Michael R. James writes: Re. “€360b souvlaki in the back of the room refuses to go away” (yesterday, item 21). I suppose that “Greece’s bailout needs could balloon to €444 billion in a worse-case scenario” despite its current debt being €360 billion because of the high interest rates and compounding on that debt (e.g. it was €340 billion in June). This is why there needs to be a haircut to those bonds and more than the 20% the banks want. My simple and perhaps simple-minded calculations are thus:
Greece: GDP: ≈€219 billion; Debt: €360 billion (164% of GDP but Wikipedia lists it as 130% to 140%, perhaps being Net Debt) Outcomes when bonds are written down to varying degrees (remaining debt):
- Write-down 20% (€288 b) = 132% of GDP
- Write-down 40% (€216 b) = 99% of GDP
- Write-down 50% (€180 b) = 82% of GDP
- Write-down 60% (€144 b) = 66% of GDP
The 50% write-down would put them in the same ballpark (debt as %GDP) as many EU members including France and Germany. That may still be unviable because Greece simply doesn’t have anywhere near a productive economy and still has not managed to fix its tax collection (making it even more difficult for the government to make those payments, less of a problem in the northern European countries). Thus, the case for the 60% write-down.
When Glenn Dyer says “Europe should be preparing for an orderly default for Greece”, isn’t this exactly what a 60% write-down on those bonds is? And why wouldn’t it do the job? The banks are not going to get all their reckless lending back and the recapitalisation of the banks will have to happen whichever scenario comes to pass. (I suppose allowing a few to go bankrupt as they deserve is hoping for too much.) Unless Dyer, like Rundle earlier, is saying the Greeks should unilaterally default, which would mean abandoning the EU. Most Greeks understand that would be even more disastrous and impoverishing.
This doesn’t mean the Greeks should be let off the hook. Both as private citizens and their government, they are gorged on totally irresponsible borrowing, grotesquely rewarded public servants and systematically cheated on their taxes. No matter the culpability of others they need to take responsibility. Essentially Greece is not a serious country and needs to grow up if it wants to belong to a serious club like the EU, not least establish serious tax collection as this author and others have pointed out endlessly.
They need to sort themselves out to create a sustainable country where the rewards and burdens are distributed more fairly. This self-inflicted crisis represents an excellent opportunity to do so with the encouragement and backing of the EU. For all the complaints about the agonising pace of EU negotiations, this is democracy in action. In contrast to the intemperate partisan dysfunction we see in the Anglo democracies (UK, USA, Australia) it is proceeding methodically and I for one hope and believe it will succeed and emerge stronger.
Another set of comparative statistics for those Australians a bit too smug about their relative prosperity:
- Greece: €30,900 per capita debt (private + public)
- Australia: €45,454 per capita debt (private + public)
Kath Hughes writes: Glenn Dyer, “rendering” can be what you do to fat to make it into candles; or when you’re slapping stuff on walls for a nice finish; or giving (such as to “rendering” unto Caesar when it’s Caesar’s, like Jesus said); however, “rending” is what you do when you tear something, as in: “…Being Europe, the one-day summit has turned into six days of talks, horse trading and garment renderin g…”
They are two different words, with different meanings.
One is “rendering”, the other is “rending” and, well, they are just not interchangeable. Truly.
Brian Mitchell writes: Re. “Richard Farmer’s chunky bits” (yesterday, item 12). As much as I dislike disagreeing with the sage-like wisdom of Richard Farmer, I take issue with his claim that Wilkie’s best chance to retain Denison is to force Labor to an early election.
Any examination of the Denison electorate shows that it skews 60-65% “left” and Wilkie won’t be thanked by many of his admirers for seeking to install Tony Abbott and his Visigoths on the government benches.
I would imagine his preference flow would suffer significantly among progressive voters who deserted Labor in 2010 and who might come back given the party’s learning curve on climate change action and equal marriage rights.
Wilkie was a beneficiary of an anti-Labor swing predicated largely on the Rudd/Gillard government’s timidity on those two issues, assisted by the retirement of long-serving and much-admired Labor MP Duncan Kerr.
I don’t want to downplay his victory but in the end it was the donkey vote that did it: Wilkie scored top of the ticket and he needed that one and a bit per cent to crawl ahead of the Greens and Liberals, hoovering up their preferences (I might add he has his wife Kate Burton to thank — she was the one who rolled the little wooden “Lotto” balls that determined the ballot paper placings).
Wilkie will be tough to beat next election: he has incumbency, a local media that adores his every utterance and a national stage and megaphone. But if he thinks moving to the right is the best way to keep his seat, well, who am I to disabuse him?
The Baillieu Dump:
Kirill Reztsov writes: Re. “The Baillieu Dump: more accountability, but same tactics from Ted” (yesterday, item 5). Andrew Dodd and Sue Green wrote:
“Victoria had a change of government late last year but the same old tactic of dumping annual reports continues.”
But in the same article they also go on to write:
“On the day those annual reports were released, the then-opposition leader, Ted Baillieu, denounced the dumping and vowed that things would improve if he was elected. So this year only half of the reports were released together, with the rest arriving in a couple of tranches on later parliamentary sitting days. As a result, more reports were covered by the mainstream media this year.”
Why is it that when the government regularly releases information it’s a “dump”? If the media doesn’t cover all the 200-odd agencies that make up the government, isn’t it the media’s fault?
Justin Templer writes: Re. “Tips and rumours” (yesterday, item 7). In Tips and Rumours you include a quote, supposedly from a Victorian policeman, referring to the police intervention on the Occupy protest as having been in response to “the orders of a minor public official (to) use force to move on what was a harmless bunch of wastrels with some tents and a live feed.”
This is perfect propaganda for the wastrels, as included in the Wastrel 101 guidebook, which reads as follows:
(a) occupy public precinct, preferably at inconvenience to public,
(b) ignore all lawful requests to move,
(c) passively resist police when they enforce legal order,
(d) scream long and loud about use of force and police brutality,
(e) claim taxpayer-funded legal aid,
(f) do not forget to claim dole.