Greek Referendum Threatens Bailout Deal

[Twalbert]

Apparently, Greece has never heard the expression “beggars can't be choosers”. After Euro leaders agreed the bailout deal last year that would effectively release the pressure valve on Greece, at least for a while, Greek Prime Minister George Papandreou announced that there would be a referendum.

Source: Greek Referendum Threatens Bailout Deal | Benzinga

 

[editec]

I suspect that George knows the pain that the bailout deal will impose on the people and therefore wants a referendum to cover his own ass.

Just a guess of course, but that's what I'd do, were I him.

 

[ekrem]

The government has replaced the generals of the top-brass from General Staff.
And Greeks start to attack their own soldiers on the street, there's clearly a lot of anger in the air.

[ame=http://www.youtube.com/watch?v=JDkrr2fmqy0]Greek Military Parade in Solun (Thessaloniki) 28 october 2011 - YouTube[/ame]

 

[Toro]

I couldn't believe it when I heard this.

Guess a default is on the way. The only question is whether it will be orderly or disorderly.

I would also imagine it is only a matter of time before Greece is booted out of the eurozone.

 

[Baruch Menachem]

I Think Editic is right on this. The greek government needs cover on this thing, because the deal is going to be really painful for Greece. If he just imposes it, he is the lap dog lackey of foreign business interests. if he get his way on the referendum, he can say "This is what you voted for."

However, the Greeks have been reading the newspapers too. They know that the Germans, Scandinavians and French are not happy about this, do not want to do it, and if they had their druthers they would dump Greece from the EU in a heartbeat. And Greece would loose a lot worse if that were to happen than any austerity package.

The will whine, moan, yell, be all Mediterranean about it, but if they know what is the best for them, they will approve it by a large margin.

And as bad as the haircut is for them, it is a deal they can live with. If the bonds became valueless they would be in an even bigger fix.

 

[Mad Scientist]

I don't understand. Why don't the Greek people wanna' be Euro Union Debt Slaves and have all their assets sold off and pensions cut under "austerity measures"?

WTF is wrong with them?

(By the way, this is coming to America)

 

[Baruch Menachem]

If they had been more honest, they wouldn't be in this fix.

In order to be in the EMS, you have to maintain certain standards on debt and budgets. The Greeks flat out lied about their obligations and hoped they would get away with it.

Being in the EMS has lots of really cool bennies. No currency transaction fees, free travel from the Bosporus to Limerick. But it also has some pretty harsh obligations.

 

[Mad Scientist]

Being in the EMS has lots of really cool bennies. No currency transaction fees, free travel from the Bosporus to Limerick. But it also has some pretty harsh obligations.

Yeah, like the crashing Euro. Plus, I'm sure it's fun to live under rules of "austerity".

 

[Baruch Menachem]

Austerity is no biggie. Poland, Lithuania, Hungary, Slovakia and Germany all do pretty well under 'austerity'. Living under the pay back for profligacy is the bitch. They have to service a debt larger than their economy at junk bond rates. That is the killer.

We face the same sort of issue here already. Debt service is one of the major parts of the budget. Had we been living within our means before, we could spend like crazy now. All that spending 30,20,10,5 years ago just builds on to the interest we pay now. What we could do with the money we pay in interest ......

 

[Toro]

Austerity is no biggie. Poland, Lithuania, Hungary, Slovakia and Germany all do pretty well under 'austerity'. Living under the pay back for profligacy is the bitch. They have to service a debt larger than their economy at junk bond rates. That is the killer.

We face the same sort of issue here already. Debt service is one of the major parts of the budget. Had we been living within our means before, we could spend like crazy now. All that spending 30,20,10,5 years ago just builds on to the interest we pay now. What we could do with the money we pay in interest ......

Poland, Lithuania and Hungary all do not use the euro so those examples don't apply. Germany is the euro. Slovakia is the closest analogy but it's deficit was half that of Greece and approximates France. Austerity is necessary in Greece. That's why they have already slashed spending and raised taxes. However, the level of necessary austerity in Greece is much more severe and is probably beyond the breaking point of the Greek people, which is why they will default and eventually leave the eurozone.

 

[California Girl]

I don't understand. Why don't the Greek people wanna' be Euro Union Debt Slaves and have all their assets sold off and pensions cut under "austerity measures"?

WTF is wrong with them?

(By the way, this is coming to America)

If their public sector hadn't been so damned greedy, this wouldn't be happening. This isn't the fault of the Euro. This is the fault of left wing governments pandering to left wing unions at the cost of the rest of their country.

 

[editec]

If Greece's bonds default?

Banks all over Europe are going down, folks.

If you folks think that this refi deal is for the benefit of the GREEK people you're mistaken.

This deal serves the banks that hold Greek Debts, first and foremost. (and them not especially well, either)

The people in Greece fully understand that and they're probably not willing to fall on their sword to save German and English and French banks.

And really most of the Greek people have no reason to care, anyway.

Most Greeks citizens did not benefit from the Greek government's overspending.

Those that did benefit (Greece's Insider class) will probably weather the austerity storm much better than those who gained little to nothing from the proflagate spending of the previous decades.

What a mess and yet how very typical of what happens when government become captives of cabals of insiders.

 

[martybegan]

I Think Editic is right on this. The greek government needs cover on this thing, because the deal is going to be really painful for Greece. If he just imposes it, he is the lap dog lackey of foreign business interests. if he get his way on the referendum, he can say "This is what you voted for."

However, the Greeks have been reading the newspapers too. They know that the Germans, Scandinavians and French are not happy about this, do not want to do it, and if they had their druthers they would dump Greece from the EU in a heartbeat. And Greece would loose a lot worse if that were to happen than any austerity package.

The will whine, moan, yell, be all Mediterranean about it, but if they know what is the best for them, they will approve it by a large margin.

And as bad as the haircut is for them, it is a deal they can live with. If the bonds became valueless they would be in an even bigger fix.

I have a bad feeling that they will vote it down. The required austerity measures have a direct impact on the lives of everyday Greeks. Most of the consequences of a default are unknown, and even the known ones are macro economic in scale. There is also the perception in the greek populace that most of the pain would be inflicted on thier banks and other countries, not themselves.

I see it being voted down 60%-40%.