What happened in Greece was they couldn't borrow more / issue more bonds without needing to pay huge amounts of interest on them because investors saw them as risky.

Unfortunately you can't just keep borrowing, eventually no-one will lend to you because they know you can't pay it back. Plus if you default the investors have no money to invest / pay their creditors, and then the economy is in even bigger trouble

All I am saying is, I think countries like Spain, Greece and portugal will have easier times cutting down their debt when they recover from this recession...

ok, i'll bite, that last comment makes no sense, care to explain?

Ok Fiedler: I'll make this as simple as possible.

Recession = Bad

its caused by no consumer confidence.

when there is no consumer confidence, there is no spending in the economy. Normally also sees high unemployment.

When unemployment is high and spending is low, governments generally find it harder to gain tax revenue.

This is because the revenue from sales and income tax go down substantially. What this means is generally a decrease in taxes is needed to spur consumer confidence.

At the same time, the government needs to start spending to get the economy back on track.

After the recession, when Unemployment is 1/3 of what it is now, the cost of welfare programs will decrease, and at the same time the government can raise taxes. This will allow them to pay off the debt incurred as a result of the recession.

Why doesn't Eurozone try Keynesian economics?

Nope, you're still not making any sense.

How can the Greek government spend money they haven't got?
They can't borrow money because no one will lend it to them. If you want to lend them money you can go out and buy some of their bonds. Last time I looked two years bonds yielded fifty percent. Are you going to?

Japan's debt is supposedly sustainable because it is held domestically and servicing the debt costs little. I think they will soon be having problems as their domestic demand is no longer sufficient to buy all new issuance.

This problem is being caused by too much debt. The idea that higher spending and more debt is the answer I struggle to believe. Austerity might bring on recession and precipitate the crisis but I think it is inevitable anyway. If you borrow too much money such that you can't pay it back the only solution is to go bankrupt isn't it?

the Greek unemployment is now 20% in papers and 25% in reality.
That's what happens when you try to pay your debts to the European bandits.
Most recent measure was 800 euros one time tax for all freelancers.
A new one that is coming is another one time tax for everyone staying in a home (?!)
An Australian conference is going to take place October 8-9 in Athens where 18.000 Greek will be hired to work in Australia. The applications number will reach 1.000.000 for those positions.
So everything is great. There is still bread and water! God bless EU.

"How can the Greek government spend money they haven't got?"
They did a perfect job at that prior to 2008...

"They can't borrow money because no one will lend it to them."
So the multi-billion dollar conditional loan the EU gave them a while ago never happened because they didn't want to borrow money.

Its not the fact that the EU gave them the money that I am complaining about (although it was stupid), its the fact that they did so irrisponsibly and thinking it would magically solve their deficit if they raised taxes and reduced spending. No mention of the decreasing tax revenue Greece has had since said tax raises.

"Japan's debt is supposedly sustainable because it is held domestically and servicing the debt costs little. I think they will soon be having problems as their domestic demand is no longer sufficient to buy all new issuance."
They are having problems, but I am confused as to why Europe isn't using the standard issue of put off our problems to the next generation. (a generation that I will be in, lol)

"This problem is being caused by too much debt. The idea that higher spending and more debt is the answer I struggle to believe."
The problem was in 2008, they went into a recession, and nobody was willing to lend them the money they needed. Austerity resulted in riots for the following weeks...
damaging the economy even more.

"I think it is inevitable anyway"
It is, but lets try to at least push them to the next generation.

"If you borrow too much money such that you can't pay it back the only solution is to go bankrupt isn't it?"
Exactly, but that will be the next generations problem...

"the Greek unemployment is now 20% in papers and 25% in reality."
my sources are a few months out dated, but it furthers my point.

"European bandits."
I am glad someone agrees that the EU is handling it poorly.

"That's what happens when you try to pay your debts to the European bandits.
Most recent measure was 800 euros one time tax for all freelancers.
A new one that is coming is another one time tax for everyone staying in a home"
its disgusting!

"European bandits."

"I am glad someone agrees that the EU is handling it poorly."

Does that mean Ireland is handling it poorly? Does that mean France/Germany are handling it poorly? The EU is largely a collection of member states. (though i wish it were more) Admittedly the Eurozone has invested a large amount of fiscal policy in the European Central Bank (ECB) What have they done?

I'm not sure i understand how these states and institutions should have acted better, or who you're really pointing the finger at...

@orathaic - the problem would have been solved by creating a monetary union that (a) kept to it's targets for each nation's borrowing requirements from the beginning and (b) explicitally ruled out any bail outs. The lenders (banks) would not have been so willing to lend to unstable countries then.

No, Maniac. The problem would only be solved if Greece abandoned fiscally unsustainable cradle-to-grave socialism. That is a lesson that Italy, Portugal, Ireland, and Spain and all the other failing socialist European entities can't avoid.
It is simply impossible to pay people for being irresponsible and unproductive.

Capitalism is the problem.
Now let me rate the USA financial status: AA++
Ooops I didn't give AA+++
Now the whole world economy is going to collapse.
Better luck next time planet earth.

Tettleton's Chew, the average Greek works about 10hrs/week more than the average German.
Productive? We have limited agriculture and non existent industry so we can't be productive in anything more than tourism.
If you think the problem is that Greeks (and italy, ireland, portugal, spain etc) are just lazy (PIGS stupid joke) then your country is going to be the one who falls next.
Or do you feel any safer being in belgium or hollands or even france?
The only country who is not going to collapse is Germany and that's because they manipulate Europe.
When your country collapses due to mathematical illegal irrational and NON EXISTENT debts enforced to it through the hands of a USA puppet prime minister then we ll see if you blame yourself for being "lazy".
So fuck Greece, fuck EU, fuck Germany, fuck USA.

@TC - When did Ireland have 'cradle-to-grave socialism'?

Each country should be allowed to organise its econony however it likes providing they are not bailed out. If the Greeks want to be socialist and they live within there means I don't have a problem with that.

Greece is socialist only in paper.
Don't call failed capitalism socialism.

"the problem would have been solved by..."

without agreeing or disagreeing with your solution, my question is, who is to blame for not doing this in the first place?

As i understand the situation for Germany, each decrease in the value of the Euro increases the demand for German exports (decreases their costs)

here is one thing that is definitely wrong from today's news -

http://www.bcs.org/content/conWebDoc/41674

Invent something worthwhile in government funded higher education and flog it to the Americans to manufacture. Why?

Hellalt, you can't find your butt with two hands behind your back and you post that you know what capitalism is.

It is endlessly watching your ignorant, totally inept, and endlessly idiotic socialist running from one disaster to another claiming socialism didn't wreak the havoc that it always does without exception.

Free market capitalism vanished from Europe with the rise of Bismark.
Free market capitalism vanished from the United States with the election of FDR.

Statism now dominates the United States and is trying to institute a full-fledged replica of Europe's catastrophically failing socialism, but of course as the historical record clearly indicates, American's are not as ignorant as the masses of sheep in Europe, and the American body politic keeps fighting off the plague of European socialism, but for how long.

That's a cool new battery technology. It could do wonders for R/C vehicles too, losing the centralized weight of the current LiPo and spreading across the fuselage and wings would make for a better balanced R/C airplane.

Socialism is not necessarily something bad. Only ignorant lump it in with communism. Macrthyists

sorry, i ment ignorant macarthyists

"Does that mean Ireland is handling it poorly? Does that mean France/Germany are handling it poorly? The EU is largely a collection of member states. (though i wish it were more) Admittedly the Eurozone has invested a large amount of fiscal policy in the European Central Bank (ECB) What have they done?"
Germany and France are the problem. They enforced austerity measures on countries who;s social policies were already largely underfunded.

"No, Maniac. The problem would only be solved if Greece abandoned fiscally unsustainable cradle-to-grave socialism. That is a lesson that Italy, Portugal, Ireland, and Spain and all the other failing socialist European entities can't avoid.
It is simply impossible to pay people for being irresponsible and unproductive."
Its to late for said change, capitalism is good but not perfect.

The way I see it the countries have 3 options:
1. Austerity cuts and tax raises. As shown in Greece these only decrease government revenue and damage the economy even further.
2. Austerity cuts and tax cuts (What TC is calling for): This doesn't boost the consumer confidence, instead makes the recession harsher for a shot period, but following the recession the economy will be much safer and stronger then using the 3rd method.
3. The 3rd method is lowering taxes and increasing spending: This will make the nation more in debt then before, but will increase consumer confidence, making the recession much much shorter and less painful. However it means taxes will have to be higher and spending lower in the future.

Thanks for the chuckle Diplomat.

Someone putting these two words together "ignorant maccarthyists". LOL!

Socialism is inherently destructive. It destroys individualism and concentrates enormous power in the hands of those with the gift of sophistry and the absence of common sense.

^Agree

I dont know what theyre doing but I hope they get it together and avoid a second recession, otherwise i will probably need to join the army to avoid unemployment