Graphic Example Of Blatant Dishonesty In The Greek Media

Ta Nea has an article in which it summarises an editorial in the NY Times. The Ta Nea article is a text-book example of the Greek media taking any opportunity to blame the problems with the Greek government crisis on Germany. This kind of thing is probably what you have to do if you want to be at the front of the queue when it comes to dispersing government announcements.

I have pasted in both articles in below so you can make your own judgment with regards to the honesty of the Greek media

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Ta Nea

The newspaper “New York Times” in the main article, noted yesterday that the “biggest mistake” in the last agreement of the Eurogroup and the IMF for Greece that makes any relief of Greek debt continued fiscal austerity.Recognizes, however, that what is agreed “clear improvement” compared with previous agreements. 

The New York newspaperbelieves that measures such as the real “haircut” of the debt would be more effective and suggests that this has been postponed for political reasons, after the German elections. However, it is noted that what the Greek economy needs to be sustainable long term, be aggressive measures to boost growth, among them, public investment in the modernization of ports and infrastructure tax credits to encourage exports and better public education .

The Article states that the agreement maintains Greece financially solvent for the next month, but the price may be too great to withstand the Greek economy and society.Also, the paper speaks of “fragility” of the Greek coalition government and argues that Greece might not stand up to the German elections, which may even result in bankruptcy and exit from the euro.

Again, according to an editorial in the “New York Times”, the catastrophe can be avoided, provided that Mrs Merkel will offer in the survival of Greece and the future of the European Union against the electoral calculations.

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New York Times

ECONOMIC relations in the euro zone amount to a game of chicken. Like car drivers aiming directly at one another, governments are challenging their counterparts to flinch first and give in. Unfortunately, the economic study of strategic behavior — also known as game theory — suggests that if you play chicken too many times, you will eventually crash the proverbial car.

To illuminate this crisis, imagine the day-to-day machinations of the euro zone as set in a broader bargaining struggle. There is continuing deal-making between the more solvent countries, like Germany, the Netherlands and Finland, and the more financially troubled countries, most prominently Greece, Portugal and Spain. The sounder countries aid the fiscally troubled ones, but also try to control those nations’ spending, if only to limit potential future exposure through additional bailouts. Countries on both sides are seeking more favorable terms from these negotiations, which are often conducted through intermediate institutions like the European Central Bank and various bailout funds.

In such a setting, the euro zone’s mess could last for a long time, with neither solution nor dissolution.

When matters appear to improve, or when the troubled countries receive more aid, there is more slack in the system. The troubled countries respond by behaving less responsibly and, as a result, move the financial situation closer to the precipice again. For instance, when the European Central Bank announced its debt monetization plans, Spain’s government suddenly faced lower borrowing rates and then refused to apply for a politically costly bailout and austerity package.

When matters become worse, the fiscally healthier countries pony up more aid, as we have seen them do repeatedly for Greece.

It is thus a mistake to overreact to most of the headline events about the euro zone crisis. The good news is never quite as good as it looks, and the bad news often brings beneficial responses. It seems that for dozens of months now, we’ve been hearing that the fate of the euro zone will be decided “shortly,” yet somehow the drama continues.

Unfortunately, longer-lasting solutions require coordinated agreement among many euro-zone nations and, possibly, the broader European Union. That would include significant debt write-offs (as the International Monetary Fund is suggesting), quick moves toward better-integrated European banking institutions, and a general agreement that the European Central Bank unconditionally support troubled debt securities without trying to manipulate home governments’ policies.

Could all of that happen? For comparison, the current fiscal standoff in the United States involves no more than a president and two houses of Congress. In Europe, however, the bargaining is much more precarious, as it must span numerous nations, many of which have coalition governments, separation of powers and, in the case of Spain and Belgium, significant ethnic and linguistic division. The European Union has even had trouble concluding routine budget negotiations, the disputed parts of which concern no more than 0.03 percent of the union’s gross domestic product.

On the bright side, the fact that markets haven’t ended the European mess by themselves — say, through a truly huge capital flight from the more troubled countries — suggests that a solution does exist in principle, and may even take hold. That isn’t much to cheer about, but, under the circumstances, even simple survival is positive news. One specific bright spot is that both Spain and Greece have been making some wage adjustments to restore longer-term competitiveness.

Until a broad solution is enacted, the system remains within the danger zone for a broader crash.

WHAT form could a crash take? Imagine a situation where the sounder countries need to put up more money, or the troubled countries need to make bigger financial adjustments, or — most likely — both. Yet power vacuums on each side, or voter rebellions against cross-national agreements, could stop these responses from being applied in a timely way. Political paralysis could then become the harbinger of disaster.

The mess won’t be resolved until the various governments raise their hands and announce transparently just how much of the mess they will pay for — and how. Such announcements will then need to be validated by elections. That means sending a consistent message to other countries and to their own domestic electorates and interest groups. Until then, the game of chicken will continue, and the risks of financial catastrophe will remain high.

Unfortunately, the relevant governments — and their citizens — still don’t seem close to accepting the onerous financial burdens they need to face. And when those burdens are unjust to mostly innocent voters, no matter whose particular story you endorse, acceptance becomes that much tougher.

Still, we shouldn’t forget that a solution exists. In essence, the required debt write-down is a large check lying on the table waiting to be picked up. No one knows how costly it is, but estimates have ranged from the hundreds of billions to the trillions of dollars. It need only be decided how to divide the bill. The reality is this: The longer that the major players wait, the larger that bill will grow. That they’ve yet to split the check is the worst news of all.

Tyler Cowen is a professor of economics at George Mason University.

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