Greece tells banking cartel STICK IT

[dcraelin]

My understanding of one of the south American nations that defaulted was that they were doing pretty good....until some hedge funders in US started harassing them in the courts after buying up the debt pennies on the dollar....

Your understanding would be incorrect.

when Greece, Ireland and Iceland first started having problems I am pretty sure I saw comparisons to Argentina and how good they were dong after defaulting.

I also believe Iceland, presumably with less natural resources and a smaller economy that greece at least partially defaulted and is doing pretty good.

 

[sealybobo]

The problem is that Greece, not matter how much they are squeezed can't pay back what they have borrowed. Unless the creditors are prepared to forgive a large percentage of the Greek debt, they will be back in a year or two doing the same thing and the taxpayers of the other countries of the Eurozone will have to fork out money again. Money that is used to pay the creditors, not the Greeks!

The only solution is for Greece to default (in essence declare bankruptcy) and start from zero debt with their own currency.

Germany has done this 7 times since 1800 and it has worked out well for them. With Spain and Austria, Germany is the pathological defaulter of Europe.

Couldn't you say the exact same thing about the American debt?

 

[Steinlight]

Where is the money for your "massive infrastructure spending"(of an unspecified amount) going to come from?

Borrowed.

How much? And how do you intend to pay it back?

Through the taxes raised from the workers who now have full-time jobs. In the case of new roads, through tolls. In the case of a new airport, fees on airlines and passengers.

That sounds like a terrible idea. All full time workers, regardless of pay? How much of a percentage increase, and how much will you spend on these government projects? You would essentially be taking money from middle class workers to fund these public works. Taking money from the very people you claim to defend by giving away to politically connected cronies and public unions. You can't grow an economy by taking money from one sector and putting it in another.

It's not taking money from middle class workers.

Yes it is, you said raise taxes on full time workers. That is the middle class. The Middle Class isn't comprised of part time workers. Why should the middle class have to pay for your run away spending?

 

[Steinlight]

There is no money to collect, you can't even get to an ATM in Greece because the debt has sapped the country of its wealth.

You make it sound like no one has any money, no one has a job, no one is getting a paycheck.

25% unemployment, 50% youth unemployment, and you can't withdraw money due to bank holidays. This is the product of Democratic socialism. The society is bankrupt and can't mathematically pay back the debt they created through this massive spending(primarily through the pensions of government union workers).

 

[Andylusion]

You are missing something important. Greece does not have the ability to default. Not in the way Germany did, or any other country that has defaulted.

The German defaults were on bonds owed to private companies and individuals. The Greeks owe governments money.

Forgive me for this poor analogy. It's similar to the difference of having a bank loan, or private loan of some sort, and having a Federally Insured student loan.

With the private loan, you can make the choice to default, and intentionally force your creditors to restructure the debt. That's what "strategic default" is all about. And the reason why you can do this, is because there is an authority above the creditors, namely the Government, which will arbitrate between you and the creditors.

But what if the creditor *IS* the arbiter? What if the there is no authority over your creditor? Who arbitrates between you and the government, when there is no higher authority government?

This is why you pay back 100% of a Federally Insured student loan. You will either pay back every penny with interest, that you borrowed under a Federal Guarantee, or you will carry that debt until you die.

Back to Greece.

If you look at the chart on page 1 of this thread, only about 22% (roughly) of Greece's debt, is owed to private institutions, the majority of which is owed to public within Greece. Defaulting on pensioners and unions, and voting citizens would be horrific politically, but worse, it wouldn't solve the problem.

78% of Greece's debt is to other GOVERNMENTs. It's not bankruptable.
The IMF is not bankruptable. The ECB is not bankruptable. The Eurozone is not bankruptable.

Greece has absolutely no way of forcing the IMF, ECB, or the EU, or any of it's governmental creditors to take a hair cut on their debt. Not even if they ditch the Euro, and start over with their own currency.

Starting over with the Drachma again, doesn't make the debts they owe any less. They would still owe everyone billions of Euros of debt.

They would still owe everyone, everything they currently do, but the economic consequences would be horrendous.

Tariffs on exported and imported goods. Cost of living would drastically increase throughout Greece, as retail prices jumped by at least 1/3rd, if not more.

The drachma would drop in value like a rock. Investments would leave the country, as would jobs.

The economic crash in Greece after being forced out of the EU, would make the economic recession they have dealt with up till now, look like a bad hair day.

Ditching the Euro, and leaving the EU, would simply make paying back the debt even more difficult, because they would have to purchase Euros, to pay back the debt owed in Euros, with Drachma.... which would fall in value you like a rock.

Honestly, it's hard to imagine what possible bright side would result from this course of action.

The countries could of course keep the debt on their books as you say, ...but Greece doesnt have to pay it either.

and the low value of the drachma would pump up one of Greece's main industries ....tourism.

Yes and no.

Greece can't directly be forced to pay back the debts, no. But, Argentina keeps trying to avoid paying it's debts, and every single time they refuse to pay, their interest rates jack up, and currency values drop, and the country goes into recession. Just look at their economic history, it's a roller-coaster of crash rise crash rise. If that's what you are willing to deal with, to avoid paying the debts you owe... fine... but just understand, you will reap the consequences of actions.

It would pump up tourism.... in theory. Yes. Because the Drachma would drop in value you like a rock, and that would allow Europeans to exchange 1 Euro for 10 Drachma (or other massive exchange rate), and then renting a room for 100 Euros today, would cost 100 Drachma, which after exchange would be 10 Euro.

But here's the problem.... The wages for the staff at the Hotel would be in Drachma. So while the business might be booming, the employees would actually be taking a pay cut. If they are earning 10 Euros an hour before, now they're earning 10 Drachma an hour, and it costs them twice as much to buy food, fuel, clothing and goods.

The rest of the industry in Greece would be wiped out though. If I make tires in Greece, and now it costs me twice as much to buy material to run my business, not to mention import and export duties, and then on top of that, all other countries are putting custom duties and tariffs on my products I'm trying to sell.... cost of doing business goes up, purchases of my products goes down.... that's called "fail".

My understanding of one of the south American nations that defaulted was that they were doing pretty good....until some hedge funders in US started harassing them in the courts after buying up the debt pennies on the dollar....

It doesn't necessarily cost twice as much for food etc if they produce that themselves.

Why would other countries put custom duties and tariffs on?...especially if they are now trying to sell into broke Greece, when they previously sold into a subsidized Greece.

No doubt it will be tough for a while in some areas,....but the market will eventually even things out.

The moment they are no longer part of the EU, automatically, there would be tariffs and import duties on goods entering the EU, just like goods imported into the US have tariffs and import duties.

The only reason some goods have zero duties and tariffs, is because we sign a free-trade agreement.

For Greece to do this, they would have to go negotiate a treaty with the EU........ the same EU they just defaulted on..... Do you really really think that those negotiations are going to go well? Not a chance.

Why would they impose duties or tariffs on goods exported from Greece? Oh gee I don't know.... maybe to pay back the debt they still owe?

Why would Greece impose duties and tariffs on goods imported into Greece? Oh I don't know... maybe because the government is completely broke and desperate for cash?

And don't underestimate how much the price of food would go up.

View attachment 44399
This is Greece. Empty shelves.

Greek Importers Begin to Feel the Squeeze - WSJ

Greece hasn't produced enough food to feed itself for decades. Now maybe it will....

But remember, they have to import seed, import tires, tractors, pesticide, herbicides, fertilizer, fuel for the equipment....

The price of food, and all common goods will drastically increase. It's unavoidable.

As for African nations.... Yeah, any nation can do fantastic borrowing endlessly. If I open a dozen credit cards, and mortgage my home, and borrow a car loan..... I can live like a King.... for awhile.

Eventually the notes come due, and the entire system crashes.

Similarly, a nation can borrow endlessly and do just amazingly well.... Then when the notes come due, instead of blaming themselves for borrowing, they blame the IMF or whoever was dumb enough to lend to them.

Argentina is not a great comparable because unlike Greece, they have natural resources. The austerity rejected by Greeks will, as you noted, still be imposed but the imposer will be the Greek gov't and market forces and the international debts on which they have and will continue to default (big payments are due this summer) will not just go away. Someday they will want back into the global economy and only hard currency (euros, dollars) will buy their re-entry.

Agreed. Argentina happen to default last time, in the middle of a commodity boom. Lucky them, they had natural resources.

But regardless, choosing to default has still wreaked havoc on their economy.

Greece can only postpone the crash if they leave the Euro. Right now they are screwed because they have no ability to get money to keep what is left of their government operating. That's why public banks have been closed.

If they ditch the Euro and start printing out Drachma.... they can hand out all the money they want.... of course in the long run, the hyper inflation of a worthless currency will have the Zimbabwe effect.

And you are exactly right. Greeks are under the illusion that the EU needs them as much as they need the EU. Not true. They need the EU, and the EU could do just as well without them at all.

 

[Toro]

Greece capitulated. They have chosen to stay in the euro.

 

[Andylusion]

You are missing something important. Greece does not have the ability to default. Not in the way Germany did, or any other country that has defaulted.

The German defaults were on bonds owed to private companies and individuals. The Greeks owe governments money.

Forgive me for this poor analogy. It's similar to the difference of having a bank loan, or private loan of some sort, and having a Federally Insured student loan.

With the private loan, you can make the choice to default, and intentionally force your creditors to restructure the debt. That's what "strategic default" is all about. And the reason why you can do this, is because there is an authority above the creditors, namely the Government, which will arbitrate between you and the creditors.

But what if the creditor *IS* the arbiter? What if the there is no authority over your creditor? Who arbitrates between you and the government, when there is no higher authority government?

This is why you pay back 100% of a Federally Insured student loan. You will either pay back every penny with interest, that you borrowed under a Federal Guarantee, or you will carry that debt until you die.

Back to Greece.

If you look at the chart on page 1 of this thread, only about 22% (roughly) of Greece's debt, is owed to private institutions, the majority of which is owed to public within Greece. Defaulting on pensioners and unions, and voting citizens would be horrific politically, but worse, it wouldn't solve the problem.

78% of Greece's debt is to other GOVERNMENTs. It's not bankruptable.
The IMF is not bankruptable. The ECB is not bankruptable. The Eurozone is not bankruptable.

Greece has absolutely no way of forcing the IMF, ECB, or the EU, or any of it's governmental creditors to take a hair cut on their debt. Not even if they ditch the Euro, and start over with their own currency.

Starting over with the Drachma again, doesn't make the debts they owe any less. They would still owe everyone billions of Euros of debt.

They would still owe everyone, everything they currently do, but the economic consequences would be horrendous.

Tariffs on exported and imported goods. Cost of living would drastically increase throughout Greece, as retail prices jumped by at least 1/3rd, if not more.

The drachma would drop in value like a rock. Investments would leave the country, as would jobs.

The economic crash in Greece after being forced out of the EU, would make the economic recession they have dealt with up till now, look like a bad hair day.

Ditching the Euro, and leaving the EU, would simply make paying back the debt even more difficult, because they would have to purchase Euros, to pay back the debt owed in Euros, with Drachma.... which would fall in value you like a rock.

Honestly, it's hard to imagine what possible bright side would result from this course of action.

The countries could of course keep the debt on their books as you say, ...but Greece doesnt have to pay it either.

and the low value of the drachma would pump up one of Greece's main industries ....tourism.

Yes and no.

Greece can't directly be forced to pay back the debts, no. But, Argentina keeps trying to avoid paying it's debts, and every single time they refuse to pay, their interest rates jack up, and currency values drop, and the country goes into recession. Just look at their economic history, it's a roller-coaster of crash rise crash rise. If that's what you are willing to deal with, to avoid paying the debts you owe... fine... but just understand, you will reap the consequences of actions.

It would pump up tourism.... in theory. Yes. Because the Drachma would drop in value you like a rock, and that would allow Europeans to exchange 1 Euro for 10 Drachma (or other massive exchange rate), and then renting a room for 100 Euros today, would cost 100 Drachma, which after exchange would be 10 Euro.

But here's the problem.... The wages for the staff at the Hotel would be in Drachma. So while the business might be booming, the employees would actually be taking a pay cut. If they are earning 10 Euros an hour before, now they're earning 10 Drachma an hour, and it costs them twice as much to buy food, fuel, clothing and goods.

The rest of the industry in Greece would be wiped out though. If I make tires in Greece, and now it costs me twice as much to buy material to run my business, not to mention import and export duties, and then on top of that, all other countries are putting custom duties and tariffs on my products I'm trying to sell.... cost of doing business goes up, purchases of my products goes down.... that's called "fail".

My understanding of one of the south American nations that defaulted was that they were doing pretty good....until some hedge funders in US started harassing them in the courts after buying up the debt pennies on the dollar....

It doesn't necessarily cost twice as much for food etc if they produce that themselves.

Why would other countries put custom duties and tariffs on?...especially if they are now trying to sell into broke Greece, when they previously sold into a subsidized Greece.

No doubt it will be tough for a while in some areas,....but the market will eventually even things out.

The moment they are no longer part of the EU, automatically, there would be tariffs and import duties on goods entering the EU, just like goods imported into the US have tariffs and import duties.

The only reason some goods have zero duties and tariffs, is because we sign a free-trade agreement.

For Greece to do this, they would have to go negotiate a treaty with the EU........ the same EU they just defaulted on..... Do you really really think that those negotiations are going to go well? Not a chance.

Why would they impose duties or tariffs on goods exported from Greece? Oh gee I don't know.... maybe to pay back the debt they still owe?

Why would Greece impose duties and tariffs on goods imported into Greece? Oh I don't know... maybe because the government is completely broke and desperate for cash?

And don't underestimate how much the price of food would go up.

View attachment 44399
This is Greece. Empty shelves.

Greek Importers Begin to Feel the Squeeze - WSJ

Greece hasn't produced enough food to feed itself for decades. Now maybe it will....

But remember, they have to import seed, import tires, tractors, pesticide, herbicides, fertilizer, fuel for the equipment....

The price of food, and all common goods will drastically increase. It's unavoidable.

As for African nations.... Yeah, any nation can do fantastic borrowing endlessly. If I open a dozen credit cards, and mortgage my home, and borrow a car loan..... I can live like a King.... for awhile.

Eventually the notes come due, and the entire system crashes.

Similarly, a nation can borrow endlessly and do just amazingly well.... Then when the notes come due, instead of blaming themselves for borrowing, they blame the IMF or whoever was dumb enough to lend to them.

first of all I dont know that it is automatic increases in tariff when out of EU............if so the market will find the correct new price. The monetray union I believe came after some of the other stuff so maybe still under EU anyway regarding trade.

Yes perhaps creditor nations will try to up tariffs but they will get push-back from those doing business, same visa versa.

Have to import seed?.........hell no they wont have to import seed, they may but they may not, and I dont know about tractors tires etc. either.

I said nothing about African nations, I did mention South America...........I agree with you, in a way. But the crooked rt-wing politicians in Greece hid their borrowing from their constituents. more open government is part of the answer.

The IMF is contributed to by member countries, including us I think. and those "dumb enough" to lend to Greece have used undo influence to insulate themselves...they are largely gone.....It will hit the EU taxpayer, and even us to some extent I think.

Making me work to prove my case eh? Very well.

What is the Common Customs Tariff - European Commission

Since the completion of the internal market, goods can circulate freely between Member States. The 'Common Customs Tariff' (CCT) therefore applies to the import of goods across the external borders of the EU.​

The whole point of the European Union, was to have free trade of goods within the EU. The Euro Zone, was to have a unified currency.

If Greece is removed out of the EU, they would automatically have the Common Customs Tariff applied to them because they would now be outside the border of the EU.

Now, you are correct that they could.... in theory.... leave the Euro Zone, but not leave the EU. While that is a possibility, I highly doubt it.

The EU treaties that must be signed to join, and the EuroZone treaties, all of it is a compact of trust. Greece defaulting on all the countries of the EU, and then breaching every treaty of the EuroZone for the explicit purpose of avoiding paying back their debts.... it's hard to imagine how they wouldn't be forced out of the EU. Possible... yes. Likely? No.

Corrupt Right wing? Other than the generic corrupted politicians generally, not sure what you mean. From what I've read, Greece hasn't really been right wing in decades. New Democracy is by most estimations a "progressive center" party, and PASOK is as left wing as you can get, only surpassed by Syriza.

And most of the massive problems we see Greece in now, all happened under Kostas Simitis PASOK rule.

There is no such thing as 'undo influence' in lending. If you ask to borrow money from me, then you have to follow my requirements. That's how lending works.

If you don't want to follow my requirements.... great. Don't borrow the money.

The IMF is not dumb for lending. They always make sure they have enough legal backing to get their money back. That's why everyone hates the IMF. They don't lend out money without stipulations, and then just forgive the loan later.

The US hasn't lent much money to Greece directly. The EU taxpayers are screwed.

 

[SAYIT]

Greece capitulated. They have chosen to stay in the euro.

Remarkably, the deal is far more draconian than the terms Greece had been rejecting for months. Greeks have so depleted their well of integrity that foreign entities must be involved in the sale and dispersal of gov't assets and the passage of laws. In many ways it's a trusteeship with the gov't abdicating much of its authority to foreign bankers. Even with all that I still don't trust the situation and the Grexit still looms large on the horizon.

 

[SAYIT]

Greece tells banking cartel to STICK IT!

Greece voted down the knife that international banks had to their throat...
Now those very banks will be FORCED to negotiate a more equitable settlement and payment package because they have no choice...

Uh-huh, and today after years of failing to honor financial terms and months of strutting and preening (and yet untallied self-imposed damage to Greece's economy and her people) she lifted her skirt, bent over and asked those international banks to please "STICK IT" here.
Socialists are like children ... they think all they must do is have a referendum and their problems are solved. Children.

 

[SAYIT]

Greece needs to keep funding the fakes and phonies who are drawing the public trough, they are dependable Socialist voters!

And one week after their proud, defiant referendum they awoke with a world-classs hangover (complete with severe austerity) that may well last decades. Stupid ... just STUPID.

 

[dcraelin]

The countries could of course keep the debt on their books as you say, ...but Greece doesnt have to pay it either.

and the low value of the drachma would pump up one of Greece's main industries ....tourism.

Yes and no.

Greece can't directly be forced to pay back the debts, no. But, Argentina keeps trying to avoid paying it's debts, and every single time they refuse to pay, their interest rates jack up, and currency values drop, and the country goes into recession. Just look at their economic history, it's a roller-coaster of crash rise crash rise. If that's what you are willing to deal with, to avoid paying the debts you owe... fine... but just understand, you will reap the consequences of actions.

It would pump up tourism.... in theory. Yes. Because the Drachma would drop in value you like a rock, and that would allow Europeans to exchange 1 Euro for 10 Drachma (or other massive exchange rate), and then renting a room for 100 Euros today, would cost 100 Drachma, which after exchange would be 10 Euro.

But here's the problem.... The wages for the staff at the Hotel would be in Drachma. So while the business might be booming, the employees would actually be taking a pay cut. If they are earning 10 Euros an hour before, now they're earning 10 Drachma an hour, and it costs them twice as much to buy food, fuel, clothing and goods.

The rest of the industry in Greece would be wiped out though. If I make tires in Greece, and now it costs me twice as much to buy material to run my business, not to mention import and export duties, and then on top of that, all other countries are putting custom duties and tariffs on my products I'm trying to sell.... cost of doing business goes up, purchases of my products goes down.... that's called "fail".

My understanding of one of the south American nations that defaulted was that they were doing pretty good....until some hedge funders in US started harassing them in the courts after buying up the debt pennies on the dollar....

It doesn't necessarily cost twice as much for food etc if they produce that themselves.

Why would other countries put custom duties and tariffs on?...especially if they are now trying to sell into broke Greece, when they previously sold into a subsidized Greece.

No doubt it will be tough for a while in some areas,....but the market will eventually even things out.

The moment they are no longer part of the EU, automatically, there would be tariffs and import duties on goods entering the EU, just like goods imported into the US have tariffs and import duties.

The only reason some goods have zero duties and tariffs, is because we sign a free-trade agreement.

For Greece to do this, they would have to go negotiate a treaty with the EU........ the same EU they just defaulted on..... Do you really really think that those negotiations are going to go well? Not a chance.

Why would they impose duties or tariffs on goods exported from Greece? Oh gee I don't know.... maybe to pay back the debt they still owe?

Why would Greece impose duties and tariffs on goods imported into Greece? Oh I don't know... maybe because the government is completely broke and desperate for cash?

And don't underestimate how much the price of food would go up.

View attachment 44399
This is Greece. Empty shelves.

Greek Importers Begin to Feel the Squeeze - WSJ

Greece hasn't produced enough food to feed itself for decades. Now maybe it will....

But remember, they have to import seed, import tires, tractors, pesticide, herbicides, fertilizer, fuel for the equipment....

The price of food, and all common goods will drastically increase. It's unavoidable.

As for African nations.... Yeah, any nation can do fantastic borrowing endlessly. If I open a dozen credit cards, and mortgage my home, and borrow a car loan..... I can live like a King.... for awhile.

Eventually the notes come due, and the entire system crashes.

Similarly, a nation can borrow endlessly and do just amazingly well.... Then when the notes come due, instead of blaming themselves for borrowing, they blame the IMF or whoever was dumb enough to lend to them.

first of all I dont know that it is automatic increases in tariff when out of EU............if so the market will find the correct new price. The monetray union I believe came after some of the other stuff so maybe still under EU anyway regarding trade.

Yes perhaps creditor nations will try to up tariffs but they will get push-back from those doing business, same visa versa.

Have to import seed?.........hell no they wont have to import seed, they may but they may not, and I dont know about tractors tires etc. either.

I said nothing about African nations, I did mention South America...........I agree with you, in a way. But the crooked rt-wing politicians in Greece hid their borrowing from their constituents. more open government is part of the answer.

The IMF is contributed to by member countries, including us I think. and those "dumb enough" to lend to Greece have used undo influence to insulate themselves...they are largely gone.....It will hit the EU taxpayer, and even us to some extent I think.

Making me work to prove my case eh? Very well.

What is the Common Customs Tariff - European Commission

Since the completion of the internal market, goods can circulate freely between Member States. The 'Common Customs Tariff' (CCT) therefore applies to the import of goods across the external borders of the EU.​

The whole point of the European Union, was to have free trade of goods within the EU. The Euro Zone, was to have a unified currency.

If Greece is removed out of the EU, they would automatically have the Common Customs Tariff applied to them because they would now be outside the border of the EU.

Now, you are correct that they could.... in theory.... leave the Euro Zone, but not leave the EU. While that is a possibility, I highly doubt it.

The EU treaties that must be signed to join, and the EuroZone treaties, all of it is a compact of trust. Greece defaulting on all the countries of the EU, and then breaching every treaty of the EuroZone for the explicit purpose of avoiding paying back their debts.... it's hard to imagine how they wouldn't be forced out of the EU. Possible... yes. Likely? No.

Corrupt Right wing? Other than the generic corrupted politicians generally, not sure what you mean. From what I've read, Greece hasn't really been right wing in decades. New Democracy is by most estimations a "progressive center" party, and PASOK is as left wing as you can get, only surpassed by Syriza.

And most of the massive problems we see Greece in now, all happened under Kostas Simitis PASOK rule.

There is no such thing as 'undo influence' in lending. If you ask to borrow money from me, then you have to follow my requirements. That's how lending works.

If you don't want to follow my requirements.... great. Don't borrow the money.

The IMF is not dumb for lending. They always make sure they have enough legal backing to get their money back. That's why everyone hates the IMF. They don't lend out money without stipulations, and then just forgive the loan later.

The US hasn't lent much money to Greece directly. The EU taxpayers are screwed.

In modern Greek New Democracy has been the main centre-right political party (wikipedia)

PASOK had not ruled in the time of the debt run-up.....when it came to power, it was saddled with debt and debt hidden by the past administrations.

You are naive if you dont think weak or crooked government rulers dont fall prey to undo influence in borrowing money.

As I write this Tsipras seems to have caved, tho any deal will have to be approved by Parliament. I think it would be in the long term best interests of both the EU and Greece to turn it down. If so I think it would be also be short-sighted on the part of the EU to kick Greece out of the customs union.

 

[Vigilante]

 

[bendog]

I don't think we can tell if it's a good deal or a bad deal or, more importantly, if it actually accomplishes anything good. On the face of it, I'd say it does nothing to actually cure the Greek problem.

Possible scenarios for Greece Econbrowser

"It’s very clear that two things have to happen from here. First, Greece needs relief from its mountain of debt, and second, the country needs to find a way to become more competitive economically.

The traditional way these goals would be achieved is first, creditors would accept substantial haircuts and restructuring of the outstanding debt, and second, a big currency depreciation would give Greek exports a competitive international advantage to get the economy growing again without new borrowing.

The main complication preventing these steps in the current situation is Greece’s participation in the euro system. On the first issue, this meant that European governments, banks and the ECB extended substantial loans on the (mis)understanding that Greece’s membership in the European union meant default was impossible. On the second issue, devaluation would seem not to be an option because Greece does not have control over the value of its currency."
................

On the face if it, simply raising taxes and cutting pensions not only does nothing, but in terms of how monetarists view ending recessions, it's typical Merkel azz-backwards. But then there were these quotes.

Greece Submits Reform Proposals To European Creditors

"Many of the proposed reforms were harsher than those roundly rejected by the Greek public in a bailout referendum last Sunday. But the government said, in return, it "would seek a commitment from creditors to negotiate ... further measures to restructure the long-term debt

"Earlier Thursday, Donald Tusk of Poland, who chairs the EU summits, indicated that European officials would make an effort to address Greece's key request for debt relief.

"The realistic proposal from Greece will have to be matched by an equally realistic proposal on debt sustainability from the creditors. Only then will we have a win-win situation," Tusk said."
...................
So, if Europe is finally accepting the fact that there has to be a "haircut," maybe that's a forward step. But, there's still the Euro problem. Basically, the "Greek euro" has to be worth less than a "EU euro." That's the only way to get Greek exports cheaper for trading partners, and the only way to get "EU euros" to visit Greece and buy stuff.

The normal way to approach a debacle like Greece has is: a. a haircut, b. some kind of currency devaluation and c. a commitment to not just cut govt spending but more importantly to continually hold debt growth at less a % of gnp and gnp growth.

We may have a and c, but I'm not sure about b.

 

[SAYIT]

...Basically, the "Greek euro" has to be worth less than a "EU euro." That's the only way to get Greek exports cheaper for trading partners, and the only way to get "EU euros" to visit Greece and buy stuff....

Not so. Domestic policies (gov't regs, taxes) that add to the costs of production must be scaled back to allow Greeks to produce more cheaply. VOILA!

 

[theHawk]

Greece needs to keep funding the fakes and phonies who are drawing the public trough, they are dependable Socialist voters!

And one week after their proud, defiant referendum they awoke with a world-classs hangover (complete with severe austerity) that may well last decades. Stupid ... just STUPID.

They were the ones that chose to spend 170% of their GDP at times.
That was just stupid.

 

[bendog]

...Basically, the "Greek euro" has to be worth less than a "EU euro." That's the only way to get Greek exports cheaper for trading partners, and the only way to get "EU euros" to visit Greece and buy stuff....

Not so. Domestic policies (gov't regs, taxes) that add to the costs of production must be scaled back to allow Greeks to produce more cheaply. VOILA![/QUO\\

.

Greece undoubtedly is years from being a market economy, but regardless of reforms, it will never compete in terms of real export markets with Germany ... or even France. It does have agricultural and fishery supplies. But, it's basic economics that if a country can't pay its debt, it has to default and devalue. Something that is better avoided by not having the debt in the first place

 

[dcraelin]

here is a good article on outlining the least of what should happen to Goldman Sachs for facilitating the hiding of Greek debt.

Goldman Sachs could face lawsuit for helping hide Greek debt - report RT Business

 

[Bleipriester]

Greece is going to receive more billions from ESM. But they have to make reforms now.

 

[Synthaholic]

Yes it is, you said raise taxes on full time workers. That is the middle class. The Middle Class isn't comprised of part time workers. Why should the middle class have to pay for your run away spending?

Another wingnut with reading comprehension issues.

I didn't say raise taxes on workers, I said put people to work so that you can then collect income taxes from them.

 

[Synthaholic]

25% unemployment

Uh...that means 75% employment.