Occupy REI!

[Sunder]

I think we're starting to understand each other a little more, and realising the difference is perhaps not as large as we might have both initially thought. Here are where I see the common points:

1. Mild to Moderate socialism is not a bad thing. I work hard - do you work 60 hours a week? - But I've also had lucky breaks. I am happy for my taxes - effectively my work - to support two other people in this society who are not so lucky. I pointed that out in my second post.

2. The disability support pension and the carer's pension is not a bad thing. It's also not as generous as I had first thought - that part of my vent is invalidated and I'm happy to be wrong on that one. My other vent was not against people in legitimate need receiving it - but those that turn up on tabloid papers and current affairs programs a few times a year, where they show videos of people supposedly on disability payments, doing heavy manual labouring for cash - often in the six figure digit cash.

3. The Greeks are currently in survival mode, which puts them between a rock and a hard place. (I'm not sure if that's an Australian slang - it basically means you have to choose between two difficult or impossible choices).

Where I feel we differ is:

1. Nothing really

2. What is a bad thing, is people take that money, and instead of being grateful, complain about those who worked hard to provide it, and the system that enables that to happen - Capitalism with a socialist government.

3. The Greeks put themselves in there through excessively generous scheme, paid for by creative accounting and borrowing off the low Euro rates. Sure. I'd love to retire at 55 with a permanent 75% pension - who pays? I'd love if only 1/3rd of the people paid tax - especially if I was the 2/3rds. But then, who pays? I'll tell you who's paying - German and French banks, which are not large faceless entities as many socialists like to believe, but people like you, me, your mother and grandmother. I don't know what the system is like in Germany or France - or even Ireland, but in Australia, 80% of adults own shares through their retirement fund. The Commonwealth Bank in Australia alone, is 20% of the ASX200. Almost every retirement fund owns shares in it. If the value of CBA halved because it lent money to Greece, then everyone in Australia would retire with 10% less. It's not faceless corporations writing down debt with very little ill effect. It's not the CEO's bonus packet which is cut. It's not some multimillionaire trader, or some rich man invested in the stock market. The money is taken out of every day people's pockets.

Have you heard of the term "Moral hazard"? If the Euro banks allow the Greeks an easy default on their debt, then what's to prevent them - or another country doing it in the future? The Germans are well known for their industriousness and good work ethic. Should they have to pay for the Greeks to retire early and pay little tax?

 

[Joseph C.]

I think we're starting to understand each other a little more, and realising the difference is perhaps not as large as we might have both initially thought. Here are where I see the common points:

1. Mild to Moderate socialism is not a bad thing. I work hard - do you work 60 hours a week? - But I've also had lucky breaks. I am happy for my taxes - effectively my work - to support two other people in this society who are not so lucky. I pointed that out in my second post.

Self-employed so yes, probably more. And the business is still in start-up mode.

2. The disability support pension and the carer's pension is not a bad thing. It's also not as generous as I had first thought - that part of my vent is invalidated and I'm happy to be wrong on that one. My other vent was not against people in legitimate need receiving it - but those that turn up on tabloid papers and current affairs programs a few times a year, where they show videos of people supposedly on disability payments, doing heavy manual labouring for cash - often in the six figure digit cash.

They exist too but they are definitely a slim minority. It's getting harder to fake disability and with things so tight in certain countries people are watching out for con-artists. They have linked paying taxes and cheating together.

3. The Greeks are currently in survival mode, which puts them between a rock and a hard place. (I'm not sure if that's an Australian slang - it basically means you have to choose between two difficult or impossible choices).

Where I feel we differ is:

1. Nothing really

2. What is a bad thing, is people take that money, and instead of being grateful, complain about those who worked hard to provide it, and the system that enables that to happen - Capitalism with a socialist government.

3. The Greeks put themselves in there through excessively generous scheme, paid for by creative accounting and borrowing off the low Euro rates. Sure. I'd love to retire at 55 with a permanent 75% pension - who pays? I'd love if only 1/3rd of the people paid tax - especially if I was the 2/3rds. But then, who pays? I'll tell you who's paying - German and French banks, which are not large faceless entities as many socialists like to believe, but people like you, me, your mother and grandmother. I don't know what the system is like in Germany or France - or even Ireland, but in Australia, 80% of adults own shares through their retirement fund. The Commonwealth Bank in Australia alone, is 20% of the ASX200. Almost every retirement fund owns shares in it. If the value of CBA halved because it lent money to Greece, then everyone in Australia would retire with 10% less. It's not faceless corporations writing down debt with very little ill effect. It's not the CEO's bonus packet which is cut. It's not some multimillionaire trader, or some rich man invested in the stock market. The money is taken out of every day people's pockets.

Have you heard of the term "Moral hazard"? If the Euro banks allow the Greeks an easy default on their debt, then what's to prevent them - or another country doing it in the future? The Germans are well known for their industriousness and good work ethic. Should they have to pay for the Greeks to retire early and pay little tax?

Yes - I agree but it was the German's responsibility to pay attention. What have the debts of private intuitions got to do with the Greek public? Secondly, the Germans are profiting for the Greeks. The reason they lent them money in the first place was so that the Greeks could buy their exports. They can't have it both ways.

All of the moral hazards go out the window though. The past can never be visited again. So the question for the Germans and the French now becomes how can we get back as much of our money as possible?

This, they handled very poorly when they tried to bully the Greeks to purchase more debt (a form of madness that the Irish Government fell for and still are falling for) and it backfired. Now with the proposed referendum they may get nothing in return.

I do realise that a certain portion of the debt comes from the public. However, subordinate bondholders should never have been guaranteed. That is why this class of bond exists. It's a risky investment that offers high returns in exchange. Senior bondholders should be paid at a reduced amount but they should be paid.

The above points at another gaping flaw in the German exporter model. The Germans are fastidious savers but terrible spenders - I think I posted something on this somewhere else. They are also the largest exporter in the world (2010). Though they will probably be overtaken by China this year.

All this means that the have huge surpluses of cash that must be put somewhere. To earn interest, this has to be invested in other countries. They didn't want to spend the money on themselves so they invested in bad decisions.

You see, even without the morality/ethics issues, the PIIGS scenario was inevitable. If you have export-orientated nations such as Germany requiring import-orientated nations such as the PIIGS to obtain loans from you in order to buy your stuff - you are guaranteed to have a crash. Perhaps a crash as often as every decade or so.

This is the gaping hole in the capitalist model today. Instead of everyone being exporters and importers we have got a few specialist countries with a dislike of importing producing all of the world's good. These are Germany, China, and new arrivals Argentina, Brasil and India. We then have the import nations which are practically everyone else. The U.S., Australia, PIIGS etc. etc. Only export nations make money in this model and then they have to give the import nations money to keep up the demand.

When the import-nations can't pay anymore the system goes into turmoil. And this will happen every decade or so. This is the main argument of the anti-globalisation movement. Whether or not the Occupy Protesters realise this or not they are also protesting against this system. (I'm sure some of them realise this).

As for the Euro banks not allowing default. That's their own fault. The ECB can't force any country to pay - though they can threaten them. In the long-term, countries defaulting will be good for the Euro, eventually. Borrowing more money to get out of debt reduces the spending power of import nations such as the PIIGS to nothing. All that equals no money for the export nations. So they are screwed.

A far more amicable scenario for all concerned is a huge debt write down. Coupled with a debt-for-equity swap. At least that way the Euro actually has a future.

As for Ireland - our two biggest markets are the UK and the U.S. Although we have a close affinity with the Euro nations, we have a closer relationship economically with the UK and the U.S. Therefore, it makes no sense for us to remain in the Euro when we are so heavily penalised to do so.

When you say Australia is doing vibrantly. I look at the bottom-line. Is it running a budget surplus or a deficit? If it is a surplus everything is fine. You are running a year-in-year-out budget deficit. The figures don't lie. Something is therefore wrong.

It's not different with a business. Ignore all the superfluous fluff in accounts. If you want to know if a business is making money or losing money ignore gross profits and net profits etc.

Look at the cash. Is the closing cash less or more than the opening cash? If it is less then you made a loss. If it is more then you are doing okay. Its a simple equation.

 

[Sunder]

I can understand most of what you say, and I can even agree to a small degree. Taking it on a smaller scale, there was a story here where a boy was repeatedly opening bank accounts, overdrawing them to their max, then ignoring them. The bank let him continue doing this until he was $200,000 in debt.

Now I would say in that case:

1. The kid should get some kind of age appropriate punishment, but
2. The bank should wear all the losses for not doing their due diligence.

Yet, on the other hand, if it was an adult who faked up documents to buy a house, I'd say throw the book at them and go after them for every last cent... The difference? I can't categorically say it's because of age, or the difference between intent to defraud, and just using a loophole, but somewhere in that fuzzy line there is a difference.

My guess is that you think the bank is wholly responsible in both cases?

I don't know if the majority of Greeks realise that if they vote for the reforms, they're in pain for years. If they vote against the reform, it could be even worse for a shorter time - but then things might get a chance to improve, if not back to the levels they used to enjoy.

I don't know that the Occupy Sydney protesters (the main ones I have issue with) actually know what they're protesting for or against, except that they're not happy with the current system. I can see why that would be in the US - where the difference between the average and median wages are stark, and the poor are living in poverty.

All this conversation really came from, is the fact that Occupy Sydney is a bit of a joke, because we have it so good here compared to the US.

On other random notes, Current Account Deficit is fairly small - Only 8.8 billion. However, what it doesn't show is the trend - Exports rose 5.8 Billion, where as imports only rose 3 billion. If the current trend continues, we will become a net exporter. Admittedly that's not a guaranteed thing.

Also, Australia had been running a budget surplus for a very long time, and in fact totally paid of Australia's public debt. Then we swapped from a right leaning government to a left leaning government. They gave out $900 to anyone who earned under $100,000 as a once off payment. They gave out free roof insulation for the same purpose. They gave big subsidies for people to install solar panels, and paid nearly ten times the wholesale rate to those people for any excess electricity returned (which is a bit of a rort, since you sold electricity to the government at 60c per kwh in the day, then bought it back at 13c in the night). They also then gave schools billions of dollars to build - all at once, and forced them to spend it IMMEDIATELY or lose it. You can imagine what that did to the building industry, which is why if you want a tradie, you have to book 6weeks to 3 months in advance, quite often they won't turn up, and most tradies working for themselves are now earning 150-200k.

If we leave this government in power, and they continue to act this way, I agree - we are up shit creek, but I think sooner or later, people will see through the hand outs, get sick of the inflation and high interest rates, and go back to a more fiscally conservative government.