Greece Goes Broke

[GostHacked]

If revenues were higher, so would the benefits. That's how it's worked for decades.

I think there is something very fundamental you are not quite grasping. Where are those revenues coming from?

[sharkman]

I'm really wondering what's going to happen to Greece. Are they going to run into Putin's open arms, or deal with the reality that they can't spend money they don't have on the pensions anymore.

[dre]

I'm really wondering what's going to happen to Greece. Are they going to run into Putin's open arms, or deal with the reality that they can't spend money they don't have on the pensions anymore.

Those are false choices. They may or may not do some business with Russia... But that would not constitute "running into Putins arms". All of Europe does quite a bit of business with Russia.

The real choice facing Greece is whether they should stay in the Eurozone, or bring back the Drachma, and that will be determined by how much the ECB is willing to write down Greek debt.

[Big Guy]

To dre - What do you think should be done in the best interest of Greece? Of the Eurozone? Of North America?

[WWWTT]

Here's an interesting link.

Is Greece a cash cow now?

Obviously, if you make money from lending the Greeks money, then ya, Greece IS a cash cow!

http://jubileedebt.org.uk/news/imf-made-e2-5-billion-profit-greece-loans

Now this is an older link, however, one has to wonder, is there a conflict of interest going on here?

WWWTT

[sharkman]

Those are false choices. They may or may not do some business with Russia... But that would not constitute "running into Putins arms". All of Europe does quite a bit of business with Russia.

The real choice facing Greece is whether they should stay in the Eurozone, or bring back the Drachma, and that will be determined by how much the ECB is willing to write down Greek debt.

I did not define what I meant by running into Putin's arms, and your assumed meaning is wrong. At any rate, if they leave the EU, they won't be paying back the debt, and that will cause problems. They seem bent on going completely bankrupt. Cue the rioters.

[dre]

I did not define what I meant by running into Putin's arms, and your assumed meaning is wrong. At any rate, if they leave the EU, they won't be paying back the debt, and that will cause problems. They seem bent on going completely bankrupt. Cue the rioters.

Most of that debt is never going to get paid whether they leave the EU or not. It will get inflated away or written down.

And a default WILL cause problems, but its still probably the best option in the long term.

[dre]

To dre - What do you think should be done in the best interest of Greece? Of the Eurozone? Of North America?

They should go back to the drachma, and inflate away all the debt.

[TimG]

They should go back to the drachma, and inflate away all the debt.

That worked so well for Argentina that they were forced to adopt a peg to the USD to end the chaos. Unfortunately, in Argentina's the USD peg could not last because, like the Greeks, the government could not restrain itself and is now heading back down the hyper inflation highway.

Greece has no future unless it learns fiscal discipline which means matching their level of social services to the taxes that can be collected.

Edited July 2, 2015 by TimG

[sharkman]

Which is right back to the issue with Greece spending money they don't have, and running right into the brick wall of reality. My question is, how ugly will it get?

I'm really wondering what's going to happen to Greece. Are they going to run into Putin's open arms, or deal with the reality that they can't spend money they don't have on the pensions anymore.

[sharkman]

Answer? Pretty ugly.

Pavlos Deas, owner of an olive processing factory in Chalkidiki, told The Telegraph that he may have to shut down a plant employing 250 people within days.

"We can't send any money abroad to our suppliers. Three of our containers have been stopped at customs control because the banks can't give a bill of landing. One is full of Spanish almonds, the others full of Chinese garlic," he said.

[Canada_First]

wWe must let Greece fall and fail. It will teach the communists a lesson.

[sharkman]

I don't think Putin is going to let that happen.

[WIP]

Those are false choices. They may or may not do some business with Russia... But that would not constitute "running into Putins arms". All of Europe does quite a bit of business with Russia.

The real choice facing Greece is whether they should stay in the Eurozone, or bring back the Drachma, and that will be determined by how much the ECB is willing to write down Greek debt.

This is all just one more example of what Naomi Klein termed "Disaster Capitalism" 10 or 15 years ago.

The origins of the crisis began with a previous government that was trying to hide it's actual public debt levels to gain access into the Eurozone....and guess who was there to help them hide the money...for a price: Goldmann Sachs! And the rest is history.

Five years ago, when what calls itself a 'socialist' government - Pasok, agreed to terms dictated by the IMF and cabal of Eurobankers, the austerity measures of service&benefit cuts, combined with tax increases, was somehow supposed to help Greece pay off the financial iceberg. Instead, the economy tanked, debt levels, unemployment, extreme poverty all increased, and now Greeks are being asked to give more in a financial bailout that will go to their banks...not the people!

I've been following this story somewhat since Syriza got elected, and the worse thing about Tsipras and this Syriza Government is that it is looking more and more like they were just bluffing, and had no actual backup plan for a Grexit and a return to the Drachma. A lot of Greeks thought they were serious and were making secret Grexit plans in the event they couldn't get a deal that would not include more austerity.

So, it's a dismal situation for Greece with no good options. Because it doesn't look like they have a government willing or able to make the hard choices and lead them out of Euro debt bondage, but will most likely take the best of whatever the hell the bankers offer, and will continue to bleed more income and wealth, especially after their Government sells off hard assets the bankers want...like some of those islands in the Aegean that would make nice little estates for the billionaires who will buy them at firesale prices.

[msj]

If I was voting I would vote no and tell Europe to get stuffed.

Greece needs its own currency to get out of this mess and lenders need to learn that loaning money is risky and sometimes leads to loss of principal.

I agree with this guy's reasons: http://www.marketwatch.com/story/why-id-vote-no-on-greeces-referendum-2015-07-03?page=1

[sharkman]

They are going to run out of money by the end of this weekend. It would take several months to set up their own currency again and they don't have time.

[msj]

Scaremongering nonsense.

Plenty of countries have gone broke and rebuilt - heck, Greece only has to look at their own history over the past 2,600 years for lots of examples.

[sharkman]

Scaremongering nonsense.

Plenty of countries have gone broke and rebuilt - heck, Greece only has to look at their own history over the past 2,600 years for lots of examples.

Quoted so we can see how right you are a month from now.

[Argus]

Again... thats objectively false. Greek state expenditures were lower than the EU average. Social spending was lower than the EU average.

And the cost of living was lower than the average. They might have spent a lower number of Euros than the 'EU average' but they couldn't afford to spend what they spent. The cost, in absolute terms, of letting people retire with an average 96% pension might be lower, than doing so in Germany, but it was still nuts.

[msj]

Quoted so we can see how right you are a month from now.

What is there going to see a month from now?

Greece will likely vote yes, the stupidity of the austerity will continue, and we will hit some important dates on 7/20 and then 8/20.

Life will go on as before: the austerity failure will continue.

Or they could break the cycle, tell Europe to suck it up, and move on.

Then Finland can do the same.

[Wilber]

Why Finland? It has high debt to GDP ratio for Scandinavia but one of the lowest in the Euro Zone and much lower than Canada.

[msj]

It's about currency.

Without some kind of internal form of transfers there is no way to balance out the fact that Germany and perhaps France are suitable under one currency and almost everyone else is not.

Imagine Canada in the 90's and early 2000's - if we were tied to the US dollar then we would have been hooped. Our sliding dollar saved us just as Harper hopes it will save him come October.

Finland has seen its GDP down about 5% points lower than prior to the GFC and they are facing a form of austerity thanks to the currency.

Why countries choose to do something so boneheaded is beyond me - hey, let's pursue policies that do not lead to full employment but it's worth it because we get some pretty coins out of it.

[Big Guy]

Strange world financial conditions. Greece is in a major turmoil because it defaulted on a $1.5 billion loan.

Warren Buffet is worth about $80 billion. He can take 2% of his assets and give them to Greece to make its payment in return for ...?

How about if Putin jumps in and pledges $10 billion to Greece if Russia is allowed to establish a permanent port in Greece on the Aegean Sea side, like the USA has Guantanamo Bay in Cuba?

Or what if Greece goes to BRICS and gets funding for certain "concessions"?

$1.5 billion is peanuts in international relations.

[TimG]

Strange world financial conditions. Greece is in a major turmoil because it defaulted on a $1.5 billion loan.

It is in turmoil because no one with money has confidence that Greece will be able to repay any additional moneys loaned to it. The 1.5 billion default is a symptom - not the cause. It is unlikely that Russia or anyone else would think that throwing good money after bad is a good idea.

[Wilber]

It's about currency.

Without some kind of internal form of transfers there is no way to balance out the fact that Germany and perhaps France are suitable under one currency and almost everyone else is not.

Imagine Canada in the 90's and early 2000's - if we were tied to the US dollar then we would have been hooped. Our sliding dollar saved us just as Harper hopes it will save him come October.

Finland has seen its GDP down about 5% points lower than prior to the GFC and they are facing a form of austerity thanks to the currency.

Why countries choose to do something so boneheaded is beyond me - hey, let's pursue policies that do not lead to full employment but it's worth it because we get some pretty coins out of it.

France? It hasn't run a budget surplus since the early 70's. I agree that the structure behind Euro is questionable. Too bad, it makes traveling in much of Europe so much easier.