Greece Crisis Is All About German Greed.

The Greek Crisis is all about greed. Space may be the ‘final frontier’, but the Greek Crisis proves that the real ‘final frontier’ is changing people from being greedy, money-grubbing jerks to being loving, empathic individuals! The Germans continue to be German which explains why we even have this ‘crisis’ in the first place! They are the most money-grubbing, and selfish group of people on the European continent! They set up the euro because it benefited them, and they were then able to steal money from the weaker countries. This is how the world seems to be running now, but it does not bode well for the future. ‘Greed may be good’ in the short run for the crooked people, but it inevitably leads to war. World War I, and World War II were caused by greed. And, now we are facing World War III. The hard human heart is the final frontier that must be conquered, or there will be no future.

8 thoughts on “Greece Crisis Is All About German Greed.”

  1. Let’s look at the history of the euro. I recall a rate as low as $0.69 per euro in 2001 or so, and as high as $1.38 in 2012. This is what I had to pay to buy euros via an ATM in Germany. The interbank rate is probably a penny (US) or two cheaper per euro. When they converted the deutschemark to the euro when the euro was first formed, German bank customers got about 1 euro for every 2 deutschemarks. I don’t recall what the conversion from the drachma was. I looked it up, and 1 drachma was worth 0.003 cents.

    You are ignoring problems that the Greek government has had for many years with collecting taxes. People are technically delinquent, but the taxes aren’t being collected. The Greek government has better success collecting small amounts of money than large amounts. Avoiding income tax and other forms of taxes is the Greek national sport. Among people who follow exchange rates, having the euro reach parity with the dollar was a big deal.

    Not having debt denominated in drachma does expose the Greeks to currency risk. It does hurt that the current value of Greek debt is at least 50% higher than the initial amount borrowed due to appreciation of the euro (currently $1.12) against other world currencies. However, it did give them an opportunity to borrow unprecedented amounts. The Germans have to hold the line on Greek debt because Spain, Portugal, Ireland and Italy are next up for loan default. The Greek 10-year bond is trading at about 8-9% interest. Compare this to U.S. Treasury bonds at 2.3% or so. Any lender who expects to get their money back will price for the risk of default.

    It might interest you to know that there is no mechanism in the Maastricht Treaty to kick Greece out of the euro. THEY have to choose to leave the euro. What banks can do, and should do, is stop lending to Greece. The risk of ceasing lending is to have the euro-denominated loans default. However, continuing with an “extend and pretend” lending model is to throw good money after bad.

    A consequence of the banking crisis is that Germans who have more than about 10K euros on deposit are now being charged to leave the money in the bank. The Germans call this “punishment interest”. They are seeing a somewhat worse version of the low interst rate enviroment that the U.S. has been experiencing for the last six years or so.

    For what it’s worth, historians have blamed the reparations demanded from Germany for World War I as a trigger for World War II.

    I believe that a common currency makes sense, but only when all parties in the currency are about equally strong economically. If trade between parties is roughly equal, they might decide to take payment in goods rather than currency, and just mark the value of the goods to market to determine how much is owed, avoiding most of the transaction fees that the common currency was touted to eliminate. Greece might go the way of Venezuela, and use the U.S. dollar as their currency, but they would have the same problems as with the euro, that of not being able to print however many they needed.

    I used to have to manage exchange rate risk on a small scale. It’s why I didn’t buy a house while in Germany. The benefit package that I had would have given me 10% of the purchase price toward the purchase of a house or apartment annually instead of paying my rent for me, up to the level of maximum rent. This would have been more than enough to pay off a 15-year mortgage, and would have been enough to pay dor a house worth about $300K (200K euros at the time of purchase). My 10% payment would be in dollars, fixed at the value of the euro when I bought the house. I would have had some pain while the euro went to $1.38 or so, but I would be making money on the payment now with the euro at $1.12. Unfortunately, if I sold the house, I’d be taking a big loss when the euro payment was converted to dollars. I figured that my downside risk would have been about $60K if the euro declined. Instead, I wound up taking about a $500 loss when my euros from the refund of my apartment deposit were converted to dollars. I would have done much better had I waited to go to Las Vegas to change my euros for dollars.

  2. Well, I have to say you have had an interesting life. I think your experience in Germany shows why the euro was developed for intra-European trade. I think the problem with Greece is that it isn’t just Greece that is the problem! Greece is really a basket case, and always was. But, we have to remember that the other nations that had problems,’the piigs’as they are called collectively, were actually well run until the financial crisis of 2008. Germany is currently the China of European economies. This is why the country is so reviled in Europe. It has always been a tendency of Germany to dominate, but this does not bode well for the European Union in the future. The best thing is for Greece to leave the Eurozone, and for Germany to basically reform the euro for only strong countries. And of course to form a strong federal European Eurozone entity with a strong, independent central bank. That is what eventually happened after the adoption of the US Constitution, and no doubt it’s necessary for all stable currencies to have a strong central bank and a strong central government. The Germans need to face this reality, as do all the other members of the Eurozone!

  3. My mother had a firm prejudice against Germans, but I figured that it was because, in the war that had been the great adventure of her life, they were the enemy. My initial reaction was that the Greek crisis isn’t the result of Germans being Germans, but rather, banksters being banksters.

    Why is there a Euro? We in the United States didn’t think about it very much, but I always understood it in terms of generalities about European countries forming a stronger economic union, while maintaining their own national identities. But maybe that wasn’t the reason for it at all.

    Perhaps the Euro, by design, was a way for the richer countries, led by the Germans, to bring the poorer countries (the ‘PIIGS’) into debt peonage, and acquire their resources really cheaply. It wasn’t a bug, it was a feature.

    So maybe it is, indeed, Germans being Germans.

    What’s particularly interesting is that the Syriza party was elected in Greece for the specific purpose of bringing an end to austerity. They were full of tough rhetoric about how they would stand up to the bankers. But in the first week of negotiations, they folded up like a cheap suit, agreeing to another round of ‘extend and pretend.’ One wonders what sort of blackjack the bankers were able to use against them.

    1. One of the arguments that I’ve heard for forming the Euro is to reduce transaction costs between parties in the Eurozone. An argument against this that I can see is for companies or other parties who trade directly with each other to agree to a contractual price for their goods, and then send the difference between the two contracts.

      Thee are certain similarities between the problems that the PIIGS are having and the recent foreclosure mess. People were subject to increasing mortgage payments on variable rte mortgages as interest rates increased. With the PIIGS, the exchange rate went against them much more than expected. It is seldom pleasant to have to repay a debt in an appreciating currency, or one where the goods that you have to sell do not enjoy high demand, and so you don’t have pricing power.

      http://www.oanda.com/currency/historical-rates/
      This should be a 5-year chart, but you can put in your own time range. If you look at the chart going back to 2000, the low is about 88 cents to the euro and the high is over $1.60. I saw rates between $1.30 and $1.50 between May 2009 and January 2014, but I paid a little more than the interbank rate. Community Bank, a subsidiary of Bank of America that is supposed to serve military members overseas, has worse exchange rates than anywhere else but the airport. They donot offer accounts denominated in euros, so I went to Deutsche Bank for my bank account.

  4. I think that the evidence supports the Germans really do know they are to blame. There is no way that they could not known the consequences of the way the Eurozone’s was set up. The Greeks took advantage of it, but really the Germans have to be held accountable because in the end they had more experience in how to run an economy properly. They’re like the crooked bankers on Wall Street who basically took advantage of poor people who then took advantage of the bankers. Two crooks dancing together may indeed cause the end of the European experiment. Greed is never good!!!

    1. The Bundesbank and the other money-center banks have to balance getting more back from the Greeks than they extend in additional credit.

      A funny thing about life in Germany is that Germans really like cash. Debit cards are common, but the clerks in the stores where I shopped made change faster than I could use a debit card. Most of my purchases were under $50, so I got used to carrying both dollars and euros

  5. There is a Christian money advisor who says people should use cash because it is harder to spend cash then a debit, or credit card. I think he makes sense, but at the same time there is a benefit to a credit card, and that is if it’s stolen you’re only responsible for up to $50. Debit cards, and cash don’t have that protection. I think the Germans are more responsible with money, but obviously their history shows that can lead to some strange outcomes; for instance World War II. I think the German banks got greedy, and the piper must be paid! And Europe will have to foot the bill. Which in my opinion is only right. As for the speedy cashiers in Germany: I think because they are paid better wages, and have union representation and are more respected because they have better wages, then you get a higher quality of people working those jobs. Quality does indeed follow the money!

  6. I’ve read studies that said that we will tend to spend around 30% more when we pay with plastic. Check your credit card agreement. Your liability might be nothing on the credit card and only up to $50 on the debit card as long as you report the improper use as soon as you know about it. I had my wallet stolen last year. I lost the money, but when they tried to use the credit cards, the transaction was turned down because they were trying to buy things that I usually didn’t. I also had the money that they spent on gasoline with my debit card refunded to me. They were stupid and greedy. They tried to get cash advances on my credit card, and were refused. Too bad that they were never caught.

    Wal-Mart tried to move into Germany, and failed utterly. They took over a chain of multi-goods stores and might have built some more. The chain’s name is “Real”, and from what I’ve read, Wal-Mart couldn’t deal with the unions. They did better in the United Kingdom, buying out Asda, a grocery store chain, about 15 years ago.

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