- First, a default would likely have cost it the €5 billion a year it receives in annual EU subsidies;
- Second, it would have put at risk other benefits Greek citizens derive from being in the EU, including the ability to work in other countries, move capital across borders, and trade freely;
- Third, even when the Europeans were not providing cash transfers directly to the Greek Government they were providing financing to the Greek private sector, basically to offset the capital flight from the banks, on terms that were vastly more generous than what the banks could have hoped to obtain from private lenders – who in fact probably would not have been willing to lend nearly as much on the same collateral regardless of the interest rate.
Sunday, June 28, 2015
RECOMMENDED READING: "The truth about Greece"
Good article by my predecessor at the FTC, Jeremy Bulow, and coauthor Kenneth Rogoff on Greece. They point out that Greece has been receiving net inflows (austerity would imply net outflows), at least until Syriza got elected and stopped implementing reforms. He concludes by telling Greece why they should re-impose the reforms and struggle to stay in the EU:
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Chapter 16 – “bargaining” part 1
ReplyDeleteCertainly one of the most common forms of bargaining is the acquisition of a new vehicle. Dreaded by some (producing fear and anxiety just thinking about the processes involved), tolerated by many as an accepted and necessary part of American life by rural, suburban and commuting workers (where public transportation is not practical), and enjoyed by a fractional minority as a strategic game titillating their adrenaline rush and inner primal warrior lust for winning. Perhaps I fall into the last category finding the hunt more stimulating than the meal.
Certainly with origins dating back to the earliest of horse trading centuries ago, finding the right vehicle (car, truck, SUV, or even a bus) has obligations to the buyer to know what they are getting in terms of the prize itself. Of equal or even greater import, is the knowing the seller. Once upon a time your father, grandfather and uncles taught you how to open the horse’s mouth and look at its teeth. No matter how pretty the color of the horse, or how carefully its hair had been brushed, the teeth told the story. Worn teeth meant an old horse, so buyer beware. (As an aside, I’ve seen many people who’ve had extensive plastic surgery, except they forgot to take care of all of the teeth.) The second hand car can be washed, waxed and polished, even a new set of tires. They can steam clean under the hood and under the whole car. They can illegally reset the odometer backwards. But they always never change the worn gas, brake and clutch pedals, or the internal cabin air filter, hard to get to, behind the glove box.
And a new vehicle! Is there an honest dealer anywhere? If one is experienced, you research exactly what you want, and any compromises you might accept. Don’t start with the sticker MSRP and work down. You can determine what the tissue price (the dealer’s initial invoice amount from the factory/manufacturer to get the car on the lot) much easier this century by going to online sources such as Kelly’s Blue Book, Edmund’s, Consumer Reports or TruCar. Gaining knowledge, you find the manufacturer’s “hold back” amount averages 3% for American cars. The dealer needs to make some money to run the business, but with learning information about dealerships (and the specific one you would deal with) gives an edge when you suit up to battle (uh, I mean bargain and negotiate) for that new car. Knowing the best time to buy a particular model (best time of month, best time of model year, best season, and even the right day of the week) can improve bargaining leverage. Remember, often the dealer may be charged interest from the manufacturer for keeping a car on the lot and not selling it. (“Moving product” or not moving it.)
"bargaining" part 2 (split for character count)
ReplyDeleteAnd do you have an old horse to trade in?? (I meant your beat up daily driver with 156K miles and some parking garage dings.) Is it worth it to try and squeeze a few dollars more on the “trade-in”? Or would you just be grateful that someone will relieve you of its burden and take possession of it. Some folks want a different brand for each new car. Some want flash vs practicality. Some opt for an expensive brand name, some want prestige. I take after my father and uncles, I stick with the same brand, even the same type of vehicle. Change of color is the most exciting event.
Recently (three weeks ago) I took delivery of a new vehicle. Since I am a Chevy person, and my favorite, the Trailblazer is no longer produced, the next applicable vehicle was the Tahoe. Well researched, my choice has a great structural steel frame. Since I have expensive DNA (costing more each year, and becoming as I progress through this MBA program), I want to protect myself from the increasingly wacko drivers on the NJ Garden State Parkway every day. This SUV fits the bill. The dealer is 400 miles away near Pittsburgh, but we established ourselves as completely amiable and knowledgeable buyer and seller match in 1998. The first round of bargaining and negotiation set the template for all future purchases.
This time my initial cost was under his tissue price, that means he directly reduced his profit in order to keep me a customer, and I understood and in a Nash “axiomatic”, “non-strategic” agreement we both increase our bargaining power by giving gain to the other immediately. This reduces wasted time, and we both gain from agreement. The Tahoe was flatbedded to my office parking lot, the Trailblazer went back home to origin (Pittsburgh). Additional gains come from reducing hassling. I do not need to get a certified check from the bank, they take my (mailed to them) personal check. The extra work done on the vehicle (skid plates and some under the hood upgrades) were basically done for the cost of the parts. Win-win.
Lee Lichtenstein
"bargaining" part 2
ReplyDeleteAnd do you have an old horse to trade in?? (I meant your beat up daily driver with 156K miles and some parking garage dings.) Is it worth it to try and squeeze a few dollars more on the “trade-in”? Or would you just be grateful that someone will relieve you of its burden and take possession of it. Some folks want a different brand for each new car. Some want flash vs practicality. Some opt for an expensive brand name, some want prestige. I take after my father and uncles, I stick with the same brand, even the same type of vehicle. Change of color is the most exciting event.
Recently (three weeks ago) I took delivery of a new vehicle. Since I am a Chevy person, and my favorite, the Trailblazer is no longer produced, the next applicable vehicle was the Tahoe. Well researched, my choice has a great structural steel frame. Since I have expensive DNA (costing more each year, and becoming as I progress through this MBA program), I want to protect myself from the increasingly wacko drivers on the NJ Garden State Parkway every day. This SUV fits the bill.
The dealer is 400 miles away near Pittsburgh, but we established ourselves as completely amiable and knowledgeable buyer and seller match in 1998. The first round of bargaining and negotiation set the template for all future purchases. This time my initial was under his tissue price, that means he directly reduced his profit in order to keep me a customer, and I understood and in a Nash “axiomatic”, “non-strategic” agreement we both increase our bargaining power by giving gain to the other immediately. This reduces wasted time, and we both gain from agreement.
The Tahoe was flatbedded to my office parking lot, the Trailblazer went back home to origin (Pittsburgh). Additional gains come from reducing hassling. I do not need to get a certified check from the bank, they take my (mailed to them) personal check. The extra work done on the vehicle (skid plates and some under the hood upgrades) were basically done for the cost of the parts. Win-win.
Lee Lichtenstein
And do you have an old horse to trade in?? (I meant your beat up daily driver with 156K miles and some parking garage dings.) Is it worth it to try and squeeze a few dollars more on the “trade-in”? Or would you just be grateful that someone will relieve you of its burden and take possession of it. Some folks want a different brand for each new car. Some want flash vs practicality. Some opt for an expensive brand name, some want prestige. I take after my father and uncles, I stick with the same brand, even the same type of vehicle. Change of color is the most exciting event.
ReplyDeleteRecently (three weeks ago) I took delivery of a new vehicle. Since I am a Chevy person, and my favorite, the Trailblazer is no longer produced, the next applicable vehicle was the Tahoe. Well researched, my choice has a great structural steel frame. Since I have expensive DNA (costing more each year, and becoming as I progress through this MBA program), I want to protect myself from the increasingly wacko drivers on the NJ Garden State Parkway every day. This SUV fits the bill. The dealer is 400 miles away near Pittsburgh, but we established ourselves as completely amiable and knowledgeable buyer and seller match in 1998. The first round of bargaining and negotiation set the template for all future purchases. This time my initial was under his tissue price, that means he directly reduced his profit in order to keep me a customer, and I understood and in a Nash “axiomatic”, “non-strategic” agreement we both increase our bargaining power by giving gain to the other immediately. This reduces wasted time, and we both gain from agreement. The Tahoe was flatbedded to my office parking lot, the Trailblazer went back home to origin (Pittsburgh). Additional gains come from reducing hassling. I do not need to get a certified check from the bank, they take my (mailed to them) personal check. The extra work done on the vehicle (skid plates and some under the hood upgrades) were basically done for the cost of the parts. Win-win.
Lee Lichtenstein
The unification of Europe and the development of a common currency was supposed to strengthen the national economies of its members. Unfortunately due to the economic policies not streamlined, weaker economies such as Greece weren’t able to take advantage of strong currency due to competition of member countries. This lead to excessive debt, capital flight, potential default and subsequent bailout.
ReplyDeleteCurrently, Grexit headlines are no longer creating the panic that originally accompanied it, but instead many are realizing that this could be a viable option. The current bailout program implemented by the EU is causing strife among the EU and Greece, and between other member countries as well. Greece and the EU are constantly kicking the can down the road with reform development every 6 months to a year to determine if they will continue to receive the bailout.
The Grexit is not fatal to the EU, but “could bring the nation into economic and political chaos” (Van Den Spiegel, Ph.D., 2015). It’s not likely that other countries will follow suit if this were to happen, which is what originally caused fear among member countries and global markets.
Van Den Spiegel, Ph.D., F. (2015, April). Risk of Greek Exit and QE. Business Credit, 20-21.