google News is once again filled with Greece on the Brink headlines and the Telegraph has started a live update page for the Greek debt crisis. Today’s Eurogroup meeting ended without any deal, Merkel says she won’t budge, and Greece admits they have no money to make their bundled payment to the IMF at the end of the month.
And the IMF has said there will be no grace period if Greece misses their June 30 deadline.
Also, tomorrow Greece owes €85 million to the European Central Bank. Since the ECB backstop is the only reason Greek banks aren’t already insolvent, I suspect Greece will find some way to make that payment, even if it means raiding the Emergency Transplants for Crippled Orphans fund.
Other than that, things are going swimmingly.
The sticking point, as always, is Greece’s insistence that the rest of Europe lend it more so as to allow Greece to continue spending insanely more money than it actually has on its bloated welfare state, and that it absolutely will not cut government pensions (the pensions it will be unable to pay without a loan anyway) at all. But “Greece still spends more than any other country in the European Union on pensions as a proportion to GDP – with the country shelling out a whopping 17.5 percent.”
British tourists are warned to take cash if they’re vacationing in Greece, since cash machines and credit cards may not work due to capital controls.
How much is Greece uncertainty weighing down stocks?
Eh, not so much…
Tags:Angela Merkel, Budget, European Central Bank, European Debt Crisis, Foreign Policy, Greece, Welfare State
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Monday, June 15th, 2015
It looks like the rest of Europe has finally wised up to the fact that Alexis Tsipras has been playing them for chumps. It should be obvious to everyone now that Tsipras and his far-left Syriza party have no intention of reforming Greece’s bloated welfare state, they just wanted to pretend to as long as the rest of Europe was willing to underwrite it in exchange for pretending to reform. But lately even the pretense of reform has become intolerable. They want debt forgiveness and Europe to continue paying their bills, and they’re not going to budge until they get it, or until they totally destroy the Greek economy. You know, whichever.
Europe seems to finally have said “Enough!”
Other Greek links:
Might the European Central Bank impose capital controls on Greece (ala Cyprus) to force a change in the Greek government? Since the Greek banking system only exists at the mercy of ECB-backstopping, this could very well be the easiest way out of the crisis for everyone (even, weirdly, Tsipras and Syriza, who will still be able to claim they never gave in to Troika demands…)
“The latest Greek negotiating strategy is to demand a ransom to desist threatening suicide. Such blackmail might work for a suicide bomber. But Greece is just holding a gun to its own head — and Europe does not need to care very much if it pulls the trigger.”
“For the creditors, the test of whether Mr. Tsipras really wants Greece to remain in the eurozone comes down to a simple question: Is Syriza willing or able to reform Greece’s public sector?” Syriza wants to reform Greece’s public sector the way O. J. Simpson wants to find the real killers.
Gameplanning Greek outcomes. (Warning: Autoplaying video. Up yours, Bloomberg.)
Tags:Alexis Tsipras, Budget, Cyprus, European Central Bank, European Debt Crisis, Eurozone, Foreign Policy, Greece, Syriza, Welfare State
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Thursday, June 11th, 2015
The IMF just said to Greece “Screw you guys, I’m going home.” (Note: For the full effect, you have to say the preceding in the voice of Eric Cartman.)
The International Monetary Fund said it was halting bailout talks with Greece in a stark signal of its exasperation about a lack of progress toward a deal needed to avert a Greek default, as European leaders suggested the negotiations were nearing their endgame without an agreement in sight.
And keep in mind that these are transnational bureaucrats whose entire job description is long, drawn-out economic negotiations. And they’ve finally had enough of talking to Greece.
That’s not the fat lady warming up, that’s the fat lady striding boldly on stage and waiting for the cue to open her mouth.
The Greek debt crisis was always going to come to a bad end. The least bad alternative was introducing real austerity when the crisis hit, paring back their welfare state, reforming their economy, and living within their means for several years until their economy started growing again.
But by electing the far-left Syriza party, Greece has ended up opting for a far worse fate: They’re going to end up absolutely broke, absolutely in debt, and they won’t even be able to fund the day-to-day operations of their bloated welfare state. Unless the Greek parliament can somehow force a snap election and replace Alexis Tsipras’s lying, farcical government with one actually capable of recognizing reality, Greece is in for a level of economic pain that’s going to make the Great Depression look like a picnic…
(Hat tip: Zero Hedge.)
Tags:Budget, European Debt Crisis, Greece, IMF, Syriza, Welfare State
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Wednesday, June 3rd, 2015
Looks like all of Greece’s creditors have finally decided it’s put up or shut up time for reform. “Greek Prime Minister Alexis Tsipras is expected to face demands for tough reforms of Greece’s pension system, labor laws and other areas, as well as creditors’ insistence on painful budget measures to ensure that Greece runs a fiscal surplus before interest.”
At this point Greece seems completely and utterly broke, unless there’s more upfront money in that still unsigned Russian pipeline deal than reports indicate (doubtful, given Russia’s own financial straits), or Tsipras finds yet another hidden money reserve to tap (“We can can pay pensions from the children’s bone marrow fund!”). So despite Tsipras’ insistence that they be allowed to keep spending other people’s money on their bankrupt welfare state, this time the jig may finally, finally, really, we mean it this time, for sure, be up.
Here’s a piece that explains in terms of game theory why Tsipras overplayed his weak hand:
Now, as long as the EU keeps Greece in the Eurozone then the Tsipras administration will find itself forced to either exit the Eurozone or apply the austerity it promised to end. Not only would such an outcome send a clear signal to other Eurozone nations that exiting was foolhardy, it would also indicate that radical, nationalist, anti-establishment and anti-austerity parties cannot deliver on their promises.
The EU won’t force Greece to exit the Eurozone but it won’t offer anything to keep Syriza in power, either. The EU simply needs to keep negotiating without offering anything but strict compliance with what was already agreed upon, which is continued austerity in return for loans. In effect, to use a sports analogy, the EU just needs to “run out the clock.” In the end, it appears that Tsipras will either be forced out of office or forced to break up his coalition and form a new government with the mainstream parties, the outcome that EU and Germany have been angling for all along.
(Though make no mistake: that “primary surplus” was always illusory.)
A few more Greek debt crisis links:
Now Greece is threatening not to pay this week’s debt payment to the IMF unless a deal is agreed on. Once again, Tsipras is playing chicken with a Yugo, while his opponents are driving a Tiger tank…
Tsipras needs to stop making empty promises and get a clue. “He cannot expect Germans to volunteer the money Greece needs, so he can spend it on the kind of leftist economic fantasy that was discredited all over Europe in the 1970s and 1980s. Just ask Argentina where default followed by populist economics leads.”
Germany has good reason to stop subsidizing Greece, namely their own crashing demographics: “Germany’s birth rate has collapsed to the lowest level in the world and its workforce will start plunging at a faster rate than Japan’s by the early 2020s, seriously threatening the long-term viability of Europe’s leading economy.” (Hat tip: Powerline.)
“A Greek exit is already priced into the euro.”
Tags:Alexis Tsipras, Budget, Euro, European Debt Crisis, Eurozone, Foreign Policy, Germany, Greece, PIIGS, Welfare State
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Tuesday, May 26th, 2015
This Newt Gingrich piece on Baltmore’s dysfunction came out last week, and I thought it was worth doing a separate post on. It’s not that the Democratic Party culpability dissected here will be new to anyone paying attention, but that he frames the issue with admirable economy, pith and precision amidst a barrage of data points.
Fact: The last Republican city council member in Baltimore City left office in 1942. That is 73 years of solid Democrat city councils.
Fact: The last Republican mayor of Baltimore City left office in 1967. That is 48 years of unbroken Democrat control of the mayor’s office…
Fact: The last time Republicans held even one chamber of the Maryland General Assembly—the House—was 1917. That is unbroken Democrat control of the Maryland legislature since 1918, or nearly a century of Democrat control.
“The first duty of government is to protect the innocent and the weak from predators and violence. Once again, a Democrat favored the violent over the victims.”
It is Democrats who control the teachers union that traps Baltimore City’s children in schools that fail and ruin their lives. They do so on behalf of the unionized bureaucratic political machine that controls the city.
Poverty in general has been institutionalized by the destructive ideological biases of Democrat President Lyndon Johnson’s Great Society. On May 22, 1964, President Johnson said, “Our society will never be great until our cities are great. Today the frontier of imagination and innovation is inside those cities and not beyond their borders.”
Tragically, his policies trapped people in dependency, killed small businesses in favor of bureaucracy, and favored unionized workers over children. The result has been a 50-year disaster which no liberal Democrat is prepared to analyze honestly.
His most recent incarnation as a scatter-shot idea-a-minute futurist makes it easy to forget what an excellent, focused ideological street-fighter Gingrich was in his prime. This piece is a nice reminder, and instructive reminder of exactly which political party has run (and failed) Baltimore.
Tags:Baltimore, Democrats, Newt Gingrich, welfare, Welfare State
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Thursday, May 21st, 2015
Time for another Texas vs. California update:
“March marked a phenomenal run of 99 consecutive months when Texas’ unemployment rate was at or below the national average.” Also: “Texas employs an impressive two and a half times more people since December 2007 than the rest of the nation combined.”
The Texas state legislature is on the verge of passing an actual conservative budget.
Will Franklin looks at local bond debt in Texas. It’s creeping up, partially due to big government advocates scheduling off-year bond elections when fewer people are voting. Even so, voters seem willing to reject big-ticket bond items.
San Bernardino’s bankruptcy plan: CalPERS gets theirs, bondholders get screwed.
And San Bernardino is planning to outsource their firefighting operations, not least of which because the fire department sucks up $7 million worth of overtime a year. And the fact their union stopped participating in bankruptcy talks didn’t help… (Hat tip: Pension Tsunami.)
How a few wealthy California environmentalists give the illusion of a mass movement.
How retroactive pension increases destroyed California budgets. (Hat tip: Pension Tsunami.)
California is a victim of repeated short-sighted thinking.
Los Angeles joins the minimum wage hike bandwagon. Expect another wave of small business closure stories over the next few months…
Why public employee unions are the elephant in the room for California’s debt crisis. (Hat tip: Pension Tsunami.)
California’s majority Democrats shelve legislative transparency bill written by Republican. This is my shocked face.
Compton teachers get laid off, Do-Da, Do-Da…
“In another corporate exodus from Torrance, California, to North Texas, Kubota Tractor Corp. and Kubota Credit Corp. announced Thursday that they will move their headquarters to Grapevine from the Los Angeles area.”
“The number of young adults admitted to California hospital emergency rooms with heroin poisoning increased sixfold over the past decade.” (Hat tip: Cal WatchDog.)
The Weinstein Company hit with $130 million lawsuit. File under: Hollywood Accounting.
Tags:bankruptcy, California, CalPERs, Crime, Democrats, environmentalism, Grapevine, Regulation, San Bernardino, Texas, Texas 84th Legislative Session, Texas Public Policy Foundation, unions, Welfare State, WILLisms
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Thursday, May 14th, 2015
Greece managed to make its scheduled IMF loan repayment of around €750 million ($837 million) which “buys the country a few more weeks to reach a deal with creditors on fresh financing.”
Greek finance minister Yanis Varoufakis said “Greece must escape the ‘strictness trap’ of budget measures that might hurt the economy and so prevent the country from reducing its debt mountain to manageable levels.” In other words: “We absolutely refuse to stop spending other people’s money to prop up our welfare state.”
So the farce will continue on a little longer, at least.
In other Greek debt news:
Greece is “back” in recession. Assuming you believe it ever actually left it.
Europe wants €3 billion in budget cuts from Greece.
“The German Finance Ministry is supporting the idea of a vote by Greek citizens to either accept the economic reforms being sought by creditors to receive a payout from the country’s bailout program or ultimately opt to leave the euro.” Hmm, recognize economic reality or exit the Euro. Decisions…
And if you thought Greece had abandoned their stupid “German war reparations” idea, think again: “Archival video footage highlighting Nazi atrocities in Greece is being shown to commuters on the Athens subway as part of a campaign demanding war reparations from Germany.” I’m sure that will get them on Angela Merkel’s good side.
The Two Greeces: “Official Greece is dysfunctional; unofficial Greece works quite well. The official, theoretical Greece has checks and balances. The unofficial, reality-based Greece turns a blind eye when people break rules and dodge taxes.” I’m not nearly as positive as the author that the corrupt one can be swept away, or that Syriza wants to.
The Ghost Factories of Greece.
Tags:Angela Merkel, Budget, European Debt Crisis, fraud, Greece, IMF, Syriza, Welfare State, Yanis Varoufakis
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Friday, May 8th, 2015
And the Greece shell game over implementing reform (or, since it’s Greece, “reform”) continues.
Greece’s finance minister Yanis Varoufakis (who’s evidently still doing the negotiating, reports to the contrary notwithstanding) has handed the Eurocrats a proposal that doesn’t match what was discussed in negotiations. It’s like a cheap farce, or a con game to see how long they can keep string Europe along without actually agreeing to anything.
Greece Syriza government has said to their creditors: Economic reality? We don’t need your stinking economic reality! “Greece defied its international creditors on Thursday, refusing to cut pensions or ease layoffs to meet their demands, dimming prospects of progress next week towards securing desperately needed financial aid.”
Greece’s government also rehired public sector employees they previously laid off. What’s giving the engine a little more gas when you’re headed for the wall at full speed?
Other Greek debt crisis tidbits:
Greece introduces mandatory surcharges on tax withdrawals above €1,000 Euros.
Plus an 18% hotel and restaurant tax. Extra bonus: It will hit some tourists who have already prepaid for vacations. “It’s catastrophic.”
Living life under the threat of default. “I’ve got a bad feeling we’re not going to get a good ending.”
European “Commission President Jean Claude Juncker said that if Greece left the single currency area, the ‘Anglo-Saxon world’ would try everything to break it up.” Hey Jean Claude: Reality is doing a great job breaking up the Eurozone all by itself, between its unsustainable welfare state, its aging population, and the insistence of Euroelites on cutting those filthy commoners from having any say in the matter. And as for the “Anglo-Saxon world” trying to break up the Eurozone, have you seen whose in charge of things these days?
Greece’s Blazing Saddles act is wearing thin. (I seem to remember having made this exact comparison before…)
Tags:Budget, European Central Bank, European Debt Crisis, Eurozone, Foreign Policy, Greece, Jean Claude Juncker, Syriza, Welfare State, Yanis Varoufakis
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