ARmy Rumour SErvice

Originally Posted by FORMER_FYRDMAN

So we do nothing to ameliorate the situation and assist those charged politically with hauling Greece back from the brink and we do this in the knowledge that, if Greece can't hold on for 12-18 months, the markets will move on to the next of the PIIGS with similar results only this time with an economy that may be too big for anyone to do anything about? And we're taking this risk, not because it is the only thing to do, but because we want to 'teach the Greeks a lesson', as if this is the only way to do that. Finance to one side, whatever the drivers, it is the policy of the politically inept to rub a nation's nose it simply because they can. I agree with Wordsmith 100%; all stick, no carrot invites an equally inflexible response, a poisonous legacy and a perpetual faultline between Northern and Southern Europe.

Well as structural change cannot happen in a puff of smoke, short of handing out money on street corners a quick fix is not there.
It remains to be seen what will be done, but I would expect some areas to be looked at to the benefit of some.
You seem to be under the illusion that there are some nice options available, there are not.

Originally Posted by FORMER_FYRDMAN

So we do nothing to ameliorate the situation and assist those charged politically with hauling Greece back from the brink...

I think we're into the realm of realpolitik here. There must be a clear understanding in Paris and Berlin that the austerity measures are proving counter productive: more austerity = less taxes = more austerity required. So, if we were dealing with the problem from purely a financial perspective, a mixture of the carrot and stick would work fine.

However, the cost of the 'carrots' would have to be financed by Northern Europe - and you don't need a crystal ball to see the 'carrots' are going to be required for 5 - 10 years. That would (to put it mildly) be electorally unpopular - and both Sarkozy (2012) and Merkel (2013) are coming up for re-election.

From Sarkozy's point of view, I'd bet he'd like to defer any talk of carrots until after his election [April/May]. If it were agreed beforehand, it would have no immediate effect in Greece, but would probably be seized on by his opponent.

Merkel is between the devil and the deep blue sea. If she does nothing, she may well be looking at a collapsing/defaulting Greece about the time of her elections. If she starts to finance carrots, her electoral prospects take a sharp knock.

Wordsmith

Originally Posted by bokkatankie

Now, and please do not delete me, how can an economy survive that is heavily dependent on the public sector?

Obviously by trying to move away from a the current absolute dependence on the public sector......

Originally Posted by Alsacien

Well as structural change cannot happen in a puff of smoke, short of handing out money on street corners a quick fix is not there.
It remains to be seen what will be done, but I would expect some areas to be looked at to the benefit of some.
You seem to be under the illusion that there are some nice options available, there are not.

Wordsmith's suggestion was not unreasonable and Germany is in a position (largely due to Greek participation in the Euro) to offer a sweetener.

Originally Posted by Wordsmith

I think we're into the realm of realpolitik here. There must be a clear understanding in Paris and Berlin that the austerity measures are proving counter productive: more austerity = less taxes = more austerity required. So, if we were dealing with the problem from purely a financial perspective, a mixture of the carrot and stick would work fine.

However, the cost of the 'carrots' would have to be financed by Northern Europe - and you don't need a crystal ball to see the 'carrots' are going to be required for 5 - 10 years. That would (to put it mildly) be electorally unpopular - and both Sarkozy (2012) and Merkel (2013) are coming up for re-election.

From Sarkozy's point of view, I'd bet he'd like to defer any talk of carrots until after his election [April/May]. If it were agreed beforehand, it would have no immediate effect in Greece, but would probably be seized on by his opponent.

Merkel is between the devil and the deep blue sea. If she does nothing, she may well be looking at a collapsing/defaulting Greece about the time of her elections. If she starts to finance carrots, her electoral prospects take a sharp knock.

Wordsmith

We already covered this pages ago, carrots would come at institutional level, who are also best postioned to deliver them.

Originally Posted by Wordsmith

I think we're into the realm of realpolitik here. There must be a clear understanding in Paris and Berlin that the austerity measures are proving counter productive: more austerity = less taxes = more austerity required. So, if we were dealing with the problem from purely a financial perspective, a mixture of the carrot and stick would work fine.

However, the cost of the 'carrots' would have to be financed by Northern Europe - and you don't need a crystal ball to see the 'carrots' are going to be required for 5 - 10 years. That would (to put it mildly) be electorally unpopular - and both Sarkozy (2012) and Merkel (2013) are coming up for re-election.

From Sarkozy's point of view, I'd bet he'd like to defer any talk of carrots until after his election [April/May]. If it were agreed beforehand, it would have no immediate effect in Greece, but would probably be seized on by his opponent.

Merkel is between the devil and the deep blue sea. If she does nothing, she may well be looking at a collapsing/defaulting Greece about the time of her elections. If she starts to finance carrots, her electoral prospects take a sharp knock.

Wordsmith

I agree, which takes us back to where we both were at the outset - the Euro is unsustainable in its present form and all the German (and French efforts to date have simply been a major circle squaring exercise.

Originally Posted by FORMER_FYRDMAN

Wordsmith's suggestion was not unreasonable and Germany is in a position (largely due to Greek participation in the Euro) to offer a sweetener.

What do you recommend?

Alsacien,

You mentioned earlier that it was wierd that no carrots have been included in the Greek package.

I suggest that if there are indeed carrots they should be publicised to give comfort to the Greeks that it's not a one way street. As it is, reward seems too far down the line to persuade the population that the effort will be worthwhile.

The absence of publicised carrots merely reinforces speculation that Greece hasn't a chance.