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Will François Hollande stand with the Greek people against austerity? Or will he stand with the German government and the IMF, in insisting that the Greek bailout cannot be renegotiated?

Read Gideon Rachman's column http://on.ft.com/IFf8wF and share your views below:
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68 comments
 
what 's a theme in the photo?....
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Heh! If he sides with Greece, Greece is domed, if he sides with Germany, Greece has a chance, but is probably still doomed, given the attitude against debt reduction held by the Greek population.
 
My guess is that the fiscal pact already agreed on will not be re-negotiated, but that the EU will announce measures to promote growth at the summit which has been hurriedly called for May 23 as a sop to Hollande. Thus the French will remain on board the Big Ship Euro and the Greeks will be left to sink or swim, depending on whether or not they manage to cobble together a government - which is looking increasingly unlikely.
 
Still the only way forward is fiscal union. The Eurozone has never been a monetary union in terms of the criteria set out by Mundell, and very few economists believed it fulfilled them. The Euro is a political ploy, but they stupidly thought that it could work without making it a truly integrated economic one too.
It's amazing that there has been no progress is solving the eurozone issue; let's be clear this is not an issue that is entirely the fault of the peripheral countries; it was going to happen to someone at some point due to the complete lack of foresight of the founding fathers. Even if the debt crisis is solved, it changes nothing.
 
Seems that for FT, Hollande will lead Europe toward the disaster(still is room for it?) And the only conceivable approach to avoid it ,it's the austerity without nothing more to offer for growth. By the way, the IMF said that only with harsh measures won't be possible to put Europe back on track.
 
American banks, forever faithful to their bottom line, held (and helped hide) Greek debt in order to assist their (Greece's) acceptance into the European Union. While bashing "wall street" is a favorite pastime, this is about the Greeks.

IMHO, Greece should not have been allowed into the European Union. Without being saddled by Greek debt, (there still would be debt & economic problems) the EU would be much better situated.
 
But austerity is supposed to be a good thing, I mean, I don't have too much knowledge but I think it means to control the costs isn't it?
 
+Michel Baratella it could be both. It means cutting expenditure. Countries now are cutting expenditure (affecting people). It could be good for the government books, but it isn't good for people, especially the vulnerable ones. It has, in theory, worked for Latvia, as its GDP is growing at a good rate, but people are fleeing the country.
 
Fabulous cartoon! Can't wait until #francoishollande meets Madame Merkel! Yippi kay ya, kay yo. She is not Valerie or Segolene. To be a fly on the wall... A woman who holds the purse-strings, is a mighty powerful woman.
 
I wouldn't be so violent as +Antony Bowden, but yeah, the economy itself would be golden if south-eastern Europe could get rid of its corrupt politicians. There is plenty of money, even in stony Greece, but it gets looted by selfish, shameless thugs, and there is indeed little the people can do to get rid of them short of assassination.
 
+Aivis Indans Latvia should be growing at a decent rate regardless, the Solow growth model tells you so much.
Also you forgot to say that if expenditure is cut, then tax revenues are also reduced. Unlike the words of Cameron, government fiscal balance is not to do with credit cards.
Fixing the structural issues is a very good idea, but only once recovery is underway and needs the private sector to be ready to take up the slash rather than whilst still in recession.
 
I didn't think I was suggesting anything violent, Corina. Anything less would be a like a pat on the back for these criminals/politicians. In Italy they keep saying, "The Italians have been living beyond their means," like it's the population's fault. But I don't know anyone who has lived beyond their means, just politicians who take massive pay-offs to give useless public works commissions to their own private companies or those of mafioso friends. In Italy the high-speed railway costs 3 times more per km than in France, and they've already spent well over 250 million euros on a bridge to Sicily that will never be built. And that's the tip of the iceberg. The waste is truly astounding, and it's the same in Greece. All we need is some honest people in our governments who aren't just there to get rich on public money.
 
+Adam Brooker I am totally agree with you that the key is a fiscal union. But the problem is how to implement it. The hog never looks higher than his head...and there's a lack of foresight in each country. I can only speak for French people as I am French myself. Some part of French people (a little bit too much for me) only think about themselves and their privilege at short term and not seeing what happens globally at long term. If mentality does not change, nothing will be really solved.
 
ha ha nice one that shows how dumb Francois Holland is, HE SUCKS!!!!!!!!!
 
I agree in part +Quynh Huong Duong and +Adam Brooker about the fiscal union, however, history is not with this being possible except under duress and castrophe. However, corporations and the financial markets own nations. They are globalized and they will insist.

Watch the #G8 and #G20 talks. And pay attention to +Air France labor talks, Philippe Calavia says AF will not back down to "dramatically transform" the airline's labor costs. http://articles.chicagotribune.com/2012-05-04/business/sns-rt-us-airfrance-klmbre8430mk-20120504_1_air-france-klm-french-unions-french-government
 
That is what the EU gets for accepting another third world country into their economic block…
 
Politicians say what they need to say while campaigning ,after election it is usually very different to what they eventually do while in office
 
Case in point +William Johnston President +Barack Obama and why he has faced equally as much resistance from the left as from the right. Reality sets in and pragmatists better have an emotional backbone because they're gonna get hammered.
 
hello to, may friend with you
 
If the anti-austerity governments and anti-austerity public see a panacea ahead, then the Titanic passengers and crew should have been able to "wish" their ship to repair itself and not sink. Europe is going to be just as sunk - as the USA will be, unless everyone ceases thinking Government can fix everything by printing money.
 
RIP Euro. We hardly knew ye.
 
Um... spending money fixing unsafe bridges (of which the USA officially has several thousand) certainly fixes the bridges. It also makes jobs within the country, which stimulates the economy. Or we could just tighten our belts and wait for the economy to get better through contraction-- remind me when that's worked before?
 
Contraction always works; just like gravity. And like gravity, it hurts. But raising taxes to pay for infrastructure repair is borrowing from Peter to pay Paul. It increases the debt far faster than the economy improves. however, it DOES have other benefits which may outweigh the downside. Better infrastructure is a good thing. You can't bootstrap the economy with government spending; because the government has to get those spending dollars from that same economy, and there's always loss.
 
Last time I balanced my checkbook. contracted spending, and not a single bounced check fee.

I know perfectly well you'd just argue that any specific instance of contraction I name was actually solved by some other factor; I'm not going down that road. The same can be said for the reverse, as well, of course.
 
The real trick is to not rely SOLELY on contraction, but to allow it to run it's course, and mitigate it's effects with real growth.
 
Personally if I was the greece president, I would leave the Euro League
 
+Harvey Cohen It worked in the UK, in Sweden in Canada and in many other places. It works because it usually relies on the private sector to generate growth. Whereas the public sector 'growth' model was tried over and over again. And it never worked.
Racking up debt in order to expand the public sector is not a viable growth strategy.
What we need now are more aggressive growth policies, but ones that dont come with increased expenditure. Liberalising labour markets. Free up restrictive practices. Privitisations etc
 
Not sure it will do him any good. He's in the same position as ancient Rome; the populi have discovered they can vote themselves bread and circuses; now he has to pay for them. No one invests for their old age when taxes are high and the government offers cradle-to-grave care.
 
If Greece defaults disorderly, they will be thrown out of the Euro and their economy will fall into an even worse catastrophe. Their new currency will be of little value and no one will lend them money. It will be an unmitigated disaster.
 
I cant think of 1 bail out that actually worked, I can think of a few flops
 
+Rossi McLaine The article you link to is not entirely accurate, but I guess it's supposed to serve a specific purpose? Iceland's biggest uphill battle in the foreseeable future will be to attract investment and to painfully abolish the capital controls that are slowly sucking the life out of the economy. Economic isolation. Our response to the crisis can not really be assessed in full until these issues begin to be resolved.
 
+Rossi McLaine in saying the article wasn't entirely accurate, I wasn't saying the whole thing was wrong. Not even close. Neither did I say I don't think Iceland took the best path - I think the path taken was one that has worked out relatively well, although the government didn't have much choice at the time and as such should not be given much credit. Their ousting goes to show that the public was not very pleased with their work. I'm not going to contest every point in the article, since much of it is perfectly fine. But here are a few points:

Iceland is still heavily indebted, and burning through its foreign currency reserves at an alarming pace. The currency controls, which were suprisingly supported by the IMF, helped us at first, but are now beginning to tighten the noose. Some of the country's largest companies have said that they will consider moving abroad if the restrictions are not abolished. This may not sound like much, but if a couple of large companies with a few hundred employees up and leave, that's going to hurt such a small economy and its workforce. Individuals are allowed to buy a specific amount of foreign currencies, but have to show a flight ticket for example, and then return any remaining balance upon returning. Foreign currency deposits have been frozen since 2008.

Sure, there are not riots in the streets and there is food on the table. But the middle class is very much paying for the perceived stability, with high inflation directly increasing housing costs. Imported goods have skyrocketed in price since the crisis, and for an island country that relies on imports to such a large extent this has a dramatic impact on the quality of life. But if the benchmark is going to be riots, I don't think you'll find what you're looking for here. There is lingering resentment, and the popular support for the coalition is at an all time low, lower than in late 2008/9.

This is partly because the biggest issues on their list of promises: overhauling the fisheries system, implementing a new constitution, and joining the EU are all extremely unlikely to happen before next year's elections. If the opposition parties return to government, which seems very likely, these plans will all be scrapped. I know the article you linked to is from last year, so this will not have been factored in. People are disillusioned in that they feel that nothing has really changed. The unemployment figures don't look to bad, but several thousand working age Icelanders have moved to Norway for work in the last few years. Many of those would probably be unemployed otherwise, adding to the unemployment %.

One point worth having in mind is that Iceland may have gotten an easy ride because of its relative size. I think most were surprised by how "friendly" the IMF were, but there have been suggestions that they wanted to make a poster-child of Iceland, it being the first western country in a long time to go to the fund. You can see that the approach taken elsewhere, where the repercussions will be felt more strongly in counterparty nations, is a lot more harsh.

All the best +Rossi McLaine !
 
I wish the Uk would come out the EU..
 
+Rossi McLaine I am indeed from Iceland. Would be happy to discuss matters with you. I'm a bit of a G+ newbie - is there a private message mechanism of some sort?
 
+Einar Gíslason please unless you feel threatened, share with us. I think the whole word could benefit from hearing individual thoughts vs what we are told
 
I am mainly concerned about hijacking what should be a discussion about Mr. Hollande and his policies. (If I haven't done so already)
 
+Surbjit Singh I did refer to a 'disorderly' default for Greece which would be an absolute catastrophe for them. It would also create a lot legal headaches and crystallise losses at the ECB.
Bailouts do work if the recipients are sincere about getting back on a sustainable debt path. Greece has never looked genuine in its efforts and frankly, the EuroZone would be better off without them, but in an orderly fashion.
As for austerity. It most certainly does work. The principles of sound finance are in evidence in Germany/Austrai/Netherlands today. The principles of racking up debt and spending are in evidence in Italy, Greece and Portugal. Who is doing better?
 
+Rossi McLaine I am not much for participating in intelligent conversation, but I really am interested in hearing another point of view
 
quynh , create a new post on that video and take the discussion there. i think it clarifies a lot of things about debt to me. either we let central banks create the money and have inflation, or let the commercial banks create the money as credit,and the borrowers pay interest and have huge debts. if we let central banks create the money as advocated by the video, we shall have everyone paying for it via inflation instead of only the borrowers... is that good or bad?
though we could argue that because the govt has taken on the debts of the banks, we are shafted anyway.
it looks like our capitalist system works by creating money, so that people can borrow it and pay interest and enable more money to be created as credit, and so the thing keeps building up and up.A bit like a ponzi scheme. and like a ponzi scheme, periodically we need a crash to bring everything down to baselline, to start all over again.
it looks like we should factor in a crash every 10-20 yr intervals. that should solve the problem
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