19 Responses

    1. @MamMoTh, Enter the no spin zone:


      Yet at the same time…

      That’s right – 30%, or a polling record high, support anti-bailout Syriza. Finally, something like 120% want to shove Merkel’s memorandum in her face, or any other orifice, although that number is based on our own, highly unscientific estimates. Basically, the Greeks don’t care what currency their debt is denominated in, as long as it is not paid…

      The only number we are missing is what is the real amount of deposits left in Greek banks as of this posting.

      1. @Willie Lomax,

        “The only number we are missing is what is the real amount of deposits left in Greek banks as of this posting.”

        Exactly the same amount as the loans and reserves – by accounting identity.

        People may move their deposits to Germany, but the TARGET2 system ensures that it flows right back as central bank liquidity.

        And that continues for as long as the Bank of Greece back up their commercial banks.

        The deposit flight is part of the scaremongering to try and get the Greek people to roll over.

      2. @Neil Wilson,This evening brings new information from The Guardian that ‘Police are urging Greeks to keep their money in bank accounts rather than putting it at risk of theft, amid further uncertainty about whether the austerity-struck country will remain in the eurozone.’ Greece’s national police spokesman, Thanassis Kokkalakis, told Reuters: “Many people have withdrawn their money from the banks fearing a financial crash, and they either carry it on them, find a hideout at home or in storage rooms. We urge people to trust the banking system, leave their money there, or at least in a safe place, not hide it at home.

        You are in a room with a policeman with a gun, he says put your money back in the bank, instead of under your mattress, or he will send his mafia friends into your house to either burn your mattress or steal all your money out of it.

      3. @Neil Wilson, People may move their deposits to Germany, but the TARGET2 system ensures that it flows right back as central bank liquidity.

        I don’t get that part Neil.

      4. @Neil Wilson, What if deposit holders do not transfer their deposit, but withdraw it to have physical cash?
        This to avoid potential forced conversion of their euro deposits at some initially set conversion rate of the new currency.
        How do you see this play out for the ratios of the bank?
        Any risk in this kind of bank run?

      5. @Neil Wilson,

        Cash notes and coins are just receipts for liabilities at the central bank. So when you ‘withdraw cash’ all you are actually doing is moving your deposit from a commercial bank to the central bank.

        So the central bank will just top the commercial bank back up with emergency loan assistance.

        What those withdrawing cash don’t appear to realise is that each Euro note is marked with the country code (as is the obverse of the coins) – which corresponds to which central bank holds the offsetting Euro liabilities.

        If those Euro liabilities cease to have a 1-1 exchange value, then so does the value of the note.

        If Greece is ejected from the Euro (assuming they beat Spain to the exit), ‘Y’ marked Euro notes and Pantheon marked coins are likely to be rejected by other Euro banks.

      6. @Neil Wilson,

        If Greece is ejected from the Euro (assuming they beat Spain to the exit), ‘Y’ marked Euro notes and Pantheon marked coins are likely to be rejected by other Euro banks.

        I doubt it. They will probably be accepted as payment of taxes in every other country, and maybe also in Greece.

  1. I wouldn’t leave the euro either, who cares what the currency is as long as you don’t have to repay your debt. They know those suckers in germany will keep the game going, but if a local currency comes back, maybe local law enforcement will put that “mythical” mosler gun to thier head. I like how you “spin” it that their motives are something else though, o’reilly at THE FACTOR will be bringing you into his no spin zone soon I am sure.

  2. Is this a ringing endoresement for austerity or are do they really not like or trust their own elites any better than the Germans? Or both? Either way, more suffering is on tap, it seems.

  3. The propaganda machine has been turned up to 11 by the European Union.

    The ‘if you think its bad now line just wait until we sling you out of the EU’ pitch is working – because the belief in the EU and Euro is still strong.

    It’s the same in Ireland.

    Essentially the elite want to do a ‘Latvia’ on the periphery – force most of the ‘excess’ population to emigrate.

    The EU solution is trains of poor people wandering around Europe looking for work.

    1. @Neil Wilson,
      Makes you wonder what would be better: German manufacturers opening factories around Europe or all these Europeans moving to those factories in Germany?
      For the moment not many German factories outside Germany. What do you think, when they reach full employment in Germany where will be the next factory built, in Germany or Greece?

      In the Soviet Union they chose to open factories in all regions.

      1. @walter, A payroll tax holiday for the rich companies, not so much for the poor citizens:


        Across the United States more than 2,700 companies are collecting state income taxes from hundreds of thousands of workers – and are keeping the money with the states’ approval, says an eye-opening report published on Thursday.

        The report from Good Jobs First, a nonprofit taxpayer watchdog organization funded by Ford, Surdna and other major foundations, identifies 16 states that let companies divert some or all of the state income taxes deducted from workers’ paychecks. None of the states requires notifying the workers, whose withholdings are treated as taxes they paid.

        General Electric, Goldman Sachs, Procter & Gamble, Chrysler, Ford, General Motors and AMC Theatres enjoy deals to keep state taxes deducted from their workers’ paychecks, the report shows. Foreign companies also enjoy such arrangements, including Electrolux, Nissan, Toyota and a host of Canadian, Japanese and European banks, Good Jobs First says.

        Why do state governments do this? Public records show that large companies often pay little or no state income tax in states where they have large operations, as this column has documented. Some companies get discounts on property, sales and other taxes. So how to provide even more subsidies without writing a check? Simple. Let corporations keep the state income taxes deducted from their workers’ paychecks for up to 25 years.

      2. @walter, Labor mobility versus capital mobility:


        As author of Competing for Capital, however, I am more interested in the question of whether government competition for investment leads to more efficient outcomes. The answer, in short, is that it does not. Indeed, competition for investment leads to economic inefficiency, heightened income inequality, and rent-seeking behavior by firms (a further cause ofinefficiency).

        Mankiw claims:

        …competition among governments leads to better governance. In choosing where to live, people can compare public services and taxes. They are attracted to towns that use tax dollars wisely….The argument applies not only to people but also to capital. Because capital is more mobile than labor, competition among governments significantly constrains how capital is taxed. Corporations benefit from various government services, including infrastructure, the protection of property rights and the enforcement of contracts. But if taxes vastly exceed these benefits, businesses can – and often – move to places offering a better mix of tax and services.

        Mankiw doesn’t stop to think about what this competition looks like in the real world. To attract mobile capital, immobile governments offer a dizzying array of fiscal, financial, and regulatory incentives to companies in sums that have been growing over time for U.S. state and local governments, as I document in Competing for Capital and Investment Incentives and the Global Competition for Capital. His discussion centers on the reduction of corporate income tax rates, which is surely a part of the competition, but which is no longer an issue when an individual firm is negotiating with an individual government.

        At that level, the issues then become more concrete: Can we keep our employees’ state withholding tax? Can we get out of paying taxes every other company has to pay? Will you give us a cash grant? The list goes on and on. As governments make varying concessions on these issues, you then begin to see the consequences: discrimination among firms (especially to the detriment of small business); overuse and mis-location of capital as subsidies distort investment decisions; a more unequal post-tax, post-subsidy distribution of income than would have existed in the absence of incentive use (a corollary of the fact noted by Mankiw that “capital is more mobile than labor”); and at times the subsidization of environmentally harmful projects. Moreover, many location incentives are actually relocation incentives, paying companies at times over $100 million to move across a state line while staying in the same metropolitan area, with no economic benefit for the region or the country as a whole (Cerner-OnGoal, now in Kansas rather than Kansas City, is a good case in point).

        Once upon a time, about 50 years ago in this country, companies made their investment decisions based on their best estimate of the economic case for various locations without requesting subsidies. On the rare occasion when a company did ask for government support, it was at levels that would appear quaint today. For example, when Chrysler built its Belvidere, Illinois, assembly plant in the early 1960s, it asked for the city to run a sewer line out to the facility–and it even lent the city the money to do it.

        Today, companies have learned that the site location decision is a great opportunity to extract rents from immobile governments, and invest considerable resources into doing just that. An entire industry has sprung up to take advantage of businesses’ informational advantages over governments–and, indeed, intensify that asymmetry–to make rent extraction as effective (not “efficient”!) as possible.

        Finally, let’s reflect on the force that makes this process happen, capital mobility. The fact that capital has far greater ability to move geographically than labor does, and that governments of course are geographically bound to one place, is a source of power for owners of capital.

      3. @Willie Lomax, Is it capital mobility or discrimination among firms that is the real issue? Seems government’s ability to pick winners and losers creates the problem. Fix that and it seems you solve the problem and have a fairer system.

  4. Reminds me of British colonialism in India, where the Brits would withohld food from Indian workers and see how much work they could do before starving to death.

    The Greeks are just doing it to themselves.

  5. Still support for the Euro from the *Greeks*, but a recent poll showed less than 60% of Germans want to keep the EUR, and a large majority want a referendum on the matter…

Leave a Reply

Your email address will not be published. Required fields are marked *