This economics question

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Banedon
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Postby Banedon » Jun 30 2012, 16:49

ShadowLiberal wrote:A few problems with your hypothetical Banedon.

1) Who's going to invade Greece? Russia? They have no need to, nor does anyone else. Plus it would be cheaper to just buy any resources Greece has that they wanted.

2) The one thing that big governments can always find more money for is the military.

3) Is Greece a member of NATO? If so then there's another reason why they don't need to worry about the unlikely event of a military invasion.


Let's assume that the invader is a bunch of aliens who crash landed somewhere in Greece with technological capabilities roughly on par with whatever the Greek armies are fielding, and NATO isn't intervening ;)

If the government can always find money for the military, how are they going to do it? The obvious way is to reduce public spending, but after that they still have to find money to pay their solders + increase military production. They won't have reduced spending then will they? They still have to pay, they just need to pay for different things. In fact if I'm not mistaken it's historically the case that government spending increases during wartime, see e.g. US government debt during WW2.

So if Greece needs to pay, they need to borrow. Except of course Greece can't increase borrowing because nobody is willing to lend them money. Right?
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Postby HodgePodge » Jun 30 2012, 17:46

Banedon wrote:Let's assume that the invader is a bunch of aliens who crash landed somewhere in Greece with technological capabilities roughly on par with whatever the Greek armies are fielding, and NATO isn't intervening ;)



:rofl: … lol … :rofl: … If 'aliens' crash landed somewhere, anywhere on planet Earth, they would be the ones in big trouble, no matter how advanced their technology was.

Every greedy, capitalist corporation would be all over them trying to cash in on whatever they could grab. And that's not even taking into consideration all our problems, pollution, bacteria, viruses and insane people. (Didn't you ever see War of the Worlds?)

But I digress:

Nope, it would be the poor aliens who would need help from NATO if they ever crash landed on this cursed planet.
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Postby Pitsu » Jun 30 2012, 17:52

Banedon wrote:Let's assume that the invader is a bunch of aliens who crash landed somewhere in Greece with technological capabilities roughly on par with whatever the Greek armies are fielding, and NATO isn't intervening ;)


Uh? Intervention in such cases is almost all that NATO is about.
Anyway, Greek goverment could increase spending by doing what has been done countless times before in history and what it needs to do anyway - increase taxes on own (not german or greenland) people. And in case of foreign invasion it is more likely that the ordinary peasants actually pay rather than come to streets, burn cars and demand that the rest of the world should pay for them.
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Postby ShadowLiberal » Jul 1 2012, 2:35

Anyway, Greek goverment could increase spending by doing what has been done countless times before in history and what it needs to do anyway - increase taxes on own (not german or greenland) people.
Isn't that part of why Greece was in trouble in the first place, because even though they had taxes to pay for things there was massive amounts of tax cheating going on by most people? I recall hearing a few years ago that over half of Greece's debt could have been paid off if there weren't such massive tax cheating. Or is this not true?

Personally, I think despite whatever financial aid Greece gets it looks like it's still going to go bankrupt eventually in a few years. It seems like they're just delaying the inevitable, and making things much more painful for the Greece people in the process (their GDP has shrunk a lot in the last few years). I think Greece would be better off if it just got the pain over with sooner rather than later.

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Postby Pitsu » Jul 1 2012, 8:30

ShadowLiberal wrote:
Anyway, Greek goverment could increase spending by doing what has been done countless times before in history and what it needs to do anyway - increase taxes on own (not german or greenland) people.
Isn't that part of why Greece was in trouble in the first place, because even though they had taxes to pay for things there was massive amounts of tax cheating going on by most people?


By "increase taxes" i did not mean the mere number that is formally asked, but the amount that is collected in reality. War is a good excuse for more harsh collection practice as cheating can now be labelled as treason. Additionally, not only the possibility for more severe punishments for tax/anti-goverment crimes, I'd believe the people themselves are less likely to cheat when a danger is real and not a "rumor spread by some economics doomsayers".
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Postby BoardGuest808888 » Jul 2 2012, 11:49

Banedon wrote:OK TT new and completely different question.

So now Greece has no money and needs the EU to bail them out ... does that mean if a war starts and the international community does not help, Greece cannot defend itself? After all:

1. They have no money;
2. They still can't borrow money because the chances of them borrowing back any massive wartime spending they have to make is even less than it is now.
3. They can't feed their soldiers even if all their citizens volunteer to fight for them and they have the best weapons in the world.


Well, before a country was considered bankrupt, there are several things you might consider more than just "having no money".

1. A country, while might have no money still have various assets which can be liquidated at any given time. This was true for just about any country, lands, mortgages, natural resources, etc.
2. Borrowing money is much less a matter of trust than giving certain advantage for the creditors. As long as this can be done, the country's financial conditions weren't really matter.
3. Conditions by which creditor countries/organizations/whatever might impose for lending any given amount of money might change according to other circumstances as well.
4. People's attitude might change according to their country's need, regardless of their political/financial conditions (to better or worse).

Thus, having no money does not by itself equal bankruptcy which by itself does not equal defenseless.

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Postby ThunderTitan » Jul 4 2012, 13:46

A country that's actually out of money isn't actually a country any more, see Somalia.

Now this whole thing is pretty complex and i haven't been very diligent at actually maintaining my knowledge after finishing college, but if i remember right it's not that Greece doesn't have any money, is that the money they make isn't enough to pay for wages, expenses and the interest on their debt...

Think of it like if you make 5$ per day, but have to pay 5.001$ per day to a guy you own money to. Eventually that .001 adds up to a cent you don't have on day 100 (obviously ignoring money you saved previously to make the example more clear)...

As if there was a war, i'm pretty sure Greece could just pull an Argentina and default, and with an actual war going on most of the bad stuff would have happened anyway.
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Postby BoardGuest808888 » Jul 9 2012, 9:11

In other words, there's always someone willing to buy, if u just wanna sell u'r soul.

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Postby Banedon » Jun 30 2015, 10:38

Here's a new question in light of the latest round of Grexit worries. While ordinary people obviously have trouble counterfeiting money, surely an entity with the resources of the United States can do this.

Therefore, why can't Greece keep itself afloat by printing euros (ECB be damned), and why can't the US apply pressure on Russia by printing Roubles (or vice versa)?
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Postby Pol » Jun 30 2015, 10:59

Because that's against rules of IMF. Here's example what happen when you do that.
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Postby BoardGuest808888 » Jul 7 2015, 7:17

Banedon wrote:Here's a new question in light of the latest round of Grexit worries. While ordinary people obviously have trouble counterfeiting money, surely an entity with the resources of the United States can do this.

Therefore, why can't Greece keep itself afloat by printing euros (ECB be damned), and why can't the US apply pressure on Russia by printing Roubles (or vice versa)?


Because when you put an unfair measure for your advantage, not only both party can play it (like USA and Russia), but also there will be the 3rd party or even 4th who will no doubt join the festivities (say, China or India) with end result no one is winning but everyone losing :-D


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