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Author: ukgold Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 465050  
Subject: Greece the NEVER ENDING Money Pit Date: 11/12/2012 11:55 AM
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Greece the NEVER ENDING Money Pit

The latest draft of the Troika report shows that Greece may need an extra €15bn in aid between now and 2014, and an extra €17.6bn for 2015-16.
These bailouts are becoming a bit like bottom less pits for the creditor nations of the currency bloc.
After two and half years’ Greece remains a problem and it is hard to see the Eurozone remaining patient with Greece when its problems seem never-ending.

http://www.telegraph.co.uk/finance/debt-crisis-live/9671011/...

Alan
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Author: steve203 Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 408231 of 465050
Subject: Re: Greece the NEVER ENDING Money Pit Date: 11/12/2012 1:08 PM
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The latest draft of the Troika report shows that Greece may need an extra

Some reports have projected handouts to Greece will eventually total some 380B.

To put that in perspective:

Government support for Fannie Mae and Freddie Mac

In addition to the government conservatorship, which CBO estimates will increase the federal government's net liabilities by $238 billion, several government agencies have taken steps to increase liquidity within Fannie Mae and Freddie Mac. Among these steps includes:[32]
1.Federal Reserve purchases of $23 billion in GSE debt (out of a potential $100 billion) and $53 billion in GSE-held mortgage backed securities (out of a potential $500 billion).
2.Federal Reserve purchases of $24 billion in GSE debt.
3.Treasury Department purchases of $14 billion in GSE stock (out of a potential $200 billion).
4.Treasury Department purchases of $71 billion in mortgage backed securities
5.Federal Reserve extension of primary credit rate for loans to the GSEs


http://en.wikipedia.org/wiki/Federal_takeover_of_Fannie_Mae_...

The game is the same: protecting banks from losses.

Steve

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Author: flyerboys Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 408246 of 465050
Subject: Re: Greece the NEVER ENDING Money Pit Date: 11/12/2012 3:26 PM
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Steve: The game is the same: protecting banks from losses.

...and screwing and then disparaging the people.


The Greek people are not innocent of stupidness and greed, but they sure are not the primary culprits in this horror show.



david fb

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Author: sykesix Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 408258 of 465050
Subject: Re: Greece the NEVER ENDING Money Pit Date: 11/12/2012 4:32 PM
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The game is the same: protecting banks from losses.

But to be fair, the Greek banks were acting in good faith, it was the Greek government that was cooking the books.

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Author: SuisseBear Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 408272 of 465050
Subject: Re: Greece the NEVER ENDING Money Pit Date: 11/12/2012 4:59 PM
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...and screwing and then disparaging the people.

The Greek people are not innocent of stupidness and greed, but they sure are not the primary culprits in this horror show.



Many were bought with useless government posts so they'd gloss over the corrupt "elite" enriching themselves. As usual the fish rots from its head.

Case in point - the arrest of the journalist who published the list of Greeks with a Swiss Private Bank account three governments had kept in the drawer for years (he has since been released).

Still no action to pursue the list though. As a ruling politician, it must be so much easier still to cut teacher's and police men's salaries and face civil unrest than to make your corrupt friends pay taxes - let alone throw them under the bus for the better of the country...

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Author: aspenglow Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 408281 of 465050
Subject: Re: Greece the NEVER ENDING Money Pit Date: 11/12/2012 5:25 PM
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man, having Greece around is like owning a yacht or something.... it's never over, always keeps costing you, and big bucks too

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Author: WendyBG Big gold star, 5000 posts Top Favorite Fools Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 408285 of 465050
Subject: Re: Greece the NEVER ENDING Money Pit Date: 11/12/2012 6:18 PM
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I often think of the Euro zone as "The United States of Europe." Of course, Europe is larger and less unified than the U.S., but it similarly has larger and smaller states, some of which are more economically successful than others.

In the U.S., more successful states support less successful states by an imbalance of taxes and federal (central government) transfers.

http://www.economist.com/blogs/dailychart/2011/08/americas-f...


America's fiscal union
The red and the black

Aug 1st 2011, 16:16 by The Economist online

Where federal taxes are raised and spent in the U.S.

SOME American states receive more in federal spending than they pay in federal taxes; others receive less. Over twenty years these fiscal transfers can add up to a sizeable sum....

In New Mexico, Mississippi and West Virginia, the 20-year transfer [the states received more in federal spending than they pay in federal taxes] exceeded 200% of their annual GDP. Transfers to Puerto Rico, which is a US territory not a fully incorporated state, exceeded 290%.

UKgold wrote: "The latest draft of the Troika report shows that Greece may need an extra €15bn in aid between now and 2014."


...relative to the size of its economy, Delaware made the biggest contribution [the state received less in federal spending than it paid in federal taxes], equivalent to more than twice its 2009 GDP. ...
[end quote]

http://en.wikipedia.org/wiki/Federal_taxation_and_spending_b...

In 2007,
Tiny Delaware (a very nice little state with no natural resources where DH and I lived for 15 years) contributed $12,285 per capita in excess taxes. Gigantic Alaska, which has immense natural resources, including oil, sucked in $7,448 more in Federal spending per capita than it paid in taxes. The District of Columbia, which is the capital of the U.S. and seat of the Federal Government, sucked in an incredible $39,234 more in Federal spending per capita than it paid in taxes.

To put it into perspective:
The GDP of Greece is about $300 billion per year (2011). The extra €15bn in aid is roughly 5% of Greece's GDP. With roughly 11 million people, this is about $1,363 per person more in E.U. spending per capita than it paid in taxes.

http://en.wikipedia.org/wiki/Economy_of_Greece
http://en.wikipedia.org/wiki/Demographics_of_Greece

Americans accept (or simply don't realize) that a bunch of states (not to mention D.C.) are "money pits" that dwarf Greece. Wealth transfer is part of maintaining a fairly equivalent standard of living across the U.S. even though some states are more prosperous than others.

If Europeans want a similar uniformity in Europe (not accepting pockets of extreme poverty), they will have to accept that some states (nations) will be permanent money pits.

Greece isn't so bad (proportionally) when compared with some areas in the U.S.

Wendy

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Author: MadCapitalist Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 408289 of 465050
Subject: Re: Greece the NEVER ENDING Money Pit Date: 11/12/2012 6:40 PM
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I often think of the Euro zone as "The United States of Europe." Of course, Europe is larger and less unified than the U.S., but it similarly has larger and smaller states, some of which are more economically successful than others.

In the U.S., more successful states support less successful states by an imbalance of taxes and federal (central government) transfers.


There is one important difference. They don't have a central government that forces transfers to the states.

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Author: markr33 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 408349 of 465050
Subject: Re: Greece the NEVER ENDING Money Pit Date: 11/13/2012 10:22 AM
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I don't think the comparison is anywhere near apples and apples. Take Delaware, for example. Is it possible that Delaware pays so much Federal taxes due to one of its main industries being hosting corporations from all 50 states?

Ot take any of the southern sunbelt states. Is it possible that the reason so much social security money is sent there is because so many retired people move there upon retirement?

And the real culprit is the steeply progressive Federal income tax and the fact that the vast majority of income tax is paid by the very wealthy, and the fact that a large majority of the very wealthy live in northern industrial hubs. A flatter tax would have the southern, poorer states contribute something closer to their proportionate share to the Federal coffers.

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Author: WendyBG Big gold star, 5000 posts Top Favorite Fools Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 408361 of 465050
Subject: Re: Greece the NEVER ENDING Money Pit Date: 11/13/2012 11:36 AM
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<They don't have a central government that forces transfers to the states. >

They do have a "troika" (the European Central Bank, International Monetary Fund and bailout fund) which lend money to the banks, which then lend to each other and the defaulting sovereigns. This is not supposed to be a transfer, since it is supposed to be paid back. However, the money that is being loaned now is to pay back previous loans that were supposed to be repaid on time but can't be.

The countries that are in trouble now are all "serial defaulters," according to "This Time is Different," by Reinhart and Rogoff.

Lending money to roll over loans indefinitely isn't actually a transfer, but it looks, walks and quacks like one.

Wendy

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Author: SuisseBear Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 408371 of 465050
Subject: Re: Greece the NEVER ENDING Money Pit Date: 11/13/2012 12:59 PM
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There is one important difference. They don't have a central government that forces transfers to the states.

That's exactly what the Club Med wants. What they don't want of course is limitation to their budget authority which such a deal would mandate.

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Author: Windchasers Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 408380 of 465050
Subject: Re: Greece the NEVER ENDING Money Pit Date: 11/13/2012 1:55 PM
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In New Mexico, Mississippi and West Virginia, the 20-year transfer [the states received more in federal spending than they pay in federal taxes] exceeded 200% of their annual GDP. Transfers to Puerto Rico, which is a US territory not a fully incorporated state, exceeded 290%.

The GDP of Greece is about $300 billion per year (2011). The extra €15bn in aid is roughly 5% of Greece's GDP. With roughly 11 million people, this is about $1,363 per person more in E.U. spending per capita than it paid in taxes.
...
Greece isn't so bad (proportionally) when compared with some areas in the U.S.



It's worth noting again that the 20-year transfer for US states is the accumulated net spending or deficit for the entire period of 1990-2009. Greece's 5% subsidy is just for the latest aid package.. if this represented the normal annual aid, it'd be 100% of GDP over 20 years.

It'd also be really interesting to see the breakdown of spending by state. How much is Medicare/aid, veterans' benefits, food stamps, military bases, infrastructure, etc.

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Author: PolymerMom Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 408403 of 465050
Subject: Re: Greece the NEVER ENDING Money Pit Date: 11/13/2012 6:54 PM
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After two and half years’ Greece remains a problem and it is hard to see the Eurozone remaining patient with Greece when its problems seem never-ending.

Well, of course it's a never ending problem. Greece has been in a depression for over a year, exacerbated by yet more austerity. It's a downward spiral.

The cuts the government makes results in people being laid off. Since the newly unemployed don't have any income, the tax receipts go down. I believe I saw an unemployment statistic for the 18-29 year olds experiencing a 53% unemployment rate. No tax revenue there, either. The rich, who have Swiss bank accounts, aren't paying taxes, either.

I have no idea why the "troika" expects it to work by calling for more austerity, one more time. It's worked so well every time they tried it...

It'd be really nice if they tried another approach. About anything has a better chance than more austerity.

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Author: warrl Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 408409 of 465050
Subject: Re: Greece the NEVER ENDING Money Pit Date: 11/13/2012 7:39 PM
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I have no idea why the "troika" expects it to work by calling for more austerity, one more time. It's worked so well every time they tried it...

what was missing from European-government austerity efforts until recently, and may still be missing, is the sort of austerity where the government does not buy everything it wants and give money to whomever it wants at a steadily increasing pace.

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Author: brucedoe Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 408423 of 465050
Subject: Re: Greece the NEVER ENDING Money Pit Date: 11/14/2012 12:09 AM
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Wendy

Of course, Europe is larger and less unified than the U.S.,...

If Europe is less unified than the U.S., no wonder they are in deep yogurt. Texans are again signing petitions to secede.

Gigantic Alaska, which has immense natural resources, including oil, sucked in $7,448 more in Federal spending per capita than it paid in taxes. Yes, and Alaska is the land of rugged individualists, isn't it?

brucedoe

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