Has Europe put the loaded gun on the table?

A post by Edward Harrison

Greek Prime Minister Papandreou asked the European leaders to "put the loaded gun on the table" at this summit i.e. do something concrete to ward off speculators. So they have. The deal which European leaders have now struck is the best we could have hoped for given the political constraints for everyone involved. The 16 countries in the eurozone have agreed to a contingent aid package of loans and IMF assistance and supervision. The Greek Prime Minister expressed satisfaction with the result, largely hammered out by the French and the Germans before the EU summit.

But, is it enough? Will it be enough? When I posted this at Credit Writedowns I made the title a statement. I have changed it to a question here because I suspect many of you will have some opinions. Below are a few salient points that are likely to be made in order to ‘sell’ this deal to a sceptical European voting public. Update 29 Mar 2010: I have to stress I don’t buy these arguments below. I have presented them because they are likely to be employed, not because they are true. My view is that this plan is another version of extend and pretend.

  1. This is not a bailout. The accord is a contingency plan. The ‘no-bailout’ concept was always a key sticking point for the Germans. In this plan, any aid Greece receives will be made as loans. Moreover, monies will only be made available as a last resort if Greece finds itself shut out of normal market-based debt financing and faces default.
  2. This has always been a psychological crisis. From the very start, most European leaders stressed the need for ‘psychological and political support‘ over immediate financial aid. The point in this positioning is to avoid showing panic which would spill over as contagion into the markets for other eurozone sovereign debt (Portugal, Italy, Spain or Ireland).
  3. Greece never asked for a bailout. I guarantee you we will soon hear the politicians saying Greece made no formal request for aid, which is technically true. This allows Greek Prime Minister Papandreou to save face, rather than appear to be dependent on the graces 0f Germany or France.
  4. The loaded gun is on the table. From Papandreou’s perspective, it was important that he receive immediate psychological and political support, but that this support be backed by specific contingency plans. According to diplomats in Brussels, this aid package is in the 20-23 billion euro range. Note that all 16 eurozone members must agree to release the monies and all members would contribute to the loan. Germany will contribute the largest share, at 27%. The IMF will pony up 10 billion euros according to its rules of engagement.

This plan is largely similar to the one I have been recommending when it became evident that the Germans would not support a bailout (see my post The politicization of economic problems for specifics). The key is the IMF involvement, which I have advocated to both take the heat off the EU as task master and to ensure budgetary compliance. Update 29 Mar 2010: The key problem, however, is that it is not immediately operative – and, thus, in my view, will be tested down the line. It must be so because of the Germans’ aversion to a bailout.

The biggest stumbling block has been the French because IMF head Dominique Strauss-Kahn is a political rival to the French President Sarkozy, who is looking weak, having just been handed astounding losses in French provincial elections. While many Europeans don’t like the IMF because of its American influence, under no circumstances did Sarkozy personally want the IMF riding to the rescue because it would strengthen Strauss-Kahn in a future election against Sarkozy.

Last night, I posted an article based on a Figaro report that was the first to outline the deal now in place. My guess is that Sarkozy and Merkel agreed for a number of reasons.  The principal one is that they did not want Europe to look weak. Having no definite plan after this summit would certainly qualify. I said in a separate post yesterday that "I suspect, the EU will do nothing except offer political support for the foreseeable future unless default is imminent." And while this is technically true even now, the contingency plan is likely to change the optics considerably Sarkozy also gets comfort from the fact that Strauss-Kahn is not involved unless absolutely necessary.  While Merkel is able to say that there will be no bailout.

All around, this is an optimal outcome given the number of chefs in the kitchen, all with differing agendas.

Note, however, that The Economist says Greece is likely to need far more financial aid than seems to be on offer, three times as much, in fact. For now, the worst has been avoided.

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About Edward Harrison

I am a banking and finance specialist at the economic consultancy Global Macro Advisors. Previously, I worked at Deutsche Bank, Bain, the Corporate Executive Board and Yahoo. I have a BA in Economics from Dartmouth College and an MBA in Finance from Columbia University. As to ideology, I would call myself a libertarian realist - believer in the primacy of markets over a statist approach. However, I am no ideologue who believes that markets can solve all problems. Having lived in a lot of different places, I tend to take a global approach to economics and politics. I started my career as a diplomat in the foreign service and speak German, Dutch, Swedish, Spanish and French as well as English and can read a number of other European languages. I enjoy a good debate on these issues and I hope you enjoy my blogs. Please do sign up for the Email and RSS feeds on my blog pages. Cheers. Edward http://www.creditwritedowns.com


  1. Wisdom Speaker

    You must be joking.

    This half-loaded, half-baked, too-many-chefs-in-the-stew situation is going to be scrutinized thoroughly by the markets and tossed back in the European leaders’ faces. It’s not much different from Paulson’s “bazooka” in summer 2008, because it reveals the following:

    1) The European leadership has no grasp of the magnitude of the issue. It’s not just Greece, and even for Greece, the problem is a lot larger than 20 billion.

    2) The Europeans haven’t got the political cohesion that will be needed to face the far larger *actual* problem (Europe-wide), which in the course of time will reveal itself. If it takes this much time to produce even this half-baked solution, how will they cope with Spain and Portugal? Eastern Europe? The technically-insolvent-but-no-one-is-peeking main European banks?

    The market’s reaction today showed a lot of worry, a lot of fear, and even incipient panic in the bond sector…

    1. Alfred

      technically insolvent European banks??? Where is the proof for that. The problem bank list has just increased to over 600 in the US with combined assets of some 400bn USD. This kind of fearmongering really helps no one. If you want to comment do it in an impartial calm way or otherwise leave it alone. Just remember we are all sitting in the same boat pal.

      Greece has said it can finance in the market. They have done so twice already, with both their bond sales 3 times oversubscribed. They need about 15 bn euro till May according to their PDMA. In fact with debt guarantees from EU and IMF I would argue that spreads are rediculously high and will come in. Also, a good percentage of 500 million Europeans cant wait to spend their summer vacation in Greece with its thousands of beautiful islands in the Mediteranean Sea.

  2. Trainwreck

    Worry about the crazies in the USA. Lock and Load when it comes to the USA. Oh and buy food stocks, maybe ammo.

  3. Claire


    I don’t understand where the loaded gun is. What happens, exactly, if Greece doesn’t live up to its side of the bargain?

    It seems from my (admittedly very shallow) perspective that Greece got a fantastic deal–one that is much better than they should have expected. In exchange for actual cash, they’ve provided merely empty words that are subject to all sorts of disclaimers about future growth. I don’t think this lesson will be lost on the next person to come begging at Germany’s doorstep.

    1. Edward Harrison Post author


      The euro zone leaders think this is all about market psychology. By putting forward a contingency plan if Greece is near default, they will have beaten back the speculators. Basically, they believe Greece doesn’t need a bailout if it commits to a credible austerity package because investors will still be willing to roll over its debt.

      But the key word there is credibility. The first commenter is on target when he says they only put one round in the chamber because I don’t see this issue going away permanently. Austerity is likely to worsen the economic situation in Greece, requiring further cuts or an actual bailout at some point down the line. The same is true again in Spain. The eurozone is an untenable construct in its present form and this will become increasingly apparent in due course.

      In my view, the likely outcome here will be a compression of spreads and a reduction of panic for a while – followed by renewed tension when it is apparent that Europe is double dipping. What then?

      1. danny

        This is a bandaid solution designed to perpetuate the crisis. In due time it will become evident the current backstop agreement will be inadequate in an environment of a multitude of EU nations in trouble.

        As a result a new EU treaty will be arranged along the lines of incorporating an EMF, EU economic enforcement and monitoring powers and some type of EU wide taxation system. New EU treaties do not require public referendums after the Lsbon treaty as I understand it so now the political class can further their influence without any democratic checks.

        The global financial crises’ are a well planned powergrab by certain private interests in order to further centralise control globally and bypass national democratic processes.

  4. ShinjukuBaby

    “In this plan, any aid Greece receives will be made as loans.”

    Yet again, a problem of excessive debt being dealt with by taking on more debt.

  5. Hugh

    Hey, Geithner and Summers think our problems are psychological as well. It’s all a crisis of confidence. Get those rose colored glasses on everyone and the world will look fine again. Problem solved.

    “The key is the IMF involvement, which I have advocated to both take the heat off the EU as task master and to ensure budgetary compliance”

    Doesn’t the EU have the largest GDP of any economic entity on the planet? Why does it have to keep running off to the IMF to get its hand held? Haven’t we seen this before in Eastern Europe and the Baltics, where instead of leadership by the Germans and French, we have seen more of a cut and run? If the EU can’t stand the heat, maybe it shouldn’t just stay out of the kitchen, maybe there should be no kitchen. All of this just looks like a patch, and not even a real patch, but more like a promise of a patch. Greece pretends it will change its ways, and Germany pretends it will loan Greece money. Seems like a Euro-version of extend and pretend. Nobody is looking at the underlying problems and they are all hoping if they don’t long enough they will magically disappear. Where do these guys think they are? Kindergarten?

  6. attempter

    All four of those elements of the con are familiar from the American version.

    Paulson led the way in trying to say “it’s not a bailout”, though even the MSM didn’t try much to help there; to this day they still try to say this is just a psychological crisis (“the fundamentals are fine”, America’s a “nation of whiners”), or at worst a liquidity bottleneck, but under no circumstances a fundamental insolvency fact; Goldman’s party line to this day is “everyone benefited from the bailout, but we never needed it”, and don’t even the likes of AIG try to say the same?; as disgusting as speculators are, and as severely as they should be dealt with, they aren’t the reason Greece, or Lehman, or anybody else is insolvent. With this “gun on the table” they really do just threaten to shoot the messenger. Like when Goldman led the way in scapegoating short sellers (and getting some kinds of short selling temporarily banned in 08, another aspect of the Bailout customized especially for them).

  7. Tortoise

    The most important decision was taken by Mr Trichet. That’s the most important news of the day on the matter of the “Greek crisis” and will be helpful to maintain liquidity to Greece. Here it comes in case you missed it:

    “ECB president Jean-Claude Trichet said the bank will leave emergency collateral rules in place into 2011, softening his stance as Greece struggles to reduce the European Union’s largest budget deficit. It is the intention of the ECB’s Governing Council to keep the minimum credit threshold in the collateral framework at investment grade level (BBB-) beyond the end of 2010,” Trichet told the European Parliament on Thursday. He also said the ECB will in January introduce a “graded haircut schedule,” allowing it to charge banks more for the lower-rated collateral they submit in return for ECB loans.” http://economictimes.indiatimes.com/news/international-business/ECB-to-keep-collateral-rules-into-2011-Trichet/articleshow/5725196.cms

    As for the euro-group, it went well. Merkel can go back and claim Germany will spend nothing. Sarkozy will claim that he forced a solution. And Papandreou is reinforced in his efforts for reform.

  8. KD

    The real problem in Europe is, I think, cheap currency and cheap labor in Germany. Of course, it would not be fair not to refer to Greece’s profligacy. The aid package is only a patchwork. Without the reform of underlining economic condition, we will be intermittently reminded of this malaise.

  9. PJM

    In my humble opinion, this is not clear to all what is happening in Europe.

    Germany and others believe (and my personal opinion is the same) that is better an outsider to give political an technichal assistance than governments in case of default risk. Wich isnt the case of Greece or others in eurozne. Politically is dangerous because for some countries theure feeling that are loosing his soberanity during the cure to the economic problems. If is and international institution outside Europe involved in the rescue plane is better accepted by populations and they save the face. Otherwise some countries can feel that rivaliry inside Europe could be a way to capture his own soberany, as we can see today in Greece where nationalism dont acepts the cure to their problem. So the best thing to Europe is to have external aid and involving in case of a need od rescue plan.

    What politicians believe also isnt only a psychological problem because they know that we are living rough times. They use some language that is rethorical to his own poplation and calm their countries. But they know that markets are nont functioning well and there is a suspection that marekts are beeing rigged and manipulated by some big investment bankers linked with external governements to atack eurozone as wednesday, after the release of good economic indicators in Europe. Thats why Spain, Greece and later Germany gave indications to their secret services to find who are manipulating markets and trying to atack the Eurozne and who is shorting €uro.

    This is important because there are signs that USA is leading deliberated atacks to Eurozone to try destring the euro currency. But not only the euro but it exists the blame game cheater agaisnt others, atacking China, Europe and even japan to hide the crude reallyty: USA doesnt have enouph investors to sell his debt. Thats why without FED support USA coulde have a colapse in his debt bubble and an sudden skyrocketing interst rates. USA cant sustain his debt issuing at this rates unless FED monetizes his debt or rise interest rates. And youre seeing the first signs that the debt governement bubble is cracking as we saw in the last treasuries auction.

    The problem is. USA has excessive interest rates that are exporting inflation and his imbalances to others countries, as ASIA, for example. They must increases his interest rates because excessive low interest rates and imports from USA. USA cant sustain this levels od debt without higher interest rates. There has an gigantic american debt bublle that is cracking. Ant to divert thw world, USA is blaming others and seeing armageddons outside their own borders when the roots of international imbalances are the dollar printing and federal spending without control by Obama Admnistration.

    Europe knows this and knows that markest are suspectious of manipulation. And they feel that someone is behind the histeric screams about some europeans countries. The plain truth is: USA is in worst siuation than Europe. USA lost his credibility when mr. Buffett has better credibility and financing yields than USA Federal Governement. And european politicians feel something is rotten in international markets. They feel but dont say openly to others.

    So the european situation isnt good but is better than we see in news. And if Europe sustain his fiscal deficits and imbalances inside Eurozone, euro could be the winner who takes place instead the dollar in international markets. Euro is the best competitor to replace dollar as reserve currency. That is the main truth. USA dollar is doomed if the american twins deficts arent cut. And the onlye real competitor is the euro. If Germany introduces reforms in the eurozone, euro will replace the dollar. Europeans knew that as americans.

    Who dont discusses that fact, euro competition verus dollar, when were talking about that actual sovereign debt crisis, ins only entertenaing his readers. As we will see when the selloffs of american bonds is reallity. And the debt bubble blows up and put dollar interest rates in the stratosphere.

  10. Swedish Lex

    The EU has just managed to avoid disaster, but not by much. This is obviously not a solution, but a temporary band aid in the absence of something more substantial.

    Looking at it positively, the States at least managed to create a new legal and political process that should come up with proposals before the end of the year. From the final Statement: “We ask the President of the European Council to establish, in cooperation with the Commission, a task force with representatives of Member States, the rotating presidency and the ECB, to present to the Council, before the end of this year, the measures needed to reach this aim, exploring all options to reinforce the legal framework.”

    Those recommendations, which thus should come before the end of the year, could include Treaty changes concerning the non-bailout clause. The politics between now and the end of the year will be interesting to follow.

    As regards the position of France, it is probably true that petty politics have played their part as regards France wanting to exclude the IMF, but I believe that is a minor point. More relevant is the French fear of the IMF being a Trojan Horse for the U.S., and the rest of the world. The vision in France concerning Europe is that it, ideally, should be as foreign for the EU to call in the IMF as it would be for the Washington to solicit the support of the EU to prop up California. That vision is quite obviously quite far from present reality, but France, and other euro states, have a clear vision of proper EU economic governance, which also came across in the final Statement:
    “Furthermore, we commit to promote a strong coordination of economic policies in Europe. We consider that the European Council must improve the economic governance of the European Union and we propose to increase its role in economic coordination and the definition of the European Union growth strategy.”

    According to media reports, the word “governance” was initially “government” but was changed on the insistence of the UK. Not a minor detail.

    So, the cultural/economic/political clash between the competing visions and non-visions for the euro zone will continue and a new political process for that has been created. We will see if it is the team that plays offense or the defense team that scores most points. Merkel’s new Germany first policy may make her popular at home but she is may risk losing friends in other euro states and hence crucial support when she needs to build necessary support for whatever compromise she will be championing.

    1. Hubert

      Swedish Lex,

      If you were german chancellor or french president,
      what would your approach to the problem be here and looking forward?

      1. Swedish Lex

        It takes two to tango, but it seems that the German political leadership is forgetting/moving on from the insight that Europe is “doomed to” interdependence. The new German approach was well analysed in a good FT column today: http://www.ft.com/cms/s/0/6bbc71d8-3847-11df-8420-00144feabdc0.html

        If this trend continues, with Germany wanting to turn itself into a “greater Switzerland”, then it would mean a complete strategic shift in Europe. Irrespective if one think that is a good or bad thing as such, it would inevitably mean that Europe’s lead on climate change, environmental laws, a (sort of) coherent Trade Policy, etc. would weaken significanlty over time. All these things matter a lot to Germany, so my hope is that they reconsider and re-engage with the rest of us which they seem to consider to be a bunch of squibbling economic under-performers.

    2. Kevin de Burxelles

      Thanks for your summary Swedish Lex. This aligns well with what I am hearing as well.

      The key point for me is that at least there is a roadmap for future expansion of economic government. It will be interesting to hear what our British euro-sceptic friends have to say about this. Brown toned down the language a bit so that it would not become an issue in the upcoming election.

      I suppose the bitter pill of the IMF replaces the “euro death penalty” that was being discussed earlier in the week. In these situations carrots do have to be matched by sticks. Now there is a serious incentive to avoid having to resort to bailouts and hopefully all parties will be incentivized to work things out before it is necessary to call in the IMF.

      The underlying tensions about the IMF are based on the fact that Europeans know their social model is under Anglo-Saxon assault. There is no question that American (and some British) elites would love to see Europe be forced to abandon its social model. By this I mean the long vacations, the free pre-schools and universities, the mostly public universal health care systems, the pension systems, etc. American elites know they can only feed so much anti-European propaganda before their domestic population starts asking why they too cannot have these same benefits. You see American commentators more and more openly questioning the European way of life.

      The European social model is the real battleground here and the EU must realize that it’s mission statement is first and foremost to fight and win this war against attempts to socially Americanize Europe (it’s already far too late in the battle against American culture unfortunately).

      1. Swedish Lex

        My view is, as you might suspect, that the only way for the European social model to survive is for the EU to continue down the path of economic integration. Without that integration, inter-state economic cannibalism would come in place, in particular in times of crisis.

          1. Swedish Lex

            German media is trashing Merkel: “Merkel’s Greece Deal ‘Betrays the Concept of Europe'”


            A quote: “The center-left Frankfurter Rundschau writes:

            “If — after forty years and a single currency — the Chancellor now calls on the International Monetary Fund to save Greece, she is betraying the very concept of Europe. In calling on the IMF, Merkel calls on none other than the United States, which dominates the IMF with its blocking minority of 17 percent. What a wretched state of affairs. What a disgrace for the European Commission and the European Central Bank. It is as if Germany could not solve a problem of the size of Hesse.”

            “And the betrayal goes deeper still: In the past, every European crisis has deepened EU integration. It moved forward in the very moments when the pressure became unbearable and the institutions revealed weakness. Now, though, it is moving backwards.””

          2. Kevin de Burxelles

            I’m going to try to make the case for Angela Merkel. And I admit that there is no doubt I am erring on the optimistic side here.

            First off let’s set a few limits. The first is that it the IMF must not get their hands on European social policy. Just think back a few years to all those young Republicans, fresh out of their Christian Academies, flooding into Baghdad in the heady days just after the invasion in 2003. If the IMF were to have their way now, we would have swarms of even more lethal young Democrats, fresh out of their Ivy League schools, flowing into Athens to impose among other things privatized ObamaCare on the Greek population. Sixty six years after American marines stormed the beaches of Normandy; Europe has worked itself into the unenviable position of facing imminent invasion by the even more dangerous forces of American social policy embodied by the IMF.

            But leadership is difficult and sometimes it means taking criticism. In this case it was Greek Prime Minister Papandreou who first pulled the IMF Glock out of his waistband and started waving it at Merkel. All she has done is wrestle it out of his hands and managed to pin him to the ground, his arm pinned behind his back, and she has that IMF gat pointed straight at his dome. That’s pretty much where we find ourselves today.

            The other limit is that Germany has no option to go it alone, to become a Greater Switzerland. I hate to even bring this up, but as an exporting nation they are vulnerable to their products being boycotted, and if your average rank-and-file European even suspected that Germany wanted to help Obama impose privatized health care on Europe through the IMF there would be huge picket lines in front of all major German companies throughout the rest of Europe. Small children would be sacrificing their precious Playmobil toys so they could be burned in huge anti-IMF bonfires.

            Although I admit the sample size is quite small, I have met enough Germans to be convinced that they are committed Europeans and that this bottom up pressure will reach its way to the top, and when combined with the latent threat to German exports, this should provide enough raw pressure to assure that the current leadership’s apparent egoism go will not go too far.

            And while it is difficult to compare a country with a bank, we have to bear in mind all the criticism that we have for the American bailouts in 2008. In that case American policy makers were ever so eager to throw free taxpayer money at Wall Street and in the process created a sticky web of moral hazard. At the end of the day it has been a combination of Greek extravagance and EU complacency that lead to the crisis on this side of the Atlantic. If she wanted to avoid criticism she could have already just written a check for Greece. But this easy move would have been even more damaging long-term for the European social model than those IMF troops squatting in landing crafts, bobbing in the wake, just over the horizon. Europeans must fundamentally and firmly reject the Anglo-Saxon debt booby traps and those who have been caught fiddling with them along the railroad tracks despite repeated warnings must learn a hard lesson.

            I certainly felt Sarkozy’s pain as he struggled to answer questions about the logic of an IMF intervention in Europe. Undoubtedly he had been arguing against it heatedly an hour earlier. And by the tone of his voice it was pretty clear that all those military hardware sales he was trying to get in at the last minute before Greece’s credit cards get torn up are now officially history.

            As for future reforms it is clear that Europe has fatally divided its troops between those in the Eurozone and those countries without. The interests of the two groups are so differing hat no meaningful accord is likely to be found between them. The plan from here on out has to be to advance European integration only among the Eurozone countries. One advantage of the organic growth of the European project is its flexibility. While it is true that De Gaulle made a critical error ever letting fifth columnist Britain to join the EC, the time is now to right this mistake by pushing forward with economic government among only the sixteen euro countries. In five years or so Britain will decide that they cannot afford to be out of the union–in other words they will be ordered by America to join in order to slow things down again.

            As for the charge of Merkel being blinded by self interest; this is historically quite a normal situation. We have a tendency to look back and see great events as if they were inspired by far-sighted statesmen. Like the Normandy landing for example, surely the Allies put their petty self-interests aside and concentrated on the huge task of defeating Hitler for the good of mankind, right?

            Unfortunately no, due to his petty obsession with maintaining Britain’s colonies, if Winston Churchill had had his way the Normandy invasion would never have happened and instead the Allies would have landed on the beaches of Rhodes. In 1943 after the initial Allied successes in North Africa and Sicily there was a huge disagreement in the Allied camp on which steps next to take. Roosevelt wanted to launch Operation Overlord and invade France along its north Atlantic coast (as well as another eventual operation in the south of France). Churchill rejected Overlord and instead wanted to launch the rather wispily named Operation Accolade, an invasion of the Greek island of Rhodes. The British, concerned about their colonial possessions further east wanted to pursue a Mediterranean strategy of island hopping. Next after Rhodes would have been Crete and then perhaps Cyprus. In the end the two Allies could not agree, the British were strongly resisting invading France, and, believe it or not, it was actually Stalin at the Tehran conference that ended the debate decided on Operation Overlord. And what would have happened if Churchill had won the debate and the Allies had veered off into the abyss of the Mediterranean? The Soviets would have eventually given up on Allied promises of real action and instead made a separate peace with Nazi Germany. The German occupation of Western Europe would have continued and the Allies would have been the proud owners of a bunch of useless islands (although admittedly their naval situation would have been improved). Hitler would have lived on to fight a one-front war against the West.

            So even the best of statespersons falls into the trap of self-interest.

            With yesterday’s summit, Merkel’s weak version of Operation Accolade has won the day. But this is not the final say and at this point that was the best they could do. I’m not sure who is going to play Stalin but in the next round they will have to be better, much better, or the IMF will indeed launch their own version of Overlord and gain a beachhead in Greece and then it is just a matter of time before the European social model joins the dustbin of history.

  11. blagroll

    Euro uber alles! Warms the cockles of my heart – not.

    Europe is simply caught in a complex game of national corporate interests versus the ideal of the EU as a superstate, but where no super-Europen-corporate clientele, as such, exists to nurture. The patch applied to this crisis is not so much a Greek patch as a patch on the French-German cooperative vision for Europe. The Germans by virtue of their export oriented economy, relatively high personal savings rates, and so-called reforms that have weakened domestic worker and consumer bargaining power hold all the aces now. The can enforce deflation on those they consider the most profligate Euro members at the moment. Weakening Euro members may give them room to manouvre their domestic corporations, along with a few token corps from other nations, into the predominant suppliers of goods for the Euro zone.

  12. PJM

    I would like to remember the same histery against the doomed scandinavian countries some years ago. When nordic european countries had a credit crunch and a financial crisis, all said that they will crash because thay had high debts, high fiscal deficits and socialialist menthality.

    Nordic countries made some economic reforms, they saved their financial system and, surprise for some, they reduced their external debt in levels that are a good example for others. Especially Finland, Danmark and, of course Norgway, they are the best examples what can be done in Europe.

    Germany wants to do the same. They introduced in their basic law that they must to have superavits in their budget balances. Germany wants the same in Eurozone. As in the nordic countries, except Sweden, that economic reforms made them high competitive.

    So who is seeing Europe doomed isnt good at seeing what others made in the past.

    Is good to see armageddon in Europe when we close eyes inside home. hey, you canm allways blame others for your own mistakes but the reallyty is: USA has a fiscal deficit higher than Europe and has a trade deficit. Who is worst?

    American nationalism is dangerous when cognitive dissonance dont gives the real picture to some analysts. Too bad. Like in the thirties. Too bad for all. As the past showed to us in the worst way: blood, tears and painful for all.

    1. EB

      The Scandinavian recovery was a somewhat smaller challenge to an expanding and ‘relatively healthy’ world economy.

      Now we are talking about a region with the world’s largest GDP, recently expanded to 27 nations, sailing into a global economic hurricane, from which there is no escape, and no safe harbour. As Sarrazin recently admitted, there are only 5/27 countries in the EU that are technically sound.

      Let’s not kid ourselves. The gun is on the table.

  13. a

    Make no doubt about what the IMF involvement shows – Merkel is running the European show. Not even the German Finance Minister wanted it.

    I don’t think Sarkozy is against IMF intervention because of Strauss-Kahn. A basic rule of politics is your popularity usually goes up the less responsibility you have. So on the contrary, if Strauss-Kahn and the IMF tell the Greeks to increase their retirement age, it’s probably a negative for Strauss-Kahn in the French Presidential election, because the French don’t like the idea (Sarkozy’s current push to raise the age limit is making him very unpopular). Sarkozy is against IMF intervention because: (1) he wants Europe to follow French orders, not Washington’s; and (2) he would dearly like to go the Brown route and spend his way to re-election, but IMF involvement sends a clear signal that there will be costs to fiscal profiligacy.

    Germany wants IMF involvement for a number of reasons. First, to send a signal about fiscal extravagance. Secondly, so Germany isn’t the bad guy telling the Greeks to do things like raise the retirement age; that will be the IMF’s job. Thirdly, all the usual suspects in Europe didn’t want it, so that in itself said it was a good idea. And fourth, it showed who’s boss – Merkel.

    Somebody mentioned the ECB extending its emergency measures on collateral another year. I can’t believe this decision was taken lightly. There’s a big decision looming on the ECB – who replaces Trichet. Weber, the German, was the favorite before. Even more he is the favorite now.

  14. /L

    The phantom of Heinrich Brünning is ruling Euro economic dogmas, didn’t they learn anything the last time. Brünning dished up Germany to Hitler and the Nazi party. Brünning was convinced to the end that he was almost there, despite that around him German economy was in splinters, reality at last should conform to economic dogma. Six million unemployed and another million or two that have fallen out of the system, heavy industry and construction in a standstill and communes and even federal governments filing for bankruptcy. But Brünning was convinced he was almost there, but when he attacked the estates east of Elbe Hindenburg (himself an estate owner) finally fired the loony.

  15. PJM

    I am sure that a lot of readers will be disapponetd to know facts. But yesterday, portuguese Parlament endorsed the government austerity plan. And mr. Triched agreed that Portugal has moving forward to cut his fiscal deficit and debt.

    You can ckeck this:

    “Lawmakers in Portugal have backed an austerity plan to restore the country’s battered public finances.

    The minority Socialist government and the opposition Social Democrats agreed on measures to ease the country’s huge debts.

    Investors fear Portugal could follow Greece into a deeper financial crisis.

    Portugal’s finance minister said the vote was key to restoring credibility with the markets.”

    “European Central Bank President Jean Claude Trichet hailed the vote as “important decision” taken by Portugal, in particular the move to freeze salaries for civil servants.”

    Both in http://www.euronews.net/2010/03/26/portugal-s-parliament-says-yes-to-cuts/ .

    Maybe some will be disappointed to know that Portugal is very quiet withotu riots in the streets. Maybe will be disappointed to see political support from the main oppostion party to the fight against the fiscal deficit and public debt. Maybe will be disappointed to see that greek crisis didnt spread to our cowntry as they predicted. maybe they will be disappointed to see that we dont have any armageddon in Portugal.

    Perhaps its time to look inside home instead having fun with others problems. Blaming others for yours problems isnt the way to live as we know in Portugal. We dont laugh on others problems. We hope to fix ours problems and to see others fix their own problems.

    Instead wars between countries we sould be together trying to fix global problems: instead blaming others for ours mistakes we should fix ours and help who needs our help. But some people believe that will emerge as good ones just because they see neighbors home in fire. But sometimes that fire at our neighbors home sperads to our won home. Careful with you wish.

    1. Diego Méndez


      you are absolutely right. The problem with the Greek bailout, previous commenters said, is that it doesn’t include a bailout for Portugal and Spain.

      Well, that’s what a Greek bailout is supposed to be, isn’t it?

      Financial and economic conditions outside Greece are completely different to those inside Greece. Only Greece objectively needed a bailout (and this only because of investors’ fears).

  16. Terry

    The “solution” solves nothing. If Greece has to borrow from the EU-IMF, which it almost certainly will have to do, it will (a) make a liar of Merkel, (b) weaken Sarkozy’s position, and (c) add to Athens’ debt woes.

    This is the kind of solution–extend and pretend–that is getting ALL the major economies in ever deeper water.

  17. Losing Ground

    “(and this only because of investors’ fears).”

    I would say that those fears are well-founded. When the guy who is begging for money claims that he can’t afford to pay 6% interest on his borrowings, you can assume that his country has a problem.

  18. Vinny

    This is a bad precedent. the EU should have let Greece collapse.

    It’s easy to bail out a second world country of 10 million people like Greece where salaries and pensions are 1/4 what they are in other EU nations. Let’s see what Germany will do when Spain, Italy, Portugal, Ireland and France get in line, hat in hand. Spain in particular, because it really has to come down a lot in order for their salaries and pensions to match their productivity and the nation’s overall value, and there’s 40 million people in that country.

    I think the PIGS have some pain to go through. That’s too bad, because they are nice countries.


  19. PJM

    Vinny, youre absolutely right. Thats why USA saved banksters and is screwing the middle classe.

    At least in Portugal we put banksters in jail.

    I read a lot of words from who doesnt know what is happening in Portugal. But, hey, you can seacrh where Portugal is. Google it. ;)

    Sorry but is funny.

    1. jdmckay

      At least in Portugal we put banksters in jail.

      Just curious… for what/when/how long? Do you have links?

      IMO that’s one of the best economic corrections available. I’m continuously amazed (I live in US) that we’ve bailed out WS crooks to the tune of over a years GDP, w/out really even having a public discussion about their role in this mess, let alone corrections.

      And FWIW, I had very close friends living in Cascais… me & wife travelled their twice (spring of ’88/9) to visit/vacation for 2 weeks. Lovely, wonderful time there… great people.

      1. PJM

        I found news in english concerning BPNs case:

        “Former head of nationalised bank goes on trial

        The former head of Portugal’s BPN bank, nationalised after losing €700 million, is to stand trial for fraud and money laundering, officials said.

        José Oliveira e Costa, BPN’s ex-chairman, is accused of creating a devious scheme to siphon of funds from the former private bank. State owned CGD has pumped around €4.2 billion into BPN since it was nationalised late 2008 to plug a black hole.”

        In http://www.theportugalnews.com/cgi-bin/article.pl?id=1054-15

        The problem with all the cases is the portuguese judicial system is very slow because our juridical system have a high degree of warranties to peoples whos is charged by courts. Before our Democracy the juridical system was very politized and had low warranties when the State charged agaisnt some person. Other problem is the complexety of our system with a lot of corruption in our political and justice systems that we are struggling to manage. I think the corruption is the worst thing in Portugal and is very difficult to combat. However the judicial system is learning more about corruption and to fight that problem, that uses a high degree of sophistication in financial products and channels.

        Some thinkers in Portugal believe the main portuguese problem is corruption and distorts internal competition and markets that doesnt help wole Portugals competitive position. I believe that corruption has a high degree wheigth in our lack to export to others countries because we have high rent seeking sectors in our economy. Others have another view in that problem.

    2. PJM

      Dear jdmckay, I hope that helps:

      “Ex-gestor do BPN José Oliveira e Costa detido após buscas

      O antigo administrador do Banco Português de Negócios José Oliveira e Costa foi detido na sequência de buscas domiciliárias. O antigo gestor do banco está indiciado por burla, branqueamento de capitais e fraude fiscal.”

      In http://tv1.rtp.pt/noticias/?article=67181&visual=3&layout=10

      Now the courts are judging his case and others mates from this ex-banker. We had more problems with bad behavior from banksters but the case are in Court.

      The good thinh is that others bankers are asking for more and better regulation and supervising. They said that fair competition inside portuguese financial system was corrupted. The best example is the banker leader from BPI:

      “Ulrich defende regulação dos CDS

      A discussão a nível europeu deveria focar-se no aumento da “competitividade da economia e coesão social” e não no sistema financeiro, entende Fernando Ulrich. Porque “a crise financeira foi anglo-saxónica e não uma crise global”, o presidente do BPI defende que se deveria deixar ingleses e americanos “porem as suas casas em ordem” antes de discutir alterações. O banqueiro defendeu, contudo, a regulação dos credit default swaps (CDS) – instrumentos utilizados para cobrir incumprimentos de empresas ou Estados – e frisou que o mercado da dívida deveria ser obrigado a ir para plataformas regulamentadas, como o mercado de acções, para reforçar a transparência.”

      In http://jornal.publico.pt/noticia/27-03-2010/ulrich-defende-regulacao-dos-cds-19077110.htm

      In Portugal we have a better financial system today than others countries because we have some conservative management in the banks. The main problem for the financial sector is the current high number of foreclosures that afects the balance sheet and impairment costs.

      Thanks for your question and I hope that you still enjoy yours Cascais friends and the good becha and sun there. Is very good.

      1. jdmckay

        Thanks for the links.

        Now the courts are judging his case and others mates from this ex-banker. We had more problems with bad behavior from banksters but the case are in Court.

        I’m very curious about this. As you describe, sounds like what I’d like to see here. My interest relates to what Portuguese legal system is able to do effectively, eg:

        *identify crimes and call them that, largely removed from political influences… or in other words, honest justice.

        I’ve become skeptical of this process… too many instances in last decade where a big show was made by (US) DOJ of their efforts to “uphold the rule of law”, followed by… well, not much of anything.

        Just off top of my head, we had…
        * Jack Abramhoff: (arguably) most influential, by means of corruption (bribery/political contributions) lobbyist operation in my lifetime. The scope was wide & deep: he affected judicial appointments, ran scam non-profits, routed stolen $$ to politicos, and had a hotline to Karl Rove’s office (among others) which he used to maximum affect. His co-operatives were throughout government, both federal and state, and together they defrauded (literally) millions of $USD. He was directly tied to host of highest ranking GOP lawmakers throughout K-Street years. We were told that he was “co-operating” with investigations, thus receiving lower prison sentence (reduced to 4.5 years). There were no prosecutions from his “cooperation”, he’s about to get out of jail, and US Senate investigating committee (Sen McCain) has sealed records of that investigation for 50 years.
        * US Attorney scandal… political appointees doing political lawmaking decisions across the country. And… nothing.
        * Enron scam, involving WS up to it’s ass, defrauding California of (at minimum) $32b in cooperative fraud executed by small consortium of Texas energy companies. Result? A couple prosecutions, Ken Lay’s fake death, no re-compensation, and federal agencies (FERC) making deals w/perpetrators to: a) seal records of their “confessions” and b) promise of no fines/prosectuions.

        * Through all this: Enron, WorldCom and a couple others… our Feds went after…. Martha Stuart.

        * And of course, the broad/wide/deep utterly corrupt “financial crisis” we now enjoy, where our federal government agencies, across the board, have chosen to refinance the crooks and put bill for doing so on taxpayer’s backs.

        So anyway, out of perverse desire to see if justice is working well somewhere on the planet, I think I’ll dig a bit and follow your proceedings. If it proceeds to conclusion and you suggest, would be a beacon of useful & moral justice IMO.

        Best wishes on that.

        They said that fair competition inside portuguese financial system was corrupted.

        Who would have thunk it?

        1. PJM

          Dear Jdmckay, if I understood weel your question is: is the corruptios that stops better economy functioning?

          Some authors, anglosaxon, believe that isnt the corruption that stops the cacthing up process. (Im saying using my memory but I remember read some working papers with that assumption.) My personal opinio is. Is true that more rich the country, less tolerance to corruption. That their assumption. But however I think the corruption harms more the growth process than they found in their empirical studies. And harms in terms of less growth rates as income distibution. I cant give you better thatn my opinion using several international studies made concerning Portugals case. When they find high rent seeking sectors I think that happens because keynesian thought and corruption on political parties. But I can that factor, the corruption, is more complex than taht and I dont have good studies on that problem.

          The portuguese judicial system is slow but generally works well. However fighting white collor criminality and corruption is somewhat less efective because werre a small cowntry. Do you see, I have old school friends that are judges, others politicians, others business men. And that relations arent good when that criminality happens because the friends in good position, even they dont like corruption, dont believes that their friends can be a corrupt man or something like that. What is bad when that kind of criminality is fighetd by judicial system.

          But maybe Im wrong and corruption isnt so harmfull as I think. Maybe is wishfull thinking however is that what I believe.

          1. PJM

            Dear Jdmckay, I can give you more information concerning internal market behaviour.

            Some years ago, Portugal adopetd new legislation to combat trusts and economic corruption . Then an anti-trust agency was created with american inspiration. One teacher and economic researcher in that subject was the leader of that new agency. His name is prof. Abel Mateus and is one of good academic author in the subject.

            What hapenned was good. Our internal inflation was allways above the european everage inflation before that agency was created. But since then our inflation is lower than in €urope and we have less volatility in our prices.

            Some can say that change in our price fixing inside the portuguese economy has one main factor: economic crisis. Others tend to believe that was the new regulation and that agency that start having effects on our internal market.

            I tend to believe that is a mix of causes. Internal crisis (less internal demand, of course) and better regulation and better instruments to combat corruption, trusts, oligopolies and so on.

            Im dont live in Portugal now and I dont know much more studies on that subject in Portugal. So is my personal opinion but I stringly believe that last years a lot of things changed for better.

            I believe that by indirect observation. Portuguese economy missed last businesscycle with an “lost decade.” However, this time, our economy is in better than some years ago and industrial production and exports are leading the economi cycle, in connection with european cycle, with some lagg. Normaly portuguese economy has an time decalay to central europeans economies.

            I think that our economy is in better shape because that new laws anti-trust and anti-corruption and we cuted some internal imbalances. Today I am more optimist about portuguese economy because Im seeing good signs and political system now has a strong believe that is fiscal imbalances and lack of internal competition that harms the good companies.

            I hope helped you with my view on that subject.

  20. PJM

    Sometimes I read people pretending teaching PIGS doing is work.

    However, let me remembering some figures:

    Fiscal deficit USA 10,4% GDP.

    Portugal 9,3%.

    Public Debt in Portugal 77%

    USA 130%.

    Hey, dont save Portugal, ask mr. Bernanke to stop QE and ask for FMIs from FMI. Chinese will ne glasd helping americans, too. Hey, I hope chinese dont forget helping portuguese too. We are screwed, right?

    Come on, when that fake superiotity disapear?

    Look at home instead pretending be smart than others. We call in Europe these kind of beahavior racism or xenophobic. I am so sorry, but that is the truth.

    1. mezcal

      No you’re not.
      It’s what you came here to say.

      I don’t post much but am a regular Yves reader.
      It would be a crying shame to have the frequently-informative comment section here devolve into yet another race-baiting cesspool.

      Please go back to Huffpo or the Kos or wherever it is you came from.

    2. jdmckay

      Look at home instead pretending be smart than others.

      That is a first principle, and ignoring it in service of what you describe is why we (US) are up to our ass in disorganized, purposeless, war against ourselves confusion. I’m not sure, under current conditions, we have the intelligent & moral core to right the ship.

      Just 10 yrs ago, things (economy) in pretty good shape w/a good roadmap for the future if we had followed it. US leadership will have to come to terms w/what steered us off course, be honest about evaluating, and ruthless about corrections… if we’re ever going to get back on track.

      I don’t see much evidence of that happening, I’m sorry to say.

      We call in Europe these kind of beahavior racism or xenophobic.

      I think those terms are appropriate.

  21. PJM

    My dear Mezcal, normally I came here to read as you until I start seeing double standards to PIGS. Do you see, Im portuguese. I am from Portugal. And I dont like to see some peoples arguing as if we portuguese are pigs. Stupids, spenders, and so on. But at same time I dont see the same analisys concerning USA and UK, who are in worst shape than Portugal. This is the truth and this is thne old emperor without clothe.

    I remember the first time when Ives put a leading headline: “violent protests in Portugal.” I read and I thougth: “what hell is that? This isnt true. This is spining against my country. Who is shorting Portugals debt and puting these lies in the news?

    Yves recognized the error and changed the headline. Showing good faith. But a lot of commentators are ignorantes or blaming others for theirs own problems.

    A lot of comentators they dont even they dont know Portugals figures concerning public debt, fiscal deficits bute they say: “Its a PIG, let them fall. They deserve to blow and default.”

    Of course when I compare the portuguese figures and american figures I smile. Because USA is in worst position and has more problems than Portugal. The only thing is that Portugal doesnt have nuclear nukes.

    However, today I read this:

    “Total debt: $12.606 trillion. Debt to GDP: 87.2%. Adding $6.264 trillion in GSE debt which is explicitly backed and should be on the Treasury’s book, the total debt is $18.87 trillion and the Total Adjusted Debt to GDP is 130.6%.”

    Tyler Durden, in http://www.zerohedge.com/article/final-q4-gdp-revision-comes-56-total-real-debt-gdp-1306 .

    Is worst than americans think and worst than portuguese debt. Ouch! Emperor without clothes.

    But hey! USA has another problem that we portuguese dont have. A deficit in Social Security:

    “Social Security is officially losing ground”

    In http://blogs.marketwatch.com/fundmastery/2010/03/25/social-security-is-officially-losing-ground/

    As a citizen from Portugal, do you see mye friend, I feell if the PIGS deserve broke, americans too. May I brag abouth americans problems? No. I pray for them. because, isnt good for american people and for the world. However I cant see that double standard against PIGS and only smiling. I think that is my obligation to say the truth even if some arrogants americans dont deserve an answer.

    Im portuguese and Im seeing a tentativa to carnage my people by arrogantes and stupides ignorants. They talk about my cowntry and Europe but the are ignorantes and only wants braguing with others problems.

    Of course a lot of commentators are ignorants about the reality about my cowntry. But others are deliberatly lying to blame others for their own problems. But my wish is to give a Portugals view concerning his problems, financial position and what is happening in my cowntry. And with my views showing that what they read in mainstream media and a lot of anglosaxon blogs are lies, errors and deliberated action to show a nasty picture aboout Europen and Portugal that isnt real.

    I read some commentatores talking about… War! War in Europe because we fight with each others as brothers. That is silly and only sick mind could talk about that because we have economic problems. Are we europeans troglodits? I dont think so.

    Maybe some commentators should respect more others countries. Even poor countries deserve more respect by some who think they are rich. Maybe some think that others countries are populated with retared pople. No, they arent. And they deserve respect as USA deserve. And deserve to defense byself from others agressions. Verbal agressions, labeled people as PIGS or treated as retarded.

    A lot of commentators believe that only in USA has good analysts, economists, politicans and so on. No, others countries have others thinkers, opinions and often, more acurate picture from the world than americans.

    As ive been said before, maybe is time to americans stopr their decandence and trying to learn with others. Do you see, about 30 years ago Portugal had a lot of economic problems and we got help from USA. Do you see, mr. krugman when was very youn, gwas in Portugal helping us, portuguese, manipulating our currency. We learned a lot with him ad his mates, like Solow. Thats why I smile a lot, reading some what is wrigth here. a lot of ignorance and hate for others view or they like to see others house in fire. Maybe because USA is worst situation than others countries and wants deny his own mistakes.

    Its time for all think in that crisis without preconception and racism. We portuguese are like americans. Werent pigs. We portuguese have more than thousand of History with a lot of mistakes and goods things. Maybe you, american, should be more lowly and try to learn with us too. We had the most powerful empire in the past and now were only a small country. Maybe we could teach some americans about what there living today. Isnt good, easy and funny but its the life.

    1. Vinny


      My friend, I don’t disagree with you. I was born in Europe, lived in the US for almost 30 years, and now I live in Greece, s I know both places. I’ll be the first to say the US is a very shitty country, with no social structure or social safety (just look at the crappy health care “reform” bill they just passed), and a terrible place to have a family. It’s also declining at a very rapid pace.

      It’s not only the PIGS that are in trouble. It’s the whole world. But, because countries like the US and Britain have nukes, a phony but massive global financial scam, and also an established global media presence, they control the world. Just look at all the lying that CNN and BBC are spewing out. Other nations, like China and Germany are trying to rise in power by pure hard work, however it’s a lot harder to accomplish that nowadays.

      The problem with the PIGS, though, is that they don’t fit with nations like the US or with nations like Germany. A long time ago, Portugal was a powerful country. However, today Portugal, Greece, Ireland, and even Spain and Italy are small and weak nations. Unfortunately, little countries have to eat the crumbs that fall off the table.

      Anyway, that’s how I see things.

      As far as you English goes, I’m sure everybody here can understand what you write without any problems.


      1. KD


        I’m not inclined to defend everything in the US, but Americans are much more hardworking than most of European countries. According to OECD, Americans now work 300 hours longer annually than Germans, 200 hours longer than French, and 100 hours longer than Spanish and British. America’s rise in power has also been brought up by hard work.

        Of course, you might say, “What kind of hard work is it? Americans are working harder and harder to prop up phony financial capitalism!” But I think that continental European financial powers are also benefiting from the current world.

        By the way, China has nukes, and is very eagerly importing the technique of phony financial scams from Western countries.

      2. PJM

        Dear KD, isnt the hours that is importante in your work. is the vallue added that you give to your work and effort.

        Often are the poor countries that works a lot of hours with less financial returns.

        You must to see value addedd as the returns from your capital-work. Maybe Its good to you start to read Karl Marx in the begining. ;9

        Do you see, I have a neigbour who is american. He came to Europe to fulfill his dream. he only needs working 37,5 hours by week to produce the same as in USA. His problem is his hard working habits and he still struggles to spend his free hours. He is single and isnt so easy spending free hours as when were married. Internet helps of course.

        Ill give you another example. Luxembourg is one of most rich countrie of world. About 1/3 of Luxembourg labour is portuguese imigrants. Do you see, the same labour taht cant do the same at home. Why? This is the economic problem and chalaenge in my country.

        I hope helped you.

  22. PJM

    I would to sorry about my bad english. Its bad english and I cant do better thnan that. Languages arent my strongest skills even if I can read and wright some. But I hoped to give you a better perspective from a poor guy from one PIGS cowntry.

    Thanks a lot.

    1. jdmckay

      I would to sorry about my bad english. Its bad english and I cant do better thnan that.

      Your English not so bad… better than our last President. :) Try using an english spill chacker, however.

      But I hoped to give you a better perspective from a poor guy from one PIGS cowntry.

      t’hee heee… enjoyed reading your comments, thanks.

  23. global citizen


    You might be a poor guy but you are a smart guy. Your English will naturally get better with practice, so just keep on trying to communicate and learn. As you say, every country has economic abnd social problems and we all need to co-operate.

  24. michalis

    Hi all,

    I would like to contribute to this “gun-on-the-table” discussion. Greek goverment started this game, trying to push european leaders (germany and france) to bailout, if needed, greece. My opinion is that the more you talk about your problems, the greater the problem becomes. As I wrote last week on dailySynopsis blog, when you have a rotten product, you hide it and not promote it all over the world. For those you may be interested, I copy the link of the full article,


  25. anonymous

    Why bother with a piddling little gun when you can borrow Hank Paulson’s bazooka? It’s in mint condition, original packaging, never taken out… oops, never mind.

    By the way, I sure hope that Papandreou’s easy and ready resorting to thug-life metaphors doesn’t reflect the current state of how business-as-usual is transacted among the bigwigs in his country. Otherwise, it would explain a lot about how Greece found itself in its current predicament. Maybe when he poses for the official photo-op with other EU leaders he can make those goofy gang signs with his wrists and fingers.

    1. michalis


      All Greeks admit NOW that the country;s business model the last 30 years was wrong.. But maybe not.. In terms of people’s prosperity Greece has experienced very good times the last decades. The increase of GDP and generally the increase of quality of life was enormous. Looks like a paradox.. What do you think?

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