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This kind of horridly unfair and inaccurate propaganda is exactly the reason. German taxpayers committed massive amounts of money to help Greece, and they get spit in the face for it.
Bad idea alltogether, from the start.
The German taxpayer has committed a whole lot of money to bailing out German, French and British banks. The German taxpayer actually got a pretty good deal on that bailout, seeing as the American taxpayer and the other EU countries' taxpayers chipped in with well over half the bailout of the German, French and British banks.
That the bailout was laundered through a compliant Greek government is incidental and irrelevant.
- Jake Friends come and go. Enemies accumulate.
As long as Germany wants to keep running a current accounts surplus against Greece, it needs to be willing to pony up the money to finance that surplus, or allow Greece to print that money itself. Insisting that Greece pays for the German current accounts surplus is an exercise in futility. (Also in arbitrary cruelty to Greek society. But we seem to have established that the German version of European solidarity ends when it starts costing money, so that probably doesn't count.)
Do really want to argue that Greece has exactly one trade partner?
Trade: Exports (2010): $22 billion: manufactured goods, agricultural products, beverages, tobacco, petroleum products, cement, chemicals. Major markets--Germany, Italy, Cyprus, Bulgaria, Turkey, U.K., France, U.S., Romania, Spain. Imports (2010)--$64.55 billion: basic manufactures, food and animals, crude oil, chemicals, machinery, transport equipment. Major suppliers--Germany, Italy, China, France, Netherlands, U.S., Russia.
Assming the countries are listed in decreasing order of importance, Germany is both Greece's leading importer and exporter. Now we just need to find a source for the actual amounts. tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
With bilateral trade worth more than EUR 8.5 billion, Germany is Greece's principal trading partner. German companies are among the most important foreign investors in the country. Over the past two years, Deutsche Telekom has gradually acquired a 40 per cent share in the semi-state-owned Greek telecommunications company OTE. In addition to companies including Siemens and Bayer that have been operating in Greece for many years, there has been a recent increased influx of retail companies like Lidl and Media-Saturn. Major infrastructure projects such as the Athens Metro and the new Athens airport have been conducted with the help of German companies. The 144 German companies operating in Greece employ a total workforce of approximately 37,000 and account for an annual turnover of some EUR 10.5 billion (German Federal Bank figures, as of April 2010).
Nice how they give the gross amount of bilateral trade, but not the net. tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
Of those three, one is Germany and the other two (Finland and the Netherland - and Finland's inclusion on this list is actually questionable) are an order of magnitude (and some small change) smaller. As trade scales faster than linearly with size, Germany is well in excess of 80 % of the trade imbalance.
So for all practical purposes, yes, Greece's primary deficit went to German export companies.
The percent of total German exports going to the Euro area as a whole has actually declined since the euro was introduced because the Euro area has grown more slowly than other regions. Germany's bilateral trade balance in goods with each of the GIIPS, however, has improved. For example, Greece's bilateral trade deficit with Germany widened from -1.5 percent of Greece's GDP in 1999 to -2.5 percent in 2008. Other core European countries, like the Netherlands, saw similar developments with the GIIPS, suggesting that all of the surplus countries benefited from increased demand in the weaker Euro area members.
First, rather than providing peripheral countries with a market for their distress goods, the Germans have been enthusiastically selling their manufactured goods to the periphery. According to Eurostat, Germany's trade surplus with the rest of the EU grew from 46.4 billion euro in 2000 to 126.5 billion in 2007. The evolution of Germany's bilateral trade surpluses with the Mediterranean countries is especially revealing. Between 2000 and 2007, Greece's annual trade deficit with Germany grew from 3 billion euro to 5.5 billion, Italy's doubled, from 9.6 billion to 19.6 billion, Spain's almost tripled, from 11 billion to 27.2 billion, and Portugal's quadrupled, from 1 billion to 4.2 billion. Between 2001 and 2009, moreover, Germany saw its final total consumption fall from 78.5 percent of GDP to 74.5 percent. Its gross savings rate increased from less than 19 percent of GDP to almost 26 percent over the same period.
I do overuse rhetorical questions, but I really don't think that matters . A assertion without a question mark is not really much better.
Now , according to the statistical annex of the OECD economic outlook report 90,
http://stats.oecd.org/Index.aspx?DataSetCode=EO90_INTERNET
Greece had a current account trade deficit of 14.9% in 2008. In absolute numbers 51.2 billion $. The trade deficit was 49,1 billion $. Now as big as 2.5% of gdp is, that is not everything and certainly not 80% of the total.
The rest are surplus sources, and the external account is balanced.
Therefore, any surplus generated by the deficit countries will eventually find its way to the five surplus sinks.
Germany is larger than the other four by a factor of what? Four? Five? Something like that, anyway.
The fact that the Greek sovereign primary deficit passed through Italy before ending up at Siemens and Rheinmetall AG is of no consequence to the conclusion that it did, in fact, end up there.
RoW is not a surplus sink for the Eurozone, which means that none of the money the Eurozone's members pay for import end up in China.
The notion that "China is bankrolling Europe" is American conventional wisdom that you're puking up as if it were fact.
I said nothing of the sort. Don't make things up.
I cuold have used Ireland. Or the Netherlands. But countries with a considerable trade surplus with Germany. Or Japan.
The Eurozone has balanced foreign accounts. RoW is therefore not a surplus sink for the Eurozone. RoW not being a surplus sink, and China belonging to RoW, China cannot be a surplus sink.
This is elementary graph theory. So elementary, in fact, that you can prove it simply by drawing a graph with the nodes "Greece," "rest of Eurozone" and "Rest of World."
Then impose the boundary conditions that inflows must exceed outflows for Greece, and that all in- and outflows to RoW must sum to zero.
The only sink in that graph is RoE. China is not in the Eurozone, and is therefore not a sink.
Q.e.d.
This has been your first and last fee lesson in elementary graph theory. If anything here is unclear, look it up before venturing into discussions of international trade again.
The Eurozone is running a balanced trade with RoW.
That means that the Greek deficit cannot end up in a sink outside the Eurozone. It. Is. Not. Possible.
As long as the Eurozone as a whole is running balanced foreign accounts, all Eurozone countries' aggregate deficits must end up as surpluses for other Eurozone countries.
This is not a difficult concept to grasp, so I really don't see why you continue this obtuse insistence that German surpluses are not the problem.
Greece doesn't have a problem with its debt in Yuan either. tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
Did Germany suffer the consequences of its decisions then, as you so put it?
Germany received massive stimulus funds?
Just like anybody else, including Greece and proportionally the least.
1948/1949: 176
1949/1950: 156
1951: 45 million $
from the Marshall plan. That is not nothing.
Say it ain't so! tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
It's curious that when it comes to financialization methods meant to line the pockets of bankers, we dream up the most fanciful vehicles. But when it comes to addressing the sovereign debts of nations, it's direct deposits.
Or, as we say in America, "Straight cash, homey."
austerity -> shrinking economy -> shrinking tax base -> unsustainable debt -> da capo al fine.
The name of the game now is "humiliate them until they snap".
Hence the endlessly moving goalposts. It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
The lie (sold most vehemently of all to the German public) is that austerity measures were every going to put Greece into a position to pay off it's debt.
What was needed was a short sharp ECB intervention at the beginning to show that it wasn't going to tolerate random speculation in Eurozone government bonds - and then an EU-wide dose of fiscal spending to dig Europe out of the worst situation since the Great Depression.
Ever since Austerity was chosen as the policy response, we've been locked into a death spiral. Many on this site (including me) kept hoping that we could break out of that - but the reality is as long as people keep pretending the Austerity could work in the middle of a Lesser Depression, the more doomed we are.
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